Top U.S. shale producer pitches plan to vary dividend based on annual cash flow

By Jennifer Hiller

HOUSTON, Aug 5 (Reuters) - U.S. shale producer Pioneer Natural Resources PXD.N plans a variable dividend to be paid starting in 2022, Chief Executive Scott Sheffield said on Wednesday.

Shale firms are searching for a way to reward shareholders after years of poor financial returns, and Pioneer is trying to carve out a new model for a volatile industry that is out of favor with investors.

Devon Energy Corp DVN.N said on Tuesday it would pay a special dividend related to the sale of some of its shale assets, while ConocoPhillips last week said it would consider a variable dividend or share buybacks on top of its regular dividend.

Pioneer's variable dividend would be paid on top of its regular dividend, likely quarterly, though plans would be laid out next year, Sheffield said on anearnings callwith analysts.

The company does not plan share buybacks at any time, which Sheffield said do not work because they tend to be poorly timed.

The oil industry has "destroyed value whether growing too fast or buying stock at very high prices," he said.

Pioneer is looking at how other S&P 500 companies pay a variable dividend, "but we do have a cyclical commodity business," Sheffield said, adding, "it's hard to predict what the commodity price is going to be."

The variable dividend would be based on cash flow, he said.

The company expects output of about to 200,000 barrels of oil per day in the fourth quarter, and expects to start growing production about 5% per year starting in 2021.

(Reporting by Jennifer Hiller in Houston Editing by Bernadette Baum)

((Jennifer.Hiller@thomsonreuters.com; +1 713 254 9109; Twitter: @Jennifer_Hiller))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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