Devon Energy Corp. said Feb. 16 its board of directors had declared a variable cash dividend in addition to its fixed quarterly dividend—an “industry first,” according to the CEO of the Oklahoma City-based oil and gas producer.

The $128 million variable cash dividend is in the amount of $0.19 per share based on the company’s pro forma fourth-quarter 2020 financial results, also released on Feb. 16.

“We are excited to reward shareholders and differentiate ourselves from peers by declaring an industry-first variable dividend,” said Rick Muncrief, president and CEO, in a statement.

Previously chairman and CEO of WPX Energy, Muncrief joined Devon Energy following the closing of the company’s acquisition of WPX in January

Upon closing of the all-stock transaction valued at about $5.75 billion, Devon Energy enhanced the scale of its operations, particularly a dominant position in the Delaware Basin within the Permian where it expected to produce nearly 60% of its total oil production.

The company’s “fixed plus variable” dividend framework was implemented following closing of the merger with WPX Energy on Jan. 7. This cash-return strategy is designed to pay a sustainable fixed dividend and evaluate a variable dividend on a quarterly basis, according to the Devon company release.

“With our business scaled to consistently generate free cash flow, this innovative ‘fixed plus variable’ dividend framework is uniquely designed to enhance our ability to return meaningful and appropriate amounts of cash to shareholders across a variety of market conditions,” Muncrief added in his statement.

The variable dividend is in addition to Devon’s previously declared fixed quarterly dividend of $0.11 per share.

After the fixed dividend is funded, up to 50% of the remaining excess free cash flow in each quarter may be distributed to shareholders through a variable dividend.

Both the fixed and variable dividends are payable on March 31, to shareholders of record at the close of business on March 15.