Ovintiv Inc. (OVV) Q2 Results - July 29

[dan_s]

Second Quarter 2020 Financial and Operating Results

The Company recorded a net loss in the second quarter of $4.4 billion, or $16.87 per share of common stock. Results were impacted by the following items:

A non-cash ceiling test impairment of $3,250 million, before-tax, primarily related to the decline in 12-month average trailing commodity prices which reduced SEC proved reserves.
A non-cash charge of $568 million related to a deferred tax asset valuation allowance.
A non-cash unrealized loss on risk management of $679 million, before-tax, related to the mark-to-market value of derivative positions.
A restructuring charge of $81 million, before-tax, related to a 25% reduction in Ovintiv's workforce as staffing levels were balanced with planned activity levels.

Excluding these and other items, the Company reported a non-GAAP operating loss of $111 million. < Compares to my forecast of a $133 million loss.
Cash from operating activities was $117 million and non-GAAP cash flow was $304 million. < Compares to my forecast of $299 million.
Cash flow was impacted by the $81 million restructuring charge mentioned above.

Ovintiv delivered higher than expected production during the quarter and continued to show significant reductions in costs. Capital investment levels were below the mid-point of the Company's previous guidance.

Total average production for the second quarter was nearly 537 thousand barrels of oil equivalent per day (MBOE/d). < Compares to my forecast of 530 thousand BOE/day.
Crude and condensate production averaged 198 Mbbls/d. In response to low oil prices, the Company voluntarily shut-in, delayed or curtailed approximately 32 MBOE/d, or 18 Mbbls/d of crude and condensate during the quarter. Substantially all shut-in volumes are now back on-line.

Total Costs of $11.23 per BOE were nearly 8% lower when compared to the first quarter of 2020.

Second quarter capital investments were $252 million and nearly 70% below first quarter 2020 investment levels. The Company moved rapidly from its March 2020 operated rig count of 23 rigs to seven rigs by mid-May. Completion activities were halted across the business during the quarter.

[dan_s]

I've updated my forecast/valuation model for OVV. First Call's target price of $15.35 is slightly below my valuation.