14 Best American Energy Stocks To Buy According to Analysts

5. Ovintiv Inc. (NYSE:OVV)

Number of Hedge Fund Investors  in Q1 2024: 34

Average Analyst Share Price Target Upside: 83.28%

Average Analyst Share Price Target: $84.27

Ovintiv Inc. (NYSE:OVV) is a Colorado based oil and gas company with operations in Texas, Oklahoma, Canada, Utah, and other regions. The firm has a considerable presence in one of America’s largest oil production areas, the Permian basin. It expanded its Permian operations in 2023 through a massive $4.3 billion acquisition, and touted additional efficiency increases through a process that Ovintiv Inc. (NYSE:OVV) dubs as ‘Trimul-frac.’ This allows it to save $125,000 per well by fracking three wells at a time instead of two through Simulfrac. However, Ovintiv Inc. (NYSE:OVV)’s Permian expansion has increased its debt load, and it ended 2023 with $6 billion in long term debt. Free cash flow was $1.4 billion during the year, dropping by $600 million annually on the back of higher capital expenditures which also led to lower debt repayments and stock purchases. Looking ahead, production growth, debt repayment, and efficiency improvements will be key for Ovintiv Inc. (NYSE:OVV)’s share price performance.

Ovintiv Inc. (NYSE:OVV)’s management highlighted productivity gains to enable it to reduce the debt load during the Q1 2024 earnings call:

“The combination of strong productivity across the portfolio, our leading capital efficiency and stronger oil price environment have raised our expectations for 2024 free cash flow from $1.6 billion to $1.9 billion, roughly $750 million more than last year with similar volumes and less capital spend.

This will allow us to deliver enhanced returns to our shareholders and accelerate debt repayment. As we highlighted in February, we also added 65 premium 10,000-foot equivalent locations in the Permian through three bolt-on transactions at an average cost of less than $3 million per location. These inventory additions are immediately competitive for capital, and are contiguous with our existing acreage in the core of the Midland Basin. Our multiyear disciplined strategy of both organic and inorganic inventory extension has added about 1,650 premium net 10,000-foot locations to our portfolio, delivering a huge boost to our full cycle returns and the durability of our business. We believe our 2024 program is highly repeatable in 2025 and beyond, reflecting our leading capital efficiency and the depth of our premium inventory.”