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Both Diamondback Energy (NASDAQ:FANG) and Southwestern Energy Company (NYSE:SWN) provided updates to their capital return programs before the open Tuesday pushing their stocks higher.
Diamondback Energy shares are up more than 7% and Southwestern Energy has risen over 2% following the announcements.
In its announcement, Diamondback announced its intention to increase its quarterly base dividend to $0.75 per share compared to the previous $0.70 per share. It will also increase its return of capital commitment to at least 75% of free cash flow and 2Q22 share buyback of $253 million. It also expects to maintain its 2Q22 dividend at $3.05 per share.
Meanwhile, Southwestern announced it has approved a share repurchase program with an authorization of up to $1 billion through to the end of 2023. The company said it remains focused on debt reduction and expects to be on track for achieving leverage levels of 1.0x-1.5x by the end of 2022 and a $3 billion to $3.5 billion debt target by 2023.
Following the Diamondback announcement, Stifel analyst Derrick Whitfield told investors in a note that the combination of these stock repurchases and dividends constitutes a return of capital to stockholders well in excess of 50% of Diamondback’s FCF for Q222.
“Net-net, we believe the accelerated return program highlights Diamondback’s strong operational and financial performance and peer-leading commitment to capital discipline and shareholder returns,” stated Whitfield.
