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Ovintiv (OVV) Q1 Earnings Miss Estimates, Revenues Beat
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Ovintiv (OVV - Free Report) reported first-quarter 2023 adjusted earnings per share (EPS) of $1.82, narrowly missing the Zacks Consensus Estimate of $1.83. This earnings miss can be attributed to year-over-year higher expenses and a decline in realized oil prices. Moreover, the reported figure was lower than the year-ago figure of $2.17 per share.
Total revenues of $2.6 billion increased 30% from the year-ago quarter’s $2 billion and beat the Zacks Consensus Estimate of $2.3 billion. This uptick was due to higher-than-expected total oil and natural gas production.
OVV’s board of directors declared a quarterly dividend of 30 cents per share for common shareholders of record as of Jun 15, 2023, which will be paid out on Jun 30. This represents a 20% increase from the previous level.
Total first-quarter production came in at 511,400 BOE/d compared with 499,900 BOE/d in the prior-year period, beating the Zacks Consensus Estimate of 507,000 BOE/d. Higher volumes can be attributed to natural gas production increasing 4.6% year over year to 1,555 million cubic feet per day (MMcf/d). Production of liquids slightly increased to 252,200 BOE/d.
Ovintiv's realized natural gas price was $3.80 per thousand cubic feet compared with the year-ago quarter’s figure of $2.60. The realized oil price decreased to $74.06 per barrel from $80.74 in the first quarter of 2022.
Costs, Capex & Balance Sheet
Total expenses in the reported quarter increased to $2.17 billion from the year-ago quarter’s figure of $1.87 billion due to higher transportation and processing, operating, depreciation, depletion and amortization costs.
Ovintiv’s cash from operating activities in the quarter under review was $1.1 billion, which increased from the year-ago figure of $685 million. OVV's capital investments were $610 million compared with $451 million in the year-ago period.
Ovintiv generated a non-GAAP free cash flow of $241 million in the reported quarter.
As of Mar 31, the company had cash and cash equivalents worth $26 million and long-term debt of $3.2 billion. Its debt-to-capitalization ratio was 28.7%.
Guidance
Ovintiv expects capital expenditure in the $590-$630 million range for second-quarter 2023 and between $2.6 and 2.9 billion for the full year.
For 2023, OVV projects crude oil and condensate volumes to average between 170,000 and 174,000 barrels per day (bpd) in the second quarter and between 185,000 and 195,000 bpd for the full year. In second-quarter 2023, natural gas production is estimated to be in the range of 1,525-1,575 MMcf/d and between 1,525 and 1,575 MMcf/d for the entire year.
For 2024, following the integration of the Midland Basin acquisition and the Bakken divestiture, Ovintiv anticipates 2024 total company average oil and condensate production volumes of greater than 200 Mbbls/d with a total capital investment of $2.1-$2.5 billion.
Zacks Rank and Key Picks
Currently, Ovintiv carries a Zacks Rank #3 (Hold).
Evolution Petroleum: EPM is worth approximately $219.16 million. EPM currently pays a dividend of 48 cents per share, or 7.38%, annually.
The company currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means EPM is trading at a discount to the group.
Archrock: AROC is valued at around $1.55 billion. It delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock provides natural gas contract compression services and aftermarket services of compression equipment.
Ranger Energy Services: RNGR is valued at around $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.
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Ovintiv (OVV) Q1 Earnings Miss Estimates, Revenues Beat
Ovintiv (OVV - Free Report) reported first-quarter 2023 adjusted earnings per share (EPS) of $1.82, narrowly missing the Zacks Consensus Estimate of $1.83. This earnings miss can be attributed to year-over-year higher expenses and a decline in realized oil prices. Moreover, the reported figure was lower than the year-ago figure of $2.17 per share.
Total revenues of $2.6 billion increased 30% from the year-ago quarter’s $2 billion and beat the Zacks Consensus Estimate of $2.3 billion. This uptick was due to higher-than-expected total oil and natural gas production.
OVV’s board of directors declared a quarterly dividend of 30 cents per share for common shareholders of record as of Jun 15, 2023, which will be paid out on Jun 30. This represents a 20% increase from the previous level.
Ovintiv Inc. Price, Consensus and EPS Surprise
Ovintiv Inc. price-consensus-eps-surprise-chart | Ovintiv Inc. Quote
Production & Prices
Total first-quarter production came in at 511,400 BOE/d compared with 499,900 BOE/d in the prior-year period, beating the Zacks Consensus Estimate of 507,000 BOE/d. Higher volumes can be attributed to natural gas production increasing 4.6% year over year to 1,555 million cubic feet per day (MMcf/d). Production of liquids slightly increased to 252,200 BOE/d.
Ovintiv's realized natural gas price was $3.80 per thousand cubic feet compared with the year-ago quarter’s figure of $2.60. The realized oil price decreased to $74.06 per barrel from $80.74 in the first quarter of 2022.
Costs, Capex & Balance Sheet
Total expenses in the reported quarter increased to $2.17 billion from the year-ago quarter’s figure of $1.87 billion due to higher transportation and processing, operating, depreciation, depletion and amortization costs.
Ovintiv’s cash from operating activities in the quarter under review was $1.1 billion, which increased from the year-ago figure of $685 million. OVV's capital investments were $610 million compared with $451 million in the year-ago period.
Ovintiv generated a non-GAAP free cash flow of $241 million in the reported quarter.
As of Mar 31, the company had cash and cash equivalents worth $26 million and long-term debt of $3.2 billion. Its debt-to-capitalization ratio was 28.7%.
Guidance
Ovintiv expects capital expenditure in the $590-$630 million range for second-quarter 2023 and between $2.6 and 2.9 billion for the full year.
For 2023, OVV projects crude oil and condensate volumes to average between 170,000 and 174,000 barrels per day (bpd) in the second quarter and between 185,000 and 195,000 bpd for the full year. In second-quarter 2023, natural gas production is estimated to be in the range of 1,525-1,575 MMcf/d and between 1,525 and 1,575 MMcf/d for the entire year.
For 2024, following the integration of the Midland Basin acquisition and the Bakken divestiture, Ovintiv anticipates 2024 total company average oil and condensate production volumes of greater than 200 Mbbls/d with a total capital investment of $2.1-$2.5 billion.
Zacks Rank and Key Picks
Currently, Ovintiv carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum (EPM - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Archrock (AROC - Free Report) and Ranger Energy Services (RNGR - Free Report) , both holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum: EPM is worth approximately $219.16 million. EPM currently pays a dividend of 48 cents per share, or 7.38%, annually.
The company currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means EPM is trading at a discount to the group.
Archrock: AROC is valued at around $1.55 billion. It delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock provides natural gas contract compression services and aftermarket services of compression equipment.
Ranger Energy Services: RNGR is valued at around $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.