Australia's Santos announces $250mn share buyback
Australian oil and gas producer Santos on April 20 announced an initial on-market share buyback of up to $250mn as a part of a new capital management framework targeting higher shareholder returns.
The new capital management framework also includes a dividend policy of 10-30% payout of free cash flow and additional shareholder returns of at least 40% of the incremental free cash flow in the form of additional dividends.
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"We are now in a position to target higher shareholder returns through our new capital management framework and are pleased to announce an initial on-market share buyback of up to $250mn because we believe the current share price undervalues the company," Santos CEO Kevin Gallagher said.
The share buyback is expected to start in May. Any shareholder returns over and above the base dividend announced in respect of the 2022 half-year results in August will be inclusive of this $250mn buyback.
“Santos' strategy is to maintain a disciplined, low-cost operating model that is designed to deliver strong cash flows through the oil price cycle,” the company said. “The new capital management framework seeks to maintain an appropriate capital structure that enables Santos to balance the allocation of capital between investment in the business, the development of strategic growth and clean energy projects, and the provision of sustainable returns to shareholders at higher commodity prices.”
The company reported a record underlying profit in 2021 on the back of surging oil and gas prices. The underlying profit, which excludes one-off items, came in at $946mn for the 12 months to December 31, compared with $287mn a year earlier.