CIBC CIBC recently completed a virtual energy conference and analyst Dennis Fong came away more convinced of payout increases and buybacks in the sector,
“Capital discipline and maximizing free cash flow remain the core focus. Despite rising commodity prices, we found very little indication that producers are likely to meaningfully increase capital programs through the balance of 2021. Free cash flow generation, debt reduction, and returning cash to shareholders continue to dominate capital allocation decisions. We see improvements in commodity pricing accruing to shareholders through 2021 and into 2022. We would not be surprised to see dividend increases from royalty companies in particular (FRU/PSK/TPZ), along with producers (ERF/OVV/POU/TOU/WCP) or share buybacks (SU/CVE/IMO/CNQ) as price strength continues.”