Denver-based Ovintiv Inc. has once again increased its production guidance for the year, following a second-quarter performance that saw output reach the high end or exceed the company’s projections across all product categories.
In the second quarter, Ovintiv reported production figures of 594,000 barrels of oil equivalent per day (boe/d), comprising 212,000 barrels per day (b/d) of oil and condensate, 92,000 b/d of other natural gas liquids (NGLs), and 1,740 million cubic feet per day (MMcfd) of natural gas. The company anticipates third-quarter production to range between 565,000 and 580,000 boe/d.
For the full year, Ovintiv has revised its production guidance upwards to 570,000-580,000 boe/d. This includes 207,000-209,000 b/d of oil and condensate and 1,660-1,690 MMcfd of natural gas, up from the original 2024 guidance of 545,000-575,000 boe/d.
Financial Performance and Capital Investments
Ovintiv reported net earnings of $340 million for the second quarter of 2024. This figure includes net gains of $77 million from risk management in revenues, before tax. Cash flow from operating activities totaled $1.02 billion, while non-GAAP cash flow was slightly higher at $1.025 billion. The company’s capital investment for the quarter was approximately $622 million, resulting in a non-GAAP free cash flow of $403 million.
For the full year, Ovintiv expects capital investments to range between $2.25 billion and $2.35 billion, reflecting its commitment to growth and expansion across its core operating areas.
Regional Production Insights
- Permian Basin: Ovintiv’s production in the Permian Basin averaged 203,000 boe/d in the second quarter, with liquids comprising 81% of this output. The company successfully brought 40 net wells online during this period. Ovintiv plans to invest between $1.35 billion and $1.45 billion in the Permian Basin in 2024, targeting the completion of 120-130 net wells.
- Montney: In the Montney formation, Ovintiv achieved an average production of 251,000 boe/d, with liquids making up 20% of this total. The company turned 33 net wells in line during the quarter. Planned investments for 2024 in Montney are projected to be between $425 million and $475 million, with an expected 60-70 net wells to be brought online.
- Uinta Basin: Ovintiv’s production in the Uinta Basin averaged 33,000 boe/d in the second quarter, with a high liquids content of 87%. The company brought seven net wells online. For 2024, Ovintiv plans to allocate $300 million to $350 million to the Uinta Basin, aiming to complete 25-30 net wells.
- Anadarko Basin: The Anadarko Basin saw average production of 104,000 boe/d in the second quarter, with liquids making up 57% of this output. No new wells were brought online during the quarter. Ovintiv has earmarked $100 million to $125 million for investment in the Anadarko Basin this year, with plans to bring on 7-10 net wells.
Strategic Outlook and Market Position
Ovintiv’s decision to revise its production guidance for the second time this year underscores its operational efficiency and strategic foresight in navigating the volatile oil and gas market. The company’s robust performance across its core basins reflects its ability to optimize production and manage investments effectively.
The increase in production guidance and the substantial capital investments highlight Ovintiv’s confidence in its asset base and operational capabilities. The company’s focus on key regions such as the Permian and Montney basins, known for their prolific production potential, positions Ovintiv well to capitalize on favorable market conditions.
Additionally, the strong financial performance, marked by significant free cash flow and prudent capital allocation, reinforces Ovintiv’s commitment to delivering value to its shareholders. The company’s strategic investments and operational excellence are likely to drive sustained growth and profitability in the coming quarters.
Conclusion
Ovintiv Inc.’s elevated production forecasts and strong second-quarter results are a testament to the company’s strategic prowess and operational efficiency. With significant capital investments planned across its core regions and a robust financial performance, Ovintiv is well-positioned to continue its growth trajectory and deliver substantial value to its stakeholders. The company’s proactive approach to managing production and investments underscores its resilience and adaptability in a dynamic market environment.
