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Ovintiv (OVV) Shares Rise 21.4% Despite Q4 Earnings Miss
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Shares of Ovintiv Inc. (OVV - Free Report) have rallied 21.4% since the fourth-quarter 2021 earnings announcement on Feb 24. This uptrend can be attributed to Ovintiv’s higher-than-expected revenues and a hike in dividends.
Behind the Earnings Headlines
Ovintiv recently reported fourth-quarter adjusted earnings per share of $1.25, missing the Zacks Consensus Estimate of $1.61. This downside in results can be attributed to much higher costs. However, the $1.25 figure was higher than the year-ago bottom line’s profit of 70 cents per share due to higher price realization.
Total revenues of $3.34 billion beat the Zacks Consensus Estimate of $1.88 billion due to better-than-expected total oil production. Total oil production came in at 178,000 barrels of oil equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 138,000 BOE/d. The top line improved 118.3% from the year-ago sales of $1.53 million.
In pleasant news for investors, OVV’s board of directors declared a quarterly dividend of 20 cents per share for its common shareholders of record as of Mar 15, 2022, which will be paid out on Mar 31. This represents an increase of 43% from the previous level and an increase of 113% from the year-ago level and is the second dividend hike in the last six months.
Production & Prices
Total fourth-quarter production came in at 508,200 BOE/d compared with 557,200 BOE/d in the prior-year period, missing the Zacks Consensus Estimate of 522,000 BOE/d. Lower volumes can be attributed to Natural gas production falling 5.3% year over year to 1,476 million cubic feet per day (MMcf/d), while liquids production was down 11.8% to 262,200 BOE/d.
Ovintiv's realized natural gas price was $2.84 per thousand cubic feet compared with the year-ago level of $2.33. The realized oil price increased to $53.43 per barrel from $47.75 in the fourth quarter of 2020.
Costs, Capex & Balance Sheet
Total expenses decreased to $1.89 billion from the year-ago figure of $2.12 billion. This decline is primarily attributable to lower depreciation, depletion and amortization charges.
Ovintiv’s cash from operating activities in the quarter under review summed $740 million, up from the year-ago figure of $719 million. OVV's capital investments were $421 million compared with $343 million in the year-ago period.
Ovintiv generated non-GAAP free cash flow of $1.7 billion.
As of Dec 31, OVV had cash and cash equivalents worth $195 million and long-term debt of $4.8 billion. Its debt-to-capitalization ratio was 48.5%.
In the fourth quarter, Ovintiv reduced its net debt by $2.3 billion. The company is on track to meet its $3 billion net debt target in the second half of 2022.
Ovintiv expects capital expenditure in the $425-$440 million range for the first quarter of 2022 and around $1.5 billion for the full year.
For 2022, OVV projects crude oil and condensate volumes to average between 174,000 barrels per day (bpd) and 178,000 bpd in the first quarter and between 180,000 and 190,000 bpd for the full year. Natural gas production is estimated at the 1,430-1,480 MMcf/d range for the first quarter and between 1,450 and 1,500 MMcf/d for the entire year.
Marathon Oil has a projected earnings growth rate of 95.5% this year. The Zacks Consensus Estimate for Marathon Oil’s 2022 earnings has been revised 16.7% upward over the past 30 days.
Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 37.4%. MRO shares have surged around 116.2% in a year.
ConocoPhillips is valued at around $129 billion. The consensus estimate for ConocoPhillips’ 2022 earnings has been revised 7.4% upward over the past 30 days.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 96.3% in a year.
Cenovus Energy is valued at around $30.6 billion. The Zacks Consensus Estimate for Cenovus Energy’s 2022 earnings has been revised 18.9% upward over the past 30 days. Cenovus Energy, headquartered in Alberta, delivered a 4.9% beat in the fourth quarter of 2021. CVE shares have surged around 97.2% in a year.
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Ovintiv (OVV) Shares Rise 21.4% Despite Q4 Earnings Miss
Shares of Ovintiv Inc. (OVV - Free Report) have rallied 21.4% since the fourth-quarter 2021 earnings announcement on Feb 24. This uptrend can be attributed to Ovintiv’s higher-than-expected revenues and a hike in dividends.
Behind the Earnings Headlines
Ovintiv recently reported fourth-quarter adjusted earnings per share of $1.25, missing the Zacks Consensus Estimate of $1.61. This downside in results can be attributed to much higher costs. However, the $1.25 figure was higher than the year-ago bottom line’s profit of 70 cents per share due to higher price realization.
Total revenues of $3.34 billion beat the Zacks Consensus Estimate of $1.88 billion due to better-than-expected total oil production. Total oil production came in at 178,000 barrels of oil equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 138,000 BOE/d. The top line improved 118.3% from the year-ago sales of $1.53 million.
In pleasant news for investors, OVV’s board of directors declared a quarterly dividend of 20 cents per share for its common shareholders of record as of Mar 15, 2022, which will be paid out on Mar 31. This represents an increase of 43% from the previous level and an increase of 113% from the year-ago level and is the second dividend hike in the last six months.
Production & Prices
Total fourth-quarter production came in at 508,200 BOE/d compared with 557,200 BOE/d in the prior-year period, missing the Zacks Consensus Estimate of 522,000 BOE/d. Lower volumes can be attributed to Natural gas production falling 5.3% year over year to 1,476 million cubic feet per day (MMcf/d), while liquids production was down 11.8% to 262,200 BOE/d.
Ovintiv's realized natural gas price was $2.84 per thousand cubic feet compared with the year-ago level of $2.33. The realized oil price increased to $53.43 per barrel from $47.75 in the fourth quarter of 2020.
Costs, Capex & Balance Sheet
Total expenses decreased to $1.89 billion from the year-ago figure of $2.12 billion. This decline is primarily attributable to lower depreciation, depletion and amortization charges.
Ovintiv’s cash from operating activities in the quarter under review summed $740 million, up from the year-ago figure of $719 million. OVV's capital investments were $421 million compared with $343 million in the year-ago period.
Ovintiv generated non-GAAP free cash flow of $1.7 billion.
As of Dec 31, OVV had cash and cash equivalents worth $195 million and long-term debt of $4.8 billion. Its debt-to-capitalization ratio was 48.5%.
In the fourth quarter, Ovintiv reduced its net debt by $2.3 billion. The company is on track to meet its $3 billion net debt target in the second half of 2022.
Ovintiv Inc. Price, Consensus and EPS Surprise
Ovintiv Inc. price-consensus-eps-surprise-chart | Ovintiv Inc. Quote
Guidance
Ovintiv expects capital expenditure in the $425-$440 million range for the first quarter of 2022 and around $1.5 billion for the full year.
For 2022, OVV projects crude oil and condensate volumes to average between 174,000 barrels per day (bpd) and 178,000 bpd in the first quarter and between 180,000 and 190,000 bpd for the full year. Natural gas production is estimated at the 1,430-1,480 MMcf/d range for the first quarter and between 1,450 and 1,500 MMcf/d for the entire year.
Zacks Rank & Key Picks
Ovintiv currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy space are Marathon Oil (MRO - Free Report) , ConocoPhillips (COP - Free Report) and Cenovus Energy (CVE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Oil has a projected earnings growth rate of 95.5% this year. The Zacks Consensus Estimate for Marathon Oil’s 2022 earnings has been revised 16.7% upward over the past 30 days.
Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 37.4%. MRO shares have surged around 116.2% in a year.
ConocoPhillips is valued at around $129 billion. The consensus estimate for ConocoPhillips’ 2022 earnings has been revised 7.4% upward over the past 30 days.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 96.3% in a year.
Cenovus Energy is valued at around $30.6 billion. The Zacks Consensus Estimate for Cenovus Energy’s 2022 earnings has been revised 18.9% upward over the past 30 days. Cenovus Energy, headquartered in Alberta, delivered a 4.9% beat in the fourth quarter of 2021. CVE shares have surged around 97.2% in a year.