On Monday, ConocoPhillips (COP) said on its investor-update call that it expects to grow its cash flow to $22 billion by 2016 – that’s up from about $16 billion this year, an 8.2% compound annual growth rate. The firm also noted that it expects to allocate roughly 20% to 25% of its annual cash flow to dividend payments. We continue to like this high-yielder (3.6% annual payout) in the portfolio of our Dividend Growth newsletter and expect the company to experience high-single-digit dividend growth for some time to come.
Conoco’s 3-Year Repositioning Plan
“ConocoPhillips continues to execute its asset disposition program, targeting $10 billion in proceeds during 2012. During the quarter, the company closed on the sale of its Vietnam business unit and expects to record an after-tax gain of approximately $940 million. Additional dispositions are under contract for mature partner-operated assets in the North Sea and North American conventional natural gas assets. These are expected to close in the second and third quarters of 2012.
The company expects to reach final investment decision on the second train of the Australia Pacific LNG Project in the second quarter of 2012. In connection with the resulting dilution of interest, ConocoPhillips expects to record an after-tax loss of approximately $135 million in the second quarter.
During the first quarter of 2012, Phillips 66 completed the private placement of $5.8 billion of senior notes, the net proceeds of which were deposited into escrow accounts pending the separation. As a result, at March 31, 2012, ConocoPhillips’ total debt is expected to be $5.8 billion higher than at Dec. 31, 2011, with a corresponding $5.8 billion of restricted cash. Post separation, Phillips 66 will retain this debt, and ConocoPhillips will use the majority of a special cash distribution from Phillips 66 to make further debt reductions.
The company anticipates first-quarter 2012 repurchases under the share repurchase program to be $1.9 billion and the number of weighted-average diluted shares outstanding during the quarter to be approximately 1,293 million.
As previously announced, the ConocoPhillips board of directors has approved the planned separation of ConocoPhillips and Phillips 66, effective from May 1, 2012. Phillips 66 and ConocoPhillips look forward to sharing additional information about each company and their future plans at the April 9 and April 16 investor updates, respectively.”
Source: http://www.conocophillips.com/EN/newsroom/news_releases/2012NewsReleases/Pages/04-05-2012.aspx