Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Unless the context otherwise requires or otherwise expressly stated, all references in this Quarterly Report on Form 10-Q to “Ovintiv,” the “Company,” “us,” “we,” “our,” and “ours” refer to Ovintiv Inc. and its consolidated ~~subsidiaries for periods on or after January 24, 2020 and to Encana Corporation and its consolidated subsidiaries for periods before January 24, 2020.~~subsidiaries. In addition, the following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10‑Q:

“AECO” means Alberta Energy Company and is the Canadian benchmark price for natural gas.

“MD&A” means Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In this Quarterly Report on Form 10-Q, a conversion of natural gas volumes to BOE is on the basis of six Mcf to one bbl. BOE is based on a generic energy equivalency conversion method primarily applicable at the burner tip and does not represent economic value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value, particularly if used in isolation.

Unless otherwise specified, all dollar amounts are expressed in U.S. dollars, all references to “dollars”, “$” or “US$” are to U.S. dollars and all references to “C$” are to Canadian dollars. All amounts are provided on a before tax basis, unless otherwise stated. In addition, all information provided herein is presented on an after royalties basis.

The terms “include”, “includes”, “including” and “included” are to be construed as if they were immediately followed by the words “without limitation”, except where explicitly stated otherwise.

The term “liquids” is used to represent oil, NGLs and condensate. The term “liquids rich” is used to represent natural gas streams with associated liquids volumes. The term “play” is used to describe an area in which hydrocarbon accumulations or prospects of a given type occur. Ovintiv’s focus of development is on hydrocarbon accumulations known to exist over a large areal expanse and/or thick vertical section and are developed using hydraulic fracturing. This type of development typically has a lower geological and/or commercial development risk and lower average decline rate, when compared to conventional development.

References to information contained on the Company’s website at www.ovintiv.com are not incorporated by reference into, and does not constitute a part of, this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q, and the other documents incorporated herein by reference (if any), contain certain forward-looking statements or information (collectively, “forward-looking statements”) within the meaning of applicable securities legislation, including Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), ~~as amended,~~ and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, except for statements of historical fact, that relate to the anticipated future activities, plans, strategies, objectives or expectations of the Company are forward-looking statements. When used in this Quarterly Report on Form 10‑Q, and the other documents incorporated herein by reference (if any), the use of words and phrases including “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “focused on,” “forecast,” “guidance,” “intends,” “maintain,” “may,” “opportunities,” “outlook,” “plans,” “potential,” “strategy,” “targets,” “will,” “would” and other similar terminology is intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words or phrases. Without limiting the generality of the foregoing, forward-looking statements contained in this Quarterly Report on Form 10‑Q include: expectations of plans, strategies and objectives of the Company, including anticipated reserves development; the Company’s ability to consummate any future acquisition and divestiture transactions; the Company’s ability to successfully integrate any acquired assets (including the Permian Acquisition as defined in Note 89 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q)) into its business; drilling plans and programs, including the amount and availability of capital to complete these plans and programs; the composition of the Company’s assets and the anticipated capital returns associated with its assets; anticipated oil, NGL and natural gas prices; the anticipated success of, and benefits from, technology and innovation, including the cube development model, Trimulfrac and Simulfrac techniques and other new or advanced drilling techniques or well completion designs; anticipated drilling and completions activity, including the number of drilling rigs and frac crews utilized; anticipated proceeds and future benefits from various joint venture, partnership and other agreements; anticipated oil, NGLs and natural gas production and commodity mix; the Company’s ~~capital structure and~~ ability to access credit facilities, credit markets and other sources of liquidity; the ability of the Company to timely achieve its stated ESG goals, targets and initiatives; the impact of changes in federal, state, provincial, local and tribal laws, rules and regulations; anticipated compliance with current or proposed environmental legislation; the Company’s ability to manage debt and financial ratios and comply with financial covenants; the implementation and outcomes of risk management programs, including exposure to commodity prices, interest rate and foreign exchange fluctuations and the volume of oil, NGLs and natural gas production hedged; the declaration and payment of future dividends and the anticipated repurchase of the Company’s outstanding common shares; the Company’s ability to manage cost inflation and expected cost structures, including expected operating, transportation, processing and labor expenses; and the outlook of the oil and natural gas industry generally, including impacts from changes to the geopolitical environment.

The forward-looking statements included in this Quarterly Report on Form 10-Q involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We have based these forward-looking statements on current expectations and assumptions about future events, taking into account all information currently known by us. While we consider these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond our control. The risks and

uncertainties that may affect the operations, performance and results of our business and forward-looking statements include, but are not limited to, those set forth in Item 1A. Risk Factors of the Company’s most recent Annual Report on Form 10‑K for the fiscal year ended December 31, ~~2022~~2023 (the ~~“2022~~“2023 Annual Report on Form 10-K”) ~~and the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023;~~; and other risks and uncertainties impacting

the Company’s business as described from time to time in the Company’s other periodic filings with the SEC or Canadian securities regulators.

Although the Company believes the expectations represented by its forward-looking statements are reasonable based on the information available to it as of the date such statements are made, forward-looking statements are only predictions and statements of our current beliefs and there can be no assurance that such expectations will prove to be correct. All forward-looking statements contained in this Quarterly Report on Form 10‑Q are made as of the date of this document (or in the case of a document incorporated herein by reference, the date of such document) and, except as required by law, the Company undertakes no obligation to update publicly or revise any forward-looking statements. The forward-looking statements contained or incorporated by reference in this Quarterly Report on Form 10‑Q, and all subsequent forward-looking statements attributable to the Company, whether written or oral, are expressly qualified by these cautionary statements.

The reader should carefully read the risk factors described in Item 1A. Risk Factors of the ~~2022~~2023 Annual Report on Form 10‑K ~~and the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2023,~~ for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements


			As at			As at					As at			As at
			June 30,			December 31,					March 31,			December 31,
(US$ millions)			2023			2022					2024			2023

Assets
Current Assets
Cash and cash equivalents			$	52		$	5				$	5		$	3
Accounts receivable and accrued revenues (net of allowances
of $4 million (2022: $4 million))		(Note 3)		1,253			1,594
of $5 million (2023: $5 million))										(Note 4)		1,270			1,442
Risk management		(Notes 18, 19)		167			53			(Notes 19, 20)		146			214
Income tax receivable				7			43					31			17
				1,479			1,695					1,452			1,676
Property, Plant and Equipment, at cost:		(Note 9)								(Note 10)
Oil and natural gas properties, based on full cost accounting
Proved properties				62,058			57,054					64,586			64,084
Unproved properties				1,989			1,172					1,340			1,486
Other				945			882					905			907
Property, plant and equipment				64,992			59,108					66,831			66,477
Less: Accumulated depreciation, depletion and amortization				(50,775	)		(49,640	)				(52,023	)		(51,837	)
Property, plant and equipment, net		(Note 2)		14,217			9,468			(Note 3)		14,808			14,640
Other Assets				1,047			1,004					991			1,015
Risk Management		(Notes 18, 19)		21			34			(Notes 19, 20)		-			4
Deferred Income Taxes				157			271					-			53
Goodwill		(Note 2)		2,598			2,584			(Note 3)		2,583			2,599
		(Note 2)	$	19,519		$	15,056			(Note 3)	$	19,834		$	19,987

Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities			$	2,443		$	2,221				$	1,920		$	2,209
Current portion of operating lease liabilities				85			76					78			87
Income tax payable				97			4					10			232
Risk management		(Notes 18, 19)		5			86			(Notes 19, 20)		30			-
Current portion of long-term debt		(Note 11)		680			393			(Note 12)		745			284
				3,310			2,780					2,783			2,812
Long-Term Debt		(Note 11)		5,454			3,177			(Note 12)		5,453			5,453
Operating Lease Liabilities				847			814					818			832
Other Liabilities and Provisions	(Note 12)			118			131		(Note 13)			128			132
Risk Management		(Notes 18, 19)		7			-			(Notes 19, 20)		8			2
Asset Retirement Obligation				283			281					269			276
Deferred Income Taxes				184			184					113			110
				10,203			7,367					9,572			9,617
Commitments and Contingencies		(Note 21)								(Note 22)
Shareholders’ Equity
Share capital - authorized 775 million shares of stock
2023 issued and outstanding: 273.9 million shares (2022: 245.7 million shares)		(Note 13)		3			3
2024 issued and outstanding: 267.6 million shares (2023: 271.7 million shares)										(Note 14)		3			3
Paid in surplus		(Note 13)		8,671			7,776			(Note 14)		8,331			8,620
Retained earnings (Accumulated deficit)				(401	)		(1,081	)
Retained earnings												955			697
Accumulated other comprehensive income		(Note 14)		1,043			991			(Note 15)		973			1,050
Total Shareholders’ Equity				9,316			7,689					10,262			10,370
			$	19,519		$	15,056				$	19,834		$	19,987

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Changes in Shareholders’ Equity (unaudited)

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Statement of ~~Changes in Shareholders’ Equity~~Cash Flows (unaudited)

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements


3.	Segmented Information

Ovintiv’s reportable segments are determined based on the following operations and geographic locations:

•

USA Operations includes the exploration for, development of, and production of oil, NGLs and natural gas and other related activities within the U.S. cost center.

•

Canadian Operations includes the exploration for, development of, and production of oil, NGLs and natural gas and other related activities within the Canadian cost center.

•

Market Optimization is primarily responsible for the sale of the Company’s proprietary production. These results are reported in the USA and Canadian Operations. Market optimization activities include third-party purchases and sales of product to provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification. These activities are reflected in the Market Optimization segment. Market Optimization sells substantially all of the Company’s upstream production to third-party customers. Transactions between segments are based on market values and are eliminated on consolidation.

Corporate and Other mainly includes unrealized gains or losses recorded on derivative financial instruments. Once the instruments are settled, the realized gains and losses are recorded in the reporting segment to which the derivative instruments relate. Corporate and Other also includes amounts related to sublease rentals.

Results of Operations (For the three months ended ~~June 30)~~March 31)

Segment and Geographic Information

USA Operations

Canadian Operations

Market Optimization

2023

2022

2023

2022

2023

2022

Revenues

Product and service revenues

$
1,181

$
1,925

$
468

$
962

$
703

$
1,127

Gains (losses) on risk management, net

5

(383
)

-

(425
)

-

-

Sublease revenues

-

-

-

-

-

-

Total Revenues

1,186

1,542

468

537

703

1,127

Operating Expenses

Production, mineral and other taxes

73

115

3

3

-

-

Transportation and processing

148

159

268

253

36

41

Operating

167

149

2

25

6

6

Purchased product

-

-

-

-

692

1,115

Depreciation, depletion and amortization

336

217

78

56

-

-

Total Operating Expenses

724

640

351

337

734

1,162

Operating Income (Loss)

$
462

$
902

$
117

$
200

$
(31
)

$
(35
)

Corporate & Other

Consolidated

2023

2022

2023

2022

Revenues

Product and service revenues

$
-

$
-

$
2,352

$
4,014

Gains (losses) on risk management, net

142

513

147

(295
)
Sublease revenues

18

17

18

17

Total Revenues

160

530

2,517

3,736

Operating Expenses

Production, mineral and other taxes

-

-

76

118

Transportation and processing

-

-

452

453

Operating

-

-

175

180

Purchased product

-

-

692

1,115

Depreciation, depletion and amortization

5

5

419

278

Accretion of asset retirement obligation

4

5

4

5

Administrative

168

71

168

71

Total Operating Expenses

177

81

1,986

2,220

Operating Income (Loss)

$
(17
)

$
449

531

1,516

Other (Income) Expenses

Interest

80

91

Foreign exchange (gain) loss, net

25

3

Other (gains) losses, net

(11
)

-

Total Other (Income) Expenses

94

94

Net Earnings (Loss) Before Income Tax

437

1,422

Income tax expense (recovery)

101

65

Net Earnings (Loss)

$
336

$
1,357

~~Results of Operations (For the six months ended June 30)~~

~~Segment and Geographic Information~~


	USA Operations					Canadian Operations						Market Optimization						USA Operations				Canadian Operations						Market Optimization
	2023		2022			2023			2022			2023			2022			2024		2023		2024			2023			2024			2023

Revenues
Product and service revenues	$	2,367	$	3,472		$	1,158		$	1,740		$	1,419		$	2,209		$	1,462	$	1,186	$	469		$	690		$	456		$	716
Gains (losses) on risk management, net		7		(602	)		(78	)		(652	)		-			-			24		2		22			(78	)		-			-
Sublease revenues		-		-			-			-			-			-			-		-		-			-			-			-
Total Revenues		2,374		2,870			1,080			1,088			1,419			2,209			1,486		1,188		491			612			456			716

Operating Expenses
Production, mineral and other taxes		153		205			7			7			-			-			80		80		3			4			-			-
Transportation and processing		295		294			535			484			77			81			127		147		251			267			41			41
Operating		337		291			31			62			13			15			211		170		25			29			7			7
Purchased product		-		-			-			-			1,393			2,181			-		-		-			-			440			701
Depreciation, depletion and amortization		630		417			143			115			-			-			489		294		72			65			-			-
Total Operating Expenses		1,415		1,207			716			668			1,483			2,277			907		691		351			365			488			749
Operating Income (Loss)	$	959	$	1,663		$	364		$	420		$	(64	)	$	(68	)	$	579	$	497	$	140		$	247		$	(32	)	$	(33	)

						Corporate & Other						Consolidated										Corporate & Other						Consolidated
						2023			2022			2023			2022							2024			2023			2024			2023

Revenues
Product and service revenues						$	-		$	-		$	4,944		$	7,421						$	-		$	-		$	2,387		$	2,592
Gains (losses) on risk management, net							160			(499	)		89			(1,753	)						(100	)		18			(54	)		(58	)
Sublease revenues							35			35			35			35							19			17			19			17
Total Revenues							195			(464	)		5,068			5,703							(81	)		35			2,352			2,551

Operating Expenses
Production, mineral and other taxes							-			-			160			212							-			-			83			84
Transportation and processing							-			-			907			859							-			-			419			455
Operating							-			-			381			368							-			-			243			206
Purchased product							-			-			1,393			2,181							-			-			440			701
Depreciation, depletion and amortization							10			10			783			542							5			5			566			364
Accretion of asset retirement obligation							9			10			9			10							5			5			5			5
Administrative							226			215			226			215							102			58			102			58
Total Operating Expenses							245			235			3,859			4,387							112			68			1,858			1,873
Operating Income (Loss)						$	(50	)	$	(699	)		1,209			1,316						$	(193	)	$	(33	)		494			678

Other (Income) Expenses
Interest													151			165													98			71
Foreign exchange (gain) loss, net													22			2													(28	)		(3	)
Other (gains) losses, net													(14	)		(27	)												(4	)		(3	)
Total Other (Income) Expenses													159			140													66			65
Net Earnings (Loss) Before Income Tax													1,050			1,176													428			613
Income tax expense (recovery)													227			60													90			126
Net Earnings (Loss)												$	823		$	1,116												$	338		$	487

1312

Intersegment Information


							Market Optimization																		Market Optimization
	Marketing Sales						Upstream Eliminations						Total						Marketing Sales						Upstream Eliminations						Total
For the three months ended June 30,	2023			2022			2023			2022			2023			2022
For the three months ended March 31,																			2024			2023			2024			2023			2024			2023

Revenues	$	2,874		$	4,346		$	(2,171	)	$	(3,219	)	$	703		$	1,127		$	2,498		$	3,136		$	(2,042	)	$	(2,420	)	$	456		$	716

Operating Expenses
Transportation and processing		180			161			(144	)		(120	)		36			41			170			165			(129	)		(124	)		41			41
Operating		6			6			-			-			6			6			7			7			-			-			7			7
Purchased product		2,719			4,213			(2,027	)		(3,098	)		692			1,115			2,353			2,997			(1,913	)		(2,296	)		440			701
Operating Income (Loss)	$	(31	)	$	(34	)	$	-		$	(1	)	$	(31	)	$	(35	)	$	(32	)	$	(33	)	$	-		$	-		$	(32	)	$	(33	)

							Market Optimization
	Marketing Sales						Upstream Eliminations						Total
For the six months ended June 30,	2023			2022			2023			2022			2023			2022

Revenues	$	6,010		$	7,769		$	(4,591	)	$	(5,560	)	$	1,419		$	2,209

Operating Expenses
Transportation and processing		345			313			(268	)		(232	)		77			81
Operating		13			15			-			-			13			15
Purchased product		5,716			7,508			(4,323	)		(5,327	)		1,393			2,181
Operating Income (Loss)	$	(64	)	$	(67	)	$	-		$	(1	)	$	(64	)	$	(68	)

Capital Expenditures by Segment


	Three Months Ended				Six Months Ended				Three Months Ended
	June 30,				June 30,				March 31,
	2023		2022		2023		2022		2024		2023

USA Operations	$	502	$	410	$	969	$	782	$	457	$	467
Canadian Operations		137		101		279		179		133		142
Corporate & Other		1		-		2		1		1		1
	$	640	$	511	$	1,250	$	962	$	591	$	610

Goodwill, Property, Plant and Equipment and Total Assets by Segment


	Goodwill				Property, Plant and Equipment				Total Assets				Goodwill				Property, Plant and Equipment				Total Assets
	As at				As at				As at				As at				As at				As at
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,		March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2023		2022		2023		2022		2023		2022		2024		2023		2024		2023		2024		2023

USA Operations	$	1,938	$	1,938	$	12,841	$	8,259	$	15,642	$	11,043	$	1,938	$	1,938	$	13,273	$	13,129	$	16,126	$	16,033
Canadian Operations		660		646		1,217		1,044		2,117		2,075		645		661		1,388		1,357		2,368		2,404
Market Optimization		-		-		-		-		292		446		-		-		-		-		166		232
Corporate & Other		-		-		159		165		1,468		1,492		-		-		147		154		1,174		1,318
	$	2,598	$	2,584	$	14,217	$	9,468	$	19,519	$	15,056	$	2,583	$	2,599	$	14,808	$	14,640	$	19,834	$	19,987


3.4.	Revenues from Contracts with Customers

The following table summarizes Ovintiv’s revenues from contracts with customers.

Revenues (For the three months ended ~~June 30)~~March 31)

USA Operations

Canadian Operations

Market Optimization

2023

2022

2023

2022

2023

2022

Revenues from Customers

Product revenues (1)

Oil

$
947

$
1,313

$
-

$
1

$
644

$
931

NGLs

149

312

246

383

5

8

Natural gas

86

302

223

581

49

183

Service revenues

Gathering and processing

2

1

1

(1
)

-

-

Product and Service Revenues

$
1,184

$
1,928

$
470

$
964

$
698

$
1,122

Corporate & Other

Consolidated

2023

2022

2023

2022

Revenues from Customers

Product revenues (1)

Oil

$
-

$
-

$
1,591

$
2,245

NGLs

-

-

400

703

Natural gas

-

-

358

1,066

Service revenues

Gathering and processing

-

-

3

-

Product and Service Revenues

$
-

$
-

$
2,352

$
4,014

~~(1)~~

~~Includes revenues from production and revenues of product purchased from third parties, but excludes intercompany marketing fees transacted between the Company’s operating segments.~~

~~Revenues (For the six months ended June 30)~~


	USA Operations				Canadian Operations				Market Optimization				USA Operations				Canadian Operations				Market Optimization
	2023		2022		2023		2022		2023		2022		2024		2023		2024		2023		2024		2023

Revenues from Customers
Product revenues (1)
Oil	$	1,798	$	2,393	$	-	$	1	$	1,253	$	1,817	$	1,181	$	851	$	1	$	-	$	392	$	609
NGLs		333		579		483		745		25		11		188		184		234		237		8		20
Natural gas		241		508		678		1,000		129		366		97		155		235		455		49		80
Service revenues
Gathering and processing		2		1		2		-		-		-		1		-		1		1		-		-
Product and Service Revenues	$	2,374	$	3,481	$	1,163	$	1,746	$	1,407	$	2,194	$	1,467	$	1,190	$	471	$	693	$	449	$	709

					Corporate & Other				Consolidated								Corporate & Other				Consolidated
					2023		2022		2023		2022						2024		2023		2024		2023

Revenues from Customers
Product revenues (1)
Oil					$	-	$	-	$	3,051	$	4,211					$	-	$	-	$	1,574	$	1,460
NGLs						-		-		841		1,335						-		-		430		441
Natural gas						-		-		1,048		1,874						-		-		381		690
Service revenues
Gathering and processing						-		-		4		1						-		-		2		1
Product and Service Revenues					$	-	$	-	$	4,944	$	7,421					$	-	$	-	$	2,387	$	2,592

(1)

Includes revenues from production and revenues of product purchased from third parties, but excludes intercompany marketing fees transacted between the Company’s operating segments.

The Company’s revenues from contracts with customers consists of product sales including oil, NGLs and natural gas, as well as the provision of gathering and processing services to third parties. Ovintiv had no contract asset or liability balances during the periods presented. As at ~~June 30, 2023,~~March 31, 2024, receivables and accrued revenues from contracts with customers were $~~843~~935 million ($~~1,257~~1,070 million as at December 31, ~~2022)~~2023).

Ovintiv’s product sales are sold under short-term contracts with terms that are less than one year at either fixed or market index prices or under long-term contracts exceeding one year at market index prices.

The Company’s gathering and processing services are provided on an interruptible basis with transaction prices that are for fixed prices and/or variable consideration. Variable consideration received is related to recovery of plant operating costs or escalation of the fixed price based on a consumer price index. As the service contracts are interruptible, with service provided on an “as available” basis, there are no unsatisfied performance obligations remaining at ~~June 30, 2023.~~March 31, 2024.

As at ~~June 30, 2023,~~March 31, 2024, all remaining performance obligations are priced at market index prices or are variable volume delivery contracts. As such, the variable consideration is allocated entirely to the wholly unsatisfied performance obligation or promise to deliver units of production, and revenue is recognized at the amount for which the Company has the right to invoice the product delivered. As the period between when the product sales are transferred and Ovintiv receives payments is generally 30 to 60 days, there is no financing element associated with customer contracts. In addition, Ovintiv does not disclose unsatisfied performance obligations for customer contracts with terms less than 12 months or for variable consideration related to unsatisfied performance obligations.

Ovintiv’s interim income tax expense is determined using the estimated annual effective income tax rate applied to year-to-date net earnings before income tax plus the effect of legislative changes and amounts in respect of prior periods. The estimated annual effective income tax rate is impacted by expected annual earnings, changes in valuation allowances, income tax related to foreign operations, state taxes, the effect of legislative changes, non-taxable items and tax differences on transactions, which can produce interim effective tax rate fluctuations.

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2024, the current income tax expense was primarily due to Canadian operations being in a taxable position and the corporate alternative minimum tax in the U.S. During the three months ended March 31, 2023, the current income tax expense was primarily due to the ~~expected~~ full utilization of Ovintiv’s operating losses in Canada resulting in current tax in 2023. ~~During the three and six months ended June 30, 2022, the current income tax expense in the United States was primarily due to state taxes.~~

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and March 31, 2023, the deferred tax expense was ~~primarily~~predominately due to the annual effective tax rate applied to the U.S. earnings. ~~During the three and six months ended June 30, 2022, the deferred tax expense was due to the lower annual effective income tax rate applied to jurisdictional earnings.~~

~~The effective tax rate of~~ ~~21.6~~ ~~percent for the six months ended June 30, 2023, is higher than the U.S. federal statutory rate of~~ 21 ~~percent primarily due to state taxes. The effective tax rate of~~ ~~5.1~~ ~~percent for the six months ended June 30, 2022, was lower than the U.S. federal statutory tax rate of~~ 21 ~~percent primarily due to the lower annual effective income tax rate resulting from a reduction in valuation allowances.~~

For the three months ended March 31, 2024, acquisitions in the USA Operations were $190 million, which primarily included property purchases in Permian with oil and liquids-rich potential.

~~Additionally, pro forma earnings were adjusted to exclude acquisition-related costs incurred of approximately $~~75 million for the three and six months ended June 30, 2023, and 2022. The pro forma financial information does not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been or will be incurred to integrate the assets. The pro forma financial data does not include the results of operations for any other acquisitions made during the periods presented, as they were primarily acreage acquisitions, and their results were not deemed material.

USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration, development and construction activities of $7651 million, which have been capitalized during the ~~six~~three months ended ~~June 30, 2023 (2022~~March 31, 2024 (2023 - $8953 million).

~~On May 31, 2023, Ovintiv completed a public offering of senior unsecured notes of $600~~ ~~million with a coupon rate of~~ ~~5.65~~ ~~percent due~~ ~~May 15, 2025, $700~~ ~~million with a coupon rate of~~ ~~5.65~~ ~~percent due~~ ~~May 15, 2028, $600~~ ~~million with a coupon rate of~~ ~~6.25~~ ~~percent due~~ ~~July 15, 2033, and $400~~ ~~million with a coupon rate of~~ ~~7.10~~ ~~percent due~~ ~~July 15, 2053. The net proceeds of the offering, totaling $2,278~~ ~~million, were used to fund a portion of the Company’s Permian Acquisition. See Note 8 for further information on the business combination.~~

~~During the three and six months ended June 30, 2022, the Company repurchased, in the open market, approximately $~~55 ~~million and $~~61 ~~million, respectively, in principal amount of its senior notes, plus accrued interest.~~

~~On June 10, 2022, Ovintiv redeemed the Company’s $1,000~~ ~~million,~~ ~~5.625~~ ~~percent senior notes due~~ ~~July 1, 2024, using cash on hand and proceeds from short-term borrowings. Ovintiv paid approximately $1,072~~ ~~million in cash including accrued and unpaid interest of $~~25 ~~million and a make-whole payment of $~~47 ~~million, which was included in interest expense as discussed in Note 4.~~

As at ~~June 30, 2023,~~March 31, 2024, the Company had outstanding commercial paper of $~~330~~495 million maturing at various dates with a weighted average interest rate of approximately ~~5.98~~6.14 percent. As at ~~June 30, 2023,~~March 31, 2024, the Company also had $~~350~~250 million drawn on its revolving credit facilities.

As at ~~June 30, 2023,~~March 31, 2024, total long-term debt had a carrying value of $~~6,134~~6,198 million and a fair value of $~~6,161~~6,451 million (as at December 31, ~~2022~~2023 - carrying value of $~~3,570~~5,737 million and a fair value of $~~3,648~~5,989 million). The estimated fair value of long-term borrowings is categorized within Level 2 of the fair value hierarchy and has been determined based on market information of long-term debt with similar terms and maturity, or by discounting future payments of interest and principal at interest rates expected to be available to the Company at period end.

On June 12, 2023, in accordance with the terms of the Permian Acquisition agreement, Ovintiv issued approximately 31.8 million shares of common stock as a component of the consideration paid to EnCap as discussed in Note 8.9. In conjunction with the share issuance, the Company recognized share capital of $318 thousand and paid in surplus of $1,169 million.

Ovintiv’s Performance Share Units (“PSU”) and Restricted Share Units (“RSU”) stock-based compensation plans allow the Company to settle the awards either in cash or in the Company’s common stock. Accordingly, Ovintiv issued ~~4.1~~1.3 million shares of common stock during the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 (~~2.4~~4.1 million shares of common stock during the twelve months ended December 31, ~~2022)~~2023), as certain PSU and RSU grants vested during the period.

During the three months ended ~~June 30, 2023,~~March 31, 2024, the Company purchased approximately ~~2.5~~5.4 million shares for total consideration of approximately $89250 million. Of the amount paid, $2554 thousand was charged to share capital and $89250 million was charged to paid in surplus.

During the ~~six~~three months ended ~~June 30,~~March 31, 2023, the Company purchased approximately ~~7.7~~5.2 million shares for total consideration of approximately $~~328~~239 million. Of the amount paid, $7752 thousand was charged to share capital and $~~328~~ ~~million was charged to paid in surplus.~~

~~During the three months ended June 30, 2022, the Company purchased approximately~~ ~~2.8~~ ~~million shares under its previous NCIB program which extended from October 1, 2021, to September 30, 2022. Total consideration of approximately $135~~ ~~million was paid to complete the share repurchases, of which $~~21 ~~thousand was charged to share capital and $135~~ ~~million was charged to paid in surplus.~~

~~During the six months ended June 30, 2022, the Company purchased approximately~~ ~~4.5~~ ~~million shares under its previous NCIB program for total consideration of approximately $206~~ ~~million, of which $~~35 ~~thousand was charged to share capital and $206~~239 million was charged to paid in surplus.

For the twelve months ended December 31, ~~2022,~~2023, the Company purchased approximately ~~14.7~~9.9 million shares ~~under a combination of its current and previous NCIB programs~~ for total consideration of approximately $~~719~~426 ~~million. Of the amount paid,~~million, of which $~~147~~99 thousand was charged to share capital and $~~719~~426 million was charged to paid in surplus.

All NCIB purchases were made in accordance with ~~the~~their respective ~~NCIB~~ programs at prevailing market prices plus brokerage fees, with consideration allocated to share capital up to the par value of the shares, with any excess allocated to paid in surplus.

During the three months ended ~~June 30, 2023,~~March 31, 2024, the Company declared and paid dividends of $0.30 per share of common stock totaling $8280 million ~~(2022~~(2023 - $0.25 per share of common stock totaling $64 ~~million).~~

~~During the six months ended June 30, 2023, the Company declared and paid dividends of $0.55~~ ~~per share of common stock totaling $143~~ ~~million (2022 - $0.45~~ ~~per share of common stock totaling $116~~61 million).

On ~~July 27, 2023~~May 7, 2024, the Board of Directors declared a dividend of $0.30 per share of common stock payable on ~~September 29, 2023~~June 28, 2024, to shareholders of record as of ~~September 15, 2023~~June 14, 2024.

Shares issued as a result of awards granted from stock-based compensation plans are ~~generally~~ funded out of the common stock authorized for issuance as approved by the Company’s shareholders.

Certain PSUs and RSUs are classified as equity-settled if the Company has sufficient common stock held in reserve for issuance. These awards are included in the calculation of fully diluted net earnings (loss) per share of common stock, using the treasury stock method, if dilutive.

Ovintiv’s stock options with associated Tandem Stock Appreciation Rights (“TSARs”) give the employee the right to purchase shares of common stock of the Company or receive cash. Historically, most holders of options have elected to exercise their TSARs in exchange for a cash payment. As a result, outstanding options are not considered potentially dilutive securities.


~~14.~~15.	Accumulated Other Comprehensive Income


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2023			2022			2023			2022			2024			2023

Foreign Currency Translation Adjustment
Balance, Beginning of Period	$	939		$	1,072		$	937		$	1,044
Balance, Beginning of Year													$	1,000		$	937
Change in Foreign Currency Translation Adjustment		53			(59	)		55			(31	)		(76	)		2
Balance, End of Period	$	992		$	1,013		$	992		$	1,013		$	924		$	939

Pension and Other Post-Employment Benefit Plans
Balance, Beginning of Period	$	52		$	47		$	54		$	48
Balance, Beginning of Year													$	50		$	54

Amounts Reclassified from Other Comprehensive Income:
Reclassification of net actuarial (gains) and losses to net earnings (See Note 17)		(2	)		(3	)		(4	)		(4	)
Reclassification of net actuarial (gains) and losses to net earnings (See Note 18)														(1	)		(2	)
Income taxes		1			1			1			1			-			-
Balance, End of Period	$	51		$	45		$	51		$	45		$	49		$	52
Total Accumulated Other Comprehensive Income	$	1,043		$	1,058		$	1,043		$	1,058		$	973		$	991


~~15.~~16.	Variable Interest Entities

Veresen Midstream Limited Partnership

Veresen Midstream Limited Partnership (“VMLP”) provides gathering, compression and processing services under various agreements related to the Company’s development of liquids and natural gas production in the Montney play. As at ~~June 30, 2023,~~March 31, 2024, VMLP provides approximately ~~1,156~~1,153 MMcf/d of natural gas gathering and compression and ~~918~~913 MMcf/d of natural gas processing under long-term service agreements with remaining terms ranging from ~~eight~~seven to 2221 years and have various renewal terms providing up to a potential maximum of 10 years.

Ovintiv has determined that VMLP is a variable interest entity and that Ovintiv holds variable interests in VMLP. Ovintiv is not the primary beneficiary as the Company does not have the power to direct the activities that most significantly impact VMLP’s economic performance. These key activities relate to the construction, operation, maintenance and marketing of the assets owned by VMLP. The variable interests arise from certain terms under the various long-term service agreements and include: i) a take or pay for volumes in certain agreements; ii) an operating fee of which a portion can be converted into a fixed fee once VMLP assumes operatorship of certain assets; and iii) a potential payout of minimum costs in certain agreements. The potential payout of minimum costs will be assessed in the eighth year of the assets’ service period and is based on whether there is an overall shortfall of total system cash flows from natural gas gathered and compressed under certain agreements. The potential payout amount can be reduced in the event VMLP markets unutilized capacity to third-party users. Ovintiv is not required to provide any financial support or guarantees to VMLP.

As a result of Ovintiv’s involvement with VMLP, the maximum total exposure to loss related to the commitments under the agreements is estimated to be $~~1,367~~1,180 million as at ~~June 30, 2023.~~March 31, 2024. The estimate comprises the take or pay volume commitments and the potential payout of minimum costs. The take or pay volume commitments associated with certain gathering and processing assets are included in Note 2122 under Transportation and Processing. The potential payout requirement is highly uncertain as the amount is contingent on future production estimates, pace of development and downstream transportation constraints. As at ~~June 30, 2023,~~March 31, 2024, accounts payable and accrued liabilities included $~~0.6~~0.4 million related to the take or pay commitment.

2422


~~16.~~17.	Compensation Plans

Ovintiv has a number of compensation arrangements under which the Company awards various types of long-term incentive grants to eligible employees and Directors. They may include Stock Appreciation Rights (“SARs”), TSARs, PSUs, Deferred Share Units (“DSUs”) and RSUs.

Ovintiv accounts for certain PSUs and RSUs as equity-settled stock-based payment transactions provided there is sufficient common stock held in reserve for issuance. SARs, TSARs and DSUs are accounted for as cash-settled stock-based payment transactions. The Company accrues compensation costs over the vesting period based on the fair value of the rights determined using the Black-Scholes-Merton or other appropriate fair value models.

During the first quarter of 2023, Ovintiv’s Board of Directors resolved to settle certain PSU awards and RSU awards with the issuance of the Company’s common stock. Accordingly, these awards were modified and reclassified as equity-settled share-based payment transactions at the modification date. The modification date fair value of the awards was US$~~43.80~~ ~~per share and C$59.47~~ ~~per share for the U.S. dollar denominated and Canadian dollar denominated awards, respectively, and there was no incremental compensation cost recognized at the modification date.~~

The following weighted average assumptions were used to determine the fair value of SAR and TSAR units outstanding:

As at June 30, 2023

As at June 30, 2022

As at March 31, 2024

As at March 31, 2023

US$ SAR

C$ TSAR

US$ SAR

C$ TSAR

US$ SAR

C$ TSAR

US$ SAR

C$ TSAR

Share Units

Risk Free Interest Rate

4.61%

3.12%

4.16%

3.79%

Dividend Yield

3.15%

3.21%

2.26%

2.23%

2.31%

2.30%

2.77%

2.78%

Expected Volatility Rate (1)

59.69%

55.88%

107.62%

106.01%

50.59%

47.01%

64.06%

60.86%

Expected Term

1.4 yrs

1.2 yrs

1.7 yrs

1.6 yrs

1.5 yrs

1.4 yrs

Market Share Price

US$38.07

C$50.42

US$44.19

C$56.94

US$51.90

C$70.28

US$36.08

C$48.72

Weighted Average Grant Date Fair Value

US$44.87

C$62.66

US$39.92

C$56.97

US$41.11

C$55.44

US$45.01

C$62.36

(1)

Volatility was estimated using historical rates.

The Company has recognized the following share-based compensation costs:


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2023			2022			2023			2022			2024			2023

Total Compensation Costs of Transactions Classified as Cash-Settled	$	4		$	1		$	(24	)	$	90		$	5		$	(28	)
Total Compensation Costs of Transactions Classified as Equity-Settled		24			21			45			31			24			21
Less: Total Share-Based Compensation Costs Capitalized		(5	)		(7	)		(13	)		(16	)		(6	)		(8	)
Total Share-Based Compensation Expense (Recovery)	$	23		$	15		$	8		$	105		$	23		$	(15	)

Recognized in the Condensed Consolidated Statement of Earnings in:
Operating	$	7		$	8		$	11		$	19		$	8		$	4
Administrative		16			7			(3	)		86			15			(19	)
	$	23		$	15		$	8		$	105		$	23		$	(15	)

As at ~~June 30, 2023,~~March 31, 2024, the liability for cash-settled share-based payment transactions totaled $1417 million ($~~153~~ ~~million as at December 31, 2022), of which $~~14 ~~million ($139~~ ~~million as at December 31, 2022) is recognized in accounts payable and accrued liabilities and~~ ~~nil~~ ($14 million as at December 31, ~~2022)~~2023), which is recognized in ~~other liabilities~~accounts payable and ~~provisions in the Condensed Consolidated Balance Sheet.~~accrued liabilities.

The following units were granted primarily in conjunction with the Company’s annual grant of long-term incentive awards. The PSUs and RSUs were granted at the volume-weighted average trading price of shares of Ovintiv common stock for the five days prior to the grant date.


~~Six~~Three Months Ended ~~June 30, 2023~~March 31, 2024 (thousands of units)

PSUs			~~1,891~~1,405
RSUs			~~1,636~~572
DSUs			63

2523


~~17.~~18.	Pension and Other Post-Employment Benefits

The Company has recognized total benefit plans expense which includes pension benefits and other post-employment benefits (“OPEB”) for the ~~six~~three months ended ~~June 30~~March 31 as follows:


	Pension Benefits				OPEB						Total						Pension Benefits				OPEB						Total
	2023		2022		2023			2022			2023			2022			2024		2023		2024			2023			2024			2023

Net Defined Periodic Benefit Cost	$	1	$	-	$	(2	)	$	(2	)	$	(1	)	$	(2	)	$	-	$	1	$	(1	)	$	(1	)	$	(1	)	$	-
Defined Contribution Plan Expense		12		12		-			-			12			12			7		6		-			-			7			6
Total Benefit Plans Expense	$	13	$	12	$	(2	)	$	(2	)	$	11		$	10		$	7	$	7	$	(1	)	$	(1	)	$	6		$	6

Of the total benefit plans expense, $116 million ~~(2022~~(2023 - $106 million) was included in operating expense and $21 million ~~(2022~~(2023 - $31 million) was included in administrative expense. Excluding service costs, net defined periodic benefit gains of $21 million ~~(2022~~(2023 - gains of $31 million) were recorded in other (gains) losses, net.

The net defined periodic benefit cost for the ~~six~~three months ended ~~June 30~~March 31 is as follows:


	Defined Benefits						OPEB						Total						Defined Benefits						OPEB						Total
	2023			2022			2023			2022			2023			2022			2024			2023			2024			2023			2024			2023

Service Cost	$	-		$	-		$	1		$	1		$	1		$	1		$	-		$	-		$	-		$	1		$	-		$	1
Interest Cost		4			3			1			1			5			4			1			2			-			-			1			2
Expected Return on Plan Assets		(3	)		(3	)		-			-			(3	)		(3	)		(1	)		(1	)		-			-			(1	)		(1	)
Amounts Reclassified from Accumulated Other Comprehensive Income:
Amortization of net actuarial (gains) and losses		-			-			(4	)		(4	)		(4	)		(4	)		-			-			(1	)		(2	)		(1	)		(2	)
Total Net Defined Periodic Benefit Cost (1)	$	1		$	-		$	(2	)	$	(2	)	$	(1	)	$	(2	)	$	-		$	1		$	(1	)	$	(1	)	$	(1	)	$	-

(1)

The components of total net defined periodic benefit cost, excluding the service cost component, are included in other (gains) losses, net.

2624


~~18.~~19.	Fair Value Measurements

The fair values of cash and cash equivalents, accounts receivable and accrued revenues, and accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of those instruments. The fair values of restricted cash and marketable securities included in other assets approximate their carrying amounts due to the nature of the instruments held.

Recurring fair value measurements are performed for risk management assets and liabilities and other derivative contracts, as discussed further in Note ~~19.~~20. These items are carried at fair value in the Condensed Consolidated Balance Sheet and are classified within the three levels of the fair value hierarchy in the following tables.

Fair value changes and settlements for amounts related to risk management assets and liabilities are recognized in revenues and foreign exchange gains and losses according to their purpose.


As at June 30, 2023	Level 1 Quoted Prices in Active Markets		Level 2 Other Observable Inputs		Level 3 Significant Unobservable Inputs			Total Fair Value		Netting (1)			Carrying Amount
As at March 31, 2024															Level 1 Quoted Prices in Active Markets		Level 2 Other Observable Inputs		Level 3 Significant Unobservable Inputs			Total Fair Value		Netting (1)			Carrying Amount

Risk Management Assets
Commodity Derivatives:
Current assets	$	2	$	134		$	53	$	189	$	(27	)	$	162	$	-	$	186		$	-	$	186	$	(43	)	$	143
Long-term assets		-		20			7		27		(6	)		21		-		1			-		1		(1	)		-
Foreign Currency Derivatives:
Current assets		-		5			-		5		-			5		-		3			-		3		-			3

Risk Management Liabilities
Commodity Derivatives:
Current liabilities	$	-	$	32		$	-	$	32	$	(27	)	$	5	$	-	$	32		$	41	$	73	$	(43	)	$	30
Long-term liabilities		-		13			-		13		(6	)		7		-		9			-		9		(1	)		8

Other Derivative Contracts (2)
Current in accounts payable and accrued liabilities	$	-	$	5		$	-	$	5	$	-		$	5	$	-	$	4		$	-	$	4	$	-		$	4

As at December 31, 2022	Level 1 Quoted Prices in Active Markets		Level 2 Other Observable Inputs		Level 3 Significant Unobservable Inputs			Total Fair Value		Netting (1)			Carrying Amount
As at December 31, 2023															Level 1 Quoted Prices in Active Markets		Level 2 Other Observable Inputs		Level 3 Significant Unobservable Inputs			Total Fair Value		Netting (1)			Carrying Amount

Risk Management Assets
Commodity Derivatives:
Current assets	$	-	$	93		$	12	$	105	$	(53	)	$	52	$	-	$	188		$	16	$	204	$	(1	)	$	203
Long-term assets		-		34			-		34		-			34		-		5			-		5		(1	)		4
Foreign Currency Derivatives:
Current assets		-		1			-		1		-			1		-		11			-		11		-			11

Risk Management Liabilities
Commodity Derivatives:
Current liabilities	$	-	$	128		$	-	$	128	$	(53	)	$	75	$	-	$	1		$	-	$	1	$	(1	)	$	-
Foreign Currency Derivatives:
Current liabilities		-		11			-		11		-			11
Long-term liabilities																-		3			-		3		(1	)		2

Other Derivative Contracts (2)
Long-term in other liabilities and provisions	$	-	$	5		$	-	$	5	$	-		$	5
Current in accounts payable and accrued liabilities															$	-	$	4		$	-	$	4	$	-		$	4

(1)

Netting to offset derivative assets and liabilities where the legal right and intention to offset exists, or where counterparty master netting arrangements contain provisions for net settlement.

(2)

Includes credit derivatives associated with certain prior years’ divestitures.

2725

The Company’s Level 1 and Level 2 risk management assets and liabilities consist of commodity fixed price contracts, NYMEX three-way options, NYMEX costless collars, foreign currency swaps and basis swaps with terms to 2025. The fair values of these contracts are estimated using inputs which are either directly or indirectly observable from active markets, such as exchange and other published prices, broker quotes and observable trading activity throughout the term of the instruments.

Level 3 Fair Value Measurements

As at ~~June 30, 2023,~~March 31, 2024, the Company’s Level 3 risk management assets and liabilities consist of WTI three-way options and WTI costless collars with terms to ~~2024.~~2025. The WTI three-way options are a combination of a sold call, a bought put and a sold put. The WTI costless collars are a combination of a sold call and a bought put. These contracts allow the Company to participate in the upside of commodity prices to the ceiling of the call option and provide the Company with complete (collars) or partial (three-way) downside price protection through the put options. The fair values of these contracts are determined using an option pricing model using observable and unobservable inputs such as implied volatility. The unobservable inputs are obtained from third parties whenever possible and reviewed by the Company for reasonableness.

A summary of changes in Level 3 fair value measurements for risk management positions is presented below:


	Six Months Ended					Three Months Ended
	June 30,					March 31,
	2023		2022			2024			2023

Balance, Beginning of Year	$	12	$	(172	)	$	16		$	12
Total Gains (Losses)		48		(683	)		(57	)		8
Purchases, Sales, Issuances and Settlements:
Purchases, sales and issuances		-		-			-			-
Settlements		-		420			-			-
Transfers Out of Level 3		-		-			-			-
Balance, End of Period	$	60	$	(435	)	$	(41	)	$	20
Change in Unrealized Gains (Losses) During the
Period Included in Net Earnings (Loss)	$	48	$	(263	)	$	(57	)	$	8

Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at ~~June 30, 2023:~~March 31, 2024:


	Valuation Technique	Unobservable Input	Range	Weighted Average (1)

Risk Management - WTI Options	Option Model	Implied Volatility	2819% - 6635%	3233%

(1)

Unobservable inputs were weighted by the relative fair value of the instruments.

A 10 percent increase or decrease in implied volatility for the WTI options would cause an approximate corresponding $34 million ($21 million as at December 31, ~~2022)~~2023) increase or decrease to net risk management assets and liabilities.

2826


~~19.~~20.	Financial Instruments and Risk Management

A) Financial Instruments

Ovintiv’s financial assets and liabilities are recognized in cash and cash equivalents, accounts receivable and accrued revenues, other assets, accounts payable and accrued liabilities, risk management assets and liabilities, long-term debt, and other liabilities and provisions.

B) Risk Management Activities

Ovintiv uses derivative financial instruments to manage its exposure to fluctuating commodity prices and foreign currency exchange rates. The Company does not apply hedge accounting to any of its derivative financial instruments. As a result, gains and losses from changes in the fair value are recognized in net earnings (loss).

Commodity Price Risk

Commodity price risk arises from the effect that fluctuations in future commodity prices may have on revenues from production. To partially mitigate exposure to commodity price risk, the Company has entered into various derivative financial instruments. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors.

Oil and NGLs - To partially mitigate oil and NGL commodity price risk, the Company uses WTI- and NGL-based contracts such as fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas, products and price points.

Natural Gas - To partially mitigate natural gas commodity price risk, the Company uses NYMEX-based contracts such as fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas and benchmark price points.

Foreign Exchange Risk

Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at ~~June 30, 2023,~~March 31, 2024, the Company has entered into $~~266~~301 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$~~1.3470~~1.3622 to US$1, which mature monthly through the remainder of ~~2023.~~2024.

2927

Risk Management Positions as at ~~June 30, 2023~~March 31, 2024


	Notional Volumes	Term	Average Price	Fair Value			Notional Volumes	Term	Average Price	Fair Value

Oil and NGL Contracts			US$/bbl						US$/bbl

Fixed Price Contracts
WTI Fixed Price	35.0 Mbbls/d	2023	76.94	$	41
WTI Fixed Price	12.4 Mbbls/d	2024	73.69		19		8.3 Mbbls/d	2024	73.69	$	(19	)
Ethane Fixed Price	5.0 Mbbls/d	2024	10.28		(1	)	5.0 Mbbls/d	2024	10.28		2

WTI Three-Way Options
Sold call / bought put / sold put	40.0 Mbbls/d	2023	111.60 / 65.63 / 50.00		14		30.1 Mbbls/d	2024	86.75 / 65.00 / 50.00		(13	)
Sold call / bought put / sold put	8.3 Mbbls/d	2024	90.13 / 65.00 / 50.00		7		11.4 Mbbls/d	2025	83.67 / 65.00 / 50.00		(7	)

WTI Costless Collars
Sold call / bought put	35.0 Mbbls/d	2023	87.60 / 65.00		10		28.2 Mbbls/d	2024	81.78 / 64.41		(21	)
Sold call / bought put	37.3 Mbbls/d	2024	81.34 / 64.67		29

Basis Contracts (1)		2023			2			2024			-

Other Financial Positions					-
Oil and NGLs Fair Value Position					121						(58	)

Natural Gas Contracts			US$/Mcf						US$/Mcf

Fixed Price Contracts
NYMEX Fixed Price	200 MMcf/d	2024	3.62		6		200 MMcf/d	2024	3.62		67

NYMEX Three-Way Options
Sold call / bought put / sold put	395 MMcf/d	2023	8.90 / 3.85 / 2.76		55		200 MMcf/d	2024	4.48 / 3.00 / 2.25		26
Sold call / bought put / sold put	150 MMcf/d	2024	4.56 / 3.00 / 2.25		(2	)	410 MMcf/d	2025	4.49 / 3.00 / 2.25		(7	)

NYMEX Costless Collars
Sold call / bought put	200 MMcf/d	2023	3.68 / 3.00		7		400 MMcf/d	2024	4.13 / 3.00		81
Sold call / bought put	400 MMcf/d	2024	4.37 / 3.00		(5	)

Basis Contracts (2)		2023			(24	)		2024			(2	)
		2024			5
		2025			7			2025			(2	)

Other Financial Positions					1						-
Natural Gas Fair Value Position					50						163

Other Derivative Contracts
Fair Value Position (3)					(5	)					(4	)

Foreign Currency Contracts
Fair Value Position (4)		2023			5			2024			3
Total Fair Value Position				$	171					$	104

(1)

Ovintiv has entered into oil differential swaps associated with Canadian condensate and WTI.

(2)

Ovintiv has entered into natural gas basis swaps associated with AECO, ~~Malin,~~ Waha and NYMEX.

(3)

Includes credit derivatives associated with certain prior years’ divestitures.

(4)

Ovintiv has entered into U.S. dollar denominated fixed-for-floating average currency swaps to protect against fluctuations between the Canadian and U.S. dollars.

3028

Earnings Impact of Realized and Unrealized Gains (Losses) on Risk Management Positions


	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2023			2022			2023			2022			2024			2023

Realized Gains (Losses) on Risk Management
Commodity and Other Derivatives:
Revenues (1)	$	5		$	(808	)	$	(71	)	$	(1,254	)	$	46		$	(76	)
Foreign Currency Derivatives:
Foreign exchange		(3	)		1			(7	)		2			-			(4	)
Interest Rate Derivatives:
Interest Rate (2)		1			-			1			-
	$	3		$	(807	)	$	(77	)	$	(1,252	)	$	46		$	(80	)

Unrealized Gains (Losses) on Risk Management
Commodity and Other Derivatives:
Revenues (3)	$	142		$	513		$	160		$	(499	)
Revenues (1)													$	(100	)	$	18
Foreign Currency Derivatives:
Foreign exchange		9			(7	)		15			(4	)		(8	)		6
	$	151		$	506		$	175		$	(503	)	$	(108	)	$	24

Total Realized and Unrealized Gains (Losses) on Risk Management, net
Commodity and Other Derivatives:
Revenues (1) (3)	$	147		$	(295	)	$	89		$	(1,753	)
Foreign Currency Derivatives:
Revenues (1)													$	(54	)	$	(58	)
Foreign Currency Derivatives:
Foreign exchange		6			(6	)		8			(2	)		(8	)		2
Interest Rate Derivatives:
Interest Rate (2)		1			-			1			-
	$	154		$	(301	)	$	98		$	(1,755	)	$	(62	)	$	(56	)

(1)

~~Includes realized gains of~~ ~~nil~~ ~~for the three and six months ended June 30, 2023, respectively (2022 - gains of~~ ~~nil~~ ~~and $~~2 ~~million, respectively), related to other derivative contracts.~~

~~(2)~~

~~The interest rate swap was executed and settled during the three months ended June 30, 2023, in relation to the senior notes issuance described in Note 11. The gain was recognized in interest expense.~~

~~(3)~~

There were no realized or unrealized gains or losses related to other derivative contracts for the three ~~or six~~ months ended ~~June 30, 2023,~~March 31, 2024 or ~~2022.~~2023.

Reconciliation of Unrealized Risk Management Positions from January 1 to ~~June 30~~March 31

Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 1819 for a discussion of fair value measurements.

Credit risk arises from the potential that the Company may incur a loss if a counterparty to a financial instrument fails to meet its obligation in accordance with agreed terms. While exchange-traded contracts are subject to nominal credit risk due to the financial safeguards established by the exchanges and clearing agencies, over-the-counter traded contracts expose Ovintiv to counterparty credit risk. Counterparties to the Company’s derivative financial instruments consist primarily of major financial institutions and companies within the energy industry. This credit risk exposure is mitigated through the use of credit policies approved by the Board of Directors governing the Company’s credit portfolio including credit practices that limit transactions according to counterparties’ credit quality. Mitigation strategies may include master netting arrangements, requesting collateral, purchasing credit insurance and/or transacting credit derivatives. The Company executes commodity derivative financial instruments under master agreements that have netting provisions that provide for offsetting payables against receivables. Ovintiv actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. As at ~~June 30, 2023,~~March 31, 2024, Ovintiv’s maximum exposure of loss due to credit risk from derivative financial instrument assets on a gross and net fair value basis was $~~221~~190 million and $~~188~~146 million, respectively, as disclosed in Note ~~18.~~19. The Company had no significant credit derivatives in place and held no collateral at ~~June 30, 2023.~~March 31, 2024.

Any cash equivalents include high-grade, short-term securities, placed primarily with financial institutions with investment grade ratings. Any foreign currency agreements entered into are with major financial institutions that have investment grade credit ratings.

A substantial portion of the Company’s accounts receivable are with customers and working interest owners in the oil and gas industry and are subject to normal industry credit risks. As at ~~June 30, 2023,~~March 31, 2024, approximately 8692 percent (8891 percent as at December 31, ~~2022)~~2023) of Ovintiv’s accounts receivable and financial derivative credit exposures were with investment grade counterparties.

During 2015 and 2017, the Company entered into agreements resulting from divestitures, which may require Ovintiv to fulfill certain payment obligations on the take or pay volume commitments assumed by the purchasers. The circumstances that would require Ovintiv to perform under the agreements include events where a purchaser fails to make payment to the guaranteed party and/or a purchaser is subject to an insolvency event. The agreements expire in June 2024 with a fair value recognized of $54 million as at ~~June 30, 2023~~March 31, 2024 ($54 million as at December 31, ~~2022)~~2023). The maximum potential amount of undiscounted future payments is $235 million as at ~~June 30, 2023,~~March 31, 2024, and is considered unlikely.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The MD&A is intended to provide a narrative description of the Company’s business from management’s perspective, which includes an overview of Ovintiv’s condensed consolidated results for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024, and period-over-period comparison. This MD&A should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and accompanying notes for the period ended ~~June 30, 2023~~March 31, 2024 (“Consolidated Financial Statements”), which are included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and accompanying notes and MD&A for the year ended December 31, ~~2022,~~2023, which are included in Items 8 and 7, respectively, of the ~~2022~~2023 Annual Report on Form 10‑K.

Common industry terms and abbreviations are used throughout this MD&A and are defined in the Definitions, Conversions and Conventions sections of this Quarterly Report on Form 10-Q. This MD&A includes the following sections:

Ovintiv isaims to be a leading North American energy producer ~~that~~and is focused on developing its high-quality multi-basin portfolio of oil ~~NGLs~~ and natural gas producing plays. Ovintiv is committed to ~~growing long-term shareholder value by safely~~ delivering onquality returns from its capital investment, generating significant cash flows and providing durable cash returns to its shareholders through the commodity price cycle. The Company aims to achieve its strategic priorities through execution excellence, disciplined capital allocation, and commercial acumen and risk ~~management, while~~management. In addition, the Company is dedicated to driving progress in areas of environmental, social, and governance, ~~progress. The Company’s strategy is founded on~~aligning with its ~~multi-basin portfolio of top-tier assets, financial strength, as well as its core and foundational values.~~commitment to corporate responsibility.

Ovintiv ~~is delivering~~continually monitors and evaluates changing market conditions to maximize cash flows, mitigate risks and renew its premium well inventory. The Company’s assets, located in some of the most prolific plays in North America, form a multi-basin, multi-product portfolio which enables flexible and efficient investment of capital that supports the Company’s strategy.

Ovintiv seeks to deliver results in a socially and environmentally responsible manner. ~~Thoughtfully developed best~~Best practices are deployed across its assets, allowing the Company to capitalize on operational efficiencies and decrease emissions intensity. The Company’s sustainability reporting, which outlines its key metrics, targets and relative progress achieved, ~~relating to ESG practices~~ can be found in the Company Outlook section of this MD&A and on the Company’s sustainability website.

Ovintiv continually reviews and evaluates its strategy and changing market conditions to maximize cash flow generation from its high-quality assets and renew its premium well inventory in some of the best plays in North America. These assets form a multi-basin portfolio of oil, NGLs and natural gas producing plays enabling flexible and efficient investment of capital that support the Company’s strategy.

Underpinning Ovintiv’s strategy are core values of one, agile, innovative and driven, which guide the organization to be collaborative, responsive, flexible and determined. The Company is committed to excellence with a passion to drive corporate financial performance and shareholder value.

For additional information on Ovintiv’s strategy, its reporting segments and the plays in which the Company operates, refer to Items 1 and 2 of the ~~2022~~2023 Annual Report on Form 10-K.

In evaluating its operations and assessing its leverage, Ovintiv reviews performance-based measures such as Non‑GAAP Cash Flow and debt-based metrics such as Debt to Adjusted Capitalization, Debt to EBITDA and Debt to Adjusted EBITDA, which are non-GAAP measures and do not have any standardized meaning under U.S. GAAP. These measures may not be similar to measures presented by other issuers and should not be viewed as a substitute for measures reported under U.S. GAAP. Additional information regarding these measures, including reconciliations to the closest GAAP measure, can be found in the Non-GAAP Measures section of this MD&A.

During the first ~~six months~~quarter of ~~2023,~~2024, the Company focused on ~~executing~~commencing its ~~2023~~2024 capital investment plan aimed at maximizing profitability through operational and capital efficiencies ~~minimizing the impact of inflation~~ and delivering cash from operating activities. ~~In conjunction with closing the Permian Acquisition as discussed below, the Company was also focused on integrating the additional Permian assets into its existing operations. Lower~~Higher upstream product revenues in the first ~~six months~~quarter of ~~2023~~2024 compared to ~~2022,~~2023, primarily resulted from higher production volumes, partially offset by lower average realized natural gas prices, excluding the impact of risk management activities. Production volumes increased 12 percent compared to the first quarter of 2023 primarily due to the addition of the Permian assets acquired in the second quarter of 2023. Decreases in average realized natural gas ~~and liquids~~ prices of 4649 percent ~~and 32 percent, respectively,~~ were primarily due to lower benchmark prices. Ovintiv continues to focus on optimizing realized prices from the diversification of the Company’s downstream markets.

The Company’s upstream operations refers to the summation of the USA and Canadian operating segments. Additional information on the items above and other expenses can be found in the Results of Operations section of this MD&A.

~~2023~~Subsequent to the quarter end, Ovintiv resolved a dispute related to the previous disposition of certain legacy assets. The Company expects to receive proceeds later in the year, at which time, the Company will recognize a gain within Other (gains) losses in its Consolidated Statement of Earnings. The Company estimates that the aggregate gain will be approximately $150 million.

The oil and gas industry is cyclical and commodity prices are inherently volatile. Oil prices reflect global supply and demand dynamics as well as the geopolitical and macroeconomic environment.

Oil prices for the remainder of ~~2023 will~~2024 are expected to be impacted by the interplay between ~~recessionary concerns and~~ the ~~resulting direction~~pace of global economic growth and demand for oil, continued OPEC+ production restraint and continued supply uncertainties resulting from ~~the Russian invasion of Ukraine.~~geopolitical events. Recessionary concerns continue to have an impact on global demand as central banks ~~maintain tight monetary policies.~~evaluate and recalibrate their strategies in response to the prevailing economic environment. Supply and the accumulation of global oil inventories ~~will~~are expected to be impacted by changes in OPEC+ production levels, ~~the extent of decline in oil exports from Russia~~consumer demand behavior and ~~changes in production by non-OPEC countries.~~

OPEC+ continues to proactively adjust its production in an attempt to stabilize global oil markets. During the second quarter of 2023, OPEC+ announced additional production cuts which are expected to remain in place through 2024 and Russia extended previously announced production cuts which are expected to remain in place until the end of 2023.geopolitical volatility.

Natural gas prices are primarily impacted by structural changes in supply and demand as well as deviations from seasonally normal weather.

Natural gas prices for the remainder of ~~2023 will~~2024 are expected to be impacted by the interplay between natural gas production and associated natural gas from oil production, changes in demand from the power generation sector, changes in export levels of U.S. liquefied natural gas, impacts from seasonal weather, as well as supply chain constraints or other disruptions resulting from ~~the Russian invasion of Ukraine.~~geopolitical events.

The Company will continue to exercise discretion and discipline, and intends to optimize capital allocation ~~throughout 2023 following~~through the ~~closing~~remainder of ~~the Permian Acquisition and~~2024 as the commodity price environment evolves. Ovintiv pursues innovative ways to maximize cash flows and ~~minimize the impact of inflation~~ to reduce upstream operating and administrative expenses.

Markets for oil and natural gas are exposed to different price risks and are inherently volatile. To mitigate price volatility and provide more certainty around cash flows, the Company enters into derivative financial instruments. ~~With the closing of the Permian Acquisition and the expected additional production volumes in 2023, the Company has undertaken additional oil hedge positions since the agreement was announced.~~ As at ~~June 30, 2023,~~March 31, 2024, the Company has hedged approximately ~~110.0~~66.6 Mbbls/d of expected oil ~~and condensate~~ production and ~~595~~800 MMcf/d of expected natural gas production for the remainder of the year. In addition, Ovintiv proactively utilizes transportation contracts to diversify the Company’s sales markets, thereby reducing significant exposure to any given market and regional pricing.

Additional information on Ovintiv’s hedging program can be found in Note 1920 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The Company ~~continues to execute~~has commenced its ~~2023~~2024 capital investment program, focusing on maximizing returns from ~~high margin liquids~~high-margin oil and condensate, and generating ~~significant~~ cash flows in excess of capital expenditures.

~~In June 2023, the Company revised its second quarter and full year 2023 capital investment guidance ranges reflecting the closing of the Permian Acquisition and sale of the Bakken assets.~~ During the ~~second~~first quarter of ~~2023,~~2024, the Company invested ~~$640~~$591 million, which was ~~lower than~~in line with the ~~second~~first quarter guidance range of ~~$670~~$580 million to ~~$710 million due~~$620 million. The Company expects to ~~capital efficiencies and higher recoveries from updated operating contract terms. In July 2023, the Company further updated~~meet its full year ~~2023~~2024 capital investment guidance range ~~to $2,680~~of $2,200 million to ~~$2,850 million to reflect execution efficiencies and cost savings.~~

Ovintiv continually strives to improve well performance and lower costs through innovative techniques. Ovintiv’s large-scale cube development model utilizes multi-well pads and advanced completion designs to maximize returns and resource recovery from its reservoirs. The Company continues to enhance its multi-frac technology by shifting, where possible, from simultaneously fracing two wells (“Simulfrac”) to fracing three wells (“Trimulfrac”) at the same time. Ovintiv’s disciplined capital program and continuous innovation create flexibility to allocate capital in changing commodity markets to ~~minimize the impact of inflation and~~ maximize cash flows while preserving the long-term value of the Company’s multi-basin portfolio.

In June 2023, the Company updated its second quarter and full year 2023 guidance ranges for oil and condensate, and total production volumes to reflect the closing of the Permian Acquisition and sale of the Bakken assets.

During the ~~second~~first quarter of ~~2023,~~2024, total average production volumes were ~~573.0~~573.8 MBOE/d, which ~~exceeded~~was in line with the ~~second~~first quarter guidance range of ~~520.0~~560.0 MBOE/d to ~~540.0~~575.0 MBOE/d. Average oil and plant condensate production volumes were ~~185.9~~210.9 Mbbls/d and average other NGL production volumes were ~~96.8~~88.4 Mbbls/d, which were in line with first quarter guidance ranges of 208.0 Mbbls/d to 212.0 Mbbls/d and ~~average~~86.0 Mbbls/d to 89.0 Mbbls/d, respectively. Average natural gas production volumes were ~~1,743~~1,648 MMcf/d, which exceeded ~~second~~the first quarter guidance ~~ranges~~range of ~~175.0 Mbbls/d to 179.0 Mbbls/d, 85.0 Mbbls/d to 90.0 Mbbls/d and~~ 1,575 MMcf/d to 1,625 MMcf/~~d, respectively.~~d.

~~In July 2023, the Company further updated its full year 2023 production volume guidance ranges to reflect strong well performance and lower royalty rates in Montney.~~ The Company expects to meet its updated full year ~~2023~~2024 total production guidance range of ~~535.0~~560.0 MBOE/d to ~~550.0~~575.0 MBOE/d, including oil and plant condensate production volumes of approximately ~~190.0~~204.0 Mbbls/d to ~~196.0~~208.0 Mbbls/d, other NGLs production volumes of approximately ~~83.0~~88.0 Mbbls/d to ~~87.0~~92.0 Mbbls/d and natural gas production volumes of approximately ~~1,575~~1,600 MMcf/d to ~~1,625~~1,650 MMcf/d.

~~During~~Ovintiv promotes a collaborative culture that values knowledge exchange, open communication, continuous improvement and learning. This culture stimulates innovation and fosters the ~~first six months~~creation of ~~2023, the oil and gas industry experienced continued supply chain constraints and inflationary pressures~~best practices resulting ~~from the elevated commodity price environment. However, with recent declines~~ in commodity prices and oil and gas activity, the industry has begun to see decreases in inflationary pressures. While some supply chain constraints and inflationary pressures may persist for the remainder of 2023, the Company expects inflation to stabilize. Ovintiv continues to minimize any inflationary pressures with efficiency improvements and ~~effective supply chain management to reduce upstream operating expenses. The Company quickly deploys best practices across its portfolio, ultimately maximizing~~enhanced operational performance for the ~~performance and overall efficiency of its operations.~~Company.

~~In July 2023, the Company updated its upstream transportation and processing costs guidance range to approximately $8.25 per BOE to $8.75 per BOE for the remainder of the year.~~ The Company is on track to ~~maintain~~achieve full year upstream transportation and processing costs of approximately $7.50 per BOE to $8.00 per BOE, operating expenses of approximately ~~$4.00~~$4.25 per BOE to ~~$4.50~~$4.75 per BOE, and total production, mineral and other taxes of approximately four to five percent of upstream product revenues.

~~During~~ The Company’s upstream operations refers to the ~~second quarter of 2023, the Company closed the Permian Acquisition and funded the cash portion~~summation of the ~~transaction with net proceeds of $2,278 million from the issuance of senior unsecured notes, cash proceeds received from the sale of the Company’s Bakken assets, cash on hand~~USA and ~~proceeds from short-term borrowings.~~

As at June 30, 2023, the Company had $330 million of commercial paper outstanding under its U.S. commercial paper (“U.S. CP”) programs and $350 million outstanding under its revolving credit facilities.Canadian operating segments.

Additional information on Ovintiv’s long-term debt and liquidity position can be found in Note 11 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Liquidity and Capital Resources section of this MD&A, respectively.

~~Additional information on Ovintiv’s discrete third~~second quarter and updated full year ~~2023~~2024 Corporate Guidance can be accessed on the Company’s website at www.ovintiv.com.

Ovintiv recognizes climate change as a global concern and the importance of reducing its environmental footprint as part of the solution. The Company voluntarily participates in emission reduction programs and has adopted a range of strategies to help reduce emissions from its operations. These strategies include incorporating new and proven technologies, ~~and~~ optimizing processes in its operations and working closely with third-party providers to develop best practices. The Company continues to look for innovative techniques and efficiencies ~~to help maintain~~in support of its commitment to emission reductions.

~~In May 2023,~~ Ovintiv ~~published its full year 2022 ESG results in~~expects to publish its 2023 ~~sustainability~~Sustainability Report in May. The report ~~which highlights~~will highlight the Company’s 2023 environmental, social and governance results, and its progress in emissions intensity reductions ~~including an emissions reduction roadmap aimed~~with the goal to meet ~~the Company’s~~its Scope 1&2 GHG emissions target by 2030. As at the end of ~~2022,~~2023, the Company ~~has~~had achieved a greater than 3040 percent reduction in the Scope 1&2 GHG emissions intensity and is on track to meet its emissions intensity reduction target of 50 percent by 2030. The GHG emissions reduction target is tied to the annual compensation program for all employees.

~~Ovintiv’s constant pursuit~~During the second quarter of efficiencies and continuous improvements allowed the Company to eliminate routine flaring in its operations. The Company is in full alignment with the World Bank Zero Routine Flaring initiative, well ahead of the World Bank’s target date of 2030.

~~In June~~ 2023, the Company ~~closed the~~acquired assets in Permian ~~Acquisition, increasing~~which increased both oil production volumes and net premium ~~inventory in the Permian. The Company is working to understand the impact of the additional Permian assets on its emissions profile and~~well inventory. Ovintiv is undergoing an integration period to align the ~~performance~~emissions profile of the acquired inventory ~~into~~with the ~~Company’s existing assets.~~World Bank Zero Routine Flaring initiative. Ovintiv remains committed to its ~~ESG~~emissions reduction targets.

Ovintiv is committed to diversity, equity and inclusion (“DEI”). The Company’s social commitment framework, which is rooted in the Company’s foundational values of integrity, safety, sustainability, trust and respect, ~~fosters a~~reflects Ovintiv’s positive contributions to the communities where it operates and highlights the Company’s approach to enabling an inclusive culture that embraces diversity of ~~inclusion that respects stakeholders~~thought, background and ~~strengthens communities.~~experience.

Ovintiv remains committed to protecting the health and safety of its workforce. Safety is a foundational value at Ovintiv and plays a critical role in the Company’s belief that a safe workplace is a strong indicator of a well-managed business. This safety-oriented mindset enables the Company to quickly respond to emergencies and minimize any impacts to employees and business continuity. Safety performance goals are incorporated into the Company’s annual compensation program. Additional information on DEI and employee safety can be found in the Human Capital section of Items 1 and 2 of the ~~2022~~2023 Annual Report on Form 10-K.

Additional information on Ovintiv’s ~~ESG~~sustainable business practices are included in its most recent Sustainability Report on the Company’s sustainability website at https://sustainability.ovintiv.com.

Ovintiv’s revenues are substantially derived from sales of oil, NGLs and natural gas production. Increases or decreases in Ovintiv’s revenue, profitability and future production are highly dependent on the commodity prices the Company receives. Prices are market driven and fluctuate due to factors beyond the Company’s control, such as supply and demand, seasonality and geopolitical and economic factors. The Company’s realized prices generally reflect WTI, NYMEX, Edmonton Condensate and AECO benchmark prices, as well as other downstream benchmarks, including Houston and Dawn. The Company proactively mitigates price risk and optimizes margins by entering into firm transportation contracts to diversify market access to different sales points. Realized prices, excluding the impact of risk management activities, may differ from the benchmarks for many reasons, including quality, location, or production being sold at different market hubs.


	Three months ended June 30,									Six months ended June 30,									Three months ended March 31,
	Production Volumes (1)					Realized Prices (2)				Production Volumes (1)					Realized Prices (2)				Production Volumes (1)				Realized Prices (2)
	2023		2022			2023		2022		2023		2022			2023		2022		2024		2023		2024		2023

Oil (Mbbls/d, $/bbl)
USA Operations		142.4		132.7		$	72.83	$	108.58		134.8		130.4		$	73.41	$	101.05		170.2		127.2	$	76.17	$	74.06
Canadian Operations		-		0.1			-		100.11		0.1		0.1			71.44		91.79		0.2		0.1		72.34		71.44
Total		142.4		132.8			72.83		108.57		134.9		130.5			73.41		101.04		170.4		127.3		76.17		74.06

NGLs – Plant Condensate (Mbbls/d, $/bbl)
USA Operations		10.5		10.1			55.09		86.56		10.6		9.7			58.46		85.87		10.6		10.6		57.97		61.84
Canadian Operations		33.0		32.5			70.99		107.78		30.6		34.0			73.84		101.79		29.9		28.1		71.70		77.22
Total		43.5		42.6			67.14		102.74		41.2		43.7			69.89		98.26		40.5		38.7		68.10		73.01

NGLs – Other (Mbbls/d, $/bbl)
USA Operations		78.1		72.6			13.43		34.88		76.0		68.7			15.99		34.26		74.6		73.7		19.35		18.73
Canadian Operations		18.7		14.4			18.62		47.84		15.6		14.4			25.20		44.56		13.8		12.5		30.13		35.17
Total		96.8		87.0			14.43		37.03		91.6		83.1			17.56		36.04		88.4		86.2		21.03		21.11

Total Oil & NGLs (Mbbls/d, $/bbl)
USA Operations		231.0		215.4			51.94		82.70		221.4		208.8			52.99		78.36		255.4		211.5		58.79		54.16
Canadian Operations		51.7		47.0			52.06		89.39		46.3		48.5			57.43		84.77		43.9		40.7		58.65		64.32
Total		282.7		262.4			51.96		83.90		267.7		257.3			53.76		79.57		299.3		252.2		58.77		55.80

Natural Gas (MMcf/d, $/Mcf)
USA Operations		530		485			1.79		6.87		518		479			2.57		5.86		526		507		2.02		3.40
Canadian Operations		1,213		941			2.02		6.73		1,131		977			3.30		5.61		1,122		1,048		2.30		4.80
Total		1,743		1,426			1.95		6.78		1,649		1,456			3.07		5.69		1,648		1,555		2.21		4.34

Total Production (MBOE/d, $/BOE)
USA Operations		319.2		296.1			40.56		71.39		307.7		288.8			42.45		66.40		343.0		296.1		46.85		44.52
Canadian Operations		253.8		203.9			20.26		51.70		234.7		211.2			27.21		45.39		230.8		215.3		22.30		35.50
Total		573.0		500.0			31.56		63.36		542.4		500.0			35.86		57.52		573.8		511.4		36.97		40.72

Production Mix (%)
Oil & Plant Condensate		32		35							32		35							37		32
NGLs – Other		17		17							17		16							15		17
Total Oil & NGLs		49		52							49		51							52		49
Natural Gas		51		48							51		49							48		51

Production Change
Year Over Year (%) (3)
Total Oil & NGLs		8		(8	)						4		(8	)						19		-
Natural Gas		22		(11	)						13		(8	)						6		5
Total Production		15		(10	)						8		(9	)						12		2

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Oil revenues were ~~lower~~higher by ~~$368~~$330 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

~~Oil revenues were lower by $595 million compared to the first six months of 2022 primarily due to:~~

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

NGL revenues were ~~lower~~higher by ~~$299~~$1 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

~~NGL revenues were lower by $506 million compared to the first six months of 2022 primarily due to:~~

~~Natural gas revenues were lower by $571 million compared to the second quarter of 2022 primarily due to:~~

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Natural gas revenues were lower by ~~$584~~$277 million compared to the first ~~six months~~quarter of ~~2022~~2023 primarily due to:

As a means of managing commodity price volatility, Ovintiv enters into commodity derivative financial instruments on a portion of its expected oil, NGLs and natural gas production volumes. Additional information on the Company’s commodity price positions as at ~~June 30, 2023~~March 31, 2024, can be found in Note 1920 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The following tables provide the effects of the Company’s risk management activities on revenues.

Ovintiv recognizes fair value changes from its risk management activities each reporting period. The changes in fair value result from new positions and settlements that occur during each period, as well as the relationship between contract prices and the associated forward curves. Realized gains or losses on risk management activities related to commodity price mitigation are included in the USA Operations, Canadian Operations and Market Optimization revenues as the contracts are cash settled. Unrealized gains or losses on fair value changes of unsettled contracts are included in the Corporate and Other segment. Additional information on fair value changes can be found in Note 1819 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Market Optimization product revenues relate to activities that provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification. Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with the Company’s previous divestitures.

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Market Optimization product revenues decreased ~~$424~~$260 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

Operating expense includes costs paid by the Company, net of amounts capitalized, on oil and natural gas properties in which Ovintiv has a working interest. These costs primarily include labor, service contract fees, chemicals, fuel, water hauling, electricity and workovers.

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Operating expense ~~decreased $5~~increased $37 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

~~Operating expense increased $13 million compared to the first six months of 2022 primarily due to:~~

Additional information on the Company’s long-term incentive costs can be found in Note 1617 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Purchased product expense includes purchases of oil, NGLs and natural gas from third parties that are used to provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification. Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with the Company’s previous divestitures.

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Purchased product expense decreased ~~$423~~$261 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

~~Purchased product expense decreased $788 million compared to the first six months of 2022 primarily due to:~~

•

Lower oil and natural gas benchmark prices ($621 million), lower third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($85 million) and lower third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($82 million).

Depreciation, Depletion & Amortization

Proved properties within each country cost center are depleted using the unit-of-production method based on proved reserves as discussed in Note 1 to the Consolidated Financial Statements included in Item 8 of the ~~2022~~2023 Annual Report on Form 10-K. Depletion rates are impacted by impairments, acquisitions, divestitures and foreign exchange rates, as well as fluctuations in 12-month average trailing prices which affect proved reserves volumes. Corporate assets are carried at cost and depreciated on a straight-line basis over the estimated service lives of the assets.

Additional information can be found under Upstream Assets and Reserve Estimates in the Critical Accounting Estimates section of the MD&A included in Item 7 of the ~~2022~~2023 Annual Report on Form 10-K.

Three months ended June 30,

Six months ended June 30,

($ millions)

2023

2022

2023

2022

USA Operations

$
336

$
217

$
630

$
417

Canadian Operations

78

56

143

115

Upstream DD&A

414

273

773

532

Corporate & Other

5

5

10

10

Total

$
419

$
278

$
783

$
542

Three months ended June 30,

Six months ended June 30,

($/BOE)

2023

2022

2023

2022

USA Operations

$
11.56

$
8.05

$
11.31

$
7.98

Canadian Operations

$
3.36

$
3.04

$
3.37

$
3.01

Upstream DD&A

$
7.93

$
6.00

$
7.87

$
5.88


	$ millions				$/BOE
Three months ended March 31,	2024		2023		2024		2023

USA Operations	$	489	$	294	$	15.69	$	11.03
Canadian Operations		72		65	$	3.42	$	3.38
Upstream DD&A		561		359	$	10.75	$	7.81

Corporate & Other		5		5
Total	$	566	$	364

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

DD&A increased ~~$141~~$202 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

•

Higher depletion rates ~~in the USA~~ and ~~Canadian Operations ($102 million and $11 million, respectively) and higher~~ production volumes in the USA ~~and Canadian~~ Operations ($17145 million and ~~$13~~$50 million, respectively).

The depletion rate in the USA ~~and Canadian~~ Operations increased ~~$3.51~~$4.66 per BOE ~~and $0.32 per BOE, respectively~~ compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to a higher depletable ~~base.~~

~~Six months ended June 30, 2023 versus June 30, 2022~~

~~DD&A increased $241 million compared to~~base associated with the ~~first six months of 2022 primarily due to:~~

•

~~Higher depletion rates~~Permian assets acquired in the ~~USA and Canadian Operations ($185 million and $23 million, respectively) and higher production volumes in the USA and Canadian Operations ($27 million and $12 million, respectively);~~

~~partially offset by:~~

•

~~Higher U.S./Canadian dollar exchange rate ($7 million).~~

~~The depletion rate in the USA and Canadian Operations increased $3.33 per BOE and $0.36 per BOE, respectively compared to the first six months~~second quarter of ~~2022 primarily due to a higher depletable base.~~2023.

Administrative

Administrative expense represents costs associated with corporate functions provided by Ovintiv staff. These expenses primarily include salaries and benefits, operating lease, office, information technology, ~~transaction~~legal and long-term incentive costs.

Three months ended June 30,

Six months ended June 30,

($ millions)

2023

2022

2023

2022

Administrative, excluding Long-Term Incentive,

Transaction and Legal Costs, and Current

Expected Credit Losses (1)

$
66

$
62

$
137

$
128

Long-term incentive costs

16

7

(3
)

86

Transaction and legal costs

86

-

92

(1
)
Current expected credit losses

-

2

-

2

Total Administrative

$
168

$
71

$
226

$
215

Three months ended June 30,

Six months ended June 30,

($/BOE)

2023

2022

2023

2022

Administrative, excluding Long-Term Incentive,

Transaction and Legal Costs, and Current

Expected Credit Losses (1)

$
1.28

$
1.36

$
1.39

$
1.41

Long-term incentive costs

0.30

0.15

(0.03
)

0.95

Transaction and legal costs

1.65

-

0.94

(0.01
)
Current expected credit losses

-

0.05

-

0.03

Total Administrative

$
3.23

$
1.56

$
2.30

$
2.38


	$ millions						$/BOE
Three months ended March 31,		2024		2023				2024		2023

Administrative, excluding Long-Term Incentive and Legal Costs (1)		$	75	$	71			$	1.43	$	1.52
Long-term incentive costs			15		(19	)			0.29		(0.41	)
Legal costs			12		6				0.23		0.14
Total Administrative		$	102	$	58			$	1.95	$	1.25

(1)

The ~~second~~first quarter ~~and first six months~~ of ~~2023 include~~2024 includes costs related to The Bow office lease of $29 million ~~and $57 million, respectively (2022~~(2023 - ~~$29 million and $58 million, respectively)~~$28 million), half of which is recovered from sublease revenues.

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Administrative expense increased ~~$97~~$44 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

•

~~Transaction costs mainly related to the Permian Acquisition in the second quarter of 2023 ($82 million) and higher long-term~~Long-term incentive costs resulting from ~~an increase in the Company’s share price in the second quarter of 2023 compared to a decrease in 2022 ($9 million).~~

~~Six months ended June 30, 2023 versus June 30, 2022~~

~~Administrative expense increased $11 million compared to the first six months of 2022 primarily due to:~~

•

~~Transaction costs mainly related to the Permian Acquisition in the second quarter of 2023 ($82 million) and increases in legal and operating lease costs ($16 million);~~

~~partially offset by:~~

•

~~Recovery of long-term incentive costs resulting from a decrease~~changes in the Company’s share price in the first ~~six months~~quarter of 2023 ~~compared to an increase in 2022~~ ($8934 million) and higher legal costs ($6 million).

Other (Income) Expenses


	Three months ended June 30,					Six months ended June 30,						Three months ended March 31,
($ millions)	2023			2022		2023			2022			2024			2023

Interest	$	80		$	91	$	151		$	165		$	98		$	71
Foreign Exchange (Gain) Loss, Net		25			3		22			2			(28	)		(3	)
Other (Gains) Losses, Net		(11	)		-		(14	)		(27	)		(4	)		(3	)
Total Other (Income) Expenses	$	94		$	94	$	159		$	140		$	66		$	65

Interest

Interest expense primarily includes interest on Ovintiv’s short-term and long-term debt. Additional information on changes in interest can be found in Note 45 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Interest expense ~~decreased $11~~increased $27 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

•

~~A make-whole interest payment of $47 million resulting from the early redemption of the Company’s 2024 senior notes in June 2022 and interest savings~~Interest expense related to the ~~redemption of certain other~~ senior unsecured notes issued in ~~2022~~May 2023 ($1836 million);

partially offset by:

•

The acceleration of the fair value amortization related to the early redemption of the Company’s 2024 senior notes in June 2022 of $30 million, interest expense related to outstanding balances under the Company’s U.S. CP program and revolving credit facilities ($11 million) and interest expense related to senior unsecured notes issued in May 2023 ($11 million).

~~Six months ended June 30, 2023 versus June 30, 2022~~

~~Interest expense decreased $14 million compared to the first six months of 2022 primarily due to:~~

•

A make-whole interest payment of $47 million resulting from the early redemption of the Company’s 2024 senior notes in June 2022 and interest savings related to the redemption of certain other senior notes in 2022 ($34 million);

~~partially offset by:~~

•

The acceleration of the fair value amortization related to the early redemption of the Company’s 2024 senior notes in June 2022 of $30 million, interest expense related to outstanding balances under the Company’s U.S. CP program and revolving credit facilities ($19 million), interest expense related to senior unsecured notes issued in May 2023 ($11 million) and anAn assessment related to certain prior years’ tax items in the first quarter of 2023 ($8 million).

Foreign Exchange (Gain) Loss, Net

Foreign exchange gains and losses primarily result from the impact of fluctuations in the Canadian to U.S. dollar exchange rate. Additional information on changes in foreign exchange gains or losses can be found in Note 56 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Additional information on foreign exchange rates and the effects of foreign exchange rate changes can be found in Part I, Item 3 of this Quarterly Report on Form 10-Q.

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Net foreign exchange ~~losses~~gain increased ~~$22~~$25 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

•

~~Foreign exchange losses on the translation and settlement of intercompany notes ($24 million) and losses on other monetary revaluations compared to gains in 2022 ($11 million);~~

~~partially offset by:~~

•

Unrealized foreign exchange gains on the translation of ~~U.S. dollar risk management contracts issued from Canada~~intercompany notes compared to losses in ~~2022~~2023 ($1630 million).

~~Six months ended June 30, 2023 versus June 30, 2022~~

~~Net~~ and no foreign exchange ~~losses increased $20 million compared to the first six months of 2022 primarily due to:~~

•

~~Foreign exchange losses on the translation and settlement of intercompany notes ($25 million), realized foreign exchange~~gains or losses on the settlement of U.S. dollar risk management contracts issued from Canada compared to ~~gains~~losses in ~~2022~~2023 ($~~9 million) and higher losses on other monetary revaluations ($6~~4 million);

partially offset by:

•

Unrealized foreign exchange ~~gain~~losses on the translation of U.S. dollar risk management contracts issued from Canada compared to ~~losses~~gains in ~~2022~~2023 ($1912 million).

Other (Gains) Losses, Net

Other (gains) losses, net, primarily includes other non-recurring revenues or expenses and may also include items such as interest income, interest received from tax authorities, reclamation charges relating to decommissioned assets, government stimulus programs and adjustments related to other assets.

Other gains in the first six months of 2023 includes interest income of $7 million primarily generated from short-term investments. Other gains in the first six months of 2022 includes interest income of $23 million primarily associated with the resolution of prior years’ tax items.45

Income Tax


	Three months ended June 30,				Six months ended June 30,				Three months ended March 31,
($ millions)	2023		2022		2023		2022		2024		2023

Current Income Tax Expense (Recovery)	$	54	$	7	$	116	$	10	$	32	$	62
Deferred Income Tax Expense (Recovery)		47		58		111		50		58		64
Income Tax Expense (Recovery)	$	101	$	65	$	227	$	60	$	90	$	126

Effective Tax Rate	23.1%		4.6%		21.6%		5.1%		21.0%		20.6%

Income Tax Expense (Recovery)

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

In the second quarter of 2023, Ovintiv recorded higher income tax expense of $36 million compared to 2022 primarily due to changes in valuation allowances and the expected full utilization of Ovintiv’s operating losses in Canada, resulting in current tax in 2023.

~~Six months ended June 30, 2023 versus June 30, 2022~~

In the first ~~six months~~quarter of ~~2023,~~2024, Ovintiv recorded ~~higher~~a lower income tax expense ~~of $167 million~~ compared to ~~2022~~2023 ($36 million), primarily due to ~~changes in valuation allowances and the expected full utilization of Ovintiv’s operating losses in Canada, resulting in current tax in 2023.~~lower net earnings before income tax.

Effective Tax Rate

Ovintiv’s interim income tax expense is determined using the estimated annual effective income tax rate applied to year‑to‑date net earnings before income tax plus the effect of legislative changes and amounts in respect of prior periods. The estimated annual effective income tax rate is impacted by expected annual earnings, changes in valuation allowances, income tax related to foreign operations, state taxes, the effect of legislative changes, non-taxable items and tax differences on transactions, which can produce interim effective tax rate fluctuations.

For the second quarter and the first six months of 2023, the Company’s effective tax rate was 23.1 percent and 21.6 percent, respectively, which are higher than the U.S. federal statutory rate of 21 percent primarily due to state taxes.

For the second quarter and the first six months of 2022, the Company’s effective tax rate was 4.6 percent and 5.1 percent, respectively, which were lower than the U.S federal statutory tax rate of 21 percent primarily due to a lower annual effective income tax rate resulting from a reduction in valuation allowances.

The determination of income and other tax liabilities of the Company and its subsidiaries requires interpretation of complex domestic and foreign tax laws and regulations, that are subject to change. The Company’s interpretation of tax laws may differ from the interpretation of the tax authorities. As a result, there are tax matters under review for which the timing of resolution is uncertain. The Company believes that the provision for income taxes is adequate.

In 2023, Canada released its draft Global Minimum Tax Act (“GMTA”), which implements the Organization for Economic Cooperation and Development Pillar II framework, providing a global minimum tax of 15 percent. The legislation, once enacted, will be effective as of January 1, 2024. The Company continues to evaluate the GMTA but does not anticipate any material impact in 2024.

Additional information on income taxes can be found in Note 67 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Liquidity and Capital Resources

Sources of Liquidity

The Company has the flexibility to access cash equivalents and a range of funding alternatives at competitive rates through committed revolving credit facilities as well as debt and equity capital markets. Ovintiv closely monitors the accessibility of cost-effective credit and ~~seeks to ensure~~ensures that sufficient liquidity is in place to fund capital expenditures and dividend payments. In addition, the Company may use cash and cash equivalents, cash from operating activities, or proceeds from asset divestitures to fund its operations and capital allocation framework or to manage its capital structure as discussed below. At June 30, 2023, $46 million in cash and cash equivalents was held by Canadian subsidiaries. The cash held by Canadian subsidiaries is accessible and may be subject to additional U.S. income taxes and Canadian withholding taxes if repatriated.

The Company’s capital structure consists of total shareholders’ equity plus long-term debt, including any current portion. The Company’s objectives when managing its capital structure are to maintain financial flexibility to preserve Ovintiv’s access to capital markets and its ability to meet financial obligations and finance internally generated growth, as well as potential acquisitions. Ovintiv has a practice of maintaining capital discipline and strategically managing its capital structure by adjusting capital spending, adjusting dividends paid to shareholders, issuing new shares of common stock, purchasing shares of common stock for cancellation or return to treasury, issuing new debt and repaying or repurchasing existing debt.

As at June 30,

($ millions, except as indicated)

2023

2022

Cash and Cash Equivalents

$
52

$
8

Available Credit Facilities (1)

3,150

3,500

Available Uncommitted Demand Lines (2)

278

308

Issuance of U.S. Commercial Paper

(330
)

(215
)
Total Liquidity

$
3,150

$
3,601

Long-Term Debt, including current portion

$
6,134

$
3,902

Total Shareholders’ Equity (3)

$
9,316

$
5,821

Debt to Capitalization (%) (4)

40

40

Debt to Adjusted Capitalization (%) (5)

26

22


	As at March 31,
($ millions, except as indicated)	2024			2023

Cash and Cash Equivalents	$	5		$	26
Available Credit Facilities		3,250			3,200
Available Uncommitted Demand Lines (1)		237			280
Issuance of U.S. Commercial Paper		(495	)		(280	)
Total Liquidity	$	2,997		$	3,226

Long-Term Debt, including current portion (2)	$	6,198		$	3,756
Total Shareholders’ Equity (2)	$	10,262		$	7,894

Debt to Capitalization (%) (3)		38			32
Debt to Adjusted Capitalization (%) (3)		26			19

(1)

~~2023 includes available credit facilities of $1.85 billion in the U.S. and $1.3 billion in Canada (2022 - $2.2 billion and $1.3 billion, respectively).~~

~~(2)~~

Includes three uncommitted demand lines totaling ~~$326~~$285 million, net of $48 million in related undrawn letters of credit ~~(2022~~(2023 - ~~$333~~$322 million and ~~$25~~$42 million, respectively).

~~(3)~~(2)

~~Shareholders’ Equity reflects~~Includes the impact of long-term debt and shares of common stock ~~purchased, for cancellation, under the Company’s NCIB program and shares~~ issued in conjunction with the acquisition of Permian ~~Acquisition.~~assets in the second quarter of 2023.

~~(4)~~(3)

~~Calculated as long-term debt, including the current portion, divided by shareholders’ equity plus long-term debt, including the current portion.~~

~~(5)~~

~~A non-GAAP measure which is~~These measures are defined in the Non-GAAP Measures section of this MD&A.

The Company has full access to two committed revolving U.S. dollar denominated credit facilities totaling $3.5 billion, which include a $2.2 billion revolving credit facility for Ovintiv Inc. and a $1.3 billion revolving credit facility for a Canadian subsidiary (collectively, the “Credit Facilities”). The Credit Facilities, which mature in July 2026, provide financial flexibility and allow the Company to fund its operations or capital investment program. At ~~June 30, 2023, $350~~March 31, 2024, $250 million was outstanding under the revolving Credit Facilities.

Depending on the Company’s credit rating and market demand, the Company may issue from its two U.S. CP programs, which include a $1.5 billion program for Ovintiv Inc. and a $1.0 billion program for a Canadian subsidiary. As at ~~June 30, 2023,~~March 31, 2024, the Company had ~~$330~~$495 million of commercial paper outstanding under its U.S. CP program maturing at various dates with a weighted average interest rate of approximately ~~5.98~~6.14 percent, which is supported by the Company’s Credit Facilities. All of Ovintiv’s credit ratings are investment grade as at ~~June 30, 2023.~~March 31, 2024.

The available Credit Facilities, uncommitted demand lines, and cash and cash equivalents, net of outstanding commercial paper, provide Ovintiv with total liquidity of approximately ~~$3.2~~$3.0 billion as at ~~June 30, 2023.~~March 31, 2024. At ~~June 30, 2023,~~March 31, 2024, Ovintiv also had approximately $48 million in undrawn letters of credit issued in the normal course of business primarily as collateral security related to sales arrangements.

On June 12, 2023, the Company closed the Permian Acquisition and issued approximately 31.8 million shares of Ovintiv common stock and paid approximately $3.2 billion in cash, for total consideration of approximately $4.4 billion, which included customary closing adjustments. The cash portion of the acquisition was funded through a combination of net proceeds from the issuance of senior unsecured notes, cash proceeds received from the sale of the Company’s Bakken assets, cash on hand and proceeds from short-term borrowings.

Ovintiv has a U.S. shelf registration statement under which the Company may issue from time to time, debt securities, common stock, preferred stock, warrants, units, share purchase contracts and share purchase units in the U.S. The U.S. shelf registration statement ~~was renewed~~expires in March ~~2023.~~2026.

The obligations under the Company’s existing debt securities are fully and unconditionally guaranteed on a senior unsecured basis by Ovintiv Canada ULC, an indirect wholly-owned subsidiary of the Company. Additional information on the Company’s

Canadian Operations segment and the Bow office lease can be found in the Results of Operations section in this MD&A and the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the MD&A and audited Consolidated Financial Statements and accompanying notes for the year ended December 31, ~~2022,~~2023, which are included in Items 7 and 8, respectively, of the ~~2022~~2023 Annual Report on Form 10-K.

Ovintiv is currently ~~in compliance with, and expects that it will continue to be~~ in compliance with all financial covenants under the Credit Facilities. Management monitors Debt to Adjusted Capitalization, which is a non-GAAP measure defined in the Non-GAAP Measures section of this MD&A, as a proxy for Ovintiv’s financial covenant under the Credit Facilities, which requires Debt to Adjusted Capitalization to be less than 60 percent. As at ~~June 30, 2023,~~March 31, 2024, the Company’s Debt to Adjusted Capitalization was 26 percent. The definitions used in the covenant under the Credit Facilities adjust capitalization for cumulative historical ceiling test impairments recorded in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP. Additional information on financial covenants can be found in Note 1415 to the Consolidated Financial Statements included in Item 8 of the ~~2022~~2023 Annual Report on Form 10‑K.

The Company’s debt-based metrics have increased over the prior year primarily due to the increase in long-term debt resulting from the acquisition of Permian ~~Acquisition.~~assets in the second quarter of 2023.

Sources and Uses of Cash

In the first ~~six months~~quarter of ~~2023,~~2024, Ovintiv primarily generated cash through operating activities and ~~received net proceeds~~ from the ~~Company’s debt~~net issuance ~~to fund a portion~~ of ~~the Permian Acquisition.~~revolving debt. The following table summarizes the sources and uses of the Company’s cash and cash equivalents.

Three months ended June 30,

Six months ended June 30,

($ millions)
Activity Type

2023

2022

2023

2022

Sources of Cash, Cash Equivalents and Restricted Cash

Cash from operating activities
Operating

$
831

$
1,344

$
1,899

$
2,029

Proceeds from divestitures
Investing

717

4

729

5

Net issuance of revolving long-term debt
Financing

100

215

287

215

Issuance of long-term debt
Financing

2,278

-

2,278

-

Other
Investing

155

-

89

48

4,081

1,563

5,282

2,297

Uses of Cash and Cash Equivalents

Capital expenditures
Investing

640

511

1,250

962

Acquisitions
Investing

15

7

214

22

Corporate acquisition, net of cash acquired
Investing

3,225

-

3,225

-

Repayment of long-term debt (1)
Financing

-

1,103

-

1,109

Purchase of shares of common stock
Financing

89

135

328

206

Dividends on shares of common stock
Financing

82

64

143

116

Other
Financing

1

2

72

66

4,052

1,822

5,232

2,481

Foreign Exchange Gain (Loss) on Cash, Cash Equivalents
and Restricted Cash Held in Foreign Currency

(3
)

(4
)

(3
)

(3
)
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

$
26

$
(263
)

$
47

$
(187
)

~~(1)~~

~~Includes open market repurchases and redemption of the Company’s $1.0 billion senior notes in 2022.~~


		Three months ended March 31,
($ millions)	Activity Type	2024		2023

Sources of Cash and Cash Equivalents
Cash from operating activities	Operating	$	659	$	1,068
Proceeds from divestitures	Investing		2		12
Corporate acquisition	Investing		12		-
Net issuance of revolving debt	Financing		461		187
Other	Investing		6		-
			1,140		1,267

Uses of Cash and Cash Equivalents
Capital expenditures	Investing		591		610
Acquisitions	Investing		190		199
Purchase of shares of common stock	Financing		250		239
Dividends on shares of common stock	Financing		80		61
Other	Investing/Financing		29		137
			1,140		1,246
Foreign Exchange Gain (Loss) on Cash, Cash Equivalents and Restricted Cash Held in Foreign Currency			2		-
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash		$	2	$	21

Operating Activities

Net cash from operating activities in the ~~second~~first quarter ~~and first six months~~ of ~~2023~~2024 was ~~$831~~$659 million ~~and $1,899 million, respectively,~~ and was primarily a reflection of the impacts from ~~lower average realized commodity prices, partially offset by lower realized losses on risk management in revenues,~~ changes in non‑cash working capital, production volumes, average realized commodity prices, and ~~higher production volumes.~~realized gains/losses on risk management.

Additional detail on changes in non-cash working capital can be found in Note 2021 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Ovintiv expects it will continue to meet the payment terms of its suppliers.

Non-GAAP Cash Flow in the ~~second~~first quarter ~~and first six months~~ of ~~2023~~2024 was ~~$699~~$1,035 million ~~and $1,550 million, respectively,~~ and was primarily impacted by the items affecting cash from operating activities which are discussed below and in the Results of Operations section of this MD&A.

5548

Three months ended ~~June 30,~~March 31, 2024 versus March 31, 2023 ~~versus June 30, 2022~~

Net cash from operating activities decreased ~~$513~~$409 million compared to the ~~second~~first quarter of ~~2022~~2023 primarily due to:

•

~~Lower~~Changes in non-cash working capital ($586 million), lower realized commodity prices ($~~1,571~~314 million), higher ~~administrative expenses,~~operating expense, excluding non-cash long-term incentive costs ($8342 million) and ~~increase in current income taxes~~higher interest expense ($4727 million);

partially offset by:

•

~~Realized~~Higher production volumes ($368 million), realized gains on risk management in revenues compared to losses in ~~2022~~2023 ($~~813~~122 million), ~~higher production volumes ($333 million) and~~ lower ~~production, mineral and other taxes ($42 million).~~

~~Six months ended June 30, 2023 versus June 30, 2022~~

~~Net cash from operating activities decreased $130 million compared to the first six months of 2022 primarily due to:~~

•

~~Lower realized commodity prices ($1,968 million), increase in current income taxes ($106 million), higher administrative expenses, excluding non-cash long-term incentive costs ($59 million), higher~~ transportation and processing expense ($4836 million), ~~higher operating~~and a decrease in current income tax expense ~~excluding non-cash long-term incentive costs~~ ($~~19 million) and lower interest income ($16 million);~~

~~partially offset by:~~

•

Lower realized losses on risk management in revenues compared to 2022 ($1,183 million), changes in non-cash working capital ($579 million), higher production volumes ($283 million) and lower production, mineral and other taxes ($5230 million).

Investing Activities

Cash used in investing activities in the first ~~six months~~quarter of ~~2023~~2024 was ~~$3,871~~$761 million primarily due to capital expenditures and acquisitions ~~and capital expenditures.~~in the USA Operations. Capital expenditures, and acquisition and divestiture activities are summarized in Notes 23 and 7,8, respectively, to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form ~~10-Q.~~10‑Q.

Capital expenditures ~~increased $288~~decreased $19 million compared to the first ~~six months~~quarter of ~~2022,~~2023, primarily due to ~~a higher capital expenditure plan, inflationary cost pressures~~decreased activity in Anadarko, and ~~timing~~the sale of ~~projects.~~the Bakken assets in the second quarter of 2023, partially offset by increased activity in Permian and Uinta.

Acquisitions in the first ~~six months~~quarter of ~~2023~~2024 were ~~$214~~$190 million, which primarily included property purchases with oil and ~~liquids rich~~liquids-rich potential ~~(2022~~in the USA Operations (2023 - ~~$22~~$199 million).

Corporate ~~acquisition~~acquisitions reflect the final cash settlements of $12 million completed in the first ~~six months~~quarter of ~~2023 was $3,225 million, which relates~~2024 related to the assets acquired in Permian ~~Acquisition~~ in the second quarter of 2023. Additional information regarding the Permian Acquisition can be found in Note 89 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form ~~10-Q.~~

Divestitures in the first six months of 2023 were $729 million, which primarily included the sale of the Bakken assets in North Dakota and certain properties that did not complement Ovintiv’s existing portfolio of assets. Divestitures in the first six months of 2022 were $5 million, which primarily included certain properties that did not complement Ovintiv’s existing portfolio of assets.10‑Q.

Financing Activities

Net cash from and/or used in financing activities has been impacted by ~~the Company’s bond offering in the second quarter of 2023 and~~ Ovintiv’s strategic objective to return value to shareholders by repaying or repurchasing existing debt, purchasing shares of common stock and paying dividends.

Net cash from financing activities in the first ~~six months~~quarter of ~~2023~~2024 was ~~$2,022~~$102 million, compared to net cash used in financing activities of ~~$1,282~~$184 million in ~~2022.~~2023. The change was primarily due to ~~the net issuance of long-term debt~~an increase in ~~2023 of $2,278 million as discussed below compared to a repayment in 2022 of $1,109 million and~~ net issuance of revolving ~~long-term~~ debt in 2024 compared to 2023 ($72274 million), partially offset by an increase in dividend payments in 2024 ($19 million) and increased purchases of shares of common stock ~~under the Company’s NCIB program~~ in ~~2023~~2024 compared to ~~2022 ($122 million) and an increase in dividend payments in~~ 2023 ($2711 million).

From time to time, Ovintiv may seek to retire or purchase the Company’s outstanding debt through cash purchases and/or exchanges for other debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.

The Company’s long-term debt, including the current portion of ~~$680~~$745 million, totaled ~~$6,134~~$6,198 million at ~~June 30, 2023.~~March 31, 2024. The Company’s long-term debt at December 31, ~~2022,~~2023, including the current portion of ~~$393~~$284 million, totaled ~~$3,570~~$5,737 million. As at ~~June 30, 2023,~~March 31, 2024, the Company has no fixed rate long-term debt due until May 2025 and beyond.

On May 31, 2023, Ovintiv completed a public offering of senior unsecured notes of $600 million with a coupon rate of 5.65 percent due May 15, 2025, $700 million with a coupon rate of 5.65 percent due May 15, 2028, $600 million with a coupon rate of 6.25 percent due July 15, 2033 and $400 million with a coupon rate of 7.10 percent due July 15, 2053. The net proceeds of the offering, totaling $2,278 million, were used to fund a portion of the Company’s Permian Acquisition.

In support of the Company’s commitment to ~~unlocking~~enhancing shareholder value, Ovintiv utilizes its capital allocation framework to ~~increase~~provide competitive returns to shareholders ~~and to focus on strategic opportunities to strengthen the~~while strengthening its balance sheet. Ovintiv expects to continue to deliver ~~additional~~ shareholder returns through share ~~buybacks under its NCIB program.~~buybacks.

For additional information on long-term debt, refer to Note 1112 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Further details on the Company’s debt-based metrics can be found in the Non-GAAP measures section of this MD&A.

Dividends

The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.


	Three months ended June 30,					Six months ended June 30,				Three months ended March 31,
($ millions, except as indicated)		2023		2022		2023		2022			2024		2023

Dividend Payments		$	82	$	64	$	143	$	116		$	80	$	61
Dividend Payments ($/share)		$	0.30	$	0.25	$	0.55	$	0.45		$	0.30	$	0.25

On ~~July 27, 2023,~~May 7, 2024, the Board of Directors declared a dividend of $0.30 per share of common stock payable on ~~September 29, 2023,~~June 28, 2024, to common shareholders of record as of ~~September 15, 2023.~~June 14, 2024.

Dividends increased ~~$27~~$19 million compared to the first ~~six months~~quarter of ~~2022~~2023 as a result of Ovintiv increasing its annualized dividend to ~~$1.00 per share of common stock in the second quarter of 2022 and a further increase to an annualized dividend of~~ $1.20 per share of common stock in the second quarter of 2023. The dividend increase reflects the Company’s commitment to returning capital to shareholders.

Normal Course Issuer Bid

On September 28, 2022, the Company announced it had received regulatory approval for the renewal of its NCIB program, that enables the Company to purchase, for cancellation or return to treasury, up to approximately 24.8 million shares of common stock over a 12-month period from October 3, 2022 to October 2, 2023. The number of shares authorized for purchase represents approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as at September 19, 2022. The Company expects to continue to execute the renewed NCIB program in conjunction with its capital allocation framework.

In the ~~second~~first quarter ~~and first six months~~ of ~~2023,~~2024, under the ~~current~~ NCIB program, the Company purchased, for cancellation, approximately ~~2.5~~5.4 million ~~and 7.7 million, respectively,~~ shares of common stock for total consideration of approximately ~~$89 million and $328 million, respectively.~~$250 million. The Company expects to continue to execute the NCIB program in conjunction with its capital allocation framework. For additional information on the NCIB, refer to Note 14 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Material Cash Requirements

For information on material cash requirements, refer to the Material Cash Requirements section of the MD&A included in Item 7 of the ~~2022~~2023 Annual Report on Form 10-K.

Commitments and Contingencies

For information on commitments and contingencies, refer to Note 2122 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

There have been no significant changes to the Company’s critical accounting policies and use of estimates from the disclosures reported in the “Critical Accounting Estimates” section of the MD&A included in Item 7 of the ~~2022~~2023 Annual Report on Form 10-K. The Company evaluated the impact of the Permian Acquisition, and the use of estimates and key judgments used in the preliminary purchase price allocation are disclosed in Note 8 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

5850

Non-GAAP Measures

Certain measures in this document do not have any standardized meaning as prescribed by U.S. GAAP and, therefore, are considered non-GAAP measures. These measures may not be comparable to similar measures presented by other issuers and should not be viewed as a substitute for measures reported under U.S. GAAP. These measures are commonly used in the oil and gas industry and by Ovintiv to provide shareholders and potential investors with additional information regarding the Company’s liquidity and its ability to generate funds to finance its operations. Non-GAAP measures include: Non-GAAP Cash Flow, Debt to Adjusted Capitalization, Debt to EBITDA and Debt to Adjusted EBITDA. Management’s use of these measures is discussed further below.

Cash from Operating Activities and Non-GAAP Cash Flow

Non-GAAP Cash Flow is a non-GAAP measure defined as cash from (used in) operating activities excluding net change in other assets and liabilities, and net change in non-cash working capital.

Management believes this measure is useful to the Company and its investors as a measure of operating and financial performance across periods and against other companies in the industry, and is an indication of the Company’s ability to generate cash to finance capital investment programs, to service debt and to meet other financial obligations. This measure is used, along with other measures, in the calculation of certain performance targets for the Company’s management and employees.


	Three months ended June 30,						Six months ended June 30,						Three months ended March 31,
($ millions, except as indicated)	2023			2022			2023			2022			2024			2023

Cash From (Used in) Operating Activities	$	831		$	1,344		$	1,899		$	2,029		$	659		$	1,068
(Add back) deduct:
Net change in other assets and liabilities		(12	)		(13	)		(17	)		(25	)		(12	)		(5	)
Net change in non-cash working capital		144			133			366			(213	)		(364	)		222
Non-GAAP Cash Flow	$	699		$	1,224		$	1,550		$	2,267		$	1,035		$	851

Debt to Capitalization and Debt to Adjusted Capitalization

Debt to Adjusted Capitalization is a non-GAAP measure which adjusts capitalization for historical ceiling test impairments that were recorded as at December 31, 2011. Management monitors Debt to Adjusted Capitalization as a proxy for the Company’s financial covenant under the Credit Facilities which require Debt to Adjusted Capitalization to be less than 60 percent. Adjusted Capitalization includes debt, total shareholders’ equity and an equity adjustment for cumulative historical ceiling test impairments recorded as at December 31, 2011 in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP.

($ millions, except as indicated)

June 30, 2023

December 31, 2022

Debt (Long-Term Debt, including Current Portion)

$
6,134

$
3,570

Total Shareholders’ Equity

9,316

7,689

Capitalization

$
15,450

$
11,259

Debt to Capitalization

40%

32%

Debt (Long-Term Debt, including Current Portion)

$
6,134

$
3,570

Total Shareholders’ Equity

9,316

7,689

Equity Adjustment for Impairments at December 31, 2011

7,746

7,746

Adjusted Capitalization

$
23,196

$
19,005

Debt to Adjusted Capitalization

26%

19%

~~The increase in Debt to Capitalization and Debt to Adjusted Capitalization are primarily due to the increase in long-term debt resulting from the Permian Acquisition.~~


($ millions, except as indicated)	March 31, 2024		December 31, 2023


Debt (Long-Term Debt, including Current Portion)	$	6,198	$	5,737
Total Shareholders’ Equity		10,262		10,370
Capitalization	$	16,460	$	16,107
Debt to Capitalization	38%		36%

Debt (Long-Term Debt, including Current Portion)	$	6,198	$	5,737
Total Shareholders’ Equity		10,262		10,370
Equity Adjustment for Impairments at December 31, 2011		7,746		7,746
Adjusted Capitalization	$	24,206	$	23,853
Debt to Adjusted Capitalization	26%		24%

Debt to EBITDA and Debt to Adjusted EBITDA

Debt to EBITDA and Debt to Adjusted EBITDA are non-GAAP measures. EBITDA is defined as trailing 12-month net earnings (loss) before income taxes, depreciation, depletion and amortization, and interest. Adjusted EBITDA is EBITDA adjusted for impairments, accretion of asset retirement obligation, unrealized gains/losses on risk management, foreign exchange gains/losses, gains/losses on divestitures and other gains/losses.

Management believes these measures are useful to the Company and its investors as a measure of financial leverage and the Company’s ability to service its debt and other financial obligations. These measures are used, along with other measures, in the calculation of certain financial performance targets for the Company’s management and employees.

($ millions, except as indicated)

June 30, 2023

December 31, 2022

Debt (Long-Term Debt, including Current Portion)

$
6,134

$
3,570

Net Earnings (Loss)

3,344

3,637

Add back (deduct):

Depreciation, depletion and amortization

1,354

1,113

Interest

297

311

Income tax expense (recovery)

90

(77
)
EBITDA

$
5,085

$
4,984

Debt to EBITDA (times)

1.2

0.7

Net Earnings (Loss)

3,344

3,637

Add back (deduct):

Depreciation, depletion and amortization

1,354

1,113

Accretion of asset retirement obligation

17

18

Interest

297

311

Unrealized (gains) losses on risk management

(1,400
)

(741
)
Foreign exchange (gain) loss, net

35

15

Other (gains) losses, net

(20
)

(33
)
Income tax expense (recovery)

90

(77
)
Adjusted EBITDA

$
3,717

$
4,243

Debt to Adjusted EBITDA (times)

1.7

0.8

The increase in Debt to EBITDA and Debt to Adjusted EBITDA are primarily due to the increase in long-term debt resulting from the Permian Acquisition. EBITDA and Adjusted EBITDA only include the results of operations from the acquired Permian assets for the post-acquisition period from June 12, 2023 to June 30, 2023.


($ millions, except as indicated)	March 31, 2024			December 31, 2023

Debt (Long-Term Debt, including Current Portion)	$	6,198		$	5,737

Net Earnings (Loss)		1,936			2,085
Add back (deduct):
Depreciation, depletion and amortization		2,027			1,825
Interest		382			355
Income tax expense (recovery)		389			425
EBITDA	$	4,734		$	4,690
Debt to EBITDA (times)		1.3			1.2


Debt (Long-Term Debt, including Current Portion)	$	6,198		$	5,737

Net Earnings (Loss)		1,936			2,085
Add back (deduct):
Depreciation, depletion and amortization		2,027			1,825
Accretion of asset retirement obligation		19			19
Interest		382			355
Unrealized (gains) losses on risk management		(76	)		(194	)
Foreign exchange (gain) loss, net		(6	)		19
Other (gains) losses, net		(21	)		(20	)
Income tax expense (recovery)		389			425
Adjusted EBITDA	$	4,650		$	4,514
Debt to Adjusted EBITDA (times)		1.3			1.3

Item 3: Quantitative and Qualitative Disclosures About Market Risk

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about Ovintiv’s potential exposure to market risks. The term “market risk” refers to the Company’s risk of loss arising from adverse changes in oil, NGL and natural gas prices, foreign currency exchange rates and interest rates. The following disclosures are not meant to be precise indicators of expected future losses but rather indicators of reasonably possible losses. The forward-looking information provides indicators of how the Company views and manages ongoing market risk exposures.

COMMODITY PRICE RISK

Commodity price risk arises from the effect fluctuations in future commodity prices, including oil, NGLs and natural gas, may have on future revenues, expenses and cash flows. Realized pricing is primarily driven by the prevailing worldwide price for ~~crude~~ oil and spot market prices applicable to the Company’s natural gas production. Pricing for oil, NGLs and natural gas production is volatile and unpredictable as discussed in Part 1, Item 2 of this Quarterly Report on Form 10‑Q in the Executive Overview section in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Item 1A. “Risk Factors” of the ~~2022~~2023 Annual Report on Form 10‑K. To partially mitigate exposure to commodity price risk, the Company may enter into various derivative financial instruments including futures, forwards, swaps, options and costless collars. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors and may vary from time to time. Both exchange traded and over-the-counter traded derivative instruments may be subject to margin-deposit requirements, and the Company may be required from time to time to deposit cash or provide letters of credit with exchange brokers or counterparties to satisfy these margin requirements. For additional information relating to the Company’s derivative and financial instruments, see Note 1920 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10‑Q.

The table below summarizes the sensitivity of the fair value of the Company’s risk management positions to fluctuations in commodity prices, with all other variables held constant. The Company has used a 10 percent variability to assess the potential impact of commodity price changes. Fluctuations in commodity prices could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows:


	June 30, 2023					March 31, 2024
(US$ millions)	10% Price Increase			10% Price Decrease		10% Price Increase			10% Price Decrease

Crude oil price	$	(169	)	$	186
Oil price						$	(120	)	$	79
NGL price		(2	)		2		(1	)		1
Natural gas price		(69	)		67		(52	)		50

FOREIGN EXCHANGE RISK

Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. As Ovintiv operates primarily in the United States and Canada, fluctuations in the exchange rate between the U.S. and Canadian dollars can have a significant effect on the Company’s reported results.

The table below summarizes selected foreign exchange impacts on Ovintiv’s financial results when compared to the same ~~periods~~period in ~~2022.~~2023.


	Three Months Ended June 30,						Six Months Ended June 30,
	$ millions			$/BOE			$ millions			$/BOE			$ millions		$/BOE

Increase (Decrease) in:
Capital Investment	$	(5	)				$	(10	)				$	-
Transportation and Processing Expense (1)		(12	)	$	(0.24	)		(27	)	$	(0.28	)		1	$	0.01
Operating Expense (1)		(2	)		(0.02	)		(4	)		(0.04	)		-		-
Administrative Expense		(2	)		(0.04	)		(7	)		(0.07	)		-		-
Depreciation, Depletion and Amortization (1)		(3	)		(0.05	)		(7	)		(0.07	)		-		-

(1)

Reflects upstream operations.

6153

Foreign exchange gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated and settled, and primarily include:

•

U.S. dollar denominated financing debt issued from Canada

•

U.S. dollar denominated risk management assets and liabilities held in Canada

•

U.S. dollar denominated cash and short-term investments held in Canada

•

Foreign denominated intercompany loans

To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at ~~June 30, 2023,~~March 31, 2024, Ovintiv has entered into ~~$266~~$301 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$~~1.3470~~1.3622 to US$1, which mature monthly through the remainder of ~~2023.~~2024.

As at ~~June 30, 2023,~~March 31, 2024, Ovintiv did not have any U.S. dollar denominated financing debt issued from Canada that was subject to foreign exchange exposure.

The table below summarizes the sensitivity to foreign exchange rate fluctuations, with all other variables held constant. The Company has used a 10 percent variability to assess the potential impact from Canadian to U.S. foreign currency exchange rate changes. Fluctuations in foreign currency exchange rates could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows:


	June 30, 2023					March 31, 2024
(US$ millions)	10% Rate Increase		10% Rate Decrease			10% Rate Increase		10% Rate Decrease

Foreign currency exchange	$	125	$	(153	)	$	124	$	(152	)

INTEREST RATE RISK

Interest rate risk arises from changes in market interest rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. The Company may partially mitigate its exposure to interest rate changes by holding a mix of both fixed and floating rate debt and may also enter into interest rate derivatives to partially mitigate effects of fluctuations in market interest rates.

As at ~~June 30, 2023,~~March 31, 2024, Ovintiv had floating rate revolving credit and term loan borrowings of ~~$680~~$745 million. Accordingly, on a before-tax basis, the sensitivity for each one percent change in interest rates on floating rate revolving credit and term loan borrowings was $7 million.

6254

Item 4: Controls and Procedures

DISCLOSURE CONTROLS AND PROCEDURES

Ovintiv’s Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of ~~June 30, 2023.~~March 31, 2024.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

For the second quarter ended June 30, 2023, management’s assessment of, and conclusion on, the effectiveness of internal controls over financial reporting did not include the internal controls related to the Permian Acquisition that closed on June 12, 2023. Upon closing, the Permian Acquisition’s total assets acquired represented 33 percent of the Company’s consolidated total assets as of March 31, 2023. The assets acquired generated revenues of $67 million for the period from June 12, 2023, to June 30, 2023, which represented three percent and one percent of the Company’s consolidated total revenues for the three and six months ended June 30, 2023, respectively. Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal controls over financial reporting for a period of up to one year following an acquisition while integration occurs. The Company is in the process of assessing the internal controls over financial reporting of the Permian Acquisition. Except as noted above, thereThere were no changes in the Company’s internal controls over financial reporting during the ~~second~~first quarter of ~~2023~~2024 that have materially affected, or are reasonably likely to affect, the Company’s internal controls over financial reporting.

6355

PART II

Item 1. Legal Proceedings

Please refer to Item 3 of the ~~2022~~2023 Annual Report on Form 10‑K and Note 2122 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10‑Q.

In July 2020, the Company received a Notice of Violation (“NOV”) from the U.S. Environmental Protection Agency (“EPA”) and the Utah Department of Environmental Quality, Division of Air Quality (“UDAQ”). The NOV alleges violations under the federal Clean Air Act, the State of Utah’s State Implementation Plan, and the State of Utah’s air quality regulations for the oil and natural gas industry, at certain of the Company facilities located in the Uinta Basin. The Company has exchanged information with the EPA and UDAQ and is engaged in discussions aimed at resolving the allegations. The Company is unable to predict the financial impact of the NOV or the timing of its resolution at this time. Resolution of the matter may result in monetary sanctions of more than $300,000.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Item 1A., "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, ~~2022 and our Quarterly Report on Form 10-Q for the three months ended March 31,~~ 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchase of Equity Securities

On September ~~28, 2022,~~26, 2023, the Company announced it had received regulatory approval to purchase, for cancellation or return to treasury, up to approximately ~~24.8~~26.7 million shares of common stock pursuant to a NCIB over a 12-month period from October 3, ~~2022~~2023 to October 2, ~~2023.~~2024. The number of shares of common stock authorized for purchase ~~represents~~represented approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as ~~at September 19, 2022.~~of such time.

During the three months ended ~~June 30, 2023,~~March 31, 2024, the Company purchased approximately ~~2.5~~5.4 million shares of common stock for total consideration of approximately ~~$90~~$248 million at a weighted average price of ~~$35.84.~~$46.15. The following table presents the common shares purchased during the three months ended ~~June 30, 2023.~~March 31, 2024.

Period
Total Number of
Shares Purchased (1)

Average
Price Paid
per Share (2)

Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs

Maximum Number of Shares
That May Yet be Purchased
Under the Plans or Programs

April 1 to April 30, 2023

-

$
-

-

16,158,179

May 1 to May 31, 2023

391,750

32.80

391,750

15,766,429

June 1 to June 30, 2023

2,119,514

36.40

2,119,514

13,646,915

Total

2,511,264

$
35.84

2,511,264

13,646,915


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
January 1 to January 31, 2024		1,426,914	$	42.06		1,426,914		24,103,360
February 1 to February 29, 2024		1,375,867		43.62		1,375,867		22,727,493
March 1 to March 31, 2024		2,572,346		49.77		2,572,346		20,155,147
Total		5,375,127	$	46.15		5,375,127		20,155,147

(1)

For the three months ended ~~June 30, 2023, no~~March 31, 2024, 2,802,781 shares of common stock were repurchased through our broker in accordance with a Rule ~~10b5-1~~10b5‑1 compliant plan initially adopted by the Company on September 30, 2021.

(2)

Includes commissions but excludes excise taxes.

In the first quarter of 2022, Ovintiv obtained an exemption order (the “NCIB Exemption”) from the Alberta Securities Commission and the Ontario Securities Commission, which permits Ovintiv to make repurchases (the “Proposed Bids”), under its current and any future normal course issuer bids, through the facilities of the NYSE and other U.S.-based trading systems (collectively, “U.S. Markets”), in excess of the maximum allowable purchases under applicable Canadian securities laws. The NCIB Exemption applies to any Proposed Bid commenced within 36 months of the date of the exemption order and is subject to several other conditions, including that Ovintiv remain a U.S. and SEC foreign issuer under applicable Canadian securities laws. The purchases of common stock under a Proposed Bid must also be made in compliance with other applicable Canadian securities laws and applicable U.S. rules. Additionally, the NCIB Exemption ~~imposed~~imposes restrictions on the number of shares of common stock that may be acquired under the exemption, including that: (a) Ovintiv may not acquire common stock in reliance upon the exemption under subsection 4.8(3) of Canadian National Instrument 62-104 – Take-Over Bids and Issuer Bids (“NI 62-104”) from the requirements applicable to issuer bids (the “Other Published Markets Exemption”) if the aggregate number of shares of common stock purchased by Ovintiv, and any person or company acting jointly or in concert with Ovintiv, in

reliance on the NCIB Exemption and the Other Published Markets Exemption within any period of 12 months exceeds 5%5 percent of the outstanding common stock on the first day of such 12-month period; and (b) the aggregate number of shares of common stock purchased pursuant to (i) a Proposed Bid in reliance on the NCIB Exemption; (ii) exempt issuer bid purchases made in the normal course through the facilities of the TSX; and (iii) the Other Published Markets Exemption does not exceed, over the 12-month period of its current NCIB, ~~10%~~10 percent of Ovintiv’s public float. As a result, the NCIB Exemption effectively allows Ovintiv to purchase up to ~~10%~~10 percent of its public float on U.S. Markets under its NCIB. Without the NCIB Exemption this amount would be limited to 5%5 percent of Ovintiv’s outstanding common stock within a 12-month period under applicable Canadian securities law.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits


Exhibit No		Description
2.1*		Securities Purchase Agreement, dated April 3, 2023, by and among Black Swan Oil & Gas, LLC, PetroLegacy II Holdings, LLC, Piedra Energy III Holdings, LLC, Piedra Energy IV Holdings, LLC, Black Swan Permian, LLC, Black Swan Operating, LLC, PetroLegacy Energy II, LLC, PearlSnap Midstream, LLC, Piedra Energy III, LLC and Piedra Energy IV, LLC, solely in its capacity as Sellers’ Representative, NMB Seller Representative, LLC, and Ovintiv Inc. and Ovintiv USA Inc. (incorporated by reference to Exhibit 2.1 to Ovintiv’s Current Report on Form 8-K filed on April 4, 2023, SEC File No. 001-39191).
~~4.1~~		Indenture, dated as of May 31, 2023, between Ovintiv Inc. and the Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to Ovintiv’s Current Report on Form 8-K filed on May 31, 2023, SEC File No. 001-39191).
~~4.2~~		First Supplemental Indenture, dated as of May 31, 2023, among Ovintiv Inc., Ovintiv Canada ULC and the Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 to Ovintiv’s Current Report on Form 8-K filed on May 31, 2023, SEC File No. 001-39191).
~~4.3~~		~~Form of 5.650% Senior Notes due 2025 (incorporated by reference to Exhibit 4.3 to Ovintiv’s Current Report on Form 8-K filed on May 31, 2023, SEC File No. 001-39191).~~
~~4.4~~		~~Form of 5.650% Senior Notes due 2028 (incorporated by reference to Exhibit 4.4 to Ovintiv’s Current Report on Form 8-K filed on May 31, 2023, SEC File No. 001-39191).~~
~~4.5~~		~~Form of 6.250% Senior Notes due 2033 (incorporated by reference to Exhibit 4.5 to Ovintiv’s Current Report on Form 8-K filed on May 31, 2023, SEC File No. 001-39191).~~
~~4.6~~		~~Form of 7.100% Senior Notes due 2053 (incorporated by reference to Exhibit 4.6 to Ovintiv’s Current Report on Form 8-K filed on May 31, 2023, SEC File No. 001-39191).~~
10.1		~~Term Credit~~Transition Services and Separation Agreement dated as of April 26, 2023, Ovintiv, as borrower, Goldman Sachs, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Ovintiv’s Current Report on Form 8-K filed on April 27, 2023, SEC File No. 001-39191).
~~10.2~~		~~Registration Rights Agreement, dated as of June 12, 2023, by and~~ between Ovintiv Inc. and ~~NMB Stock Trust (incorporated by reference to Exhibit 10.1 to Ovintiv’s Current Report on Form 8-K filed on June 12, 2023, SEC File No. 001-39191).~~Renee E. Zemljak effective March 7, 2024.
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema ~~Document.~~
~~101.CAL~~		~~Inline XBRL Calculation Linkbase Document.~~
~~101.DEF~~		~~Inline XBRL Definition Linkbase Document.~~
~~101.LAB~~		~~Inline XBRL Label Linkbase Document.~~
~~101.PRE~~		~~Inline XBRL Presentation Linkbase~~With Embedded Linkbases Document.
104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2023,~~March 31, 2024, has been formatted in Inline XBRL.

* Certain annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Ovintiv Inc. hereby undertakes to furnish supplemental copies of any of the omitted annexes, schedules and exhibits upon request by the SEC.

** The certifications on Exhibits 32.1 and 32.2 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certifications will not be deemed incorporated by reference to any filings under the Securities Act or the Exchange Act.

6657

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Ovintiv Inc.

By:	/s/ Corey D. Code

	Name:	Corey D. Code
	Title:	Executive Vice-President & Chief Financial Officer

Dated: ~~July 27, 2023~~May 7, 2024

6758


Delaware		84-4427672
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	OVV	New York Stock Exchange


Three Months Ended June 30, 2023 (US$ millions)			Share Capital		Paid in Surplus			Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income				Total Shareholders’ Equity

Balance, March 31, 2023			$	3	$	7,555			$	(655	)		$	991			$	7,894
Net Earnings (Loss)				-		-				336				-				336
Dividends on Shares of Common Stock ($0.30 per share)		(Note 13)		-		-				(82	)			-				(82	)
Shares of Common Stock Purchased under Normal
Course Issuer Bid		(Note 13)		-		(89	)			-				-				(89	)
Shares of Common Stock Issued	(Notes 8, 13, 20)			-		1,169				-				-				1,169
Equity-Settled Compensation Costs				-		36				-				-				36
Other Comprehensive Income (Loss)		(Note 14)		-		-				-				52				52
Balance, June 30, 2023			$	3	$	8,671			$	(401	)		$	1,043			$	9,316

Three Months Ended June 30, 2022 (US$ millions)			Share Capital		Paid in Surplus			Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income				Total Shareholders’ Equity

Balance, March 31, 2022			$	3	$	8,334			$	(4,772	)		$	1,119			$	4,684
Net Earnings (Loss)				-		-				1,357				-				1,357
Dividends on Shares of Common Stock ($0.25 per share)		(Note 13)		-		-				(64	)			-				(64	)
Shares of Common Stock Purchased under Normal
Course Issuer Bid		(Note 13)		-		(135	)			-				-				(135	)
Equity-Settled Compensation Costs				-		40				-				-				40
Other Comprehensive Income (Loss)		(Note 14)		-		-				-				(61	)			(61	)
Balance, June 30, 2022			$	3	$	8,239			$	(3,479	)		$	1,058			$	5,821


Preliminary Purchase Price Allocation
Purchase Price Allocation

Consideration:
Fair value of shares of Ovintiv common stock issued (1)	$	1,169		$	1,169
Consideration paid in cash		3,241
Consideration paid in cash (2)					3,229
Total Consideration	$	4,410		$	4,398

Assets Acquired:
Cash and cash equivalents	$	16		$	16
Accounts receivable and accrued revenues		180
Proved properties		3,593
Unproved properties		1,141
Other property, plant and equipment		33
Accounts receivable and accrued revenues (3)					202
Proved properties (3)					3,727
Unproved properties (3)					914
Other property, plant and equipment (3)					17

Liabilities Assumed:
Accounts payable and accrued liabilities		(519	)
Accounts payable and accrued liabilities (3)					(446	)
Asset retirement obligation		(28	)		(28	)
Other liabilities and provisions		(6	)
Other liabilities and provisions (3)					(4	)
Total Purchase Price	$	4,410		$	4,398


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(US$ millions, except per share amounts)	2023		2022		2023		2022

Revenues	$	2,791	$	3,925	$	5,653	$	6,001
Net Earnings (Loss)	$	419	$	1,390	$	1,012	$	1,109

Net Earnings (Loss) per Share of Common Stock
Basic	$	1.68	$	4.81	$	4.10	$	3.84
Diluted		1.67		4.75		4.04		3.77


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


Number of registrant’s shares of common stock outstanding as of ~~July 21, 2023~~April 26, 2024			~~273,860,224~~266,980,795


	PART I

Item 1.	Financial Statements	6
	Condensed Consolidated Statement of Earnings	6
	Condensed Consolidated Statement of Comprehensive Income	6
	Condensed Consolidated Balance Sheet	7
	Condensed Consolidated Statement of Changes in Shareholders’ Equity	8
	Condensed Consolidated Statement of Cash Flows	109
	Notes to Condensed Consolidated Financial Statements	1110

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3533
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6153
Item 4.	Controls and Procedures	6355

	PART II

Item 1.	Legal Proceedings	6456
Item 1A.	Risk Factors	6456
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6456
Item 3.	Defaults Upon Senior Securities	6557
Item 4.	Mine Safety Disclosures	6557
Item 5.	Other Information	6557
Item 6.	Exhibits	6657
Signatures		6758


Three Months Ended March 31, 2024 (US$ millions)		Share Capital		Paid in Surplus			Retained Earnings				Accumulated Other Comprehensive Income				Total Shareholders’ Equity

Balance, December 31, 2023		$	3	$	8,620			$	697			$	1,050			$	10,370
Net Earnings (Loss)			-		-				338				-				338
Dividends on Shares of Common Stock ($0.30 per share)	(Note 14)		-		-				(80	)			-				(80	)
Shares of Common Stock Purchased	(Note 14)		-		(250	)			-				-				(250	)
Equity-Settled Compensation Costs			-		(39	)			-				-				(39	)
Other Comprehensive Income (Loss)	(Note 15)		-		-				-				(77	)			(77	)
Balance, March 31, 2024		$	3	$	8,331			$	955			$	973			$	10,262

Three Months Ended March 31, 2023 (US$ millions)		Share Capital		Paid in Surplus			Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income				Total Shareholders’ Equity

Balance, December 31, 2022		$	3	$	7,776			$	(1,081	)		$	991			$	7,689
Net Earnings (Loss)			-		-				487				-				487
Dividends on Shares of Common Stock ($0.25 per share)	(Note 14)		-		-				(61	)			-				(61	)
Shares of Common Stock Purchased	(Note 14)		-		(239	)			-				-				(239	)
Equity-Settled Compensation Costs			-		18				-				-				18
Other Comprehensive Income (Loss)	(Note 15)		-		-				-				-				-
Balance, March 31, 2023		$	3	$	7,555			$	(655	)		$	991			$	7,894


Six Months Ended June 30, 2023 (US$ millions)			Share Capital		Paid in Surplus			Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income				Total Shareholders’ Equity

Balance, December 31, 2022			$	3	$	7,776			$	(1,081	)		$	991			$	7,689
Net Earnings (Loss)				-		-				823				-				823
Dividends on Shares of Common Stock ($0.55 per share)		(Note 13)		-		-				(143	)			-				(143	)
Shares of Common Stock Purchased under Normal
Course Issuer Bid		(Note 13)		-		(328	)			-				-				(328	)
Shares of Common Stock Issued	(Notes 8, 13, 20)			-		1,169				-				-				1,169
Equity-Settled Compensation Costs				-		54				-				-				54
Other Comprehensive Income (Loss)		(Note 14)		-		-				-				52				52
Balance, June 30, 2023			$	3	$	8,671			$	(401	)		$	1,043			$	9,316

Six Months Ended June 30, 2022 (US$ millions)			Share Capital		Paid in Surplus			Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income				Total Shareholders’ Equity

Balance, December 31, 2021			$	3	$	8,458			$	(4,479	)		$	1,092			$	5,074
Net Earnings (Loss)				-		-				1,116				-				1,116
Dividends on Shares of Common Stock ($0.45 per share)		(Note 13)		-		-				(116	)			-				(116	)
Shares of Common Stock Purchased under Normal
Course Issuer Bid		(Note 13)		-		(206	)			-				-				(206	)
Equity-Settled Compensation Costs				-		(13	)			-				-				(13	)
Other Comprehensive Income (Loss)		(Note 14)		-		-				-				(34	)			(34	)
Balance, June 30, 2022			$	3	$	8,239			$	(3,479	)		$	1,058			$	5,821


(undiscounted)	2023		2024		2025		2026		2027		Thereafter		Total		2024		2025		2026		2027		2028		Thereafter		Total

Sublease Income	$	26	$	52	$	52	$	52	$	48	$	419	$	649	$	38	$	51	$	51	$	46	$	41	$	369	$	596


	Expected Future Payments														Expected Future Payments
(undiscounted)	2023		2024		2025		2026		2027		Thereafter		Total		2024		2025		2026		2027		2028		Thereafter		Total

Transportation and Processing	$	404	$	722	$	601	$	510	$	484	$	2,304	$	5,025	$	523	$	667	$	595	$	501	$	447	$	2,141	$	4,874
Drilling and Field Services		200		31		-		-		-		-		231		233		102		9		-		-		-		344
Building Leases		4		7		7		5		4		22		49
Building Leases & Other Commitments																6		10		8		7		7		19		57
Total	$	608	$	760	$	608	$	515	$	488	$	2,326	$	5,305	$	762	$	779	$	612	$	508	$	454	$	2,160	$	5,275


	Three months ended June 30,

($ millions)	Oil			NGLs - Plant Condensate			NGLs - Other			Natural Gas			Total

2022 Upstream Product Revenues (1)	$	1,312		$	399		$	294		$	879		$	2,884
Increase (decrease) due to:
Sales prices		(463	)		(141	)		(202	)		(765	)		(1,571	)
Production volumes		95			7			37			194			333
2023 Upstream Product Revenues	$	944		$	265		$	129		$	308		$	1,646

	Six months ended June 30,

($ millions)	Oil			NGLs - Plant Condensate			NGLs - Other			Natural Gas			Total

2022 Upstream Product Revenues (1)	$	2,387		$	777		$	542		$	1,500		$	5,206
Increase (decrease) due to:
Sales prices		(675	)		(208	)		(304	)		(781	)		(1,968	)
Production volumes		80			(49	)		55			197			283
2023 Upstream Product Revenues	$	1,792		$	520		$	293		$	916		$	3,521


2.	Recent Accounting Pronouncements


4.5.	Interest


8.9.	Business Combination


	As at June 30,
($ millions, except as indicated)	2023			2022

Cash and Cash Equivalents	$	52		$	8
Available Credit Facilities (1)		3,150			3,500
Available Uncommitted Demand Lines (2)		278			308
Issuance of U.S. Commercial Paper		(330	)		(215	)
Total Liquidity	$	3,150		$	3,601

Long-Term Debt, including current portion	$	6,134		$	3,902
Total Shareholders’ Equity (3)	$	9,316		$	5,821

Debt to Capitalization (%) (4)		40			40
Debt to Adjusted Capitalization (%) (5)		26			22


($ millions, except as indicated)	June 30, 2023		December 31, 2022


Debt (Long-Term Debt, including Current Portion)	$	6,134	$	3,570
Total Shareholders’ Equity		9,316		7,689
Capitalization	$	15,450	$	11,259
Debt to Capitalization	40%		32%

Debt (Long-Term Debt, including Current Portion)	$	6,134	$	3,570
Total Shareholders’ Equity		9,316		7,689
Equity Adjustment for Impairments at December 31, 2011		7,746		7,746
Adjusted Capitalization	$	23,196	$	19,005
Debt to Adjusted Capitalization	26%		19%