Ovintiv (OVV) Valuation Update - July 31

[dan_s]

I have updated my forecast/valuation model for Ovintiv's Q2 results that beat my forecast and their updated guidance for 2H 2024.

My valuation increases by $2 to $72/share. < I have gained more confidence in my model, so I raised my valuation multiple from 4.5 to 4.6 X annualized operating cash flow. I do believe that Ovintiv will beat their increased production guidance.

My 2025 forecast is based on production of 585,000 Boepd, which now looks conservative.

Ovintiv is on pace to generate over $1.8 billion of free cash flow in 2024. They already have a fairly strong balance sheet, so more dividends and stock buybacks can be expected.

The only negative is that the Company's production mix is a bit too "gassy": 48.8% natural gas, 35.7% oil & plant condensate and 15.5% NGLs. This year's revenues are heavily weighted to the sale of liquids.