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Diamondback Energy and Southwestern Energy Update Capital Returns Programs, Sending Stocks Higher

2022.06.21 20:31

Diamondback Energy and Southwestern Energy Update Capital Returns Programs, Sending Stocks Higher
Diamondback Energy (FANG) and Southwestern Energy (SWN) Update Capital Returns Programs, Sending Stocks Higher

By Sam Boughedda

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.

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