"Hi Brian
Quick question. At todays depressed WTI price of USD $69.00 what is the impact to the dollar figure committed to daily share repurchases in the amount of $1.4 million?
I would like to understand the percentage decline in share repurchasing power relative to WTI pricing and in relation to the commitment that has been expressed at the given price.
Thanks for your guidance as always,
xxxxxxxx"
"Hi xxxxxxx I would refer you to Slide 8 in our September IR deck – it provides a FCF sensitivity for 2024 based on actual H1/2024 results and H2/2024 WTI prices of US$70, US$75 and US$80 WTI. The chart is consistent with the cash flow sensitivities highlighted on Slide 14.
To illustrate, at US$70 WTI for H2/2024, we generate ~ $500 million of free cash flow in 2024, comprised of $181 million in H1/2024 and $319 million in H2/2024. Applying 50% of the free cash flow to shareholder returns leaves us with $250 million – split ~ $80 million to the dividend and $170 million to buybacks.
Through August, our buybacks have totaled ~ $141 million so this gives you a sense of the remaining balance available for 2024 buybacks. Given our higher cost of equity relative to our debt (i.e. our common shares are inexpensive today), we believe share repurchases are an attractive return for investors today and while we are committed to our 50/50 framework,
in the short-term, you could see a modestly higher percentage of free cash flow allocated to share buybacks." 