Energy Prospectus

At the time of this post OVV was trading for $43.86.

The two large transactions announced this morning are accretive to my forecast for 2025, as the net result is a ~40,000 Boepd increase in the Company's production next year. Increased revenues are offset by increases in operating expenses, interest expense and G&A.

My current valuation of OVV increases by $1 to $69/share, based on just 4.5 X annualized operating cash flow per share. Post-closing of the Montney Acquisition and Unita Basin Sale (late in December or early January), I will roll my forecast/valuation model forward a year, which will raise my valuation, since my 2025 forecast now shows operating CFPS of approximately $17.00.

Ovintiv is a large-cap that produced 592,600 Boepd in Q3 2024. My 2025 forecast is based on 630,000 Boepd.

TipRanks current price target has not yet been updated for the transactions announced this morning: "In the last 3 months, 15 ranked analysts set 12-month price targets for OVV. The average price target among the analysts is $54.67. The 15 price targets range from $46 to $68."

Ovintiv kept at Outperform at National Bank After US$2.38-Billion Property Buy; Price Target Raised to US$59.00.

TipRanks: "Gabriele Sorbara, a 5 Star analyst from Siebert Williams Shank & Co, reiterated the Buy rating on Ovintiv (OVV). The associated price target was raised to $64.00."

Gabriele Sorbara has given his Buy rating due to a combination of factors including Ovintiv’s strategic acquisitions and divestitures, which are expected to enhance the company’s financial performance. The acquisition of oil-rich Alberta Montney assets and the divestiture of Uinta Basin assets are projected to be immediately and long-term beneficial across key financial metrics. This includes an anticipated increase in free cash flow by 2025, supported by cost synergies from these transactions.
Despite potential valuation concerns due to a greater presence in the Montney, the low entry cost and potential for increased oil production are seen as favorable. The Montney assets offer a solid inventory and are being acquired under favorable conditions, with strong operational results expected. These strategic moves are reflected in the increased price target of $64, up from $60, reaffirming the Buy rating for Ovintiv.

Gabriel Daoud at TD Cowen now rates OVV a Buy with a price target of $70.00

OVV closed on Nov. 14th at $44.72 < Just 2.6 X my 2025 Operating CFPS forecast of $16.98