Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
Recently, the oil giant ConocoPhillips (COP) has been on a rapid growth trajectory, and the management’s first thought is to give shareholders a “bonus.” The company announced a 34% increase in its dividend and plans to repurchase $20 billion in company stock. ConocoPhillips’ confidence stems from strong performance in its traditional business, as shown in its recent third-quarter results, and the significant boost expected from the anticipated completion of its acquisition of Marathon Oil in the fourth quarter.
In summary, ConocoPhillips is very confident about its future.
ConocoPhillips’ third-quarter production exceeded 1.9 million barrels of oil equivalent per day, surpassing the company’s production guidance. Record production was achieved in the Lower 48 states, particularly in the Permian, Bakken, and Eagle Ford regions. Adjusted for acquisitions and asset sales, production increased by 3% year-over-year. However, the average oil price fell 10% year-over-year to $54.18 per barrel. As a result, adjusted earnings decreased from $2.6 billion to $2.1 billion.
Despite this, ConocoPhillips generated $4.7 billion in operating cash flow for the quarter, with $2.9 billion allocated to capital expenditures for maintenance and expansion, and $2.1 billion returned to investors, which included $1.2 billion in stock buybacks and $0.9 billion in cash dividends (including dividends and variable return of cash, VORC). By the end of the third quarter, the company held $7.1 billion in cash and $1 billion in long-term investments.
ConocoPhillips is expected to complete its $22.5 billion merger with Marathon Oil in the fourth quarter and has also increased its investment in Alaska by purchasing remaining working interests in the Kuparuk River and Prudhoe Bay for $300 million. These transactions will further expand the company’s asset base, with the acquisition of Marathon Oil expected to immediately enhance earnings per share, operating cash flow, free cash flow, and return of capital. The first year’s cost and capital synergies following the deal completion are projected to significantly exceed the initial estimate of at least $500 million.
As a result, ConocoPhillips announced a 34% increase in its quarterly dividend and made the current VORC permanent. The new dividend exceeds the previous historical high level, and the company plans for its future dividend growth rate to be in the top 25% of the S&P 500 index. Additionally, the company’s board of directors has approved increasing the existing stock repurchase authorization to $20 billion, with plans to increase the annual repurchase volume from the current $5 billion to around $7 billion after the transaction closes, allowing the company to buy back all shares issued for the Marathon acquisition (approximately $17.1 billion) within three years.
