Oil & Gas E&P

Variable Dividends Arrive in the Oil Patch

June 23, 2021

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Key Takeaways


  • U.S. exploration & production companies are flush with cash, benefiting from the return of $70 per barrel crude oil, yet remaining disciplined on the capex front.

  • Devon Energy (DVN) recently made its first variable dividend payout, and Cimarex Energy (XEC) and Pioneer Natural Resources (PXD) have announced plans to do the same. We see this as an elegant solution to the problem of returning excess cash to shareholders without burdening management teams, should prices relapse.

  • Based on our analysis of oil-focused E&Ps in our coverage universe, we think DVN, PXD, and XEC stand out as having the most income potential, but we also see COP and MUR being able to initiate similar programs, if desired.



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