01—Abstract
Summary
Summary of the 10-Q filed May 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Ovintiv Inc. reported first-quarter 2024 net earnings of $338 milliona, or $1.25 basic per share, down from $487 million in the first quarter of 2023.
Total revenues were $2,352 millionb versus $2,551 million a year earlier, reflecting lower product and service revenues of $2,387 million, which were pressured by a $322 million decline from lower realized natural gas prices. Cash from operating activities was $659 million, and Non-GAAP Cash Flow was $1,035 million. Capital expenditures were $591 million, in line with the first-quarter guidance range of $580 million to $620 million, and the company reiterated its full-year 2024 capital guidance of $2,200 million to $2,400 million.
Production rose to 573.8 MBOE/d, up 12 percent year over year, driven mainly by the Permian assets acquired in June 2023. Upstream DD&A increased to $566 millionc from $364 million, and administrative expense rose to $102 million. Shareholder returns continued, with 5.4 million shares repurchased for approximately $250 million and dividends of $80 million paid.
Balance sheet metrics included long-term debt of $6,198 milliond, shareholders' equity of $10,262 million, and total liquidity of approximately $3.0 billion. A subsequent event disclosed that Ovintiv resolved a dispute over previously divested legacy assets and expects to recognize an aggregate gain of approximately $150 million later in 2024. Management also updated full-year 2024 total production guidance to 560.0 to 575.0 MBOE/d and expects upstream transportation and processing costs of approximately $7.50 to $8.00 per BOE.
02—Key points
Key Highlights
- Net earnings of $338 million ($1.25 basic EPS) compared with $487 million ($1.99 basic EPS) in Q1 2023.
- Total revenues of $2,352 million versus $2,551 million; product and service revenues were $2,387 million.
- Cash from operating activities of $659 million; Non-GAAP Cash Flow of $1,035 million.
- Production averaged 573.8 MBOE/d, up 12 percent year over year, mainly from Permian assets acquired in Q2 2023.
- Capital expenditures of $591 million; full-year 2024 capital guidance of $2,200 million to $2,400 million.
- Repurchased about 5.4 million shares for roughly $250 million and paid $80 million in dividends ($0.30 per share).
- Subsequent event: resolved a legacy asset disposition dispute, with an expected aggregate gain of approximately $150 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 7, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $2.35B$2.55B | −7.8% |
| Operating Expenses | $1.86B$1.87B | −0.8% |
| Operating Income | $494.00M$678.00M | −27.1% |
| Interest Expense | $98.00M$71.00M | +38.0% |
| Net Income | $338.00M$487.00M | −30.6% |
| EPS (Basic) | $1.25$1.99 | −37.2% |
| EPS (Diluted) | $1.24$1.97 | −37.1% |
| Shares Outstanding (Basic) | 269.70M244.30M | +10.4% |
| Shares Outstanding (Diluted) | 272.30M247.70M | +9.9% |
05—Questions
Frequently Asked Questions
Why did net earnings decline year over year?
Net earnings fell to $338 million from $487 million, mainly because natural gas realized prices dropped 49 percent, reducing upstream product revenues by $322 million on a price basis. Higher DD&A of $566 million (versus $364 million), a $44 million increase in administrative expense, and losses on risk management of $54 million also weighed on results, partly offset by production growth and lower purchased product costs.
How is Ovintiv funding its capital program and shareholder returns?
In Q1 2024 Ovintiv funded operations primarily from $659 million of operating cash flow and $461 million of net revolving debt issuance. Long-term debt including the current portion rose to $6,198 million from $5,737 million at year-end 2023. Total liquidity was approximately $3.0 billion, and the company stated it was in compliance with its financial covenants.
What is the outlook for 2024 production and costs?
The company updated its full-year 2024 total production guidance to 560.0 to 575.0 MBOE/d, including natural gas of approximately 1,600 to 1,650 MMcf/d. It is on track for upstream transportation and processing costs of about $7.50 to $8.00 per BOE and operating expenses of about $4.25 to $4.75 per BOE.
What is the $150 million subsequent event?
After quarter end, Ovintiv resolved a dispute related to the previous disposition of certain legacy assets. The company expects to receive proceeds later in 2024 and will then recognize an aggregate gain of approximately $150 million within other (gains) losses.
What did the company say about its Permian acquisition?
The Permian Acquisition, completed June 12, 2023, added approximately 1,050 net well locations and 65,000 net acres. The filing notes that Permian assets drove higher oil volumes (47.6 Mbbls/d of the 43.1 Mbbls/d total increase, net of divestitures) and higher operating and DD&A costs in the first quarter of 2024.
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