By Dhirendra Tripathi
Investing.com – Diamondback Energy stock (NASDAQ:FANG) rose 4% Friday as the company’s board approved an up to $2 billion share repurchase program to complement its plan to return 50% of free cash flow to stockholders.
The company said it will be flexible on the ways to return cash to its shareholders but remains committed to consistently returning money.
The share repurchase starts next quarter, the company said, adding it will cease the exercise and return excess free cash flow as a variable dividend when it expects the return on the buyback to be less than its cost of capital at mid-cycle commodity prices. That is not the case right now, as per the company.
The company last month raised its annual dividend by 12.5% to $1.80 per share while declaring a second-quarter payout of 45 cents per share.
The company said the sale of its North Dakota assets should close in the next few weeks, with the outcome dependent on final government approval. The net proceeds from that sale, along with cash on hand, will be used to pay off the remaining $650 million in outstanding callable debt in the company’s capital structure, Diamondback Chief Executive Officer Travis Stice said in a note.
Diamondback had $344 million in cash and cash equivalents as on June 30 this year, more than thrice the $104 million it had at the end of December 2020. Current assets amounted to $1.14 billion at the end of June.