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- Santos (STO) unveils a new capital management framework, targeting higher shareholder returns
- As part of the new framework, the company will undertake an initial on-market share buyback of up to US$250 million (A$337 million)
- The share buyback is expected to commence in May 2022
- Also included in the new framework is a dividend policy of 10 per cent to 30 per cent of free cash flow generated per annum at an average Brent oil price up to US$65 per barrel
- STO shares down 0.78 per cent to $8.26
Santos (STO) has announced a new capital management framework, targeting higher shareholder returns and including an initial on-market share buyback of up to US$250 million (A$337 million).
The new capital management framework was designed to balance the company’s allocation of capital between investment in the business, development of strategic growth projects and provision of sustainable returns to shareholders at higher commodity prices.
The framework included a dividend policy of 10 per cent to 30 per cent of free cash flow generated per annum at an average Brent oil price up to US$65 per barrel and a target gearing range of 15 per cent to 25 per cent.
Also part of the framework were further shareholder returns of at least 40 per cent of the incremental free cash flow in the form of additional dividends and or share buybacks – at the board’s discretion – at Brent oil prices above US$65 per barrel.
Santos Managing Director and CEO Kevin Gallagher said consistent delivery of the company’s Transform Build Grow strategy had placed it in a strong financial position with a robust outlook.
“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 US$250 million because we believe the current share price undervalues the company,” he said.
The share buyback was expected to commence in May 2022.
Santos said any shareholder return over and above the base dividend announced in respect of the 2022 half-year results in August would be included in the share buyback.
STO shares were down 0.78 per cent to $8.26 at 1:47 pm AEST.
