Ovintiv's Q4 Earnings Surpass Estimates and Revenues Miss

Ovintiv Inc. OVV reported fourth-quarter 2024 adjusted earnings per share of $1.35, which beat the Zacks Consensus Estimate of $1.11. The beat can be attributed to better-than-expected total oil production volumes, which exceeded the consensus mark by 1.8%.  However, the bottom line decreased from the year-ago level of $2.35 due to lower realized commodity prices (oil and natural gas), along with a rise in total expenses during the quarter.The Denver, CO-based oil and gas exploration and production company’s total revenues of $2.2 billion decreased 30.9% from the year-ago quarter’s figure and missed the Zacks Consensus Estimate by 5.6%. Find the latest EPS estimates and surprises on Zacks Earnings Calendar.On Feb. 26, 2025, Ovintiv's board of directors declared a quarterly dividend of 30 cents per share, which will be paid on March 31, 2025, to its shareholders of record as of March 14.The company demonstrated a strong commitment to shareholder value in 2024, distributing a total of approximately $913 million. This was achieved through $597 million in share buybacks, representing 12.7 million shares and $316 million in base dividend payments.OVV also optimized its portfolio, acquiring high-potential Montney assets for $2.3 billion (closed Jan. 31, 2025) and divesting Uinta assets for $2 billion (closed Jan. 22, 2025). This strategic restructuring resulted in a $323 million decrease in non-GAAP net debt.Ovintiv Inc. Price, Consensus and EPS Surprise Ovintiv Inc. price-consensus-eps-surprise-chart | Ovintiv Inc. QuoteOVV’s Production & PricesTotal fourth-quarter production was 579,900 barrels of oil equivalent per day (BOE/d) compared with 605,200 BOE/d in the prior-year period. Moreover, the figure missed our prediction of 581,600 BOE/d.Natural gas production increased 1,680 million cubic feet per day (MMcf/d) in the fourth quarter of 2024 compared with 1,645 MMcf/d in the prior-year quarter. However, the figure missed our estimate of 1,704.3 MMcf/d.Total liquids production decreased to 299.8 thousand barrels per day (Mbbls/d) in the fourth quarter of 2024, down from 331.1 Mbbls/d in the fourth quarter of 2023. However, the figure beat our prediction of 297.6 Mbbls/d.Ovintiv's realized natural gas price was $2.42 per thousand cubic feet compared with the year-ago level of $2.65. The figure beat our estimate of $1.89.Realized oil price decreased to $67.93 per barrel from $76.64 in the fourth quarter of 2023. Moreover, the figure missed our estimation of $69.20.OVV’s Costs, Capex & Balance SheetTotal expenses in the reported quarter increased to $2.2 billion from the year-ago quarter’s figure of $2 billion.  The figure also beat our estimate of $1.8 billion.Ovintiv’s cash from operating activities in the quarter under review was $1 billion, which decreased from the year-ago figure of $1.4 billion.OVV's capital investments were $552 million compared with $660 million in the year-ago period. The company generated a non-GAAP free cash flow of $1004 million in the reported quarter.As of Dec. 31, the company had cash and cash equivalents worth $42 million and long-term debt of $4.9 billion Its debt-to-capitalization ratio was 32%.OVV’s Asset Performance and OutlookPermian Basin: In the fourth quarter, Ovintiv's Permian operations yielded an average of 208 thousand barrels of oil equivalent per day (mboe/d), with liquids comprising 80% of that production, as 42 net wells were brought online. Looking ahead to 2025, the company plans to invest $1.2-$1.3 billion in the Permian, targeting the completion of 130 to 140 net new wells.Montney: Ovintiv plans significant growth in Montney, investing $575-$625 million in 2025 to bring 75-85 net wells into production. This follows a strong fourth quarter where production reached 235 MBOE/d (20% liquids) with 13 new wells completed.Anadarko Basin: In the fourth quarter, Anadarko production averaged 100 mboe/d, with liquids comprising 56% of that volume. Notably, no new wells were brought online during this period. However, for 2025, the company intends to invest between $300 million and $325 million in Anadarko, targeting the completion of 25 to 35 net new wells.OVV’s Q1 and 2025 GuidanceThis Zacks Rank #2 (Buy) company expects capital expenditure in the range of $600-$650 million for first-quarter 2025 and between $2.15 billion and $2.25 billion for the full year.OVV’s management expects total production volumes to average between 575,000 barrels per day (bpd) and 595,000 bpd in the first quarter and between 595,000 bpd and 615,000 bpd for the full year.The company anticipates crude oil and condensate volumes to average between 200,000 bpd and 204,000 bpd in the first quarter and in the band of 202,000-208,000 bpd in 2025.In the first quarter, natural gas production is estimated to be in the range of 1,750-1,800 MMcf/d and between 1,825 MMcf/d and 1,875 MMcf/d for the year.OVV predicts its lowest production of the year will occur in the first quarter. This is primarily due to recent asset changes, namely the acquisition of Montney and the disposition of Uinta. Consequently, these transactions will temporarily reduce production by about 3,000 barrels per day. However, the company expects oil and condensate production to level out in the second quarter.In order to finance the Montney acquisition, OVV implemented a temporary pause on its share buyback program. This strategic move will also result in approximately $368 million being redirected toward debt reduction by the end of the first quarter of 2025. Ovintiv aims to recommence its share buyback program during the second quarter of 2025.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Important Earnings at a GlanceWhile we have discussed OVV’s fourth-quarter results in detail, let us take a look at three other key reports of this space.Oil and gas equipment and services provider Liberty Energy LBRT reported a fourth-quarter 2024 adjusted net income of 10 cents per share, which marginally beat the Zacks Consensus Estimate of 9 cents, due to a year-over-year decrease in costs and expenses.  However, the bottom line underperformed the year-ago quarter’s reported figure of 54 cents, due to poor equipment and service execution, along with lower activity.As of Dec. 31, Liberty had approximately $20 million in cash and cash equivalents. The pressure pumper’s long-term debt of $190.5 million represented a debt-to-capitalization of 8.8%.Another oil and gas equipment and services provider Halliburton Company HAL posted a fourth-quarter 2024 adjusted net income per share of 70 cents, same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 86 cents (adjusted). The numbers indicated softer activity in the region of North America, partly offset by improved fluid work in the Gulf of Mexico.As of Dec. 31, 2024, the company had approximately $2.6 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. The company generated $1.5 billion of cash flow from operations in the fourth quarter, leading to a free cash flow of $1.1 billion. Energy infrastructure provider Kinder Morgan KMI reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan anticipates a net income of $2.8 billion, up 8% from the prior-year level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous-year level.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Halliburton Company (HAL): Free Stock Analysis Report Kinder Morgan, Inc. (KMI): Free Stock Analysis Report Liberty Energy Inc. (LBRT): Free Stock Analysis Report Ovintiv Inc. (OVV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks