Diamondback Energy (NASDAQ: FANG) shares rose over 7% after announcing plans to increase its quarterly base dividend to USD0.75 per share, up from the previous USD0.70 a share. Furthermore, it intends to raise its return of capital commitment to a minimum of 75% of free cash flow and a 2Q22 share buyback of USD253 Million.
The renewable energy company expects to maintain its second-quarter dividend at USD3.05 per share. Additionally, the company repurchased 1,966,516 shares of its common stock for about USD253 Million throughout the second quarter for a weighted average price of USD128.42 per share.
Though the second quarter has not yet ended, Diamondback Energy believes that the combination of these stock repurchases together with its expected base-plus-variable dividends for the quarter will generate a return of capital to stockholders of over 50% of the company’s Free Cash Flow.
“We are pleased to announce our enhanced capital return framework,” stated Travis Stice, Chairman and Chief Executive Officer of Diamondback. “This is a natural progression of our shareholder returns program that began with the initiation of our base dividend in 2018, which has been increased 500% since then and continues to deliver significant value to our stockholders.”
Stice continued on to say, “We have continued to use cash on hand to pay down debt and believe that we now have a strong balance sheet that can withstand another down cycle. The increased return of capital framework announced today displays the confidence we have in our forward outlook, with our high cash margins and low-cost structure driving an increasing return on capital.”