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Ovintiv Inc. has reported $406 million in net earnings for the third quarter and increased expected production for the year to 550–560 million barrels of oil equivalent per day (MMboepd), encouraged by a surge in contributing wells in the U.S. Permian Basin.
The North American exploration and production company averaged 572,000 boepd in output during the July–September quarter. While that was down by 1,000 boepd from the prior three-month period, Ovintiv said in a press release, “Full year production guidance was increased due to strong well productivity across the portfolio and faster than expected integration of recently acquired Permian assets”.
Net sales wells rose to 83 from 22 quarter on quarter in the Permian. Denver, Colorado-headquartered Ovintiv now expects to turn in line 170–180 wells net in the Permian for full-year 2023, planning to invest about $1.43–1.47 billion.
On June 12 Ovintiv completed the acquisition of around 1,050 net 10,000-foot well locations in the Permian Midland sub-basin. The new assets add approximately 65,000 net acres of mostly undeveloped land next to Ovintiv’s existing Permian operations, according to Ovintiv.
“The company has acquired substantially all the leasehold interest and related assets of Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources, which are portfolio companies of funds managed by EnCap Investments L.P., in a cash and stock transaction valued at $4.275 billion”, it said in a news release at the time.
But at the same time Ovintiv also sold its lower-producing assets in the Williston Basin Bakken Formation to the same company from which it purchased the new Permian assets.
Last year Ovintiv’s Permian production averaged about 62,700 barrels per day (bpd) of oil, about 29,400 bpd of natural gas liquids (NGLs) and about 149 million cubic feet per day (MMcfpd) of natural gas. Its Bakken production in 2022 meanwhile averaged about 15,300 bpd of oil, about 8,200 bpd of NGLs and about 36 MMcfpd of natural gas, according to Ovintiv’s annual report February 27.
Ovintiv’s total production last year was 510 MMboepd on average. Its latest guidance exceeds that by 40 MMboepd at the lower end of the range.
During the third quarter of 2023, Ovintiv generated $906 million in cash from operating activities, compared to $834 million in capital expenditure, as production across all products exceeded guidance.
While it has now tightened its full-year capital guidance range to $2.75–$2.79 billion, Ovintiv earlier announced it was pursuing a further one-year buyback program for 26,734,819 common shares starting October 2023. “The number of shares authorized for purchase represents 10 percent of Ovintiv’s public float as of September 21, 2023, as calculated pursuant to TSX [Toronto Stock Exchange] rules”, it said in a news release September 26. Ovintiv, which also has operations in Canada, trades in the stock market in New York and Toronto.
Ovintiv returned about $127 million in dividends and share repurchases in the third quarter of 2023.
On November 7 it declared a quarterly dividend of $0.3 per common unit for shareholders on record as of December 15, compared to third-quarter earnings per common share of $1.47 diluted.
Ovintiv exited the third quarter with $3.1 billion in liquidity, including $3.15 billion in available credit facilities and $3 million in cash and cash equivalents. Its total current liabilities meanwhile stood at $3.54 billion.
To contact the author, email jov.onsat@rigzone.com
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