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Ovintiv (OVV) Q4 Earnings Beat Estimates, Sales Miss Mark
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Ovintiv Inc. (OVV - Free Report) recently reported fourth-quarter 2020 adjusted earnings per share of 70 cents, beating the Zacks Consensus Estimate of 63 cents. The better-than-anticipated bottom line can be attributed tosuccessful cost-control initiatives. In fact, the company achieved a record low well cost in each of its Core 3 assets during the period.
However, the reported figure was lower than the year-ago bottom line of 81 cents per share due to lower production and oil price realizations.
Total revenues of $1.53 billion missed the Zacks Consensus Estimate of $1.69 billion and also dipped 2.6% from the year-ago sales of $1.57 billion.
Production and Prices
Total fourth-quarter production came in at 557,200 barrels of oil equivalent per day (BOE/d) compared with 592,600 BOE/d in the prior-year period. The decline in volumes was in response to the coronavirus-induced oil price slump. Natural gas production fell 4% year over year to 1,559 million cubic feet per day while liquids production was down 7.6% to 297,400 BOE/d.
Ovintiv's realized natural gas price was $2.33 per thousand cubic feet compared with the year-ago level of $2.25. Realized oil price decreased to $47.75 per barrel from $56.17 in the fourth quarter of 2019.
Total expenses increased to $2.1 billion from the year-ago figure of $1.6 billion. This rise is primarily attributed to a $717-million impairment charge.
Ovintiv’s cash from operating activities in the quarter under review summed $719 million, down from the year-ago figure of $730 million. The company's capital investments were $343 million compared with $574 million in the year-ago period.
As of Dec 31, Ovintiv had cash and cash equivalents worth $10 million, and a long-term debt of $6.4 billion. Its debt-to-capitalization ratio was 62.4.
The company generated non-GAAP free cash flow of $349 million.
Ovintiv’s board of directors declared a quarterly dividend of 9.375 cents per share to its common shareholders of record on Mar 15, 2021. The payout will be made on Mar 31.
Update on Duvernay Assets Sale
Ovintiv, formerly known as Encana Corp., recently decided to divest its Duvernay assets for roughly $263 million comprising approximately $12 million in contingency payments based on future commodity prices.The deal is slated to close by the second quarter of this year and is contingent on regulatory approvals and usual closing conditions.
Ovintiv CEO Doug Suttles believes that "today's announcement of the sale of our Duvernay asset combined with our strong fourth quarter and 2021 guide clearly demonstrate our commitment to debt reduction and puts us squarely on track to achieve our $4.5 billion dollar year-end 2022 goal”.
Guidance
Ovintiv anticipates its 2021 capital expenditure to be $1.5 billion. Crude oil and condensate volumes are projected to average 200,000 barrels per day in 2021 while NGL and natural gas productions are anticipated to average 80,000 BOE/d and 1.55 billion cubic feet per day, respectively. Total costs in 2021 are projected to average in the $12.25-$12.50 per barrel of oil equivalent range. Finally, Ovintiv is expected to generate free cash flow for the fourth consecutive year in 2021, which is estimated at $1 billion. Further, the company set a target to trim its total debt to $4.5 billion by 2022 end, reflecting a 35% reduction from the current levels.
In a separate press release, Ovintiv revised its compensation program so that the remuneration across all categories is in direct proportion to its carbon-reduction targets.
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Ovintiv (OVV) Q4 Earnings Beat Estimates, Sales Miss Mark
Ovintiv Inc. (OVV - Free Report) recently reported fourth-quarter 2020 adjusted earnings per share of 70 cents, beating the Zacks Consensus Estimate of 63 cents. The better-than-anticipated bottom line can be attributed tosuccessful cost-control initiatives. In fact, the company achieved a record low well cost in each of its Core 3 assets during the period.
However, the reported figure was lower than the year-ago bottom line of 81 cents per share due to lower production and oil price realizations.
Total revenues of $1.53 billion missed the Zacks Consensus Estimate of $1.69 billion and also dipped 2.6% from the year-ago sales of $1.57 billion.
Production and Prices
Total fourth-quarter production came in at 557,200 barrels of oil equivalent per day (BOE/d) compared with 592,600 BOE/d in the prior-year period. The decline in volumes was in response to the coronavirus-induced oil price slump. Natural gas production fell 4% year over year to 1,559 million cubic feet per day while liquids production was down 7.6% to 297,400 BOE/d.
Ovintiv's realized natural gas price was $2.33 per thousand cubic feet compared with the year-ago level of $2.25. Realized oil price decreased to $47.75 per barrel from $56.17 in the fourth quarter of 2019.
Ovintiv Inc. Price, Consensus and EPS Surprise
Ovintiv Inc. price-consensus-eps-surprise-chart | Ovintiv Inc. Quote
Costs, Capex and Balance Sheet
Total expenses increased to $2.1 billion from the year-ago figure of $1.6 billion. This rise is primarily attributed to a $717-million impairment charge.
Ovintiv’s cash from operating activities in the quarter under review summed $719 million, down from the year-ago figure of $730 million. The company's capital investments were $343 million compared with $574 million in the year-ago period.
As of Dec 31, Ovintiv had cash and cash equivalents worth $10 million, and a long-term debt of $6.4 billion. Its debt-to-capitalization ratio was 62.4.
The company generated non-GAAP free cash flow of $349 million.
Ovintiv’s board of directors declared a quarterly dividend of 9.375 cents per share to its common shareholders of record on Mar 15, 2021. The payout will be made on Mar 31.
Update on Duvernay Assets Sale
Ovintiv, formerly known as Encana Corp., recently decided to divest its Duvernay assets for roughly $263 million comprising approximately $12 million in contingency payments based on future commodity prices.The deal is slated to close by the second quarter of this year and is contingent on regulatory approvals and usual closing conditions.
Ovintiv CEO Doug Suttles believes that "today's announcement of the sale of our Duvernay asset combined with our strong fourth quarter and 2021 guide clearly demonstrate our commitment to debt reduction and puts us squarely on track to achieve our $4.5 billion dollar year-end 2022 goal”.
Guidance
Ovintiv anticipates its 2021 capital expenditure to be $1.5 billion. Crude oil and condensate volumes are projected to average 200,000 barrels per day in 2021 while NGL and natural gas productions are anticipated to average 80,000 BOE/d and 1.55 billion cubic feet per day, respectively. Total costs in 2021 are projected to average in the $12.25-$12.50 per barrel of oil equivalent range. Finally, Ovintiv is expected to generate free cash flow for the fourth consecutive year in 2021, which is estimated at $1 billion. Further, the company set a target to trim its total debt to $4.5 billion by 2022 end, reflecting a 35% reduction from the current levels.
In a separate press release, Ovintiv revised its compensation program so that the remuneration across all categories is in direct proportion to its carbon-reduction targets.
Zacks Rank & Other Key Picks
Ovintiv currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , PDC Energy, Inc. and Denbury Inc. , each presently flaunting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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