Ovintiv's Cash Flows Exceed Our Expectations

No-moat Ovintiv, formerly Encana, reported third-quarter results that exceeded our expectations. The company generated adjusted cash flow from operations of $398 million, a substantial increase from $304 million in the second quarter due to higher commodity prices. The outperformance in cash flow was driven by better-than-expected oil and gas pricing, which was partially offset by higher-than-expected cash costs and lower-than-expected production levels. Cash costs increased sequentially to $11.77 a barrel from $11.23 in the second quarter. The company’s third-quarter production averaged 510 thousand barrels of oil equivalent per day with 186 mboe/d from crude oil and plant condensate. Production decreased sequentially from 536.6 mboe/d due to voluntary shut-ins.