Ovintiv slips in Q1 on hedging losses
Denver-based Ovintiv (formerly Canada’s Encana) said April 28 it had pre-tax earnings of $133mn in Q1 2021, down from $561mn in the comparable period a year ago.
Adjusted net earnings (Ebitda), however, improved to $412mn from $27mn in Q1 2020, a period which saw the company record impairments of $277mn and a non-operating foreign exchange loss of $104mn. Hedging losses in Q1 2021 amounted to $156mn on a pre-tax basis.
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“We are focused on generating free cash flow and delivering quality returns,” CEO Doug Suttles said. “Our priorities today are clear – reduce debt, maintain scale, drive efficiencies, and return cash to shareholders. Our progress is evident across the business but highlighted by the fact we’ve reduced total debt by almost $1 billion in the last three quarters. 2021 is expected to be our fourth consecutive year of free cash flow generation.”
Cash from operating activities increased to $827mn from $566mn, while free cash flow (after capital expenditures of $350mn), increased to $540mn after settling at a loss of $255mn on capital expenditures of $790mn in Q1 2020.
Total production in Q1 2021 averaged 538,300 barrels of oil equivalent (boe)/day, down from 571,300 boe/day a year ago, largely reflecting “severe” winter weather in large parts of its operating basins. Ovintiv added, however, that it recovered quickly from February’s Winter Storm Uri in Texas and Oklahoma, with production staying on longer at the start of the storm and recovering sooner after it passed.
Natural gas production increased modestly year-over-year, to 1.58bn ft3/day from 1.57bn ft3/day, but liquids production fell to 275,600 boe/day from 309,800 boe/day in Q1 2020.