Parsley Energy PE recently announced the initiation of a quarterly dividend. This shareholder-friendly move puts the stock on offer to dividend-seeking investors and is expected to boost the sentiments of existing stockholders. The company’s board of directors has green signaled the clearance of a dividend of 3 cents per share on its Class A Common Stock.
Headquartered in Austin, TX, this oil and gas E&P company’s declaration of its first cash dividend reflects its willingness to return funds to its shareholders. The payout translates to 12 cents per share (or $34 million) on an annualized basis. However, its allocation is negligible from an yield standpoint at just 0.7%, lower than the industry average of 1.4%. The dividend is likely to be paid out on Sep 30 this year to stockholders of record as of Sep 20, 2019.
The dividend announcement is supported by the company’s target to generate significant free cash flow from its operations during the second half of 2019. Notably, Parsley Energy is focused on strengthening its balance sheet to gain financial flexibility.
Meanwhile, the E&P player’s oil production in the third quarter is expected in the upper end of the previous guided range of 87,000-90,000 barrels of oil per day (Boe/d), indicating a 2% sequential improvement. This raise in production outlook suggests an almost 25% annual year-over-year organic growth.
In order to build a sustainable stream of free cash flow, the company is adopting various measures. Through cost-curb and scale benefits, it focuses on obtaining more value per barrel of production. Parsley Energyhas also reduced 8% of its headcount since the end of 2018.
It further plans to boost capital efficiency by 12-14 %, lowering high-tech and big-budget development procedures.
Several energy sector entities notified dividend initiation and hikes lately. While E&P player Continental Resources CLR initiated its quarterly cash dividend payout to its shareholders, the major refining and marketing company Phillips 66 PSX rewarded its shareholders with a quarterly dividend increase. Another upstream energy company Noble Energy, Inc. NBL bumped up its quarterly dividend payout by 9% at April-end.
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