Ovintiv sees mixed results in Q4, full year earnings
Denver-based producer Ovintiv said February 27 it had higher adjusted earnings in Q4 2023 and for the full year, but net earnings were essentially flat in the quarter and weaker for all of 2023.
Adjusted earnings – which Ovintiv defines as net earnings excluding non-cash items – in Q4 increased to $647mn from $228mn in Q4 2022 and to $1.8bn for all of 2023 versus $1.77bn in 2022.
Net earnings in the final quarter were flat, at $1.07bn against $1.1bn in Q4 2022, but full year net earnings in 2023 fell to $2.5bn from $3.6bn in 2022.
“Our focus on operational excellence led to multiple quarters of positive guidance revisions, as we repeatedly outperformed our production targets without increasing spending,” Ovintiv CEO Brendan McCracken said. “From volumes, to capital, to per unit costs, we beat our 2023 targets and enhanced the capital efficiency of the business.”
Free cash flow was slightly higher in Q4 2023 versus Q4 2022, at $577mn compared to $537mn, but sharply lower in 2023 from 2022, falling to $1.15bn from $2.28bn.
Total production averaged 605,200 barrels of oil equivalent (boe)/day in Q4, up year-on-year from 523,600 boe/day, while full-year production averaged 565,600 boe/day, up from 510,000 boe/day in 2022.
Since rebranding from Encana and moving its domicile from Calgary to Denver in 2020, Ovintive has increasingly moved from a focus on natural gas – Encana was originally created as a natural gas pure play investment – to focus on liquids. In 2023, crude oil, condensate and natural gas liquids accounted for 51.6% of total production.
Natural gas production in Q4 2023 increased to 1.64bn ft3/day from 1.56bn ft3/day in the comparable period a year earlier, and averaged 1.64bn ft3/day for all of 2023, up from 1.49bn ft3/day in 2022.
Production from the Permian Basin averaged 220,000 boe/day in Q4 2023, 84% of which was liquids. Ovintiv expects to invest $1.35-$1.45bn in the basin this year, with plans to bring on between 120 and 130 net wells.
Utah’s Uinta Basin provided 34,000 boe/day of Q4 production, 86% of which was liquids. Ovintiv expects to spend $300-$350mn there this year to add 25-30 net wells.
In the Anadarko Basin, which spans parts of Oklahoma, Texas, Kansas and Colorado, Ovintiv produced 113,000 boe/day (59% liquids) in the fourth quarter last year. Expenditures in 2024 are expected to be $100-$125mn, with seven to 10 net wells to be added.
And in the Montney – Ovintiv’s core Canadian play – production averaged 234,000 boe/day in Q4, with natural gas accounting for 78% of the total. The company expects 2024 expenditures in the Montney of $425-$475mn, with 60-70 net wells planned.
Ovintiv’s aggressive risk management programmes, which generated an unrealised gain in Q4 2023 of $326mn, yielded an average realised natural gas price in the quarter of $2.65/’000 ft3, up from $2.49/’000 ft3 in Q4 2023. For comparison purposes, NYMEX averaged $2.88/mnBtu in Q4 2023, down sharply from $6.26/mnBtu in Q4 2022.