These are my "Quick Takes" on Ovintiv's Q2 results. I will update my forecast/valuation model this afternoon.
Second Quarter 2025 Financial and Operating Results
> The Company recorded net earnings of $307 million, or $1.18 per diluted share of common stock, including net gains on risk management in revenues of $87 million, before tax. < In line with my forecast of Adjusted Net Income of $264 million.
> Cash from operating activities was $1,013 million, Non-GAAP Cash Flow was $913 million, and capital investment totaled approximately $521 million, resulting in $392 million of Non-GAAP Free Cash Flow. < Beat my Adjusted Operating Cash Flow forecast (compare to Non-GAAP) of $886 million.
> Second quarter average total production volumes were approximately 615 MBOE/d, including 211 Mbbls/d of oil and condensate, 96 Mbbls/d of other NGLs (C2 to C4) and 1,851 MMcf/d of natural gas. < Beat my Q2 production forecast of 595,000 Boepd, including 205,870 bpd of oil and condensate and 89,250 bpd of NGLs. Actual production for Q2 was up 26,600 Boepd quarter-over-quarter, primarily due to the Paramount Acquisition that closed January 31st. OVV's production beat all of the analsyts' forecasts.
> Upstream operating expense was $3.84 per barrel of oil equivalent ("BOE"). Upstream transportation and processing costs were $7.62 per BOE. Production, mineral and other taxes were $1.31 per BOE, or 4.1% of upstream revenue. < These costs were below the midpoint of guidance on a combined basis.
> Excluding the impact of hedges, second quarter average realized prices were $63.28 per barrel for oil and condensate (99% of WTI), $18.28 per barrel for other NGLs (C2 to C4) and $2.24 per thousand cubic feet ("Mcf") for natural gas (65% of NYMEX) resulting in a total average realized price of $31.32 per BOE.
> Including the impact of hedges, the average realized prices for oil and condensate was $63.77 (100% of WTI), the average realized price for other NGLs (C2 to C4) was unchanged, and the average realized price for natural gas was $2.38 per Mcf (69% of NYMEX) resulting in a total average realized price of $31.91 per BOE. < Realized oil prices were above my forecast and realized natural gas & NGL prices were below my forecasts; basically offsetting each other.
Guidance
The Company issued its third quarter 2025 guidance and increased its full year production guidance while reducing expected capital investment. Full year production volumes are now expected to average 600 to 620 MBOE/d, with full year expected capital investment of $2.125 billion to $2.175 billion. < This is why OVV is getting some "love" today and it will get numerous price target increases.
Ovintiv (OVV) Q2 Results - July 25
Ovintiv (OVV) Q2 Results - July 25
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Ovintiv (OVV) Q2 Results - July 25
This morning Wolfe Research analyst Doug Leggate (rated 5-Stars by Tipranks) maintained a Buy rating on Ovintiv today, raising his price target to $67.00.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
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Petroleum economist
- Posts: 442
- Joined: Wed Aug 23, 2023 7:01 am
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Re: Ovintiv (OVV) Q2 Results - July 25
Ovintiv is a US/Canadian oil and producer, operating for 51% in the US (Oklahoma - Anadarko basin, Uinta basin, Texas - Permian basin) and for 49% in Canada (Alberta - Montney basin).
Summary
Ovintiv reported good Q2 results. Ovintiv is a slow growing company. Production is becoming gassier. The balance sheet is in a reasonable state, but the long-term debt needs reduction. Ovintiv is a profitable company. Q2 profits were higher than expected. PE is medium/low. Profits are robust under low oil prices. Shareholder returns are good and can increase after 2025.
In my 84 oil and gas company ranking system, Ovintiv sits in the top 25 at a good 14th position.
Production
• Ovintiv production has been virtually flat over the last six years. Production went from 558 K BoE/d (2019) to 585K BoE/d (2024).
• Ovintiv has good reserves (2.751 M BoE = 9 years of 2025 production), which combined with a RRR of 1.01 allows or some production growth.
• Q2 production (615.3 K BoE/d) was well above the Q2 outlook (585-605 K BoE/d) and Q1 (588 K BoE/d).
• The majority of the increase versus Q1 was due to the introduction of Montney assets bought from Paramount, offset by the sale of the Uinta assets to FourPoint. I had expected 610 K BoE/d.
• Q3 outlook is 610-630 K BoE/d. I expect for Q3 a production 628 K BoE/d.
• Ovintiv increased its 2025 outlook from 595-615 K BoE/d to 600-620 K BoE/d. I expect 615 K BoE/d.
• In 2026 production can increase to 641 K BoE/d, if Ovintiv will continue with its Montney development, where it has 15-20 years of drilling available.
• The Montney assets are the main growth area. As the gas content in Montney (74%) is higher than that of the Permian (20%) and the Anadarko (41% gas), the fluids will continue become gassier
• Over the last 18 months the oil share has fallen from 29.7% (Q1 2024) to 23.1% (Q2 2025).
• Q2 fluids were 23% oil, 27% condensate/NGL and 50% gas.
Balance sheet
• Ovintiv has a reasonable balance sheet.
• Q2 equity ratio (=equity/balance sheet total) was a reasonable 52.6%, slightly up from 51.4% in Q1
• Q2 long-term debt ($ 4,393 M) was flat compared to Q1 ($ 4.394 M).
• Q2 debt/EBITDA ratio on an annual basis is a reasonable 1.1. Ovintiv has stated that it targets to reduce the long-term debt to $ 4.0 B.
• The balance sheet allows for moderate shareholder returns.
Profitability
• Ovintiv is a profitable company.
• Q2 eps ($ 1.02) was down versus Q1 ($ 1.42) due to the lower oil prices, but exceeded my expectation of $ 0.90.
• Hydrocarbon prices and operating cost were close to expectation
• For 2025, with WTI at $ 65/bbl, I expect an eps of $ 6.15. The PE is a medium/low 6.8.
• The eps can rise in 2026/2027 with higher production and higher gas prices, to fall again thereafter.
• Ovintiv profits are robust under low oil prices.
Shareholder returns
• Shareholder returns are decent.
• Ovintiv has indicated it targets to returns 50% of the FCF to shareholders.
• Ovintiv pays a quarterly dividend of $ 0.30, or $ 1.20 on an annual basis. This is equivalent to a return rate of 2.9%.
• Ovintiv did not buy back shares in Q1, but started buybacks of $ 146 M in Q2. I expect buybacks to continue at $ 170 M per quarter in Q3 and Q4.
• Total shareholder returns in 2025 equate to a decent 8.1%.
• After 2025 returns can increase to 11-12% (see chart below.
• Returns are robust under low oil prices.
Conclusions
Ovintiv is a slow growing company. Ovintiv reported good Q2 results. Production is growing and becoming gassier. The balance sheet is in a reasonable state, but the long-term debt needs reduction. Ovintiv is a profitable company, also under low oil prices. Q2 profits were higher than expected. PE is medium/low. Shareholder returns are good and can increase after 2025.
In my 84 oil and gas company ranking system, Ovintiv sits in the top 25 at a good 14th position.
Summary
Ovintiv reported good Q2 results. Ovintiv is a slow growing company. Production is becoming gassier. The balance sheet is in a reasonable state, but the long-term debt needs reduction. Ovintiv is a profitable company. Q2 profits were higher than expected. PE is medium/low. Profits are robust under low oil prices. Shareholder returns are good and can increase after 2025.
In my 84 oil and gas company ranking system, Ovintiv sits in the top 25 at a good 14th position.
Production
• Ovintiv production has been virtually flat over the last six years. Production went from 558 K BoE/d (2019) to 585K BoE/d (2024).
• Ovintiv has good reserves (2.751 M BoE = 9 years of 2025 production), which combined with a RRR of 1.01 allows or some production growth.
• Q2 production (615.3 K BoE/d) was well above the Q2 outlook (585-605 K BoE/d) and Q1 (588 K BoE/d).
• The majority of the increase versus Q1 was due to the introduction of Montney assets bought from Paramount, offset by the sale of the Uinta assets to FourPoint. I had expected 610 K BoE/d.
• Q3 outlook is 610-630 K BoE/d. I expect for Q3 a production 628 K BoE/d.
• Ovintiv increased its 2025 outlook from 595-615 K BoE/d to 600-620 K BoE/d. I expect 615 K BoE/d.
• In 2026 production can increase to 641 K BoE/d, if Ovintiv will continue with its Montney development, where it has 15-20 years of drilling available.
• The Montney assets are the main growth area. As the gas content in Montney (74%) is higher than that of the Permian (20%) and the Anadarko (41% gas), the fluids will continue become gassier
• Over the last 18 months the oil share has fallen from 29.7% (Q1 2024) to 23.1% (Q2 2025).
- Ovintiv - Q2 production.jpg (83.29 KiB) Viewed 114 times
Balance sheet
• Ovintiv has a reasonable balance sheet.
• Q2 equity ratio (=equity/balance sheet total) was a reasonable 52.6%, slightly up from 51.4% in Q1
• Q2 long-term debt ($ 4,393 M) was flat compared to Q1 ($ 4.394 M).
• Q2 debt/EBITDA ratio on an annual basis is a reasonable 1.1. Ovintiv has stated that it targets to reduce the long-term debt to $ 4.0 B.
• The balance sheet allows for moderate shareholder returns.
Profitability
• Ovintiv is a profitable company.
• Q2 eps ($ 1.02) was down versus Q1 ($ 1.42) due to the lower oil prices, but exceeded my expectation of $ 0.90.
• Hydrocarbon prices and operating cost were close to expectation
• For 2025, with WTI at $ 65/bbl, I expect an eps of $ 6.15. The PE is a medium/low 6.8.
• The eps can rise in 2026/2027 with higher production and higher gas prices, to fall again thereafter.
• Ovintiv profits are robust under low oil prices.
- Ovintiv - Q2 profit.jpg (55.48 KiB) Viewed 114 times
• Shareholder returns are decent.
• Ovintiv has indicated it targets to returns 50% of the FCF to shareholders.
• Ovintiv pays a quarterly dividend of $ 0.30, or $ 1.20 on an annual basis. This is equivalent to a return rate of 2.9%.
• Ovintiv did not buy back shares in Q1, but started buybacks of $ 146 M in Q2. I expect buybacks to continue at $ 170 M per quarter in Q3 and Q4.
• Total shareholder returns in 2025 equate to a decent 8.1%.
• After 2025 returns can increase to 11-12% (see chart below.
- Ovintiv - Q2 returns.jpg (30 KiB) Viewed 114 times
Conclusions
Ovintiv is a slow growing company. Ovintiv reported good Q2 results. Production is growing and becoming gassier. The balance sheet is in a reasonable state, but the long-term debt needs reduction. Ovintiv is a profitable company, also under low oil prices. Q2 profits were higher than expected. PE is medium/low. Shareholder returns are good and can increase after 2025.
In my 84 oil and gas company ranking system, Ovintiv sits in the top 25 at a good 14th position.
Harry