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Ovintiv's (OVV) Q4 Earnings Miss Estimates, Revenues Beat

Ovintiv Inc. OVV reported fourth-quarter 2022 adjusted earnings per share (EPS) of 91 cents, which missed the Zacks Consensus Estimate of $1.75. This decline can be attributed to year-over-year higher expenses. The bottom line also underperformed the year-ago quarter’s figure of $1.24 per share.

Total revenues of $3.2 billion decreased 3.8% from the year-ago quarter’s $3.3 billion but beat the Zacks Consensus Estimate of $2.3 billion. This uptick was due to higher-than-expected production and better oil realizations. Total oil production came in at 174,700 barrels of oil equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 131,000 BOE/d.

OVV’s board of directors declared a quarterly dividend of 25 cents per share for its common shareholders of record as of Mar 15, 2023. The dividend will be paid out on Mar 31.

Ovintiv Inc. Price, Consensus and EPS Surprise

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

Production & Prices

Total fourth-quarter production was 523,600 BOE/d compared with 508,200 BOE/d in the prior-year period.  It beat the Zacks Consensus Estimate of 519,000 BOE/d. Higher volumes can be attributed to natural gas production increasing 5.8% year over year to 1,561 million cubic feet per day (MMcf/d). Liquids production edged up 0.5% to 263,400 BOE/d.

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Ovintiv's realized natural gas price was $2.49 per thousand cubic feet compared with the year-ago quarter’s figure of $2.84. The realized oil price increased to $75.85 per barrel from $53.43 in the fourth quarter of 2021.

Costs, Capex & Balance Sheet

Total expenses in the reported quarter increased to $2 billion from the year-ago figure of $1.9 billion.

Ovintiv’s cash from operating activities was $875 million, up from the year-ago figure of $740 million. Its capital investments were $358 million compared with $421 million in the year-ago period. The company generated a non-GAAP free cash flow of $537 billion in the quarter.

As of Dec 31, the company had cash and cash equivalents worth $5 million and long-term debt of $3.6 billion. Its debt-to-capitalization at the end of the reported quarter was 32%.

Guidance

Ovintiv expects capital expenditure of $2.15-$2.35 billion for full-year 2023 and of $600-$650 million for the first quarter of 2023.

The company now projects crude oil and condensate volumes of 165,000-175,000 barrels per day (bpd) for full-year 2023, and of 160,000 bpd for the first quarter of 2023. Natural gas production is estimated in the 1,525–1,575 MMcf/d range for the entire year and at 1,525 MMcf/d for the first quarter.

Zacks Rank and Key Picks

Currently, Ovintiv carries a Zacks Rank #5 (Strong Sell). Investors interested in the energy sector might look at some better-ranked stocks like NGL Energy Partners NGL, sporting a Zacks Rank #1 (Strong Buy), and Energy Transfer ET and Helix Energy Solutions Group HLX, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NGL Energy Partners: The company is worth approximately $451.75 million. Its shares have increased 48.8% in the past year.

NGL is a limited partnership company that operates a vertically-integrated propane business with three segments — retail propane, wholesale supply and marketing, and midstream.

Energy Transfer LP: The company is valued at around $38.99 billion. It delivered an average earnings surprise of 11.43% for the last four quarters and its current dividend yield is 9.48%.

ET currently has a forward P/E ratio of 9.17. In comparison, its industry has an average forward P/E of 9.40, which means the company is trading at a discount to the group.

Helix Energy Solutions Group: The company is valued at around $1.20 billion. In the past year, its stock has increased 63.3%.

HLX currently has a forward P/E ratio of 12.02. In comparison, its industry has an average forward P/E of 12.50, which means the company is trading at a discount to the group.

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NGL Energy Partners LP (NGL) : Free Stock Analysis Report

Energy Transfer LP (ET) : Free Stock Analysis Report

Helix Energy Solutions Group, Inc. (HLX) : Free Stock Analysis Report

Ovintiv Inc. (OVV) : Free Stock Analysis Report

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