ConocoPhillips forecasts 16% rise in 2022 shareholder returns

Oil producer ConocoPhillips said on Monday 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 barrels of oil equivalent per day 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 $9.7 billion transaction for Concho Resources Inc.

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 capital expenditure of about $7.2 billion in 2022. It had forecast annual capital expenditures of $8 billion, as part of a 10-year plan it announced in September.

The planned capital expenditure 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.