Oil and gas major Santos on Wednesday announced a simplified capital management framework which would see a minimum of at least 40% of yearly free cash flow returned to shareholders.
The company said in a statement that the revised capital framework seeks to maintain an appropriate capital structure that enables Santos to balance the allocation of capital between investment in the business to develop backfill projects, decarbonisation projects, the development of strategic growth and clean fuels projects, and the provision of sustainable returns to shareholders based on the generation of free cash flow.
Santos chairperson Keith Spence says Santos is generating strong free cash flows at current commodity prices.
“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.
“Once the Barossa and Pikka Phase 1 projects commence production, the board’s intention is to consider increasing shareholder returns to at least 50% of free cash flow generated per annum.”
The shareholder returns will be effected by way of cash dividends or share buybacks, subject to market conditions and at board discretion.
Santos on Wednesday also announced a further $350-million increase in the on-market share buyback, in addition to the $350-million announced in August this year, which is 98% complete and brings the total on-market share buyback amount to $700-million for 2022.