Ovintiv (OVV) Valuation Update - Mar 18

[dan_s]

At the time of this post OVV was trading at $50.69 per share.

I finished reviewing the updated profile for Ovintiv this morning. My current valuation is $65.00, but I think a company of this size (605,267 Boepd production in Q4) deserves a much higher valuation multiple than the 4X annualized operating CFPS than what I'm using.

It is a bit "gassy", but that should turn from a negative to a positive by year-end. My 2024 forecast is based on their realized ngas price being $2.12/mcf net of differentials and cash settlements on their hedges. Their net realized ngas price was $2.81/mcf in 2023.

This is what I like most:
Inventory Renewal / “Running Room”
"Since 2021, Ovintiv has added approximately 1,650 net premium drilling locations to its inventory through the combination of the Permian acquisition in 2023, low-cost strategic bolt-on transactions and its organic inventory appraisal and assessment programs. This represents an addition of more than seven years of drilling inventory based on the number of wells the Company expects to drill in 2024. Approximately two thirds of the inventory additions, or about 1,100 net locations, are located in the Permian."

My updated profile will be posted to the EPG website this afternoon.