Last year, oil companies paid a gusher of dividends. Many oil producers set new capital allocation frameworks to return the majority of their free cash flow to investors. Most opted to accomplish this goal by paying variable dividends.

This year, some of those oil companies are shifting their capital return strategy away from paying outsized dividends toward repurchasing shares. Driving this pivot is the belief that their stocks are incredible bargains. Here's a look at two oil stocks buying back their shares hand over fist this year.

Diamondback Energy (NASDAQ: FANG) established a new capital return target last year. It aims to return 75% of its quarterly free cash flow to investors, up from 50%. The base return is a fixed quarterly dividend. Diamondback had the flexibility to pay variable dividends and repurchase shares to achieve its 75% target.

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Source Fool.com