We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
APA or Ovintiv: Where Should Energy Investors Look Now?
Read MoreHide Full Article
Key Takeaways
OVV is driven by strong Permian and Montney execution, with recent wells beating expectations.
APA's GranMorgu Suriname project with TotalEnergies targets first oil in mid-2028 via FPSO.
APA trades at ~1.57X forward P/S and has surged ~114% in the past year, outpacing rivals.
APA Corporation (APA - Free Report) and Ovintiv Inc. (OVV - Free Report) are both upstream energy names with better balance sheets, disciplined spending and leverage to oil and gas prices. Yet, the two stories are different. OVV offers strong execution in key North American basins, while APA brings a broader portfolio and a clearer medium-term catalyst through Suriname.
The Case for APA Stock
APA’s investment case rests on near-term cash generation and longer-term optionality. The portfolio is anchored by the Permian and Egypt, with the Permian accounting for most adjusted production and offering more than a decade of economic inventory. Execution has improved as well. APA has reduced drilling and completion costs in the Permian, lowered drilling costs in Egypt and continues to target sizable cost savings by year-end 2026. That focus supports margins when commodity prices turn choppy.
APA’s GranMorgu project, developed with TotalEnergies, remains on track for first oil in mid-2028. With a large offshore resource base and planned production through an FPSO, the project could become a meaningful source of high-margin oil growth and free cash flow for investors, which gives APA a visible growth lever beyond simply drilling more in the Permian.
APA is also showing financial discipline. The company has reduced debt, has no major debt maturities until late 2029 and is working toward a $3 billion net debt target. Its gas trading portfolio is another support, with management expecting a large pretax cash contribution in 2026, helped by wider Waha differentials and stronger LNG pricing. That said, APA is not without risk. Egypt carries geopolitical and fiscal exposure, U.K. taxes remain high, and Suriname upside will not arrive until 2028. APA still depends on commodity prices and execution.
The Case for OVV Stock
Ovintiv’s investment appeal is largely driven by the strength of its North American operations. The company holds attractive positions in the Permian Basin and the Montney, two of the continent’s leading oil- and liquids-rich regions. Recent wells have been performing better than expected, supported by a combination of improved drilling and completion techniques. In the Permian, Ovintiv has used technologies such as surfactants, enhanced completion designs, multi-well development strategies and AI-based analysis to improve results. Since 2019, the company has applied surfactants to more than 300 Permian wells and says they have boosted oil productivity by about 9%.
OVV also deserves credit for reshaping its portfolio. The NuVista acquisition expanded its Montney footprint, while the Anadarko sale helped reduce debt. The company has taken net debt below $3.3 billion, lowered leverage below 0.8X and has no long-term debt maturities before 2030. Liquidity is strong, and lower interest costs should support free cash flow. Its shareholder return policy is flexible, with 50-100% of free cash flow targeted for dividends and buybacks.
However, Ovintiv’s story is not without challenges. Management is prioritizing steady production and strong returns rather than aggressively growing output, which may limit upside for investors looking for faster production growth. The company also faces some exposure to Canadian royalty structures, which can reduce reported production volumes when condensate prices rise. In addition, Ovintiv’s strong well performance is closely tied to its operational expertise and technology-driven approach. If competitors adopt similar techniques and narrow the performance gap, the company’s advantage could become less pronounced over time.
Price Performance
Both stocks have delivered strong gains over the past year, but APA has clearly been the bigger winner. APA shares have surged about 114.2%, more than doubling in value, while Ovintiv has gained roughly 60%. Although both stocks have benefited from stronger energy-sector sentiment and improving fundamentals, APA’s significantly stronger performance suggests investors have become increasingly optimistic about its cost-reduction efforts, growing cash-flow potential, gas trading business and the long-term upside from the GranMorgu project in Suriname. OVV has also performed well, but the market has shown greater enthusiasm for APA’s story.
Image Source: Zacks Investment Research
Valuation
On a forward price-to-sales basis, APA trades at around 1.57X, below OVV’s 1.79X. The gap, while not huge, gives APA a relative edge. Ovintiv’s premium is understandable because of its cleaner North American asset base, strong execution and improved leverage profile. Even so, APA offers a lower sales multiple while still carrying visible free cash flow potential and a major offshore project.
Image Source: Zacks Investment Research
EPS Estimates
Earnings estimates show a mixed picture. The Zacks Consensus Estimate for APA calls for 37% growth in 2026, followed by a 34% decline in 2027.
Image Source: Zacks Investment Research
For OVV, the estimate points to stronger 2026 growth of 68%, followed by a milder 14% decline in 2027.
Image Source: Zacks Investment Research
OVV therefore has a better near-term earnings growth profile. However, APA’s lower valuation, larger visible catalyst and improving cost structure help offset that difference.
Which Stock Should Investors Prefer?
Both APA and Ovintiv are disciplined E&P operators with credible shareholder return frameworks and commodity-linked upside. OVV looks stronger on near-term EPS growth and North American execution, while APA offers cheaper valuation, slightly better recent price performance and a distinctive medium-term growth catalyst in Suriname. Both stocks hold a Zacks Rank #3 (Hold), but APA looks slightly better positioned at the moment.
View the Zacks #1 Rank List
Image: Bigstock
APA or Ovintiv: Where Should Energy Investors Look Now?
Key Takeaways
APA Corporation (APA - Free Report) and Ovintiv Inc. (OVV - Free Report) are both upstream energy names with better balance sheets, disciplined spending and leverage to oil and gas prices. Yet, the two stories are different. OVV offers strong execution in key North American basins, while APA brings a broader portfolio and a clearer medium-term catalyst through Suriname.
The Case for APA Stock
APA’s investment case rests on near-term cash generation and longer-term optionality. The portfolio is anchored by the Permian and Egypt, with the Permian accounting for most adjusted production and offering more than a decade of economic inventory. Execution has improved as well. APA has reduced drilling and completion costs in the Permian, lowered drilling costs in Egypt and continues to target sizable cost savings by year-end 2026. That focus supports margins when commodity prices turn choppy.
APA’s GranMorgu project, developed with TotalEnergies, remains on track for first oil in mid-2028. With a large offshore resource base and planned production through an FPSO, the project could become a meaningful source of high-margin oil growth and free cash flow for investors, which gives APA a visible growth lever beyond simply drilling more in the Permian.
APA is also showing financial discipline. The company has reduced debt, has no major debt maturities until late 2029 and is working toward a $3 billion net debt target. Its gas trading portfolio is another support, with management expecting a large pretax cash contribution in 2026, helped by wider Waha differentials and stronger LNG pricing. That said, APA is not without risk. Egypt carries geopolitical and fiscal exposure, U.K. taxes remain high, and Suriname upside will not arrive until 2028. APA still depends on commodity prices and execution.
The Case for OVV Stock
Ovintiv’s investment appeal is largely driven by the strength of its North American operations. The company holds attractive positions in the Permian Basin and the Montney, two of the continent’s leading oil- and liquids-rich regions. Recent wells have been performing better than expected, supported by a combination of improved drilling and completion techniques. In the Permian, Ovintiv has used technologies such as surfactants, enhanced completion designs, multi-well development strategies and AI-based analysis to improve results. Since 2019, the company has applied surfactants to more than 300 Permian wells and says they have boosted oil productivity by about 9%.
OVV also deserves credit for reshaping its portfolio. The NuVista acquisition expanded its Montney footprint, while the Anadarko sale helped reduce debt. The company has taken net debt below $3.3 billion, lowered leverage below 0.8X and has no long-term debt maturities before 2030. Liquidity is strong, and lower interest costs should support free cash flow. Its shareholder return policy is flexible, with 50-100% of free cash flow targeted for dividends and buybacks.
However, Ovintiv’s story is not without challenges. Management is prioritizing steady production and strong returns rather than aggressively growing output, which may limit upside for investors looking for faster production growth. The company also faces some exposure to Canadian royalty structures, which can reduce reported production volumes when condensate prices rise. In addition, Ovintiv’s strong well performance is closely tied to its operational expertise and technology-driven approach. If competitors adopt similar techniques and narrow the performance gap, the company’s advantage could become less pronounced over time.
Price Performance
Both stocks have delivered strong gains over the past year, but APA has clearly been the bigger winner. APA shares have surged about 114.2%, more than doubling in value, while Ovintiv has gained roughly 60%. Although both stocks have benefited from stronger energy-sector sentiment and improving fundamentals, APA’s significantly stronger performance suggests investors have become increasingly optimistic about its cost-reduction efforts, growing cash-flow potential, gas trading business and the long-term upside from the GranMorgu project in Suriname. OVV has also performed well, but the market has shown greater enthusiasm for APA’s story.
Valuation
On a forward price-to-sales basis, APA trades at around 1.57X, below OVV’s 1.79X. The gap, while not huge, gives APA a relative edge. Ovintiv’s premium is understandable because of its cleaner North American asset base, strong execution and improved leverage profile. Even so, APA offers a lower sales multiple while still carrying visible free cash flow potential and a major offshore project.
EPS Estimates
Earnings estimates show a mixed picture. The Zacks Consensus Estimate for APA calls for 37% growth in 2026, followed by a 34% decline in 2027.
For OVV, the estimate points to stronger 2026 growth of 68%, followed by a milder 14% decline in 2027.
OVV therefore has a better near-term earnings growth profile. However, APA’s lower valuation, larger visible catalyst and improving cost structure help offset that difference.
Which Stock Should Investors Prefer?
Both APA and Ovintiv are disciplined E&P operators with credible shareholder return frameworks and commodity-linked upside. OVV looks stronger on near-term EPS growth and North American execution, while APA offers cheaper valuation, slightly better recent price performance and a distinctive medium-term growth catalyst in Suriname. Both stocks hold a Zacks Rank #3 (Hold), but APA looks slightly better positioned at the moment.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.