Santos framework targets higher shareholder returns

The National Business

SANTOS has announced a new capital management framework targeting higher shareholder returns and including an initial on-market share buyback of up to US$250 million (about K862 million).
According to the company, its strategy is to maintain a disciplined, low-cost operating model that is designed to deliver strong cash flows through the oil price cycle. The new capital management framework would seek to maintain an appropriate capital structure that would enable Santos to balance allocation of capital between investment in business, development of strategic growth and clean energy projects, and provision of sustainable returns to shareholders at higher commodity prices.
The new capital management framework included:

  • A DIVIDEND policy of 10 per cent to 30 per cent payout of free cash flow (excluding major growth) generated per annum at an average Brent oil price up to US$65 (about K224.22) per barrel;
  • ADDITIONAL shareholder returns of at least 40 per cent of the incremental free cashflow (excluding major growth) in the form of additional dividends and/or sharebuybacks at the board’s discretion at Brent oil price outcomes above US$65 (about K224.22) per barrel; and,
  • A TARGET gearing range of 15 per cent to 25 per cent. Given the strong free cash flow being generated at current oil prices and gearing at 26 per cent at the end of last month, Santos intends to return up to US$250million (about K862 million) to shareholders through an on-market share buyback during the remainder of this year. Santos managing director and chief executive officer Kevin Gallagher said consistent delivery of Santos’ Transform Build Grow strategy had placed the company in a strong financial position.