Ovintiv shuffles some fourth-quarter spending to Permian basin
The leaders of Ovintiv Inc., Denver, are diverting $50 million in fourth-quarter capital spending to the operator's Permian basin operations from the Montney to account for an Alberta gas plant being offline.
President and chief executive officer Brendan McCracken and his team told analysts and investors on Nov. 4 that the adjustment to fourth-quarter spending plans should help oil and condensate production in the Permian basin average 125,000 and 130,000 b/d this quarter, in line with the third-quarter's 127,000 b/d.
The $50 million amounts to about 9% of Ovintiv’s planned capex this quarter and will let the company further manage the unplanned outage of CSV Midstream Solutions’ Albright sour gas plant in northern Alberta, which went offline in late July. Greg Givens, Ovintiv’s chief operating officer, said the CSV team has told Ovintiv that Albright should be up and running again before yearend and that Ovintiv has been able to manage the plant’s outage so that the company is only losing out on 3,000 boe/d.
“If we think about that [capex] shift, that is really just us leaning into the flexibility of our portfolio,” Givens said on a conference call discussing Ovintiv’s third-quarter results. “The team has been doing a great job operating year to date. Our drilling performance was a little ahead of schedule so it just allowed us to accelerate some completion activity there.”
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Crescent acquires Eagle Ford acreage from Devon EnergyMaking it easier to justify spending more has been the growing efficiency of Ovintiv’s Permian basin assets. Base declines are on track to be 3% better than executives’ original plan and teams have been using AI and automation tools brought down from the Montney to run a remote operations center.
Ovintiv’s total production last quarter averaged 631,000 boe/d (32% oil and condensate) and McCracken and his team expect the fourth quarter number to be 615,000-640,000 boe/d. Teams turned in line 31 net wells in the Permian basin and 28 in the Montney. Those activities helped Ovintiv produce $680 million of free cash flow and $549 million in net income.
Looking ahead to 2027, McCracken said his team will look at adding a rig next year to the Logan Energy Corp. acreage it recently announced it plans to acquire. Even without that, he added, oil production per share should grow by 8% or more without Ovintiv spending more and demand for Canadian condensate—“we have never seen a more favorable setup”—also will drive earnings growth.
Shares of Ovintiv (Ticker: OVV) were down nearly 5% to $63.18 in early-afternoon trading Nov. 4, when crude oil was changing hands down 8% from the day before. The stock is essentially flat over the past 6 months and the company’s market value is now about $17.5 billion.
About the Author
Geert De LombaerdeGeert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
