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Be the first with the news that moves the market- Oil and gas company, Ovintiv (TSX:OVV) is implementing further cost cutting measures as the low oil price continues to impact the industry
- Ovintiv has cut its second quarter capital spending by 60 per cent
- The company has also increased its expected cost savings to approximately C$278.77 million by the end of the year
- Furthermore, Ovintiv has fully hedged its second quarter production at approximately $58.67 a barrel
- Ovintiv (OVV) is up 6.47 per cent, with shares trading for $7.90 and a market cap of $2.05 billion
Oil and gas company, Ovintiv (TSX:OVV) is implementing further cost cutting measures as the low oil price continues to impact the industry.
Ovintiv has cut its second quarter capital spending by 60 per cent, to adjust to the recent oil price decline.
The company has redoubled its cost-saving efforts, increasing its expected savings to approximately C$278.77 million by the end of the year.
To shield further losses in the second quarter, Ovintiv has fully hedged its second quarter production at approximately $58.67 a barrel. The hedging applies to more than 200,000 barrels a day.
These hedging gains have positively impacted the company’s net earnings in the first quarter. Net earnings were up to around $586.81 million, compared to a net loss of approximately $341.49 million in 2019’s same quarter.
However, the hedging gains are unrealised and the company reporting operating earnings of approximately $37.63 million, down significantly from around $229.99 million in 2019’s first quarter.
Doug Suttles, Ovintiv CEO, believes the hedging measures are necessary, given the present challenges facing the industry.
“In the first quarter, we built on our track record of industry-leading efficiency and once again significantly drove down costs and delivered strong corporate-level results.
“These are challenging times, but we are using the flexibility we purposely built into our business to maintain financial strength and set our company up to thrive in whatever new environment emerges in the coming months and years,” he said.
Looking forward to next year, the company remains confident that it can deliver free cash flow, even at a low oil price, while maintaining a 200,000-barrel a day production rate.
Ovintiv (OVV) is up 6.47 per cent, with shares trading for $7.90 at 11:20am EDT.
