TPH's take on CLR's new dividends + buyback plan

Post Reply
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

TPH's take on CLR's new dividends + buyback plan

Post by dan_s »

Tudor Pickering Holt on June 6

CLR Stock Thoughts
Taking a more balanced approach to capital allocation, likely see moderation of growth to finance buyback at strip
Sector: NAm E&P | Ticker: CLR | Recommendation: HOLD | Target: $49 | Close: $38.49
Following Monday's announcement of the introduction of a dividend and $1B buyback, we've revised our outlook for growth to better balance FCF in order to finance the buyback close to strip pricing. We're maintaining our 2019 outlook, but for 2020 are essentially envisioning a flat y/y program at ~$2.6B (Street $3.0B) which would drive 9% oil growth (Street 14%). Management's 5-year vision plan underwrote a $60/bbl WTI environment, and we'd likely see a lower base level of activity if WTI were to be <$55/bbl with a move to ex-growth if WTI were to be ~$45/bbl. This plan would generate the FCF to fully execute on the remaining $500-700MM of buybacks by YE'20 (assuming $300-500MM of buybacks by YE'19, net debt at ~$5.2B). Big picture, the buyback and dividend make CLR more competitive with large-cap growth peers on shareholder returns and would look for greater clarity on strategy around balancing growth, debt reduction and shareholder returns at strip.
Dan Steffens
Energy Prospectus Group
Post Reply