APA Corp. on Sept. 14 unveiled a doubling of its base dividend and a significant increase to the company’s buyback authorization.

“Over the last year, we’ve significantly strengthened our balance sheet and committed to returning a minimum of 60% of free cash flow to our shareholders through dividend and stock repurchases,” APA CEO and President John Christmann IV commented in a release by the Houston-based company.

According to the release, the APA board of directors increased the company’s dividend on common shares from an annualized rate of 50 cents per share to $1 per share. The board of directors also approved a further 40 million shares of additional share repurchase authorization, according to the release.

“The vast majority of this return is still being delivered through stock repurchases,” Christmann continued. “However, we are confident that our long-term cash flow will comfortably support this step-up in the base dividend payment.”

Analysts with Tudor, Pickering, Holt & Co. (TPH) viewed APA’s news as positive. The dividend boost represents annualized 2.4% dividend yield exceeding the current S&P 500 yield of roughly 1.7%, according to TPH analyst Jeoffrey Lambujon.

“At ~$86/bbl WTI and ~$91/bbl Brent, we see the potential for APA to return TPHe ~$2.1 billion to shareholders, assuming an increase to the payout framework from >60% of FCF to >70%. For context, TPHe $2.06 billion capex for oil volumes growing ~2% exit/exit for $2.86 billion pre-returns FCF (18% FCF/EV), comparable to Street’s ~$2 billion capex program for similar oil growth with ~$2.55 billion FCF,” Lambujon wrote in a Sept. 15 research note.

APA’s next quarterly dividend on common shares is payable Nov. 22 to stockholders of record on Oct. 21, at a rate of 25 cents per share on the company’s common stock, up from 12.5 cents per share.

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