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Ovintiv (OVV) Q3 Earnings Miss Estimates, Revenues Beat

Ovintiv Inc. OVV reported third-quarter adjusted earnings per share of $1.44, missing the Zacks Consensus Estimate of $1.98. The downside in results can be attributed to a year-over-year dip in production and much higher costs. Moreover, $1.44 was lower than the year-ago bottom line’s profit of $1.50 per share.

However, total revenues of $3.55 billion beat the Zacks Consensus Estimate of $2.52 billion due to higher-than-expected total oil and natural gas liquid production. Total oil production came in at 179,000 barrels of oil equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 136,000 BOE/d. The top line improved by about 98.4% from the year-ago sales of $1.79 billion.

OVV’s board of directors declared a quarterly dividend of 25 cents per share for its common shareholders of record as of Dec 15, 2022. The dividend will be paid out on Dec 30.

Production & Prices

The total third-quarter production came in at 516,300 BOE/d compared with 534,700 BOE/d in the prior-year period. However, the same outperformed the Zacks Consensus Estimate of 503,000 BOE/d. Lower volumes can be attributed to natural gas production falling 4.2% year over year to 1,500 million cubic feet per day (MMcf/d), while liquids production was down 2.7% to 266,300 BOE/d.

Ovintiv's realized natural gas price was $1.85 per thousand cubic feet compared with the year-ago level of $3.02. The realized oil price increased to $81.74 per barrel from $53.31 in the third quarter of 2021.

Ovintiv Inc. Price, Consensus and EPS Surprise

Ovintiv Inc. Price, Consensus and EPS Surprise
Ovintiv Inc. Price, Consensus and EPS Surprise

Ovintiv Inc. price-consensus-eps-surprise-chart | Ovintiv Inc. Quote

Costs, Capex & Balance Sheet

Total expenses in the reported quarter increased to $2.18 billion from the year-ago figure of $1.79 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 $962 million, up from the year-ago figure of $812 million. Its capital investments were $511 million compared with $365 million in the year-ago period. Ovintiv generated non-GAAP free cash flow of $437 billion in the reported quarter.

As of Sep 30, the company had cash and cash equivalents worth $18 million and long-term debt of $3.18 billion. Its debt-to-capitalization at the end of the reported quarter was 35.6%.

Guidance

Ovintiv expects capital expenditure in the $300-$350 million range for the fourth quarter of 2022 and 1.8 billion for the full year.

For 2022, OVV now projects crude oil and condensate volumes to average between 174,000 barrels per day (bpd) and 176,000 bpd, and between 174,000 and 176,000 bpd for the fourth quarter. Natural gas production is estimated in the 1,525-1,575 MMcf/d range for the fourth quarter and between 1,480 and 1,510 MMcf/d for the entire year.

Zacks Rank & Key Picks

Ovintiv currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space that warrant a look include Phillips 66 PSX, Murphy USA MUSA and Liberty Energy LBRT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Phillips’ 2022 earnings stands at $20.62 per share, which suggests an increase of about 261.7% from the year-ago earnings of $5.70.

PSX beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 28%.

The Zacks Consensus Estimate for Murphy USA’s 2022 EPS has been revised upward by about 5.2% over the past 60 days from $24.09 to $25.34.

MUSA beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 51%.

The Zacks Consensus Estimate for Liberty’s 2022 earnings is pegged at $2.02 per share, which implies an increase of about 298% from the year-ago loss of $1.02.

LBRT beat the consensus mark for earnings in three of the trailing four quarters, the average being around 58.4%.

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Ovintiv Inc. (OVV) : Free Stock Analysis Report

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