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By Robb M. Stewart
ConocoPhillips has increased its planned 2021 share buybacks by $ 1 billion pending more savings and profits from its recent takeover of shale rival Concho Resources Inc.
Ahead of a market update on Wednesday in which the energy company said it would affirm its commitment to a disciplined, yield-driven strategy, it said the increase in planned share buybacks would bring the total distributions forecast for the year at approximately $ 6 billion, or 7% of ConocoPhillips’ current market capitalization.
The company resumed share buybacks in March at an annualized level of $ 1.5 billion, a 50% increase from ongoing buybacks in the final quarter of 2020 when the program was suspended due to the acquisition of Concho. ConocoPhillips completed the $ 9.7 billion acquisition of Concho in mid-January, significantly expanding its presence in the Permian Basin of Texas and New Mexico, the hottest oil field in the United States
ConocoPhillips said it is increasing the synergies and expected savings from the Concho transaction to $ 1 billion per year. At the same time, he announced that he would cut capital spending in 2021 and adjusted the operating cost forecast by $ 200 million and $ 100 million, due to “stronger business execution. provided that”.
Capital spending is expected to average $ 7 billion per year, resulting in compound annual growth of about 3% in production at an average reinvestment rate of about 50%, the statement said.
ConocoPhillips said its return on capital employed is expected to increase by 1 to 2 percentage points per year, with balance sheet strength improving further throughout the 2022-2031 plan period.
Write to Robb M. Stewart at [email protected]
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