OVV
OVV
Hold 2026-03-30
Model
DCF
Price at Report
$62.08
Base IV
$55.38
Bear IV
$35.54
Bull IV
$79.34
Entry Zone: 37-51 · Sell Above: 67
Bore Family Office
Valuation Report — Ovintiv (OVV) • March 30, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 9.07% • Current Price: $62.08
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Ovintiv (formerly Encana) is a North American E&P company with ~580,000 BOE/day of production across five multi-basin positions: Permian (Texas), Anadarko (Oklahoma), Montney (British Columbia/Alberta), Uinta (Utah), and Clearwater (Alberta). The company has been executing a capital-disciplined strategy since 2020, reducing debt from ~$9.5B to ~$6.4B while maintaining production volumes and returning capital via dividends and buybacks.
OVV trades at a discount to US peers (Pioneer, Devon, Coterra) despite comparable operational metrics, reflecting a lingering "Canadian company" discount from its Encana days and lower liquidity vs. larger peers. The company generates ~$1.5B in normalized FCF at $70 WTI / $2.50 Henry Hub, providing a ~10% FCF yield at the current stock price — but upside is capped by commodity price uncertainty and the fact that OVV is currently trading ABOVE the analyst consensus price target.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Permian Basin | $2,100M | 24% | +12.0% | — | Fast-growing; ~175 KBOE/day; Midland & Delaware |
| Montney | $1,900M | 21% | +8.0% | — | Canadian nat gas/condensate; low-cost, long-life |
| Anadarko Basin | $1,600M | 18% | -4.0% | — | SCOOP/STACK Oklahoma; maturing |
| Uinta Basin | $800M | 9% | +20.0% | — | Acquired 2023; high-BTU waxy crude |
| Clearwater | $700M | 8% | +18.0% | — | Alberta heavy oil; low-cost |
| Other / Marketing | $1,808M | 20% | -5.0% | — | Third-party marketing revenues; low margin |
| Blended Growth Rate | — | 100% | +6.1% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 7.2% | <8% weak |
| FCF Margin | 16.9% | ≥10% strong |
| Debt / EBITDA | 1.9x | ≤2x conservative |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $8,658 | $12,464 | $10,883 | $9,152 | $8,908 |
| Rev YoY Growth | — | +44.0% | -12.7% | -15.9% | -2.7% |
| Gross Margin | 36.6% | 43.4% | 46.9% | 51.4% | 51.5% |
| EBITDA ($M) | $2,709 | $4,966 | $4,689 | $3,869 | $3,310 |
| EBITDA Margin | 31.3% | 39.8% | 43.1% | 42.3% | 37.2% |
| Operating Income ($M) | $1,519 | $3,853 | $2,864 | $1,579 | $1,131 |
| Operating Margin | 17.5% | 30.9% | 26.3% | 17.3% | 12.7% |
| Net Income ($M) | $1,416 | $3,637 | $2,085 | $1,125 | $1,242 |
| Net Margin | 16.4% | 29.2% | 19.2% | 12.3% | 13.9% |
| EPS (diluted) | $5.32 | $14.08 | $7.90 | $4.21 | $4.90 |
| Free Cash Flow ($M) | $1,610 | $2,035 | $1,423 | $1,418 | $1,505 |
| Annual DPS | $0.468 | $0.950 | $1.150 | $1.200 | $1.200 |
| Total Debt ($M) | $5,737 | $4,460 | $6,656 | $6,272 | $6,424 |
📈 DCF Scenarios
$36
🔴 Bear
$55
📊 Base
$79
🚀 Bull
$62.08
Current Price
$57
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -3.0% | -1.0% | 1.5% | 9.07% | $36 | ▼42.8% |
| 📊 Base | 1.0% | 1.5% | 2.0% | 9.07% | $55 | ▼10.8% |
| 🚀 Bull | 5.0% | 3.0% | 2.5% | 9.07% | $79 | ▲27.8% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -3.0% | Stage 2: -1.0% | Terminal: 1.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.46B | $1.33B | $1.33B |
| Year 2 | Stage 1 | $1.41B | $1.19B | $2.52B |
| Year 3 | Stage 1 | $1.37B | $1.06B | $3.58B |
| Year 4 | Stage 1 | $1.33B | $0.94B | $4.51B |
| Year 5 | Stage 1 | $1.29B | $0.83B | $5.35B |
| Year 6 | Stage 2 | $1.28B | $0.76B | $6.11B |
| Year 7 | Stage 2 | $1.26B | $0.69B | $6.79B |
| Year 8 | Stage 2 | $1.25B | $0.62B | $7.42B |
| Year 9 | Stage 2 | $1.24B | $0.57B | $7.98B |
| Year 10 | Stage 2 | $1.22B | $0.51B | $8.50B |
| Terminal | — | TV=$16.4B | PV(TV)=$6.9B (45% of EV) | EV=$15.4B |
| Intrinsic Value | — | — | EV $15.4B − Net Debt → Equity / Shares | $36 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.07%) to get its present value. After Year 10, FCF grows at the terminal rate (1.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $16.4B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $6.9B). Enterprise Value = PV of FCFs ($8.5B) + PV of TV ($6.9B) = $15.4B. Subtracting net debt gives equity value of $9.0B, divided by shares outstanding = $36 per share.
Base Scenario
Stage 1: 1.0% | Stage 2: 1.5% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.51B | $1.39B | $1.39B |
| Year 2 | Stage 1 | $1.53B | $1.29B | $2.68B |
| Year 3 | Stage 1 | $1.55B | $1.19B | $3.87B |
| Year 4 | Stage 1 | $1.56B | $1.10B | $4.97B |
| Year 5 | Stage 1 | $1.58B | $1.02B | $5.99B |
| Year 6 | Stage 2 | $1.60B | $0.95B | $6.94B |
| Year 7 | Stage 2 | $1.62B | $0.88B | $7.83B |
| Year 8 | Stage 2 | $1.65B | $0.82B | $8.65B |
| Year 9 | Stage 2 | $1.67B | $0.77B | $9.41B |
| Year 10 | Stage 2 | $1.70B | $0.71B | $10.13B |
| Terminal | — | TV=$24.5B | PV(TV)=$10.3B (50% of EV) | EV=$20.4B |
| Intrinsic Value | — | — | EV $20.4B − Net Debt → Equity / Shares | $55 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.07%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $24.5B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $10.3B). Enterprise Value = PV of FCFs ($10.1B) + PV of TV ($10.3B) = $20.4B. Subtracting net debt gives equity value of $14.0B, divided by shares outstanding = $55 per share.
Bull Scenario
Stage 1: 5.0% | Stage 2: 3.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.57B | $1.44B | $1.44B |
| Year 2 | Stage 1 | $1.65B | $1.39B | $2.83B |
| Year 3 | Stage 1 | $1.74B | $1.34B | $4.17B |
| Year 4 | Stage 1 | $1.82B | $1.29B | $5.46B |
| Year 5 | Stage 1 | $1.91B | $1.24B | $6.70B |
| Year 6 | Stage 2 | $1.97B | $1.17B | $7.87B |
| Year 7 | Stage 2 | $2.03B | $1.11B | $8.98B |
| Year 8 | Stage 2 | $2.09B | $1.04B | $10.02B |
| Year 9 | Stage 2 | $2.15B | $0.99B | $11.01B |
| Year 10 | Stage 2 | $2.22B | $0.93B | $11.94B |
| Terminal | — | TV=$34.6B | PV(TV)=$14.5B (55% of EV) | EV=$26.5B |
| Intrinsic Value | — | — | EV $26.5B − Net Debt → Equity / Shares | $79 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.07%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $34.6B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $14.5B). Enterprise Value = PV of FCFs ($11.9B) + PV of TV ($14.5B) = $26.5B. Subtracting net debt gives equity value of $20.1B, divided by shares outstanding = $79 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.1% | $80 | $86 | $94 | $103 | $116 |
| 7.6% | $71 | $76 | $82 | $90 | $99 |
| 8.1% | $64 | $68 | $73 | $79 | $86 |
| 8.6% | $58 | $61 | $65 | $70 | $75 |
| 9.1% | $52 | $55 | $58 | $62 | $67 |
| 9.6% | $47 | $50 | $53 | $56 | $59 |
| 10.1% | $43 | $45 | $48 | $50 | $53 |
| 10.6% | $39 | $41 | $43 | $45 | $48 |
| 11.1% | $36 | $38 | $39 | $41 | $43 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.200 |
| Current Yield | 1.93% |
| Consecutive Growth Years | 3 |
| 1-yr DPS CAGR | +0.0% |
| 3-yr DPS CAGR | +11.1% |
| 5-yr DPS CAGR | +20.7% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 24.5% |
| FCF Payout Ratio | 20.2% |
| Sustainability Verdict | Safe |
Dividend is Safe but unexciting. FCF payout ratio of 20% leaves ample room, but the 1.9% yield is too low to be an income investment. OVV is primarily a capital appreciation + FCF return story, not a yield story. Dividend growth stalled in 2025 ($1.20 same as 2024).
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $5.32 | — | — | — | Actual |
| 2022 | $14.08 | — | — | — | Actual |
| 2023 | $7.90 | — | — | — | Actual |
| 2024 | $4.21 | — | — | — | Actual |
| 2025 | $4.90 | — | — | — | Actual |
| 2026 | $3.08 | $4.30 | $5.64 | 23 | Estimate |
| 2027 | $4.22 | $5.69 | $7.94 | 20 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $8.7B | — | — | — | Actual |
| 2022 | $12.5B | — | — | — | Actual |
| 2023 | $10.9B | — | — | — | Actual |
| 2024 | $9.2B | — | — | — | Actual |
| 2025 | $8.9B | — | — | — | Actual |
| 2026 | $6.7B | $8.6B | $10.6B | 23 | Estimate |
| 2027 | $7.5B | $8.8B | $10.7B | 20 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Gabe Daoud | Truist Securities | Strong Buy | $70 | +12.8% |
| Nitin Kumar | Mizuho | Buy | $68 | +9.5% |
| Jason Bouvier | Scotiabank | Buy | $65 | +4.7% |
| Robert Hodges | TD Cowen | Strong Buy | $60 | -3.4% |
| Hanwen Chang | Wells Fargo | Hold | $54 | -13.0% |
💡 Investment Thesis
- Multi-basin diversification reduces commodity concentration: OVV's five-basin structure limits exposure to any single commodity price. Montney provides low-cost natural gas optionality; Permian/Uinta provide oil upside; Clearwater provides heavy oil exposure.
- ~10% FCF yield at current price: Normalized FCF of $1.5B on a $15.7B market cap = 9.6% FCF yield, supporting a $1.20/share dividend (1.9% yield) and $300M+ in buybacks annually.
- Debt reduction runway: OVV reduced net debt from ~$9.5B (2020) to $6.4B (2025). Management targets $4.0B net debt longer term — each $1B reduction adds ~$4/share of equity value.
- Operational efficiency gains: OVV has reduced well costs 30-40% since 2019 through technology and scale. Breakeven oil price ~$45 WTI, providing meaningful margin of safety.
⚖️ DCF Verdict: Hold — Ovintiv (OVV)
Current price: $62.08 | Analyst Avg PT: $56.63
$36
🔴 Bear
$55
📊 Base
$79
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$51 | Begin position |
| Tier 2 — Add | ≤$45 | Add on weakness |
| Tier 3 — Full | ≤$37 | Full allocation |
| Sell Alert | ≥$67 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Initiate at Reduce/Hold. At $62.08, OVV trades above the analyst consensus price target of $56.63, implying 8.8% downside to consensus. Our Base DCF of ~$56 corroborates the analyst view. The stock has rallied materially and is no longer cheap on a normalized FCF basis versus its capital return profile. Wait for a pullback toward $50–55 before establishing a position. Below $55, OVV offers an attractive 10%+ FCF yield with multi-basin optionality — that's the right entry point.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | DCF chosen: OVV is a growth-and-FCF-return E&P company where intrinsic value is best captured by discounted FCFF. The dividend ($1.20/yr) is too low to anchor a meaningful DDM. |
| FCF Base | Normalized FCF $1,500M = avg of FY2023 ($1,423M), FY2024 ($1,418M), FY2025 ($1,505M). Excludes FY2022 ($2,035M — energy price spike) and FY2021 ($1,610M — post-COVID recovery distortion). |
| WACC Build | Ke = 4.4% + 1.20 × 5.5% = 11.0% (E&P beta 1.20 reflects oil price sensitivity). Kd = 5.5% pretax × (1-0.21) = 4.35% after-tax. We = $15.7B/(15.7+6.4) = 71%; Wd = 29%. WACC = 0.71×11.0% + 0.29×4.35% = 9.07%. |
| Sanity Check | Base IV ~$55.38–$56.60 vs. analyst consensus PT $56.63 — virtually identical. The stock at $62.08 is materially above both our Base IV and analyst consensus. This is a Reduce/Hold at current levels. |
| OVV vs. Analyst Consensus | OVV is unusual in that the stock currently trades ABOVE analyst consensus PT. This typically signals the market is pricing in a more optimistic scenario than analyst base cases. We view the risk/reward as unfavorable above $60. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.