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Ovintiv Inc. (OVV)
:OVV
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Ovintiv
(NYSE:OVV)
74Outperform
Positive Factors
Operational Performance
Ovintiv's portfolio is more focused now than any time in its history, with core positions in the Midland and Montney, both of which generate attractive returns and strong operational performance.
Shareholder Returns
Leverage is being reduced, and share buybacks are set to resume near term, with Ovintiv's commitment to return 50% of free cash flow equating to a significant portion of its market cap.
Negative Factors
Acquisitions and Divestitures
The company experienced a temporary loss of oil volumes due to the timing of recent acquisitions and divestitures.
Production Expectations
First quarter oil volumes are expected to be modestly below expectations due to deal timing and winter weather impacts.
Ovintiv (OVV) vs. S&P 500 (SPY)
Market Cap
$8.58B
Dividend Yield3.64%
Average Volume (3M)4.35M
Price to Earnings (P/E)7.8
Beta (1Y)1.09
Revenue Growth-15.82%
EPS Growth-46.85%
CountryUS
Employees1,623
SectorEnergy
Sector Strength61
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)4.20
Shares Outstanding260,324,460
10 Day Avg. Volume3,745,921
30 Day Avg. Volume4,345,739
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.17
Price to Cash Flow (P/CF)2.60
P/FCF Ratio4.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$56.71Price Target Upside72.16% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
Ovintiv Business Overview & Revenue Model
Company DescriptionOvintiv Inc. (OVV) is a prominent energy producer that operates primarily in the oil and natural gas sector. The company is engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs) across its extensive asset base in North America. Ovintiv focuses on optimizing its portfolio through a combination of technological innovation, operational efficiency, and strategic resource management to deliver energy solutions that meet market demands.
How the Company Makes MoneyOvintiv makes money through the exploration, extraction, and sale of oil, natural gas, and NGLs. The company's revenue comes from the production and sale of these commodities, which are extracted from its significant holdings in resource-rich areas such as the Permian Basin, Montney, and Anadarko Basin. Ovintiv's revenue streams are influenced by global commodity prices, production volumes, and the successful implementation of cost-effective extraction and production techniques. Additionally, Ovintiv benefits from strategic partnerships and joint ventures that enhance its operational capabilities and market reach, thereby contributing to its overall earnings.
Ovintiv Financial Statement Overview
Summary
Ovintiv demonstrates improved cost management with a higher gross profit margin, but declining revenue and net income impact overall financial health. The balance sheet indicates reduced debt, yet lower profitability is a concern. Lack of 2024 cash flow data adds uncertainty, but previous trends suggest cash management needs improvement.Income Statement
Ovintiv shows a decline in total revenue over the past year, with a decrease from $10.66B in 2023 to $9.15B in 2024. The gross profit margin increased significantly from 46.58% in 2023 to 89.81% in 2024, indicating improved cost management. However, net income dropped, leading to a decrease in net profit margin from 19.56% in 2023 to 12.29% in 2024. EBIT and EBITDA margins also decreased, suggesting pressure on operational efficiency.70
Positive
Balance Sheet
The debt-to-equity ratio improved from 0.64 in 2023 to a much more favorable position in 2024, as the company reduced its debt to zero. Return on equity decreased from 20.10% in 2023 to 10.89% in 2024, reflecting lower profitability. The equity ratio was 51.89% in 2023, indicating a stable equity position but was not calculable for 2024 due to missing asset data.65
Positive
Cash Flow
Cash flow data for 2024 is missing, making it challenging to fully evaluate current performance. In 2023, Ovintiv had a free cash flow of $1.42B, down from $2.03B in 2022, indicating a decline in cash available after capital expenditures. The free cash flow to net income ratio was 0.68 in 2023, showing a moderate conversion of income to free cash flow.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 9.15B | 10.66B | 12.46B | 8.66B | 6.09B | Gross Profit |
| 4.98B | 4.96B | 7.30B | 4.22B | 2.71B | EBIT |
| 1.58B | 2.86B | 3.85B | 1.52B | 609.00M | EBITDA |
| 4.05B | 4.71B | 5.00B | 2.79B | -3.50B | Net Income Common Stockholders |
| 1.13B | 2.08B | 3.64B | 1.42B | -6.10B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 42.00M | 3.00M | 5.00M | 195.00M | 10.00M | Total Assets |
| 19.25B | 19.99B | 15.06B | 14.05B | 14.47B | Total Debt |
| 6.29B | 6.68B | 4.49B | 5.78B | 8.01B | Net Debt |
| 6.25B | 6.68B | 4.49B | 5.58B | 8.00B | Total Liabilities |
| 8.92B | 9.62B | 7.37B | 8.98B | 10.63B | Stockholders Equity |
| 10.33B | 10.37B | 7.69B | 5.07B | 3.84B |
| Cash Flow | Free Cash Flow | |||
| 1.42B | 1.42B | 2.04B | 1.61B | 159.00M | Operating Cash Flow |
| 3.72B | 4.17B | 3.87B | 3.13B | 1.90B | Investing Cash Flow |
| -2.46B | -5.52B | -1.79B | -525.00M | -1.86B | Financing Cash Flow |
| -1.23B | 1.36B | -2.27B | -2.42B | -206.00M |
Ovintiv Technical Analysis
Negative
32.94
Price Trends
41.89
Negative
42.05
Negative
42.03
Negative
Market Momentum
0.53
Negative
58.60
Neutral
53.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OVV, the sentiment is Negative. The current price of 32.94 is below the 20-day moving average (MA) of 41.08, below the 50-day MA of 41.89, and below the 200-day MA of 42.03, indicating a bearish trend. The MACD of 0.53 indicates Negative momentum. The RSI at 58.60 is Neutral, neither overbought nor oversold. The STOCH value of 53.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OVV.
Ovintiv Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $12.20B | 23.68 | 7.56% | 7.68% | 3.28% | -47.59% | |
74 Outperform | $8.58B | 7.83 | 10.87% | 3.64% | -15.82% | -46.85% | |
74 Outperform | $3.63B | 9.43 | 7.77% | 5.49% | -12.48% | -36.47% | |
74 Outperform | $8.64B | 7.43 | 12.79% | 3.91% | 60.23% | 19.57% | |
70 Outperform | $10.41B | 185.37 | 0.82% | ― | -4.22% | -77.20% | |
65 Neutral | $6.61B | 82.82 | -0.36% | 2.82% | -10.64% | -102.62% | |
57 Neutral | $7.70B | 4.18 | -3.52% | 8.32% | 0.35% | -64.68% |
* Energy Sector Average
Performance Comparison
OVV
Ovintiv
32.94
-20.81
-38.72%
MUR
Murphy Oil
22.32
-24.16
-51.98%
NFG
National Fuel Gas Company
73.03
21.37
41.37%
PAA
Plains All American
17.34
-0.22
-1.25%
AR
Antero Resources
33.46
3.49
11.64%
PR
Permian Resources
10.75
-6.20
-36.58%
Ovintiv Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -20.78% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong financial and operational performance with significant free cash flow generation, shareholder returns, and successful debt reduction. Strategic acquisitions and operational efficiency gains were highlighted as key achievements. However, there were minor challenges related to natural gas and NGL volumes and expected higher Canadian royalties.Highlights
Record Free Cash Flow and Shareholder Returns
Generated free cash flow of approximately $1.7 billion, up 50% year over year, with more than $900 million returned to shareholders.
Strong Operational Performance in Key Assets
Delivered oil and condensate volumes averaging 210,000 barrels per day, beating guidance, driven by strong results in the Permian and Montney.
Debt Reduction Achievements
Reduced net debt by more than $320 million, ending the year with $5.4 billion of net debt.
Enhanced Capital Efficiency
Achieved significant efficiency gains, including industry-leading drilling and completion speeds and reduced well costs across key assets.
Strategic Acquisitions and Divestitures
Acquired assets in the Alberta Montney and divested Uinta assets, adding 900 high-quality drilling locations and enhancing free cash generation.
Lowlights
Challenges in Natural Gas and NGLs
Natural gas and NGL volumes came in slightly below guidance due to a value-based decision to reject ethane in the Anadarko and temporary weather impacts.
Higher Canadian Royalties Expected
Projected to experience higher Canadian royalties due to increased gas prices, which may modestly affect volumes.
Company Guidance
During the conference call, Ovintiv provided comprehensive guidance for 2025, projecting a robust financial performance. The company expects to generate over $2.1 billion in free cash flow, assuming commodity prices of $70 WTI and $4 NYMEX gas, marking an increase of more than $300 million from the previous year. They plan to maintain oil and condensate production at approximately 205,000 barrels per day, with total production volumes between 595,000 and 615,000 BOE per day, supported by a capital investment of about $2.2 billion. Ovintiv also highlighted significant efficiency improvements, citing a reduction in drilling and completion costs and enhanced productivity per lateral foot across their assets. They are strategically leveraging their diversified portfolio, focusing on high-return oil and condensate-rich areas, while also positioning themselves to benefit from potential increases in gas prices. With ongoing efforts to reduce net debt to below $5 billion by year-end, Ovintiv is poised to continue delivering strong shareholder returns and optimizing their capital structure.Ovintiv Corporate Events
Executive/Board ChangesShareholder Meetings
Ovintiv Announces Board Member Departure in 2025
Neutral
Feb 25, 2025
On February 19, 2025, Suzanne P. Nimocks informed Ovintiv Inc. that she will not seek re-election to the Board of Directors at the 2025 Annual Meeting of Shareholders. Her decision was not due to any disagreements with the company’s operations or policies. The Board plans to reduce the number of directors to eleven following her departure, and the company expressed gratitude for her service.
M&A TransactionsBusiness Operations and Strategy
Ovintiv’s Strategic Asset Sale and Acquisition Moves
Positive
Jan 22, 2025
On January 22, 2025, Ovintiv Inc. announced the completion of its $2 billion sale of Uinta assets in Utah to FourPoint Resources, LLC, marking a strategic move to enhance value from non-core assets. The divestiture aligns with Ovintiv’s strategy to focus on core areas, and the company anticipates closing its acquisition of Alberta Montney assets from Paramount Resources Ltd. by the end of the first quarter.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.