(Adds details of buyback, stock movement)
By Ernest Scheyder
HOUSTON, Sept 20 (Reuters) - U.S. oil producer Anadarko Petroleum Corp said on Wednesday it would spend $2.5 billion to buy back its own stock, a plan worth roughly 10 percent of its outstanding shares at current prices.
Anadarko, like many U.S. oil producers, has seen its stock languish in 2017 as crude prices have stayed at or below $50 per barrel, depressing profits. Anadarko’s shares have dropped 35 percent since January.
In after-hours trading on Wednesday, the company’s stock jumped 3.6 percent to $46.40.
Stock buybacks decrease the number of a company’s outstanding shares, boosting earnings per share. They have been controversial among some investors who have pushed for higher dividends instead.
Anadarko, which has a 5 cent dividend that is far below peers, said it would spend $1 billion by December on buybacks and the remaining $1.5 billion by the end of next year.
“We believe this is a very attractive use of our cash given the value of our assets and the highly accretive nature of this program,” Chief Executive Al Walker said in a statement.
The company had $6 billion in cash as of June 30.
Anadarko also expects to pump 130,000 barrels per day (bpd) this year in its Gulf of Mexico operations and end the year pumping a combined 150,000 bpd in the Permian and Denver-Julesburg shale basins, it said.
Going into 2018, Anadarko said it should produce substantial cash flow with an average oil price of $50 per barrel. (Reporting by Ernest Scheyder in Houston; Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Maju Samuel and Peter Cooney)