Ovintiv Misses Our Cash Flow Expectations

No-moat Ovintiv, formerly Encana, reported first-quarter results that fell short of our expectations. The company generated adjusted cash flow from operations of $566 million, which fell substantially from $815 million in the fourth quarter due to lower commodity prices. Lower production levels were the main culprit for the lower-than-expected cash flow. The company’s production averaged 571.3 thousand barrels of oil equivalent per day with 215.2 mboe/d from crude oil and plant condensate. Production decreased sequentially from 592.6 mboe/d. Lower production levels were partially offset by higher-than-expected realized pricing and lower-than-expected cash costs. Cash costs declined to $12.17/bbl from $13.44/bbl in the year-ago quarter and slightly below our $12.60/bbl forecasts.