Ovintiv Inc.’s ( OVV Quick Quote OVV - Free Report) shares have gone down 4.2% since the first-quarter 2022 earnings release on May 9.
The stock depreciation could be attributed to Ovintiv’s top and bottom lines lagging the consensus mark.
Behind the Earnings Headlines
Ovintiv reported its first-quarter adjusted earnings per share (EPS) of $2.17, missing the Zacks Consensus Estimate of $2.54. This downside in results can be attributed to a year-over-year dip in production and much higher costs. However, $2.17 was higher than the year-ago bottom line’s profit of $1.10 per share due to higher price realizations.
Total revenues of $1.97 billion missed the Zacks Consensus Estimate of $2.42 billion due to lesser-than-expected total oil and natural gas liquid production. Total oil production came in at 173,000 barrels of oil equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 129,000 BOE/d. The top line improved by 7% from the year-ago sales of $1.84 billion.
In pleasant news for investors, OVV’s board of directors declared a quarterly dividend of 25 cents per share for its common shareholders of record as of Jun 15, 2022, which will be paid out on Jun 30. This represents an increase of 25% from the previous level.
Production & Prices
Total first-quarter production came in at 499,900 BOE/d compared with 538,300 BOE/d in the prior-year period and met the Zacks Consensus Estimate. Lower volumes can be attributed to natural gas production falling 5.6% year over year to 1,486 million cubic feet per day (MMcf/d), while liquids production was down 8.5% to 252,100 BOE/d.
Ovintiv's realized natural gas price was $2.60 per thousand cubic feet compared with the year-ago level of $3.10. The realized oil price increased to $80.74 per barrel from $47.44 in the first quarter of 2021.
Costs, Capex & Balance Sheet
Total expenses in the reported quarter increased to $2.17 billion from the year-ago figure of $1.64 billion. This rise is primarily attributable to greater market optimization operating expenses.
Ovintiv’s cash from operating activities in the quarter under review summed at $685 million, down from the year-ago figure of $827 million. OVV's capital investments were $451 million compared with $350 million in the year-ago period.
Ovintiv generated a non-GAAP free cash flow of $592 billion in the reported quarter.
As of Mar 31, the company had cash and cash equivalents worth $271 million and long-term debt of $4.77 billion. Its debt-to-capitalization ratio was 50.5%
Ovintiv expects capital expenditure in the $525-$550 million range for the second quarter of 2022 and between $1.7 and 1.8 billion for the full year, up from the previous guidance of $1.5 billion, to reflect an increase in service costs.
For 2022, OVV projects crude oil and condensate volumes to average between 172,000 barrels per day (bpd) and 175,000 bpd in the second quarter and between 180,000 and 185,000 bpd for the full year (180,000-190,000 before). Natural gas production is estimated at the 1,435-1,465 MMcf/d range for the second quarter and between 1,450 and 1,500 MMcf/d for the entire year.
Zacks Rank & Key Picks
Ovintiv Inc. currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some players from the energy sector who recently came out with their earnings reports are: ExxonMobil’s ( XOM Quick Quote XOM - Free Report) first-quarter EPS of $2.07 — excluding identified items — missed the Zacks Consensus Estimate of $2.25 but improved from the year-ago profit of 65 cents. Lower-than-expected earnings were due to a decline in oil equivalent production. This was partially offset by higher commodity prices and improved refining margins.
On a bullish note, the surging oil and gas prices allowed ExxonMobil to increase its stock repurchase program from $10 billion to $30 billion. The American energy giant plans to execute the repurchase program next year. During the quarter under review, XOM generated a cash flow of $15,081 million from operations and asset divestments.
Chevron ( CVX Quick Quote CVX - Free Report) reported adjusted first-quarter EPS of $3.36, missing the Zacks Consensus Estimate of $3.44 on the weaker-than-expected performance from the downstream segment. The income from the unit totaled $331 million, lower than the Zacks Consensus Estimate of $569 million. However, the energy major’s bottom line compared favorably with the year-earlier quarter's earnings of 90 cents due to sharply higher commodity prices.
Chevron recorded $8.1 billion in cash flow from operations compared with $4.2 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. CVX’s free cash flow for the quarter was $6.1 billion. Further, Chevron paid $2.7 billion in dividends and bought back $1.3 billion worth of its shares.
BP plc ( BP Quick Quote BP - Free Report) reported adjusted earnings of $1.92 per ADS on a replacement-cost basis, excluding non-operating items. The bottom line beat the Zacks Consensus Estimate of earnings of $1.41 per share and rose from the 78 cents reported a year ago. The strong quarterly earnings were driven by the higher realizations of commodity prices.
BP plc announced plans to execute a $2.5-billion share buyback, which is expected to be complete before it reports second-quarter results. BP anticipates buying back $1 billion worth of shares every quarter, considering the Brent crude price at $60 per barrel.