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Ovintiv (OVV) Up 11.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Ovintiv (OVV - Free Report) . Shares have added about 11.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ovintiv due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ovintiv Q1 Earnings Miss Estimates, Revenues Beat
Ovintiv 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.
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 32.2%.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -25.07% due to these changes.
VGM Scores
At this time, Ovintiv has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ovintiv has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Ovintiv (OVV) Up 11.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Ovintiv (OVV - Free Report) . Shares have added about 11.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ovintiv due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ovintiv Q1 Earnings Miss Estimates, Revenues Beat
Ovintiv 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.
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 32.2%.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -25.07% due to these changes.
VGM Scores
At this time, Ovintiv has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ovintiv has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.