US Shale Producer Ovintiv Reports Q4 Net Loss
US shale producer Ovintiv (formerly Canada’s Encana) said February 17 it had a pre-tax net loss in Q4 2020 of $642mn, compared to a Q4 2019 pre-tax net loss of $68mn. Net loss after tax was $614mn.
For full-year 2020, the company reported a pre-tax net loss of $5.7bn, largely reflecting non-cash impairments on lower reserve valuations totaling $5.58bn, taken throughout the year. In Q1 2020, the impairment was $277mn, in Q2 $3.25bn, in Q3 $1.34bn and in Q4 $717mn.
Operating earnings (Ebitda) in Q4 declined to $183mn from $210mn and for the full year fell to $91mn from $860mn.
“We achieved outstanding financial, operating and environmental results in 2020,” CEO Doug Suttles said. “Through this combination, we ‘beat our beat’ in the fourth quarter with lower capital investments and very strong cash flows.”
Cash flow from operations slipped to $692mn in Q4 from $815mn a year earlier, while full-year cash flow fell to $1.93bn from $2.93bn in 2019.
Total production in the fourth quarter of 2020 averaged 557,200 barrels of oil equivalent (boe)/day, down from 592,600 boe/day in the comparable 2019 period. Natural gas production fell to 1.56bn ft3/day from 1.62bn ft3/day, while quarterly crude oil and natural gas liquids production fell to 297,400 b/d from 322,000 b/d.
Full-year production from Ovintiv's Permian assets in the US averaged 109,000 boe/day (81% liquids), while Anadarko basin production averaged 144,000 boe/day (62% liquids). In Canada, its Montney assets produced 204,000 boe/day (75% natural gas).
Alongside its earnings report, Ovintiv also announced that it had sold its Duvernay shale assets in Canada for $263mn, including about $12mn in contingency payments based on future commodity prices, in a transaction expected to close in Q2 2021. In the fourth quarter last year, the Duvernay assets produced about 10,000 boe/day (57% natural gas).
The assets are what Ovintiv retained after it ended an eight-year joint venture last September with PetroChina Canada.