SANTOS is simplifying its management framework aimed at higher shareholder returns, it announced yesterday.
The framework includes a minimum annual return of at least 40 per cent of free cash flow:
- A POLICY of at least 40 per
- cent payout of free cash flow from operations (excluding major growth) generated per annum;
- SHAREHOLDER returns to be effected by way of cash dividends and/or share buybacks, subject to market conditions and the Board’s discretion; and,
- AN unchanged target gearing 2 range of 15 per cent to 25 per cent.
The company also announced a further US$350 million (about K1.2 billion) increase in the on-market share buyback. This amount is in addition to the US$350 million announced in August, which is about 98 per cent complete.
The additional on-market buyback is expected to commence this month.
Any shareholder return announced in respect of the 2022 full-year results in February will be inclusive of the US$350 million (about K1.2 billion) increase in the share buyback.
Santos chairman Keith Spence said Santos was generating strong free cash flows at current commodity prices.
“The board is pleased to announce higher shareholder returns and an increase in the on-market share buyback, reflecting their confidence in the company.
“In addition, the board shall give consideration to additional shareholder returns from any net proceeds derived from asset divestments through portfolio optimisation once those divestments reach completion and proceeds have been received,” he added.
Spence said once the Barossa and Pikka phase one projects began production, the board’s intention was to consider increasing shareholder returns to at least 50 per cent of free cash flow generated per year.
The National / Pacific Mining Watch
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