Opinions Greg Newman
OvintivOVV.TOWEAK BUYMay 30, 2025
Greg NewmanStock price when the opinion was issued
As of May 29, 2026. Market Open.
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10-15 years of drilling inventory in the Permian -- fine, but not great. It's more about the Montney exposure. Got a great price on NVA last year. Increased size should attract more institutional interest. Could see further M&A in the Montney this year.
At $80 oil, trading at 4x cashflow for 2026 and 3.9x for 2027. Really juicy FCF yield of 12-13% for this year and 15% for 2027. Sold non-core assets, paid down debt. Now 75% of FCF is returned to shareholders mostly via share buybacks.
A 6x multiple is not unreasonable, which would give 50% upside at today's oil price. Yield is 1.96%.
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Premium contentWe reiterate OVV, with production assets in the prolific Montney, Permian and Anadarko basins, as a TOP PICK. Their business is modelled on $55 WTI and $2.75 /mmbtu natural gas. They are generating $1.65 billion in free cash flow. It trades at 19x earnings and 1.1x book. They are building cash reserves while debt is retired and shares bought back. We recommend trailing up the stop (from $47.00) to $53.00, looking to achieve $74.50 -- upside potential of 25%. Yield 2.7%
(Analysts’ price target is $74.52)Premium contentOVV is generating over a $1 billion in cash flow, allowing the company to buyback shares, retire debt and still see cash reserves grow according to recently reported earnings. The company continues to integrate assets into their prolific Montney portfolio. It trades at book value and 19x earnings. Its dividend has been growing at over 25% annually over the past 5 years. We recommend setting a stop-loss at $47, looking to achieve $74 -- upside potential of 28%. Yield 2.8%
(Analysts’ price target is $74.55)They refocused operations on the Montney and are pushing strong into the US (Utah, the Permian Basis). It's been rangebound like all energy stocks since 2022, but the free cash-flow yield is a high 15%. They have quality assets, but are in no-man's land (changing the company name and pushing in the US) and not a focus for Canadian energy investor and lacks the scale of US peers. That said, is a good operator run by a good CEO. Not his preferred energy name.
Jamie Murray As a predictive question it is of course difficult. OVV is quite cheap and producing nice free cash flow. Positive momentum has returned to the sector. It has room for further dividend hikes. We would be comfortable holding for a while.
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Premium contentPremium contentOVV holds highly productive assets in the Montney, Anadarko and Permian basins. They have worked hard to optimize assets following the acquisition of Newfield in 2019. We like that it has maintained cash reserves while reducing debt and it trades under 2x book value. The dividend is backed by a payout ratio under 10% of cash flow. We recommend placing a stop-loss at $49, looking to achieve $81 -- upside potential of 29%. Yield 2.1%
(Analysts’ price target is $81.05)
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The former Encanna moved to the US. It was a disappointment to the market. During the pandemic they decided to move it to the US from where the new CEO was managing the assets. See his top picks today. It would be okay to own this as a short term play.
Natural gas (59%) play in the US. Went off the radar of Canadian investors. Good deal here. Q1 free cashflow beat by 16%, lower operating expenses, modestly higher liquids. Buybacks. At 3.8x, cheaper than peers at 5.5x. Decent production, flat cashflow per share. Balance sheet a bit more indebted than peers.