KEY MESSAGES
• Fixed-plus-variable dividend payout increased by 71 percent to $0.84 per share
• Board authorizes a $1.0 billion share-repurchase program through year-end 2022
• Repurchase program is equivalent to 4 percent of Devon’s market capitalization
• Top free cash flow priority continues to be the funding of the company’s market-leading dividend
• Balance sheet strength to further improve with plans to retire $1.0 billion of incremental debt
Devon Energy Corp. announced that its board of directors has declared a fixed-plus-variable dividend of $0.84 per share based on the company’s third-quarter financial performance. This represents a 71 percent increase in the dividend payout compared to the previous quarter. The dividend is payable on Dec. 30, 2021 to shareholders of record at the close of business on Dec. 10, 2021.
The company also announced today the next step in its cash-return strategy with the authorization of a $1.0 billion share-repurchase program of its common stock through year-end 2022. This program is equivalent to approximately 4 percent of the company’s current market capitalization.
“Today’s announcement is another example of Devon’s commitment to lead the energy industry in capital discipline, cash returns and alignment with shareholders,” said Rick Muncrief, president and CEO. “While our market-leading dividend will remain the top priority for free cash flow, this buyback program provides us with another avenue to opportunistically return value to shareholders and enhance per-share results.”
The timing and volume of share repurchases under this authorization will be determined by management at its discretion. Share repurchases under the program may be made through a variety of methods, including open market purchases or private transactions. The stock repurchase program may be discontinued at any time.
The top priority for the company’s free cash flow generation continues to be the funding of its fixed-plus-variable dividend. This dividend framework is designed to pay a sustainable fixed dividend through the cycle and evaluate a variable dividend on a quarterly basis. After the fixed dividend is funded, up to 50 percent of the remaining free cash flow will be distributed to shareholders through a variable dividend.
After funding the dividend, the remaining free cash flow will be deployed toward share repurchase activity and the continued improvement of Devon’s balance sheet. The company intends to further improve its financial strength by retiring and calling low-premium debt of approximately $1.0 billion in 2022 and 2023. Devon has accumulated sufficient cash balances to execute on this strategic objective.
