Net Income Per Share and Stockholders' Equity

9 Months Ended

Sep. 30, 2023

Net Income Per Share and Stockholders' Equity

Net Income Per Share and Shareholders' Equity

Net income per share. The components of basic and diluted net income per share attributable to common shareholders are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions, except per share data)
Net income attributable to common shareholders	$	1,301	$	1,984	$	3,625	$	6,364
Participating share-based earnings (a)	(3)		(4)		(5)		(11)
Basic net income attributable to common shareholders	1,298		1,980		3,620		6,353

Adjustment to after-tax interest expense to reflect the dilutive impact attributable to Convertible Notes	1		1		3		5
Diluted net income attributable to common shareholders	$	1,299	$	1,981	$	3,623	$	6,358

Basic weighted average shares outstanding	233		239		234		241

Convertible Notes (b)	7		11		8		12
Diluted weighted average shares outstanding	240		250		242		253

Net income per share attributable to common shareholders:
Basic	$	5.56	$	8.29	$	15.47	$	26.36
Diluted	$	5.41	$	7.93	$	14.96	$	25.11

______________________

(a)Unvested Equity Awards and Liability Awards represent participating securities because they participate in non-forfeitable dividends with the common equity owners of the Company. Participating share-based earnings represent the distributed and undistributed earnings of the Company attributable to the participating securities. Unvested Equity Awards and Liability Awards do not participate in undistributed net losses as they are not contractually obligated to do so. The dilutive effect of the reallocation of participating share-based earnings to diluted net income attributable to common shareholders was negligible.

(b)Diluted weighted average common shares outstanding includes the dilutive effect had the Company's Convertible Notes been converted as of the beginning of the three and nine months ended September 30, 2023 and 2022, respectively. If converted by the holder, the Company may settle in cash, Company's common shares or a combination thereof, at the Company's election. See Note 6 for additional information.

Shareholders' equity. The Company's return of capital strategies include payments of base and variable dividends and a share repurchase program. The Board, at its sole discretion, may change its dividend practices and/or the Company's share repurchase program based on the Company's outlook for commodity prices, liquidity, debt levels, capital resources, quarterly operating cash flows or other factors, including terms outlined in the Merger Agreement. Dividends declared by the Board and shares repurchased during the period are presented in the Company's consolidated statements of equity as dividends declared and purchases of treasury shares, respectively. Dividends paid and shares repurchased during the period are presented as cash used in financing activities in the Company's consolidated statements of cash flows. Dividends that are declared and have not been paid, if any, are included in other current liabilities in the consolidated balance sheets. Shares repurchases are included as treasury shares in the consolidated balance sheets.

Dividends. Base and variable dividends declared by the Board are as follows:


	Base		Variable		Total		Total
	(per share)		(per share)		(per share)		(in millions)
2023:
First quarter	$	1.10	$	4.48	$	5.58	$	1,314
Second quarter	1.25		2.09		3.34		784
Third quarter	1.25		0.59		1.84		429

	$	3.60	$	7.16	$	10.76	$	2,527
2022:
First quarter	$	0.78	$	3.00	$	3.78	$	922
Second quarter	0.78		6.60		7.38		1,788
Third quarter	1.10		7.47		8.57		2,053

	$	2.66	$	17.07	$	19.73	$	4,763

The Company can provide no assurance that dividends will be authorized or declared in the future or as to the amount of any future dividends. The Merger Agreement provides certain restrictions on future base and variable dividend declarations, including the Company no longer paying a variable dividend after distributing the variable dividend attributable to fourth quarter 2023 results.

See Note 15 for additional information.

Share repurchase programs. In April 2023, the Board authorized a $4 billion common share repurchase program to replace the $4 billion common share repurchase program authorized in February 2022. As was the case with the previous shares repurchase programs, the Company may repurchase shares in accordance with applicable securities laws or pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Act of 1934, which would permit the Company to repurchase shares at times that may otherwise be prohibited under the Company's insider trading policy.

Expenditures to acquire shares under the share repurchase program are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in millions)
Shares repurchased (a)	$	—	$	500	$	624	$	1,249

______________________

(a)During the three and nine months ended September 30, 2023, the Company repurchased no shares and 3.0 million shares, respectively, under the share repurchase program, as compared to 2.3 million and 5.5 million shares repurchased during the same periods in 2022, respectively. Expenditures for share repurchases during the nine months ended September 30, 2023 exclude the one percent excise tax on all share repurchases after December 31, 2022.

With limited exceptions, the Merger Agreement precludes the Company from future repurchases or acquisition of the Company's common shares, including repurchases under the Company's share repurchase program.