$53 billion in North American buybacks – What does this mean for upstream shareholders?

Share buybacks are having a major impact on investors in upstream North American oil and gas companies – and Evaluate Energy’s latest data has more than one way to identify who’s benefiting the most.

First, examine the sheer amount of dollars spent.

Investors welcome buybacks because share prices get a boost. Reviewing company cash usage – a calculation streamlined in our database – shows 87 U.S. and Canadian producers spent $53 billion on buybacks over the past 15 months.

More than 80% was spent by 33 oil-focused U.S. producers plus five Canadian oilsands operators. These groups include the largest producers in the study, with ConocoPhillips, Imperial Oil, CNRL, Suncor and Occidental among the biggest spenders.

Second, and perhaps more interestingly, we have improving per share metrics.

Operators of all sizes are buying back shares. Analyzing per share metrics identifies significant activity regardless of company size and cash outlay. If a company buys back shares, i.e. reduces the number of shares it has in-market, this has a direct positive impact on any metric that investors use to analyze performance on a per-share basis. Earnings or cash flow per share are popular examples.

A simple all-encompassing barometer for success for us here, therefore, is the percentage reduction in outstanding shares, a figure that directly impacts every single per-share metric.

By analyzing this data since January 2022, several smaller companies are highlighted.

The results reflect the extent of change in share volume within these smaller companies.

Appalachia-focused CNX Resources plus International Petroleum, Advantage Energy, ARC Resources and Enerplus – four Canadian companies not involved in oilsands – comprise five of the top seven companies when ranked by percentage reduction in outstanding shares.

This means these five producers were able to have the largest relative positive impact on their per share performance metrics than nearly every other producer in our group.

This is despite just $2.5 billion in buybacks combined over the entire 15-month period, proving that share buybacks of all sizes can have a significant impact when analyzing oil and gas company performance.

(All $ figures shown in US$)

Evaluate Energy’s streamlined cash flow data, including detailed breakdowns of all uses and sources of cash, provide our users with a far clearer picture than ever before of how oil and gas producers use their cash as commodity prices change over time. Data points include capital expenditures, finance raised, debt repaid, assets sold or acquired, dividend payments and more. 

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