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Ovintiv (OVV) Q2 Earnings Miss Estimates, Revenues Beat

·4 min read

Ovintiv Inc. OVV reported second-quarter adjusted earnings per share of $2.42, missing the Zacks Consensus Estimate of $2.69. This downside in results can be attributed to a year-over-year dip in production and much higher costs. However, $2.42 was higher than the year-ago bottom line’s profit of $1.11 per share due to higher price realizations.

Total revenues of $3.74 billion beat the Zacks Consensus Estimate of $2.66 billion due to higher-than-expected total oil and natural gas liquid production. Total oil production came in at 175,000 barrels of oil equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 129,000 BOE/d. The top line improved by about 120% from the year-ago sales of $1.69 billion.

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

Production & Prices

The total second-quarter production came in at 500,000 BOE/d compared with 554,600 BOE/d in the prior-year period. The same outperformed the Zacks Consensus Estimate of 496,000 BOE/d. Lower volumes can be attributed to the natural gas production falling 11.3% year over year to 1,426 million cubic feet per day (MMcf/d), while the liquids production was down 8.5% to 262,400 BOE/d.

Ovintiv's realized natural gas price was $2.78 per thousand cubic feet compared with the year-ago level of $2.74. The realized oil price increased to $89.16 per barrel from $51.27 in the second 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 $2.20 billion from the year-ago figure of $1.81 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 $1.34 billion, up from the year-ago figure of $750 million. OVV's capital investments were $511 million compared with $383 million in the year-ago period.

Ovintiv generated non-GAAP free cash flow of $713 billion in the reported quarter.

As of Jun 30, the company had cash and cash equivalents worth $8 million and long-term debt of $3.9 billion. Its debt-to-capitalization ratio was 40.1%

Guidance

Ovintiv expects capital expenditure in the $450-$500 million range for the third quarter of 2022 and between $1.7 and 1.8 billion for the full year.

For 2022, OVV now projects crude oil and condensate volumes to average between 178,000 barrels per day (bpd) and 183,000 bpd in the third quarter and between 177,000 and 180,000 bpd for the full year (180,000-185,000 before). Natural gas production is estimated in the 1,440-1,500 MMcf/d range for the third quarter and between 1,450 and 1,475 MMcf/d for the entire year.

Zacks Rank & Other Key Picks

Ovintiv Inc. currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the energy space that warrant a look include Earthstone Energy ESTE, TotalEnergies TTE and RPC RES, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Earthstone’s 2022 earnings stands at $4.79 per share, up about 283.2% from the year-ago earnings of $1.25.

ESTE beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 27%.

The Zacks Consensus Estimate for TotalEnergies’ 2022 earnings is pegged at $13.83 per share, up about 107% from the year-ago earnings of $6.68.

TTE beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 14.6%.

The Zacks Consensus Estimate for RPC’s 2022 earnings is pegged at 63 cents per share, up 2000% from the year-ago earnings of 3 cents.

RES beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 80%.


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