Ovintiv Inc. (OVV) Valuation Update - Aug 6

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Ovintiv Inc. (OVV) Valuation Update - Aug 6

Post by dan_s »

OVV closed at $47.82 on August 5.

TipRanks: "In the last 3 months, 12 ranked analysts set 12-month price targets for OVV. The average price target among the analysts is $68.00. The 12 price targets range from $51 to $100."

I have increased my current valuation by $3 to $92.00 per share.

Ovintiv (formerly named EnCana) is a large-cap upstream company that deserves to be trading at much more than 2.7 X operating cash flow per share.
MY Operating CFPS forecasts
2021A = $12.29
2022E = $17.90 < TipRank's consensus is $18.23
2023E = $25.51 < TipRank's consensus is $23.86

Why?
> In 1H 2022 the Company generated $2,242 million of operating cash flow and they should come close to $4.6 billion of operating cash flow this year.
> Assuming they spend the high end of the their capex budget range ($1.8 billion) this Company should generate $2.8 billion of free cash flow this year.
> From Q2 Ovintiv's production should ramp up by 20,000 Boepd to a 2022 exit rate of 520,000 Boepd.
> If WTI averages $100/bbl and HH ngas averages $5/MMBtu, Ovintiv should generate over $6.3 billion of operating cash flow and over $4 billion of FCF in 2023.
> Look for higher dividends and aggressive stock buybacks to draw more attention.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Ovintiv Inc. (OVV) Valuation Update - Aug 6

Post by dan_s »

Note this morning from Neal Dingman at Truist Financial

Ovintiv Inc. (OVV, $45.63, Buy) - More Active Role Coupled with High Prices Drive Strong Cash Flow
Ovintiv has made strides in all facets of their operations over the past quarters resulting in notably improved margins. The company highlighted improvement in most segments from D&C to marketing, which helped drive average realized commodity price improvement up significantly in the past year. Further OVV has been successful at blocking up existing upstream assets and enhancing market access such as in the Montney where incremental takeaway was added directly to Chicago. - Neal Dingmann

Neal's price target is $77.00
Dan Steffens
Energy Prospectus Group
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