(Reuters) – Australia’s Santos Ltd has announced a buyback of up to $250m in on-market shares on Wednesday. This is part of a capital framework that aims at higher shareholder returns, despite rising commodity prices.

A new capital framework provides a dividend policy with 10%-30% free cash flow. Additional shareholder returns are available in the form additional shares buybacks and dividends.

After Russia invaded Ukraine, oil and gas prices rose sharply during the March quarter. This was despite their already high levels. [O/R] [LNG/]

On Thursday, Santos will publish its quarterly sales-and production report. This is partly due to the company’s takeover at Oil Search (OTC) and rising crude oil prices.

The Adelaide-based company, which booked record annual sales revenue in January and expects to reap big gains following its $6.2 billion takeover of Oil Search, is experiencing strong cash flow generation, it said in a statement https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02511651-2A1369353?access_token=83ff96335c2d45a094df02a206a39ff4 on Wednesday.

Kevin Gallagher (Santos Chief Executive Officer) stated, “We now have the ability to target higher shareholder returns via our new capital management framework,” adding that he thinks “the company’s current share price is undervaluing it.”

On Tuesday, shares closed at A$8.32 – a new two year high. Shares have grown 31.9% this year compared to a modest 0.6% gain in last year.

Share buybacks are expected to begin next month and continue throughout the year.