Headquartered in Houston, ConocoPhillips had operations and activities in 15 countries, $63 billion of total assets, and approximately 9,700 employees at Dec. 31, 2020. (Source: ConocoPhillips Co.; ConocoPhillips illustration by IgorGolovniov / Shutterstock.com)
ConocoPhillips Co. resumed its share buyback program at an annualized level of $1.5 billion on March 10 citing improved market conditions while doubling down on its capital discipline promise.
“It’s still early in the new year, but commodity prices have strengthened such that our dividend alone may not be sufficient to meet our return of capital commitment,” Ryan Lance, chairman and CEO of the Houston-based independent E&P company, said in a statement.
Oil prices have continued to rebound from the lows reached last year due to the pandemic with the price of Brent crude trading above $70/bbl on March 8, its highest since January 2020. Still, Lance reiterated in his statement on March 10 that ConocoPhillips has no plans to increase its previously announced operating capital program of $5.5 billion despite the more constructive outlook on 2021.
“We believe this market will favor companies who demonstrate sustainable discipline and strong free cash flow generation with a track record of predictable returns of capital,” Lance said.
As such, ConocoPhillips joins other oil and gas producers such as U.S. oil majors Exxon Mobil Corp. and Chevron Corp. that have recently reaffirmed plans to keep spending in check regardless of an oil price recovery.
“At a time of reckoning for the sector, ConocoPhillips’ proven value proposition remains the right one for this volatile business,” Lance added.
ConocoPhillips’ share repurchase program will be executed ratably across all four quarters in 2021. The company added the buyback program will resume 50% higher than the level of repurchases in fourth-quarter 2020 when the program was suspended due to its deal to buy Concho Resources.
Based on the company’s current outlook, this level of share repurchases, combined with the ordinary dividend, reflects ConocoPhillips’ long-standing priority to return greater than 30% of cash from operations to shareholders annually, according to the company release.
ConocoPhillips will continue to monitor the environment closely and adjust the share repurchase program as needed, according to Lance’s statement.
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