Ovintiv Inc. (OVV) Update - Feb 6

[dan_s]

EnCana has change its name to Ovintiv and moved the headquarters to Denver. Part of the conversion was a 1 for 5 reverse stock split.

At the time of this post OVV is trading for $16.78.

Last week (January 24-28) nine Wall Street firms published updated reports on the company. Their valuations range from $20 to $35. < My valuation is higher because I believe a company of this quality should be trading for much more than 2X operating cash flow per share. 2019 results should be $1.60 to $1.70 EPS and approximately $11.00 operating cash flow per share.
Cash flow from operations s/b near $800 million in Q4 2019.

Highlights:
> Production s/b up ~61% year-over-year in 2019, primarily because of the merger with Newfield Exploration that closed 2-13-2019.
> My forecast/valuation model assumes ~9% YOY production growth in 2020; fully funded by operating cash flow.
> Production is approximately 607,000 Boepd now (31% crude oil, 25% NGLs and 44% natural gas). ~80% of Q4 revenues are from liquids sales.
> More than 50% of their crude oil and natural gas production in 2020 is hedged at $54.83/bbl and $2.65/mcf.

My updated forecast/valuation model will be posted to the EPG website this afternoon.

[cmm3rd]

Capital One Starts Ovintiv at Equal-Weight With $25 Price Target
MT NEWSWIRES 12:28 PM ET 2/7/2020

[dan_s]

OVV is a very large company with over 600,000 Boepd of production. The only negative is their production mix. It is a bit too "gassy", but it will still generate a lot of free cash flow from operations this year. Total cash flow from operations s/b over $2.9 Billion this year. Read our profile on Encana that can be found under the Sweet 16 tab.