Ovintiv's Q4 Earnings Surpass Estimates and Revenues Miss

Core Viewpoint - Ovintiv Inc. reported fourth-quarter 2024 adjusted earnings per share of $1.35, exceeding the Zacks Consensus Estimate of$1.11, driven by better-than-expected oil production volumes, although the earnings decreased from $2.35 in the previous year due to lower commodity prices and increased expenses [1][2]. Financial Performance - Total revenues for the fourth quarter were$2.2 billion, a decrease of 30.9% from the previous year and missing the Zacks Consensus Estimate by 5.6% [2]. - Total expenses increased to $2.2 billion from$2 billion in the prior year, surpassing the estimate of $1.8 billion [9]. - Cash from operating activities was$1 billion, down from $1.4 billion year-over-year [9]. - The company generated a non-GAAP free cash flow of$1,004 million in the reported quarter [10]. Production and Prices - Total production in the fourth quarter was 579,900 barrels of oil equivalent per day (BOE/d), down from 605,200 BOE/d in the prior year and missing the estimate of 581,600 BOE/d [6]. - Natural gas production increased to 1,680 million cubic feet per day (MMcf/d) from 1,645 MMcf/d year-over-year, but fell short of the estimate of 1,704.3 MMcf/d [6]. - Realized natural gas price was $2.42 per thousand cubic feet, down from$2.65 in the previous year, but exceeded the estimate of $1.89 [7]. - Realized oil price decreased to$67.93 per barrel from $76.64 in the fourth quarter of 2023, missing the estimate of$69.20 [8]. Shareholder Value and Capital Management - The company distributed approximately $913 million to shareholders in 2024, including$597 million in share buybacks and $316 million in base dividend payments [4]. - A quarterly dividend of 30 cents per share was declared, payable on March 31, 2025 [3]. Strategic Moves - Ovintiv optimized its portfolio by acquiring Montney assets for$2.3 billion and divesting Uinta assets for $2 billion, resulting in a$323 million decrease in non-GAAP net debt [5]. - The company plans to invest $1.2-$1.3 billion in the Permian Basin in 2025, targeting the completion of 130 to 140 net new wells [12]. - In Montney, Ovintiv plans to invest $575-$625 million in 2025 to bring 75-85 net wells into production [13]. - For the Anadarko Basin, the company intends to invest between $300 million and$325 million in 2025, targeting 25 to 35 net new wells [14]. Guidance - Ovintiv expects capital expenditure of $600-$650 million for Q1 2025 and $2.15 billion to$2.25 billion for the full year [15]. - Total production volumes are anticipated to average between 575,000 and 595,000 barrels per day in Q1 and between 595,000 and 615,000 barrels per day for the full year [15]. - The company predicts a temporary reduction in production of about 3,000 barrels per day due to recent asset changes but expects production to stabilize in Q2 [17]. - A temporary pause on the share buyback program will redirect approximately $368 million toward debt reduction by the end of Q1 2025, with plans to resume buybacks in Q2 2025 [18].