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Ovintiv (OVV) Gives Preliminary Update on Q4 Output & Capex

Ovintiv Inc. OVV recently issued a preliminary update on its fourth-quarter 2020 results.

The company’s crude oil and condensate volumes outpaced the prior projection of 200,000 barrels per day (bbls/d) in the fourth quarter and exceeded 210,000 bbls/d owing to solid well performances. Overall production in the final quarter of 2020 was more than 550,000 barrels of oil equivalent per day (boe/d) with the full-year output anticipated at 540,000-plus boe/d.

Ovintiv envisions its 2020 capital expenditure to be $1.75 billion, lower than the previous projection of $1.8 billion. The lower capex resulted from a disciplined capital approach. Precisely, the average completed well costs in the December quarter were almost 25% lower than the 2019 averages.

Formerly known as Encana Corp., Ovintiv always prioritized minimizing its debt and aims to reduce its total debt by at least $1 billion from the second half of 2020 through the end of this year. The company was successful in decreasing its debt by $257 million in the fourth quarter of 2020, higher than the prior guidance of $200 million. With this better-than-expected debt decline, Ovintiv reached almost halfway to attain its 2021-end target. Finally, the company is expected to generate free cash flow for the third consecutive year in 2020.

The company’s 2021 investment is expected to be $1.5 billion, which will be used to produce average annual oil and condensate worth 200,000 bbls/d. Ovintiv further anticipates WTI oil to average at $45 per barrel while natural gas to be priced at $3 per thousand cubic feet.

Ovintiv is set to report fourth-quarter 2020 results on Wednesday Feb 17, after the market closes. The current Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 52 cents per share and for revenues stands at $1.62 billion.

Company Profile

Ovintiv engages in exploration, development, production and marketing of natural gas, oil and natural gas liquids. The company holds principal assets in Anadarko Basin, located in Western and Central Oklahoma, the Permian Basin located in Western Texas and South Eastern New Mexico, Midland Basin in Texas and the Montney Basin in western Canada.

Zacks Rank & Key Picks

Ovintiv currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are DCP Midstream Partners, LP DCP, Plains Group Holdings, L.P. PAGP and Altus Midstream Company ALTM, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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