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The Zacks Analyst Blog Highlights: BP, Royal Dutch Shell, Chevron, Equinor and Diamondback Energy
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For Immediate Release
Chicago, IL – August 23, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: BP p.l.c. (BP - Free Report) , Royal Dutch Shell plc , Chevron Corporation (CVX - Free Report) , Equinor ASA (EQNR - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Flush with Cash, Oil Companies Focus on Shareholder Returns
As the energy space continues to recover from last year's blows, some of the world’s biggest oil companies have started generating healthy cash flows. After a dire 2020 — devastated by the pandemic-induced demand destruction and price plunge — the sector components have shown significant improvement in profits over the past few quarters.
Ballooning Cash Flows
The sharp increase in crude prices from the depths of minus $38 a barrel in April 2020 to around $70 has allowed the energy companies to deliver a solid financial performance. In particular, cash from operations is on a sustainable path as revenues improve and companies slash capital expenditures from the pre-pandemic levels amid sharply higher commodity prices. To put it simply, the environment of strong oil prices has helped the big energy operators to generate significant “excess cash,” which they intend to use to boost investor returns.
Let’s have a rundown on how some of the oil supermajors are allocating the increasing cash pile toward stock buybacks and dividends.
Share Repurchases
British energy major BP plc, which had a solid start to the year after comfortably beating first and second-quarter earnings estimates, announced plans to buy back $1.4 billion worth of shares by utilizing surplus cashflow that was generated through the January-to-June period.
Continental rival Royal Dutch Shell launched a $2 billion stock repurchase program to be completed by the end of 2021. France’s TotalEnergies said that it will spend up to 40% of the additional cash flows generated at a $60+ oil price environment to share buybacks.
American supermajor Chevron revived its stock repurchase program and vowed to buy back $2-$3 billion in shares annually starting from the third quarter.
Dividends
Royal Dutch Shell increased its quarterly dividend by 38.3% to 24 cents per share, while Zacks Rank of #1 (Strong Buy) BP’s board of directors approved a dividend hike of 4% in the June quarter to 5.46 cents per ordinary share. Staying with ‘Big Oil,’ Norway’s Equinor ASA proposed a quarterly dividend of 18 cents per share, representing a hike of 20% from the prior payout.
Continental Resources announced a quarterly fixed dividend payment of 15 cents per share, which increased from 11 cents per share in the previous quarter. Permian pure play Diamondback Energy also boosted its quarterly dividend, announcing that it will go up 4.5% to 45 cents. Besides, Houston, TX-based Marathon Oil increased its quarterly base dividend to by 25% from 4 cents to 5 cents per share, signaling its commitment to shareholder return
Another upstream operator Ovintiv raised its quarterly dividend by around 50% to 14 cents per share. Meanwhile, Devon Energy, which added a variable dividend component to its fixed payout last quarter, has promised to shell out 44% more this time. Shale behemoth Pioneer Natural Resources Company brought forward the timing of its special dividend by six months and will pay nearly 75% of the company’s free cash flow after the payment of the base dividend.
Wrapping Up
A much-improved crude price scenario and the economic recovery have contributed to the balance sheet strength of the energy companies. Benefiting from the robust fundamentals, their cash from operations are now covering capital spending. This provides a sustainable financial framework for the oil firms to increase cash returns to shareholders.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: BP, Royal Dutch Shell, Chevron, Equinor and Diamondback Energy
For Immediate Release
Chicago, IL – August 23, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: BP p.l.c. (BP - Free Report) , Royal Dutch Shell plc , Chevron Corporation (CVX - Free Report) , Equinor ASA (EQNR - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Flush with Cash, Oil Companies Focus on Shareholder Returns
As the energy space continues to recover from last year's blows, some of the world’s biggest oil companies have started generating healthy cash flows. After a dire 2020 — devastated by the pandemic-induced demand destruction and price plunge — the sector components have shown significant improvement in profits over the past few quarters.
Ballooning Cash Flows
The sharp increase in crude prices from the depths of minus $38 a barrel in April 2020 to around $70 has allowed the energy companies to deliver a solid financial performance. In particular, cash from operations is on a sustainable path as revenues improve and companies slash capital expenditures from the pre-pandemic levels amid sharply higher commodity prices. To put it simply, the environment of strong oil prices has helped the big energy operators to generate significant “excess cash,” which they intend to use to boost investor returns.
Let’s have a rundown on how some of the oil supermajors are allocating the increasing cash pile toward stock buybacks and dividends.
Share Repurchases
British energy major BP plc, which had a solid start to the year after comfortably beating first and second-quarter earnings estimates, announced plans to buy back $1.4 billion worth of shares by utilizing surplus cashflow that was generated through the January-to-June period.
Continental rival Royal Dutch Shell launched a $2 billion stock repurchase program to be completed by the end of 2021. France’s TotalEnergies said that it will spend up to 40% of the additional cash flows generated at a $60+ oil price environment to share buybacks.
American supermajor Chevron revived its stock repurchase program and vowed to buy back $2-$3 billion in shares annually starting from the third quarter.
Dividends
Royal Dutch Shell increased its quarterly dividend by 38.3% to 24 cents per share, while Zacks Rank of #1 (Strong Buy) BP’s board of directors approved a dividend hike of 4% in the June quarter to 5.46 cents per ordinary share. Staying with ‘Big Oil,’ Norway’s Equinor ASA proposed a quarterly dividend of 18 cents per share, representing a hike of 20% from the prior payout.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Continental Resources announced a quarterly fixed dividend payment of 15 cents per share, which increased from 11 cents per share in the previous quarter. Permian pure play Diamondback Energy also boosted its quarterly dividend, announcing that it will go up 4.5% to 45 cents. Besides, Houston, TX-based Marathon Oil increased its quarterly base dividend to by 25% from 4 cents to 5 cents per share, signaling its commitment to shareholder return
Another upstream operator Ovintiv raised its quarterly dividend by around 50% to 14 cents per share. Meanwhile, Devon Energy, which added a variable dividend component to its fixed payout last quarter, has promised to shell out 44% more this time. Shale behemoth Pioneer Natural Resources Company brought forward the timing of its special dividend by six months and will pay nearly 75% of the company’s free cash flow after the payment of the base dividend.
Wrapping Up
A much-improved crude price scenario and the economic recovery have contributed to the balance sheet strength of the energy companies. Benefiting from the robust fundamentals, their cash from operations are now covering capital spending. This provides a sustainable financial framework for the oil firms to increase cash returns to shareholders.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.