Shares of Ovintiv Inc. ( OVV Quick Quote OVV - Free Report) have dropped 6.5% since the third-quarter 2021 earnings announcement on Nov 2. This downtrend could be attributed to OVV’s mixed performance of higher-than-expected earnings but a top-line miss due to weak natural gas production. Behind the Earnings Headlines Ovintiv recently reported adjusted earnings per share of $1.50, beating the Zacks Consensus Estimate of $1.47. However, the year-ago bottom line was a loss of 3 cents per share. This upside in results can be attributed to a higher commodity price realization and successful cost-control initiatives. Total revenues of $1.79 billion missed the Zacks Consensus Estimate of $2.05 billion owing to lower-than-expected Natural gas production. Natural gas production came in at 1,566million cubic feet per day (MMcf/d), missing the Zacks Consensus Estimate of 1,581MMcf/d. The top line improved 50.33% from the year-ago sales of $726 million. Ovintiv’s board of directors declared a quarterly dividend of 14 cents per share for its common shareholders of record as of Dec 15, 2021, which will be paid out on Dec 31. Production and Prices Total third-quarter production came in at 534,700 barrels of oil equivalent per day (BOE/d) compared with 510,200 BOE/d in the prior-year period. The rise in volumes was owing to a balanced commodity mix. Natural gas production rose 8.6% year over year to 1,566MMcf/d while liquids production was up 1.4% to 273,600 BOE/d. Ovintiv's realized natural gas price was $3.02 per thousand cubic feet compared with the year-ago level of $2.15. Realized oil price increased to $53.31 per barrel from $41.39 in the third quarter of 2020. Costs, Capex and Balance Sheet Total expenses decreased to $1.8 billion from the year-ago figure of $2.7 billion. This decline is primarily attributed to lower depreciation, depletion and amortization charges. Ovintiv’s cash from operating activities in the quarter under review summed $812 million, up from the year-ago figure of $493 million. OVV's capital investments were $365 million compared with $351 million in the year-ago period. As of Sep 30, Ovintiv had cash and cash equivalents worth $8 million, and long-term debt of $4.8 billion. Its debt-to-capitalization ratio was 55.8. OVV generated a non-GAAP free cash flow of $480 million. In the third quarter, Ovintiv reduced its net debt by $409 million to $4.8 billion. OVV is on track to meet its $4.5 billion net debt target for the year. Ovintiv set a new net debt target of $3 billion, which it intends to meet by the end of 2023, assuming oil prices to be trending at $50 per barrel and natural gas prices at $2.75 per Mcf on the NYMEX. OVV aims to accomplish this goal without funds from asset sales. In the third quarter, OVV received a regulatory clearance for a share buyback program, thus advancing its goal to boost its shareholder returns. This move was in line with OVV's capital allocation strategy, which aims to unlock shareholder value by delivering on its strategies like solid liquidity, increased cash distributions to its shareholders, better returns on capital investment and ESG development. Ovintiv aims to return 25% of the preceding quarter's free cash flow after base dividends to its shareholders through share buybacks and/or variable dividends starting the fourth quarter of 2021 and continuing until it meets its $3-billion net debt objective. Guidance Ovintiv reaffirms its 2021 capital expenditure at $1.5 billion. Following its assets' significant output performance, OVV now projects crude oil and condensate volumes to average between 191,000 barrels per day (bpd) and 194,000 bpd in 2021. With a capital expenditure of $1.5 billion envisioned for 2022, OVV aims to sustain its crude and condensate production volume view in the 180-190 Mbbls/d range, similar to the second half of 2021. Zacks Rank & Key Picks Ovintiv currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the space are energy EOG Resources ( EOG Quick Quote EOG - Free Report) , Diamondback Energy ( FANG Quick Quote FANG - Free Report) and ConocoPhillips ( COP Quick Quote COP - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here . EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Strong earnings were driven by increased production volumes and a higher realization of commodity prices. EOG announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to its shareholders of record as of Jan 14, 2022. EOG Resources also declared a special dividend of $2 per share. Moreover, the board of directors updated its share repurchase authorization to $5 billion. Diamondback Energy reported third-quarter 2021 adjusted earnings of $2.94 per share, which surpassed the Zacks Consensus Estimate of $2.81 and the year-ago quarter’s earnings of 62 cents. FANG’s bottom line was aided by better-than-expected production. The board of directors declared a dividend of 50 cents per share for the third quarter, accounting for an 11.1% hike in its quarterly payout from the previous level of 45 cents. The amount will be paid out on Nov 18, 2021, to its shareholders of record as of Nov 11. FANG also generated a free cash flow of $740 million in the third quarter. ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. This outperformance is led by increased production volumes owing to the Concho acquisition and the rising realized commodity prices. Based in Houston, TX, this one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. ConocoPhillips’ net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. COP generated a free cash flow of $2.8 billion in the third quarter.