What are the Sweet 16 doing with all of that FCF?

[dan_s]

Devin McDermott – Morgan Stanley
August 2, 2021 4:01 AM GMT

OVV raised its dividend payout by ~50% to now yield ~2%, while MRO bumped its by 25% to now yield ~1.7%. CLR increased its quarterly base dividend from $0.11/sh to $0.15/sh, with its payout now 3x the pre-Covid level. On the gas side, AR expects leverage to fall below $2 B in early 2022 (vs prior guidance of mid-2022), at which point it will be opportunistic in further debt paydown and returning capital to shareholders. EQT expects its debt level to decrease below 1.5x in 2022 and plans to release capital return framework details with 4Q earnings.

Cost inflation effects remain muted. As we wrote in our 2Q preview, we expected the industry to largely offset rising steel, labor, and fuel costs through increased drilling and completion efficiencies and maintain 2021 capital budgets. In addition, many companies were able to lock in spending on certain categories such as rigs and tubulars at the start of this year. Those reporting so far have been able to hold the line on costs and expect to offset inflation with greater efficiency.