Published on 27 May 2024 on Zacks via Yahoo Finance

4 Energy Companies Announcing Aggressive Buyback Programs

A share buyback, also known as a stock repurchase, occurs when a company buys back its own shares from the marketplace. This practice reduces the number of outstanding shares, which can increase the value of remaining shares and boost earnings per share (EPS). Over recent decades, share buybacks have become a preferred method for returning cash to shareholders, often signaling that management believes the stock is undervalued.

For Oil/Energy companies, strong oil prices post-COVID have significantly increased their cash generation. With higher crude realizations, these firms have enjoyed substantial profits, leading to a surge in free cash flow. Instead of focusing on production growth, energy firms are opting to return excess cash to shareholders through buybacks and dividends, aiming to retain investor confidence.