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Ovintiv (OVV) Under Pressure From Activist Investor Kimmeridge
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Ovintiv Inc. (OVV - Free Report) is under pressure from private equity firm Kimmeridge Energy Management Company, which sees that the oil and gas producer lagging behind its fellow operators due to its reckless expenditure, expensive acquisitions and inadequate management.
Kimmeridge stated that it is willing to nominate a more general group of candidates for Ovintiv’s board of directors if the latter does not attempt to uplift the company’s achievements and restore investor confidence. Kimmeridge is a private investment firm, which has a 2.4% equity interest in Ovintiv.
The investment firm alleged that there are inconsistency and unaccountability in Ovintiv’s accomplishments, and importantly, it fails to provide recognitions to its shareholders. In fact, 85% of the company’s stock has given negative returns to its shareholders since 2013.
Even before the coronavirus-induced oil price slump, drilling companies were no longer supported and regarded by investors as the oil and gas drillers initiated reckless expenditure, which failed to increase investor return and left them in unsustainable debt.
Kimmeridge claimed that Ovintiv must implement a pay-for-performance compensation strategy and restructure its board for restoring investor confidence. It demonstrated an approach to meet the investor concerns by adjusting executive compensation with performance and divesting non-core assets to pay off debts.
Ovintiv’s operations are mainly focused on a limited number of basins, including the Montney formation in Canada, and the Bakken, Anadarko, Permian and Eagle Ford shale fields in the United States. In fact, it acquired the Anadarko basin assets in spite of the industry experts’ opinion that the assets were not economically competitive. Notably, Kimmeridge hopes that Ovintiv shifts its entire spending into the Permian Basin of West Texas and New Mexico, which is likely to yield better returns.
However, Ovintiv initially disagreed with Kimmeridge’s depiction of its governance and compensation programs, and upholds its strategies to reduce debt and repay shareholders. Importantly, among other measures, Kimmeridge encourages the company to reduce its greenhouse gas emissions by setting emission-reduction targets in line with the Paris Agreement on climate change.
Company Profile
Headquartered in Denver, Ovintiv is an independent energy producer. It engages in the exploration, development, production and marketing of natural gas, oil and natural gas liquids.
Enerplus’s earnings for 2021 are expected to increase 437.5% year over year.
Sunoco’s earnings for 2021 are expected to increase 47.9% year over year.
CNX Resources’ earnings for 2021 are expected to increase 34.4% year over year.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Ovintiv (OVV) Under Pressure From Activist Investor Kimmeridge
Ovintiv Inc. (OVV - Free Report) is under pressure from private equity firm Kimmeridge Energy Management Company, which sees that the oil and gas producer lagging behind its fellow operators due to its reckless expenditure, expensive acquisitions and inadequate management.
Kimmeridge stated that it is willing to nominate a more general group of candidates for Ovintiv’s board of directors if the latter does not attempt to uplift the company’s achievements and restore investor confidence. Kimmeridge is a private investment firm, which has a 2.4% equity interest in Ovintiv.
The investment firm alleged that there are inconsistency and unaccountability in Ovintiv’s accomplishments, and importantly, it fails to provide recognitions to its shareholders. In fact, 85% of the company’s stock has given negative returns to its shareholders since 2013.
Even before the coronavirus-induced oil price slump, drilling companies were no longer supported and regarded by investors as the oil and gas drillers initiated reckless expenditure, which failed to increase investor return and left them in unsustainable debt.
Kimmeridge claimed that Ovintiv must implement a pay-for-performance compensation strategy and restructure its board for restoring investor confidence. It demonstrated an approach to meet the investor concerns by adjusting executive compensation with performance and divesting non-core assets to pay off debts.
Ovintiv’s operations are mainly focused on a limited number of basins, including the Montney formation in Canada, and the Bakken, Anadarko, Permian and Eagle Ford shale fields in the United States. In fact, it acquired the Anadarko basin assets in spite of the industry experts’ opinion that the assets were not economically competitive. Notably, Kimmeridge hopes that Ovintiv shifts its entire spending into the Permian Basin of West Texas and New Mexico, which is likely to yield better returns.
However, Ovintiv initially disagreed with Kimmeridge’s depiction of its governance and compensation programs, and upholds its strategies to reduce debt and repay shareholders. Importantly, among other measures, Kimmeridge encourages the company to reduce its greenhouse gas emissions by setting emission-reduction targets in line with the Paris Agreement on climate change.
Company Profile
Headquartered in Denver, Ovintiv is an independent energy producer. It engages in the exploration, development, production and marketing of natural gas, oil and natural gas liquids.
Zacks Rank & Stocks to Consider
Ovintiv currently carries a Zack Rank #3 (Hold). Some better-ranked players in the energy space are Enerplus Corporation (EPR - Free Report) and Sunoco LP (SUN - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy), and CNX Resources Corporation (CNX - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Enerplus’s earnings for 2021 are expected to increase 437.5% year over year.
Sunoco’s earnings for 2021 are expected to increase 47.9% year over year.
CNX Resources’ earnings for 2021 are expected to increase 34.4% year over year.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>