Ovintiv Inc OVV

50%+ FCF @ YE 2023

[ROIcrusader]

Assuming $100 WTI, $10 WCS diff and gas strip pricing.

https://twitter.com/ericnuttall/status/1542575319646863366?cxt=HBwWjICw7ZGFqugqAAAA&cn=ZmxleGlibGVfcmVjcw%3D%3D&refsrc=email

[cashworx22]

This post has been removed in accordance with Community Policy

[clamlinguine]

It's a good thing we have Nuttall to show us the potential here because the OVV presentation is a mixed up, unreadable mess imo. Maybe it's just me.

[Margin321]

It is not that mixed up. It is just incomplete. They left a billion dollars on the table with their aggressive hedges. They didn't hedge anything when oil was over $120. Their 2023 projections assume oil of $100.  And oil is in 80's. Nuttal makes good case that oil price drop is temporary. And OVV will be fine - buybacks at low prices are good in long term. But all the self

[autofocus111]

@Margin "They didn't hedge anything when oil was over $120"  Appendix shows their FY23 hedges. They have 3-way options on WTI capped at ~$110 with downside protection kicking in ~$65 on ~20% of production. Natgas also 3-way averaging @ ~$8 with downside protection at ~$3.50 on ~20% of production. So they have partial hedges, but largely running naked. Looks quite reasonable to

[Margin321]

you are right, current plan is to hedge about 25% 4 quarters in advance with a new hedge for the quarter a tear away added to replace the one expiring in current quarter. Will protect them with enough cash flow to service debt and invest some maintenance capital, if there is a brief but short collapse of energy prices. That is a lot better than lopping off potential upside. 

[clamlinguine]

Companies should just sell product on the futures markets if they want certainty. Is there a reason I'm not aware of to use these collars etc.? It seems like greasing financiers to me. 

[Margin321]

I think the idea of the collars  is to  protect againt utter downside carnage that threatens financial health of the company - while not giving away everything on the upside, which is a diferent type of pain.  I am not sure how well it works. OVV and Encana before it could tech a master's class on how not to time hedges. Yet here we are printing monet and rapidly paying down