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Conoco (COP) Hikes Share Repurchase Program, Lowers Debt

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ConocoPhillips (COP - Free Report) has received consent from board of directors for increasing share repurchase program for 2018 by 50% to $3 billion from $2 billion. In 2018, the company will have sufficient cash from operations to fund the program along with dividend and capital expenditures.

Currently, the company has a total share repurchase authorization of $6 billion. The 2018 share repurchase program expansion to $3 billion along with shares repurchased worth $3 billion during 2016 and 2017, will fully utilize the board’s existing authorization. Therefore, the board has authorized additional share repurchases of $9 billion, taking the total amount to $15 billion.

In late 2016, ConocoPhillips had commenced the current share repurchase program. The $15-billion authorization reflects about 20% of the total shares outstanding as of Sep 30, 2016. This comprises shares already repurchased under this program as well as future repurchases based on the current share price.

ConocoPhillips also announced that it has reduced debt by $2.1 billion during the second quarter and has attained declared debt target of $15 billion much before the original target date of 2019 end.

The board of directors holds the discretionary power to execute the repurchase authorization. The level or rate of activity may be impacted by future earnings, financial condition, capital requirements, levels of indebtedness, credit ratings and other considerations that are relevant.

These initiatives emphasize the company’s commitment toward boosting shareholders’ value. It also highlights the fact that the company projects upside potential in shares. As the company achieved the target of meeting debt before the targeted date, ConocoPhillips can focus on channeling cash flows toward business growth and maintain efficiency in operations.

As oil and gas prices continue to recover, several oil giants have reinitiated share repurchase program, which is intended to increase shareholders’ value. Some of these companies include BP plc (BP - Free Report) and Anadarko Petroleum Corporation (APC - Free Report)

Price Performance

In the past three months, ConocoPhillips’ shares have gained 8.7% compared with the industry’s rise of 8.5%.



 

Zacks Rank & Another Stock to Consider

ConocoPhillips currently sports a Zacks Rank #1 (Strong Buy). Another top-ranked player in the same sector is Occidental Petroleum Corporation (OXY - Free Report) , flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.

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