Ovintiv (OVV) Q4 Earnings Beat Estimates on Lower Costs
Ovintiv Inc. OVV reported fourth-quarter 2023 adjusted earnings per share (EPS) of $2.35, which beat the Zacks Consensus Estimate of $1.94. The bottom line also improved from the year-ago level of 91 cents. The upside can be attributed to lower expenses year over year.
Total revenues of $3.2 billion decreased 1.4% from the year-ago quarter’s figure. This was due to a year-over-year decline in revenues from products and services. The top line, however, beat the Zacks Consensus Estimate by 14.3%. This was due to higher-than-expected production. Total oil production came in at 194,100 barrels of oil equivalent per day (BOE/d), which outpaced the Zacks Consensus Estimate of 174,000 BOE/d.
OVV’s board of directors declared a quarterly dividend of 30 cents per share for its common shareholders of record as of Mar 15, 2024. The dividend will be paid out on Mar 28.
During this quarter, the company returned approximately $135 million to shareholders through share buybacks of $53 million and a base dividend of $82 million.
Ovintiv Inc. Price, Consensus and EPS Surprise
Ovintiv Inc. price-consensus-eps-surprise-chart | Ovintiv Inc. Quote
Production & Prices
Total fourth-quarter production was 605,200 BOE/d compared with 523,600 BOE/d in the prior-year period. The figure beat our projection of 567,000 BOE/d. Higher volumes can be attributed to a 5.4% year-over-year increase in natural gas production that amounted to 1,645 million cubic feet per day (MMcf/d). Production of liquids increased to 331,100 BOE/d.
Ovintiv's realized natural gas price was $2.65 per thousand cubic feet compared with the year-ago quarter’s figure of $2.49. However, the reported figure fell short of our projection of $3.13 per thousand cubic feet.
The realized oil price increased to $76.64 per barrel from $75.85 in the fourth quarter of 2022. However, the figure fell short of our projection of $85.70.
Costs, Capex & Balance Sheet
Total expenses in the reported quarter decreased to $1.98 billion from the year-ago figure of $2.05 billion.
Ovintiv’s cash from operating activities in the quarter under review summed at $1.4 billion, up from the year-ago figure of $875 million. Its capital investments amounted to $660 million compared with $358 million in the year-ago period. Ovintiv generated non-GAAP free cash flow of $577 billion in the reported quarter.
As of Dec 31, the company had cash and cash equivalents worth $3 million and long-term debt of $5.7 billion. Its debt-to-capitalization at the end of the reported quarter was 34.5%.
Guidance
Ovintiv expects capital expenditures in the range of $2.2-$2.4 billion for full-year 2024 and in the band of $580-$620 million for the first quarter of the year.
OVV now projects crude oil and condensate volumes to be in the range of 202,000-208,000 bpd for 2024, and in the band of 208,000-212,000 bpd for the first quarter. Natural gas production is estimated to be in the 1,575-1,625 MMcf/d range for the first quarter, and between 1,550 MMcf/d and 1,650 MMcf/d for the entire year.
In the first quarter of 2024, share buybacks are expected to be worth $248 million.
Zacks Rank and Key Picks
Currently, OVV carries a Zacks Rank #5 (Strong Sell).
Investors interested in the energy sector might look at some better-ranked stocks like Subsea 7 S.A. SUBCY, Energy Transfer LP ET and Murphy USA Inc. MUSA, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Subsea 7 is valued at $4.20 billion. The company currently pays a dividend of 38 cents per share, or 2.78%, on an annual basis.
SUBCY offers offshore project services for the energy industry, specializing in subsea field development, covering project management, design, engineering, procurement, fabrication, survey, installation and commissioning of seabed production facilities.
Energy Transfer is valued at $49.47 billion. The company currently pays a dividend of $1.26 per share, or 8.58%, on an annual basis.
ET is an independent energy company, principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
Murphy USA is valued at around $8.62 billion. In the past year, its shares have risen 63%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.
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