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 indicates, references to “Ovintiv,” the ~~“Company”~~“Company,” “us,” “we,” “our,” “ours,” (i) for periods until the Reorganization (as hereinafter defined), refer to Encana Corporation and its consolidated subsidiaries and (ii) for periods after the Reorganization, refer to Ovintiv Inc. and its consolidated 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 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.

The term “core asset” refers to plays that are the focus of the Company’s current capital investment and development plan. The Company continually reviews funding for development of its plays based on strategic fit, profitability and portfolio diversity and, as such, the composition of plays identified as a core asset may change over time.

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 contains certain forward-looking statements or information (collectively, “forward-looking statements”) within the meaning of applicable securities legislation, including the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements include: composition of the Company’s core assets, including allocation of capital and focus of development plans; growth in long-term shareholder value; vision of being a leading North American energy producer; statements with respect to the Company’s strategic objectives, including capital allocation strategy, shut-in strategy, focus of investment, return of capital to stockholders, growth of high margin liquids volumes, operating and capital efficiencies and ability to preserve balance sheet strength; statements regarding the benefits of the Company’s multi-basin portfolio; statements regarding the Company’s updated capital plan; statements regarding the Company’s application of excess cash flows to reduce long-term debt; ability to maximize cash flow through a disciplined capital allocation strategy; anticipated cost savings, capital efficiency and sustainability thereof; ability to repeat and deploy successful practices across the Company’s multi-basin portfolio; anticipated commodity prices; anticipated success of and benefits from technology and innovation, including cube development approach and advanced completion designs; ability to optimize well and completion designs; future well inventory; anticipated drilling, number of drilling rigs and the success thereof; anticipated drilling costs and cycle times; anticipated proceeds and future benefits from various joint venture, partnership and other agreements; potential impacts of an extended period of low commodity prices and responses of the Company thereto; estimates of reserves and resources and potential for negative price related reserve revisions; expected production and product types; ~~statements regarding anticipated cash flow, non-GAAP cash flow margin and leverage ratios;~~ anticipated access to cash, cash equivalents and other methods of funding; anticipated hedging and outcomes of risk management program, including exposure to certain commodity prices and foreign exchange fluctuations, amount of hedged production, market access and physical sales locations; impact of changes in laws and regulations; compliance with environmental legislation and claims related to the purported causes and impact of climate change, and the costs therefrom; adequacy of provisions for abandonment and site reclamation costs; statements regarding the Company’s operational and financial flexibility, discipline and ability to respond to evolving market conditions; ability to meet financial obligations, manage debt and financial ratios, finance growth and comply with financial covenants; impact to the Company as a result of ~~changes to or~~ a reduction of its credit rating; access to the Company’s credit facilities; planned dividend and the declaration and payment of future dividends, if any; expectations with respect to the Company’s restructuring initiative, including anticipated transition and severance costs and the timing thereof; adequacy of the Company’s provision for taxes and legal claims; projections and statements in respect of funding; ability to manage cost inflation and expected cost structures, including expected operating, transportation and processing and administrative expenses; competitiveness and pace of growth of the Company’s assets within North America and against its peers; outlook of oil and gas industry generally and impact of geopolitical environment; expected future interest expense; the Company’s commitments and ~~obligations~~contingencies and anticipated payments thereunder; and the possible impact of accounting pronouncements, rule changes and standards.

Readers are cautioned against unduly relying on forward-looking statements which, by their nature, involve numerous assumptions, risks and uncertainties that may cause such statements not to occur, or results to differ materially from those expressed or implied. These assumptions include: future commodity prices and differentials; foreign exchange rates; ability to access credit facilities and shelf prospectuses; data contained in key modeling statistics; availability of attractive hedges and enforceability of risk management program; effectiveness of the Company’s drive to productivity and efficiencies; results from innovations; expectation that counterparties will fulfill their obligations under the gathering, midstream and marketing agreements; access to transportation and processing facilities where Ovintiv operates; assumed tax, royalty and regulatory regimes; assumptions contained herein and expectations and projections made in light of, and generally consistent with,

Ovintiv’s historical experience and its perception of historical trends, including with respect to the pace of technological development, benefits achieved and general industry expectations.

Risks and uncertainties that may affect these business outcomes include: suspension of or changes to guidance, and associated impact to production; ability to generate sufficient cash flow to meet obligations; market and commodity price volatility and associated impact to the Company’s stock price, credit rating, financial condition, reserves and access to liquidity; the impact of COVID-19 to the Company’s operations, including maintaining ordinary staffing levels, securing operational inputs, executing on portions of its business and managing cyber-security risks associated with remote work; ability to secure adequate transportation; potential curtailments of refinery operations, including resulting storage constraints or widening price differentials; variability and discretion of Ovintiv’s board of directors (the “Board of Directors”) to declare and pay dividends, if any; timing and costs of well, facilities and pipeline construction; business interruption, property and casualty losses or unexpected technical difficulties, including impact of weather; risks associated with decommissioning activities, including timing and costs thereof; counterparty and credit risk; impact of changes in credit rating and access to liquidity, including costs thereof; fluctuations in currency and interest rates; failure to achieve cost and efficiency initiatives; risks inherent in marketing operations; risks associated with technology, including electronic, cyber and physical security breaches; changes in or interpretation of royalty, tax, environmental, greenhouse gas, carbon, accounting and other laws or regulations; the Company’s ability to utilize U.S. net operating loss carryforwards and other tax attributes; risks associated with existing and potential lawsuits and regulatory actions made against the Company; impact of disputes arising with its partners, including suspension of certain obligations and inability to dispose of assets or interests in certain arrangements; the Company’s ability to acquire or find additional reserves; imprecision of reserves estimates and estimates of recoverable quantities, including future net revenue estimates; risks associated with past and future acquisitions or divestitures of certain assets or other transactions or receipt of amounts contemplated under the transaction agreements (such transactions may include third-party capital investments, farm-outs or partnerships, which Ovintiv may refer to from time to time as “partnerships” or “joint ventures” and the funds received in respect thereof which Ovintiv may refer to from time to time as “proceeds”, “deferred purchase price” and/or “carry capital”, regardless of the legal form) as a result of various conditions not being met; and other risks described in Item 1A. Risk Factors of the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Annual Report on Form 10-K”) and in this Quarterly Report on Form 10-Q, and risks and uncertainties impacting Ovintiv’s business as described from time to time in the Company’s other periodic filings with the SEC.

Although the Company believes the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions, risks and uncertainties referenced above are not exhaustive. Forward-looking statements are made as of the date of this 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 in this Quarterly Report on Form 10-Q are expressly qualified by these cautionary statements.

The reader should read carefully the risk factors described in Item 1A. Risk Factors of the 2019 Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.

			Three Months Ended						Six Months Ended								Three Months Ended						Nine Months Ended
			June 30,						June 30,								September 30,						September 30,
(US$ millions, except per share amounts)			2020			2019			2020			2019					2020			2019			2020			2019

Revenues		(Note 3)														(Note 3)
Product and service revenues		(Note 4)	$	1,023		$	1,848		$	2,593		$	3,420			(Note 4)	$	1,326		$	1,771		$	3,919		$	5,191
Gains (losses) on risk management, net		(Note 22)		(314	)		190			741			(165	)		(Note 22)		(154	)		81			587			(84	)
Sublease revenues		(Note 11)		17			17			35			35			(Note 11)		18			19			53			54
Total Revenues				726			2,055			3,369			3,290					1,190			1,871			4,559			5,161

Operating Expenses		(Note 3)														(Note 3)
Production, mineral and other taxes				27			73			79			121					47			66			126			187
Transportation and processing				368			412			764			750					365			398			1,129			1,148
Operating	(Notes 19, 20)			154			187			319			352		(Notes 19, 20)			133			193			452			545
Purchased product				319			222			717			520					322			264			1,039			784
Depreciation, depletion and amortization				493			532			1,027			909					406			545			1,433			1,454
Impairments		(Note 10)		3,250			-			3,527			-			(Note 10)		1,336			0			4,863			0
Accretion of asset retirement obligation		(Note 14)		9			10			18			19			(Note 14)		8			9			26			28
Administrative	(Notes 18, 19, 20)			165			81			218			308		(Notes 18, 19, 20)			79			81			297			389
Total Operating Expenses				4,785			1,517			6,669			2,979					2,696			1,556			9,365			4,535
Operating Income (Loss)				(4,059	)		538			(3,300	)		311					(1,506	)		315			(4,806	)		626

Other (Income) Expenses
Interest		(Note 5)		86			99			182			186			(Note 5)		97			99			279			285
Foreign exchange (gain) loss, net		(Notes 6, 22)		(40	)		(55	)		76			(92	)		(Notes 6, 22)		(25	)		30			51			(62	)
(Gain) loss on divestitures, net				-			-			-			1					0			(5	)		0			(4	)
Other (gains) losses, net		(Notes 8, 12, 20)		(16	)		(3	)		(30	)		25			(Notes 8, 12, 20)		(18	)		(1	)		(48	)		24
Total Other (Income) Expenses				30			41			228			120					54			123			282			243
Net Earnings (Loss) Before Income Tax				(4,089	)		497			(3,528	)		191					(1,560	)		192			(5,088	)		383
Income tax expense (recovery)		(Note 7)		294			161			434			100			(Note 7)		(39	)		43			395			143
Net Earnings (Loss)			$	(4,383	)	$	336		$	(3,962	)	$	91				$	(1,521	)	$	149		$	(5,483	)	$	240

Net Earnings (Loss) per Share of Common Stock ⁽¹⁾
Basic & Diluted		(Note 15)	$	(16.87	)	$	1.22		$	(15.25	)	$	0.35			(Note 15)	$	(5.85	)	$	0.56		$	(21.10	)	$	0.92
Weighted Average Shares of Common Stock Outstanding (millions) ⁽¹⁾	Weighted Average Shares of Common Stock Outstanding (millions) ⁽¹⁾														Weighted Average Shares of Common Stock Outstanding (millions) ⁽¹⁾
Basic & Diluted		(Note 15)		259.8			276.2			259.8			260.2			(Note 15)		259.8			264.6			259.8			261.7

		Three Months Ended						Six Months Ended							Three Months Ended						Nine Months Ended
		June 30,						June 30,							September 30,						September 30,
(US$ millions)		2020			2019			2020			2019				2020			2019			2020			2019

Net Earnings (Loss)		$	(4,383	)	$	336		$	(3,962	)	$	91			$	(1,521	)	$	149		$	(5,483	)	$	240
Other Comprehensive Income (Loss), Net of Tax
Foreign currency translation adjustment	(Note 16)		87			4			(47	)		38		(Note 16)		26			(6	)		(21	)		32
Pension and other post-employment benefit plans	(Notes 16, 20)		3			(23	)		1			(24	)	(Notes 16, 20)		(2	)		0			(1	)		(24	)
Other Comprehensive Income (Loss)			90			(19	)		(46	)		14				24			(6	)		(22	)		8
Comprehensive Income (Loss)		$	(4,293	)	$	317		$	(4,008	)	$	105			$	(1,497	)	$	143		$	(5,505	)	$	248

			As at			As at					As at			As at
			June 30,			December 31,					September 30,			December 31,
(US$ millions)			2020			2019					2020			2019

Assets
Current Assets
Cash and cash equivalents			$	39		$	190				$	32		$	190
Accounts receivable and accrued revenues (net of allowances of $5 million (2019: $3 million))				819			1,235
Accounts receivable and accrued revenues (net of allowances of $4 million (2019: $3 million))												766			1,235
Risk management		(Notes 21, 22)		347			148			(Notes 21, 22)		170			148
Income tax receivable				269			296					251			296
				1,474			1,869					1,219			1,869
Property, Plant and Equipment, at cost:		(Note 10)								(Note 10)
Oil and natural gas properties, based on full cost accounting
Proved properties				51,926			51,210					52,653			51,210
Unproved properties				3,323			3,714					3,168			3,714
Other				876			904					887			904
Property, plant and equipment				56,125			55,828					56,708			55,828
Less: Accumulated depreciation, depletion and amortization				(44,489	)		(40,637	)				(46,485	)		(40,637	)
Property, plant and equipment, net		(Note 3)		11,636			15,191			(Note 3)		10,223			15,191
Other Assets				1,103			1,213					1,113			1,213
Risk Management		(Notes 21, 22)		2			2			(Notes 21, 22)		8			2
Deferred Income Taxes		(Note 7)		-			601			(Note 7)		0			601
Goodwill		(Notes 3, 8)		2,580			2,611			(Notes 3, 8)		2,594			2,611
		(Note 3)	$	16,795		$	21,487			(Note 3)	$	15,157		$	21,487

Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities			$	1,529		$	2,239				$	1,615		$	2,239
Current portion of operating lease liabilities				68			78					66			78
Income tax payable				1			1					3			1
Risk management		(Notes 21, 22)		55			114			(Notes 21, 22)		65			114
				1,653			2,432					1,749			2,432
Long-Term Debt		(Note 12)		7,366			6,974			(Note 12)		7,142			6,974
Operating Lease Liabilities				902			977					912			977
Other Liabilities and Provisions	(Note 13)			390			464		(Note 13)			377			464
Risk Management		(Notes 21, 22)		109			68			(Notes 21, 22)		154			68
Asset Retirement Obligation		(Note 14)		435			425			(Note 14)		446			425
Deferred Income Taxes				67			217					25			217
				10,922			11,557					10,805			11,557
Commitments and Contingencies		(Note 24)								(Note 24)
Shareholders’ Equity
Share capital - authorized 775 million shares of common stock
2020 issued and outstanding: 259.8 million shares (2019: 259.8 million shares)		(Note 15)		3			7,061			(Note 15)		3			7,061
Paid in surplus		(Note 15)		8,460			1,402			(Note 15)		8,460			1,402
Retained earnings (Accumulated deficit)				(3,590	)		421					(5,135	)		421
Accumulated other comprehensive income		(Note 16)		1,000			1,046			(Note 16)		1,024			1,046
Total Shareholders’ Equity				5,873			9,930					4,352			9,930
			$	16,795		$	21,487				$	15,157		$	21,487

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

Three Months Ended June 30, 2020 (US$ millions)		Share Capital		Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income		Total Shareholders’ Equity
Three Months Ended September 30, 2020 (US$ millions)																Share Capital			Paid in Surplus			Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income			Total Shareholders’ Equity

Balance, March 31, 2020		$	3	$	8,460	$	818		$	910	$	10,191
Balance, June 30, 2020																$	3		$	8,460		$	(3,590	)		$	1,000		$	5,873
Net Earnings (Loss)			-		-		(4,383	)		-		(4,383	)				0			0			(1,521	)			0			(1,521	)
Dividends on Shares of Common Stock ($0.09375 per share)	(Note 15)		-		-		(25	)		-		(25	)		(Note 15)			0			0			(24	)			0			(24	)
Other Comprehensive Income (Loss)	(Note 16)		-		-		-			90		90		(Note 16)			0			0			0				24			24
Balance, June 30, 2020		$	3	$	8,460	$	(3,590	)	$	1,000	$	5,873
Balance, September 30, 2020																$	3		$	8,460		$	(5,135	)		$	1,024		$	4,352

Three Months Ended June 30, 2019 (US$ millions)		Share Capital			Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Three Months Ended September 30, 2019 (US$ millions)																	Share Capital			Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Total Shareholders’ Equity

Balance, March 31, 2019		$	7,827		$	1,358	$	144		$	1,031		$	10,360
Balance, June 30, 2019																	$	7,318		$	1,358	$	327		$	1,012		$	10,015
Net Earnings (Loss)			-			-		336			-			336				0			0		149			0			149
Dividends on Common Shares ($0.09375 per share ⁽¹⁾)	(Note 15)		-			-		(25	)		-			(25	)	(Note 15)		0			0		(24	)		0			(24	)
Common Shares Purchased under Normal Course Issuer Bid			(509	)		-		(128	)		-			(637	)
Common Shares Purchased under Substantial Issuer Bid																(Note 15)		(257	)		44		-			-			(213	)
Other Comprehensive Income (Loss)	(Note 16)		-			-		-			(19	)		(19	)	(Note 16)		0			0		0			(6	)		(6	)
Balance, June 30, 2019		$	7,318		$	1,358	$	327		$	1,012		$	10,015
Balance, September 30, 2019																	$	7,061		$	1,402	$	452		$	1,006		$	9,921

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

Six Months Ended June 30, 2020 (US$ millions)		Share Capital			Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Nine Months Ended September 30, 2020 (US$ millions)																	Share Capital			Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Total Shareholders’ Equity

Balance, December 31, 2019		$	7,061		$	1,402	$	421		$	1,046		$	9,930			$	7,061		$	1,402	$	421		$	1,046		$	9,930
Net Earnings (Loss)			-			-		(3,962	)		-			(3,962	)			0			0		(5,483	)		0			(5,483	)
Dividends on Shares of Common Stock ($0.1875 per share)	(Note 15)		-			-		(49	)		-			(49	)
Dividends on Shares of Common Stock ($0.28125 per share)																(Note 15)		0			0		(73	)		0			(73	)
Other Comprehensive Income (Loss)	(Note 16)		-			-		-			(46	)		(46	)	(Note 16)		0			0		0			(22	)		(22	)
Reclassification of Share Capital due to the Reorganization	(Note 15)		(7,058	)		7,058		-			-			-		(Note 15)		(7,058	)		7,058		0			0			0
Balance, June 30, 2020		$	3		$	8,460	$	(3,590	)	$	1,000		$	5,873
Balance, September 30, 2020																	$	3		$	8,460	$	(5,135	)	$	1,024		$	4,352

Six Months Ended June 30, 2019 (US$ millions)		Share Capital			Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income		Total Shareholders’ Equity
Nine Months Ended September 30, 2019 (US$ millions)																Share Capital			Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income		Total Shareholders’ Equity

Balance, December 31, 2018		$	4,656		$	1,358	$	435		$	998	$	7,447			$	4,656		$	1,358	$	435		$	998	$	7,447
Net Earnings (Loss)			-			-		91			-		91				0			0		240			0		240
Dividends on Common Shares ($0.1875 per share ⁽¹⁾)	(Note 15)		-			-		(53	)		-		(53	)
Dividends on Common Shares ($0.28125 per share ⁽¹⁾)															(Note 15)		0			0		(77	)		0		(77	)
Common Shares Purchased under Substantial Issuer Bid															(Note 15)		(257	)		44		0			0		(213	)
Common Shares Purchased under Normal Course Issuer Bid	(Note 15)		(816	)		-		(221	)		-		(1,037	)	(Note 15)		(816	)		0		(221	)		0		(1,037	)
Common Shares Issued	(Notes 8, 15)		3,478			-		-			-		3,478		(Notes 8, 15)		3,478			0		0			0		3,478
Other Comprehensive Income (Loss)	(Note 16)		-			-		-			14		14		(Note 16)		0			0		0			8		8
Impact of Adoption of Topic 842, Leases			-			-		75			-		75				0			0		75			0		75
Balance, June 30, 2019		$	7,318		$	1,358	$	327		$	1,012	$	10,015
Balance, September 30, 2019																$	7,061		$	1,402	$	452		$	1,006	$	9,921

			Three Months Ended						Six Months Ended								Three Months Ended						Nine Months Ended
			June 30,						June 30,								September 30,						September 30,
(US$ millions)			2020			2019			2020			2019					2020			2019			2020			2019

Operating Activities
Net earnings (loss)			$	(4,383	)	$	336		$	(3,962	)	$	91				$	(1,521	)	$	149		$	(5,483	)	$	240
Depreciation, depletion and amortization				493			532			1,027			909					406			545			1,433			1,454
Impairments		(Note 10)		3,250			-			3,527			-			(Note 10)		1,336			0			4,863			0
Accretion of asset retirement obligation		(Note 14)		9			10			18			19			(Note 14)		8			9			26			28
Deferred income taxes		(Note 7)		295			158			435			96			(Note 7)		(42	)		44			393			140
Unrealized (gain) loss on risk management		(Note 22)		679			(83	)		(225	)		344			(Note 22)		243			41			18			385
Unrealized foreign exchange (gain) loss		(Note 6)		(50	)		(35	)		51			(60	)		(Note 6)		(21	)		49			30			(11	)
Foreign exchange on settlements		(Note 6)		-			(22	)		20			(35	)		(Note 6)		(2	)		(18	)		18			(53	)
(Gain) loss on divestitures, net				-			-			-			1					0			(5	)		0			(4	)
Other				11			(19	)		(52	)		(66	)				(9	)		3			(61	)		(63	)
Net change in other assets and liabilities				(68	)		(15	)		(120	)		(26	)				(47	)		(29	)		(167	)		(55	)
Net change in non-cash working capital		(Note 23)		(119	)		44			(36	)		162			(Note 23)		142			(32	)		106			130
Cash From (Used in) Operating Activities				117			906			683			1,435					493			756			1,176			2,191
Investing Activities
Capital expenditures		(Note 3)		(252	)		(750	)		(1,042	)		(1,486	)		(Note 3)		(351	)		(566	)		(1,393	)		(2,052	)
Acquisitions		(Note 9)		(1	)		(19	)		(18	)		(41	)		(Note 9)		(1	)		(25	)		(19	)		(66	)
Corporate acquisition, net of cash and restricted cash acquired		(Note 8)		-			-			-			94			(Note 8)		0			0			0			94
Proceeds from divestitures		(Note 9)		8			4			30			6			(Note 9)		39			171			69			177
Net change in investments and other				(272	)		(30	)		(142	)		24					68			(142	)		(74	)		(118	)
Cash From (Used in) Investing Activities				(517	)		(795	)		(1,172	)		(1,403	)				(245	)		(562	)		(1,417	)		(1,965	)
Financing Activities
Net issuance (repayment) of revolving long-term debt		(Note 12)		408			761			552			761			(Note 12)		(100	)		(21	)		452			740
Repayment of long-term debt		(Note 12)		(26	)		(500	)		(115	)		(500	)		(Note 12)		(109	)		0			(224	)		(500	)
Purchase of shares of common stock		(Note 15)		-			(637	)		-			(1,037	)		(Note 15)		0			(213	)		0			(1,250	)
Dividends on shares of common stock		(Note 15)		(25	)		(25	)		(49	)		(53	)		(Note 15)		(24	)		(24	)		(73	)		(77	)
Finance lease payments and other financing arrangements				(22	)		(21	)		(44	)		(41	)				(23	)		(22	)		(67	)		(63	)
Cash From (Used in) Financing Activities				335			(422	)		344			(870	)				(256	)		(280	)		88			(1,150	)
Foreign Exchange Gain (Loss) on Cash, Cash Equivalents
and Restricted Cash Held in Foreign Currency				1			1			(6	)		4					1			0			(5	)		4
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash			(64	)		(310	)		(151	)		(834	)	Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash			(7	)		(86	)		(158	)		(920	)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period	Cash, Cash Equivalents and Restricted Cash, Beginning of Period			103			534			190			1,058		Cash, Cash Equivalents and Restricted Cash, Beginning of Period			39			224			190			1,058
Cash, Cash Equivalents and Restricted Cash, End of Period			$	39		$	224		$	39		$	224				$	32		$	138		$	32		$	138
Cash, End of Period			$	29		$	39		$	29		$	39				$	22		$	44		$	22		$	44
Cash Equivalents, End of Period				10			128			10			128					10			94			10			94
Restricted Cash, End of Period				-			57			-			57					0			0			0			0
Cash, Cash Equivalents and Restricted Cash, End of Period			$	39		$	224		$	39		$	224				$	32		$	138		$	32		$	138

On January 24, 2020, Encana Corporation (“Encana”) completed a corporate reorganization, which included a plan of arrangement (the “Arrangement”) that involved, among other things, a share consolidation by Encana on the basis of one post-consolidation share for each five pre-consolidation shares (the “Share Consolidation”), and Ovintiv Inc. ultimately acquired all of the issued and outstanding common shares of Encana in exchange for shares of common stock of Ovintiv Inc. on a 1-for-one basis. Following completion of the Arrangement, Ovintiv Inc. migrated from Canada and became a Delaware corporation, domiciled in the U.S. (the “U.S. Domestication”). The Arrangement and the U.S. Domestication together are referred to as the “Reorganization”. Ovintiv Inc. and its subsidiaries (collectively, “Ovintiv”) continue to carry on the business of the exploration for, the development of, and the production and marketing of oil, NGLs and natural gas, which was previously conducted by Encana and its subsidiaries prior to the completion of the Reorganization. References to the “Company” are to Encana Corporation and its subsidiaries prior to the completion of the Reorganization and to Ovintiv Inc. and its subsidiaries following the completion of the Reorganization.

The Arrangement, as described above, was accounted for as a reorganization of entities under common control. Accordingly, the resulting transactions were recognized using historical carrying amounts. On January 24, 2020, Ovintiv became the reporting entity upon completion of the Reorganization.

In accordance with the Share Consolidation, all common shares and per-share amounts disclosed herein reflect the post-Share Consolidation shares unless otherwise specified; comparative periods have been restated accordingly. References to shares of common stock refer to the shares of common stock of Ovintiv Inc. for any periods after the completion of the Arrangement, and to the common shares of Encana Corporation for any periods before January 24, 2020.

Following the U.S. Domestication, on January 24, 2020, the functional currency of Ovintiv Inc. became U.S. dollars, and accordingly, the financial results herein are consolidated and reported in U.S. dollars.

The interim Condensed Consolidated Financial Statements include the accounts of Ovintiv and entities in which it holds a controlling interest. All intercompany balances and transactions are eliminated on consolidation. Undivided interests in oil and natural gas exploration and production joint ventures and partnerships are consolidated on a proportionate basis. Investments in non-controlled entities over which the Company has the ability to exercise significant influence are accounted for using the equity method.

The interim Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP and the rules and regulations of the SEC. Pursuant to these rules and regulations, certain information and disclosures normally required under U.S. GAAP have been condensed or have been disclosed on an annual basis only. Accordingly, the interim Condensed Consolidated Financial Statements should be read in conjunction with the annual audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2019, which are included in Item 8 of Ovintiv’s 2019 Annual Report on Form 10-K.

The interim Condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the annual audited Consolidated Financial Statements for the year ended December 31, 2019, except as noted below in Note 2. The disclosures provided below are incremental to those included with the annual audited Consolidated Financial Statements.

These unaudited interim Condensed Consolidated Financial Statements reflect, in the opinion of Management, all normal and recurring adjustments necessary to present fairly the financial position and results of the Company as at and for the periods presented. Interim condensed consolidated financial results are not necessarily indicative of consolidated financial results expected for the fiscal year.

On January 1, 2020, Ovintiv adopted the following ASUs issued by the FASB, which have not had a material impact on the interim Condensed Consolidated Financial Statements:

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

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.

	USA Operations					Canadian Operations				China Operations ⁽¹⁾				USA Operations					Canadian Operations				China Operations ⁽¹⁾
	2020			2019		2020		2019		2020		2019		2020			2019		2020		2019		2020		2019

Revenues
Product and service revenues	$	430		$	1,188	$	245	$	389	$	-	$	21	$	670		$	1,097	$	310	$	377	$	0	$	3
Gains (losses) on risk management, net		260			41		103		67		-		-		38			35		49		87		0		0
Sublease revenues		-			-		-		-		-		-		0			0		0		0		0		0
Total Revenues		690			1,229		348		456		-		21		708			1,132		359		464		0		3

Operating Expenses
Production, mineral and other taxes		24			69		3		4		-		-		43			63		4		3		0		0
Transportation and processing		115			136		198		217		-		-		109			125		203		211		0		0
Operating		121			148		25		27		-		8		104			151		24		32		0		4
Depreciation, depletion and amortization		375			429		111		95		-		-		299			438		99		100		0		0
Impairments		3,250			-		-		-		-		-		1,336			0		0		0		0		0
Total Operating Expenses		3,885			782		337		343		-		8		1,891			777		330		346		0		4
Operating Income (Loss)	$	(3,195	)	$	447	$	11	$	113	$	-	$	13	$	(1,183	)	$	355	$	29	$	118	$	0	$	(1	)

	Market Optimization						Corporate & Other						Consolidated						Market Optimization						Corporate & Other						Consolidated
	2020			2019			2020			2019			2020			2019			2020			2019			2020			2019			2020			2019

Revenues
Product and service revenues	$	348		$	250		$	-		$	-		$	1,023		$	1,848		$	346		$	294		$	0		$	0		$	1,326		$	1,771
Gains (losses) on risk management, net		2			(1	)		(679	)		83			(314	)		190			2			0			(243	)		(41	)		(154	)		81
Sublease revenues		-			-			17			17			17			17			0			0			18			19			18			19
Total Revenues		350			249			(662	)		100			726			2,055			348			294			(225	)		(22	)		1,190			1,871

Operating Expenses
Production, mineral and other taxes		-			-			-			-			27			73			0			0			0			0			47			66
Transportation and processing		55			59			-			-			368			412			53			62			0			0			365			398
Operating		8			5			-			(1	)		154			187			5			6			0			0			133			193
Purchased product		319			222			-			-			319			222			322			264			0			0			322			264
Depreciation, depletion and amortization		-			-			7			8			493			532			0			0			8			7			406			545
Impairments		-			-			-			-			3,250			-			0			0			0			0			1,336			0
Accretion of asset retirement obligation		-			-			9			10			9			10			0			0			8			9			8			9
Administrative		-			-			165			81			165			81			0			0			79			81			79			81
Total Operating Expenses		382			286			181			98			4,785			1,517			380			332			95			97			2,696			1,556
Operating Income (Loss)	$	(32	)	$	(37	)	$	(843	)	$	2			(4,059	)		538		$	(32	)	$	(38	)	$	(320	)	$	(119	)		(1,506	)		315

Other (Income) Expenses
Interest														86			99															97			99
Foreign exchange (gain) loss, net														(40	)		(55	)														(25	)		30
(Gain) loss on divestitures, net														-			-															0			(5	)
Other (gains) losses, net														(16	)		(3	)														(18	)		(1	)
Total Other (Income) Expenses														30			41															54			123
Net Earnings (Loss) Before Income Tax														(4,089	)		497															(1,560	)		192
Income tax expense (recovery)														294			161															(39	)		43
Net Earnings (Loss)													$	(4,383	)	$	336														$	(1,521	)	$	149

	USA Operations					Canadian Operations				China Operations ⁽¹⁾				USA Operations					Canadian Operations				China Operations ⁽¹⁾
	2020			2019		2020		2019		2020		2019		2020			2019		2020		2019		2020		2019

Revenues
Product and service revenues	$	1,230		$	1,965	$	596	$	845	$	-	$	34	$	1,900		$	3,062	$	906	$	1,222	$	0	$	37
Gains (losses) on risk management, net		374			93		139		87		-		-		412			128		188		174		0		0
Sublease revenues		-			-		-		-		-		-		0			0		0		0		0		0
Total Revenues		1,604			2,058		735		932		-		34		2,312			3,190		1,094		1,396		0		37

Operating Expenses
Production, mineral and other taxes		72			113		7		8		-		-		115			176		11		11		0		0
Transportation and processing		236			215		411		429		-		-		345			340		614		640		0		0
Operating		260			263		51		64		-		12		364			414		75		96		0		16
Depreciation, depletion and amortization		793			703		220		187		-		-		1,092			1,141		319		287		0		0
Impairments		3,527			-		-		-		-		-		4,863			0		0		0		0		0
Total Operating Expenses		4,888			1,294		689		688		-		12		6,779			2,071		1,019		1,034		0		16
Operating Income (Loss)	$	(3,284	)	$	764	$	46	$	244	$	-	$	22	$	(4,467	)	$	1,119	$	75	$	362	$	0	$	21

	Market Optimization						Corporate & Other						Consolidated						Market Optimization						Corporate & Other						Consolidated
	2020			2019			2020			2019			2020			2019			2020			2019			2020			2019			2020			2019

Revenues
Product and service revenues	$	767		$	576		$	-		$	-		$	2,593		$	3,420		$	1,113		$	870		$	0		$	0		$	3,919		$	5,191
Gains (losses) on risk management, net		3			(1	)		225			(344	)		741			(165	)		5			(1	)		(18	)		(385	)		587			(84	)
Sublease revenues		-			-			35			35			35			35			0			0			53			54			53			54
Total Revenues		770			575			260			(309	)		3,369			3,290			1,118			869			35			(331	)		4,559			5,161

Operating Expenses
Production, mineral and other taxes		-			-			-			-			79			121			0			0			0			0			126			187
Transportation and processing		117			106			-			-			764			750			170			168			0			0			1,129			1,148
Operating		10			15			(2	)		(2	)		319			352			15			21			(2	)		(2	)		452			545
Purchased product		717			520			-			-			717			520			1,039			784			0			0			1,039			784
Depreciation, depletion and amortization		-			-			14			19			1,027			909			0			0			22			26			1,433			1,454
Impairments		-			-			-			-			3,527			-			0			0			0			0			4,863			0
Accretion of asset retirement obligation		-			-			18			19			18			19			0			0			26			28			26			28
Administrative		-			-			218			308			218			308			0			0			297			389			297			389
Total Operating Expenses		844			641			248			344			6,669			2,979			1,224			973			343			441			9,365			4,535
Operating Income (Loss)	$	(74	)	$	(66	)	$	12		$	(653	)		(3,300	)		311		$	(106	)	$	(104	)	$	(308	)	$	(772	)		(4,806	)		626

Other (Income) Expenses
Interest														182			186															279			285
Foreign exchange (gain) loss, net														76			(92	)														51			(62	)
(Gain) loss on divestitures, net														-			1															0			(4	)
Other (gains) losses, net														(30	)		25															(48	)		24
Total Other (Income) Expenses														228			120															282			243
Net Earnings (Loss) Before Income Tax														(3,528	)		191															(5,088	)		383
Income tax expense (recovery)														434			100															395			143
Net Earnings (Loss)													$	(3,962	)	$	91														$	(5,483	)	$	240

							Market Optimization																		Market Optimization
	Marketing Sales						Upstream Eliminations						Total						Marketing Sales						Upstream Eliminations						Total
For the three months ended June 30,	2020			2019			2020			2019			2020			2019
For the three months ended September 30,																			2020			2019			2020			2019			2020			2019

Revenues	$	1,047		$	2,135		$	(697	)	$	(1,886	)	$	350		$	249		$	1,445		$	2,088		$	(1,097	)	$	(1,794	)	$	348		$	294

Operating Expenses
Transportation and processing		152			153			(97	)		(94	)		55			59			148			173			(95	)		(111	)		53			62
Operating		8			5			-			-			8			5			5			6			0			0			5			6
Purchased product		919			2,015			(600	)		(1,793	)		319			222			1,324			1,947			(1,002	)		(1,683	)		322			264
Operating Income (Loss)	$	(32	)	$	(38	)	$	-		$	1		$	(32	)	$	(37	)	$	(32	)	$	(38	)	$	0		$	0		$	(32	)	$	(38	)

	Market Optimization																		Market Optimization
	Marketing Sales						Upstream Eliminations						Total						Marketing Sales						Upstream Eliminations						Total
For the six months ended June 30,	2020			2019			2020			2019			2020			2019
For the nine months ended September 30,																			2020			2019			2020			2019			2020			2019

Revenues	$	3,142		$	3,371		$	(2,372	)	$	(2,796	)	$	770		$	575		$	4,587		$	5,459		$	(3,469	)	$	(4,590	)	$	1,118		$	869

Operating Expenses
Transportation and processing		320			292			(203	)		(186	)		117			106			468			465			(298	)		(297	)		170			168
Operating		10			15			-			-			10			15			15			21			0			0			15			21
Purchased product		2,886			3,131			(2,169	)		(2,611	)		717			520			4,210			5,078			(3,171	)		(4,294	)		1,039			784
Operating Income (Loss)	$	(74	)	$	(67	)	$	-		$	1		$	(74	)	$	(66	)	$	(106	)	$	(105	)	$	0		$	1		$	(106	)	$	(104	)

	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2020		2019		2020		2019		2020		2019		2020		2019

USA Operations	$	218	$	641	$	846	$	1,218	$	244	$	464	$	1,090	$	1,682
Canadian Operations		33		108		194		265		106		99		300		364
Market Optimization										0		2		0		2
Corporate & Other		1		1		2		3		1		1		3		4
	$	252	$	750	$	1,042	$	1,486	$	351	$	566	$	1,393	$	2,052

For the year ended December 31, 2019	United States		Canada		Total		United States		Canada		Total

Acquisition Costs ⁽¹⁾
Unproved	$	843	$	-	$	843	$	843	$	0	$	843
Proved		5,963		-		5,963		5,963		0		5,963
Total Acquisition Costs		6,806		-		6,806		6,806		0		6,806
Exploration Costs		5		-		5		5		0		5
Development Costs		2,129		480		2,609		2,129		480		2,609
	$	8,940	$	480	$	9,420	$	8,940	$	480	$	9,420

The following tables summarize the Company’s revenues from contracts with customers.

	USA Operations				Canadian Operations				China Operations ⁽¹⁾				USA Operations					Canadian Operations				China Operations ⁽¹⁾
	2020		2019		2020		2019		2020		2019		2020		2019			2020		2019		2020		2019

Revenues from Customers
Product revenues ⁽²⁾
Oil	$	307	$	947	$	2	$	2	$	-	$	21	$	504	$	905		$	1	$	3	$	0	$	3
NGLs		60		136		88		230		-		-		98		99			139		225		0		0
Natural gas		65		105		157		158		-		-		71		95			172		150		0		0
Service revenues
Gathering and processing		1		2		1		2		-		-		0		(1	)		0		2		0		0
Product and Service Revenues	$	433	$	1,190	$	248	$	392	$	-	$	21	$	673	$	1,098		$	312	$	380	$	0	$	3

	Market Optimization				Corporate & Other				Consolidated				Market Optimization				Corporate & Other				Consolidated
	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019		2020		2019

Revenues from Customers
Product revenues ⁽²⁾
Oil	$	369	$	98	$	-	$	-	$	1,322	$	1,691	$	131	$	107	$	0	$	0	$	636	$	1,018
NGLs		4		4		-		-		417		671		0		2		0		0		237		326
Natural gas		386		459		-		-		852		1,053		210		181		0		0		453		426
Service revenues
Gathering and processing		-		-		-		-		2		5		0		0		0		0		0		1
Product and Service Revenues	$	759	$	561	$	-	$	-	$	2,593	$	3,420	$	341	$	290	$	0	$	0	$	1,326	$	1,771

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. The Company had 0 contract asset or liability balances during the periods presented. As at ~~June~~September 30, 2020, receivables and accrued revenues from contracts with customers were ~~$704~~$628 million ($1,095 million as at December 31, 2019).

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 0 unsatisfied performance obligations remaining at ~~June~~September 30, 2020.

As at ~~June~~September 30, 2020, 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.

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Unrealized Foreign Exchange (Gain) Loss on:
Translation of U.S. dollar financing debt issued from Canada	$	(14	)	$	(92	)	$	62		$	(185	)	$	(6	)	$	68		$	56		$	(117	)
Translation of U.S. dollar risk management contracts issued from Canada		(36	)		(7	)		16			(18	)		(15	)		5			1			(13	)
Translation of intercompany notes		-			64			(27	)		143			0			(24	)		(27	)		119
		(50	)		(35	)		51			(60	)		(21	)		49			30			(11	)
Foreign Exchange on Settlements of:
U.S. dollar financing debt issued from Canada		-			(11	)		17			(12	)		(2	)		(10	)		15			(22	)
U.S. dollar risk management contracts issued from Canada		6			1			9			1			(2	)		(2	)		7			(1	)
Intercompany notes		-			(11	)		3			(23	)		0			(8	)		3			(31	)
Other Monetary Revaluations		4			1			(4	)		2			0			1			(4	)		3
	$	(40	)	$	(55	)	$	76		$	(92	)	$	(25	)	$	30		$	51		$	(62	)

Following the completion of the Reorganization, including the U.S. Domestication, on January 24, 2020 as described in Note 1, the U.S. dollar denominated unsecured notes issued by Encana Corporation from Canada were assumed by Ovintiv Inc., a company incorporated in Delaware with a U.S. dollar functional currency. Accordingly, these U.S. dollar denominated unsecured notes, along with certain intercompany notes, no longer attract foreign exchange translation gains or losses.

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Current Tax
United States	$	(1	)	$	1		$	(1	)	$	2		$	4		$	1		$	3		$	3
Canada		-			2			-			2			(1	)		(2	)		(1	)		0
Total Current Tax Expense (Recovery)		(1	)		3			(1	)		4			3			(1	)		2			3

Deferred Tax
United States		(267	)		85			(139	)		61			(41	)		56			(180	)		117
Canada		563			72			573			34			0			(12	)		573			22
Other Countries		(1	)		1			1			1			(1	)		0			0			1
Total Deferred Tax Expense (Recovery)		295			158			435			96			(42	)		44			393			140
Income Tax Expense (Recovery)	$	294		$	161		$	434		$	100		$	(39	)	$	43		$	395		$	143
Effective Tax Rate		(7.2	%)		32.4	%		(12.3	%)		52.4	%		2.5	%		22.4	%		(7.8	%)		37.3	%

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, valuation allowances related to current year losses, income tax related to foreign operations, state tax, the effect of legislative changes, non-taxable capital gains and losses, and tax differences on divestitures and transactions, which can produce interim effective tax rate fluctuations.

Deferred income tax assets are routinely assessed for realizability. During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company determined, after weighing both positive and negative evidence, that a valuation allowance should be recorded to reduce the associated deferred tax assets in the United States and in Canada. The Company iscontinues to be in a cumulative three-year loss position as of ~~June~~September 30, 2020 and is expected to be in a cumulative three-year loss position by the end of the current fiscal year in both the United States and Canada. The cumulative three-year losses, as well as increased uncertainty in the timing as to when the realization of deferred tax assets will occur, is significant negative evidence to overcome, and consequently, it is more likely than not that the deferred tax assets will not be realizable. If it is determined that the deferred tax assets are ~~realized~~realizable in the future, a reduction in the valuation allowance will be recorded.

As part of the U.S. Domestication, Ovintiv also recognized a capital loss and recorded a deferred income tax benefit in the amount of $1.2 billion for Canadian income tax purposes due to the decline in the Company’s share value compared to the historical tax basis of its properties that were transferred as part of the Reorganization. Ovintiv assessed the realizability of these capital losses against capital gains and concluded that it is more likely than not that the deferred tax asset will not be realizable. Therefore, Ovintiv has recorded a corresponding valuation allowance against the deferred tax asset. If it is determined the capital loss can be utilized at a future date, a reduction in the valuation allowance will be recorded.

Following the U.S. Domestication as described in Note 1, the applicable statutory rate became the U.S. federal income tax rate. The effective tax rate of ~~(12.3)~~(7.8) percent for the ~~six~~nine months ended ~~June~~September 30, 2020 is lower than the U.S. federal statutory tax rate of 21 percent primarily due to valuation allowances recorded due to current year losses arising from ceiling test impairments and an increase in the valuation allowance of $568 million in Canada related to prior years’ deferred tax assets which was recorded as a discrete item. See Note 10 for further discussion related to the ceiling test impairments.

The effective tax rate of ~~52.4~~37.3 percent for the ~~six~~nine months ended ~~June~~September 30, 2019, was higher than the Canadian statutory tax rate of 26.6 percent primarily due to the re-measurement of the Company’s deferred tax position resulting from the Alberta tax rate reduction. On June 28, 2019, Alberta Bill 3, the Job Creation Tax Cut (Alberta Corporate Tax Amendment) Act, was signed into law resulting in a reduction of the Alberta corporate tax rate from 12 percent to 11 percent effective July 1, 2019, with further 1 percent rate reductions to take effect every year on January 1 until the general corporate tax rate is 8 percent on January 1, 2022. During the ~~three~~nine months ended ~~June~~September 30, 2019, the deferred tax expense of ~~$158~~$140 million included an adjustment of $55 million resulting from the re-measurement of the Company’s deferred tax position due to the Alberta tax rate reduction.

On June 29, 2020, Alberta announced the previously scheduled rate reduction ~~will~~would be accelerated with the Alberta rate reducing to 8 percent effective July 1, 2020. This ~~new~~ legislation is not yet enacted and the impact resulting from this announcement is not expected to be material for the Company’s tax position.

On February 13, 2019, the business combination with Newfield Exploration Company, a Delaware corporation (“Newfield”) was completed pursuant to an Agreement and Plan of Merger with Newfield (the “Merger”). As a result of the Merger, Newfield stockholders received 2.6719 Encana common shares, on a pre-Share Consolidation basis, for each share of Newfield common stock that was issued and outstanding immediately prior to the effective date of the Merger. The Company issued approximately 543.4 million Encana common shares, on a pre-Share Consolidation basis, representing a value of $3.5 billion and paid approximately $5 million in cash in respect of Newfield’s cash-settled incentive awards. Following the acquisition, Newfield’s senior notes totaling $2.45 billion were outstanding. For the ~~six~~nine months ended ~~June~~September 30, 2019, transaction costs of approximately $33 million were included in other (gains) losses, net.

Newfield’s operations focused on the exploration and development of oil and gas properties located in Anadarko and Arkoma in Oklahoma, Bakken in North Dakota and Uinta in Utah, as well as offshore oil assets located in China. The results of Newfield’s operations have been included in the Condensed Consolidated Financial Statements as of February 14, 2019.

The transaction was accounted for under the acquisition method, which requires that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date, with any excess of the purchase price over the estimated fair value of identified net assets acquired recorded as goodwill. The purchase price allocation represents the consideration paid and the fair values of the assets acquired, and liabilities assumed as of the acquisition date.

The income approach valuation technique was used for the fair value of assets acquired and liabilities assumed. The carrying amounts of cash and cash equivalents, accounts receivable and accrued revenues, restricted cash, other current assets, and accounts payable and accrued liabilities approximate their fair values due to their nature and/or the short-term maturity of the instruments. The fair values of long-term debt, right-of-use (“ROU”) assets and operating lease liabilities were categorized within Level 2 of the fair value hierarchy and were determined using quoted prices and rates from an available pricing source. The fair values of the proved and unproved properties, other property, plant and equipment, other assets, other long-term liabilities and asset retirement obligation were categorized within Level 3 and were determined using relevant market assumptions, including discount rates, future commodity prices and costs, timing of development activities, projections of oil and gas reserves, and estimates for abandonment and reclamation.

Goodwill arose from the Newfield acquisition primarily from the requirement to recognize deferred taxes on the difference between the fair value of the assets acquired and liabilities assumed and the respective carry-over tax basis. Goodwill is not amortized and is not deductible for tax purposes.

The following unaudited pro forma financial information combines the historical financial results of the Company with Newfield and has been prepared as though the acquisition had occurred on January 1, 2019. The pro forma information is not intended to reflect the actual results of operations that would have occurred if the business combination had been completed at the date indicated. In addition, the pro forma information is not intended to be a projection of the Company’s results of operations for any future period.

Additionally, pro forma earnings were adjusted to exclude transaction-related costs incurred of approximately $71 million and severance payments made to employees which totaled ~~$130~~$134 million for the ~~six~~nine months ended ~~June~~September 30, 2019. The pro forma financial information does not include any cost savings or other synergies from the Merger or any estimated costs that have been incurred to integrate the assets. Ovintiv’s consolidated results for the three and ~~six~~nine months ended ~~June~~September 30, 2020 include the results from Newfield.

For the six months ended June 30 (US$ millions, except per share amounts)	2019
For the nine months ended September 30 (US$ millions, except per share amounts)			2019

Revenues	$	3,570	$	5,440
Net Earnings (Loss)	$	231	$	376

Net Earnings (Loss) per Share ⁽¹⁾
Basic & Diluted	$	0.89	$	1.44

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Acquisitions
USA Operations	$	1		$	19		$	18		$	41		$	1		$	25		$	19		$	66
Total Acquisitions		1			19			18			41			1			25			19			66

Divestitures
USA Operations		(6	)		(3	)		(27	)		(6	)		(36	)		(171	)		(63	)		(177	)
Canadian Operations		(2	)		(1	)		(3	)		-			(3	)		0			(6	)		0
Total Divestitures		(8	)		(4	)		(30	)		(6	)		(39	)		(171	)		(69	)		(177	)
Net Acquisitions & (Divestitures)	$	(7	)	$	15		$	(12	)	$	35		$	(38	)	$	(146	)	$	(50	)	$	(111	)

For the ~~six~~nine months ended ~~June~~September 30, 2020, acquisitions in the USA Operations were ~~$18~~$19 million, which primarily included property purchases with oil and liquids rich potential. For the ~~six~~nine months ended ~~June~~September 30, 2019, acquisitions in the USA Operations were ~~$41~~$66 million which primarily included seismic purchases, water rights and ~~water rights.~~purchases with oil and liquids rich potential.

For the ~~six~~nine months ended ~~June~~September 30, 2020, divestitures in the USA and Canadian Operations were ~~$27~~$63 million and $3$6 million, respectively, which primarily included the sale of certain properties that did not complement Ovintiv’s existing portfolio of assets. For the three and nine months ended September 30, 2019, divestitures in the USA Operations were $171 million and $177 million, respectively, which primarily included the sale of the Company’s Arkoma natural gas assets.

Amounts received from the Company’s divestiture transactions have been deducted from the respective U.S. and Canadian full cost pools.

	As at June 30, 2020							As at December 31, 2019							As at September 30, 2020							As at December 31, 2019
			Accumulated							Accumulated							Accumulated							Accumulated
	Cost		DD&A			Net		Cost		DD&A			Net		Cost		DD&A			Net		Cost		DD&A			Net

USA Operations
Proved properties	$	37,078	$	(29,945	)	$	7,133	$	35,870	$	(25,623	)	$	10,247	$	37,426	$	(31,581	)	$	5,845	$	35,870	$	(25,623	)	$	10,247
Unproved properties		3,118		-			3,118		3,491		-			3,491		2,980		0			2,980		3,491		0			3,491
Other		32		-			32		19		-			19		32		0			32		19		0			19
		40,228		(29,945	)		10,283		39,380		(25,623	)		13,757		40,438		(31,581	)		8,857		39,380		(25,623	)		13,757

Canadian Operations
Proved properties		14,793		(13,869	)		924		15,284		(14,320	)		964		15,227		(14,266	)		961		15,284		(14,320	)		964
Unproved properties		205		-			205		223		-			223		188		0			188		223		0			223
Other		14		-			14		18		-			18		13		0			13		18		0			18
		15,012		(13,869	)		1,143		15,525		(14,320	)		1,205		15,428		(14,266	)		1,162		15,525		(14,320	)		1,205

Market Optimization		8		(7	)		1		9		(7	)		2		9		(7	)		2		9		(7	)		2
Corporate & Other		877		(668	)		209		914		(687	)		227		833		(631	)		202		914		(687	)		227
	$	56,125	$	(44,489	)	$	11,636	$	55,828	$	(40,637	)	$	15,191	$	56,708	$	(46,485	)	$	10,223	$	55,828	$	(40,637	)	$	15,191

USA and Canadian Operations property, plant and equipment include internal costs directly related to exploration, development and construction activities of ~~$96~~$133 million, which have been capitalized during the ~~six~~nine months ended ~~June~~September 30, 2020 (2019 - ~~$121~~$171 million).

For the three and ~~six~~nine months ended ~~June~~September 30, 2020, the Company recognized before-tax non-cash ceiling test impairments in the USA Operations of ~~$3,250~~$1,336 million and ~~$3,527~~$4,863 million, respectively (2019 - ~~nil)~~nil, respectively). The non-cash ceiling test impairments are included with accumulated DD&A in the table above and primarily resulted from the decline in the 12-month average trailing prices, which reduced proved reserves.

The 12-month average trailing prices used in the ceiling test calculations were based on the benchmark prices presented below. The benchmark prices were adjusted for basis differentials to determine local reference prices, transportation costs and tariffs, heat content and quality.

	Oil & NGLs				Natural Gas				Oil & NGLs				Natural Gas
	WTI		Edmonton Condensate		Henry Hub		AECO		WTI		Edmonton Condensate		Henry Hub		AECO
	($/bbl)		(C$/bbl)		($/MMBtu)		(C$/MMBtu)		($/bbl)		(C$/bbl)		($/MMBtu)		(C$/MMBtu)
12-Month Average Trailing Reserves Pricing ⁽¹⁾
June 30, 2020	$	47.47	$	58.46	$	2.07	$	1.70
September 30, 2020									$	43.69	$	53.93	$	1.97	$	2.01
December 31, 2019		55.93		68.80		2.58		1.76		55.93		68.80		2.58		1.76
June 30, 2019		61.38		72.91		3.02		1.61
September 30, 2019										57.76		67.81		2.87		1.52

The Company has 2 lease arrangements that are accounted for as finance leases, which include an office building and an offshore production platform. As at ~~June~~September 30, 2020, the total carrying value of assets under finance lease was ~~$35~~$34 million ($37 million as at December 31, 2019), net of accumulated amortization of ~~$658~~$669 million ($677 million as at December 31, 2019). Long-term liabilities for the finance lease arrangements are included in other liabilities and provisions in the Condensed Consolidated Balance Sheet and are disclosed in Note 13.

The following table outlines the Company’s estimated future sublease income as at ~~June~~September 30, 2020. All subleases are classified as operating leases.

(undiscounted)	2020		2021		2022		2023		2024		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter		Total

Sublease Income	$	25	$	49	$	45	$	44	$	43	$	531	$	737	$	12	$	50	$	46	$	44	$	44	$	543	$	739

For the three and ~~six~~nine months ended ~~June~~September 30, 2020, operating lease income was ~~$13~~$14 million and ~~$26~~$40 million, respectively (2019 - ~~$13~~$15 million and ~~$26~~$41 million, respectively), and variable lease income was $4 million and $9$13 million, respectively (2019 - $6$4 million and $9$13 million, respectively).

	As at			As at			As at			As at
	June 30,			December 31,			September 30,			December 31,
	2020			2019			2020			2019

U.S. Dollar Denominated Debt
Revolving credit and term loan borrowings	$	1,250		$	698		$	1,150		$	698
U.S. Unsecured Notes:
3.90% due November 15, 2021		590			600			554			600
5.75% due January 30, 2022		660			750			605			750
5.625% due July 1, 2024		1,000			1,000			1,000			1,000
5.375% due January 1, 2026		688			700			688			700
8.125% due September 15, 2030		300			300			300			300
7.20% due November 1, 2031		350			350			350			350
7.375% due November 1, 2031		500			500			500			500
6.50% due August 15, 2034		750			750			750			750
6.625% due August 15, 2037		462			462			462			462
6.50% due February 1, 2038		488			505			488			505
5.15% due November 15, 2041		236			244			212			244
Total Principal		7,274			6,859			7,059			6,859

Increase in Value of Debt Acquired		128			149			119			149
Unamortized Debt Discounts and Issuance Costs		(36	)		(34	)		(36	)		(34	)
Total Long-Term Debt	$	7,366		$	6,974		$	7,142		$	6,974

Current Portion	$	-		$	-		$	0		$	0
Long-Term Portion		7,366			6,974			7,142			6,974
	$	7,366		$	6,974		$	7,142		$	6,974

During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company repurchased approximately ~~$137~~$252 million in principal amount of its senior notes in the open market, which included approximately ~~$10~~$46 million in principal amount of its 3.9 percent senior notes due in November 2021, approximately ~~$90~~$145 million in principal amount of its 5.75 percent senior notes due in January 2022, approximately $12 million in principal amount of its 5.375 percent senior notes due in January 2026, approximately $17 million in principal amount of its 6.5 percent senior notes due in February 2038 and approximately $8$32 million in principal amount of its 5.15 percent senior notes due in November 2041.

For the three and ~~six~~nine months ended ~~June~~September 30, 2020, the aggregate cash payments related to note repurchases were ~~$26~~$109 million and ~~$115~~$224 million, respectively, plus accrued interest, and net gains of approximately ~~$11~~$6 million and ~~$22~~$28 million, respectively, were recognized in other (gains) losses, net on the Condensed Consolidated Statement of Earnings.

As at ~~June~~September 30, 2020, the Company had outstanding commercial paper of $140 million maturing at various dates with a weighted average interest rate of approximately 0.87 percent. These amounts are supported, and Management expects that they will continue to be supported by revolving credit facilities that have no repayment requirements within the next year and

which expire in 2024. As at September 30, 2020, the Company also had $1,010 million drawn on its revolving credit facilities.

As at September 30, 2020, total long-term debt had a carrying value of ~~$7,366~~$7,142 million and a fair value of ~~$6,808~~$6,804 million (as at December 31, 2019 - carrying value of $6,974 million and a fair value of $7,657 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.

	As at		As at		As at		As at
	June 30,		December 31,		September 30,		December 31,
	2020		2019		2020		2019

Finance Lease Obligations	$	75	$	121	$	51	$	121
Unrecognized Tax Benefits		152		159		155		159
Pensions and Other Post-Employment Benefits		118		119		123		119
Long-Term Incentive Costs (See Note 19)		19		38		23		38
Other Derivative Contracts (See Notes 21, 22)		9		7		9		7
Other		17		20		16		20
	$	390	$	464	$	377	$	464

	As at			As at			As at			As at
	June 30,			December 31,			September 30,			December 31,
	2020			2019			2020			2019

Asset Retirement Obligation, Beginning of Year	$	614		$	455		$	614		$	455
Liabilities Incurred		9			15			11			15
Liabilities Acquired (See Note 8)		-			184			0			184
Liabilities Settled and Divested		(108	)		(141	)		(157	)		(141	)
Change in Estimated Future Cash Outflows		22			47			12			47
Accretion Expense		18			37			26			37
Foreign Currency Translation		(17	)		17			(11	)		17
Asset Retirement Obligation, End of Period	$	538		$	614		$	495		$	614

Current Portion	$	103		$	189		$	49		$	189
Long-Term Portion		435			425			446			425
	$	538		$	614		$	495		$	614

As of January 24, 2020, following the completion of the Reorganization, Ovintiv is authorized to issue 775 million shares of common stock, par value $0.01 per share, and 25 million shares of preferred stock, par value $0.01 per share. No shares of preferred stock are outstanding.

In conjunction with the Reorganization as described in Note 1, the amount recognized in share capital in excess of Ovintiv’s established par value of $0.01 per share was reclassified to paid in surplus. Accordingly, approximately $7,058 million was reclassified.

On February 13, 2019, the Company completed the acquisition of all the issued and outstanding shares of common stock of Newfield whereby Encana issued approximately 543.4 million common shares, on a pre-Share Consolidation basis, to Newfield shareholders (approximately 108.7 million post-Share Consolidation shares), representing a pre-Share Consolidation exchange ratio of 2.6719 Encana common shares for each share of Newfield common stock held. See Note 8 for further information on the business combination.

On June 10, 2019, the Company announced its intention to purchase, for cancellation, up to $213 million of common shares through a substantial issuer bid (“SIB”) which commenced on July 8, 2019. On August 29, 2019, the Company purchased the equivalent of approximately 9.5 million post-Share Consolidation shares at a converted price of $22.50 per share, for an aggregate purchase price of approximately $213 million, of which $257 million was charged to share capital and $44 million was credited to paid in surplus.

The purchase was made in accordance with the terms and conditions of the SIB, with consideration allocated to share capital equivalent to the average carrying amount of the shares, with the excess of the carrying amount over the purchase consideration credited to paid in surplus.

On February 27, 2019, the Company announced that the TSX accepted the Company’s notice of intention to purchase, for cancellation, the equivalent of up to approximately 29.9 million post-Share Consolidation Encana common shares, pursuant to a NCIB over a 12-month period from March 4, 2019 to March 3, 2020.

For the ~~six~~nine months ended ~~June~~September 30, 2019 and the twelve months ended December 31, 2019, the Company purchased the equivalent of approximately 29.9 million post-Share Consolidation shares under the NCIB for total consideration of approximately $1,037 million. Of the amount paid, $816 million was charged to share capital and $221 million was charged to retained earnings.

All purchases were made in accordance with the NCIB at prevailing market prices plus brokerage fees, with consideration allocated to share capital up to the average carrying amount of the shares, with any excess allocated to retained earnings.

During the three months ended ~~June~~September 30, 2020, the Company declared and paid dividends of $0.09375 per share of Ovintiv common stock totaling ~~$25~~$24 million. For the three months ended ~~June~~September 30, 2019, the Company declared and paid dividends of $0.09375 per common share on a post-Share Consolidation basis totaling ~~$25~~$24 million.

During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company declared and paid dividends of ~~$0.1875~~$0.28125 per share of Ovintiv common stock totaling ~~$49~~$73 million. For the ~~six~~nine months ended ~~June~~September 30, 2019, the Company declared and paid dividends of ~~$0.1875~~$0.28125 per common share on a post-Share Consolidation basis totaling ~~$53~~$77 million.

On ~~July~~October 28, 2020, the Board of Directors declared a dividend of $0.09375 per share of Ovintiv common stock payable on ~~September 30,~~December 31, 2020 to stockholders of record as of ~~September~~December 15, 2020.

The following table presents the computation of net earnings (loss) per share of common stock:

	Three Months Ended					Six Months Ended					Three Months Ended					Nine Months Ended
	June 30,					June 30,					September 30,					September 30,
(US$ millions, except per share amounts)	2020			2019		2020			2019		2020			2019		2020			2019

Net Earnings (Loss)	$	(4,383	)	$	336	$	(3,962	)	$	91	$	(1,521	)	$	149	$	(5,483	)	$	240

Number of Shares of Common Stock ⁽¹⁾:
Weighted average shares of common stock outstanding - Basic		259.8			276.2		259.8			260.2		259.8			264.6		259.8			261.7
Effect of dilutive securities		-			-		-			-		0			0		0			0
Weighted Average Shares of Common Stock Outstanding - Diluted		259.8			276.2		259.8			260.2		259.8			264.6		259.8			261.7

Net Earnings (Loss) per Share of Common Stock ⁽¹⁾
Basic & Diluted	$	(16.87	)	$	1.22	$	(15.25	)	$	0.35	$	(5.85	)	$	0.56	$	(21.10	)	$	0.92

Ovintiv has share-based compensation plans that allow employees to purchase shares of common stock of the Company. Option exercise prices are not less than the market value of the shares of common stock on the date the options are granted. All options outstanding as at ~~June~~September 30, 2020 have associated Tandem Stock Appreciation Rights (“TSARs”) attached. In lieu of exercising the option, the associated TSARs give the option holder the right to receive a cash payment equal to the excess of the market price of Ovintiv’s shares of common stock at the time of the exercise over the original grant price. Historically, most holders of options with TSARs have elected to exercise their stock options as a Stock Appreciation Right (“SAR”) in exchange for a cash payment. As a result, outstanding TSARs are not considered potentially dilutive securities.

Ovintiv has a share-based compensation plan whereby eligible employees and Directors are granted Restricted Share Units (“RSUs”). An RSU is a conditional grant to receive the equivalent of a share of common stock upon vesting of the RSUs and in accordance with the terms and conditions of the compensation plan and grant agreements. The Company currently settles vested RSUs in cash. As a result, RSUs are currently not considered potentially dilutive securities.

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Foreign Currency Translation Adjustment
Balance, Beginning of Period	$	870		$	1,010		$	1,004		$	976		$	957		$	1,014		$	1,004		$	976
Change in Foreign Currency Translation Adjustment		87			4			(47	)		38			26			(6	)		(21	)		32
Balance, End of Period	$	957		$	1,014		$	957		$	1,014		$	983		$	1,008		$	983		$	1,008

Pension and Other Post-Employment Benefit Plans
Balance, Beginning of Period	$	40		$	21		$	42		$	22		$	43		$	(2	)	$	42		$	22

Other Comprehensive Income Before Reclassifications:
Net prior service costs from plan amendment (See Note 20)		-			(29	)		-			(29	)		0			0			0			(29	)
Income taxes		-			6			-			6			0			0			0			6

Amounts Reclassified from Other Comprehensive Income:
Reclassification of net actuarial (gains) and losses to net earnings (See Note 20)		(2	)		-			(4	)		(1	)		(2	)		0			(6	)		(1	)
Income taxes		1			-			1			-			0			0			1			0
Curtailment in net defined periodic benefit cost (See Note 20)		5			-			5			-			0			0			5			0
Income taxes		(1	)		-			(1	)		-			0			0			(1	)		0

Balance, End of Period	$	43		$	(2	)	$	43		$	(2	)	$	41		$	(2	)	$	41		$	(2	)
Total Accumulated Other Comprehensive Income	$	1,000		$	1,012		$	1,000		$	1,012		$	1,024		$	1,006		$	1,024		$	1,006

During the ~~three~~nine months ended ~~June~~September 30, 2019, the Company amended the other post-employment benefits arrangements in conjunction with the integration of the Newfield business acquired. The plan amendment resulted in an increase to pension liabilities with a corresponding loss recognized in other comprehensive income.

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~~September 30, 2020, VMLP provides approximately 1,213 MMcf/d of natural gas gathering and compression and 932 MMcf/d of natural gas processing under long-term service agreements with remaining terms ranging from 11 to 25 years and have various renewal terms providing up to a potential maximum of 10 years.

Ovintiv has determined that VMLP is a VIE 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, which represents the potential exposure to Ovintiv in the event the assets under the agreements are deemed worthless, is estimated to be ~~$1,855~~$1,858 million as at ~~June~~September 30, 2020. 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 24 under Transportation and Processing. The potential payout requirement is highly uncertain as the amount is contingent on ~~future~~

future production estimates, pace of development and the amount of capacity contracted to third parties. As at ~~June~~September 30, 2020, accounts payable and accrued liabilities included ~~$0.4~~$0.6 million related to the take or pay commitment.

In February 2019, in conjunction with the Newfield business combination as described in Note 8, the Company announced workforce reductions to better align staffing levels and ~~the~~ organizational structure with the Company’s strategy. During 2019, the Company incurred total restructuring charges of $138 million, before tax, primarily related to severance costs.

In June 2020, Ovintiv undertook a plan to reduce its workforce by approximately 25 percent as part of a company-wide reorganization to better align staffing levels and organizational structure with the Company’s planned activity levels. During the three and ~~six~~nine months ended ~~June~~September 30, 2020, the Company incurred total restructuring charges of ~~$81~~$7 million and $88 million, respectively, before tax, primarily related to severance costs, ~~(2019 - $17 million and $130 million, respectively). As at June 30, 2020, $49~~of which $14 million remains accrued ~~and is~~as at September 30, 2020. The majority of the remaining amounts accrued are expected to be paid ~~during the remainder of 2020. Total~~in 2021 and total transition and severance costs are ~~anticipated to be complete in 2020 and are~~ expected to be approximately ~~$91~~$93 million before tax.

Restructuring charges are included in administrative expense presented in the Corporate and Other segment in the Condensed Consolidated Statement of Earnings.

	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2020		2019		2020		2019		2020		2019		2020		2019

Severance and Benefits	$	80	$	16	$	80	$	128	$	6	$	4	$	86	$	132
Outplacement, Moving and Other Expenses		1		1		1		2		1		0		2		2
Restructuring Expenses	$	81	$	17	$	81	$	130	$	7	$	4	$	88	$	134

	As at			As at			As at			As at
	June 30,			December 31,			September 30,			December 31,
	2020			2019			2020			2019

Outstanding Restructuring Accrual, Beginning of Year	$	8		$	-		$	8		$	0
Restructuring Expenses Incurred		81			138			88			138
Restructuring Costs Paid		(40	)		(130	)		(82	)		(130	)
Outstanding Restructuring Accrual, End of Period ⁽¹⁾	$	49		$	8		$	14		$	8

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 TSARs, SARs, Performance Share Units (“PSUs”), Deferred Share Units (“DSUs”) and RSUs. These compensation arrangements are share-based.

Ovintiv accounts for TSARs, SARs, PSUs and RSUs as cash-settled share-based payment transactions and, accordingly, accrues compensation costs over the vesting period based on the fair value of the rights determined using the Black-Scholes-Merton and other fair value models.

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

	As at June 30, 2020		As at June 30, 2019		As at September 30, 2020		As at September 30, 2019
	US$ Share Units	C$ Share Units	US$ Share Units	C$ Share Units	US$ Share Units	C$ Share Units	US$ Share Units	C$ Share Units

Risk Free Interest Rate	0.25%	0.25%	1.49%	1.49%	0.22%	0.22%	1.58%	1.58%
Dividend Yield	3.93%	3.97%	1.46%	1.49%	4.60%	4.66%	1.63%	1.64%
Expected Volatility Rate ⁽¹⁾	100.88%	100.34%	43.62%	41.75%	102.43%	101.65%	44.14%	42.77%
Expected Term	2.8 yrs	2.3 yrs	2.9 yrs	2.6 yrs	2.5 yrs	2.0 yrs	2.9 yrs	2.6 yrs
Market Share Price ⁽²⁾	US$9.55	C$12.91	US$25.65	C$33.60	US$8.16	C$10.89	US$23.00	C$30.35

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Total Compensation Costs of Transactions Classified as Cash-Settled	$	35		$	(20	)	$	(16	)	$	44		$	4		$	2		$	(12	)	$	46
Less: Total Share-Based Compensation Costs Capitalized		(8	)		3			5			(15	)		(2	)		(1	)		3			(16	)
Total Share-Based Compensation Expense (Recovery)	$	27		$	(17	)	$	(11	)	$	29		$	2		$	1		$	(9	)	$	30

Recognized on the Condensed Consolidated Statement of Earnings in:
Operating	$	8		$	(2	)	$	(4	)	$	12		$	1		$	0		$	(3	)	$	12
Administrative		19			(15	)		(7	)		17			1			1			(6	)		18
	$	27		$	(17	)	$	(11	)	$	29		$	2		$	1		$	(9	)	$	30

As at ~~June~~September 30, 2020, the liability for share-based payment transactions totaled ~~$43~~$47 million ($78 million as at December 31, 2019), of which $24 million ($40 million as at December 31, 2019) is recognized in accounts payable and accrued liabilities and ~~$19~~$23 million ($38 million as at December 31, 2019) is recognized in other liabilities and provisions in the Condensed Consolidated Balance Sheet.

	As at June 30, 2020			As at December 31, 2019			As at September 30, 2020			As at December 31, 2019

Liability for Cash-Settled Share-Based Payment Transactions:
Unvested		$	36		$	65		$	42		$	65
Vested			7			13			5			13
		$	43		$	78		$	47		$	78

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. The RSUs issued in 2020 vest at one-third of the number granted in each of the years following the grant date, for three years.

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

	Pension Benefits				OPEB				Total				Pension Benefits				OPEB				Total
	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019		2020		2019

Net Defined Periodic Benefit Cost	$	-	$	-	$	3	$	10	$	3	$	10	$	0	$	1	$	2	$	13	$	2	$	14
Defined Contribution Plan Expense		16		11		-		-		16		11		24		18		0		0		24		18
Total Benefit Plans Expense	$	16	$	11	$	3	$	10	$	19	$	21	$	24	$	19	$	2	$	13	$	26	$	32

Of the total benefit plans expense, ~~$15~~$22 million (2019 - ~~$12~~$20 million) was included in operating expense and $3$5 million (2019 - $4$6 million) was included in administrative expense. Excluding service costs, net defined periodic benefit ~~costs~~gains of $1 million (2019 - $5losses of $6 million) were recorded in other (gains) losses, net.

The net defined periodic benefit cost for the ~~six~~nine months ended ~~June~~September 30 is as follows:

	Defined Benefits						OPEB						Total						Defined Benefits						OPEB						Total
	2020			2019			2020			2019			2020			2019			2020			2019			2020			2019			2020			2019

Service Cost	$	-		$	-		$	2		$	5		$	2		$	5		$	0		$	1		$	3		$	7		$	3		$	8
Interest Cost		3			3			1			2			4			5			4			5			2			3			6			8
Expected Return on Plan Assets		(3	)		(3	)		-			-			(3	)		(3	)		(5	)		(5	)		0			0			(5	)		(5	)
Amounts Reclassified from Accumulated Other Comprehensive Income:
Amortization of net actuarial (gains) and losses		-			-			(4	)		(1	)		(4	)		(1	)		1			0			(7	)		(1	)		(6	)		(1	)
Curtailment from net prior service costs		-			-			5			-			5			-			0			0			5			0			5			0
Curtailment		-			-			(1	)		4			(1	)		4			0			0			(1	)		4			(1	)		4
Total Net Defined Periodic Benefit Cost ⁽¹⁾	$	-		$	-		$	3		$	10		$	3		$	10		$	0		$	1		$	2		$	13		$	2		$	14

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 22. 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, 2020	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 September 30, 2020														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	$	411	$	83	$	496	$	(149	)	$	347	$	0	$	143	$	86	$	229	$	(69	)	$	160
Long-term assets		-		4		-		4		(4	)		-		0		14		0		14		(8	)		6
Foreign Currency Derivatives:
Current assets															0		10		0		10		0			10
Long-term assets		-		2		-		2		-			2		0		2		0		2		0			2

Risk Management Liabilities
Commodity Derivatives:
Current liabilities	$	-	$	200	$	-	$	200	$	(149	)	$	51	$	2	$	129	$	3	$	134	$	(69	)	$	65
Long-term liabilities		-		110		2		112		(4	)		108		0		158		4		162		(8	)		154
Foreign Currency Derivatives:
Current liabilities		-		4		-		4		-			4
Long-term liabilities		-		1		-		1		-			1

Other Derivative Contracts
Current in accounts payable and accrued liabilities	$	-	$	2	$	-	$	2	$	-		$	2	$	0	$	2	$	0	$	2	$	-		$	2
Long-term in other liabilities and provisions		-		9		-		9		-			9		0		9		0		9		-			9

As at December 31, 2019	Level 1 Quoted Prices in Active Markets		Level 2 Other Observable Inputs		Level 3 Significant Unobservable Inputs		Total Fair Value		Netting ⁽¹⁾			Carrying Amount		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	$	-	$	202	$	-	$	202	$	(67	)	$	135	$	0	$	202	$	0	$	202	$	(67	)	$	135
Long-term assets		-		6		-		6		(4	)		2		0		6		0		6		(4	)		2
Foreign Currency Derivatives:
Current assets		-		13		-		13		-			13		0		13		0		13		0			13

Risk Management Liabilities
Commodity Derivatives:
Current liabilities	$	1	$	139	$	41	$	181	$	(67	)	$	114	$	1	$	139	$	41	$	181	$	(67	)	$	114
Long-term liabilities		-		61		11		72		(4	)		68		0		61		11		72		(4	)		68

Other Derivative Contracts
Current in accounts payable and accrued liabilities	$	-	$	2	$	-	$	2	$	-		$	2	$	0	$	2	$	0	$	2	$	-		$	2
Long-term in other liabilities and provisions		-		7		-		7		-			7		0		7		0		7		-			7

The Company’s Level 1 and Level 2 risk management assets and liabilities consist of commodity fixed price contracts, NYMEX fixed price swaptions, NYMEX three-way options, NYMEX costless collars, NYMEX call options, foreign currency swaps and basis swaps with terms to 2025. Level 2 also includes financial guarantee contracts as discussed in Note 22. The fair values of these contracts are based on a market approach and 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.

As at ~~June~~September 30, 2020, the Company’s Level 3 risk management assets and liabilities consist of WTI three-way options, WTI costless collars and WTI sold payer swaptions with terms to 2021. The WTI three-way options are a combination of a sold call, 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 sold payer swaptions give the counterparty the right to extend to 2021 certain 2020 WTI fixed price swaps. The fair values of these contracts are based on the income approach and are modelled 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						Nine Months Ended
	June 30,						September 30,
	2020			2019			2020			2019

Balance, Beginning of Year	$	(52	)	$	139		$	(52	)	$	139
Total Gains (Losses)		204			(53	)		214			24
Purchases, Sales, Issuances and Settlements:
Purchases, sales and issuances		-			-			0			0
Settlements		(71	)		(29	)		(83	)		(49	)
Transfers Out of Level 3		-			-			0			0
Balance, End of Period	$	81		$	57		$	79		$	114
Change in Unrealized Gains (Losses) Related to Assets and Liabilities Held at End of Period	$	106		$	(8	)
Change in Unrealized Gains (Losses) During the Period Included in Net Earnings (Loss)							$	131		$	(25	)

Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at ~~June~~September 30, 2020:

A 10 percent increase or decrease in implied volatility for the WTI options would cause an approximate corresponding $4$5 million ($8 million as at December 31, 2019) increase or decrease to net risk management assets and liabilities.

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.

Ovintiv uses derivative financial instruments to manage its exposure to cash flow variability from commodity prices and fluctuating 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.

Commodity price risk arises from the effect that fluctuations in future commodity prices may have on future cash flows. 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.

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

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

Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future cash flows of 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~~September 30, 2020, the Company has entered into ~~$429~~$215 million notional U.S. dollar denominated currency swaps at an average exchange rate of US$0.7451 to C$1, which mature monthly through the remainder of 2020 and $350 million notional U.S. dollar denominated currency swaps at an average exchange rate of US$0.7289 to C$1, which mature monthly throughout 2021.

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

Crude Oil and NGL Contracts			US$/bbl							US$/bbl
Fixed Price Contracts
WTI Fixed Price								89.0 Mbbls/d	2020		52.95	$	101
WTI Fixed Price	124.5 Mbbls/d	2020		47.58	$	185		20.0 Mbbls/d	2021		44.08		12
Propane Fixed Price	20.0 Mbbls/d	2020		17.94		(7	)	20.0 Mbbls/d	2020		17.94		(6	)
Butane Fixed Price	8.0 Mbbls/d	2020		23.54		4		8.0 Mbbls/d	2020		23.54		(1	)
Iso-Butane Fixed Price	3.5 Mbbls/d	2020		24.36		2		3.3 Mbbls/d	2020		24.36		(1	)
Ethane Fixed Price	1.0 Mbbls/d	2020		5.25		-		1.0 Mbbls/d	2020		5.25		0

WTI Fixed Price Swaptions ⁽¹⁾	10.0 Mbbls/d	2021		58.00		(2	)	10.0 Mbbls/d	2021		58.00		0

WTI Three-Way Options
Sold call / bought put / sold put	38.0 Mbbls/d	2020	61.46 / 53.36 / 43.36			51		76.0 Mbbls/d	2020	61.46 / 53.36 / 43.36			62
Sold call / bought put / sold put	11.0 Mbbls/d	2021	50.00 / 35.29 / 24.51			(1	)	37.0 Mbbls/d	2021	50.27 / 39.61 / 29.39			8

WTI Costless Collars
Sold call / bought put	15.0 Mbbls/d	2020	68.71 / 50.00			31		15.0 Mbbls/d	2020	68.71 / 50.00			14
Sold call / bought put	14.0 Mbbls/d	2021	45.90 / 35.00			2		15.0 Mbbls/d	2021	45.84 / 35.00			(5	)

Basis Contracts ⁽²⁾		2020				(37	)		2020				(20	)
									2021				(1	)

Other Crude Financial Positions						(3	)						(3	)
Crude Oil and NGLs Fair Value Position						225							160

Natural Gas Contracts			US$/Mcf							US$/Mcf
Fixed Price Contracts
NYMEX Fixed Price	882 MMcf/d	2020		2.57		99		793 MMcf/d	2020		2.65		6
NYMEX Fixed Price	165 MMcf/d	2021		2.51		(6	)	165 MMcf/d	2021		2.51		(24	)

Fixed Price Swaptions ⁽³⁾
NYMEX Fixed Price Swaptions	165 MMcf/d	2022		2.51		(13	)	165 MMcf/d	2022		2.51		(20	)

NYMEX Three-Way Options
Sold call / bought put / sold put	330 MMcf/d	2020	2.72 / 2.60 / 2.25			11		330 MMcf/d	2020	2.72 / 2.60 / 2.25			(1	)
Sold call / bought put / sold put	170 MMcf/d	2021	3.22 / 2.75 / 2.50			(1	)	730 MMcf/d	2021	3.35 / 2.87 / 2.49			(17	)

NYMEX Costless Collars
Sold call / bought put	55 MMcf/d	2020	2.88 / 2.50			6		55 MMcf/d	2020	2.88 / 2.50			0

NYMEX Call Options
Sold call	230 MMcf/d	2020		3.25		2		230 MMcf/d	2020		3.25		0
Sold call	330 MMcf/d	2022		2.38		(38	)	330 MMcf/d	2022		2.38		(54	)

Basis Contracts ⁽⁴⁾		2020				(31	)		2020				(13	)
		2021				(20	)		2021				(33	)
		2022 - 2025				(44	)		2022 - 2025				(56	)

Other Financial Positions						2							1
Natural Gas Fair Value Position						(33	)						(211	)

Net Premiums Received on Unexpired Options						(4	)						(2	)

Other Derivative Contracts
Fair Value Position						(11	)						(11	)

Foreign Currency Contracts
Fair Value Position ⁽⁵⁾		2020 - 2021				(3	)		2020 - 2021				12
Total Fair Value Position and Net Premiums Received					$	174						$	(52	)

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

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Realized Gains (Losses) on Risk Management
Commodity and Other Derivatives:
Revenues ⁽¹⁾	$	365		$	107		$	516		$	179		$	89		$	122		$	605		$	301
Foreign Currency Derivatives:
Foreign exchange		(6	)		(1	)		(9	)		(1	)		2			2			(7	)		1
	$	359		$	106		$	507		$	178		$	91		$	124		$	598		$	302

Unrealized Gains (Losses) on Risk Management
Commodity and Other Derivatives:
Revenues ⁽²⁾	$	(679	)	$	83		$	225		$	(344	)	$	(243	)	$	(41	)	$	(18	)	$	(385	)
Foreign Currency Derivatives:
Foreign exchange		36			17			(16	)		37			15			(11	)		(1	)		26
	$	(643	)	$	100		$	209		$	(307	)	$	(228	)	$	(52	)	$	(19	)	$	(359	)

Total Realized and Unrealized Gains (Losses) on Risk Management, net
Commodity and Other Derivatives:
Revenues ^{(1) (2)}	$	(314	)	$	190		$	741		$	(165	)	$	(154	)	$	81		$	587		$	(84	)
Foreign Currency Derivatives:
Foreign exchange		30			16			(25	)		36			17			(9	)		(8	)		27
	$	(284	)	$	206		$	716		$	(129	)	$	(137	)	$	72		$	579		$	(57	)

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

	2020						2019			2020						2019
	Fair Value			Total Unrealized Gain (Loss)			Total Unrealized Gain (Loss)			Fair Value			Total Unrealized Gain (Loss)			Total Unrealized Gain (Loss)

Fair Value of Contracts, Beginning of Year	$	(41	)							$	(41	)
Change in Fair Value of Contracts in Place at Beginning of Year and Contracts Entered into During the Period		716		$	716		$	(129	)		579		$	579		$	(57	)
Settlement of Other Derivative Contracts		2									2
Amortization of Option Premiums During the Period		4									6
Fair Value of Contracts Realized During the Period		(507	)		(507	)		(178	)		(598	)		(598	)		(302	)
Fair Value of Contracts and Net Premiums Received, End of Period	$	174		$	209		$	(307	)	$	(52	)	$	(19	)	$	(359	)

Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 21 for a discussion of fair value measurements.

	As at		As at			As at			As at
	June 30,		December 31,			September 30,			December 31,
	2020		2019			2020			2019

Risk Management Assets
Current	$	347	$	148		$	170		$	148
Long-term		2		2			8			2
		349		150			178			150

Risk Management Liabilities
Current		55		114			65			114
Long-term		109		68			154			68
		164		182			219			182

Other Derivative Contracts
Current in accounts payable and accrued liabilities		2		2			2			2
Long-term in other liabilities and provisions		9		7			9			7
Net Risk Management Assets (Liabilities) and Other Derivative Contracts	$	174	$	(41	)	$	(52	)	$	(41	)

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 NYSE and the TSX, over-the-counter traded contracts expose Ovintiv to counterparty credit risk. 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. As a result of netting provisions, the Company’s maximum exposure to loss under derivative financial instruments due to credit risk is limited to the net amounts due from the counterparties under the derivative contracts, as disclosed in Note 21. As at ~~June~~September 30, 2020, the Company had 0 significant credit derivatives in place and held 0 collateral.

As at ~~June~~September 30, 2020, cash equivalents include high-grade, short-term securities, placed primarily with financial institutions and companies with strong 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~~September 30, 2020, approximately 9897 percent (95 percent as at December 31, 2019) of Ovintiv’s accounts receivable and financial derivative credit exposures were with investment grade counterparties.

As at ~~June~~September 30, 2020, Ovintiv had 34 counterparties whose net settlement position individually accounted for more than 10 percent of the fair value of the outstanding in-the-money net risk management contracts by counterparty. These counterparties accounted for 2823 percent, 2115 percent, 12 percent and 1012 percent of the fair value of the outstanding in-the-money net risk management contracts. As at December 31, 2019, the Company had 6 counterparties whose net settlement position accounted for 26 percent, 13 percent, 12 percent, 12 percent, 11 percent and 11 percent of the fair value of the outstanding in-the-money net risk management contracts.

During 2015 and 2017, the Company entered into agreements resulting from divestitures, which may require the Company to fulfill certain payment obligations on the take or pay volume commitments assumed by the purchasers. The circumstances that would require the Company 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 have remaining terms from one to four years with a fair value recognized of $11 million as at September 30, 2020 ($9 million as at December 31, 2019). The

~~four years with a fair value recognized of $11 million as at June 30, 2020 ($9 million as at December 31, 2019). The~~ maximum potential amount of undiscounted future payments is ~~$109~~$95 million as at ~~June~~September 30, 2020, and is considered unlikely.

Supplemental disclosures to the Condensed Consolidated Statement of Cash Flows are presented below:

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Operating Activities
Accounts receivable and accrued revenues	$	90		$	(57	)	$	211		$	117		$	78		$	61		$	289		$	178
Accounts payable and accrued liabilities		(223	)		104			(254	)		16			42			(82	)		(212	)		(66	)
Current portion of operating lease liabilities		(5	)		(6	)		(6	)		61			(4	)		(9	)		(10	)		52
Income tax receivable and payable		19			3			13			(32	)		26			(2	)		39			(34	)
	$	(119	)	$	44		$	(36	)	$	162		$	142		$	(32	)	$	106		$	130

	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Non-Cash Investing Activities
Asset retirement obligation incurred (See Note 14)	$	2		$	8		$	9		$	11		$	2		$	2		$	11		$	13
Asset retirement obligation change in estimated future cash outflows (See Note 14)		-			-			22			-			(10	)		0			12			0
Property, plant and equipment accruals		(280	)		(35	)		(130	)		47			68			(80	)		(62	)		(33	)
Capitalized long-term incentives		8			(3	)		(9	)		(32	)		2			1			(7	)		(31	)
Property additions/dispositions (swaps)		13			1			17			3			212			63			229			66
New ROU operating lease assets and liabilities		-			(9	)		(1	)		(10	)		(5	)		(1	)		(6	)		(11	)
Non-Cash Financing Activities
Common shares issued in conjunction with the Newfield business combination (See Note 8)	$	-		$	-		$	-		$	(3,478	)	$	0		$	0		$	0		$	(3,478	)

On September 1, 2020, Ovintiv closed an agreement with PetroChina Canada Ltd. (“PCC”) to terminate its joint venture with PCC and transfer the ownership and operation of certain Duvernay shale assets in west-central Alberta. Ovintiv and PCC have agreed to partition the Duvernay acreage and associated infrastructure as each company will independently own and operate their respective interests in the future. For the three and nine months ended September 30, 2020, property additions/dispositions (swaps) includes a $203 million non-cash swap related to the Duvernay partition.

The following table outlines the Company’s commitments as at ~~June~~September 30, 2020:

	Expected Future Payments														Expected Future Payments
(undiscounted)	2020		2021		2022		2023		2024		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter		Total

Transportation and Processing	$	348	$	668	$	625	$	518	$	409	$	2,097	$	4,665	$	173	$	675	$	644	$	541	$	433	$	2,305	$	4,771
Drilling and Field Services		49		10		1		-		-		1		61		37		12		1		0		0		1		51
Building Leases		7		14		11		7		6		8		53		3		14		11		7		6		8		49
Total	$	404	$	692	$	637	$	525	$	415	$	2,106	$	4,779	$	213	$	701	$	656	$	548	$	439	$	2,314	$	4,871

Operating leases with terms greater than one year are not included in the commitments table above. The table above includes short-term leases with contract terms less than 12 months, such as drilling rigs and field office leases, as well as non-lease operating cost components associated with building leases.

Included within transportation and processing in the table above are certain commitments associated with midstream service agreements with VMLP as described in Note 17. Divestiture transactions can reduce certain commitments disclosed above.

Ovintiv is involved in various legal claims and actions arising in the normal course of the Company’s operations. Although the outcome of these claims cannot be predicted with certainty, the Company does not expect these matters to have a material adverse effect on Ovintiv’s financial position, cash flows or results of operations. Management’s assessment of these matters may change in the future as certain of these matters are in early stages or are subject to a number of uncertainties. For material matters that the Company believes an unfavorable outcome is reasonably possible, the Company discloses the nature and a range of potential exposures. If an unfavorable outcome were to occur, there exists the possibility of a material impact on the Company’s consolidated net earnings or loss for the period in which the effect becomes reasonably estimable. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. Such accruals are based on the Company’s information known about the matters, estimates of the outcomes of such matters and experience in handling similar matters.

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. This MD&A should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and accompanying notes for the period ended ~~June~~September 30, 2020 (“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, 2019, which are included in Items 8 and 7, respectively, of the 2019 Annual Report on Form 10‑K.

On January 24, 2020, Encana Corporation (“Encana”) completed a corporate reorganization, which included a Share Consolidation, as described in Note 1 of the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Highlights section of this MD&A. Subsequent to the corporate reorganization, Ovintiv Inc. and its subsidiaries (collectively, “Ovintiv”) continue to carry on the business which was previously conducted by Encana and its subsidiaries. References to the “Company” are to Encana Corporation and its subsidiaries prior to the completion of the Reorganization and to Ovintiv Inc. and its subsidiaries following the completion of the Reorganization.

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 is a leading North American energy producer that is focused on developing its multi-basin portfolio of oil, NGLs and natural gas producing plays. Ovintiv is committed to growing long-term stockholder value through a combination of profitable growth and generating cash flows. The Company is pursuing the key business objectives of preserving balance sheet strength, maximizing profitability through operational and capital efficiencies, returning capital to stockholders through sustainable dividends, and driving cash flow through a disciplined capital allocation strategy by investing in a limited number of core assets with high margin liquids. In conjunction with Ovintiv’s focus on preserving balance sheet strength, the Company plans to allocate all excess cash flows to reduce long-term debt over the next five quarters.

In executing its strategy, Ovintiv focuses on its core values of One, Agile and Driven, which guide the organization to be flexible, responsive, innovative and determined. The Company is committed to excellence with a passion to drive corporate financial performance and succeed as a team. Ovintiv rapidly deploys successful ideas and practices across its assets, becoming more efficient as innovative and sustainable improvements are implemented.

Ovintiv continually reviews and evaluates its strategy and changing market conditions. In 2020, Ovintiv continues to focus on maximizing cash flow generation from high margin, scalable, top tier assets located in some of the best plays in North America, referred to as the “Core Assets”. In response to the current low commodity price environment resulting predominantly from the global coronavirus (“COVID-19”) pandemic, coupled with excess oil production from Saudi Arabia and Russia in the first quarter of 2020, the Company revised its capital program for the remainder of the year to focus on production from the Core Assets generating the highest returns and/or with the lowest costs, while choosing to cease operating rigs and shut-in production in certain areas. As at ~~June~~September 30, 2020, the Core Assets comprised Permian and Anadarko in the U.S., and Montney in Canada. These Core 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.

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 2019 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, Non-GAAP Cash Flow Margin, Total Costs and debt-based metrics such as Debt to Adjusted Capitalization and

Net 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.

In early 2020, the Company revised its capital program for the remainder of the year to focus on production from the Core Assets generating the highest returns and/or with the lowest costs in response to the low commodity price environment resulting from the global coronavirus (“COVID-19”) pandemic, coupled with excess oil production from Saudi Arabia and Russia.

During the first ~~six~~nine months of 2020, the Company focused on executing its reduced ~~second quarter~~ 2020 capital plan, generating cash from operating activities and maximizing profitability through operational and capital efficiencies. Lower upstream product revenues in the first ~~six~~nine months of 2020 compared to 2019 resulted from lower average realized prices, excluding the impact of risk management activities, ~~partially offset by higher~~and lower total production volumes. Decreases in average realized liquids and natural gas prices of 4338 percent and 2312 percent, respectively, were primarily due to lower WTI and NYMEX benchmark prices. Total production volumes ~~increased~~decreased by ~~four~~three percent compared to the first ~~six~~nine months of 2019 primarily due to ~~successful drilling programs~~natural declines, reduced capital investment and ~~from the Newfield acquisition, which was completed on February 13, 2019.~~curtailed production. Ovintiv continues to focus on optimizing realized prices from the diversification of the Company’s downstream markets.

Further detailed analysis on Total Costs items and Total Operating Expenses above can be found in the Results of Operations section of this MD&A.

The oil and gas industry is cyclical and commodity prices are inherently volatile. Oil prices during the remainder of 2020 are expected to reflect global supply and demand dynamics as well as the geopolitical and macroeconomic environment. In March 2020, during the midst of the global COVID-19 pandemic, Saudi Arabia and Russia failed to reach an agreement on production cuts, resulting in a price war which intensified the oversupply of oil and contributed to a dramatic decline in oil prices. In April 2020, OPEC and a group of 10 non-OPEC member nations (collectively, “OPEC+”) agreed to cut oil production through April 2022 to address the existing imbalance of global supply and demand, with the deepest cuts in May and June 2020. The production cuts, along with ~~an increase~~the gradual increases in demand ~~as a result of~~from the ~~gradual~~ reopening of global economies and the steady draw down of excess inventories accumulated during the first half of the year, generally supported stable oil prices in the ~~second~~third quarter of 2020. ~~At a meeting on June 6, 2020,~~In July, OPEC+ ~~reaffirmed the April agreement and extended~~agreed to extend the production cuts through ~~July 2020. OPEC+ is expected~~to December 2020 and plans to meet ~~once a month thereafter until~~regularly to discuss the ~~end~~state of ~~the year to review market conditions, which could potentially result in other~~global oil supply, ~~adjustments~~demand and ~~contribute to price fluctuations.~~inventory levels.

~~Global crude oil demand fell significantly in~~In early 2020, as governments worldwide took action to contain the effects of the COVID-19 ~~pandemic. Oil and~~pandemic by partially closing economies. As a result, global crude oil demand fell significantly while product storage facilities ~~were filling~~filled up at an unprecedented ~~rate as~~rates with supply materially ~~exceeded~~exceeding demand. As the gap between supply and demand in oil markets grew increasingly pronounced, the oil and gas industry responded by reducing capital spending and implementing market-based supply ~~shut-ins, leading to increased price volatility.~~shut-ins. As global restrictions began to ease in the latter half of the second quarter, demand for oil steadily increased, supporting a modest recovery of oil prices. The ~~full impact~~modest price recovery has led to a steady increase in oil production over the summer

months as operators brought wells back online. However, overall production is expected to remain relatively flat for the remainder of 2020, as crude oil demand is not expected to return to pre-pandemic levels by the end of the ~~increase in demand has yet to be reflected in oil prices as excess inventories accumulated~~year. Certain economic sectors are still restricted and concerns of further lockdowns due to ~~the oversupply~~a resurgence of COVID-19 in some countries are ~~gradually being drawn down.~~ impacting oil demand, resulting in a slow recovery.

The re-balancing of global supply and demand, and the commodity price environment is highly dependent on the global containment of the virus, pace of economic recovery, as well as changes to OPEC+ production levels. ~~With significant uncertainty amid~~As a ~~highly volatile market environment,~~result, oil prices for the remainder of 2020 are expected to fluctuate.

Natural gas prices ~~in 2020 will be~~are primarily affected by changes in both supply and demand and the effects of seasonal weather. Higher-than-average inventory levels from oversupply in early 2020 and warmer than normal temperatures during the winter months continued to put downward pressure on natural gas prices, which ~~remains~~remain volatile in both Canada and the U.S. from demand concerns stemming from the COVID-19 pandemic. Natural gas prices infor the ~~second half~~remainder of 2020 are expected to be impacted by lower associated natural gas production resulting from declines in North American oil production due to low oil prices, as well as ~~increases in~~a slow demand ~~from the gradual reopening of global economies~~recovery and seasonal fluctuations.

Despite the ~~current~~ low commodity price environment experienced in the first half of the year and modest third quarter recovery, Ovintiv is well positioned to deliver on its updated full year capital plan while generating positive cash flows. In response to the rapid decline in crude oil prices witnessed in early ~~March,~~2020, the Company took ~~immediate~~ action to reduce its ~~second quarter~~full year 2020 capital investments by $500 million and suspended its previously issued 2020 guidance. By the end of the second quarter, the Company had ceased operating 16 drilling rigs, ~~by the end of the second quarter. The Company has also shut-in~~ and ~~curtailed~~had shut in total production of 32 MBOE/d, inwhich further reduced the ~~second quarter~~Company’s expected 2020 capital investment profile. As of ~~2020.~~ September 30, 2020, the majority of the previously shut-in and curtailed production is now back on-line.

During June 2020, Ovintiv undertook a plan to reduce its workforce to better align staffing levels and organizational structure with the Company’s planned activity levels. The Company ~~will~~continues to exercise discretion and disciplined capital allocation ~~to adjust~~in adjusting its capital spending beyond the ~~third~~fourth quarter as the current demand and price environment evolves. ~~As the Company expects the current price environment to remain dynamic and volatile in the near-term, the Company will~~

continue to assess the economics of production shut-ins to align with fluctuating demand. Due to ongoing uncertainty and continued market volatility, the Company has suspended its previously issued 2020 guidance.

The Company enters into derivative financial instruments which mitigate price volatility and help sustain revenues, particularly during periods of lower prices. ~~Accordingly, during the first six months of 2020, Ovintiv restructured its remaining 2020 crude oil hedges to provide additional downside price protection.~~ As at ~~July 27,~~October 16, 2020, the Company has hedged approximately ~~177.5~~180.0 Mbbls/d, or 9487 percent, of expected crude oil and condensate production and ~~1,267~~1,178 MMcf/d, or 8070 percent, of expected natural gas production for the remainder of the year. Additional information on Ovintiv’s hedging program can be found in Note 22 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Markets for crude oil and natural gas are exposed to different price risks and are inherently volatile. While the market price for crude oil tends to move in the same direction as the global market, regional differentials may develop. Natural gas prices may vary between geographic regions depending on local supply and demand conditions. Ovintiv proactively utilizes transportation contracts to diversify the Company’s sales markets, thereby reducing significant exposure to any given market. Through a combination of derivative financial instruments and transportation capacity, Ovintiv attempts to limit exposure to regional pricing.

In conjunction with the reduction in capital investment noted above, Ovintiv also announced its plans to reduce costs by $200 ~~million. As of June 30, 2020, the Company expects~~million which have been substantially achieved to ~~exceed $200 million in cost savings and has realized approximately $92 million to~~ date. ~~The Company expects that operating cost reductions, excluding long-term incentive costs, will exceed $115 million and more than $85 million will come from other cost savings.~~

During the first ~~six~~nine months of 2020, the Company spent ~~$1,042~~$1,393 million, of which ~~$363~~$484 million was directed to Permian, ~~$294~~$362 million was directed to Anadarko and ~~$188~~$292 million was directed to Montney. Ovintiv reduced its second quarter 2020 capital investment by $500 million and expects capital spending to be primarily allocated to the Core Assets with a focus on maximizing returns from high margin liquids, while suspending capital programs in Eagle Ford, Bakken, Uinta and Duvernay. Ovintiv expects full year 2020 capital investment to be approximately $1.8 billion and plans to fund the remainder of its 2020 capital program using cash from ~~operations and funds available from the Company’s credit facilities.~~operations. As the Company monitors the global economic environment, Ovintiv will continue to evaluate its capital investment plans.

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 impact of Ovintiv’s disciplined capital program and continuous innovation create flexibility to allocate capital in changing commodity markets and to maximize cash flows while preserving the long-term value of the Company’s multi-basin portfolio.

During the first ~~six~~nine months of 2020, average oil and plant condensate production volumes were 199.8 Mbbls/d, or 70 percent of total liquids production volumes. Average liquids production volumes were ~~294.1~~286.0 Mbbls/d, or 53 percent of total production volumes, and average natural gas production volumes were ~~1,559~~1,520 MMcf/d, or 47 percent of total production volumes. For the fourth quarter of 2020, the Company expects to maintain average oil and plant condensate production volumes of approximately 200 Mbbls/d. Full year production volumes are expected to reflect the Company’s reduced capital investment plans, ~~and shut-in strategy,~~ which are highly dependent on market conditions.

In the first quarter of 2020, Ovintiv announced its commitment to reducing full year 2020 costs by $200 million in response to the low commodity price environment. These cost savings primarily include reductions to operating expenses reflected in Total Costs, as well as a reduction to other expenses discussed below. AsWith lower staffing levels as a result of the workforce reduction completed in June 2020 and other Company initiatives, Ovintiv expects to ~~exceed~~achieve more than $200 million in cost ~~savings, reflecting the Company’s lower staffing levels.~~savings.

In the first ~~six~~nine months of 2020, Total Costs was ~~$11.72~~$11.77 per BOE, and is expected to remain relatively flat for the balance of the year as activity levels normalize and cost saving measures ~~are realized through operational flexibility in response to the~~

~~low commodity price environment.~~continue. Upstream transportation and processing expense was ~~$6.42~~$6.48 per BOE, while upstream operating expense and administrative expense, excluding long-term incentive costs, restructuring costs and current expected credit losses, were ~~$3.10~~$2.98 per BOE and ~~$1.41~~$1.46 per BOE, respectively. Ovintiv expects to continue pursuing innovative ways to reduce upstream operating and administrative expenses and expects efficiency improvements and effective supply chain management to maximize cash flows.

The remaining full year cost savings are expected to include reductions to cash outflows and other expenses, such as interest expense. Following the open market repurchases of ~~$137~~$252 million in principal amount of Ovintiv’s fixed rate senior notes, the Company expects to incur lower interest expense of approximately $6$10 million on an annualized basis on the reduced fixed long-term debt balances.

In conjunction with Ovintiv’s focus on strengthening its liquidity position, the Company plans to allocate all excess cash flows to reduce long-term debt over the next ~~six~~five quarters. Additional information on Ovintiv’s long-term debt and liquidity position can be found in Note 12 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.

If the ~~current~~ low oil price environment persists for an extended period of time, Ovintiv may be subject to additional impairments of its oil and natural gas properties and other long-term assets. Additional information on the Company’s ceiling test impairment can be found in the Results of Operations section of this MD&A.

	Three months ended June 30,						Six months ended June 30,							Three months ended September 30,						Nine months ended September 30,
($ millions)		2020			2019 ⁽¹⁾			2020			2019 ⁽¹⁾				2020			2019 ⁽¹⁾			2020			2019 ⁽¹⁾

Product and Service Revenues
Upstream product revenues		$	673		$	1,594		$	1,824		$	2,839			$	980		$	1,476		$	2,804		$	4,315
Market optimization			348		250				767			576				346		294				1,113			870
Service revenues			2		4				2			5				-		1				2			6
Total Product and Service Revenues			1,023			1,848			2,593			3,420				1,326			1,771			3,919			5,191

Gains (Losses) on Risk Management, Net			(314	)		190			741			(165	)			(154	)		81			587			(84	)
Sublease Revenues			17			17			35			35				18			19			53			54
Total Revenues			726			2,055			3,369			3,290				1,190			1,871			4,559			5,161

Total Operating Expenses⁽²⁾			4,785			1,517			6,669			2,979				2,696			1,556			9,365			4,535
Operating Income (Loss)			(4,059	)		538			(3,300	)		311				(1,506	)		315			(4,806	)		626
Total Other (Income) Expenses			30			41			228			120				54			123			282			243
Net Earnings (Loss) Before Income Tax			(4,089	)		497			(3,528	)		191				(1,560	)		192			(5,088	)		383
Income Tax Expense (Recovery)			294			161			434			100				(39	)		43			395			143

Net Earnings (Loss)		$	(4,383	)	$	336		$	(3,962	)	$	91			$	(1,521	)	$	149		$	(5,483	)	$	240

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 USA Operations realized prices generally reflect WTI and NYMEX benchmark prices, as well as other downstream oil benchmarks, including Houston. The Canadian Operations realized prices are linked to Edmonton Condensate and AECO, as well as other downstream natural gas benchmarks, including Dawn. The other downstream benchmarks reflect the diversification of the Company’s markets. Recent trends in benchmark prices relevant to the Company are shown in the table below.

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
(average for the period)	2020		2019		2020		2019		2020		2019		2020		2019

Oil & NGLs
WTI ($/bbl)	$	27.85	$	59.82	$	37.01	$	57.36	$	40.93	$	56.45	$	38.32	$	57.06
Houston ($/bbl)		29.43		66.57		39.46		63.69		41.89		61.14		40.27		62.84
Edmonton Condensate (C$/bbl)		30.71		74.73		46.22		70.97		50.00		68.70		47.48		70.21

Natural Gas
NYMEX ($/MMBtu)	$	1.72	$	2.64	$	1.83	$	2.89	$	1.98	$	2.23	$	1.88	$	2.67
AECO (C$/Mcf)		1.91		1.17		2.03		1.56		2.15		1.04		2.07		1.39
Dawn (C$/MMBtu)		2.25		3.13		2.32		3.49		2.42		2.81		2.35		3.26

	Three months ended June 30,										Six months ended June 30,									Three months ended September 30,										Nine months ended September 30,
	Production Volumes ⁽¹⁾					Realized Prices ⁽²⁾					Production Volumes ⁽¹⁾				Realized Prices ⁽²⁾					Production Volumes ⁽¹⁾					Realized Prices ⁽²⁾					Production Volumes ⁽¹⁾					Realized Prices ⁽²⁾
	2020			2019			2020		2019		2020		2019			2020		2019		2020			2019			2020		2019		2020			2019			2020		2019

Oil (Mbbls/d, $/bbl)
USA Operations		146.0			175.7		$	22.95	$	59.12		153.9		149.6		$	33.74	$	57.19		138.5			177.6		$	39.41	$	55.26		148.7			159.0		$	35.51	$	56.47
Canadian Operations		0.5			0.2			11.90		53.31		0.6		0.3			28.38		44.20		0.4			0.7			34.38		58.24		0.6			0.5			29.79		51.55
China Operations ⁽³⁾		-			3.4			-		67.84		-		2.8			-		66.96		-			0.5			-		60.35		-			2.0			-		66.37
Total		146.5			179.3			22.91		59.27		154.5		152.7			33.72		57.35		138.9			178.8			39.40		55.29		149.3			161.5			35.49		56.58

NGLs – Plant Condensate (Mbbls/d, $/bbl)
USA Operations		11.0			11.2			12.47		46.65		10.9		8.7			23.51		45.57		11.4			12.6			27.98		41.70		11.1			10.0			25.05		43.93
Canadian Operations		40.8			44.1			20.48		54.66		41.3		41.4			32.36		52.31		35.8			45.9			36.71		50.73		39.4			42.9			33.69		51.74
Total		51.8			55.3			18.79		53.04		52.2		50.1			30.51		51.14		47.2			58.5			34.60		48.78		50.5			52.9			31.79		50.26

NGLs – Other (Mbbls/d, $/bbl)
USA Operations		67.2			73.6			7.83		13.19		72.4		59.2			7.56		14.92		70.2			74.9			10.47		7.48		71.7			64.5			8.52		12.01
Canadian Operations		12.9			15.8			9.56		6.95		15.0		15.9			8.08		13.54		13.6			17.0			13.16		5.39		14.5			16.3			9.68		10.66
Total		80.1			89.4			8.11		12.09		87.4		75.1			7.65		14.63		83.8			91.9			10.91		7.09		86.2			80.8			8.72		11.74

Total Oil & NGLs (Mbbls/d, $/bbl)
USA Operations		224.2			260.5			17.91		45.60		237.2		217.5			25.28		45.22		220.1			265.1			29.59		41.12		231.5			233.5			26.66		43.65
Canadian Operations		54.2			60.1			17.79		42.12		56.9		57.6			25.91		41.57		49.8			63.6			30.27		38.65		54.5			59.7			27.24		40.52
China Operations ⁽³⁾		-			3.4			-		67.84		-		2.8			-		66.96		-			0.5			-		60.35		-			2.0			-		66.37
Total		278.4			324.0			17.88		45.19		294.1		277.9			25.40		44.68		269.9			329.2			29.72		40.67		286.0			295.2			26.77		43.18

Natural Gas (MMcf/d, $/Mcf)
USA Operations		536			619			1.33		1.87		552		494			1.37		2.03		507			617			1.52		1.67		537			535			1.42		1.89
Canadian Operations		1,014			988			1.69		1.70		1,007		1,020			1.78		2.16		935			1,038			1.96		1.54		983			1,027			1.83		1.95
Total		1,550			1,607			1.57		1.76		1,559		1,514			1.63		2.12		1,442			1,655			1.81		1.59		1,520			1,562			1.69		1.93

Total Production (MBOE/d, $/BOE)
USA Operations		313.4			363.6			15.09		35.85		329.2		299.8			20.52		36.15		304.6			367.9			23.91		32.43		320.9			322.8			21.60		34.72
Canadian Operations		223.2			224.8			11.99		18.72		224.8		227.8			14.50		20.20		205.6			236.7			16.22		17.12		218.4			230.8			15.05		19.14
China Operations ⁽³⁾		-			3.4			-		67.84		-		2.8			-		66.96		-			0.5			-		60.35		-			2.0			-		66.37
Total		536.6			591.8			13.80		29.52		554.0		530.4			18.08		29.46		510.2			605.1			20.81		26.46		539.3			555.6			18.94		28.36

Production Mix (%)
Oil & Plant Condensate		37			40							37		38							37			39							37			39
NGLs – Other		15			15							16		14							16			15							16			14
Total Oil & NGLs		52			55							53		52							53			54							53			53
Natural Gas		48			45							47		48							47			46							47			47

Production Change
Year Over Year (%) ⁽⁴⁾
Total Oil & NGLs		(14	)		109							6		85							(18	)		84							(3	)		85
Natural Gas		(4	)		47							3		40							(13	)		38							(3	)		39
Total Production		(9	)		75							4		60							(16	)		60							(3	)		60

Core Assets Production
Oil (Mbbls/d)		107.9			118.9							109.6		101.2							99.4			118.2							106.2			106.9
NGLs – Plant Condensate (Mbbls/d)		45.9			47.6							46.0		42.7							41.5			48.6							44.5			44.7
NGLs – Other (Mbbls/d)		71.8			79.1							77.7		65.5							75.0			80.2							76.8			70.5
Total Oil & NGLs (Mbbls/d)		225.6			245.6							233.3		209.4							215.9			247.0							227.5			222.1
Natural Gas (MMcf/d)		1,392			1,348							1,399		1,280							1,291			1,416							1,362			1,325
Total Production (MBOE/d)		457.6			470.3							466.4		422.6							431.1			482.8							454.6			442.9
% of Total Production		85			79							84		80							84			80							84			80

	Three months ended June 30,															Three months ended September 30,

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

2019 Upstream Product Revenues⁽¹⁾	$	968		$	266		$	98		$	258		$	1,590		$	909		$	262		$	60		$	243		$	1,474
Increase (decrease) due to:
Sales prices		(483	)		(160	)		(30	)		(29	)		(702	)		(203	)		(59	)		29			29			(204	)
Production volumes		(179	)		(17	)		(10	)		(9	)		(215	)		(203	)		(52	)		(5	)		(31	)		(291	)
2020 Upstream Product Revenues	$	306		$	89		$	58		$	220		$	673		$	503		$	151		$	84		$	241		$	979

	Six months ended June 30,															Nine months ended September 30,

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

2019 Upstream Product Revenues⁽¹⁾	$	1,586		$	464		$	198		$	581		$	2,829		$	2,495		$	726		$	258		$	824		$	4,303
Increase (decrease) due to:
Sales prices		(652	)		(195	)		(112	)		(137	)		(1,096	)		(850	)		(251	)		(72	)		(99	)		(1,272	)
Production volumes		15			21			35			20			91			(193	)		(34	)		19			(20	)		(228	)
2020 Upstream Product Revenues	$	949		$	290		$	121		$	464		$	1,824		$	1,452		$	441		$	205		$	705		$	2,803

Oil revenues decreased ~~$662~~$406 million compared to the ~~second~~third quarter of 2019 primarily due to:

~~Six~~Nine months ended ~~June~~September 30, 2020 versus ~~June~~September 30, 2019

Oil revenues decreased ~~$637~~$1,043 million compared to the first ~~six~~nine months of 2019 primarily due to:

NGL revenues decreased ~~$217~~$87 million compared to the ~~second~~third quarter of 2019 primarily due to:

NGL revenues decreased $338 million compared to the first nine months of 2019 primarily due to:

~~NGL revenues decreased $251 million compared to the first six months of 2019 primarily due to:~~

Natural gas revenues decreased ~~$38~~$2 million compared to the ~~second~~third quarter of 2019 primarily due to:

~~Six~~Nine months ended ~~June~~September 30, 2020 versus ~~June~~September 30, 2019

Natural gas revenues decreased ~~$117~~$119 million compared to the first ~~six~~nine months of 2019 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, NGL and natural gas production volumes. The Company’s commodity price mitigation program reduces volatility and helps sustain revenues during periods of lower prices. Additional information on the Company’s commodity price positions as at ~~June~~September 30, 2020 can be found in Note 22 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.

	Three months ended June 30,					Six months ended June 30,					Three months ended September 30,						Nine months ended September 30,
($ millions)	2020			2019		2020		2019			2020			2019			2020			2019

Realized Gains (Losses) on Risk Management
Commodity Price ⁽¹⁾
Oil	$	223		$	15	$	305	$	46		$	26		$	10		$	331		$	56
NGLs - Plant Condensate		59			3		82		15			23			9			105			24
NGLs - Other		7			22		12		33			(7	)		28			5			61
Natural Gas		73			67		112		83			45			73			157			156
Other ⁽²⁾		3			-		5		2			2			2			7			4
Total		365			107		516		179			89			122			605			301

Unrealized Gains (Losses) on Risk Management		(679	)		83		225		(344	)		(243	)		(41	)		(18	)		(385	)
Total Gains (Losses) on Risk Management, Net	$	(314	)	$	190	$	741	$	(165	)	$	(154	)	$	81		$	587		$	(84	)

	Three months ended June 30,					Six months ended June 30,					Three months ended September 30,						Nine months ended September 30,
(Per-unit)	2020			2019		2020		2019			2020			2019			2020			2019

Realized Gains (Losses) on Risk Management
Commodity Price ⁽¹⁾
Oil ($/bbl)	$	16.79		$	0.87	$	10.86	$	1.65		$	1.99		$	0.63		$	8.09		$	1.27
NGLs - Plant Condensate ($/bbl)	$	12.58		$	0.53	$	8.65	$	1.60		$	5.39		$	1.77		$	7.62		$	1.66
NGLs - Other ($/bbl)	$	0.90		$	2.66	$	0.75	$	2.44		$	(0.92	)	$	3.28		$	0.20		$	2.76
Natural Gas ($/Mcf)	$	0.52		$	0.46	$	0.39	$	0.30		$	0.34		$	0.48		$	0.38		$	0.37
Total ($/BOE)	$	7.41		$	1.96	$	5.07	$	1.84		$	1.85		$	2.17		$	4.04		$	1.96

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.

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

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
($ millions)	2020		2019		2020		2019		2020		2019		2020		2019

Market Optimization	$	348	$	250	$	767	$	576	$	346	$	294	$	1,113	$	870

Market Optimization product revenues increased ~~$98~~$52 million compared to the ~~second~~third quarter of 2019 primarily due to:

~~Six~~Nine months ended ~~June~~September 30, 2020 versus ~~June~~September 30, 2019

Market Optimization product revenues increased ~~$191~~$243 million compared to the first ~~six~~nine months of 2019 primarily due to:

Sublease revenues primarily include amounts related to the sublease of office space in The Bow office building recorded in the Corporate and Other segment. Additional information on office sublease income 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.

Production, mineral and other taxes include production and property taxes. Production taxes are generally assessed as a percentage of oil, NGLs and natural gas production revenues. Property taxes are generally assessed based on the value of the underlying assets.

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
($ millions)	2020		2019		2020		2019		2020		2019		2020		2019

USA Operations	$	24	$	69	$	72	$	113	$	43	$	63	$	115	$	176
Canadian Operations		3		4		7		8		4		3		11		11
Total	$	27	$	73	$	79	$	121	$	47	$	66	$	126	$	187

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
($/BOE)	2020		2019		2020		2019		2020		2019		2020		2019

USA Operations	$	0.82	$	2.07	$	1.20	$	2.08	$	1.54	$	1.85	$	1.31	$	1.99
Canadian Operations	$	0.17	$	0.22	$	0.18	$	0.20	$	0.18	$	0.15	$	0.18	$	0.18
Production, Mineral and Other Taxes	$	0.55	$	1.36	$	0.79	$	1.26	$	0.99	$	1.18	$	0.85	$	1.23

Production, mineral and other taxes decreased ~~$46~~$19 million compared to the ~~second~~third quarter of 2019 primarily due to:

Production, mineral and other taxes decreased $61million compared to the first nine months of 2019 primarily due to:

~~Production, mineral and other taxes decreased $42million compared to the first six months of 2019 primarily due to:~~

Transportation and processing expense includes transportation costs incurred to move product from production points to sales points including gathering, compression, pipeline tariffs, trucking and storage costs. Ovintiv also incurs costs related to processing provided by third parties or through ownership interests in processing facilities.

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
($ millions)	2020		2019		2020		2019		2020		2019		2020		2019

USA Operations	$	115	$	136	$	236	$	215	$	109	$	125	$	345	$	340
Canadian Operations		198		217		411		429		203		211		614		640
Upstream Transportation and Processing		313		353		647		644		312		336		959		980

Market Optimization		55		59		117		106		53		62		170		168
Total	$	368	$	412	$	764	$	750	$	365	$	398	$	1,129	$	1,148

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
($/BOE)	2020		2019		2020		2019		2020		2019		2020		2019

USA Operations	$	4.07	$	4.09	$	3.95	$	3.95	$	3.85	$	3.72	$	3.92	$	3.86
Canadian Operations	$	9.75	$	10.60	$	10.02	$	10.40	$	10.71	$	9.68	$	10.24	$	10.15
Upstream Transportation and Processing	$	6.44	$	6.54	$	6.42	$	6.70	$	6.62	$	6.05	$	6.48	$	6.46

Transportation and processing expense decreased ~~$44~~$33 million compared to the ~~second~~third quarter of 2019 primarily due to:

~~Six~~Nine months ended ~~June~~September 30, 2020 versus ~~June~~September 30, 2019

Transportation and processing expense ~~increased $14~~decreased $19 million compared to the first ~~six~~nine months of 2019 primarily due to:

Upstream transportation and processing decreased $0.28 per BOE compared to the first six months of 2019 primarily due to a higher proportion of total production volumes in the USA Operations resulting from the Newfield acquisition, which benefit from lower than average per BOE transportation and processing costs.partially offset by:

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

	Three months ended June 30,					Six months ended June 30,						Three months ended September 30,				Nine months ended September 30,
($ millions)	2020		2019			2020			2019			2020		2019		2020			2019

USA Operations	$	121	$	148		$	260		$	263		$	104	$	151	$	364		$	414
Canadian Operations		25		27			51			64			24		32		75			96
China Operations ⁽¹⁾		-		8			-			12			-		4		-			16
Upstream Operating Expense		146		183			311			339			128		187		439			526

Market Optimization		8		5			10			15			5		6		15			21
Corporate & Other		-		(1	)		(2	)		(2	)		-		-		(2	)		(2	)
Total	$	154	$	187		$	319		$	352		$	133	$	193	$	452		$	545

	Three months ended June 30,					Six months ended June 30,						Three months ended September 30,				Nine months ended September 30,
($/BOE)	2020		2019			2020			2019			2020		2019		2020			2019

USA Operations	$	4.22	$	4.46		$	4.33		$	4.84		$	3.73	$	4.48	$	4.14		$	4.70
Canadian Operations	$	1.20	$	1.27		$	1.23		$	1.54		$	1.22	$	1.45	$	1.23		$	1.51
China Operations ⁽¹⁾	$	-	$	27.68		$	-		$	23.80		$	-	$	66.11	$	-		$	27.53
Upstream Operating Expense ⁽²⁾	$	2.97	$	3.39		$	3.07		$	3.52		$	2.72	$	3.35	$	2.96		$	3.46

Operating expense decreased ~~$33~~$60 million compared to the ~~second~~third quarter of 2019 primarily due to:

~~Six~~Nine months ended ~~June~~September 30, 2020 versus ~~June~~September 30, 2019

Operating expense decreased ~~$33~~$93 million compared to the first ~~six~~nine months of 2019 primarily due to:

Additional information on the Company’s long-term incentives can be found in Note 19 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. The Company also purchases and sells third-party volumes under long-term marketing arrangements associated with the Company’s previous divestitures.

	Three months ended June 30,					Six months ended June 30,				Three months ended September 30,					Nine months ended September 30,
($ millions)		2020		2019		2020		2019			2020		2019		2020		2019

Market Optimization		$	319	$	222	$	717	$	520		$	322	$	264	$	1,039	$	784

Purchased product expense increased ~~$97~~$58 million compared to the ~~second~~third quarter of 2019 primarily due to:

~~Six~~Nine months ended ~~June~~September 30, 2020 versus ~~June~~September 30, 2019

Purchased product expense increased ~~$197~~$255 million compared to the first ~~six~~nine months of 2019 primarily due to:

Proved properties within each country cost centre 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 2019 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 2019 Annual Report on Form 10-K.

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
($ millions)	2020		2019		2020		2019		2020		2019		2020		2019

USA Operations	$	375	$	429	$	793	$	703	$	299	$	438	$	1,092	$	1,141
Canadian Operations		111		95		220		187		99		100		319		287
Upstream DD&A		486		524		1,013		890		398		538		1,411		1,428

Corporate & Other		7		8		14		19		8		7		22		26
Total	$	493	$	532	$	1,027	$	909	$	406	$	545	$	1,433	$	1,454

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
($/BOE)	2020		2019		2020		2019		2020		2019		2020		2019

USA Operations	$	13.18	$	12.96	$	13.24	$	12.96	$	10.66	$	12.93	$	12.42	$	12.95
Canadian Operations	$	5.41	$	4.64	$	5.35	$	4.53	$	5.23	$	4.61	$	5.31	$	4.56
Upstream DD&A	$	9.94	$	9.78	$	10.03	$	9.32	$	8.47	$	9.67	$	9.54	$	9.45

DD&A decreased ~~$39~~$139 million compared to the ~~second~~third quarter of 2019 primarily due to:

The depletion rate in the ~~Canadian and~~ USA Operations ~~increased $0.77~~decreased $2.27 per BOE, ~~and $0.22 per BOE, respectively,~~ compared to the ~~second~~third quarter of 2019 primarily due to ~~a higher depletable base.~~

~~DD&A increased $118 million compared to~~ the ~~first six months~~ceiling test impairments recognized in the second quarter of ~~2019 primarily due to:~~

2020. The depletion rate in the Canadian ~~and USA~~ Operations increased ~~$0.82~~$0.62 per BOE, ~~and $0.28 per BOE, respectively,~~ compared to the ~~first six months~~third quarter of 2019 primarily due to a higher depletable base.

DD&A decreased $21 million compared to the first nine months of 2019 primarily due to:

The depletion rate in the USA Operations decreased $0.53 per BOE, compared to the first nine months of 2019 primarily due to the ceiling test impairments recognized in the second quarter of 2020. The depletion rate in the Canadian Operations increased $0.75 per BOE, compared to 2019 primarily due to a higher depletable base.

Under full cost accounting, the carrying amount of Ovintiv’s oil and natural gas properties within each country cost centre is subject to a ceiling test performed quarterly. Ceiling test impairments are recognized when the capitalized costs, net of accumulated depletion and the related deferred income taxes, exceed the sum of the estimated after-tax future net cash flows from proved reserves as calculated under SEC requirements using the 12‑month average trailing prices and discounted at 10 percent. The 12-month average trailing price is calculated as the average of the price on the first day of each month within the trailing 12-month period.

In the ~~second~~third quarter and first ~~six~~nine months of 2020, the Company recognized a before-tax non-cash ceiling test impairment of ~~$3,250~~$1,336 million and ~~$3,527~~$4,863 million, respectively, in the USA Operations. The non-cash ceiling test impairments primarily resulted from the decline in the 12-month average trailing prices, which reduced proved reserves.

The 12-month average trailing prices used in the ceiling test calculations were based on the benchmark prices below. The benchmark prices were adjusted for basis differentials to determine local reference prices, transportation costs and tariffs, heat content and quality.

	Oil & NGLs				Natural Gas				Oil & NGLs				Natural Gas
	WTI ($/bbl)		Edmonton Condensate (C$/bbl)		Henry Hub ($/MMBtu)		AECO (C$/MMBtu)		WTI ($/bbl)		Edmonton Condensate (C$/bbl)		Henry Hub ($/MMBtu)		AECO (C$/MMBtu)

12-Month Average Trailing Reserves Pricing ⁽¹⁾
June 30, 2020		47.47		58.46		2.07		1.70
September 30, 2020										43.69		53.93		1.97		2.01
December 31, 2019		55.93		68.80		2.58		1.76		55.93		68.80		2.58		1.76
June 30, 2019		61.38		72.91		3.02		1.61
September 30, 2019										57.76		67.81		2.87		1.52

Due to the ~~recent~~ low commodity price environment, further declines in the 12-month average trailing prices are expected and could reduce proved reserves volumes and values and result in the recognition of future ceiling test impairments. However, future ceiling test impairments are difficult to reasonably predict and depend on commodity prices, as well as changes to reserves estimates, future development costs, capitalized costs, unproved property costs transferred to the depletable base of the full cost pool, as well as proceeds received from upstream divestitures which are generally deducted from the Company’s capitalized costs and can reduce the likelihood of ceiling test impairments.

The Company has calculated the estimated effects that certain price changes would have had on its ceiling test impairment for the ~~six~~nine months ended ~~June~~September 30, 2020. Using commodity futures prices as at ~~June~~September 30, 2020, for the three months ending ~~September 30,~~December 31, 2020, the estimated 12-month average trailing prices for the period ended ~~June~~September 30, 2020 would have been ~~$43.35~~$39.55 per bbl for WTI, C$~~53.25~~49.02 per bbl for Edmonton Condensate, ~~$1.93~~$1.91 per MMBtu for Henry Hub and C$~~1.94~~2.05 per MMBtu for AECO. Based on these estimated prices, while holding all other inputs and assumptions constant, an additional before-tax ceiling test impairment of approximately $1.3 billion for the USA Operations would have been recognized for the ~~six~~nine months ended ~~June~~September 30, 2020. If a low commodity price environment is sustained during the remainder of 2020, further ceiling test impairments and related allowances on deferred tax assets may be recognized.

The additional estimated before-tax ceiling test impairment is partly a result of ~~a 13~~an eight percent decrease in proved undeveloped reserves for the USA Operations as certain locations would not be economic at these revised estimated prices. This estimate strictly isolates the potential impact of commodity prices on the Company’s proved reserves volumes and values. If the low commodity price environment continues, further negative price related reserve revisions during the remainder of 2020 and in 2021 may occur, the magnitude of which could be significant.

Due to uncertainties in estimating proved reserves, the additional before-tax ceiling test impairment described and resulting implications may not be indicative of Ovintiv’s future development plans, operating or financial results.

The Company believes that the discounted after-tax future net cash flows from proved reserves required to be used in the ceiling test calculation are not indicative of the fair market value of Ovintiv’s oil and natural gas properties or the future net cash flows expected to be generated from such properties. The discounted after-tax future net cash flows do not consider the fair market value of unamortized unproved properties, or probable or possible liquids and natural gas reserves. In addition, there is no consideration given to the effect of future changes in commodity prices. Ovintiv manages its business using estimates of reserves and resources based on forecast prices and costs. Additional information on the ceiling test calculation can be found in Note 10 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Administrative expense represents costs associated with corporate functions provided by Ovintiv staff. Costs primarily include salaries and benefits, general office, information technology, restructuring and long-term incentive costs.

	Three months ended June 30,						Six months ended June 30,					Three months ended September 30,					Nine months ended September 30,
($ millions)	2020			2019			2020			2019		2020			2019		2020			2019

Administrative, excluding Long-Term Incentive Costs,
Restructuring Costs and Current Expected Credit Losses	$	68		$	79		$	142		$	161	$	72		$	76	$	214		$	237
Long-term incentive costs		19			(15	)		(7	)		17		1			1		(6	)		18
Restructuring costs		81			17			81			130		7			4		88			134
Current expected credit losses⁽¹⁾		(3	)		-			2			-		(1	)		-		1			-
Total Administrative	$	165		$	81		$	218		$	308	$	79		$	81	$	297		$	389

	Three months ended June 30,						Six months ended June 30,					Three months ended September 30,					Nine months ended September 30,
($/BOE)	2020			2019			2020			2019		2020			2019		2020			2019

��
Administrative, excluding Long-Term Incentive Costs,
Restructuring Costs and Current Expected Credit Losses	$	1.38		$	1.48		$	1.41		$	1.67	$	1.55		$	1.38	$	1.46		$	1.57
Long-term incentive costs		0.40			(0.28	)		(0.07	)		0.18		0.02			0.01		(0.04	)		0.12
Restructuring costs		1.66			0.31			0.80			1.36		0.14			0.07		0.59			0.88
Current expected credit losses⁽¹⁾		(0.06	)		-			0.02			-		(0.03	)		-		-			-
Total Administrative	$	3.38		$	1.51		$	2.16		$	3.21	$	1.68		$	1.46	$	2.01		$	2.57

Administrative expense in the ~~second~~third quarter of 2020 ~~increased $84~~decreased $2 million compared to the ~~second~~third quarter of 2019 primarily due to lower salaries and benefits due to decreased headcount ($2 million) and lower non-recurring administrative expenses related to the Newfield acquisition in 2019 ($2 million), partially offset by higher restructuring costs incurred in 2020 ($643 million) and long-term incentive costs resulting from an increase in the Company’s share price in the second quarter of 2020 compared to a recovery of long-term incentive costs in the second quarter of 2019 resulting from a decrease in the share price in 2019 ($34 million), partially offset by lower non-recurring integration expenses of $4 million relating to the Newfield acquisition in 2019..

Administrative expense in the first ~~six~~nine months of 2020 decreased ~~$90~~$92 million compared to the first ~~six~~nine months of 2019 primarily due to lower restructuring costs incurred in 2020 ($4946 million) and a recovery of long-term incentive costs resulting from a decrease in the Company’s share price in the first ~~six~~nine months of 2020 compared to long-term incentive costs resulting from an increase in the share price in the first ~~six~~nine months of 2019 ($24 million) ~~and~~, lower non-recurring integration and administrative expenses ~~of $8 million~~ relating to the Newfield acquisition in ~~2019.~~2019 ($10 million) and lower salaries and benefits ($8 million).

During 2019, the Company completed workforce reductions in conjunction with the Newfield acquisition to better align staffing levels and the organizational structure. In June 2020, the Company completed further workforce reductions as part of a company-wide reorganization to better align with the Company’s planned activity levels. Additional information on restructuring charges can be found in Note 18 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

	Three months ended June 30,						Six months ended June 30,						Three months ended September 30,						Nine months ended September 30,
($ millions)	2020			2019			2020			2019			2020			2019			2020			2019

Interest	$	86		$	99		$	182		$	186		$	97		$	99		$	279		$	285
Foreign exchange (gain) loss, net		(40	)		(55	)		76			(92	)		(25	)		30			51			(62	)
(Gain) loss on divestitures, net		-			-			-			1			-			(5	)		-			(4	)
Other (gains) losses, net		(16	)		(3	)		(30	)		25			(18	)		(1	)		(48	)		24
Total Other (Income) Expenses	$	30		$	41		$	228		$	120		$	54		$	123		$	282		$	243

Interest expense primarily includes interest on Ovintiv’s long-term ~~debt arising from U.S. dollar denominated unsecured notes.~~debt. Additional information on changes in interest can be found in Note 5 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Interest expense decreased ~~$13~~$2 million compared to the ~~second~~third quarter of 2019 primarily due to:

~~Six~~Nine months ended ~~June~~September 30, 2020 versus ~~June~~September 30, 2019

Interest expense decreased $4$6 million compared to the first ~~six~~nine months of 2019 primarily due to:

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 6 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Following the completion of the Reorganization, including the U.S. Domestication, on January 24, 2020, as described in the Highlights section of this MD&A, the U.S. dollar denominated unsecured notes issued by Encana Corporation from Canada were assumed by Ovintiv Inc., a company incorporated in Delaware with a U.S. dollar functional currency. Accordingly, these U.S. dollar denominated unsecured notes, along with certain intercompany notes, no longer attract foreign exchange translation gains or losses.

Net foreign exchange gain ~~decreased by $15~~of $25 million compared to a loss of $30 million in the ~~second~~third quarter of 2019 primarily due to:

~~Six~~Nine months ended ~~June~~September 30, 2020 versus ~~June~~September 30, 2019

Net foreign exchange loss of ~~$76~~$51 million compared to a gain of ~~$92~~$62 million in the first ~~six~~nine months of 2019 was primarily due to:

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, transaction costs relating to acquisitions, reclamation charges relating to decommissioned assets, gains on debt repurchases, government stimulus programs and adjustments related to other assets.

Other gains in the ~~second~~third quarter and first ~~six~~nine months of 2020 primarily includes gains of ~~$11~~$6 million and ~~$22~~$28 million, respectively, relating to the repurchase of the Company’s fixed long-term debt on the open market as discussed in the Liquidity and Capital Resources section of this MD&A.

Other losses in the first ~~six~~nine months of 2019 primarily included legal fees and transaction costs related to the Newfield acquisition of $33 million, partially offset by interest income on short-term investments of $8$9 million.

	Three months ended June 30,					Six months ended June 30,					Three months ended September 30,						Nine months ended September 30,
($ millions)	2020			2019		2020			2019		2020			2019			2020		2019

Current Income Tax Expense (Recovery)	$	(1	)	$	3	$	(1	)	$	4	$	3		$	(1	)	$	2	$	3
Deferred Income Tax Expense (Recovery)		295			158		435			96		(42	)		44			393		140
Income Tax Expense (Recovery)	$	294		$	161	$	434		$	100	$	(39	)	$	43		$	395	$	143

Effective Tax Rate	(7.2%)			32.4%		(12.3%)			52.4%		2.5%			22.4%			(7.8%)		37.3%

In the ~~second~~third quarter ~~and first six months~~ of 2020, Ovintiv recorded an income tax recovery of $39 million compared to an income tax expense ~~increased $133~~of $43 million ~~and $334 million, respectively, compared to~~in 2019, primarily due to the tax benefit resulting from current year losses arising from non-cash ceiling test impairments and a lower effective tax rate due to the related valuation allowance discussed below.

In the first nine months of 2020, income tax expense increased $252 million compared to 2019, which included an increase in the valuation allowance of $568 million in Canada related to prior years’ deferred tax assets, which was recorded as a discrete ~~item.~~item in the second quarter of 2020, partially offset by the tax benefit resulting from current year losses arising from non-cash ceiling test impairments and a lower effective tax rate due to the current year valuation allowance discussed below.

Deferred income tax assets are routinely assessed for realizability. During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company determined, after weighing both positive and negative evidence, that a valuation allowance should be recorded to reduce the associated deferred tax assets in the United States and in Canada. The Company iscontinues to be in a cumulative three-year loss position as of ~~June~~September 30, 2020 and is expected be in a cumulative three-year loss position by the end of the current fiscal year in both the United States and Canada. The cumulative losses, as well as increased uncertainty in the timing as to when the realization of deferred tax assets will occur, is significant negative evidence to overcome, and consequently, it is more likely than not that the deferred tax assets will not be realizable. If it is determined that the deferred tax assets are ~~realized~~realizable in the future, a reduction in the valuation allowance will be recorded. Additional information on the determination of the valuation

allowance can be found in Note 7 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

As part of the U.S. Domestication, Ovintiv recognized a capital loss and recorded a deferred income tax benefit in the amount of $1.2 billion for Canadian income tax purposes due to the decline in the Company’s share value compared to the historical tax basis of its properties that were transferred as part of the ~~Reorganization.~~U.S. Domestication. Ovintiv assessed the realizability of these capital losses against capital gains and concluded that it is more likely than not that the deferred tax asset will not be realizable. Therefore, Ovintiv has recorded a corresponding valuation allowance against the deferred tax asset. If it is determined the capital loss can be utilized at a future date, a reduction in the valuation allowance will be recorded.

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, valuation allowances related to current year losses, income tax related to foreign operations, state tax, the effect of legislative changes, non-taxable capital gains and losses, and tax differences on divestitures and transactions, which can produce interim effective tax rate fluctuations.

Following the U.S. Domestication as described in the Highlights section of this MD&A, the applicable statutory rate became the U.S. federal income tax rate. The Company’s effective tax rate was ~~(7.2)~~2.5 percent for the ~~second~~third quarter and ~~(12.3)~~(7.8) percent for the first ~~six~~nine months of 2020, which are lower than the U.S. federal statutory tax rate of 21 percent primarily due to valuation allowances recorded due to current year losses arising from ceiling test impairments, and an increase in the valuation allowance of $568 million in Canada related to prior years’ deferred tax assets, which was recorded as a discrete item.

The effective tax rate of ~~52.4~~37.3 percent for the ~~six~~nine months ended ~~June~~September 30, 2019, was higher than the Canadian statutory tax rate of 26.6 percent primarily due to the re-measurement of the Company’s deferred tax position resulting from the Alberta tax rate reduction. On June 28, 2019, Alberta Bill 3, the Job Creation Tax Cut (Alberta Corporate Tax Amendment) Act, was signed into law resulting in a reduction of the Alberta corporate tax rate from 12 percent to 11 percent effective July 1, 2019, with further one percent rate reductions to take effect every year on January 1 until the general corporate tax rate is eight percent on January 1, 2022. During the ~~three~~nine months ended ~~June~~September 30, 2019, the deferred tax expense of ~~$158~~$140 million included an adjustment of $55 million resulting from the re-measurement of the Company’s deferred tax position due to the Alberta tax rate reduction.

On June 29, 2020, Alberta announced the previously scheduled rate reduction will be accelerated with the Alberta rate reducing to eight percent effective July 1, 2020. This ~~new~~ legislation is not yet enacted and the impact ~~resulting from this announcement~~ is not expected to be material for the Company’s tax position.

The ~~tax impacts of~~Company continues to evaluate the various stimulus and fiscal measures announced in the U.S. and Canada in response to the COVID-19 ~~pandemic, including the U.S. Coronavirus Aid, Relief and Economic Security (“CARES”) Act and the Canada Emergency Wage Subsidy (“CEWS”) legislation are currently not expected to be material on~~pandemic. The tax impact of these measures is reflected in the Company’s tax orand financial position.

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 taxation 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.

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 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 or to manage its capital structure as discussed below. At ~~June~~September 30, 2020, ~~$22~~$19 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, purchasing shares for cancellation, issuing new debt, repaying or repurchasing existing debt.

	As at June 30,					As at September 30,
($ millions, except as indicated)	2020		2019			2020			2019

Cash and Cash Equivalents	$	39	$	167		$	32		$	138
Available Credit Facilities ⁽¹⁾		2,750		4,000			2,990			4,000
Available Uncommitted Demand Lines ⁽²⁾		183		192			186			174
Issuance of U.S. Commercial Paper		-		(761	)		(140	)		(740	)
Total Liquidity	$	2,972	$	3,598		$	3,068		$	3,572

Long-Term Debt, including current portion⁽³⁾	$	7,366	$	7,052		$	7,142		$	7,024
Total Shareholders’ Equity⁽⁴⁾	$	5,873	$	10,015		$	4,352		$	9,921

Debt to Capitalization (%) ⁽⁵⁾		56		41			62			41
Debt to Adjusted Capitalization (%) ⁽⁶⁾		35		28			37			28

The Company has access to two committed revolving U.S. dollar denominated credit facilities totaling $4.0 billion, which include a $2.5 billion revolving credit facility for Ovintiv Inc. and a $1.5 billion revolving credit facility for a Canadian ~~subsidiary. These facilities mature~~subsidiary, both maturing in July ~~2024 and are fully revolving up to maturity.~~2024. The Credit Facilities provide financial flexibility and allow the Company to fund its operations ~~development activities~~ or capital ~~programs.~~program. At ~~June~~September 30, 2020, ~~$995~~$730 million and ~~$255~~$280 million were outstanding under the revolving credit facility for Ovintiv Inc. and for the Canadian subsidiary, respectively.

During the first ~~six~~nine months of 2020, asOvintiv’s credit rating was downgraded to below investment grade by one of its credit rating agencies following updates to commodity price assumptions used by the rating agency. As a result of the ~~recent economic downturn from~~downgrade, the ~~COVID-19 pandemic and falling oil prices,~~cost of short-term borrowing on the revolving credit facility for Ovintiv ~~received updates~~Inc. has increased marginally. Ovintiv continues to ~~its credit ratings. Ovintiv remains investment grade which reflects the Company’s strong liquidity position within a volatile and low commodity price environment. Ovintiv has~~have full access to its Credit Facilities and the credit rating ~~updates have~~downgrade has not impacted the Company’s ability to fund its operations ~~development activities~~ or ~~its reduced~~ capital program. While Ovintiv currently ~~maintains an~~has both investment and non-investment grade credit ~~rating,~~ratings, further reductions in the Company’s credit ratings could increase the cost of short-term borrowings on the existing Credit Facilities or other sources of ~~liquidity.~~liquidity and limit access to the Company’s commercial paper program. A prolonged period of low commodity prices and the global impact of the COVID-19 pandemic could ~~impact~~affect the Company’s credit ratings in the future.

As at June 30, 2020, the Company had no amounts outstanding under its U.S. CP programs. Outstanding commercial paper balances due in the second quarter of 2020, were repaid using advances from the Company’s Credit Facilities. Ovintiv’s access to its U.S. CP programs is market-driven, and as a result of the current low commodity price environment and the Company’s current debt rating, the Company’s access to commercial paper is limited and on less favorable terms. 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 September

30, 2020, the Company had approximately $140 million of commercial paper outstanding under its U.S. CP programs with an average remaining term of approximately 29 days and a weighted average interest rate of approximately 0.87 percent, which is supported by the Company’s Credit Facilities. As a result of the Company’s recent credit rating downgrade, the Company’s access to commercial paper is limited. If future access to the U.S. CP programs is unavailable when the outstanding commercial paper comes due, the Company intends to repay any maturing balances using advances from the Company’s Credit Facilities or available cash on hand.

The Credit Facilities, uncommitted demand lines, and cash and cash equivalents provide Ovintiv with total liquidity of approximately ~~$3.0~~$3.1 billion. At ~~June~~September 30, 2020, Ovintiv also had approximately ~~$137~~$140 million in undrawn letters of credit issued in the normal course of business primarily as collateral security, related to transportation arrangements and to support future abandonment liabilities. Further downgrades in the Company’s credit ratings could trigger additional collateral requirements to support existing agreements and such amounts could be material.

In the first ~~six~~nine months of 2020, Ovintiv filed a U.S. shelf registration statement and a Canadian shelf prospectus, 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. and/or Canada. At ~~June~~September 30, 2020, $6.0 billion remained accessible under the Canadian shelf prospectus. The ability to issue securities under the U.S. shelf registration statement or Canadian shelf prospectus is dependent upon market conditions and securities law requirements.

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~~September 30, 2020, the Company’s Debt to Adjusted Capitalization was 3537 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. Ovintiv does not expect the current COVID-19 pandemic to impact the Company’s ability to remain in compliance with its financial covenants under the Credit Facilities. Additional information on financial covenants can be found in Note 15 to the Consolidated Financial Statements included in Item 8 of the 2019 Annual Report on Form 10‑K.

In the ~~second~~third quarter and first ~~six~~nine months of 2020, Ovintiv primarily generated cash through operating activities. 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,							Three months ended September 30,						Nine months ended September 30,
($ millions)	Activity Type	2020			2019			2020			2019			Activity Type	2020			2019			2020			2019

Sources of Cash, Cash Equivalents and Restricted Cash
Cash from operating activities	Operating	$	117		$	906		$	683		$	1,435		Operating	$	493		$	756		$	1,176		$	2,191
Proceeds from divestitures	Investing		8			4			30			6		Investing		39			171			69			177
Corporate acquisition, net of cash and restricted cash acquired	Investing		-			-			-			94		Investing		-			-			-			94
Net issuance of revolving long-term debt	Financing		408			761			552			761		Financing		-			-			452			740
Other	Investing		-			-			-			24		Investing		68			-			-			-
			533			1,671			1,265			2,320				600			927			1,697			3,202

Uses of Cash and Cash Equivalents
Capital expenditures	Investing		252			750			1,042			1,486		Investing		351			566			1,393			2,052
Acquisitions	Investing		1			19			18			41		Investing		1			25			19			66
Net repayment of revolving long-term debt														Financing		100			21			-			-
Repayment of long-term debt ⁽¹⁾	Financing		26			500			115			500		Financing		109			-			224			500
Purchase of shares of common stock	Financing		-			637			-			1,037		Financing		-			213			-			1,250
Dividends on shares of common stock	Financing		25			25			49			53		Financing		24			24			73			77
Other	Investing/Financing		294			51			186			41		Investing/Financing		23			164			141			181
			598			1,982			1,410			3,158				608			1,013			1,850			4,126
Foreign Exchange Gain (Loss) on Cash, Cash Equivalents and Restricted Cash Held in Foreign Currency	Foreign Exchange Gain (Loss) on Cash, Cash Equivalents and Restricted Cash Held in Foreign Currency		1			1			(6	)		4		Foreign Exchange Gain (Loss) on Cash, Cash Equivalents and Restricted Cash Held in Foreign Currency		1			-			(5	)		4
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	$	(64	)	$	(310	)	$	(151	)	$	(834	)	Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	$	(7	)	$	(86	)	$	(158	)	$	(920	)

Cash from operating activities in the ~~second~~third quarter and first ~~six~~nine months of 2020 was ~~$117~~$493 million and ~~$683~~$1,176 million, respectively, and was primarily a reflection of the impacts from lower average realized commodity prices, partially offset by the Newfield acquisition in 2019, the effects of the commodity price mitigation program and changes in non‑cash working capital.

Additional detail on changes in non-cash working capital can be found in Note 23 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~~third quarter and first ~~six~~nine months of 2020 was ~~$304~~$398 million and ~~$839~~$1,237 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.

Net cash from operating activities decreased ~~$789~~$263 million compared to the ~~second~~third quarter of 2019 primarily due to:

Net cash from operating activities decreased $1,015million compared to the first nine months of 2019 primarily due to:

~~Net cash from operating activities decreased $752million compared to the first six months of 2019 primarily due to:~~

Cash used in investing activities in the first ~~six~~nine months of 2020 was ~~$1,172~~$1,417 million primarily due to capital expenditures. Capital expenditures decreased ~~$444~~$659 million compared to the first ~~six~~nine months of 2019 due to the Company’s reduced capital program in response to the volatile market conditions in 2020, as discussed in the 2020 Outlook section of this MD&A.

Corporate acquisition in the first ~~six~~nine months of 2019 was $94 million, which reflected the net cash acquired upon the Newfield business combination.

Acquisitions in the first ~~six~~nine months of 2020 were ~~$18~~$19 million, which primarily included property purchases with ~~liquids-rich~~oil and liquids rich potential. Acquisitions in the first ~~six~~nine months of 2019 were ~~$41~~$66 million, which primarily included seismic purchases, water rights and ~~water rights.~~purchase with oil and liquids rich potential.

Divestitures in the first ~~six~~nine months of 2020 ~~and 2019~~ were ~~$30~~$69 million, ~~and $6 million, respectively,~~ which primarily included the sale of certain properties that did not complement Ovintiv’s existing portfolio of assets. Divestitures in the first nine months of 2019 were $177 million, which primarily included the sale of the Company’s Arkoma natural gas assets.

Capital expenditures and acquisition and divestiture activity are summarized in Notes 3, 8 and 9 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Net cash used in financing activities has been impacted by the Company’s strategy to enhance liquidity and strengthen its balance sheet by repaying or repurchasing existing debt, and ~~return~~returning value to stockholders through the purchase of shares of common ~~stock.~~stock and paying dividends.

Net cash from financing activities in the first ~~six~~nine months of 2020 was ~~$344~~$88 million compared to net cash used of ~~$870~~$1,150 million in 2019. The change was primarily due to the purchase of common shares under a NCIB in 2019 ($1,037 million) ~~in 2019~~ as discussed in more detail below, ~~and~~ repayment of long-term debt in 2019 ($500 million) and purchase of common shares under a substantial issuer bid ($213 million), partially offset by a decrease in net issuance of revolving long-term debt in 2020 ($~~209~~288 million) and the open market ~~repurchase~~repurchases of long-term debt in 2020 ($~~115~~224 million) as discussed below.

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, our liquidity requirements, contractual restrictions and other factors. In the first ~~six~~nine months of 2020, the Company repurchased ~~$137~~$252 million in principal amount of its senior notes in the open market which included approximately $90 million in principal amount of its 5.75 percent senior notes due in January 2022, approximately $17 million in principal amount of its 6.5 percent senior notes due in February 2038, approximately $12 million in principal amount of its 5.375 percent senior notes due in January 2026, approximately $10 million in principal amount of its 3.9 percent senior notes due in November 2021, and approximately $8 million in principal amount of its 5.15 percent senior notes due in November 2041 for an aggregate cash payment of approximately ~~$115~~$224 million, plus accrued interest, and recognized ~~a net gain~~gains of approximately ~~$22~~$28 million. Ovintiv utilized funds available from the Company’s credit facilities, cash on hand and cash from implementing cost savings initiatives to complete these open market repurchases. For additional information on the open market repurchases, refer to Note 12 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q

The Company’s long-term debt totaled ~~$7,366~~$7,142 million at ~~June~~September 30, 2020 and $6,974 million at December 31, 2019. There was no current portion outstanding at ~~June~~September 30, 2020 or December 31, 2019. Ovintiv has no long-term debt maturities until November 2021 and, as at ~~June~~September 30, 2020, over 7980 percent of the Company’s fixed rate long-term debt is not due until 2024 and beyond. For additional information on long-term debt, refer to Note 12 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Ovintiv pays quarterly dividends to stockholders at the discretion of the Board of Directors.

	Three months ended June 30,					Six months ended June 30,				Three months ended September 30,					Nine months ended September 30,
($ millions, except as indicated)		2020		2019		2020		2019			2020		2019		2020		2019

Dividend Payments		$	25	$	25	$	49	$	53		$	24	$	24	$	73	$	77
Dividend Payments ($/share) ⁽¹⁾		$	0.09375	$	0.09375	$	0.1875	$	0.1875		$	0.09375	$	0.09375	$	0.28125	$	0.28125

In the third quarter of 2019, the Company used cash on hand and issued commercial paper to purchase, for cancellation, approximately 47.3 million of its outstanding common shares, on a pre-Share Consolidation basis, or approximately 9.5 million common shares, on a post-Share Consolidation basis for total consideration of approximately $213 million under its previously announced substantial issuer bid. For additional information on the substantial issuer bid, refer to Note 15 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In the ~~second quarter and~~ first ~~six~~nine months of 2019, the Company used cash on hand ~~of approximately $637 million and $1,037 million, respectively,~~ to purchase, for cancellation, approximately ~~93.5 million and~~ 149.4 million common shares, ~~respectively,~~ on a pre-Share Consolidation basis or approximately ~~18.7 million and~~ 29.9 million common shares, ~~respectively,~~ on a post-Share Consolidation ~~basis.~~basis, for total consideration of approximately $1,037 million under its previous NCIB program. For additional information on the NCIB, refer to Note 15 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

For information on off-balance sheet arrangements and transactions, refer to the Off-Balance Sheet Arrangements section of the MD&A included in Item 7 of the 2019 Annual Report on Form 10-K.

For information on commitments and contingencies, refer to Notes 8 and 24 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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, Non-GAAP Cash Flow Margin, Total Costs, Debt to Adjusted Capitalization and Net Debt to Adjusted EBITDA. Management’s use of these measures is discussed further below.

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, net change in non-cash working capital and current tax on sale of assets.

Non-GAAP Cash Flow Margin is a non-GAAP measure defined as Non-GAAP Cash Flow per BOE of production.

Management believes these measures are 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 are an indication of the Company’s ability to generate cash to finance capital programs, to service debt and to meet other financial obligations. These measures are 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 September 30,						Nine months ended September 30,
($ millions, except as indicated)	2020			2019			2020			2019			2020			2019			2020			2019

Cash From (Used in) Operating Activities	$	117		$	906		$	683		$	1,435		$	493		$	756		$	1,176		$	2,191
(Add back) deduct:
Net change in other assets and liabilities		(68	)		(15	)		(120	)		(26	)		(47	)		(29	)		(167	)		(55	)
Net change in non-cash working capital		(119	)		44			(36	)		162			142			(32	)		106			130
Current tax on sale of assets		-			-			-			-			-			-			-			-
Non-GAAP Cash Flow ⁽¹⁾	$	304		$	877		$	839		$	1,299		$	398		$	817		$	1,237		$	2,116
Divided by:
Production Volumes (MMBOE)		48.8			53.9			100.8			96.0			46.9			55.7			147.8			151.7
Non-GAAP Cash Flow Margin ($/BOE)	$	6.23		$	16.27		$	8.32		$	13.53		$	8.49		$	14.67		$	8.37		$	13.95

Total Costs is a non-GAAP measure which includes the summation of production, mineral and other taxes, upstream transportation and processing expense, upstream operating expense and administrative expense, excluding the impact of long-term incentive costs, restructuring costs and current expected credit losses. It is calculated as total operating expenses excluding non-upstream operating costs and non-cash items which include operating expenses from the Market Optimization and Corporate and Other segments, depreciation, depletion and amortization, impairments, accretion of asset retirement obligation, long-term incentive costs, restructuring costs and current expected credit losses. When presented on a per BOE basis, Total Costs is divided by production volumes. Management believes this measure is useful to the Company and its investors as a measure of operational efficiency across periods.

	Three months ended June 30,						Six months ended June 30,						Three months ended September 30,					Nine months ended September 30,
($ millions, except as indicated)	2020			2019			2020			2019			2020			2019		2020			2019

Total Operating Expenses	$	4,785		$	1,517		$	6,669		$	2,979		$	2,696		$	1,556	$	9,365		$	4,535
Deduct (add back):
Market optimization operating expenses		382			286			844			641			380			332		1,224			973
Corporate & other operating expenses		-			(1	)		(2	)		(2	)		-			-		(2	)		(2	)
Depreciation, depletion and amortization		493			532			1,027			909			406			545		1,433			1,454
Impairments		3,250			-			3,527			-			1,336			-		4,863			-
Accretion of asset retirement obligation		9			10			18			19			8			9		26			28
Long-term incentive costs		25			(15	)		(10	)		26			2			1		(8	)		27
Restructuring costs		81			17			81			130			7			4		88			134
Current expected credit losses		(3	)		-			2			-			(1	)		-		1			-
Total Costs	$	548		$	688		$	1,182		$	1,256		$	558		$	665	$	1,740		$	1,921
Divided by:
Production Volumes (MMBOE)		48.8			53.9			100.8			96.0			46.9			55.7		147.8			151.7
Total Costs ($/BOE) ⁽¹⁾	$	11.23		$	12.78		$	11.72		$	13.06		$	11.85		$	11.95	$	11.77		$	12.66

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, 2020		December 31, 2019		September 30, 2020		December 31, 2019

Long-Term Debt, including current portion	$	7,366	$	6,974	$	7,142	$	6,974
Total Shareholders’ Equity		5,873		9,930		4,352		9,930
Equity Adjustment for Impairments at December 31, 2011		7,746		7,746		7,746		7,746
Adjusted Capitalization	$	20,985	$	24,650	$	19,240	$	24,650
Debt to Adjusted Capitalization	35%		28%		37%		28%

Net Debt to Adjusted EBITDA is a non-GAAP measure whereby Net Debt is defined as long-term debt, including the current portion, less cash and cash equivalents and Adjusted EBITDA is defined as trailing 12-month net earnings (loss) before income taxes, DD&A, impairments, accretion of asset retirement obligation, interest, unrealized gains/losses on risk management, foreign exchange gains/losses, gains/losses on divestitures and other gains/losses.

Management believes this measure is 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. This measure is 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, 2020			December 31, 2019			September 30, 2020			December 31, 2019

Long-Term Debt, including current portion		$	7,366		$	6,974		$	7,142		$	6,974
Less:
Cash and cash equivalents			39			190			32			190
Net Debt			7,327			6,784			7,110			6,784

Net Earnings (Loss)			(3,819	)		234			(5,489	)		234
Add back (deduct):
Depreciation, depletion and amortization			2,133			2,015			1,994			2,015
Impairments			3,527			-			4,863			-
Accretion of asset retirement obligation			36			37			35			37
Interest			378			382			376			382
Unrealized (gains) losses on risk management			161			730			363			730
Foreign exchange (gain) loss, net			49			(119	)		(6	)		(119	)
(Gain) loss on divestitures, net			(4	)		(3	)		1			(3	)
Other (gains) losses, net			(32	)		23			(49	)		23
Income tax expense (recovery)	��		415			81			333			81
Adjusted EBITDA (trailing 12-month)⁽¹⁾		$	2,844		$	3,380		$	2,421		$	3,380
Net Debt to Adjusted EBITDA (times)			2.6			2.0			2.9			2.0

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about Ovitniv’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 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 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 2019 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 22 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, 2020					September 30, 2020
(US$ millions)	10% Price Increase			10% Price Decrease		10% Price Increase			10% Price Decrease
Crude oil price	$	(137	)	$	132	$	(130	)	$	120
NGL price		(11	)		11		(7	)		7
Natural gas price		(71	)		62		(114	)		99

Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows of 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 the Company’s financial results when compared to the same periods in 2019.

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	$ millions			$/BOE			$ millions			$/BOE			$ millions			$/BOE			$ millions			$/BOE
Increase (Decrease) in:
Capital Investment	$	(5	)				$	(7	)				$	(1	)				$	(8	)
Transportation and Processing Expense ⁽¹⁾		(7	)	$	(0.15	)		(9	)	$	(0.09	)		(1	)	$	(0.02	)		(10	)	$	(0.07	)
Operating Expense ⁽¹⁾		(1	)		(0.02	)		(2	)		(0.01	)		-			-			(2	)		(0.01	)
Administrative Expense		(1	)		(0.03	)		(3	)		(0.03	)		-			-			(3	)		(0.02	)
Depreciation, Depletion and Amortization ⁽¹⁾		(3	)		(0.07	)		(4	)		(0.04	)		(1	)		(0.02	)		(5	)		(0.03	)

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

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~~September 30, 2020, Ovintiv has entered into ~~$429~~$215 million notional U.S. dollar denominated currency swaps at an average exchange rate of US$0.7451 to C$1, which mature monthly through the remainder of 2020 and $350 million notional U.S. dollar denominated currency swaps at an average exchange rate of US$0.7289 to C$1, which mature monthly throughout 2021.

As at ~~June~~September 30, 2020, Ovintiv had ~~$255~~$280 million in U.S. dollar long-term debt and ~~$120~~$98 million in U.S. dollar finance lease obligations issued from Canada that were 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, 2020

September 30, 2020

(US$ millions)

10% Rate

Increase

10% Rate

Decrease

10% Rate

Increase

10% Rate

Decrease

Foreign currency exchange

(32

)

(45

)

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~~September 30, 2020, the Company had floating rate revolving credit and term loan borrowings of ~~$1,250~~$1,150 million. Accordingly, on a before-tax basis, the sensitivity ~~in net earnings~~ for each one percent change in interest rates on floating rate revolving credit and term loan borrowings was ~~$10~~$11 million.

Ovintiv’s Chief Executive Officer and Chief Financial Officer performed an evaluation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“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~~September 30, 2020.

There were no changes in Ovintiv’s internal control over financial reporting during the ~~second~~third quarter of 2020 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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 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 $100,000.

Please also refer to Item 3 of the 2019 Annual Report on Form 10-K and Note 24 of Ovintiv’s Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Item 1A. Risk Factors of the 2019 Annual Report on Form 10-K. These risks, which could materially affect our business, financial condition and/or operating results, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also adversely affect our business, financial condition and/or operating results. The risk ~~factor~~factors set forth below should be read together with the risk factors described in the 2019 Annual Report on Form 10-K.

A pandemic, epidemic or other widespread outbreak of an infectious disease, such as the ongoing outbreak of COVID-19, could affect the operation of our business.

On March 11, 2020, the World Health Organization escalated the status of the COVID-19 outbreak from epidemic to pandemic. In an effort to mitigate the spread of COVID-19, governmental authorities in the United States, Canada and around the world have implemented, among other measures, limitations on cross-border travel, restrictions on mass gatherings, stay-at-home orders and mandatory closures of non-essential businesses. In the event such restrictions remain in place for an extended period of time, the Company’s ability to maintain ordinary staffing levels, secure operational inputs, and execute on portions of its business could be impacted. Although the Company has contingency plans in place to manage the potential workplace impacts of global outbreaks, including COVID-19, restrictions implemented by governments in jurisdictions in which the Company operates could prevent employees, contractors or suppliers from accessing the Company’s properties or performing critical services, or negatively impact the availability of the Company’s key personnel. In addition, as a significant subset of the Company’s employees has and may continue to work remotely, the Company may experience a higher rate of cyber-attacks and exposure to vulnerabilities related to digital technologies.

Concerns over the prolonged negative effects of the COVID-19 pandemic on economic and business prospects across the world have contributed to increased market and oil price volatility and diminished expectations for the performance of the global economy. The COVID-19 pandemic has resulted in, and may continue to result in, significant market uncertainty, including substantial fluctuations in currency exchange rates, inflation, interest rates, counterparty credit and performance risk, and general levels of investing and consumption. An extended period of decreased global demand and/or oversupply of production may result in refiners curtailing operations or refinery utilization rates, which could contribute to storage constraints or a widening of price differentials in jurisdictions in which the Company operates. Further, low commodity prices could impact the value and amount of the Company’s reserves and result in the recognition of future ceiling test impairments.

The full impact of the COVID-19 pandemic is uncertain and will depend on a number of factors, including the location and severity of the virus's spread and the effectiveness of mitigation actions taken by governmental authorities. Ongoing market uncertainty and an extended period of low commodity prices could result in changes to the Company's spending and operating plans, substantial fluctuations in the Company’s stock price and credit ratings, and affect the Company's financial condition, operations and access to liquidity.

The Company’s ability to use net operating losses and certain other tax attributes to offset future taxable income may be limited.

The Company currently has substantial U.S. federal net operating loss (“NOL”) carryforwards with various expiration dates and other tax attributes. Our ability to use these tax attributes to reduce our future U.S. federal and state income tax obligations depends on many factors, including our future taxable income, the timing of which is uncertain. In addition, our ability to use NOL carryforwards and other tax attributes may be subject to significant limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).

Under Section 382 of the Code and corresponding provisions of state law, if a corporation undergoes an ownership change, which is generally defined as a greater than 50% change in its equity ownership over a three-year period, the company’s ability to utilize U.S. NOL carryforwards and other tax attributes, may be limited. Determining the limitation under Section 382 of the Code is highly complex and the Company believes its U.S. NOL carryforwards and other tax attributes, other than tax attributes related to prior stock acquisitions, are not currently subject to a limitation as a result of an ownership change. However, it is possible that an ownership change may occur in the future which may materially impact the Company’s ability to use the U.S. NOL carryforwards and other tax attributes to reduce U.S. federal and state taxable income. Such a limitation could adversely affect the Company’s net income and cash flows.

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.

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

	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	10
	Notes to Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6869
Item 4.	Controls and Procedures	7071

	PART II

Item 1.	Legal Proceedings	7172
Item 1A.	Risk Factors	7172
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7273
Item 3.	Defaults Upon Senior Securities	7273
Item 4.	Mine Safety Disclosures	7273
Item 5.	Other Information	7273
Item 6.	Exhibits	7273
Signatures		7374

Purchase Price Allocation

Consideration:
Fair value of Encana's common shares issued ⁽¹⁾	$	3,478
Fair value of Newfield liability awards paid in cash ⁽²⁾		5
Total Consideration	$	3,483

Assets Acquired:
Cash and cash equivalents	$	46
Accounts receivable and accrued revenues		486
Other current assets		50
Proved properties		5,903
Unproved properties		838
Other property, plant and equipment		22
Restricted cash		53
Other assets		105
Goodwill ⁽³⁾		25

Liabilities Assumed:
Accounts payable and accrued liabilities ^{(3) (4)}		(795	)
Long-term debt		(2,603	)
Operating lease liabilities		(76	)
Other long-term liabilities ⁽³⁾		(65	)
Asset retirement obligation		(184	)
Deferred income taxes ⁽³⁾		(322	)
Total Purchase Price	$	3,483


☒	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 24,~~October 23, 2020			259,860,778

	Goodwill					Property, Plant and Equipment					Total Assets
	As at					As at					As at
	June 30,		December 31,			June 30,		December 31,			June 30,		December 31,
	2020			2019		2020			2019		2020			2019

USA Operations	$	1,938		$	1,938	$	10,283		$	13,757	$	12,768		$	16,613
Canadian Operations		642			673		1,143			1,205		1,945			2,122
Market Optimization		-			-		1			2		255			253
Corporate & Other		-			-		209			227		1,827			2,499
	$	2,580		$	2,611	$	11,636		$	15,191	$	16,795		$	21,487

	As at June 30, 2020					As at December 31, 2019
	Number (millions)		Amount			Number (millions)			Amount

Shares of Common Stock Outstanding, Beginning of Year		259.8	$	7,061			190.5		$	4,656
Shares of Common Stock Purchased		-		-			(39.4	)		(1,073	)
Shares of Common Stock Issued		-		-			108.7			3,478
Reclassification of Share Capital due to the Reorganization (See Note 1)		-		(7,058	)		-			-
Shares of Common Stock Outstanding, End of Period		259.8	$	3			259.8		$	7,061

	As at September 30, 2020					As at December 31, 2019
	Number (millions)		Amount			Number (millions)			Amount

Shares of Common Stock Outstanding, Beginning of Year		259.8	$	7,061			190.5		$	4,656
Shares of Common Stock Purchased		0		0			(39.4	)		(1,073	)
Shares of Common Stock Issued		0		0			108.7			3,478
Reclassification of Share Capital due to the Reorganization (See Note 1)		-		(7,058	)		-			0
Shares of Common Stock Outstanding, End of Period		259.8	$	3			259.8		$	7,061

~~Six~~Nine Months Ended ~~June~~September 30, 2020 (thousands of units)

RSUs			~~6,550~~6,698
PSUs			~~2,220~~2,293
DSUs			5465

	Valuation Technique	Unobservable Input	Range	Weighted Average ⁽¹⁾

Risk Management - WTI Options	Option Model	Implied Volatility	~~35%~~33% - ~~61%~~62%	~~46%~~42%

Exhibit No		Description
10.1*		~~Change in Control Agreement between Ovintiv Inc. and Rachel M. Moore effective June 30, 2020.~~
10.2*		~~Letter agreement between Ovintiv Inc. and David G. Hill.~~
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 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 Document.
104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2020, has been formatted in Inline XBRL.

Ovintiv Inc.

By:	/s/ Corey D. Code

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