Company initiates a quarterly dividend, launches $1 billion share buyback, bumps free cash flow projection to $5 billion

Continental Resources, Inc. (NYSE: CLR) has entered full shareholder payback mode.

The company said today that its board approved the initiation of a quarterly dividend of $0.05 per share on its common stock, with the first divident payable on November 21, 2019 to stockholders of record on November 7, 2019. The company also announced that it launched a $1 billion share-repurchase program.

“We see the current value of our equity as being unreasonably low, making the acquisition of our stock the best use of excess cash at this time,” said Continental Chairman and CEO Harold Hamm.

Continental said the $1 billion share buyback begins in second quarter 2019 and continues through 2020 as deemed appropriate. Continental said it expects a substantial portion of this initial $1 billion amount will be executed by year-end 2019. Continental said it may prioritize further share repurchases in lieu of production growth, should market conditions warrant.

Hamm described today’s announcement of the announcement of the side-by-side shareholder payouts as a company milestone. “This demonstrates the confidence we have in the quality and sustainability of our assets and our commitment to maximizing shareholder value,” Hamm said in a statement.

No M&A being contemplated here

In its press release, Continental put out a strong statement denying any contemplation of a corporate M&A transaction. “For over 50 years, Continental has grown organically through exploration and will continue to do so. Although there has been much market speculation, the company’s five-year projection does not contemplate corporate M&A transactions,” the statement said.

Debt reduction ongoing

Continental said it will continue reducing net debt and expects to approach approximately $5 billion of net debt by yearend 2019, further reducing reduce net debt to $4.2 billion or below over the longer term.

Free cash flow projection grows to $5 billion  

Continental said it now expects to generate approximately $5 billion of free cash flow (non-GAAP) at $60 WTI, which is approximately $1 billion more than its previously disclosed projection. This increase is being driven primarily by improvement in capital efficiencies and crude oil differentials, Continental said.

Continental said the projected cash flow is expected to generate ample liquidity for further debt reduction, dividends, additional share repurchases or general corporate purposes.

“Annual return on capital employed (ROCE) is expected to improve throughout the five year period, averaging approximately 14.5%, assuming $60 WTI.”

Continental said it maintains its 2019 guidance as announced on February 13, 2019.

Continental Resources to Shareholders: 'This is For You' - Oil & Gas 360




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