Oil, condensate and natural gas producer Ovintiv has agreed to sell its Eagle Ford assets for $880 million to Validus Energy. Including this transaction, Ovintive has already clocked $1.1 billion in asset sales this year.
Ovintiv (OVV) CEO, Doug Suttles said, “Today’s Eagle Ford announcement continues our track record of unlocking value from non-core assets. Proceeds will significantly accelerate the achievement of our debt reduction target and allow us to pay off near term debt maturities with cash on hand.”
Suttles further added, “Our 2021 outlook is strong and we expect to generate significant free cash flow for the fourth consecutive year.”
Ovintiv sees its debt falling below $5 billion by the end of 2021 and hopes to achieve its target of $4.5 billion debt in 1H 2022. This expectation is based on WTI oil at $50 per barrel and NYMEX gas at $2.75.
Furthermore, Ovintiv sees winter storms in Texas and Oklahoma impacting production volumes for the first quarter. It expects 1Q crude and condensate volumes to average 196-200 Mbbls per day and production for March to average 205 Mbbls per day. (See Ovintiv stock analysis on TipRanks)
On March 23, Citigroup analyst Brian Downey reiterated a Hold rating on the stock and increased his price target to $28 (17.6% upside potential) from $18. Commenting in the exploration and production sector, Downey noted “Risks must be monitored.”
Turning to rest of the Street, the stock has a Hold consensus rating alongside an average analyst price target of $26.62 (11.8% upside potential) based on 3 Buys, 8 Holds and 1 Sell. Shares have rallied 729.6% over the past year.
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