Ovintiv Inc. (OVV) is an impartial oil and gasoline producer that explores and produces oil and pure gasoline from varied property in the USA and Canada. As a result of acquisition of Newfield Exploration in 2019, Ovintiv has grow to be one of the vital necessary upstream gamers within the North American exploration and manufacturing panorama.
Only a few years in the past, pure gasoline represented round 95% of OVV manufacturing. Nonetheless, the corporate has efficiently repositioned its asset base and switched to crude, which is extra worthwhile. A substantial a part of the corporate’s manufacturing comes from three positions in North America.
This contains Montney in British Columbia and Alberta, the Anadarko Basin in Oklahoma, and the Permian Basin in New Mexico. Its portfolio additionally contains acreage within the Bakken Shale of North Dakota, in addition to Eagle Ford in Texas. These are a number of the most cost-effective shales in North America, with substantial worthwhile drilling alternatives at present commodity costs.
Even earlier than buying Newfield Exploration, OVV already had a big asset base. However because the buy, the corporate has grown in measurement and is seeing price synergies. The truth is, the transaction added greater than 385,000 web acres within the STACK and SCOOP areas of the Anadarko Basin.
The corporate additionally has a high-end stock of high-quality, liquid-rich areas with drilled however unfinished wells. These might be put into manufacturing shortly. As well as, it has a big cushion of liquidity and may face up to low commodity costs for a very long time if needed.
Its money flows additionally profit from safety in opposition to declining oil and gasoline hedges. The corporate is hedging a stable portion of its 2021 oil and pure gasoline manufacturing at enticing costs. These hedges ought to make it attainable to attenuate the shock within the occasion of a collapse in commodity costs.
As well as, OVV has decreased its prices. It has minimize spending and is concentrating on $ 1.8 billion in price financial savings between 2021 and 2025. The discount in spending is anticipated to extend its free money move technology. The corporate additionally reported better-than-expected ends in its closing quarter.
Adjusted earnings per share got here in at $ 1.11, not solely beating estimates however nicely above a lack of 43 cents from a yr in the past. This progress is pushed by larger commodity costs and the Firm’s price discount initiatives.
Its whole manufacturing within the second quarter was 554,600 barrels of oil equal per day, greater than the 536,600 of the earlier yr. Its realized oil worth rose to $ 51.27 per barrel from $ 39.7 within the second quarter of final yr.
OVV has an general score of B, which interprets into a purchase order score in our POWR odds system. The corporate has a progress score of B as gross sales are anticipated to develop 52.5% year-over-year within the present quarter and 19.2% for the yr. Earnings are anticipated to extend 5,200% yr over yr within the present quarter and 1,328.6% for the yr.
OVV additionally has a price score of B, which isn’t shocking, with a leak P / E of three.13 and a ahead P / E of three.97. These valuation figures are extraordinarily enticing. Moreover, the corporate is undervalued by as much as 82.8% primarily based on analysts’ pricing targets.
We additionally present Momentum, Stability, Sentiment and High quality rankings for OVV, which you’ll find right here. OVV is ranked # 17 within the A-rated international oil and gasoline trade. For extra prime shares on this extremely rated trade, Click on right here.
In comparison with a few of its larger friends, OVV actually appears robust. Take Complete SA (EARLY), for instance. The corporate’s impartial score is disappointing in comparison with OVV’s purchase score, as its worth score of C. TOT can be considerably decrease in the identical trade.
One other instance is Enbridge Inc (IN B). ENB just isn’t solely rated Impartial, but it surely has a progress score of D, which is of nice concern. Identical to its C worth, the inventory additionally ranks nicely beneath the OVV within the international oil and gasoline trade. OVV is clearly the perfect inventory.
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This text was written by David Cohne, chief worth strategist for StockNews.com. David has been serving to traders discover probably the most worthwhile shares for over 20 years.
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OVV shares remained unchanged on Friday after buying and selling hours. 12 months-to-date, OVV has gained 106.11%, in comparison with an 18.83% enhance within the benchmark S&P 500 over the identical interval.
Concerning the Writer: David Cohne
David Cohne has 20 years of expertise as an funding analyst and author. He’s the chief worth strategist for StockNews.com and the writer of the POWR Worth publication. Previous to StockNews, David spent eleven years as a marketing consultant offering analysis and content material on outsourced investing to monetary companies corporations, hedge funds and on-line publications. David enjoys researching and writing about shares and markets. It takes a basic quantitative strategy in evaluating shares for readers. Following…