Pioneer Authorizes Huge Increase In Buyback Program In Note Of Confidence On Cash Flow

We all know that companies can authorize stock buybacks and never carry them out, but, nonetheless the big new buyback program authorized by Pioneer Natural Resources (PXD) is a significant sign that of the company’s confidence in its cash flow. (As well as an indication that the company’s board of directors thinks the stock is undervalued. Shares of Pioneer Natural closed at $138.60, down 1.25% on the day. The stock, a member of my long-term 50 Stocks Portfolio, is down 19.81% for 2018 to date. It traded as high as $212.31 on May 17, 2018.

The new plan, which authorized $2 billion in share buybacks–or about 8% of Pioneer’s market cap–replaces a $100 million buyback plan announced in February.

In announcing the plan Pioneer Natural said its “deep Permian Basin inventory generates best in class well returns and is expected to provide increasing levels of free cash flow to support the company’s plan to return capital to shareholders.”