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Ovintiv (OVV) Down 7% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Ovintiv (OVV - Free Report) . Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ovintiv due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Ovintiv's Q2 Earnings Beat Estimate, Revenues Lag
Ovintiv Inc. reported second-quarter 2024 adjusted earnings per share (EPS) of $1.24, which beat the Zacks Consensus Estimate of $1.22 and increased from the year-ago level of 93 cents. The outperformance can be attributed to higher oil price realization and successful year-over-year cost-control initiatives.
The Denver, CO-based oil and gas exploration and production company’s total revenues of $2.2 billion decreased 13.3% from the year-ago quarter’s figure and missed the Zacks Consensus Estimate by 9.9%. This was due to a year-over-year decline in revenues from products and services.
On Jul 30, OVV’s board of directors declared a quarterly dividend of 30 cents per share for its common shareholders of record as of Sep 13, 2024. The dividends will be paid out on Sep 27.
In the reported quarter, the company repurchased approximately 3.6 million shares of common stock for about $182 million. It paid dividends of 30 cents per share, amounting to a total of $80 million. OVV also reduced its debt more than $100 million in the quarter, bringing the trailing 12-month leverage ratio to 1.2x.
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 second-quarter production was 593,800 barrels of oil equivalent per day (BOE/d) compared with 573,000 BOE/d in the prior-year period. The figure beat our projection of 572,300 BOE/d.
Natural gas production marginally decreased year over year to 1,740 million cubic feet per day while liquids production rose 7.5% to 275,600 BOE/d.
Ovintiv's realized natural gas price was $1.86 per thousand cubic feet compared with the year-ago level of $1.98 and beat our projection of $1.79.
Realized oil price increased to $76.58 per barrel from $72.83 in the second quarter of 2023. However, the figure missed our projection of $83.12.
Costs, Capex & Balance Sheet
Total expenses in the reported quarter decreased to $1.73 billion from the year-ago quarter’s figure of $1.99 billion attributed to lower costs associated with transportation and processing, administration and purchased products.
Ovintiv’s cash from operating activities in the quarter under review was $1.1 billion, which increased from the year-ago figure of $831 million. OVV's capital investments were $622 million compared with $640 million in the year-ago period. Ovintiv generated a non-GAAP free cash flow of $403 million in the reported quarter.
As of Jun 30, the company had cash and cash equivalents worth $8 million and long-term debt of $4.9 billion. Its debt-to-capitalization ratio was 32%.
Asset Performance and Outlook
Permian Basin: Second-quarter’s production averaged 203 thousand barrels of oil equivalent per day (MBOE/d), with a strong liquids component of 81%. The company brought 40 net wells online in this period. Ovintiv expects to allocate capital expenditures of $1.35 to $1.45 billion for the Permian in 2024, targeting the addition of 120 to 130 net wells.
Montney: Production totaled 251 MBOE/d in the second quarter, with a liquids weighting of 20%. The company added 33 net wells in the quarter under review. To support growth, Ovintiv plans to invest between $425 and $475 million in the Montney in 2024, with an expected addition of 60 to 70 net wells.
Uinta Basin: Second-quarter’s production averaged 33 MBOE/d, demonstrating a strong liquids-rich profile of 87%. Seven net wells were brought online. The company anticipates investing $300 to $350 million in the Uinta Basin in 2024, targeting the addition of 25 to 30 net wells.
Anadarko Basin: Production averaged 104 MBOE/d in the second quarter, with a liquids component of 57%. No new wells were brought online in this period. Additionally, Ovintiv expects to invest $100 to $125 million in the Anadarko Basin in 2024, targeting the addition of seven to ten net wells.
Guidance
The company expects capital expenditure in the $530 - $570 million range for third-quarter 2024 and between $2.25 and $2.35 billion for the full year.
OVV’s management projects total production volumes to average between 565,000 and 580,000 barrels per day (bpd) in the third quarter and between 570,000 and 580,000 bpd for the full year.
The company projects crude oil and condensate volumes to average between 204,000 and 208,000 bpd in the third quarter and between 207,000 and 209,000 bpd for 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Ovintiv has a nice Growth Score of B, 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 quintile 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) Down 7% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Ovintiv (OVV - Free Report) . Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ovintiv due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Ovintiv's Q2 Earnings Beat Estimate, Revenues Lag
Ovintiv Inc. reported second-quarter 2024 adjusted earnings per share (EPS) of $1.24, which beat the Zacks Consensus Estimate of $1.22 and increased from the year-ago level of 93 cents. The outperformance can be attributed to higher oil price realization and successful year-over-year cost-control initiatives.
The Denver, CO-based oil and gas exploration and production company’s total revenues of $2.2 billion decreased 13.3% from the year-ago quarter’s figure and missed the Zacks Consensus Estimate by 9.9%. This was due to a year-over-year decline in revenues from products and services.
On Jul 30, OVV’s board of directors declared a quarterly dividend of 30 cents per share for its common shareholders of record as of Sep 13, 2024. The dividends will be paid out on Sep 27.
In the reported quarter, the company repurchased approximately 3.6 million shares of common stock for about $182 million. It paid dividends of 30 cents per share, amounting to a total of $80 million. OVV also reduced its debt more than $100 million in the quarter, bringing the trailing 12-month leverage ratio to 1.2x.
Production & Prices
Total second-quarter production was 593,800 barrels of oil equivalent per day (BOE/d) compared with 573,000 BOE/d in the prior-year period. The figure beat our projection of 572,300 BOE/d.
Natural gas production marginally decreased year over year to 1,740 million cubic feet per day while liquids production rose 7.5% to 275,600 BOE/d.
Ovintiv's realized natural gas price was $1.86 per thousand cubic feet compared with the year-ago level of $1.98 and beat our projection of $1.79.
Realized oil price increased to $76.58 per barrel from $72.83 in the second quarter of 2023. However, the figure missed our projection of $83.12.
Costs, Capex & Balance Sheet
Total expenses in the reported quarter decreased to $1.73 billion from the year-ago quarter’s figure of $1.99 billion attributed to lower costs associated with transportation and processing, administration and purchased products.
Ovintiv’s cash from operating activities in the quarter under review was $1.1 billion, which increased from the year-ago figure of $831 million. OVV's capital investments were $622 million compared with $640 million in the year-ago period. Ovintiv generated a non-GAAP free cash flow of $403 million in the reported quarter.
As of Jun 30, the company had cash and cash equivalents worth $8 million and long-term debt of $4.9 billion. Its debt-to-capitalization ratio was 32%.
Asset Performance and Outlook
Permian Basin: Second-quarter’s production averaged 203 thousand barrels of oil equivalent per day (MBOE/d), with a strong liquids component of 81%. The company brought 40 net wells online in this period. Ovintiv expects to allocate capital expenditures of $1.35 to $1.45 billion for the Permian in 2024, targeting the addition of 120 to 130 net wells.
Montney: Production totaled 251 MBOE/d in the second quarter, with a liquids weighting of 20%. The company added 33 net wells in the quarter under review. To support growth, Ovintiv plans to invest between $425 and $475 million in the Montney in 2024, with an expected addition of 60 to 70 net wells.
Uinta Basin: Second-quarter’s production averaged 33 MBOE/d, demonstrating a strong liquids-rich profile of 87%. Seven net wells were brought online. The company anticipates investing $300 to $350 million in the Uinta Basin in 2024, targeting the addition of 25 to 30 net wells.
Anadarko Basin: Production averaged 104 MBOE/d in the second quarter, with a liquids component of 57%. No new wells were brought online in this period. Additionally, Ovintiv expects to invest $100 to $125 million in the Anadarko Basin in 2024, targeting the addition of seven to ten net wells.
Guidance
The company expects capital expenditure in the $530 - $570 million range for third-quarter 2024 and between $2.25 and $2.35 billion for the full year.
OVV’s management projects total production volumes to average between 565,000 and 580,000 barrels per day (bpd) in the third quarter and between 570,000 and 580,000 bpd for the full year.
The company projects crude oil and condensate volumes to average between 204,000 and 208,000 bpd in the third quarter and between 207,000 and 209,000 bpd for 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Ovintiv has a nice Growth Score of B, 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 quintile 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.