Energy sector-related exchange traded funds are strengthening Friday after EOG Resources’ (NYSE: EOG) first quarter results beat expectations and declared a special dividend.
On Friday, the iShares U.S. Oil & Gas Exploration & Production ETF (Cboe: IEO) advanced 1.8% and the broader Energy Select Sector SPDR (NYSEArca: XLE) gained 1.9%.
Meanwhile, shale-oil producer EOG Resources Inc. shares jumped 5.9% on Friday. EOG makes up 9.3% of IEO’s underlying portfolio and 4.7% of XLE.
EOG declared a quarterly special dividend of $1.80 per share, or up from $1.00 per share, after more than doubling its quarterly profits, Reuters reports.
“Along with strong operating execution, EOG continues to deliver on our long-term free cash flow priorities. In addition to the $0.75 per share regular dividend, we declared a $1.80 per share special dividend. We also initiated new cash return guidance to provide greater transparency to capital allocation, committing to return at least 60 percent of free cash flow to shareholders each year. Our financial strategy aims to create long-term shareholder value and our free cash flow priorities and cash return guidance remain consistent with this goal,” Chief Executive Officer Ezra Yacob says in a press release.
Oil producers have capitalized on the surge in crude oil prices to levels not seen since 2008 after western countries enacted sanctions on the major oil exporter Russia in response to its invasion of Ukraine, further exacerbating the global supply-chain problems.
Consequently, EOG benefited as average crude oil prices advanced 65% over the reported quarter to $96.00 per barrel.
“EOG is off to a great start in 2022. We extended our track record of reliable execution with strong first quarter results. Production volumes, capital expenditures and overall operating costs were each better than expected. Despite challenges from rising inflation and supply chain constraints since we announced our 2022 plan at the start of the year, we remain well positioned to deliver within our production and capital expenditure targets. Consistent with the EOG culture, our employees continue to find new innovations and efficiencies to meet our goals for the year,” Yacob adds.