Oil producer ConocoPhillips Co. said on Dec. 6 it expects to return 16% more capital to shareholders next year, and added a new variable return of cash to its plans, underscoring the energy industry’s focus on shareholder returns over spending.
Oil and gas companies have either raised their dividends or announced share buybacks, even as crude price are up about 38% this year, as they keep their pledges to hold output flat, a marked departure from previous boom cycles.
ConocoPhillips also forecast average production of about 1.8 million boe/d in 2022, a low-single-digit percentage growth from 2021.
The forecast from the largest U.S. independent oil producer comes after it made two sizable acquisitions this year in the heart of the U.S. shale industry—a $9.5 billion deal to buy Royal Dutch Shell’s Permian Basin assets and a $13.3 billion transaction for Concho Resources Inc.
RELATED:
Insight: ConocoPhillips Made Shell Permian Deal with Cash, ‘Patience’
ConocoPhillips said it expects to return capital of about $7 billion to shareholders next year, and added its first variable return of cash of 20 cents per share would be paid on Jan. 14.
That would be on top of about $2.4 billion the company plans to pay in ordinary dividends and share repurchases of about $3.5 billion.
The company also projected capex of about $7.2 billion in 2022. It had forecast annual capex of $8 billion, as part of a 10-year plan it announced in September.
The planned capex includes $200 million for projects that would reduce the company’s emissions from its direct operations and from the power it uses.
Truist Securities analyst Neal Dingmann called the news “quite positive,” saying the new return structure and tepid production growth are what investors have been calling for.
ConocoPhillips shares rose 2.2% to $72.63 amid a broader rise in crude prices.
Recommended Reading
Some Payne, But Mostly Gain for H&P in Q4 2023
2024-01-31 - Helmerich & Payne’s revenue grew internationally and in North America but declined in the Gulf of Mexico compared to the previous quarter.
Kimmeridge Fast Forwards on SilverBow with Takeover Bid
2024-03-13 - Investment firm Kimmeridge Energy Management, which first asked for additional SilverBow Resources board seats, has followed up with a buyout offer. A deal would make a nearly 1 Bcfe/d Eagle Ford pureplay.
M4E Lithium Closes Funding for Brazilian Lithium Exploration
2024-03-15 - M4E’s financing package includes an equity investment, a royalty purchase and an option for a strategic offtake agreement.
Laredo Oil Subsidiary, Erehwon Enter Into Drilling Agreement with Texakoma
2024-03-14 - The agreement with Lustre Oil and Erehwon Oil & Gas would allow Texakoma to participate in the development of 7,375 net acres of mineral rights in Valley County, Montana.
California Resources Corp. Nominates Christian Kendall to Board of Directors
2024-03-21 - California Resources Corp. has nominated Christian Kendall, former president and CEO of Denbury, to serve on its board.