North American oil producers are refocusing on increased shareholder returns with abundant free cash flow evident across the board in Q2 2021.

This is according to Evaluate Energy’s latest review of cash spending patterns for 86 North American oil and gas producers and, this quarter, includes data on dividend payments and share buybacks.

“When combining dividend payments and net share repurchases, we can see over US$4 billion spent on shareholder returns by the study group for the first time since the pandemic started in late Q1 2020,” said Mark Young, report author and Senior Analyst at Evaluate Energy. “Things are moving slowly but latest data reveals a renewed, concerted effort by producers to return increased earnings to shareholders.”

A jump from just over US$2 billion in total shareholder returns in Q1 to around US$4 billion three months later may not appear all that gradual – this is because two oilsands producers skew the analysis.

“Imperial (IMO) and Suncor (SU) are alone responsible for 80% of 2021’s total buybacks so far. The data may suggest a sudden jump in spending across the board, but these two companies are an anomaly when it comes to the whole group, at least up to the end of June.

“Where we really see more widespread increases in shareholder returns is in dividend per share data, even if the dollar values fail to jump off the page,” said Young.

As the pandemic took hold, the number of companies declaring a quarterly dividend fell sharply from 29 in Q1 2020 to just 20 in Q2 2020. As well as those nine companies that stopped paying dividends entirely, eight more reduced quarterly distributions as cash tightened.

Q1 and Q2 2021 witnessed a recovery – particularly among oil producers who comprised the bulk of North America’s dividend-paying producers before the pandemic.

• By the end of June, 28 of the study group were paying dividends. Q1 and Q2 both saw 12 companies increase dividends per share from the previous quarter
• Cash used for dividends since the start of Q3 2020 increased by an average of US$276 million per quarter for the whole group.

“This US$276 million increase may seem insignificant when billions are being spent on capital budgets and debt repayments, but individual investors will likely approve,” said Young.

Evaluate Energy’s Q2 2021 cash flow review for North American oil and gas producers is available for download now. The report also includes a look at remaining capital budget levels for 2021 and debt-related spending for all 86 companies.