Pioneer Natural Resources (PXD) Update - June 20
Posted: Sun Jun 20, 2021 5:23 pm
Motley Fool: Pioneer follows others to limit production and pay a variable dividend
Like some of its U.S. peers, Pioneer is adopting a new operational paradigm of limiting production growth to 0-5% per year, which will lower capital expenditures and generate free cash flow. Also like others, Pioneer has announced a "fixed-plus-variable" dividend beginning in 2022.
Pioneer currently pays a fixed $2.24 per share dividend, or about 1.4% at the current stock price, and plans to pay out 75% of its free cash flow above that figure over the long-term. In its own wrinkle, the company will pay out the variable dividend based on the prior year's free cash flow, not the current year. So 2021 free cash flow will dictate variable 2022 dividends, 2022 results will dictate 2023's dividend, and so on, as long as the company realizes WTI prices above $42.
That assures investors should know what to expect, and the company will be able to keep ample liquidity on its balance sheet. The dividend structure will partially kick in next year, when the company intends to pay out 50% of excess free cash flow while paying down debt to 0.75 times EBITDAX, then ramping up to up to 75% thereafter.
On the recent conference call with analysts, CEO Scott Sheffield said that at current strip prices -- which were in the low $60s at the time of the early May conference call, but are over $70 right now -- Pioneer would be able to raise its dividend yield to about more than 4% next year, and potentially over 8% in 2023, when the full variable dividend kicks in.
Read more: https://finance.yahoo.com/m/a18fea51-36 ... yptr=yahoo
Like some of its U.S. peers, Pioneer is adopting a new operational paradigm of limiting production growth to 0-5% per year, which will lower capital expenditures and generate free cash flow. Also like others, Pioneer has announced a "fixed-plus-variable" dividend beginning in 2022.
Pioneer currently pays a fixed $2.24 per share dividend, or about 1.4% at the current stock price, and plans to pay out 75% of its free cash flow above that figure over the long-term. In its own wrinkle, the company will pay out the variable dividend based on the prior year's free cash flow, not the current year. So 2021 free cash flow will dictate variable 2022 dividends, 2022 results will dictate 2023's dividend, and so on, as long as the company realizes WTI prices above $42.
That assures investors should know what to expect, and the company will be able to keep ample liquidity on its balance sheet. The dividend structure will partially kick in next year, when the company intends to pay out 50% of excess free cash flow while paying down debt to 0.75 times EBITDAX, then ramping up to up to 75% thereafter.
On the recent conference call with analysts, CEO Scott Sheffield said that at current strip prices -- which were in the low $60s at the time of the early May conference call, but are over $70 right now -- Pioneer would be able to raise its dividend yield to about more than 4% next year, and potentially over 8% in 2023, when the full variable dividend kicks in.
Read more: https://finance.yahoo.com/m/a18fea51-36 ... yptr=yahoo