Ovintiv reverses loss, sees rising returns to shareholders
Denver-based Ovintiv, active in the Montney basin in Canada and in the Permian and Anadarko basins in the US, reported Q2 2022 net earnings of $1.36bn on August 3, reversing a $205mn net loss in the comparable period a year ago.
At the same time, quarterly cash flow and free cash flow were the highest in more than a decade, allowing the return of about $200mn to shareholders in the form of share buybacks and base dividends. Shareholder returns are expected to rise to $389mn in Q3 2022.
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“In the second quarter, we delivered our highest quarterly cash flow and free cash flow in over a decade – this result reflects the value we are generating with our culture of innovation, leading capital efficiency, top tier multi-basin portfolio and disciplined capital allocation,” CEO Brendan McCracken said. “We are resolute in our goal to unlock value for our shareholders. We expect to deliver more than $1bn to our shareholders in 2022 and assuming current strip pricing, we expect shareholder returns to more than double in 2023.”
Cash from operating activities nearly doubled in the quarter, to $1.34bn from $750mn a year ago, while free cash flow more than doubled, to $713mn from $350mn. Operating earnings rose to $629mn from $290mn.
Ovintiv began life as Canadian-based Encana, with a focus on the Montney shale gas play in Canada. Several years ago, it pivoted to a focus on oil, changed its name and re-domiciled to the US to take advantage of stronger capital markets there.
It is now largely focused on oil and associated gas from the Permian and Anadarko basins: Permian production in Q2 averaged 116,200 barrels of oil equivalent (boe)/day (79% liquids), up from 114,000 boe/day in the year ago period, while production from the Anadarko rose to 128,200 boe/day (63% liquids) from 120,100 boe/day.
Montney production averaged 198,200 boe/day (24%) liquids, down from 212,900 boe/day a year ago.
Total US natural gas production in the quarter averaged 485mn ft3/day, up from 475mn ft3/day, while Canadian natural gas production averaged 941mn ft3/day, down from 1.01bn ft3/day a year ago.