UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, ~~2021~~2022


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

Commission file number 001-39191

Ovintiv Inc.

(Exact name of registrant as specified in its charter)

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

Suite 1700, 370 17th Street, Denver, Colorado, 80202, U.S.A.

(Address of principal executive offices)

Registrant’s telephone number, including area code (303) 623-2300

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.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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).

Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


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


Number of registrant’s shares of common stock outstanding as of ~~October 29, 2021~~November 4, 2022			~~261,084,425~~248,262,047

OVINTIV INC.

FORM 10-Q

TABLE OF CONTENTS

	PART I

Item 1.	Financial Statements	7
	Condensed Consolidated Statement of Earnings	7
	Condensed Consolidated Statement of Comprehensive Income	7
	Condensed Consolidated Balance Sheet	8
	Condensed Consolidated Statement of Changes in Shareholders’ Equity	9
	Condensed Consolidated Statement of Cash Flows	11
	Notes to Condensed Consolidated Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3635
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	6462
Item 4.	Controls and Procedures	6664

	PART II

Item 1.	Legal Proceedings	6765
Item 1A.	Risk Factors	6765
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6765
Item 3.	Defaults Upon Senior Securities	6766
Item 4.	Mine Safety Disclosures	6766
Item 5.	Other Information	6766
Item 6.	Exhibits	6766
Signatures		6967

DEFINITIONS

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Ovintiv,” and the “Company,” refer to Ovintiv Inc. and its consolidated subsidiaries for periods on or after January 24, 2020 and to Encana Corporation and its consolidated subsidiaries for periods before January 24, 2020. 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.

“ASU” means Accounting Standards Update.

“bbl” or “bbls” means barrel or barrels.

“BOE” means barrels of oil equivalent.

“Btu” means British thermal units, a measure of heating value.

“DD&A” means depreciation, depletion and amortization expenses.

“ESG” means environmental, social and governance.

“FASB” means Financial Accounting Standards Board.

“GHG” means greenhouse gas.

“Mbbls/d” means thousand barrels per day.

“MBOE/d” means thousand barrels of oil equivalent per day.

“Mcf” means thousand cubic feet.

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

“MMBOE” means million barrels of oil equivalent.

“MMBtu” means million Btu.

“MMcf/d” means million cubic feet per day.

“NCIB” means normal course issuer bid.

“NGL” or “NGLs” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“NYSE” means New York Stock Exchange.

“OPEC” means Organization of the Petroleum Exporting Countries.

“SEC” means United States Securities and Exchange Commission.

“SIB” means substantial issuer bid.

“TSX” means Toronto Stock Exchange.

“U.S.”, “United States” or “USA” means United States of America.

“U.S. GAAP” means U.S. Generally Accepted Accounting Principles.

“WTI” means West Texas Intermediate.

CONVERSIONS

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.

CONVENTIONS

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

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

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

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.

FORWARD-LOOKING STATEMENTS AND RISK

This Quarterly Report on Form 10-Q, ~~contains~~and the other documents incorporated herein by reference (if any), contain certain forward-looking statements or information (collectively, “forward-looking statements”) within the meaning of applicable securities legislation, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as ~~amended.~~amended (the “Exchange Act”). All statements, except for statements of historical fact, that relate to the anticipated future activities, plans, strategies, objectives or expectations of the Company are forward-looking statements. When used in this Quarterly Report on Form ~~10-Q,~~10‑Q, and the other documents incorporated herein by reference (if any), the use of words and phrases including “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “focused on,” “forecast,” “guidance,” “intends,” “maintain,” “may,” “opportunities,” “outlook,” “plans,” “potential,” “strategy,” “targets,” “will,” “would” and other similar terminology is intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words or phrases. Forward-looking statements include statements regarding: expectations of plans, strategies and objectives of the Company, including anticipated development activity and investment levels; ~~composition of~~ the Company’s core assets, including ~~allocation~~the composition of core assets and the anticipated capital ~~and focus of development plans;~~returns associated with core assets; the Company’s capital allocation strategy, ~~focus~~capital structure, anticipated sources of ~~investment,~~funding, growth in long-term shareholder value ~~return of capital to shareholders through dividends and/or share buybacks, growth of high margin liquids volumes, operating and capital efficiencies~~ and ability to preserve balance sheet strength; the benefits of the Company’s multi-basin portfolio, including operational and commodity flexibility, and the ability to repeat and deploy successful operational learnings; the Company’s ability to maximize cash ~~flows~~flow and the application of excess cash flows to reduce long-term debt; the ability of the Company to timely meet and maintain certain targets contained in the Company’s corporate guidance, including with respect to capital efficiency, ~~hydrocarbon production,~~ cash ~~flows~~flow generation, debt reduction and leverage, the return of capital to shareholders, oil, NGLs and natural gas production, GHG emissions and ESG ~~performance,~~performance; the ability of the Company to lower costs and ~~cash returns~~improve capital and operating efficiencies, and the ability to ~~shareholders; anticipated~~maintain such cost savings ~~capital efficiency~~ and ~~sustainability thereof;~~efficiencies; anticipated oil, NGL and natural gas prices; the anticipated success of, and benefits from, technology and innovation, including the cube development ~~approach,~~model, Simul-Frac techniques and other new or advanced drilling techniques or well completion designs; anticipated drilling and completions activity, including the number of drilling rigs ~~utilized~~ and ~~success thereof;~~frac crews utilized; anticipated well inventory, drilling costs and cycle times; the Company’s ability to optimize well completion designs, including changes to horizontal lateral lengths, water and proppant volumes, number of frac stages, and well spacing and stacking; anticipated proceeds and future benefits from various joint venture, partnership and other agreements; estimates of the Company’s oil, NGLs and natural gas reserves and recoverable quantities; the Company’s expected oil, NGLs and natural gas production and ~~product types; expected~~commodity mix, including growth of high margin liquids volumes; future interest expense; the Company’s ability to access credit facilities and other ~~methods~~sources of ~~funding,~~liquidity to meet financial obligations throughout commodity price cycles; the Company’s ability to manage debt and financial ratios, finance growth and comply with financial covenants; the implementation and outcomes of risk management programs, including exposure to ~~certain~~ commodity ~~prices~~price, interest rate and foreign exchange fluctuations, the volume of oil, NGLs and natural gas production hedged, and the

markets or physical sales locations hedged; the impact of changes in federal, state, provincial, local and tribal laws, rules and regulations; anticipated compliance with current or proposed environmental ~~legislation;~~legislation, including the costs thereof; adequacy of provisions for abandonment and site reclamation costs; the Company’s operational and financial flexibility, discipline and ability to respond to evolving market conditions; ~~impacts to the Company as a result of a reduction of its credit rating;~~ the declaration and payment of future dividends ~~if any; expectations with respect to~~and the anticipated repurchase the Company’s ~~restructuring initiative, including anticipated transition and severance costs and~~outstanding common shares; the ~~timing thereof;~~ adequacy of the Company’s provision

for taxes and legal claims; the Company’s ability to manage cost inflation and expected cost structures, including expected operating, transportation, processing and ~~administrative~~labor expenses; the competitiveness of the Company against its peers, including with respect to capital, materials, people, assets and production; global oil, NGL and natural gas inventories and global demand for oil, NGL and natural gas; the outlook of the oil and natural gas industry generally, including impacts from changes to the geopolitical environment; anticipated staffing levels; anticipated payments related to the Company’s commitments, obligations and contingencies, and ~~anticipated payments thereunder;~~the ability to satisfy the same; and the possible impact of accounting and tax pronouncements, rule changes and standards.

Readers are cautioned against unduly relying on forward-looking statements which, by their nature, involve numerous assumptions and are subject to both known and unknown risks and uncertainties (many of which are beyond our control) that may cause such statements not to occur, or actual results to differ materially and/or adversely from those expressed or implied. These assumptions include: future commodity prices and basis differentials; future foreign exchange rates; the ability of the Company to access credit facilities and shelf prospectuses; assumptions contained in the Company’s corporate guidance; data contained in key modeling statistics; the availability of attractive commodity or financial hedges and the enforceability of risk management programs; the Company’s ability to capture and maintain gains in productivity and efficiency; benefits from technology and innovations; expectations that counterparties will fulfill their obligations pursuant to gathering, processing, transportation and marketing agreements; access to adequate gathering, transportation, processing and storage facilities; assumed tax, royalty and regulatory regimes; expectations and projections made in light of, and generally consistent with, the Company’s historical experience and its perception of historical industry trends, including with respect to the pace of technological development; and the other assumptions contained herein.

Risks and uncertainties that may affect the Company’s financial or operating performance include: market and commodity price volatility, including widening price or basis differentials, and the associated impact to the Company’s stock price, credit rating, financial condition, oil, NGLs and natural gas reserves and access to liquidity; uncertainties, costs and risks involved in our operations, including hazards and risks incidental to both the drilling and completion of wells and the production, transportation, marketing and sale of oil, NGL and natural gas; availability of equipment, services, resources and personnel required to perform the Company’s operating activities; suspension of or changes to corporate guidance, and associated impacts to production and cash flows; our ability to generate sufficient cash ~~flows~~flow to meet our obligations and reduce debt; the impact of a pandemic, epidemic or other widespread outbreak of an infectious disease (such as the ongoing COVID-19 ~~(or other future pandemics)~~pandemic) on commodity prices and to the Company’s operations, including maintaining adequate staffing levels, securing operational inputs, executing all or a portion of our business plan and managing cyber-security risks associated with remote work; our ability to secure adequate transportation and storage for oil, NGL and natural gas, as well as access to end markets or physical sales locations; interruptions to oil, ~~NGL~~NGLs and natural gas production, including potential curtailments of gathering, transportation or refining operations; variability and discretion of the Company’s board of directors (the “Board of Directors”) to declare and pay dividends, if any; the timing and costs associated with drilling and completing wells, and the construction of well facilities and gathering and transportation pipelines; business interruption, property and casualty losses (including weather related losses) or unexpected technical difficulties and the extent to which insurance covers any such losses; risks associated with decommissioning activities, including timing and costs thereof; counterparty and credit risk; the ~~impact~~actions of members of OPEC and other state-controlled oil companies with respect to oil, NGLs and natural gas production and the resulting impacts on oil, NGLs and natural gas prices; changes in our credit rating and its effect on our ability to access to liquidity, including the costs thereof; changes in political or economic conditions in the U.S. and Canada, including fluctuations in foreign exchange rates, tariffs, taxes, interest rates and inflation rates; failure to achieve or maintain our cost and efficiency initiatives; risks associated with technology, including electronic, cyber and physical security breaches; changes in royalty, tax, environmental, GHG, carbon, accounting and other laws, rules or regulations or the interpretations thereof; our ability to timely obtain environmental or other necessary government permits or approvals; 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;~~Company, including with respect to environmental liabilities and other liabilities that are not adequately covered by an effective indemnity or insurance; risks related to the purported causes and impact of climate change, and the costs therefrom; the impact of disputes arising with our partners, including the suspension of certain obligations and the inability to dispose of assets or interests in certain arrangements; the Company’s ability to acquire or find additional oil, NGLs and natural gas reserves; imprecision of oil, NGLs and natural gas reserves estimates and

estimates of recoverable quantities, including the impact to future net revenue estimates; land, legal, regulatory and ownership complexities inherent in the U.S., Canada and other applicable jurisdictions; risks associated with past and future acquisitions or divestitures of oil and natural gas assets, including the receipt of any contingent amounts contemplated in the transaction agreements (such transactions may include third-party capital investments, farm-ins, farm-outs or partnerships, which the Company may refer to from time to time as “partnerships” or “joint ventures” and the funds received in respect thereof which the Company may refer to from time to time as “proceeds”, “deferred purchase price” and/or “carry capital”, regardless of the legal form); our ability to repurchase the Company’s outstanding shares of common ~~shares,~~stock, including risks associated with obtaining any necessary stock exchange approvals; the existence of alternative uses for the Company’s cash resources which may be superior to the payment of dividends or effecting repurchases of the Company’s outstanding shares of common ~~shares;~~stock; risks and uncertainties described in Item 1A. Risk Factors of the Company’s most recent Annual Report on Form ~~10-K~~10‑K for the fiscal year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 Annual Report

on Form ~~10-K”~~10‑K”) and in this Quarterly Report on Form ~~10-Q;~~10‑Q; and other risks and uncertainties impacting the Company’s business as described from time to time in the Company’s other periodic filings with the SEC or Canadian securities regulators.

Readers are cautioned that the assumptions, risks and uncertainties referenced above, and in the other documents incorporated herein by reference (if any), are not exhaustive. Although the Company believes the expectations represented by its forward-looking statements are reasonable based on the information available to it as of the date such statements are made, forward-looking statements are only predictions and statements of our current beliefs and there can be no assurance that such expectations will prove to be correct. All forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this document (or in the case of a document incorporated herein by reference, the date of such document) and, except as required by law, the Company undertakes no obligation to update publicly or revise any forward-looking statements. The forward-looking statements contained or incorporated by reference in this Quarterly Report on Form 10-Q, and all subsequent forward-looking statements attributable to the Company, whether written or oral, are expressly qualified by these cautionary statements.

The reader should read carefully the risk factors described in Item 1A. Risk Factors of the 2020 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.

PART I

Item 1. Financial Statements

Condensed Consolidated Statement of Earnings (unaudited)

				Three Months Ended						Nine Months Ended								Three Months Ended						Nine Months Ended
				September 30,						September 30,								September 30,						September 30,
(US$ millions, except per share amounts)				2021			2020			2021			2020					2022			2021			2022			2021

Revenues		(Note 2)															(Note 2)
Product and service revenues		(Note 3)		$	2,720		$	1,326		$	7,440		$	3,919			(Note 3)	$	3,643		$	2,720		$	11,064		$	7,440
Gains (losses) on risk management, net		(Note 19)			(950	)		(154	)		(2,176	)		587			(Note 18)		(111	)		(950	)		(1,864	)		(2,176	)
Sublease revenues		(Note 9)			19			18			55			53			(Note 9)		17			19			52			55
Total Revenues					1,789			1,190			5,319			4,559					3,549			1,789			9,252			5,319

Operating Expenses		(Note 2)															(Note 2)
Production, mineral and other taxes					77			47			210			126					109			77			321			210
Transportation and processing					397			365			1,194			1,129					468			397			1,327			1,194
Operating	(Notes 16, 17)				153			133			466			452		(Notes 15, 16)			228			153			596			466
Purchased product					759			322			2,096			1,039					973			759			3,154			2,096
Depreciation, depletion and amortization					297			406			916			1,433					291			297			833			916
Impairments		(Note 8)			0			1,336			0			4,863
Accretion of asset retirement obligation					5			8			17			26					4			5			14			17
Administrative	(Notes 15, 16, 17)				101			79			346			297		(Notes 15, 16)			103			101			318			346
Total Operating Expenses					1,789			2,696			5,245			9,365					2,176			1,789			6,563			5,245
Operating Income (Loss)					0			(1,506	)		74			(4,806	)				1,373			-			2,689			74

Other (Income) Expenses
Interest		(Notes 4, 10)			77			97			263			279			(Notes 4, 10)		83			77			248			263
Foreign exchange (gain) loss, net		(Notes 5, 19)			0			(25	)		(15	)		51			(Notes 5, 18)		19			-			21			(15	)
Other (gains) losses, net		(Notes 6, 10, 17)			(6	)		(18	)		(31	)		(48	)	(Notes 6, 16)			(3	)		(6	)		(30	)		(31	)
Total Other (Income) Expenses					71			54			217			282					99			71			239			217
Net Earnings (Loss) Before Income Tax					(71	)		(1,560	)		(143	)		(5,088	)				1,274			(71	)		2,450			(143	)
Income tax expense (recovery)		(Note 6)			1			(39	)		(175	)		395			(Note 6)		88			1			148			(175	)
Net Earnings (Loss)				$	(72	)	$	(1,521	)	$	32		$	(5,483	)			$	1,186		$	(72	)	$	2,302		$	32

Net Earnings (Loss) per Share of Common Stock		(Note 12)															(Note 12)
Basic				$	(0.28	)	$	(5.85	)	$	0.12		$	(21.10	)			$	4.70		$	(0.28	)	$	9.00		$	0.12
Diluted					(0.28	)		(5.85	)		0.12			(21.10	)				4.63			(0.28	)		8.84			0.12
Weighted Average Shares of Common Stock Outstanding (millions)	Weighted Average Shares of Common Stock Outstanding (millions)		(Note 12)													Weighted Average Shares of Common Stock Outstanding (millions)	(Note 12)
Basic					261.1			259.8			260.7			259.8					252.5			261.1			255.7			260.7
Diluted					261.1			259.8			265.3			259.8					256.2			261.1			260.4			265.3

Condensed Consolidated Statement of Comprehensive Income (unaudited)

		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
		September 30,						September 30,							September 30,						September 30,
(US$ millions)		2021			2020			2021			2020				2022			2021			2022			2021

Net Earnings (Loss)		$	(72	)	$	(1,521	)	$	32		$	(5,483	)		$	1,186		$	(72	)	$	2,302		$	32
Other Comprehensive Income (Loss), Net of Tax
Foreign currency translation adjustment	(Note 13)		(48	)		26			(4	)		(21	)	(Note 13)		(94	)		(48	)		(125	)		(4	)
Pension and other post-employment benefit plans	(Notes 13, 17)		(1	)		(2	)		(4	)		(1	)	(Notes 13, 16)		(1	)		(1	)		(4	)		(4	)
Other Comprehensive Income (Loss)			(49	)		24			(8	)		(22	)			(95	)		(49	)		(129	)		(8	)
Comprehensive Income (Loss)		$	(121	)	$	(1,497	)	$	24		$	(5,505	)		$	1,091		$	(121	)	$	2,173		$	24

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheet (unaudited)

			As at			As at					As at			As at
			September 30,			December 31,					September 30,			December 31,
(US$ millions)			2021			2020					2022			2021

Assets
Current Assets
Cash and cash equivalents			$	8		$	10				$	18		$	195
Accounts receivable and accrued revenues (net of allowances of $3 million (2020: $4 million))		(Note 3)		1,221			928
Accounts receivable and accrued revenues (net of allowances of $7 million (2021: $5 million))										(Note 3)		1,626			1,294
Risk management		(Notes 18, 19)		1			37			(Notes 17, 18)		1			1
Income tax receivable		(Note 6)		98			272					57			97
				1,328			1,247					1,702			1,587
Property, Plant and Equipment, at cost:		(Note 8)								(Note 8)
Oil and natural gas properties, based on full cost accounting
Proved properties				54,684			53,883					56,123			55,475
Unproved properties				2,217			2,962					1,239			1,944
Other				897			911					871			903
Property, plant and equipment				57,798			57,756					58,233			58,322
Less: Accumulated depreciation, depletion and amortization				(49,208	)		(48,306	)				(49,180	)		(49,561	)
Property, plant and equipment, net		(Note 2)		8,590			9,450			(Note 2)		9,053			8,761
Other Assets				1,094			1,143					1,000			1,079
Risk Management		(Notes 18, 19)		0			4			(Notes 17, 18)		43			-
Goodwill		(Note 2)		2,624			2,625			(Note 2)		2,576			2,628
		(Note 2)	$	13,636		$	14,469			(Note 2)	$	14,374		$	14,055

Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities			$	1,866		$	1,704				$	2,216		$	1,979
Current portion of operating lease liabilities				63			68					69			62
Income tax payable				4			3					7			4
Risk management		(Notes 18, 19)		1,418			130			(Notes 17, 18)		577			703
Current portion of long-term debt		(Note 10)		-			518			(Note 10)		440			-
				3,351			2,423					3,309			2,748
Long-Term Debt		(Note 10)		4,791			6,367			(Note 10)		3,178			4,786
Operating Lease Liabilities				900			938					812			889
Other Liabilities and Provisions	(Note 11)			215			358		(Note 11)			153			190
Risk Management		(Notes 18, 19)		246			125			(Notes 17, 18)		8			25
Asset Retirement Obligation				336			401					229			339
Deferred Income Taxes				0			20					135			4
				9,839			10,632					7,824			8,981
Commitments and Contingencies		(Note 21)								(Note 20)
Shareholders’ Equity
Share capital - authorized 775 million shares of stock
2021 issued and outstanding: 261.1 million shares (2020: 259.8 million shares)		(Note 12)		3			3
2022 issued and outstanding: 249.2 million shares (2021: 258.0 million shares)										(Note 12)		3			3
Paid in surplus		(Note 12)		8,553			8,531			(Note 12)		7,939			8,458
Retained earnings (Accumulated deficit)				(5,827	)		(5,773	)				(2,355	)		(4,479	)
Accumulated other comprehensive income		(Note 13)		1,068			1,076			(Note 13)		963			1,092
Total Shareholders’ Equity				3,797			3,837					6,550			5,074
			$	13,636		$	14,469				$	14,374		$	14,055

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

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

Three Months Ended September 30, 2021 (US$ millions)

Share
Capital

Paid in
Surplus

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Income

Total
Shareholders’
Equity

Balance, June 30, 2021

$
3

$
8,532

$
(5,718
)

$
1,117

$
3,934

Net Earnings (Loss)

0

0

(72
)

0

(72
)
Dividends on Shares of Common Stock ($0.14 per share)

(Note 12)

-

-

(37
)

-

(37
)
Equity-Settled Compensation Costs

0

21

0

0

21

Other Comprehensive Income (Loss)

(Note 13)

0

0

0

(49
)

(49
)
Balance, September 30, 2021

$
3

$
8,553

$
(5,827
)

$
1,068

$
3,797

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

Balance, June 30, 2022		$	3	$	8,239		$	(3,479	)	$	1,058		$	5,821
Net Earnings (Loss)			-		-			1,186			-			1,186
Dividends on Shares of Common Stock ($0.25 per share)	(Note 12)		-		-			(62	)		-			(62	)
Shares of Common Stock Purchased under Normal Course Issuer Bid	(Note 12)		-		(325	)		-			-			(325	)
Equity-Settled Compensation Costs			-		25			-			-			25
Other Comprehensive Income (Loss)	(Note 13)		-		-			-			(95	)		(95	)
Balance, September 30, 2022		$	3	$	7,939		$	(2,355	)	$	963		$	6,550

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, June 30, 2020

$
3

$
8,460

$
(3,590
)

$
1,000

$
5,873

Net Earnings (Loss)

0

0

(1,521
)

0

(1,521
)
Dividends on Shares of Common Stock ($0.09375 per share)

(Note 12)

0

0

(24
)

0

(24
)
Other Comprehensive Income (Loss)

(Note 13)

0

0

0

24

24

Balance, September 30, 2020

$
3

$
8,460

$
(5,135
)

$
1,024

$
4,352

Three Months Ended September 30, 2021 (US$ millions)		Share Capital		Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Total Shareholders’ Equity

Balance, June 30, 2021		$	3	$	8,532	$	(5,718	)	$	1,117		$	3,934
Net Earnings (Loss)			-		-		(72	)		-			(72	)
Dividends on Shares of Common Stock ($0.14 per share)	(Note 12)		-		-		(37	)		-			(37	)
Equity-Settled Compensation Costs			-		21		-			-			21
Other Comprehensive Income (Loss)	(Note 13)		-		-		-			(49	)		(49	)
Balance, September 30, 2021		$	3	$	8,553	$	(5,827	)	$	1,068		$	3,797

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

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

Nine Months Ended September 30, 2021 (US$ millions)

Share
Capital

Paid in
Surplus

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Income

Total
Shareholders’
Equity

Balance, December 31, 2020

$
3

$
8,531

$
(5,773
)

$
1,076

$
3,837

Net Earnings (Loss)

0

0

32

0

32

Dividends on Shares of Common Stock ($0.3275 per share)

(Note 12)

0

0

(86
)

0

(86
)
Equity-Settled Compensation Costs

0

22

0

0

22

Other Comprehensive Income (Loss)

(Note 13)

0

0

0

(8
)

(8
)
Balance, September 30, 2021

$
3

$
8,553

$
(5,827
)

$
1,068

$
3,797

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

Balance, December 31, 2021		$	3	$	8,458		$	(4,479	)	$	1,092		$	5,074
Net Earnings (Loss)			-		-			2,302			-			2,302
Dividends on Shares of Common Stock ($0.70 per share)	(Note 12)		-		-			(178	)		-			(178	)
Shares of Common Stock Purchased under Normal Course Issuer Bid	(Note 12)		-		(531	)		-			-			(531	)
Equity-Settled Compensation Costs			-		12			-			-			12
Other Comprehensive Income (Loss)	(Note 13)		-		-			-			(129	)		(129	)
Balance, September 30, 2022		$	3	$	7,939		$	(2,355	)	$	963		$	6,550

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

Net Earnings (Loss)

0

0

(5,483
)

0

(5,483
)
Dividends on Shares of Common Stock ($0.28125 per share)

(Note 12)

0

0

(73
)

0

(73
)
Other Comprehensive Income (Loss)

(Note 13)

0

0

0

(22
)

(22
)
Reclassification of Share Capital

(Note 12)

(7,058
)

7,058

0

0

0

Balance, September 30, 2020

$
3

$
8,460

$
(5,135
)

$
1,024

$
4,352

Nine Months Ended September 30, 2021 (US$ millions)		Share Capital		Paid in Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income			Total Shareholders’ Equity

Balance, December 31, 2020		$	3	$	8,531	$	(5,773	)	$	1,076		$	3,837
Net Earnings (Loss)			-		-		32			-			32
Dividends on Shares of Common Stock ($0.3275 per share)	(Note 12)		-		-		(86	)		-			(86	)
Equity-Settled Compensation Costs			-		22		-			-			22
Other Comprehensive Income (Loss)	(Note 13)		-		-		-			(8	)		(8	)
Balance, September 30, 2021		$	3	$	8,553	$	(5,827	)	$	1,068		$	3,797

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Statement of Cash Flows (unaudited)

			Three Months Ended						Nine Months Ended								Three Months Ended						Nine Months Ended
			September 30,						September 30,								September 30,						September 30,
(US$ millions)			2021			2020			2021			2020					2022			2021			2022			2021

Operating Activities
Net earnings (loss)			$	(72	)	$	(1,521	)	$	32		$	(5,483	)			$	1,186		$	(72	)	$	2,302		$	32
Depreciation, depletion and amortization				297			406			916			1,433					291			297			833			916
Impairments		(Note 8)		0			1,336			0			4,863
Accretion of asset retirement obligation				5			8			17			26					4			5			14			17
Deferred income taxes		(Note 6)		1			(42	)		(19	)		393			(Note 6)		88			1			138			(19	)
Unrealized (gain) loss on risk management		(Note 19)		579			243			1,426			18			(Note 18)		(710	)		579			(211	)		1,426
Unrealized foreign exchange (gain) loss		(Note 5)		14			(21	)		20			30			(Note 5)		20			14			24			20
Foreign exchange on settlements		(Note 5)		(3	)		(2	)		(12	)		18			(Note 5)		12			(3	)		11			(12	)
Other				24			(9	)		88			(61	)				57			24			104			88
Net change in other assets and liabilities				(10	)		(47	)		(21	)		(167	)				(17	)		(10	)		(42	)		(21	)
Net change in non-cash working capital		(Note 20)		(23	)		142			(58	)		106			(Note 19)		31			(23	)		(182	)		(58	)
Cash From (Used in) Operating Activities				812			493			2,389			1,176					962			812			2,991			2,389
Investing Activities
Capital expenditures		(Note 2)		(365	)		(351	)		(1,098	)		(1,393	)		(Note 2)		(511	)		(365	)		(1,473	)		(1,098	)
Acquisitions		(Note 7)		0			(1	)		(3	)		(19	)		(Note 7)		(12	)		-			(34	)		(3	)
Proceeds from divestitures		(Note 7)		(8	)		39			1,017			69			(Note 7)		225			(8	)		230			1,017
Net change in investments and other				6			68			(36	)		(74	)				34			6			82			(36	)
Cash From (Used in) Investing Activities				(367	)		(245	)		(120	)		(1,417	)				(264	)		(367	)		(1,195	)		(120	)
Financing Activities
Net issuance (repayment) of revolving long-term debt		(Note 10)		0			(100	)		(950	)		452			(Note 10)		225			-			440			(950	)
Repayment of long-term debt		(Note 10)		(518	)		(109	)		(1,137	)		(224	)		(Note 10)		(525	)		(518	)		(1,634	)		(1,137	)
Purchase of shares of common stock																(Note 12)		(325	)		-			(531	)		-
Dividends on shares of common stock		(Note 12)		(37	)		(24	)		(86	)		(73	)		(Note 12)		(62	)		(37	)		(178	)		(86	)
Finance lease payments and other				(2	)		(23	)		(98	)		(67	)				(2	)		(2	)		(68	)		(98	)
Cash From (Used in) Financing Activities				(557	)		(256	)		(2,271	)		88					(689	)		(557	)		(1,971	)		(2,271	)
Foreign Exchange Gain (Loss) on Cash, Cash Equivalents
and Restricted Cash Held in Foreign Currency				(2	)		1			0			(5	)				1			(2	)		(2	)		-
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash			(114	)		(7	)		(2	)		(158	)	Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash			10			(114	)		(177	)		(2	)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period	Cash, Cash Equivalents and Restricted Cash, Beginning of Period			122			39			10			190		Cash, Cash Equivalents and Restricted Cash, Beginning of Period			8			122			195			10
Cash, Cash Equivalents and Restricted Cash, End of Period			$	8		$	32		$	8		$	32				$	18		$	8		$	18		$	8
Cash, End of Period			$	7		$	22		$	7		$	22				$	12		$	7		$	12		$	7
Cash Equivalents, End of Period				1			10			1			10					6			1			6			1
Restricted Cash, End of Period				0			0			0			0					-			-			-			-
Cash, Cash Equivalents and Restricted Cash, End of Period			$	8		$	32		$	8		$	32				$	18		$	8		$	18		$	8

Supplementary Cash Flow Information		(Note 20)														(Note 19)

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

1.	Basis of Presentation and Principles of Consolidation

Ovintiv is in the business of the exploration for, the development of, and the production and marketing of oil, NGLs and natural gas.

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, ~~2020,~~2021, which are included in Item 8 of Ovintiv’s ~~2020~~2021 Annual Report on Form ~~10-K.~~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, ~~2020.~~2021.

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.

2.	Segmented Information

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

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

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

•

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

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

Results of Operations (For the three months ended September 30)

Segment and Geographic Information

	USA Operations						Canadian Operations					Market Optimization						USA Operations						Canadian Operations						Market Optimization
	2021			2020			2021			2020		2021			2020			2022			2021			2022			2021			2022			2021

Revenues
Product and service revenues	$	1,286		$	670		$	663		$	310	$	771		$	346		$	1,762		$	1,286		$	893		$	663		$	988		$	771
Gains (losses) on risk management, net		(265	)		38			(107	)		49		1			2			(324	)		(265	)		(497	)		(107	)		-			1
Sublease revenues		0			0			0			0		0			0			-			-			-			-			-			-
Total Revenues		1,021			708			556			359		772			348			1,438			1,021			396			556			988			772

Operating Expenses
Production, mineral and other taxes		75			43			2			4		0			0			106			75			3			2			-			-
Transportation and processing		122			109			231			203		44			53			170			122			257			231			41			44
Operating		122			104			25			24		5			5			187			122			34			25			7			5
Purchased product		0			0			0			0		759			322			-			-			-			-			973			759
Depreciation, depletion and amortization		207			299			83			99		0			0			225			207			61			83			-			-
Impairments		0			1,336			0			0		0			0
Total Operating Expenses		526			1,891			341			330		808			380			688			526			355			341			1,021			808
Operating Income (Loss)	$	495		$	(1,183	)	$	215		$	29	$	(36	)	$	(32	)	$	750		$	495		$	41		$	215		$	(33	)	$	(36	)

	Corporate & Other						Consolidated						Corporate & Other					Consolidated
	2021			2020			2021			2020			2022		2021			2022			2021

Revenues
Product and service revenues	$	0		$	0		$	2,720		$	1,326		$	-	$	-		$	3,643		$	2,720
Gains (losses) on risk management, net		(579	)		(243	)		(950	)		(154	)		710		(579	)		(111	)		(950	)
Sublease revenues		19			18			19			18			17		19			17			19
Total Revenues		(560	)		(225	)		1,789			1,190			727		(560	)		3,549			1,789

Operating Expenses
Production, mineral and other taxes		0			0			77			47			-		-			109			77
Transportation and processing		0			0			397			365			-		-			468			397
Operating		1			0			153			133			-		1			228			153
Purchased product		0			0			759			322			-		-			973			759
Depreciation, depletion and amortization		7			8			297			406			5		7			291			297
Impairments		0			0			0			1,336
Accretion of asset retirement obligation		5			8			5			8			4		5			4			5
Administrative		101			79			101			79			103		101			103			101
Total Operating Expenses		114			95			1,789			2,696			112		114			2,176			1,789
Operating Income (Loss)	$	(674	)	$	(320	)		0			(1,506	)	$	615	$	(674	)		1,373			-

Other (Income) Expenses
Interest								77			97								83			77
Foreign exchange (gain) loss, net								0			(25	)							19			-
Other (gains) losses, net								(6	)		(18	)							(3	)		(6	)
Total Other (Income) Expenses								71			54								99			71
Net Earnings (Loss) Before Income Tax								(71	)		(1,560	)							1,274			(71	)
Income tax expense (recovery)								1			(39	)							88			1
Net Earnings (Loss)							$	(72	)	$	(1,521	)						$	1,186		$	(72	)

Results of Operations (For the nine months ended September 30)

Segment and Geographic Information

	USA Operations						Canadian Operations					Market Optimization						USA Operations						Canadian Operations						Market Optimization
	2021			2020			2021			2020		2021			2020			2022			2021			2022			2021			2022			2021

Revenues
Product and service revenues	$	3,459		$	1,900		$	1,810		$	906	$	2,171		$	1,113		$	5,234		$	3,459		$	2,633		$	1,810		$	3,197		$	2,171
Gains (losses) on risk management, net		(589	)		412			(164	)		188		3			5			(926	)		(589	)		(1,149	)		(164	)		-			3
Sublease revenues		0			0			0			0		0			0			-			-			-			-			-			-
Total Revenues		2,870			2,312			1,646			1,094		2,174			1,118			4,308			2,870			1,484			1,646			3,197			2,174

Operating Expenses
Production, mineral and other taxes		199			115			11			11		0			0			311			199			10			11			-			-
Transportation and processing		361			345			703			614		130			170			464			361			741			703			122			130
Operating		368			364			78			75		19			15			478			368			96			78			22			19
Purchased product		0			0			0			0		2,096			1,039			-			-			-			-			3,154			2,096
Depreciation, depletion and amortization		635			1,092			265			319		0			0			642			635			176			265			-			-
Impairments		0			4,863			0			0		0			0
Total Operating Expenses		1,563			6,779			1,057			1,019		2,245			1,224			1,895			1,563			1,023			1,057			3,298			2,245
Operating Income (Loss)	$	1,307		$	(4,467	)	$	589		$	75	$	(71	)	$	(106	)	$	2,413		$	1,307		$	461		$	589		$	(101	)	$	(71	)

	Corporate & Other						Consolidated						Corporate & Other						Consolidated
	2021			2020			2021			2020			2022			2021			2022			2021

Revenues
Product and service revenues	$	0		$	0		$	7,440		$	3,919		$	-		$	-		$	11,064		$	7,440
Gains (losses) on risk management, net		(1,426	)		(18	)		(2,176	)		587			211			(1,426	)		(1,864	)		(2,176	)
Sublease revenues		55			53			55			53			52			55			52			55
Total Revenues		(1,371	)		35			5,319			4,559			263			(1,371	)		9,252			5,319

Operating Expenses
Production, mineral and other taxes		0			0			210			126			-			-			321			210
Transportation and processing		0			0			1,194			1,129			-			-			1,327			1,194
Operating		1			(2	)		466			452			-			1			596			466
Purchased product		0			0			2,096			1,039			-			-			3,154			2,096
Depreciation, depletion and amortization		16			22			916			1,433			15			16			833			916
Impairments		0			0			0			4,863
Accretion of asset retirement obligation		17			26			17			26			14			17			14			17
Administrative		346			297			346			297			318			346			318			346
Total Operating Expenses		380			343			5,245			9,365			347			380			6,563			5,245
Operating Income (Loss)	$	(1,751	)	$	(308	)		74			(4,806	)	$	(84	)	$	(1,751	)		2,689			74

Other (Income) Expenses
Interest								263			279									248			263
Foreign exchange (gain) loss, net								(15	)		51									21			(15	)
Other (gains) losses, net								(31	)		(48	)								(30	)		(31	)
Total Other (Income) Expenses								217			282									239			217
Net Earnings (Loss) Before Income Tax								(143	)		(5,088	)								2,450			(143	)
Income tax expense (recovery)								(175	)		395									148			(175	)
Net Earnings (Loss)							$	32		$	(5,483	)							$	2,302		$	32

Intersegment Information

							Market Optimization																		Market Optimization
	Marketing Sales						Upstream Eliminations						Total						Marketing Sales						Upstream Eliminations						Total
For the three months ended September 30,	2021			2020			2021			2020			2021			2020			2022		��	2021			2022			2021			2022			2021

Revenues	$	2,705		$	1,445		$	(1,933	)	$	(1,097	)	$	772		$	348		$	4,109		$	2,705		$	(3,121	)	$	(1,933	)	$	988		$	772

Operating Expenses
Transportation and processing		141			148			(97	)		(95	)		44			53			164			141			(123	)		(97	)		41			44
Operating		5			5			0			0			5			5			7			5			-			-			7			5
Purchased product		2,596			1,324			(1,837	)		(1,002	)		759			322			3,972			2,596			(2,999	)		(1,837	)		973			759
Operating Income (Loss)	$	(37	)	$	(32	)	$	1		$	0		$	(36	)	$	(32	)	$	(34	)	$	(37	)	$	1		$	1		$	(33	)	$	(36	)

	Market Optimization																		Market Optimization
	Marketing Sales						Upstream Eliminations						Total						Marketing Sales						Upstream Eliminations						Total
For the nine months ended September 30,	2021			2020			2021			2020			2021			2020			2022			2021			2022			2021			2022			2021

Revenues	$	7,486		$	4,587		$	(5,312	)	$	(3,469	)	$	2,174		$	1,118		$	11,878		$	7,486		$	(8,681	)	$	(5,312	)	$	3,197		$	2,174

Operating Expenses
Transportation and processing		427			468			(297	)		(298	)		130			170			477			427			(355	)		(297	)		122			130
Operating		19			15			0			0			19			15			22			19			-			-			22			19
Purchased product		7,111			4,210			(5,015	)		(3,171	)		2,096			1,039			11,480			7,111			(8,326	)		(5,015	)		3,154			2,096
Operating Income (Loss)	$	(71	)	$	(106	)	$	0		$	0		$	(71	)	$	(106	)	$	(101	)	$	(71	)	$	-		$	-		$	(101	)	$	(71	)

Capital Expenditures by Segment

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021

USA Operations	$	265	$	244	$	805	$	1,090	$	416	$	265	$	1,198	$	805
Canadian Operations		99		106		291		300		95		99		274		291
Corporate & Other		1		1		2		3		-		1		1		2
	$	365	$	351	$	1,098	$	1,393	$	511	$	365	$	1,473	$	1,098

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

	Goodwill					Property, Plant and Equipment					Total Assets					Goodwill					Property, Plant and Equipment					Total Assets
	As at					As at					As at					As at					As at					As at
	September 30,		December 31,			September 30,		December 31,			September 30,		December 31,			September 30,		December 31,			September 30,		December 31,			September 30,		December 31,
	2021			2020		2021			2020		2021			2020		2022			2021		2022			2021		2022			2021

USA Operations	$	1,938		$	1,938	$	7,479		$	8,103	$	10,185		$	10,646	$	1,938		$	1,938	$	7,915		$	7,623	$	10,860		$	10,345
Canadian Operations		686			687		920			1,142		1,861			2,031		638			690		975			951		1,904			1,932
Market Optimization		0			0		0			2		293			233		-			-		-			-		397			300
Corporate & Other		0			0		191			203		1,297			1,559		-			-		163			187		1,213			1,478
	$	2,624		$	2,625	$	8,590		$	9,450	$	13,636		$	14,469	$	2,576		$	2,628	$	9,053		$	8,761	$	14,374		$	14,055

3.	Revenues from Contracts with Customers

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

Revenues (For the three months ended September 30)

	USA Operations				Canadian Operations				Market Optimization				USA Operations				Canadian Operations				Market Optimization
	2021		2020		2021		2020		2021		2020		2022		2021		2022		2021		2022		2021

Revenues from Customers
Product revenues ⁽¹⁾
Oil	$	866	$	504	$	1	$	1	$	609	$	131	$	1,146	$	866	$	1	$	1	$	844	$	609
NGLs		250		98		303		139		8		0		271		250		327		303		2		8
Natural gas		172		71		360		172		150		210		348		172		565		360		137		150
Service revenues
Gathering and processing		0		0		1		0		0		0		-		-		2		1		-		-
Product and Service Revenues	$	1,288	$	673	$	665	$	312	$	767	$	341	$	1,765	$	1,288	$	895	$	665	$	983	$	767

	Corporate & Other				Consolidated				Corporate & Other				Consolidated
	2021		2020		2021		2020		2022		2021		2022		2021

Revenues from Customers
Product revenues ⁽¹⁾
Oil	$	0	$	0	$	1,476	$	636	$	-	$	-	$	1,991	$	1,476
NGLs		0		0		561		237		-		-		600		561
Natural gas		0		0		682		453		-		-		1,050		682
Service revenues
Gathering and processing		0		0		1		0		-		-		2		1
Product and Service Revenues	$	0	$	0	$	2,720	$	1,326	$	-	$	-	$	3,643	$	2,720

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

Revenues (For the nine months ended September 30)

	USA Operations				Canadian Operations				Market Optimization				USA Operations				Canadian Operations				Market Optimization
	2021		2020		2021		2020		2021		2020		2022		2021		2022		2021		2022		2021

Revenues from Customers
Product revenues ⁽¹⁾
Oil	$	2,468	$	1,453	$	7	$	5	$	1,596	$	500	$	3,539	$	2,468	$	2	$	7	$	2,661	$	1,596
NGLs		587		244		844		406		34		4		850		587		1,072		844		13		34
Natural gas		413		208		963		501		519		596		856		413		1,565		963		503		519
Service revenues
Gathering and processing		0		1		4		1		5		0		1		-		2		4		-		5
Product and Service Revenues	$	3,468	$	1,906	$	1,818	$	913	$	2,154	$	1,100	$	5,246	$	3,468	$	2,641	$	1,818	$	3,177	$	2,154

	Corporate & Other				Consolidated				Corporate & Other				Consolidated
	2021		2020		2021		2020		2022		2021		2022		2021

Revenues from Customers
Product revenues ⁽¹⁾
Oil	$	0	$	0	$	4,071	$	1,958	$	-	$	-	$	6,202	$	4,071
NGLs		0		0		1,465		654		-		-		1,935		1,465
Natural gas		0		0		1,895		1,305		-		-		2,924		1,895
Service revenues
Gathering and processing		0		0		9		2		-		-		3		9
Product and Service Revenues	$	0	$	0	$	7,440	$	3,919	$	-	$	-	$	11,064	$	7,440

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

The Company’s revenues from contracts with customers consists of product sales including oil, NGLs and natural gas, as well as the provision of gathering and processing services to third parties. Ovintiv had 0no contract asset or liability balances during the periods presented. As at September 30, ~~2021,~~2022, receivables and accrued revenues from contracts with customers were ~~$1,110~~$1,344 million ($~~814~~1,070 million as at December 31, ~~2020)~~2021).

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

The Company’s gathering and processing services are provided on an interruptible basis with transaction prices that are for fixed prices and/or variable consideration. Variable consideration received is related to recovery of plant operating costs or escalation of the fixed price based on a consumer price index. As the service contracts are interruptible, with service provided on an “as available” basis, there are 0no unsatisfied performance obligations remaining at September 30, ~~2021.~~2022.

As at September 30, ~~2021,~~2022, 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.

Interest

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021

Interest Expense on:
Debt	$	74	$	91	$	251	$	262	$	79	$	74	$	237	$	251
Finance leases		1		2		3		7		1		1		2		3
Other		2		4		9		10		3		2		9		9
	$	77	$	97	$	263	$	279	$	83	$	77	$	248	$	263

For the three and nine months ended September 30, 2022, interest expense on debt includes $22 million related to premiums paid to repurchase certain of the Company’s senior notes in the open market. See Note 10 for details of the open market repurchases.

Interest expense on debt for the nine months ended September 30, ~~2021~~2022 includes a one-time make-whole interest payment of $47 million (2021 - $19 ~~million~~million) resulting from the ~~June 2021~~ early redemption of the Company’s ~~$600 million, 5.75 percent~~ senior notes ~~due January 30, 2022~~ as discussed in Note 10.

Additionally, interest expense on debt for the nine months ended September 30, 2022 includes $30 million in non-cash fair value amortization related to the senior notes, previously acquired through a business combination, which were redeemed in the second quarter of 2022 (see Note 10).

5.	Foreign Exchange (Gain) Loss, Net

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Unrealized Foreign Exchange (Gain) Loss on:
Translation of U.S. dollar financing debt issued from Canada	$	0		$	(6	)	$	1		$	56		$	-		$	-		$	-		$	1
Translation of U.S. dollar risk management contracts issued from Canada		14			(15	)		19			1			20			14			24			19
Translation of intercompany notes		0			0			0			(27	)
		14			(21	)		20			30			20			14			24			20
Foreign Exchange (Gain) Loss on Settlements of:
U.S. dollar financing debt issued from Canada		0			(2	)		(9	)		15			12			-			11			(9	)
U.S. dollar risk management contracts issued from Canada		(7	)		(2	)		(25	)		7			1			(7	)		(1	)		(25	)
Intercompany notes		(3	)		0			(3	)		3			-			(3	)		-			(3	)
Other Monetary Revaluations		(4	)		0			2			(4	)		(14	)		(4	)		(13	)		2
	$	0		$	(25	)	$	(15	)	$	51		$	19		$	-		$	21		$	(15	)

Following the completion of the corporate reorganization and U.S. domestication in 2020, 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.

6.	Income Taxes

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Current Tax
United States	$	0		$	4		$	-		$	3		$	-		$	-		$	10		$	-
Canada		0			(1	)		(156	)		(1	)		-			-			-			(156	)
Total Current Tax Expense (Recovery)		0			3			(156	)		2			-			-			10			(156	)

Deferred Tax
United States		1			(41	)		1			(180	)		44			1			44			1
Canada		0			-			(20	)		573			44			-			94			(20	)
Other Countries		0			(1	)		0			-
Total Deferred Tax Expense (Recovery)		1			(42	)		(19	)		393			88			1			138			(19	)
Income Tax Expense (Recovery)	$	1		$	(39	)	$	(175	)	$	395		$	88		$	1		$	148		$	(175	)
Effective Tax Rate		(1.4	%)		2.5	%		122.4	%		(7.8	%)		6.9	%		(1.4	%)		6.0	%		122.4	%

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

During the nine months ended September 30, 2021, the current income tax recovery was primarily due to the resolution of prior ~~year~~years’ tax items. The resolution, along with other items, resulted in a $222 million reduction of unrecognized tax benefits, offset by a $66 million reduction in valuation allowance. The Company also recognized related interest income of $12 million in other (gains) losses, net.

During the three and nine months ended September 30, 2022, the deferred tax expense was due to the lower annual effective income tax rate applied to jurisdictional earnings. During the nine months ended September 30, 2021, the deferred tax recovery was primarily due to the change in valuation allowances ~~recorded relating to the current year net loss before tax~~ and from the resolution of prior ~~year~~years’ tax items. ~~During~~

The effective tax rate of 6.0 percent for the nine months ended September 30, ~~2020,~~2022 is lower than the ~~deferred~~U.S. federal statutory tax ~~expense was~~rate of 21 percent primarily due to the ~~recognition of~~lower annual effective income tax rate resulting from a reduction in valuation ~~allowance to reduce the associated deferred tax assets in the United States and Canada.~~

allowances. The effective tax rate of 122.4 percent for the nine months ended September 30, 2021 iswas higher than the U.S. federal statutory tax rate of 21 percent primarily due to the resolution of ~~certain~~prior years’ tax items ~~relating to prior taxation years~~ and the ~~change~~changes in valuation allowances.

~~valuation allowances recorded relating to the current year net loss before tax. The effective tax rate of~~ ~~(7.8)~~ percent for the nine months ended September 30, 2020 was lower than the U.S. federal statutory tax rate of 21 percent primarily due to valuation allowances recorded due to net 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 8 for further discussion related to the ceiling test impairments.

7.	Acquisitions and Divestitures

	Three Months Ended					Nine Months Ended						Three Months Ended					Nine Months Ended
	September 30,					September 30,						September 30,					September 30,
	2021		2020			2021			2020			2022			2021		2022			2021

Acquisitions
USA Operations	$	0	$	1		$	3		$	19		$	12		$	-	$	34		$	3
Total Acquisitions		0		1			3			19			12			-		34			3

Divestitures
USA Operations		7		(36	)		(767	)		(63	)		(226	)		7		(229	)		(767	)
Canadian Operations		1		(3	)		(250	)		(6	)		1			1		(1	)		(250	)
Total Divestitures		8		(39	)		(1,017	)		(69	)		(225	)		8		(230	)		(1,017	)
Net Acquisitions & (Divestitures)	$	8	$	(38	)	$	(1,014	)	$	(50	)	$	(213	)	$	8	$	(196	)	$	(1,014	)

Acquisitions

For the three and nine months ended September 30, ~~2020,~~2022, acquisitions in the USA Operations were ~~$19~~$12 million and $34 million, respectively, which primarily included property purchases with oil and liquids rich potential.

Divestitures

For the three and nine months ended September 30, 2022, divestitures in the USA Operations were $226 million and $229 million, respectively, which primarily included the sale of portions of the Uinta assets located in northeastern Utah and Bakken assets located in northeastern Montana for combined proceeds of approximately $215 million, after closing and other adjustments. For the nine months ended September 30, 2021, divestitures in the USA Operations were $767 million, which primarily included the sale of the Eagle Ford assets located in south Texas for proceeds of approximately $762 million, after closing and other adjustments. For the nine months ended September 30, 2020, divestitures in the USA Operations were $63 million, which primarily included the sale of certain properties that did not complement Ovintiv’s existing portfolio of assets.

Texas.

For the nine months ended September 30, 2021, divestitures in the Canadian Operations were $250 million, which primarily included the sale of the Duvernay assets located in west central ~~Alberta for proceeds of approximately $238 million, after closing and other adjustments.~~Alberta.

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

As part of the Duvernay asset divestiture, the Company agreed to a contingent consideration arrangement, ~~which is~~ payable to Ovintiv, in the amount of C$5 million at the end of 2021 and an additional C$10 million at the end of 2022, if the annual average of the WTI reference price for each calendar year is greater than $56 per barrel and $62 per barrel, respectively. The ~~contingent consideration was determined to be an embedded derivative and accordingly, the Company recorded~~terms of the contingent consideration ~~at its fair value~~for the 2021 calendar year were met and the consideration was settled in the first quarter of ~~$6 million on the closing date. Subsequent changes in the~~2022. The fair value of the contingent consideration ~~are recognized as a gain or loss and presented in gains (losses) on risk management, net in~~pertaining to the ~~Condensed Consolidated Statement of Earnings. The fair value~~2022 calendar year is presented in accounts receivable and accrued revenues ~~and other assets~~ in the Condensed Consolidated Balance Sheet. See Notes 1817 and 1918 for further information on the contingent consideration.

8.	Property, Plant and Equipment, Net

	As at September 30, 2021								As at December 31, 2020							As at September 30, 2022							As at December 31, 2021
				Accumulated							Accumulated							Accumulated							Accumulated
	Cost			DD&A			Net		Cost		DD&A			Net		Cost		DD&A			Net		Cost		DD&A			Net

USA Operations
Proved properties	$	38,530	��	$	(33,217	)	$	5,313	$	37,875	$	(32,581	)	$	5,294	$	40,756	$	(34,061	)	$	6,695	$	39,145	$	(33,418	)	$	5,727
Unproved properties		2,153			0			2,153		2,785		0			2,785		1,192		-			1,192		1,884		-			1,884
Other		13			0			13		24		0			24		28		-			28		12		-			12
		40,696			(33,217	)		7,479		40,684		(32,581	)		8,103		41,976		(34,061	)		7,915		41,041		(33,418	)		7,623

Canadian Operations
Proved properties		16,154			(15,307	)		847		16,008		(15,056	)		952		15,367		(14,454	)		913		16,330		(15,450	)		880
Unproved properties		64			0			64		177		0			177		47		-			47		60		-			60
Other		9			0			9		13		0			13		15		-			15		11		-			11
		16,227			(15,307	)		920		16,198		(15,056	)		1,142		15,429		(14,454	)		975		16,401		(15,450	)		951

Market Optimization		7			(7	)		0		9		(7	)		2		7		(7	)		-		7		(7	)		-
Corporate & Other		868			(677	)		191		865		(662	)		203		821		(658	)		163		873		(686	)		187
	$	57,798		$	(49,208	)	$	8,590	$	57,756	$	(48,306	)	$	9,450	$	58,233	$	(49,180	)	$	9,053	$	58,322	$	(49,561	)	$	8,761

USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration, development and construction activities of ~~$124~~$135 million, which have been capitalized during the nine months ended September 30, ~~2021 (2020~~2022 (2021 - ~~$133~~$124 million).

For the three and nine months ended September 30, 2021, Ovintiv did 0t recognize ceiling test impairments in the USA Operations (2020 - $1,336 million and $4,863 million before tax, respectively) or Canadian Operations (2020 - nil, respectively). The non-cash ceiling test impairments recognized in the USA Operations in 2020 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

WTI

Edmonton
Condensate

Henry Hub

AECO

($/bbl)

(C$/bbl)

($/MMBtu)

(C$/MMBtu)

12-Month Average Trailing Reserves Pricing ⁽¹⁾

September 30, 2021

$
57.69

$
72.45

$
2.94

$
2.79

December 31, 2020

39.62

49.77

1.98

2.13

September 30, 2020

43.69

53.93

1.97

2.01

~~(1)~~

~~All prices were held constant in all future years when estimating net revenues and reserves.~~

Leases

The following table outlines Ovintiv’s estimated future sublease income as at September 30, ~~2021.~~2022. All subleases are classified as operating leases.

(undiscounted)	2021		2022		2023		2024		2025		Thereafter		Total		2022		2023		2024		2025		2026		Thereafter		Total

Sublease Income	$	13	$	48	$	46	$	46	$	46	$	521	$	720	$	11	$	48	$	49	$	50	$	50	$	455	$	663

For the three and nine months ended September 30, ~~2021,~~2022, operating lease income was $12 million and $37 million, respectively (2021 - $15 million and $42 ~~million, respectively (2020 - $14 million and $40~~ million, respectively), and variable lease income was $4$5 million and ~~$13~~$15 million, respectively ~~(2020~~(2021 - $4 million and $13 million, respectively).

10.	Long-Term Debt

	As at			As at			As at			As at
	September 30,			December 31,			September 30,			December 31,
	2021			2020			2022			2021

U.S. Dollar Denominated Debt
Revolving credit and term loan borrowings	$	0		$	950		$	440		$	-
U.S. Unsecured Notes:
3.90% due November 15, 2021		0			518
5.75% due January 30, 2022		0			600
5.625% due July 1, 2024		1,000			1,000			-			1,000
5.375% due January 1, 2026		688			688			459			688
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			599			750
6.625% due August 15, 2037		462			462			390			462
6.50% due February 1, 2038		488			488			430			488
5.15% due November 15, 2041		203			203			148			203
Total Principal		4,741			6,809			3,616			4,741

Increase in Value of Debt Acquired		82			111			29			77
Unamortized Debt Discounts and Issuance Costs		(32	)		(35	)		(27	)		(32	)
Total Long-Term Debt	$	4,791		$	6,885		$	3,618		$	4,786

Current Portion	$	0		$	518		$	440		$	-
Long-Term Portion		4,791			6,367			3,178			4,786
	$	4,791		$	6,885		$	3,618		$	4,786

During the nine months ended September 30, 2022, the Company repurchased approximately $565 million in principal amount of its senior notes in the open market, which included approximately $229 million in principal amount of its 5.375 percent senior notes due in January 2026, approximately $151 million in principal amount of its 6.5 percent senior notes due in August 2034, approximately $72 million in principal amount of its 6.625 percent senior notes due in August 2037, approximately $58 million in principal amount of its 6.5 percent senior notes due in February 2038 and approximately $55 million in principal amount of its 5.15 percent senior notes due in November 2041. To complete these open market repurchases, the Company paid premiums of $22 million, which are included in interest expense as discussed in Note 4.

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

On June 18, 2021, the Company ~~completed the redemption of~~redeemed its $600 million, 5.75 percent senior notes due January 30, ~~2022.~~2022, using a portion of the net proceeds from its Eagle Ford and Duvernay asset sales, as discussed in Note 7. Ovintiv paid approximately $632 million in cash including accrued and unpaid interest of $13 million and a one-time make-whole payment of $19 million, which iswas included in interest expense as discussed in Note 4.

On August 16, 2021, the Company completed the redemption of its $518 million, 3.90 percent senior notes due November 15, 2021. The Company redeemed the notes at par and paid approximately $523 million in cash including accrued and unpaid interest of $5 million.

~~The Company used the net proceeds from its Eagle Ford and Duvernay asset sales, as discussed in Note 7, and cash on hand to complete the senior note redemptions.~~

~~During the three and nine months ended~~As at September 30, ~~2020,~~2022, the Company ~~repurchased in the open market approximately $115~~had outstanding commercial paper of $440 million ~~and $252 million, respectively, in principal amount of its senior notes. The aggregate cash payments related to the note repurchases were $109 million and $224 million, respectively, plus accrued~~maturing at various dates with a weighted average interest ~~and net gains~~rate of approximately ~~$6 million and $28 million, respectively, were recognized in other (gains) losses, net in the Condensed Consolidated Statement of Earnings.~~4.08 percent.

As at September 30, ~~2021,~~2022, total long-term debt had a carrying value of ~~$4,791~~$3,618 million and a fair value of ~~$5,989~~$3,588 million (as at December 31, ~~2020~~2021 - carrying value of ~~$6,885~~$4,786 million and a fair value of ~~$7,379~~$5,804 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.

11.	Other Liabilities and Provisions

	As at		As at		As at		As at
	September 30,		December 31,		September 30,		December 31,
	2021		2020		2022		2021

Finance Lease Obligations	$	35	$	39	$	28	$	33
Unrecognized Tax Benefits (See Note 6)		0		158
Pensions and Other Post-Employment Benefits		129		129		98		104
Long-Term Incentive Costs (See Note 16)		31		9
Other Derivative Contracts (See Notes 18, 19)		5		7
Long-Term Incentive Costs (See Note 15)						10		36
Other Derivative Contracts (See Notes 17, 18)						5		5
Other		15		16		12		12
	$	215	$	358	$	153	$	190

12.	Share Capital

Authorized

Ovintiv is authorized to issue 750 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.

Issued and Outstanding

	As at September 30, 2021				As at December 31, 2020					As at September 30, 2022					As at December 31, 2021
	Number (millions)		Amount		Number (millions)		Amount			Number (millions)			Amount		Number (millions)			Amount

Shares of Common Stock Outstanding, Beginning of Year		259.8	$	3		259.8	$	7,061			258.0		$	3		259.8		$	3
Shares of Common Stock Issued (See Note 16)		1.3		0		0		0
Reclassification of Share Capital		-		0		-		(7,058	)
Shares of Common Stock Purchased											(11.2	)		-		(3.1	)		-
Shares of Common Stock Issued											2.4			-		1.3			-
Shares of Common Stock Outstanding, End of Period		261.1	$	3		259.8	$	3			249.2		$	3		258.0		$	3

~~In conjunction with~~Ovintiv’s Performance Share Units (“PSU”) and Restricted Share Units (“RSU”) stock-based compensation plans allow the ~~corporate reorganization~~Company to settle the awards either in cash or in the Company’s common stock. Accordingly, Ovintiv issued 2.4 million shares of common stock during the nine months ended September 30, 2022 (1.3 million shares of common stock during the twelve months ended December 31, 2021) as certain PSU and ~~U.S. domestication completed in 2020,~~RSU grants vested during 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.~~period.

Normal Course Issuer Bid

On September 28, ~~2021,~~2022, the Company announced it had received regulatory approval for the renewal of its NCIB program, that enables the Company to purchase, for cancellation or return to treasury, up to approximately ~~26.0~~24.8 million shares of common stock ~~pursuant to a NCIB~~ over a 12-month period from October ~~1, 2021~~3, 2022 to ~~September 30, 2022.~~

~~Dividends~~October 2, 2023.

During the three months ended September 30, 2022, under the previous NCIB program which extended from October 1, 2021 to September 30, 2022, the Company ~~declared~~purchased, for cancellation, approximately 6.7 million shares for total consideration of approximately $325 million. Of the amount paid, $77 thousand was charged to share capital and $325 million was charged to paid ~~dividends of $0.14 per share of Ovintiv common stock totaling $37 million (2020 - $0.09375 per share of Ovintiv common stock totaling $24 million).~~in surplus.

During the nine months ended September 30, ~~2021,~~2022, under the previous NCIB program, the Company ~~declared~~purchased, for cancellation, approximately 11.2 million shares for total consideration of approximately $531 million. Of the amount paid, $112 thousand was charged to share capital and $531 million was charged to paid ~~dividends~~in surplus.

All purchases were made in accordance with the previous NCIB program at prevailing market prices plus brokerage fees, with consideration allocated to share capital up to the par value of ~~$0.3275 per share of Ovintiv common stock totaling $86 million (2020 - $0.28125 per share of Ovintiv common stock totaling $73 million).~~

~~On November 2, 2021,~~ the ~~Board of Directors declared a dividend of $0.14 per share of Ovintiv common stock payable on December 31, 2021~~shares, with any excess allocated to ~~stockholders of record as of December 15, 2021.~~

paid in surplus.

Dividends

During the three months ended September 30, 2022, the Company declared and paid dividends of $0.25 per share of common stock totaling $62 million (2021 - $0.14 per share of common stock totaling $37 million).

During the nine months ended September 30, 2022, the Company declared and paid dividends of $0.70 per share of common stock totaling $178 million (2021 - $0.3275 per share of common stock totaling $86 million).

On November 8, 2022, the Board of Directors declared a dividend of $0.25 per share of common stock payable on December 30, 2022 to shareholders of record as of December 15, 2022.

Earnings Per Share of Common Stock

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

	Three Months Ended						Nine Months Ended					Three Months Ended					Nine Months Ended
	September 30,						September 30,					September 30,					September 30,
(US$ millions, except per share amounts)	2021			2020			2021		2020			2022		2021			2022		2021

Net Earnings (Loss)	$	(72	)	$	(1,521	)	$	32	$	(5,483	)	$	1,186	$	(72	)	$	2,302	$	32

Number of Shares of Common Stock:
Weighted average shares of common stock outstanding - Basic		261.1			259.8			260.7		259.8			252.5		261.1			255.7		260.7
Effect of dilutive securities ^{(1) (2)}		0			0			4.6		0
Effect of dilutive securities ⁽¹⁾													3.7		-			4.7		4.6
Weighted Average Shares of Common Stock Outstanding - Diluted		261.1			259.8			265.3		259.8			256.2		261.1			260.4		265.3

Net Earnings (Loss) per Share of Common Stock
Basic	$	(0.28	)	$	(5.85	)	$	0.12	$	(21.10	)	$	4.70	$	(0.28	)	$	9.00	$	0.12
Diluted ^{(1) (2)}		(0.28	)		(5.85	)		0.12		(21.10	)
Diluted ⁽¹⁾													4.63		(0.28	)		8.84		0.12

(1)

During the fourth quarter of 2020, Ovintiv’s Board of Directors resolved to settle certain Performance Share Units (“PSUs”) and Restricted Share Units (“RSUs”) with the issuance of the Company’s common stock. As a result, the stock-based compensation awards were modified and reclassified as equity-settled awards.

~~(2)~~

For the three months ended September 30, 2021, all of Ovintiv’s equity-settled awards were determined to be antidilutive and therefore are excluded from the calculation of fully diluted net earnings (loss) per share of common stock.

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

Stock-Based Compensation Plans

~~Ovintiv’s PSU and RSU~~Shares issued as a result of awards granted from stock-based compensation plans ~~allow~~are generally funded out of the ~~Company to settle the awards either in cash or in~~common stock authorized for issuance as approved by the Company’s ~~common stock.~~ shareholders.

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

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

13.	Accumulated Other Comprehensive Income

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Foreign Currency Translation Adjustment
Balance, Beginning of Period	$	1,086		$	957		$	1,042		$	1,004		$	1,013		$	1,086		$	1,044		$	1,042
Change in Foreign Currency Translation Adjustment		(48	)		26			(4	)		(21	)		(94	)		(48	)		(125	)		(4	)
Balance, End of Period	$	1,038		$	983		$	1,038		$	983		$	919		$	1,038		$	919		$	1,038

Pension and Other Post-Employment Benefit Plans
Balance, Beginning of Period	$	31		$	43		$	34		$	42		$	45		$	31		$	48		$	34

Amounts Reclassified from Other Comprehensive Income:
Reclassification of net actuarial (gains) and losses to net earnings (See Note 17)		(1	)		(2	)		(5	)		(6	)
Income taxes		0			0			1			1
Curtailment in net defined periodic benefit cost (See Note 17)		0			0			0			5
Reclassification of net actuarial (gains) and losses to net earnings (See Note 16)														(1	)		(1	)		(5	)		(5	)
Income taxes		0			0			0			(1	)		-			-			1			1
Balance, End of Period	$	30		$	41		$	30		$	41		$	44		$	30		$	44		$	30
Total Accumulated Other Comprehensive Income	$	1,068		$	1,024		$	1,068		$	1,024		$	963		$	1,068		$	963		$	1,068

14.	Variable Interest Entities

Veresen Midstream Limited Partnership

Veresen Midstream Limited Partnership (“VMLP”) provides gathering, compression and processing services under various agreements related to the Company’s development of liquids and natural gas production in the Montney play. As at September 30, ~~2021,~~2022, VMLP provides approximately ~~1,167~~1,160 MMcf/d of natural gas gathering and compression and ~~925~~923 MMcf/d of natural gas processing under long-term service agreements with remaining terms ranging from 10nine to 2423 years and have various renewal terms providing up to a potential maximum of 10 years.

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

As a result of Ovintiv’s involvement with VMLP, the maximum total exposure to loss related to the commitments under the agreements is estimated to be ~~$1,782~~$1,468 million as at September 30, ~~2021.~~2022. 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 2120 under Transportation and Processing. The potential payout requirement is highly uncertain as the amount is contingent on future production estimates, pace of development and the amount of capacity contracted to third parties. As at September 30, ~~2021,~~2022, accounts payable and accrued liabilities included $0.5 million related to the take or pay commitment.

15.	~~Restructuring Charges~~

In June 2020, Ovintiv undertook a plan to reduce its workforce by approximately 25 percent as part of a company-wide reorganization in response to the low commodity price environment resulting from the global pandemic and the Company’s planned reductions in capital spending. During the three and nine months ended September 30, 2021, the Company incurred restructuring charges of $2 million and $13 million, respectively (2020 - $7 million and $88 million, respectively), before tax, primarily related to severance costs. Of the $103 million in restructuring charges incurred to date, $3 million remains accrued as at September 30, 2021 ($14 million as at December 31, 2020). The majority of the remaining amounts accrued are expected to be paid in 2021 and total transition and severance costs are expected to be approximately $104 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

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Severance and Benefits

$
2

$
6

$
13

$
86

Outplacement, Moving and Other Expenses

0

1

0

2

Restructuring Expenses

$
2

$
7

$
13

$
88

As at

As at

September 30,

December 31,

2021

2020

Outstanding Restructuring Accrual, Beginning of Year

$
14

$
8

Restructuring Expenses Incurred

13

90

Restructuring Costs Paid

(24
)

(84
)
Outstanding Restructuring Accrual, End of Period ⁽¹⁾

$
3

$
14

~~(1)~~

~~Included in accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheet.~~

~~16.~~

Compensation Plans

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

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

During the ~~fourth~~second quarter of ~~2020,~~2022, Ovintiv’s ~~Board~~shareholders approved an increase to the number of ~~Directors resolved to settle certain PSU awards and RSU awards with the~~shares of common stock held in reserve for issuance ofunder the Company’s ~~common stock. Historically, the Company settled PSU and RSU awards in cash. As a result, the respective~~stock-based compensation plans. Accordingly, certain awards were modified and reclassified as equity-settled share-based payment transactions at the modification date. The ~~modified awards accrue compensation expense using the~~ modification date fair value of the awards ~~over~~was US$56.72 per share and C$72.17 per share for the ~~remaining vesting period. Common stock used to settle~~U.S. dollar denominated and Canadian dollar denominated awards, respectively. The modification impacted all employees and there was no incremental compensation cost recognized at the ~~PSU and RSU awards will be issued from Ovintiv’s common stock authorized and held in reserve for issuance under the Company’s stock-based compensation plans.~~

modification date.

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

As at September 30, 2021

As at September 30, 2020

As at September 30, 2022

As at September 30, 2021

US$ SAR

Share Units

C$ TSAR

Share Units

US$ SAR

Share Units

C$ TSAR

Share Units

US$ SAR

Share Units

C$ TSAR

Share Units

US$ SAR

Share Units

C$ TSAR

Share Units

Risk Free Interest Rate

0.49%

0.22%

3.72%

0.49%

Dividend Yield

1.70%

1.68%

4.60%

4.66%

2.17%

2.02%

1.70%

1.68%

Expected Volatility Rate ⁽¹⁾

106.19%

105.03%

102.43%

101.65%

107.63%

105.92%

106.19%

105.03%

Expected Term

1.5 yrs

2.5 yrs

2.0 yrs

1.6 yrs

1.5 yrs

Market Share Price

US$32.88

C$41.62

US$8.16

C$10.89

US$46.00

C$63.58

US$32.88

C$41.62

Weighted Average Grant Date Fair Value

US$37.63

C$50.46

US$38.11

C$48.28

US$41.97

C$57.31

US$37.63

C$50.46

(1)	Volatility was estimated using historical rates.

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Total Compensation Costs of Transactions Classified as Cash-Settled	$	33		$	4		$	115		$	(12	)	$	28		$	33		$	118		$	115
Total Compensation Costs of Transactions Classified as Equity-Settled		7			0			25			0			26			7			57			25
Less: Total Share-Based Compensation Costs Capitalized		(7	)		(2	)		(23	)		3			(8	)		(7	)		(24	)		(23	)
Total Share-Based Compensation Expense (Recovery)	$	33		$	2		$	117		$	(9	)	$	46		$	33		$	151		$	117

Recognized in the Condensed Consolidated Statement of Earnings in:
Operating	$	8		$	1		$	26		$	(3	)	$	9		$	8		$	28		$	26
Administrative		25			1			91			(6	)		37			25			123			91
	$	33		$	2		$	117		$	(9	)	$	46		$	33		$	151		$	117

As at September 30, ~~2021,~~2022, the liability for cash-settled share-based payment transactions totaled ~~$109~~$125 million ($34114 million as at December 31, ~~2020)~~2021), of which ~~$78~~$115 million ($2578 million as at December 31, ~~2020)~~2021) is recognized in accounts payable and accrued liabilities and ~~$31~~$10 million ($936 million as at December 31, ~~2020)~~2021) is recognized in other liabilities and provisions in the Condensed Consolidated Balance Sheet.

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.

Nine Months Ended September 30, ~~2021~~2022 (thousands of units)

RSUs			~~2,748~~1,463
PSUs			~~934~~502
DSUs			149

~~17.~~16.

Pension and Other Post-Employment Benefits

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

	Pension Benefits				OPEB					Total					Pension Benefits				OPEB						Total
	2021		2020		2021			2020		2021			2020		2022		2021		2022			2021			2022			2021

Net Defined Periodic Benefit Cost	$	0	$	0	$	(2	)	$	2	$	(2	)	$	2	$	-	$	-	$	(2	)	$	(2	)	$	(2	)	$	(2	)
Defined Contribution Plan Expense		19		24		0			0		19			24		17		19		-			-			17			19
Total Benefit Plans Expense	$	19	$	24	$	(2	)	$	2	$	17		$	26	$	17	$	19	$	(2	)	$	(2	)	$	15		$	17

Of the total benefit plans expense, ~~$18~~$15 million ~~(2020~~(2021 - ~~$22~~$18 million) was included in operating expense and $4 million ~~(2020~~(2021 - $5$4 million) was included in administrative expense. Excluding service costs, net defined periodic benefit gains of $5$4 million ~~(2020~~(2021 - $1gains of $5 million) were recorded in other (gains) losses, net.

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

	Defined Benefits						OPEB						Total						Defined Benefits						OPEB						Total
	2021			2020			2021			2020			2021			2020			2022			2021			2022			2021			2022			2021

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

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

2726

~~18.~~17.

Fair Value Measurements

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

Recurring fair value measurements are performed for risk management assets and liabilities and other derivative contracts, as discussed further in Note ~~19.~~18. 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 September 30, 2021	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, 2022															Level 1 Quoted Prices in Active Markets		Level 2 Other Observable Inputs		Level 3 Significant Unobservable Inputs		Total Fair Value		Netting ⁽¹⁾			Carrying Amount

Risk Management Assets
Commodity Derivatives:
Current assets	$	0	$	41	$	0	$	41	$	(41	)	$	0		$	1	$	136	$	23	$	160	$	(159	)	$	1
Long-term assets		0		2		0		2		(2	)		0			-		46		-		46		(3	)		43
Foreign Currency Derivatives:
Current assets		0		7		0		7		(6	)		1

Risk Management Liabilities
Commodity Derivatives:
Current liabilities	$	4	$	1,163	$	298	$	1,465	$	(41	)	$	1,424		$	-	$	645	$	73	$	718	$	(159	)	$	559
Long-term liabilities		0		211		37		248		(2	)		246			-		9		-		9		(3	)		6
Foreign Currency Derivatives:
Current liabilities		0		0		0		0		(6	)		(6	)		-		18		-		18		-			18
Long-term liabilities																-		2		-		2		-			2

Other Derivative Contracts ⁽²⁾
Current in accounts receivable and accrued revenues	$	0	$	0	$	4	$	4	$	-		$	4		$	-	$	-	$	7	$	7	$	-		$	7
Long-term in other assets		0		0		5		5		-			5
Current in accounts payable and accrued liabilities		0		1		0		1		-			1			-		1		-		1		-			1
Long-term in other liabilities and provisions		0		5		0		5		-			5			-		5		-		5		-			5

As at December 31, 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 December 31, 2021														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	$	0	$	70	$	0	$	70	$	(59	)	$	11	$	-	$	10	$	-	$	10	$	(10	)	$	-
Long-term assets		0		7		0		7		(3	)		4		-		1		-		1		(1	)		-
Foreign Currency Derivatives:
Current assets		0		26		0		26		0			26		-		5		-		5		(4	)		1

Risk Management Liabilities
Commodity Derivatives:
Current liabilities	$	1	$	114	$	74	$	189	$	(59	)	$	130	$	-	$	536	$	181	$	717	$	(10	)	$	707
Long-term liabilities		0		128		0		128		(3	)		125		-		26		-		26		(1	)		25
Foreign Currency Derivatives:
Current liabilities															-		-		-		-		(4	)		(4	)

Other Derivative Contracts ⁽²⁾
Current in accounts receivable and accrued revenues														$	-	$	-	$	9	$	9	$	-		$	9
Current in accounts payable and accrued liabilities	$	0	$	1	$	0	$	1	$	-		$	1		-		1		-		1		-			1
Long-term in other liabilities and provisions		0		7		0		7		-			7		-		5		-		5		-			5

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

(2)	Includes credit derivatives and contingent consideration associated with certain ~~previous and current year divestitures, respectively.~~prior years’ divestitures.

2827

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 ~~19.~~18. The fair values of these contracts are estimated using inputs which are either directly or indirectly observable from active markets, such as exchange and other published prices, broker quotes and observable trading activity throughout the term of the instruments.

Level 3 Fair Value Measurements

As at September 30, ~~2021,~~2022, the Company’s Level 3 risk management assets and liabilities consist of WTI three-way options ~~WTI costless collars~~ and a contingent consideration derivative ~~contracts~~contract tied to WTI with terms to ~~2022.~~2023. The WTI three-way options are a combination of a sold call, a bought put and a sold ~~put. The WTI costless collars are a combination of a sold call and a bought~~ put. These contracts allow the Company to participate in the upside of commodity prices to the ceiling of the call option and provide the Company with ~~complete (collars) or~~ partial ~~(three-way)~~ downside price protection through the put options. The fair values of these contracts are determined using an option pricing model using observable and unobservable inputs such as implied volatility. The unobservable inputs are obtained from third parties whenever possible and reviewed by the Company for reasonableness.

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

	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2022			2021

Balance, Beginning of Year	$	(74	)	$	(52	)	$	(172	)	$	(74	)
Total Gains (Losses)		(637	)		214			(435	)		(637	)
Purchases, Sales, Issuances and Settlements:
Purchases, sales and issuances ⁽¹⁾		6			0			-			6
Settlements		379			(83	)		564			379
Transfers Out of Level 3		0			0			-			-
Balance, End of Period	$	(326	)	$	79		$	(43	)	$	(326	)
Change in Unrealized Gains (Losses) During the Period Included in Net Earnings (Loss)	$	(258	)	$	131		$	129		$	(258	)

(1)	~~Relates to~~Purchases, sales and issuances for the nine months ended September 30, 2021, reflects the fair value of the contingent consideration ~~associated with~~arrangement at the closing date of the Duvernay asset divestiture discussed in Note 7.

Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at September 30, ~~2021:~~2022:

	Valuation Technique	Unobservable Input	Range	Weighted Average ⁽¹⁾

Risk Management - WTI Options	Option Model	Implied Volatility	~~34%~~14% - ~~138%~~65%	~~48%~~41%

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

A 10 percent increase or decrease in implied volatility for the WTI options would cause an approximate corresponding ~~$17~~$4 million ($615 million as at December 31, ~~2020)~~2021) increase or decrease to net risk management assets and liabilities.

2928

~~19.~~18.

Financial Instruments and Risk Management

A) Financial Instruments

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

B) Risk Management Activities

Ovintiv uses derivative financial instruments to manage its exposure to ~~cash flow variability from~~fluctuating 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 (loss).

Commodity Price Risk

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

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

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

Foreign Exchange Risk

Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future cash flows offrom 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 September 30, ~~2021,~~2022, the Company has entered into ~~$88 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3720 to US$1, which mature monthly through the remainder of 2021 and~~ $100 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$~~1.2820~~1.2848 to US$1, which mature monthly through the remainder of 2022, and $350 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3083 to US$1, which mature monthly throughout ~~2022.~~2023.

3029

Risk Management Positions as at September 30, ~~2021~~2022

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

Crude Oil and NGL Contracts			US$/bbl
Oil and NGL Contracts										US$/bbl
Fixed Price Contracts
WTI Fixed Price	30.0 Mbbls/d	2021		46.37	$	(77	)	5.0 Mbbls/d	2022	60.16	$	(8	)
WTI Fixed Price	5.0 Mbbls/d	2022		60.16		(18	)
Ethane Fixed Price	8.0 Mbbls/d	2021		11.05		(5	)
Propane Fixed Price	12.0 Mbbls/d	2021		25.78		(38	)
Butane Fixed Price	5.0 Mbbls/d	2021		24.83		(19	)

WTI Three-Way Options
Sold call / bought put / sold put	85.0 Mbbls/d	2021	53.92 / 44.66 / 34.79			(136	)	75.0 Mbbls/d	2022	70.79 / 60.82 / 49.33		(73	)
Sold call / bought put / sold put	75.0 Mbbls/d	2022	70.79 / 60.82 / 49.33			(164	)	27.1 Mbbls/d	2023	116.43 / 65.46 / 50.00		23

WTI Costless Collars
Sold call / bought put	15.0 Mbbls/d	2021	45.84 / 35.00			(35	)

Basis Contracts ⁽¹⁾		2021				(4	)		2022			1
		2022				(1	)

Other Crude Financial Positions						0
Crude Oil and NGLs Fair Value Position						(497	)
Oil and NGLs Fair Value Position												(57	)

Natural Gas Contracts			US$/Mcf							US$/Mcf
Fixed Price Contracts
NYMEX Fixed Price	165 MMcf/d	2021		2.51		(52	)	365 MMcf/d	2022	2.60		(143	)
NYMEX Fixed Price	200 MMcf/d	2022		2.67		(125	)

NYMEX Fixed Price Swaptions⁽²⁾	165 MMcf/d	2022		2.51		(113	)

NYMEX Three-Way Options
Sold call / bought put / sold put	980 MMcf/d	2021	3.36 / 2.89 / 2.50			(230	)	410 MMcf/d	2022	3.01 / 2.75 / 2.00		(146	)
Sold call / bought put / sold put	398 MMcf/d	2022	3.02 / 2.75 / 2.00			(205	)	322 MMcf/d	2023	8.02 / 3.60 / 2.54		(58	)

NYMEX Costless Collars
Sold call / bought put	200 MMcf/d	2022	2.85 / 2.55			(116	)	200 MMcf/d	2022	2.85 / 2.55		(74	)

NYMEX Call Options
Sold call	330 MMcf/d	2022		2.38		(244	)	330 MMcf/d	2022	2.38		(136	)

Basis Contracts ⁽³⁾		2021				(9	)
Basis Contracts ⁽²⁾									2022			3
		2022				(29	)		2023			68
		2023 - 2025				(34	)		2024 - 2025			25

Other Financial Positions						(16	)					(3	)
Natural Gas Fair Value Position						(1,173	)					(464	)

Other Derivative Contracts
Fair Value Position ⁽⁴⁾						3
Fair Value Position ⁽³⁾												1

Foreign Currency Contracts
Fair Value Position ⁽⁵⁾		2021 - 2022				7
Fair Value Position ⁽⁴⁾									2022 - 2023			(20	)
Total Fair Value Position					$	(1,660	)				$	(540	)

(1)	Ovintiv has entered into ~~crude and NGL~~oil differential swaps associated with Canadian condensate and WTI.

(2)	~~NYMEX Fixed Price Swaptions give the counterparty the option to extend certain 2021 Fixed Price swaps to 2022.~~

~~(3)~~

Ovintiv has entered into natural gas basis swaps associated with AECO, Dawn, Malin, Waha, Houston Ship Channel and NYMEX.

~~(4)~~(3)

Includes credit derivatives and contingent consideration associated with certain ~~previous and current year divestitures, respectively.~~prior years’ divestitures.

~~(5)~~(4)

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

3130

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Realized Gains (Losses) on Risk Management
Commodity and Other Derivatives:
Revenues ⁽¹⁾	$	(371	)	$	89		$	(750	)	$	605		$	(821	)	$	(371	)	$	(2,075	)	$	(750	)
Foreign Currency Derivatives:
Foreign exchange		7			2			25			(7	)		(1	)		7			1			25
	$	(364	)	$	91		$	(725	)	$	598		$	(822	)	$	(364	)	$	(2,074	)	$	(725	)

Unrealized Gains (Losses) on Risk Management
Commodity and Other Derivatives:
Revenues ⁽²⁾	$	(579	)	$	(243	)	$	(1,426	)	$	(18	)	$	710		$	(579	)	$	211		$	(1,426	)
Foreign Currency Derivatives:
Foreign exchange		(11	)		15			(19	)		(1	)		(21	)		(11	)		(25	)		(19	)
	$	(590	)	$	(228	)	$	(1,445	)	$	(19	)	$	689		$	(590	)	$	186		$	(1,445	)

Total Realized and Unrealized Gains (Losses) on Risk Management, net
Commodity and Other Derivatives:
Revenues ^{(1) (2)}	$	(950	)	$	(154	)	$	(2,176	)	$	587		$	(111	)	$	(950	)	$	(1,864	)	$	(2,176	)
Foreign Currency Derivatives:
Foreign exchange		(4	)		17			6			(8	)		(22	)		(4	)		(24	)		6
	$	(954	)	$	(137	)	$	(2,170	)	$	579		$	(133	)	$	(954	)	$	(1,888	)	$	(2,170	)

(1)	Includes realized gains of nil and $1$2 million for the three and nine months ended September 30, ~~2021,~~2022, respectively ~~(2020~~(2021 - gains of nil and $2$1 million, respectively), related to other derivative contracts.

(2)	Includes unrealized gains of ~~$1 million and $4 million~~nil for the three and nine months ended September 30, ~~2021,~~2022, respectively ~~(2020~~(2021 - ~~losses~~gains of ~~nil~~$1 million and $4 million, respectively), related to other derivative contracts.

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

	2021						2020			2022						2021
	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	$	(222	)							$	(724	)
Change in Fair Value of Contracts in Place at Beginning of Year and Contracts Entered into During the Period		(2,170	)	$	(2,170	)	$	579			(1,888	)	$	(1,888	)	$	(2,170	)
Settlement of Other Derivative Contracts		1									(2	)
Fair Value of Other Derivative Contract Assets Entered into During the Period (See Note 7)		6
Fair Value of Contracts Realized During the Period		725			725			(598	)		2,074			2,074			725
Fair Value of Contracts, End of Period	$	(1,660	)	$	(1,445	)	$	(19	)	$	(540	)	$	186		$	(1,445	)

Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 1817 for a discussion of fair value measurements.

3231

Unrealized Risk Management Positions

	As at			As at			As at			As at
	September 30,			December 31,			September 30,			December 31,
	2021			2020			2022			2021

Risk Management Assets
Current	$	1		$	37		$	1		$	1
Long-term		0			4			43			-
		1			41			44			1

Risk Management Liabilities
Current		1,418			130			577			703
Long-term		246			125			8			25
		1,664			255			585			728

Other Derivative Contract Assets
Current in accounts receivable and accrued revenues		4			0			7			9
Long-term in other assets		5			0
		9			0			7			9

Other Derivative Contract Liabilities
Current in accounts payable and accrued liabilities		1			1			1			1
Long-term in other liabilities and provisions		5			7			5			5
		6			8			6			6
Net Risk Management Assets (Liabilities) and Other Derivative Contracts	$	(1,660	)	$	(222	)	$	(540	)	$	(724	)

C) Credit Risk

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~~exchanges and ~~the TSX,~~clearing agencies, over-the-counter traded contracts expose Ovintiv to counterparty credit risk. Counterparties to the Company’s derivative financial instruments consist primarily of major financial institutions and companies within the energy industry. This credit risk exposure is mitigated through the use of credit policies approved by the Board of Directors governing the Company’s credit portfolio including credit practices that limit transactions according to counterparties’ credit quality. Mitigation strategies may include master netting arrangements, requesting collateral, purchasing credit insurance and/or transacting credit derivatives. The Company executes commodity derivative financial instruments under master agreements that have netting provisions that provide for offsetting payables against receivables. Ovintiv actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. As at September 30, ~~2021,~~2022, Ovintiv’s maximum exposure of loss due to credit risk from derivative financial instrument assets on a gross and net fair value basis was ~~$59~~$213 million and ~~$10~~$51 million, respectively, as disclosed in Note ~~18.~~17. The Company had 0no significant credit derivatives in place and held 0no collateral at September 30, ~~2021.~~2022.

As at September 30, ~~2021,~~2022, cash equivalents include high-grade, short-term securities, placed primarily with financial institutions 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 September 30, ~~2021,~~2022, approximately 9188 percent ~~(89~~(90 percent as at December 31, ~~2020)~~2021) of Ovintiv’s accounts receivable and financial derivative credit exposures were with investment grade counterparties.

During 2015 and 2017, the Company entered into agreements resulting from divestitures, which may require Ovintiv to fulfill certain payment obligations on the take or pay volume commitments assumed by the purchasers. The circumstances that would require Ovintiv to perform under the agreements include events where a purchaser fails to make payment to the guaranteed party and/or a purchaser is subject to an insolvency event. The agreements ~~have remaining terms of less than three years~~expire in June 2024 with a fair value recognized of $6 million as at September 30, ~~2021~~2022 ($86 million as at December 31, ~~2020)~~2021). The maximum potential amount of undiscounted future payments is ~~$63~~$40 million as at September 30, ~~2021,~~2022, and is considered unlikely.

~~20.~~19.

Supplementary Information

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

A)	Net Change in Non-Cash Working Capital

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Operating Activities
Accounts receivable and accrued revenues	$	(25	)	$	78		$	(287	)	$	289		$	326		$	(25	)	$	(337	)	$	(287	)
Accounts payable and accrued liabilities		13			42			211			(212	)		(289	)		13			106			211
Current portion of operating lease liabilities		(9	)		(4	)		(5	)		(10	)		(4	)		(9	)		7			(5	)
Income tax receivable and payable		(2	)		26			23			39			(2	)		(2	)		42			23
	$	(23	)	$	142		$	(58	)	$	106		$	31		$	(23	)	$	(182	)	$	(58	)

B)	Non-Cash Activities

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Non-Cash Operating Activities
ROU operating lease assets and liabilities	$	(4	)	$	(5	)	$	(22	)	$	(6	)	$	(2	)	$	(4	)	$	(54	)	$	(22	)
Non-Cash Investing Activities
Asset retirement obligation incurred	$	0		$	2		$	0		$	11
Asset retirement obligation change in estimated future cash outflows		0			(10	)		0			12
Property, plant and equipment accruals		4			68			(33	)		(62	)	$	32		$	4		$	78		$	(33	)
Capitalized long-term incentives		5			2			12			(7	)		2			5			5			12
Property additions/dispositions (swaps)		18			212			24			229			7			18			43			24
Contingent consideration (See Note 7)		0			0			6			0			-			-			-			6

~~21.~~20.

Commitments and Contingencies

Commitments

The following table outlines the Company’s commitments as at September 30, ~~2021:~~2022:

	Expected Future Payments														Expected Future Payments
(undiscounted)	2021		2022		2023		2024		2025		Thereafter		Total		2022		2023		2024		2025		2026		Thereafter		Total

Transportation and Processing	$	181	$	745	$	689	$	493	$	429	$	2,334	$	4,871	$	191	$	780	$	632	$	492	$	479	$	2,576	$	5,150
Drilling and Field Services		32		44		24		24		24		0		148		97		72		12		4		-		-		185
Building Leases		3		10		6		6		6		2		33		2		9		9		8		2		-		30
Total	$	216	$	799	$	719	$	523	$	459	$	2,336	$	5,052	$	290	$	861	$	653	$	504	$	481	$	2,576	$	5,365

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 14. Divestiture transactions can reduce certain commitments disclosed above.

Contingencies

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.

3534

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 September 30, ~~2021~~2022 (“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, ~~2020,~~2021, which are included in Items 8 and 7, respectively, of the ~~2020~~2021 Annual Report on Form 10‑K.

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

•

Executive Overview

•

Results of Operations

•

Liquidity and Capital Resources

•

Non-GAAP Measures

Executive Overview

Strategy

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 shareholder value by delivering on its strategic priorities ~~and pursuing the key business objectives of preserving financial strength, maintaining~~through execution excellence, disciplined capital allocation, ~~and maximizing profitability through execution excellence,~~ commercial acumen and risk management, while driving environmental, social and governance progress. The Company’s strategy is founded on its multi-basin portfolio of top tier assets, financial strength, as well as its core and foundational values.

In support of the Company’s commitment to ~~growing~~unlocking shareholder value, Ovintiv ~~announced a~~utilizes its capital allocation framework ~~that outlines increasing~~to increase returns to shareholders ~~as well as continuing the Company’s progress~~while focusing on continued debt reduction.

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

In executing its strategy, Ovintiv focuses on its core values of One, Agile, Innovative and Driven, which guide the organization to be flexible, responsive and determined. The Company is committed to excellence with a passion to drive corporate financial performance and succeed as a team.

Ovintiv continually reviews and evaluates its strategy and changing market conditions in order to maximize cash flow generation from its ~~top tier assets~~Core Assets located in some of the best plays in North ~~America, referred to as the “Core Assets”.~~America. As at September 30, ~~2021,~~2022, 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.

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

For additional information on Ovintiv’s strategy, its reporting segments and the plays in which the Company operates, refer to Items 1 and 2 of the ~~2020~~2021 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, Net Debt 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.

3635

Highlights

During the first nine months of ~~2021,~~2022, the Company focused on executing its ~~2021~~2022 capital investment plan aimed at maximizing profitability through operational and capital efficiencies, minimizing the impact of inflation and delivering cash from operating ~~activities and using excess cash flows to reduce total long-term debt.~~activities. Higher upstream product revenues in the first nine months of ~~2021~~2022 compared to ~~2020~~2021 resulted from higher average realized prices, excluding the impact of risk management activities. Increases in average natural gas and realized liquids ~~and natural gas~~ prices of 9189 percent and 8850 percent, respectively, were primarily due to higher benchmark prices. Ovintiv continues to focus on optimizing realized prices from the diversification of the Company’s downstream markets.

The Company ~~continued to deliver~~delivered significant cash from operating activities ~~while reducing its total long-term debt balance. Cash from operating activities~~ of ~~$2,389~~$2,991 million which included a net realized loss of ~~$725~~$2,074 million on settlement of commodity and foreign exchange risk management positions and a current income tax recovery of $156 million primarily due to the resolution of certain tax items relating to prior taxation years. The Company used excess cash flows to reduce its total long-term debt balance by $2,094 million in the first nine months of 2021.positions.

Significant Developments

•

On April 28, 2021, the Company closed the sale of its previously announced Duvernay assets and received proceeds of approximately $238 million, after closing and other adjustments. The transaction had an effective date of January 1, 2021.

•

On May 19, 2021, the Company closed the sale of its previously announced Eagle Ford assets and received proceeds of approximately $762 million, after closing and other adjustments. The transaction had an effective date of January 1, 2021.

•

~~On May 19, 2021, the Company announced its intention to redeem the Company’s $600 million, 5.75 percent senior notes due January 30,~~9, 2022, and its $518 million, 3.90 percent senior notes due November 15, 2021. The senior notes were redeemed on June 18, 2021 and August 16, 2021, respectively. The combined debt redemptions are expected to result in annualized interest savings of over $50 million.

•

~~On July 27, 2021,~~ Ovintiv announced an increase of ~~about 50~~25 percent to its quarterly dividend payment representing an annualized dividend of ~~$0.56~~$1.00 per share of common stock as part of the Company’s commitment to returning capital to shareholders.

•

On ~~September~~May 9, ~~2021,~~2022, Ovintiv ~~announced~~issued a ~~new capital allocation framework~~notice to ~~support~~the trustee to redeem the Company’s ~~strategy~~$1.0 billion, 5.625 percent senior notes due July 1, 2024. The senior notes were redeemed on June 10, 2022 with cash on hand and other existing sources of ~~increasing~~liquidity. The debt redemption will result in annualized interest savings of approximately $55 million.

•

On July 6, 2022, Ovintiv elected to accelerate the increase in cash returns to shareholders as a result of the Company’s continued strong financial performance and the previously announced asset sales. During the third quarter of 2022, the Company increased its cash return to shareholders from 25 percent to 50 percent of Non-GAAP Cash Flow in excess of capital expenditures and base dividends. Ovintiv delivered the additional shareholder returns ~~as well as reducing Net Debt.~~through share buybacks under its NCIB program.

•

During the third quarter of 2022, the Company closed its previously announced divestitures for portions of its Uinta and Bakken assets, and received combined proceeds of approximately $215 million, after closing and other adjustments. Both transactions were effective April 1, 2022.

•

On September 28, ~~2021, Ovintiv~~2022, the Company announced it had received regulatory approval ~~to commence a~~for the renewal of its NCIB program, that enables the Company to purchase, for cancellation or return to treasury, up to approximately 2624.8 million shares of common stock over a 12-month period from October ~~1, 2021~~3, 2022 to ~~September 30, 2022.~~October 2, 2023. The number of shares authorized for purchase represents approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as at September ~~20, 2021.~~19, 2022. The Company ~~plans~~continues to ~~fund~~execute the NCIB ~~through~~program in conjunction with its ~~new~~ capital allocation framework.

•

On October 6, 2021, Ovintiv launched its sustainability website, which highlights the Company’s progress on ESG metrics and initiatives, and announced several sustainability milestones related to emission reductions, social responsibility, and corporate governance. The Company announced it expects to achieve a 33 percent reduction in methane emissions intensity in 2021, four years ahead of schedule, and set a target to reduce Ovintiv’s GHG emissions intensity by greater than 20 percent compared to 2019 levels by the end of 2021.

Financial Results

Three months ended September 30, ~~2021~~2022

•

Reported net ~~loss~~earnings of ~~$72~~$1,186 million, including net losses on risk management in revenues of ~~$950~~$111 million, before tax.

•

Generated cash from operating activities of ~~$812~~$962 million, Non-GAAP Cash Flow of ~~$845~~$948 million and Non‑GAAP Cash Flow Margin of ~~$17.17~~$19.96 per BOE.

•

Purchased for cancellation, approximately 6.7 million shares of common stock for total consideration of approximately $325 million.

•

Paid dividends of ~~$0.14~~$0.25 per share of common stock totaling ~~$37~~$62 million.

•

Repurchased in the open market approximately $504 million in principal amount of the Company’s senior notes.

•

Reduced total long-term debt by $284 million during the third quarter.

Nine months ended September 30, 2022

•

Reported net earnings of $2,302 million, including net losses on risk management in revenues of $1,864 million, before tax.

•

Generated cash from operating activities of $2,991 million, Non-GAAP Cash Flow of $3,215 million and Non‑GAAP Cash Flow Margin of $23.30 per BOE.

•

Purchased for cancellation, approximately 11.2 million shares of common stock for total consideration of approximately $531 million.

•

Paid dividends of $0.70 per share of common stock totaling $178 million.

•

Repurchased in the open market approximately $565 million in principal amount of the Company’s senior notes.

•

Had $3.4 billion in total liquidity as at September 30, 2022, which included available credit facilities of $3.5 billion, available uncommitted demand lines of $296 million, and cash and cash equivalents of $18 million, net of outstanding commercial paper of $440 million.

•

Reduced total long-term debt by ~~$523 million.~~

~~Nine months ended September 30, 2021~~

•

~~Reported net earnings of $32~~$1,168 million ~~including net losses on risk management in revenues of $2,176 million, before tax and a current income tax recovery of $156 million.~~

•

~~Generated cash from operating activities of $2,389 million, Non-GAAP Cash Flow of $2,468 million and Non‑GAAP Cash Flow Margin of $16.66 per BOE.~~

•

~~Paid dividends of $0.3275 per share of common stock totaling $86 million.~~

•

Had $4.3 billion in total liquidity as at September 30, 2021, which included available credit facilities of $4.0 billion, available uncommitted demand lines of $278 million, and cash and cash equivalents of $8 million.

•

~~Reduced total long-term debt by $2,094 million.~~during the first nine months.

•

Reported Net Debt to Adjusted EBITDA of ~~1.5~~0.9 times.

Capital Investment

•

~~Continued to execute~~Executed the Company’s ~~2021~~2022 capital plan with expenditures totaling ~~$1,098~~$1,473 million for the nine months ended September 30, 2022, of which ~~$1,012~~$1,157 million, or 9279 percent, was directed to the Core Assets.

•

Focused on highly efficient capital activity to minimize the impact of inflation and to benefit from short-cycle high margin and/or low-cost projects ~~providing~~which provide flexibility to respond to fluctuations in commodity prices.

Production

Three months ended September 30, ~~2021~~2022

•

Produced average liquids volumes of ~~273.6~~266.3 Mbbls/d, which accounted for 5152 percent of total production volumes. Average oil and plant condensate volumes of ~~188.7~~179.4 Mbbls/d, represented 6967 percent of total liquids production volumes.

•

Produced average natural gas volumes of ~~1,566~~1,500 MMcf/d, which accounted for 4948 percent of total production volumes.

Nine months ended September 30, ~~2021~~2022

•

Produced average liquids volumes of ~~278.7~~260.3 Mbbls/d, which accounted for 51 percent of total production volumes. Average oil and plant condensate volumes of ~~195.8~~175.9 Mbbls/d, represented 7068 percent of total liquids production volumes.

•

Produced average natural gas volumes of ~~1,583~~1,471 MMcf/d, which accounted for 49 percent of total production volumes.

Operating Expenses

•

Incurred Total Costs in the first nine months of ~~2021~~2022 of ~~$1,918~~$2,272 million, or ~~$12.97~~$16.45 per BOE, an increase of ~~$178~~$354 million ~~and an increase of $1.20~~or $3.48 per BOE compared to ~~the first nine months of 2020.~~2021. Total Costs is defined in the Non-GAAP Measures section of this MD&A. Significant items impacting Total Costs in the first nine months of ~~2021~~2022 compared to ~~2020 impacting Total Costs~~2021 include:

Higher upstream transportation and processing expenses of ~~$105~~$141 million, primarily due to higher ~~production volumes~~variable contract rates in ~~Montney~~Permian, Uinta and aAnadarko resulting from higher ~~U.S./Canadian dollar exchange rate;~~commodity prices;

Higher upstream operating expenses, excluding long-term incentive costs, of $127 million, primarily due to inflationary pressures as a result of the higher commodity price environment and increased activity relating to discretionary workovers;

Higher production, mineral and other taxes of ~~$84~~$111 million, primarily due to higher commodity prices; and

Lower ~~upstream operating~~administrative expenses, excluding long-term incentive, restructuring and legal costs, and current expected credit losses, of ~~$16~~$25 million, primarily due to ~~durable cost savings including workforce reductions~~a decrease in ~~2020.~~consulting and operating lease costs.

•

Total Operating Expenses in the first nine months of ~~2021~~2022 of ~~$5,245~~$6,563 million ~~decreased~~increased by ~~$4,120 million, primarily due to the non-cash ceiling test impairment of $4,863 million recognized in the first nine months of 2020.~~$1,318 million.

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

~~2021~~2022 Outlook

Industry Outlook

Oil Markets

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

During the first nine months of 2022, oil prices have seen significant volatility. Oil prices ~~during 2021~~for the remainder of 2022 will continue to be impacted by the ~~global containment of the coronavirus (“COVID-19”), pace of economic recovery,~~interplay between recessionary concerns, continued OPEC+ production levels, and the potential for higher U.S. production. The distribution of COVID-19 vaccines continues to drive optimism and oil demand as countries reopen their economies. Upward pressures on oil prices and the tightening of global oil inventories during the first nine months of 2021 were mainly caused by OPEC+ production cuts andrestraint, increasing global demand for ~~oil.~~

~~In July,~~oil, supply uncertainties resulting from the Russian invasion of Ukraine and the pace of recovering U.S. production. The global recessionary concerns and tightening of monetary policies by central banks weighs on market sentiment and could further impact demand, subsequently driving prices down. OPEC+ recently announced ~~monthly~~that it would decrease oil production ~~increases~~ starting ~~from August until December 2021,~~in November 2022 and ~~in October, reconfirmed production adjustments for November. OPEC+ plans to assess market developments in December and continues~~will continue to meet ~~regularly~~ to review the state of global oil supply, demand and inventory levels.

~~Oil markets are expected to remain volatile as economic recovery centers on~~ Although the COVID-19 pandemic continues to impact economies with the emergence of variants, vaccine ~~rollouts~~rollout/uptake and ~~OPEC+ production cuts. COVID-19 variants may threaten~~ the ~~reopening~~relaxing of ~~economies in certain countries while~~restrictions have lessened the ~~gradual easing of OPEC+ oil production cuts, the potential for higher U.S. oil production, and macroeconomic risks could contribute to commodity market uncertainty.~~impact on global markets.

Natural Gas Markets

Natural gas prices are primarily ~~affected~~impacted by structural changes in supply and demand as well as deviations from seasonally normal weather. ~~In combination, these factors contributed~~

Similar to ~~increased drawdowns of natural gas inventory and generally supported~~oil prices, natural gas prices inhave been volatile during the first nine months of ~~2021. Limited supply growth from U.S. producers combined with supportive weather conditions has contributed to a significant increase in natural gas prices during the third quarter of 2021.~~2022. Natural gas prices for the remainder of ~~2021 are expected~~2022 will continue to be impacted by the interplay between natural gas production and associated natural gas from oil production, ~~as well as~~ changes in demand from the power generation sector, changes in export levels of ~~liquified~~U.S. liquefied natural gas, ~~and~~ impacts from seasonal ~~weather.~~weather, as well as supply chain constraints or other disruptions resulting from the Russian invasion of Ukraine.

Company Outlook

The Company continues to exercise discretion and discipline to optimize capital allocation throughout ~~2021~~2022 as oil demand recovers and the commodity price environment evolves. Ovintiv pursues innovative ways to maximize cash flows and minimize the impact of inflation to reduce upstream operating and administrative ~~expenses and expects to benefit from durable cost savings and efficiencies to maximize cash flows.~~expenses.

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. To mitigate price volatility and ~~help sustain revenues, particularly during periods of low commodity prices,~~provide more certainty around cash flows, the Company enters into derivative financial instruments. As at September 30, ~~2021,~~2022, the Company has hedged approximately ~~130.0~~80.0 Mbbls/d of expected ~~crude~~ oil and condensate production and ~~1,145~~1,305 MMcf/d of expected natural gas production for the remainder of the year. In addition, Ovintiv proactively utilizes transportation contracts to diversify the Company’s sales markets, thereby reducing significant exposure to any given market and regional pricing.

Additional information on Ovintiv’s hedging program can be found in Note 1918 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Capital Investment

The Company ~~is on track~~continues to ~~meet~~execute its ~~$1.5 billion 2021~~2022 capital investment program, the majority of which is allocated to the Core Assets, with a focus on maximizing returns from high margin liquids and minimizing the impact of inflation to optimize cash flows. In November 2022, the Company updated its full year 2022 capital investment guidance to approximately $1.8 billion. The recent divestitures did not have a significant impact on the Company’s capital program and the Company plans to fund the remainder of its 2022 capital investment program using cash from operations.

During the first nine months of ~~2021,~~2022, the Company invested ~~$1,098~~$1,473 million ~~of which $475~~and directed $547 million ~~was directed~~ to Permian, ~~$289~~$342 million ~~was directed~~to Anadarko, $268 million to Montney, ~~$248 million was directed to Anadarko and~~with the remainder ~~was~~ primarily directed to other upstream assets. ~~Ovintiv will continue to evaluate its capital investment plans as the global economic environment evolves.~~

Ovintiv continually strives to improve well performance and lower costs through innovative techniques. ~~Initiatives such as applying Simul-Frac techniques, a process of fracking pairs of wells at the same time instead of a single well,~~Ovintiv’s redesigned wet sand sourcing model, which incorporates on-site sand storage and delivery systems, helps to prevent mine and trucking delays, thereby increasing truck productivity to enable smooth integration with local mine access. This model increases operational efficiencies and contributes to well cost ~~savings.~~savings as well as providing increased resiliency against winter weather. 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 to minimize the impact of inflation and to maximize cash flows while preserving the long-term value of the Company’s multi-basin portfolio.

Production

Ovintiv is strategically positioned in the current environment to maintain a flat liquids production profile while generating significant cash flows in excess of capital expenditures.

During the ~~first nine months 2021,~~third quarter of 2022, total average ~~liquids~~ production volumes were ~~278.7 Mbbls/d, or 51 percent of total production volumes, and average~~516.3 MBOE/d. Average oil and plant condensate production volumes were ~~195.8~~179.4 Mbbls/d ~~or 70 percent of total liquids production volumes.Average~~and natural gas production volumes were ~~1,583~~1,500 MMcf/d, ~~or 49 percent~~which were within third quarter guidance of ~~total~~178.0 Mbbls/d to 183.0 Mbbls/d and 1,440 MMcf/d to 1,500 MMcf/d, respectively. Average other NGL production ~~volumes.~~ volumes were 86.9 Mbbls/d, which exceeded third quarter guidance of 80.0 Mbbls/d to 84.0 Mbbls/d.

During the ~~second quarter~~first nine months of ~~2021, the Company updated its full year 2021 guidance for~~2022, total average production volumes were 505.5 MBOE/d. Average oil and plant condensate production volumes ~~to approximately 190.0 Mbbls/d to 195.0~~were 175.9 Mbbls/d, other NGLs ~~production volumes to approximately 80.0 Mbbls/d to 85.0~~were 84.4 Mbbls/d and natural gas ~~production volumes to approximately 1,550 MMcf/d to 1,575~~were 1,471 MMcf/d. The ~~updated guidance reflects the divestitures completed in the second quarter of 2021. During the third quarter of 2021, the~~ Company ~~narrowed~~is on track to meet its updated full year 2022 total production guidance range ~~for~~of 505.0 MBOE/d to 515.0 MBOE/d, including oil and plant condensate production volumes toof approximately ~~191.0 Mbbs/~~174.0 Mbbls/d to ~~194.0 Mbbs/~~176.0 Mbbls/d and other NGLs production volumes toof approximately ~~82.0~~84.0 Mbbls/d to ~~83.0~~86.0 Mbbls/~~d and~~d. The Company is also on track to meet its updated full year 2022 guidance range for natural gas production volumes toof approximately ~~1,555~~1,480 MMcf/d to ~~1,570~~1,510 MMcf/d. ~~The Company expects~~Full year guidance ranges were updated in November 2022 to ~~meet or exceed all~~reflect the strong performance in Montney, the expected impact of ~~its production targets.~~returning oil volumes following the resolution of line pressure issues in the Anadarko and the decision to delay the completion of certain wells across the USA Operations to preserve capital discipline.

Operating Expenses

The Company will continue to benefit from cost savings measures implemented in 2020 which included workforce reductions and operating efficiencies. Ovintiv continues to pursue innovative ways to reduce upstream operating and administrative expenses. With ~~rising~~increased activity in the oil and gas industry and ~~the recovery of~~strong commodity prices, service and supply costs are expected to continue to increase. ~~The Company strives~~Ovintiv continues to pursue innovative ways to minimize ~~any~~ inflationary pressures with efficiency improvements and effective supply chain ~~management.~~management to reduce upstream operating and administrative expenses.

In ~~the second quarter of 2021,~~November 2022, Ovintiv ~~revised~~confirmed its ~~expectation of~~full year 2022 Total Costs ~~to approximately $12.95~~guidance range remains unchanged at $16.35 per BOE to ~~$13.20~~$16.60 per BOE ~~to reflect higher than expected changes in foreign exchange rates~~based on updated commodity price assumptions of $94.00 per barrel for WTI oil and ~~increased production taxes resulting from higher than expected commodity prices.~~$7.00 per MMBtu for NYMEX natural gas. Total Costs ~~were $12.97 per BOE in~~for the first nine months of ~~2021~~2022 was $16.45 per BOE and ~~are~~is expected to remain ~~well~~ within the full year guidance range. Total Costs is defined in the Non-GAAP Measures section of this MD&A.

~~Long-term~~Total Costs of $17.16 per BOE in the third quarter of 2022 was higher than third quarter guidance of $16.50 per BOE to $17.00 per BOE, based on the commodity prices of $100.00 per barrel for WTI oil and $8.00 per MMBtu for NYMEX natural gas. This increase is primarily due to higher electricity costs associated with higher than expected NYMEX natural gas prices and increased activity related to discretionary workovers.

Long-Term Debt Reduction

Ovintiv remains focused on strengthening its balance sheet. Since the second quarter of 2020, the Company has allocated ~~$2,575~~$3,748 million in excess cash flows to reduce its total long-term debt ~~balance, which included proceeds from~~balance.

In conjunction with the ~~Duvernay and Eagle Ford asset divestitures. The Company is targeting a Net Debt balance of approximately $3.0 billion by the end of 2023.~~

~~In June 2021, the Company~~Company’s focus on debt reduction, Ovintiv redeemed its ~~$600 million, 5.75~~$1.0 billion, 5.625 percent senior notes due ~~January 30,~~July 1, 2024 in June 2022, with cash on hand and ~~in August 2021, redeemed its $518 million, 3.90 percent senior notes due November 15, 2021.~~other existing sources of liquidity. The ~~combined~~ debt ~~redemptions are expected to~~redemption will result in annualized interest savings of ~~over $50~~approximately $55 million.

In the first nine months of 2022, the Company also repurchased in the open market, approximately $565 million in principal, plus accrued interest and premiums, which included a portion of its 5.375 percent senior notes due January 2026, its 6.5 percent senior notes due August 2034, its 6.625 percent senior notes due August 2037, its 6.5 percent senior notes due February 2038 and its 5.15 percent senior notes due November 2041. The Company paid premiums of $22 million to complete the open market repurchases. The open market repurchases will result in annualized interest savings of approximately $33 million.

As at September 30, ~~2021,~~2022, the Company had $440 million of commercial paper outstanding under its U.S. commercial paper (“U.S. CP”) programs and no outstanding balances under its revolving credit ~~facilities and U.S. dollar commercial paper programs.~~facilities.

Additional information on Ovintiv’s long-term debt and liquidity position 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 and the Liquidity and Capital Resources section of this MD&A, respectively.

Additional information on Ovintiv’s ~~2021~~discrete fourth quarter and full year 2022 Corporate Guidance can be accessed on the Company’s website at www.ovintiv.com.

Environmental, Social and Governance

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

By the end of 2021, the Company is expected to deliver on its targeted 33 percent reduction in methane emissions intensity four years ahead of schedule and expects to achieve a greater than 20 percent reduction in GHG emissions intensity compared to 2019 levels. In 2022, the Company plans to set further GHG emissions reduction targets, which will be tied to its annual compensation program for all employees.

~~As of September 1, 2021, the~~The Company is in full alignment with the World Bank Zero Routine Flaring initiative, ~~which requires participants~~well ahead of the World Bank’s target date of 2030.

During the first quarter of 2022, the Company announced a Scope 1&2 GHG emissions intensity reduction target of 50 percent compared to ~~end routine flaring~~2019 levels, to be achieved by 2030. ~~Ovintiv does not engage in routine flaring by ensuring natural gas gathering infrastructure~~The GHG emissions reduction target is ~~in place~~tied to the 2022 annual compensation program for all ofemployees.

In May 2022, Ovintiv published its ~~producing wells.~~

~~Ovintiv maintains a commitment on protecting~~full year 2021 ESG results in its 2022 Sustainability Report which highlights the ~~health and safety of its workforce. Despite the challenges presented by COVID-19,~~Company’s progress in emissions intensity reductions. During 2021, the Company ~~reported~~reduced its ~~seventh consecutive safest year in 2020~~Scope 1&2 GHG emissions intensity by 24 percent compared to 2019 and ~~is on track~~reduced its methane emissions intensity by greater than 50 percent compared to ~~report its eighth consecutive safest year for 2021.~~2019.

Ovintiv is committed to diversity, equity and inclusion. ~~In 2021, the Company developed a new~~The Company’s social commitment framework, which is rooted in the Company’s foundational values of ~~Trust, Respect, Integrity, Safety~~integrity, safety, sustainability, trust and ~~Sustainability. The framework focuses on respecting stakeholders, strengthening communities and fostering~~respect, fosters a culture of ~~inclusion.~~inclusion that respects stakeholders and strengthens communities.

Ovintiv remains committed to protecting the health and safety of its workforce. Safety is a foundational value at Ovintiv and plays a critical role in the Company’s belief that a safe workplace is a strong indicator of a well-managed business. This safety-oriented mindset enables the Company to quickly respond to emergencies and minimize any impacts to employees and business continuity.

Additional information on Ovintiv’s ESG practices and updated metrics included in its most recent Sustainability Report can be found on the Company’s sustainability website at https://sustainability.ovintiv.com.

4140

Results of Operations

Selected Financial Information

	Three months ended September 30,							Nine months ended September 30,							Three months ended September 30,							Nine months ended September 30,
($ millions)		2021			2020				2021			2020				2022			2021				2022			2021

Product and Service Revenues
Upstream product revenues		$	1,948		$	980			$	5,265		$	2,804			$	2,653		$	1,948			$	7,864		$	5,265
Market optimization			771			346				2,171			1,113				988			771				3,197			2,171
Service revenues ⁽¹⁾			1			-				4			2				2			1				3			4
Total Product and Service Revenues			2,720			1,326				7,440			3,919				3,643			2,720				11,064			7,440

Gains (Losses) on Risk Management, Net			(950	)		(154	)			(2,176	)		587				(111	)		(950	)			(1,864	)		(2,176	)
Sublease Revenues			19			18				55			53				17			19				52			55
Total Revenues			1,789			1,190				5,319			4,559				3,549			1,789				9,252			5,319

Total Operating Expenses⁽²⁾			1,789			2,696				5,245			9,365				2,176			1,789				6,563			5,245
Operating Income (Loss)			-			(1,506	)			74			(4,806	)			1,373			-				2,689			74
Total Other (Income) Expenses			71			54				217			282				99			71				239			217
Net Earnings (Loss) Before Income Tax			(71	)		(1,560	)			(143	)		(5,088	)			1,274			(71	)			2,450			(143	)
Income Tax Expense (Recovery)			1			(39	)			(175	)		395				88			1				148			(175	)

Net Earnings (Loss)		$	(72	)	$	(1,521	)		$	32		$	(5,483	)		$	1,186		$	(72	)		$	2,302		$	32

(1)	Service revenues include amounts related to the USA and Canadian Operations.

(2)	Total Operating Expenses include non-cash items such as DD&A, ~~impairments,~~ accretion of asset retirement obligations and long-term incentive costs.

Revenues

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~~Company’s realized prices generally reflect WTI, NYMEX, Edmonton Condensate and ~~NYMEX~~AECO benchmark prices, as well as other downstream ~~oil~~ benchmarks, including ~~Houston. The Canadian Operations realized prices are linked to Edmonton Condensate~~Houston and ~~AECO, as well as other downstream natural gas benchmarks, including~~ Dawn. The ~~other downstream~~Company proactively mitigates price risk and optimizes margins by entering into firm transportation contracts to diversify market access to different sales points. Realized prices, excluding the impact of risk management activities, may differ from the benchmarks ~~reflect the diversification of the Company’s markets. Recent trends in benchmark~~for many reasons, including quality, location, or production being sold at different market hubs.

Benchmark prices relevant to the Company are shown in the table below.

Benchmark Prices

	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
(average for the period)	2021		2020		2021		2020		2022		2021		2022		2021

Oil & NGLs
WTI ($/bbl)	$	70.56	$	40.93	$	64.82	$	38.32	$	91.55	$	70.56	$	98.09	$	64.82
Houston ($/bbl)		71.01		41.89		65.80		40.27		93.24		71.01		99.59		65.80
Edmonton Condensate (C$/bbl)		87.26		50.00		80.75		47.48		114.19		87.26		124.90		80.75

Natural Gas
NYMEX ($/MMBtu)	$	4.01	$	1.98	$	3.18	$	1.88	$	8.20	$	4.01	$	6.77	$	3.18
AECO (C$/Mcf)		3.54		2.15		3.11		2.07		5.81		3.54		5.56		3.11
Dawn (C$/MMBtu)		5.13		2.42		4.18		2.35		9.75		5.13		8.19		4.18

4241

Production Volumes and Realized Prices

	Three months ended September 30,										Nine months ended September 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⁾
	2021		2020				2021		2020		2021			2020				2021		2020		2022			2021			2022		2021		2022			2021				2022		2021

Oil (Mbbls/d, $/bbl)
USA Operations		136.7		138.5			$	68.69	$	39.41		143.5			148.7			$	62.82	$	35.51		133.3			136.7		$	93.22	$	68.69		131.4			143.5			$	98.37	$	62.82
Canadian Operations		0.1		0.4				64.95		34.38		0.4			0.6				55.51		29.79		0.1			0.1			82.86		64.95		0.1			0.4				88.58		55.51
Total		136.8		138.9				68.69		39.40		143.9			149.3				62.80		35.49		133.4			136.8			93.21		68.69		131.5			143.9				98.36		62.80

NGLs – Plant Condensate (Mbbls/d, $/bbl)
USA Operations		11.3		11.4				62.84		27.98		10.5			11.1				56.84		25.05		11.1			11.3			66.62		62.84		10.1			10.5				78.77		56.84
Canadian Operations		40.6		35.8				68.78		36.71		41.4			39.4				63.62		33.69		34.9			40.6			86.65		68.78		34.3			41.4				96.59		63.62
Total		51.9		47.2				67.49		34.60		51.9			50.5				62.25		31.79		46.0			51.9			81.82		67.49		44.4			51.9				92.53		62.25

NGLs – Other (Mbbls/d, $/bbl)
USA Operations		69.4		70.2				28.77		10.47		66.6			71.7				23.29		8.52		74.1			69.4			29.82		28.77		70.5			66.6				32.69		23.29
Canadian Operations		15.5		13.6				31.73		13.16		16.3			14.5				27.38		9.68		12.8			15.5			41.12		31.73		13.9			16.3				43.49		27.38
Total		84.9		83.8				29.31		10.91		82.9			86.2				24.09		8.72		86.9			84.9			31.49		29.31		84.4			82.9				34.46		24.09

Total Oil & NGLs (Mbbls/d, $/bbl)
USA Operations		217.4		220.1				55.63		29.59		220.6			231.5				50.59		26.66		218.5			217.4			70.37		55.63		212.0			220.6				75.59		50.59
Canadian Operations		56.2		49.8				58.57		30.27		58.1			54.5				53.41		27.24		47.8			56.2			74.43		58.57		48.3			58.1				81.32		53.41
Total		273.6		269.9				56.23		29.72		278.7			286.0				51.18		26.77		266.3			273.6			71.10		56.23		260.3			278.7				76.65		51.18

Natural Gas (MMcf/d, $/Mcf)
USA Operations		495		507				3.80		1.52		484			537				3.13		1.42		502			495			7.55		3.80		487			484				6.45		3.13
Canadian Operations		1,071		935				3.63		1.96		1,099			983				3.18		1.83		998			1,071			6.11		3.63		984			1,099				5.78		3.18
Total		1,566		1,442				3.69		1.81		1,583			1,520				3.17		1.69		1,500			1,566			6.60		3.69		1,471			1,583				6.00		3.17

Total Production (MBOE/d, $/BOE)
USA Operations		300.0		304.6				46.59		23.91		301.2			320.9				42.08		21.60		302.1			300.0			63.44		46.59		293.3			301.2				65.37		42.08
Canadian Operations		234.7		205.6				30.61		16.22		241.3			218.4				27.38		15.05		214.2			234.7			45.11		30.61		212.2			241.3				45.30		27.38
Total		534.7		510.2				39.57		20.81		542.5			539.3				35.54		18.94		516.3			534.7			55.83		39.57		505.5			542.5				56.94		35.54

Production Mix (%)
Oil & Plant Condensate		35		37								36			37								35			35							35			36
NGLs – Other		16		16								15			16								17			16							16			15
Total Oil & NGLs		51		53								51			53								52			51							51			51
Natural Gas		49		47								49			47								48			49							49			49

Production Change
Year Over Year (%) ⁽³⁾
Total Oil & NGLs		1		(18	)							(3	)		(3	)							(3	)		1							(7	)		(3	)
Natural Gas		9		(13	)							4			(3	)							(4	)		9							(7	)		4
Total Production		5		(16	)							1			(3	)							(3	)		5							(7	)		1

Core Assets Production
Oil (Mbbls/d)		112.2		99.4								109.9			106.2								96.8			112.2							97.8			109.9
NGLs – Plant Condensate (Mbbls/d)		50.8		41.5								49.5			44.5								44.6			50.8							43.1			49.5
NGLs – Other (Mbbls/d)		78.8		75.0								75.6			76.8								78.2			78.8							76.5			75.6
Total Oil & NGLs (Mbbls/d)		241.8		215.9								235.0			227.5								219.6			241.8							217.4			235.0
Natural Gas (MMcf/d)		1,487		1,291								1,473			1,362								1,409			1,487							1,384			1,473
Total Production (MBOE/d)		489.6		431.1								480.5			454.6								454.5			489.6							448.1			480.5
% of Total Production		92		84								89			84								88			92							89			89

(1)	Average daily.

(2)	Average per-unit prices, excluding the impact of risk management activities.

(3)	Includes production impacts ~~from~~of acquisitions and divestitures.

4342

Upstream Product Revenues

	Three months ended September 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

2020 Upstream Product Revenues⁽¹⁾	$	503		$	151	$	84		$	241	$	979
2021 Upstream Product Revenues ⁽¹⁾														$	865		$	322		$	230	$	530		$	1,947
Increase (decrease) due to:
Sales prices		369			155		144			268		936			301			60			17		402			780
Production volumes		(7	)		16		2			21		32			(22	)		(37	)		4		(21	)		(76	)
2021 Upstream Product Revenues	$	865		$	322	$	230		$	530	$	1,947
2022 Upstream Product Revenues														$	1,144		$	345		$	251	$	911		$	2,651

	Nine months ended September 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

2020 Upstream Product Revenues⁽¹⁾	$	1,452		$	441	$	205		$	705	$	2,803
2021 Upstream Product Revenues⁽¹⁾														$	2,467		$	881		$	545	$	1,368		$	5,261
Increase (decrease) due to:
Sales prices		1,072			428		348			631		2,479			1,276			370			241		1,139			3,026
Production volumes		(57	)		12		(8	)		32		(21	)		(212	)		(129	)		7		(96	)		(430	)
2021 Upstream Product Revenues	$	2,467		$	881	$	545		$	1,368	$	5,261
2022 Upstream Product Revenues														$	3,531		$	1,122		$	793	$	2,411		$	7,857

(1)	Revenues for the third quarter and first nine months of ~~2021~~2022 exclude certain other revenue and royalty adjustments with no associated production volumes of $1$2 million and $4$7 million, respectively ~~(2020~~(2021 - $1 million and $1$4 million, respectively).

Oil Revenues

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Oil revenues ~~increased $362~~were higher by $279 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

~~Higher~~An increase of $24.52 per bbl, or 36 percent, in the average realized oil prices ~~of $29.29 per bbl, or 74 percent,~~which increased revenues by ~~$369~~$301 million. The increase reflected higher ~~WTI~~Houston and ~~Houston~~WTI benchmark prices which were up 7231 percent and 7030 percent, respectively, and the strengthening of regional pricing relative to the WTI benchmark price in the USA Operations; and

•

Lower average oil production volumes of ~~2.1~~3.4 Mbbls/d decreased revenues by $7$22 million. Lower volumes were primarily due to ~~the sale~~natural declines and changes in commodity composition of ~~the Eagle Ford assets~~Permian wells (10.1 Mbbls/d), natural declines in Anadarko (3.8 Mbbls/d) and asset sales in Uinta and Bakken in the ~~second~~third quarter of ~~2021 (13.7~~2022 (1.5 Mbbls/d), partially offset by successful drilling in ~~Permian (11.4~~Uinta and Bakken (13.3 Mbbls/d).

Nine months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Oil revenues ~~increased $1,015~~were higher by $1,064 million compared to the first nine months of ~~2020~~2021 primarily due to:

•

~~Higher~~An increase of $35.56 per bbl, or 57 percent, in the average realized oil prices ~~of $27.31 per bbl, or 77 percent,~~which increased revenues by ~~$1,072~~$1,276 million. The increase reflected higher WTI and Houston benchmark prices which were both up 6951 percent, ~~and 63 percent, respectively,~~ and the strengthening of regional pricing relative to the WTI benchmark price in the USA Operations; and

•

Lower average oil production volumes of ~~5.4~~12.4 Mbbls/d decreased revenues by ~~$57~~$212 million. Lower volumes were primarily due to natural declines ~~surpassing incremental production~~and changes in ~~Anadarko, Eagle Ford and Bakken (8.9~~commodity composition of Permian wells (8.5 Mbbls/d) ~~and~~, the sale of the Eagle Ford assets in the second quarter of 2021 ~~(6.8~~(7.7 Mbbls/d) and natural declines in Anadarko (4.7 Mbbls/d), partially offset by successful drilling in ~~Permian (7.6 Mbbls/d)~~Uinta and ~~production shut-ins due to the economic downturn in 2020 (3.6~~Bakken (8.6 Mbbls/d).

4443

NGL Revenues

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

NGL revenues ~~increased $317~~were higher by $44 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

~~Higher~~An increase of $14.33 per bbl, or 21 percent, in the average realized plant condensate prices ~~of $32.89 per bbl, or 95 percent,~~which increased revenues by ~~$155~~$60 million. The increase reflected higher Edmonton Condensate and WTI benchmark prices which were up 7531 percent and 7230 percent, respectively, ~~as well as higher~~partially offset by lower regional pricing relative to the WTI benchmark ~~price;~~price in Canadian Operations;

•

~~Higher~~An increase of $2.18 per bbl, or seven percent, in the average realized other NGL prices ~~of $18.40 per bbl, or 169 percent,~~which increased revenues by ~~$144 million reflecting~~$17 million. The increase reflected higher other NGL benchmark prices and higher regional pricing; and

•

~~Higher~~Lower average plant condensate production volumes of ~~4.7~~5.9 Mbbls/d ~~increased~~decreased revenues by ~~$16~~$37 million. ~~Higher~~Lower volumes were primarily due to ~~successful drilling~~higher royalties resulting from higher commodity prices in Montney ~~(7.7~~(3.1 Mbbls/d)~~, partially offset by the sales of the Duvernay~~ and ~~Eagle Ford assets~~natural declines in ~~the second quarter of 2021 (3.5~~Montney (2.8 Mbbls/d).

Nine months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

NGL revenues ~~increased $780~~were higher by $489 million compared to the first nine months of ~~2020~~2021 primarily due to:

•

~~Higher~~An increase of $30.28 per bbl, or 49 percent, in the average realized plant condensate prices ~~of $30.46 per bbl, or 96 percent,~~which increased revenues by ~~$428~~$370 million. The increase reflected higher Edmonton Condensate and WTI benchmark prices which were up 7055 percent and 6951 percent, respectively, ~~as well as higher~~partially offset by lower regional pricing relative to the WTI benchmark ~~price;~~price in Canadian Operations;

•

~~Higher~~An increase of $10.37 per bbl, or 43 percent, in the average realized other NGL prices ~~of $15.37 per bbl, or 176 percent,~~which increased revenues by ~~$348 million reflecting~~$241 million. The increase reflected higher other NGL benchmark prices ~~and higher regional pricing;~~

•

Higher average plant condensate production volumes of 1.4 Mbbls/d increased revenues by $12 million. Higher volumes were primarily due to successful drilling in Montney (4.4 Mbbls/d), partially offset by natural declines in Duvernay (1.9 Mbbls/d), and the sales of the Duvernay and Eagle Ford assets in the second quarter of 2021 (1.9 Mbbls/d); and

•

Lower average other NGL production volumes of 3.3 Mbbls/d decreased revenues by $8 million. Lower volumes were primarily due to natural declines in Anadarko (5.2 Mbbls/d) and the sale of the Eagle Ford assets in the second quarter of 2021 (1.8 Mbbls/d), partially offset by successful drilling in Montney and Permian (4.2 Mbbls/d).

~~Natural Gas Revenues~~

~~Three months ended September 30, 2021 versus September 30, 2020~~

~~Natural gas revenues increased $289 million compared to the third quarter of 2020 primarily due to:~~

•

Higher average realized natural gas prices of $1.88 per Mcf, or 104 percent, increased revenues by $268 million. The increase reflected higher Dawn, NYMEX and AECO benchmark prices which were up 112 percent, 103 percent and 65 percent, respectively, and higher regional pricing; and

•

~~Higher~~Lower average ~~natural gas~~plant condensate production volumes of ~~124 MMcf/~~7.5 Mbbls/d ~~increased~~decreased revenues by ~~$21 million~~$129 million. Lower volumes were primarily due to ~~successful drilling~~higher royalties resulting from higher commodity prices in Montney ~~(155 MMcf/~~(3.3 Mbbls/d) ~~and decreased third-party plant down-time~~, natural declines in Montney ~~(36 MMcf/~~(2.5 Mbbls/d)~~, partially offset by~~ and the sales of the Duvernay and Eagle Ford assets in the second quarter of 2021 ~~(56 MMcf/~~(1.4 Mbbls/d).

~~Nine~~Natural Gas Revenues

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Natural gas revenues ~~increased $663~~were higher by $381 million compared to the ~~first nine months~~third quarter of ~~2020~~2021 primarily due to:

•

~~Higher~~An increase of $2.91 per Mcf, or 79 percent, in the average realized natural gas prices ~~of $1.48 per Mcf, or 88 percent,~~which increased revenues by ~~$631~~$402 million. The increase reflected higher NYMEX, Dawn ~~NYMEX~~ and AECO benchmark prices which were up 78104 percent, 6990 percent and 5064 percent, ~~respectively,~~respectively; and

•

Lower average natural gas production volumes of 66 MMcf/d decreased revenues by $21 million primarily due to higher ~~regional pricing;~~royalties resulting from higher commodity prices in Montney (103 MMcf/d), natural declines in Anadarko (16 MMcf/d), partially offset by successful drilling in Montney (44 MMcf/d) and natural changes in commodity composition of Permian (13 MMcf/d).

Nine months ended September 30, 2022 versus September 30, 2021

Natural gas revenues were higher by $1,043 million compared to the first nine months of 2021 primarily due to:

•

An increase of $2.83 per Mcf, or 89 percent, in the average realized natural gas prices which increased revenues by $1,139 million. The increase reflected higher NYMEX, Dawn and AECO benchmark prices which were up 113 percent, 96 percent and 79 percent, respectively; and

4544

•

~~Higher~~Lower average natural gas production volumes of 63112 MMcf/d ~~increased~~decreased revenues by ~~$32~~$96 million primarily due to ~~successful drilling~~higher royalties resulting from higher commodity prices in Montney ~~(154~~(118 MMcf/d) ~~and production shut-ins due to the economic downturn in 2020 (11 MMcf/d)~~, ~~partially offset by natural declines in Anadarko and Duvernay (58 MMcf/d)~~ and the sales of the Duvernay and Eagle Ford assets in the second quarter of 2021 ~~(30~~(27 MMcf/d), partially offset by successful drilling in Montney (21 MMcf/d) and natural changes in commodity composition of Permian wells (19 MMcf/d).

Gains (Losses) on Risk Management, Net

As a means of managing commodity price volatility, Ovintiv enters into commodity derivative financial instruments on a portion of its expected oil, ~~NGL~~NGLs 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 September 30, ~~2021~~2022 can be found in Note 1918 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 September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
($ millions)	2021			2020			2021			2020			2022			2021			2022			2021

Realized Gains (Losses) on Risk Management
Commodity Price ⁽¹⁾
Oil	$	(194	)	$	26		$	(478	)	$	331		$	(141	)	$	(194	)	$	(519	)	$	(478	)
NGLs - Plant Condensate		(39	)		23			(99	)		105			(26	)		(39	)		(109	)		(99	)
NGLs - Other		(42	)		(7	)		(81	)		5			-			(42	)		-			(81	)
Natural Gas		(97	)		45			(96	)		157			(654	)		(97	)		(1,449	)		(96	)
Other ⁽²⁾		1			2			4			7			-			1			2			4
Total		(371	)		89			(750	)		605			(821	)		(371	)		(2,075	)		(750	)

Unrealized Gains (Losses) on Risk Management		(579	)		(243	)		(1,426	)		(18	)		710			(579	)		211			(1,426	)
Total Gains (Losses) on Risk Management, Net	$	(950	)	$	(154	)	$	(2,176	)	$	587		$	(111	)	$	(950	)	$	(1,864	)	$	(2,176	)

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
(Per-unit)	2021			2020			2021			2020			2022			2021			2022			2021

Realized Gains (Losses) on Risk Management
Commodity Price ⁽¹⁾
Oil ($/bbl)	$	(15.38	)	$	1.99		$	(12.16	)	$	8.09		$	(11.47	)	$	(15.38	)	$	(14.44	)	$	(12.16	)
NGLs - Plant Condensate ($/bbl)	$	(8.15	)	$	5.39		$	(7.01	)	$	7.62		$	(6.09	)	$	(8.15	)	$	(8.96	)	$	(7.01	)
NGLs - Other ($/bbl)	$	(5.45	)	$	(0.92	)	$	(3.59	)	$	0.20		$	-		$	(5.45	)	$	-		$	(3.59	)
Natural Gas ($/Mcf)	$	(0.67	)	$	0.34		$	(0.22	)	$	0.38		$	(4.75	)	$	(0.67	)	$	(3.61	)	$	(0.22	)
Total ($/BOE)	$	(7.57	)	$	1.85		$	(5.09	)	$	4.04		$	(17.28	)	$	(7.57	)	$	(15.05	)	$	(5.09	)

(1)	Includes realized gains and losses related to the USA and Canadian Operations.

(2)	Other primarily includes realized gains or losses from Market Optimization and other derivative contracts with no associated production volumes.

Ovintiv recognizes fair value changes from its risk management activities each reporting period. The changes in fair value result from new positions and settlements that occur during each period, as well as the relationship between contract prices and the associated forward curves. Realized gains or losses on risk management activities related to commodity price mitigation are included in the USA Operations, Canadian Operations and Market Optimization revenues as the contracts are cash settled. Unrealized gains or losses on fair value changes of unsettled contracts are included in the Corporate and Other segment. Additional information on fair value changes can be found in Note 17 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

4645

Market Optimization Revenues

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

	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
($ millions)	2021		2020		2021		2020		2022		2021		2022		2021

Market Optimization	$	771	$	346	$	2,171	$	1,113	$	988	$	771	$	3,197	$	2,171

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Market Optimization product revenues increased ~~$425~~$217 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

Higher oil and natural gas benchmark prices ($~~350~~259 million) and higher sales of third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($~~204~~16 million);

partially offset by:

•

Lower sales of third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($~~129~~58 million).

Nine months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Market Optimization product revenues increased ~~$1,058~~$1,026 million compared to the first nine months of ~~2020~~2021 primarily due to:

•

Higher oil and natural gas benchmark prices ($~~1,041~~1,069 million) and higher sales of third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($~~354~~126 million);

partially offset by:

•

Lower sales of third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($~~337~~169 million).

Sublease Revenues

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

4746

Operating Expenses

Production, Mineral and Other Taxes

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 September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
($ millions)	2021		2020		2021		2020		2022		2021		2022		2021

USA Operations	$	75	$	43	$	199	$	115	$	106	$	75	$	311	$	199
Canadian Operations		2		4		11		11		3		2		10		11
Total	$	77	$	47	$	210	$	126	$	109	$	77	$	321	$	210

	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
($/BOE)	2021		2020		2021		2020		2022		2021		2022		2021

USA Operations	$	2.71	$	1.54	$	2.42	$	1.31	$	3.83	$	2.71	$	3.89	$	2.42
Canadian Operations	$	0.13	$	0.18	$	0.17	$	0.18	$	0.12	$	0.13	$	0.15	$	0.17
Production, Mineral and Other Taxes	$	1.57	$	0.99	$	1.42	$	0.85	$	2.29	$	1.57	$	2.32	$	1.42

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Production, mineral and other taxes increased ~~$30~~$32 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

Higher production tax in USA Operations due to higher commodity prices ($~~38 million), partially offset by the sale of the Eagle Ford assets in the second quarter of 2021 ($7~~28 million).

Nine months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Production, mineral and other taxes increased ~~$84~~$111 million compared to the first nine months of ~~2020~~2021 primarily due to:

•

Higher production tax in USA Operations due to higher commodity prices ($99112 million)~~, partially offset by the~~;

partially offset by:

•

The sale of the Eagle Ford assets in the second quarter of 2021 ($109 million).

Transportation and Processing

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 September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
($ millions)	2021		2020		2021		2020		2022		2021		2022		2021

USA Operations	$	122	$	109	$	361	$	345	$	170	$	122	$	464	$	361
Canadian Operations		231		203		703		614		257		231		741		703
Upstream Transportation and Processing		353		312		1,064		959		427		353		1,205		1,064

Market Optimization		44		53		130		170		41		44		122		130
Total	$	397	$	365	$	1,194	$	1,129	$	468	$	397	$	1,327	$	1,194

	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,				Nine months ended September 30,
($/BOE)	2021		2020		2021		2020		2022		2021		2022		2021

USA Operations	$	4.43	$	3.85	$	4.40	$	3.92	$	6.14	$	4.43	$	5.80	$	4.40
Canadian Operations	$	10.68	$	10.71	$	10.68	$	10.24	$	13.01	$	10.68	$	12.78	$	10.68
Upstream Transportation and Processing	$	7.17	$	6.62	$	7.19	$	6.48	$	8.99	$	7.17	$	8.73	$	7.19

4847

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Transportation and processing expense increased ~~$32~~$71 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

Higher variable contract rates in Permian, Uinta and Anadarko due to higher commodity prices ($35 million), higher volumes in Montney and Uinta ($2917 million), higher ~~variable~~flow-through rates resulting from increased third-party plant operating costs and turnarounds, and higher capital fees in ~~Permian due to~~Montney ($14 million), higher ~~natural gas prices~~downstream transport costs in Montney ($13 million)~~, a~~ and higher costs relating to the diversification of the Company’s downstream markets ($5 million);

partially offset by:

•

A lower U.S./Canadian dollar exchange rate ($118 million).

Nine months ended September 30, 2022 versus September 30, 2021

Transportation and processing expense increased $133 million compared to the first nine months of 2021 primarily due to:

•

Higher variable contract rates in Permian, Uinta and Anadarko due to higher commodity prices ($74 million), higher volumes in Montney, Uinta and Permian ($38 million), higher downstream transport costs in Montney ($31 million), higher flow-through rates resulting from increased third-party plant operating costs and turnarounds, and higher capital fees in Montney ($28 million), and higher costs relating to the diversification of the Company’s downstream markets ($614 million);

partially offset by:

•

The sales of the Eagle Ford and Duvernay assets in the second quarter of 2021 ($1418 million), lower U.S./Canadian dollar exchange rate ($18 million) and expired contracts relating to previously divested assets ($~~9 million) and the decommissioning of Deep Panuke ($8 million).~~

~~Nine months ended September 30, 2021 versus September 30, 2020~~

~~Transportation and processing expense increased $65 million compared to the first nine months of 2020 primarily due to:~~

•

Higher volumes in Montney ($78 million), a higher U.S./Canadian dollar exchange rate ($49 million), higher variable rates in Permian and Anadarko due to higher natural gas prices ($31 million) and higher costs relating to the diversification of the Company’s downstream markets ($11 million);

~~partially offset by:~~

•

The expiration of certain transportation contracts in the USA Operations as well as expired contracts relating to previously divested assets ($41 million), the sales of the Eagle Ford and Duvernay assets in the second quarter of 2021 ($27 million), the decommissioning of Deep Panuke ($23 million), lower natural gas volumes in Anadarko ($16 million) and recoveries of amounts related to certain transportation contracts ($8 million).

Operating

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

	Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
($ millions)	2021		2020		2021		2020			2022		2021		2022		2021

USA Operations	$	122	$	104	$	368	$	364		$	187	$	122	$	478	$	368
Canadian Operations		25		24		78		75			34		25		96		78
Upstream Operating Expense		147		128		446		439			221		147		574		446

Market Optimization		5		5		19		15			7		5		22		19
Corporate & Other		1		-		1		(2	)		-		1		-		1
Total	$	153	$	133	$	466	$	452		$	228	$	153	$	596	$	466

	Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
($/BOE)	2021		2020		2021		2020			2022		2021		2022		2021

��
USA Operations	$	4.38	$	3.73	$	4.47	$	4.14		$	6.73	$	4.38	$	5.96	$	4.47
Canadian Operations	$	1.20	$	1.22	$	1.17	$	1.23		$	1.69	$	1.20	$	1.65	$	1.17
Upstream Operating Expense ⁽¹⁾	$	2.98	$	2.72	$	3.00	$	2.96		$	4.64	$	2.98	$	4.16	$	3.00

(1)

Upstream Operating Expense per BOE for the third quarter and first nine months of ~~2021 include~~2022 includes long-term incentive costs of $0.15/BOE and $0.16/BOE, respectively (2021 - $0.13/BOE and $0.14/~~BOE, respectively (2020 - long-term incentive costs of $0.03/BOE and a recovery of long-term incentive costs of $0.02/~~BOE, respectively).

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Operating expense increased ~~$20~~$75 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

~~Increased~~Inflationary pressures as a result of the higher commodity price environment and increased activity ~~resulting from higher production in Permian and improved commodity prices~~relating to discretionary workovers ($1768 million), higher long-term incentive costs resulting from an increase in the Company’s share price in the third quarter of 2021 compared to 2020 ($7 million) and lower capitalization of directly attributable internal costs ($7 million);.

4948

Nine months ended September 30, 2022 versus September 30, 2021

Operating expense increased $130 million compared to the first nine months of 2021 primarily due to:

•

Inflationary pressures as a result of the higher commodity price environment and increased activity relating to discretionary workovers ($143 million);

partially offset by:

•

The sales of the Eagle Ford and Duvernay assets in the second quarter of 2021 ($~~16 million).~~

~~Nine months ended September 30, 2021 versus September 30, 2020~~

~~Operating expense increased $14 million compared to the first nine months of 2020 primarily due to:~~

•

Lower capitalization of directly attributable internal costs ($38 million), higher long-term incentive costs resulting from an increase in the Company’s share price in the first nine months of 2021 compared to a decrease in 2020 ($29 million) and increased activity resulting from higher production in Permian and improved commodity prices ($18 million);

~~partially offset by:~~

•

Lower salaries and benefits due to decreased headcount resulting from workforce reductions in the second quarter of 2020 ($47 million) and the sales of the Eagle Ford and Duvernay assets in the second quarter of 2021 ($26 million).

Additional information on the Company’s long-term ~~incentives~~incentive costs can be found in Note 1615 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Purchased Product

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~~Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with the Company’s previous divestitures.

	Three months ended September 30,					Nine months ended September 30,				Three months ended September 30,					Nine months ended September 30,
($ millions)		2021		2020		2021		2020			2022		2021		2022		2021

Market Optimization		$	759	$	322	$	2,096	$	1,039		$	973	$	759	$	3,154	$	2,096

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Purchased product expense increased ~~$437~~$214 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

Higher oil and natural gas benchmark prices ($~~349~~253 million) and higher third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($~~206~~17 million);

partially offset by:

•

Lower third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($~~118~~56 million).

Nine months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Purchased product expense increased ~~$1,057~~$1,058 million compared to the first nine months of ~~2020~~2021 primarily due to:

•

Higher oil and natural gas benchmark prices ($~~1,005~~1,086 million) and higher third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($~~356~~126 million);

partially offset by:

•

Lower third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($~~304~~154 million).

5049

Depreciation, Depletion & Amortization

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 ~~2020~~2021 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 ~~2020~~2021 Annual Report on Form 10-K.

	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,					Nine months ended September 30,
($ millions)	2021		2020		2021		2020		2022		2021			2022		2021

USA Operations	$	207	$	299	$	635	$	1,092	$	225	$	207		$	642	$	635
Canadian Operations		83		99		265		319		61		83	��		176		265
Upstream DD&A		290		398		900		1,411		286		290			818		900

Corporate & Other		7		8		16		22		5		7			15		16
Total	$	297	$	406	$	916	$	1,433	$	291	$	297		$	833	$	916

	Three months ended September 30,				Nine months ended September 30,				Three months ended September 30,					Nine months ended September 30,
($/BOE)	2021		2020		2021		2020		2022		2021			2022		2021

USA Operations	$	7.52	$	10.66	$	7.73	$	12.42	$	8.11	$	7.52		$	8.03	$	7.73
Canadian Operations	$	3.82	$	5.23	$	4.02	$	5.31	$	3.09	$	3.82		$	3.04	$	4.02
Upstream DD&A	$	5.90	$	8.47	$	6.08	$	9.54	$	6.03	$	5.90		$	5.93	$	6.08

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

DD&A decreased ~~$109~~$6 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

Lower depletion rates and production volumes in the Canadian Operations ($11 million and $7 million, respectively) and a lower U.S./Canadian dollar exchange rate ($3 million);

partially offset by:

•

Higher depletion rates in the USA Operations ($17 million).

The depletion rate in the USA Operations increased $0.59 per BOE compared to the third quarter of 2021 primarily due to a higher depletable base. The depletion rate in the Canadian Operations decreased $0.73 per BOE compared to the third quarter of 2021 primarily due to higher reserve volumes.

Nine months ended September 30, 2022 versus September 30, 2021

DD&A decreased $83 million compared to the first nine months of 2021 primarily due to:

•

Lower depletion rates in the ~~USA and~~ Canadian Operations ($~~87 million and $37 million, respectively) and lower production volumes in USA Operations ($5~~51 million), ~~partially offset by higher~~lower production volumes in the Canadian and USA Operations ($~~14 million)~~31 million and $17 million, respectively) and a ~~higher~~lower U.S./Canadian dollar exchange rate ($6 million);

partially offset by:

•

Higher depletion rates in the USA Operations ($24 million).

The depletion rate in the USA Operations decreased $3.14 per BOE compared to the third quarter of 2020 primarily due to the ceiling test impairments recognized in 2020 and the sale of the Eagle Ford assets in the second quarter of 2021. The depletion rate in the Canadian Operations decreased $1.41 per BOE compared to the third quarter of 2020 primarily due to a lower depletable base and the sale of the Duvernay assets in the second quarter of 2021.

~~Nine months ended September 30, 2021 versus September 30, 2020~~

~~DD&A decreased $517 million compared to the first nine months of 2020 primarily due to:~~

•

Lower depletion rates in the USA and Canadian Operations ($386 million and $114 million, respectively) and lower production volumes in USA Operations ($71 million), partially offset by higher production volumes in the Canadian Operations ($34 million) and a higher U.S./Canadian dollar exchange rate ($29 million).

~~The depletion rate in the USA Operations decreased $4.69~~increased $0.30 per BOE compared to the first nine months of ~~2020~~2021 primarily due to ~~the ceiling test impairments recognized in 2020 and the sale of the Eagle Ford assets in the second quarter of 2021.~~a higher depletable base. The depletion rate in the Canadian Operations decreased ~~$1.29~~$0.98 per BOE compared to the first nine months ~~of 2020~~2021 primarily due to ~~a lower depletable base and the sale of the Duvernay assets in the second quarter of 2021.~~higher reserve volumes.

5150

~~Impairments~~

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 third quarter and first nine months of 2021, the Company did not recognize ceiling test impairments (2020 - $1,336 million before tax, and $4,863 million before tax, respectively, in the USA Operations). The non-cash ceiling test impairments in 2020 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

WTI
($/bbl)

Edmonton
Condensate
(C$/bbl)

Henry Hub
($/MMBtu)

AECO
(C$/MMBtu)

12-Month Average Trailing Reserves Pricing ⁽¹⁾

September 30, 2021

57.69

72.45

2.94

2.79

December 31, 2020

39.62

49.77

1.98

2.13

September 30, 2020

43.69

53.93

1.97

2.01

~~(1)~~

~~All prices were held constant in all future years when estimating net revenues and reserves.~~

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

Administrative

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

	Three months ended September 30,					Nine months ended September 30,						Three months ended September 30,				Nine months ended September 30,
($ millions)	2021		2020			2021			2020			2022		2021		2022			2021

Administrative, excluding Long-Term Incentive,
Restructuring and Legal Costs, and Current
Expected Credit Losses⁽¹⁾	$	70	$	72		$	219		$	214		$	66	$	70	$	194		$	219
Long-term incentive costs		25		1			91			(6	)		37		25		123			91
Restructuring and legal costs		6		7			37			88			-		6		(1	)		37
Current expected credit losses		-		(1	)		(1	)		1			-		-		2			(1	)
Total Administrative⁽²⁾	$	101	$	79		$	346		$	297
Total Administrative												$	103	$	101	$	318		$	346

	Three months ended September 30,					Nine months ended September 30,						Three months ended September 30,				Nine months ended September 30,
($/BOE)	2021		2020			2021			2020			2022		2021		2022			2021

Administrative, excluding Long-Term Incentive,
Restructuring and Legal Costs, and Current
Expected Credit Losses⁽¹⁾	$	1.44	$	1.55		$	1.50		$	1.46
Expected Credit Losses⁽¹⁾												$	1.39	$	1.44	$	1.40		$	1.50
Long-term incentive costs		0.51		0.02			0.61			(0.04	)		0.77		0.51		0.89			0.61
Restructuring and legal costs		0.11		0.14			0.24			0.59			-		0.11		(0.01	)		0.24
Current expected credit losses		-		(0.03	)		(0.01	)		-			-		-		0.02			(0.01	)
Total Administrative	$	2.06	$	1.68		$	2.34		$	2.01		$	2.16	$	2.06	$	2.30		$	2.34

(1)	The third quarter and first nine months of ~~2021~~2022 include costs related to The Bow office lease of $30 million and $88 million, respectively ~~(2020~~(2021 - ~~$28~~$30 million and ~~$82~~$88 million, respectively), half of which is recovered from sublease revenues.

~~(2)~~

~~The third quarter and first nine months of 2021 reflect a higher U.S./Canadian dollar exchange rate of $3 million and $13 million, respectively.~~

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Administrative expense increased ~~$22~~$2 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

Higher long-term incentive costs resulting from an increase in the Company’s share price in the third quarter of ~~2021~~2022 compared to ~~2020~~2021 ($2412 million);

partially offset by:

•

ALower legal and operating lease costs ($4 million and $3 million, respectively) and a decrease in restructuring costs ~~related to workforce reductions in 2020~~ ($52 million).

Nine months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Administrative expense ~~increased $49~~decreased $28 million compared to the first nine months of ~~2020~~2021 primarily due to:

•

~~Higher long-term incentive~~Lower legal, consulting and operating lease costs ~~resulting from an increase in the Company’s share price in the first nine months of 2021 compared to~~($24 million, $13 million and $13 million, respectively) and a decrease in ~~2020 ($97 million) and higher legal and consulting~~restructuring costs ($3114 million);

partially offset by:

•

~~A decrease in restructuring~~Higher long-term incentive costs ~~and lower salaries and benefits~~mainly due to higher settlement prices related to ~~workforce reductions in 2020~~cash-settled compensation plans during the first quarter of 2022 compared to 2021 ($~~75 million and $9 million, respectively)~~32 million).

During 2020, the Company completed workforce reductions as part of a company-wide reorganization in response to the low commodity price environment resulting from the global pandemic and the Company’s planned reductions in capital spending. Additional information on ~~restructuring charges~~the Company’s long-term incentive costs can be found in Note 15 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

5351

Other (Income) Expenses

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
($ millions)	2021			2020			2021			2020			2022			2021			2022			2021

Interest	$	77		$	97		$	263		$	279		$	83		$	77		$	248		$	263
Foreign exchange (gain) loss, net		-			(25	)		(15	)		51			19			-			21			(15	)
Other (gains) losses, net		(6	)		(18	)		(31	)		(48	)		(3	)		(6	)		(30	)		(31	)
Total Other (Income) Expenses	$	71		$	54		$	217		$	282		$	99		$	71		$	239		$	217

Interest

Interest expense primarily includes interest on Ovintiv’s long-term debt. Additional information on changes in interest can be found in Note 4 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Interest expense ~~decreased $20~~increased $6 million compared to the third quarter of ~~2020~~2021 primarily due to the redemption of the Company’s 2021 and 2022 senior notes ($12 million), and open market repurchases of long-term debt completed in 2020 and decreased amounts drawn from the Company’s credit facilities ($5 million).to:

•

Premiums of $22 million related to the Company’s open market repurchases in 2022 and issuances under the Company’s U.S. CP program ($5 million);

partially offset by:

•

Interest savings related to the redemption of certain senior notes in 2021 and 2022 ($22 million).

Nine months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Interest expense decreased ~~$16~~$15 million compared to the first nine months of ~~2020~~2021 primarily due to:

•

Interest savings related to the redemption of certain senior notes in 2021 and 2022 ($36 million), and the acceleration of the fair value amortization related to the early redemption of the Company’s 2024 senior notes in June 2022 of $30 million;

partially offset by:

•

A one-time make-whole interest payment of $47 million resulting from the early redemption of the Company’s 2024 senior notes in June 2022, compared to a one-time make-whole interest payment of $19 million resulting from the early redemption of the Company’s 2022 senior notes in June 2021, and premiums of $22 million related to the Company’s open market repurchases in 2022.

Additional information on the early debt redemption and open market repurchases can be found in Note 10 to the Consolidated Financial Statements included in Part I, Item 1 of ~~long-term debt completed in 2020 and decreased amounts drawn from the Company’s credit facilities ($16 million),~~this Quarterly Report on Form 10-Q and the ~~redemption~~Liquidity and Capital Resources section of the Company’s 2021 and 2022 senior notes ($14 million), partially offset by a one-time make-whole interest payment of $19 million resulting from the June 2021 early redemption of the Company’s $600 million, 5.75 percent senior notes due January 30, 2022.this MD&A.

Foreign Exchange (Gain) Loss, Net

Foreign exchange gains and losses primarily result from the impact of fluctuations in the Canadian to U.S. dollar exchange rate. Additional information on changes in foreign exchange gains or losses can be found in Note 5 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Following the completion of the corporate reorganization and U.S. domestication in the first quarter of 2020, 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 Additional information on foreign exchange ~~translation gains or losses.~~rates and the effects of foreign exchange rate changes can be found in Part I, Item 3 of this Quarterly Report on Form 10-Q.

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Net foreign exchange loss was ~~nil~~$19 million compared to ~~a gain of $25 million~~nil in the third quarter of ~~2020~~2021 primarily due to:

•

Unrealized foreign exchange losses on the translation of U.S. dollar risk management contracts and financing debt issued from Canada compared to gains in 2020 ($29 million and $6 million, respectively);

~~partially offset by:~~

•

Higher realized foreign exchange ~~gains~~losses on the settlement of U.S. dollar financing debt issued from Canada ($12 million), realized foreign exchange losses on the settlement of U.S. dollar risk management contracts issued from Canada compared to ~~2020~~gains in 2021 ($58 million).

~~Nine months ended September 30, 2021 versus September 30, 2020~~

~~Net foreign exchange gain was $15 million compared to a loss of $51 million in the first nine months of 2020 primarily due to:~~

•

~~Lower~~ and higher unrealized foreign exchange losses on the translation of U.S. dollar ~~financing debt~~risk management contracts issued from Canada ($556 million) and realized foreign exchange gains on the settlement of U.S. dollar risk management contracts and financing debt issued from Canada compared to losses in 2020 ($32 million and $24 million, respectively);

5452

partially offset by:

•

Higher gains on monetary revaluations ($10 million).

Nine months ended September 30, 2022 versus September 30, 2021

Net foreign exchange loss of $21 million compared to a gain of $15 million the first nine months of 2021 primarily due to:

•

Lower ~~unrealized~~realized foreign exchange gains on the ~~translation~~settlement of ~~intercompany notes~~U.S. dollar risk management contracts issued from Canada ($2724 million), realized foreign exchange losses on the settlement of U.S. dollar financing debt issued from Canada compared to gains in 2021 ($20 million) and higher unrealized foreign exchange losses on the translation of U.S. dollar risk ~~managements~~management contracts issued from Canada ($185 million);

partially offset by:

•

Gains on monetary revaluations compared to losses in 2021 ($15 million).

Other (Gains) Losses, Net

Other (gains) losses, net, primarily includes other non-recurring revenues or expenses and may also include items such as interest income, interest received from tax authorities, ~~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 first nine months of ~~2021~~2022 includes interest income of $24 million (2021 - $13 ~~million~~million) primarily associated with the resolution of prior ~~year~~years’ tax items.

Other gains in the third quarter and first nine months of 2020 primarily included a gain of $6 million and $28 million, respectively, relating to the repurchase of the Company’s fixed long-term debt on the open market.

Income Tax

	Three months ended September 30,					Nine months ended September 30,					Three months ended September 30,					Nine months ended September 30,
($ millions)	2021		2020			2021			2020		2022		2021			2022		2021

Current Income Tax Expense (Recovery)	$	-	$	3		$	(156	)	$	2	$	-	$	-		$	10	$	(156	)
Deferred Income Tax Expense (Recovery)		1		(42	)		(19	)		393		88		1			138		(19	)
Income Tax Expense (Recovery)	$	1	$	(39	)	$	(175	)	$	395	$	88	$	1		$	148	$	(175	)

Effective Tax Rate	(1.4%)		2.5%			122.4%			(7.8%)		6.9%		(1.4%		)	6.0%		122.4%

Income Tax Expense (Recovery)

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

In the third quarter of 2022, Ovintiv recorded a higher income tax expense compared to 2021 ($87 million), primarily due to the changes in valuation allowances.

Nine months ended September 30, 2022 versus September 30, 2021

In the first nine months of 2022, Ovintiv recorded an income tax expense of $1$148 million compared to an income tax recovery of ~~$39~~$175 million in ~~2020, primarily due to the change in valuation allowances.~~

~~Nine months ended September 30,~~ 2021, ~~versus September 30, 2020~~

~~In the first nine months of 2021, Ovintiv recorded an income tax recovery of $175 million compared to an income tax expense of $395 million in 2020,~~ primarily due to the resolution of ~~certain~~prior years’ tax items ~~relating to prior taxation years~~recognized in 2021 and the ~~change~~changes in valuation allowances.

Effective Tax Rate

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

For the third quarter and the first nine months of 2022, the Company’s effective tax rates were 6.9 percent and 6.0 percent, respectively, which are lower than the U.S. federal statutory tax rate of 21 percent primarily due to the lower annual effective income tax rate resulting from a reduction in valuation allowances.

The Company’s effective tax rate was (1.4) percent for the third quarter of 2021, which iswas lower than the ~~U.S.~~U.S federal statutory tax rate of 21 percent primarily due to the change in valuation ~~allowances recorded relating to the current year net loss before tax.~~

allowances. The Company’s effective tax rate was 122.4 percent for the first nine months of 2021, which iswas higher than the ~~U.S.~~U.S federal statutory tax rate of 21 percent primarily due to the resolution of ~~certain~~prior years’ tax items ~~relating to prior taxation years~~ and the change in valuation ~~allowances recorded relating to the current year net loss before tax.~~

The Company’s effective tax rate was 2.5 percent for the third quarter and (7.8) percent for the first nine months of 2020, which were lower than the U.S. statutory tax rate of 21 percent primarily due to valuation allowances recorded due to net losses arising from ceiling test impairments, and an increase in the valuation allowance of $568 million in Canada related to prior year’s deferred tax assets, which was recorded as a discrete item.allowances.

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

Additional information on income taxes 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.

Liquidity and Capital Resources

Sources of Liquidity

The Company has the flexibility to access cash equivalents and a range of funding alternatives at competitive rates through committed revolving credit facilities as well as debt and equity capital markets. Ovintiv closely monitors the accessibility of cost-effective credit and ensures that sufficient liquidity is in place to fund capital expenditures and dividend payments. In addition, the Company may use cash and cash equivalents, cash from operating activities, or proceeds from asset divestitures to fund its operations and capital allocation framework or to manage its capital structure as discussed below. At September 30, 2022, $15 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 ~~execute its strategy.~~finance internally generated growth, as well as potential acquisitions. Ovintiv has a practice of maintaining capital discipline and strategically managing its capital structure by adjusting capital spending, adjusting dividends paid to shareholders, issuing new shares of common stock, purchasing shares of common stock for cancellation or return to treasury, issuing new debt and repaying or repurchasing existing debt.

	As at September 30,					As at September 30,
($ millions, except as indicated)	2021		2020			2022			2021

Cash and Cash Equivalents	$	8	$	32		$	18		$	8
Available Credit Facilities ⁽¹⁾		4,000		2,990			3,500			4,000
Available Uncommitted Demand Lines ⁽²⁾		278		186			296			278
Issuance of U.S. Commercial Paper		-		(140	)		(440	)		-
Total Liquidity	$	4,286	$	3,068		$	3,374		$	4,286

Long-Term Debt, including current portion	$	4,791	$	7,142		$	3,618		$	4,791
Total Shareholders’ Equity(3)	$	3,797	$	4,352		$	6,550		$	3,797

Debt to Capitalization (%) ⁽³⁾⁽⁴⁾		56		62			36			56
Debt to Adjusted Capitalization (%) ⁽⁴⁾⁽⁵⁾		29		37			20			29

(1)	~~Includes~~2022 includes available credit facilities of ~~$2.5~~$2.2 billion ~~(2020 - $1.77 billion)~~ in the U.S. and $1.3 billion in Canada (2021 - $2.5 billion and $1.5 billion, ~~(2020 - $1.22 billion) in Canada as at September 30, 2021 (collectively, the “Credit Facilities”)~~respectively).

(2)	Includes three uncommitted demand lines totaling ~~$335~~$319 million, net of ~~$57~~$23 million in related undrawn letters of credit ~~(2020~~(2021 - ~~$325~~$335 million and ~~$139~~$57 million, respectively).

(3)	Shareholders’ Equity reflects the shares of common stock purchased, for cancellation, under the Company’s NCIB program initiated in 2021.

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

~~(4)~~(5)

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

~~The~~In March, the Company commenced negotiations to amend and restate its committed revolving credit facilities. Effective April 1, 2022, the Company has access to two committed revolving U.S. dollar denominated credit facilities totaling ~~$4.0~~$3.5 billion, which include a ~~$2.5~~$2.2 billion revolving credit facility for Ovintiv Inc. and a ~~$1.5~~$1.3 billion revolving credit facility for a Canadian subsidiary (collectively, the “Credit Facilities”). Maturity dates for both ~~maturing in~~credit facilities were extended to July ~~2024.~~2026 and the Company has full access to these Credit Facilities. The Credit Facilities provide financial flexibility and allow the Company to fund its operations or capital investment program. At September 30, ~~2021,~~2022, there were no outstanding amounts under the revolving Credit Facilities.

During the first quarter of 2022, Ovintiv’s credit ~~facility for Ovintiv Inc.~~rating was upgraded to investment grade by one of its credit rating agencies driven by Ovintiv’s significant debt reductions and ~~for~~improved commodity price assumptions used by the ~~Canadian subsidiary.~~

~~Ovintiv currently has both investment and non-investment grade~~rating agency. All of Ovintiv’s credit ratings ~~and has full access to its Credit Facilities and U.S. commercial paper (“U.S. CP”) programs.~~are investment grade as at September 30, 2022.

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, ~~2021,~~2022, the Company had noapproximately $440 million of commercial paper outstanding under its U.S. CP ~~programs.~~programs which is supported by the Company’s Credit Facilities.

The Credit Facilities, uncommitted demand lines, and cash and cash equivalents provide Ovintiv with total liquidity of approximately ~~$4.3 billion.~~$3.4 billion as at September 30, 2022. At September 30, ~~2021,~~2022, Ovintiv also had approximately ~~$57~~$23 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.

Ovintiv has 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 September 30, 2021, $6.0 billion remained accessible under the Canadian~~The U.S. shelf ~~prospectus.~~registration statement expires in March 2023. 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 September 30, ~~2021,~~2022, the Company’s Debt to Adjusted Capitalization was 2920 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 ~~2020~~2021 Annual Report on Form 10‑K.

Sources and Uses of Cash

In the third quarter and first nine months of ~~2021,~~2022, Ovintiv primarily generated cash through operating ~~activities and divestitures.~~activities. The following table summarizes the sources and uses of the Company’s cash and cash equivalents.

		Three months ended September 30,						Nine months ended September 30,							Three months ended September 30,					Nine months ended September 30,
($ millions)	Activity Type	2021			2020			2021			2020			Activity Type	2022		2021			2022			2021

Sources of Cash, Cash Equivalents and Restricted Cash
Cash from operating activities	Operating	$	812		$	493		$	2,389		$	1,176		Operating	$	962	$	812		$	2,991		$	2,389
Proceeds from divestitures	Investing		(8	)		39			1,017			69		Investing		225		(8	)		230			1,017
Net issuance of revolving long-term debt	Financing		-			-			-			452		Financing		225		-			440			-
Other	Investing		6			68			-			-		Investing		34		6			82			-
			810			600			3,406			1,697				1,446		810			3,743			3,406

Uses of Cash and Cash Equivalents
Capital expenditures	Investing		365			351			1,098			1,393		Investing		511		365			1,473			1,098
Acquisitions	Investing		-			1			3			19		Investing		12		-			34			3
Net repayment of revolving long-term debt	Financing		-			100			950			-		Financing		-		-			-			950
Repayment of long-term debt ⁽¹⁾	Financing		518			109			1,137			224		Financing		525		518			1,634			1,137
Purchase of shares of common stock														Financing		325		-			531			-
Dividends on shares of common stock	Financing		37			24			86			73		Financing		62		37			178			86
Other	Financing/Investing		2			23			134			141		Investing/Financing		2		2			68			134
			922			608			3,408			1,850				1,437		922			3,918			3,408
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		(2	)		1			-			(5	)	Foreign Exchange Gain (Loss) on Cash, Cash Equivalents and Restricted Cash Held in Foreign Currency		1		(2	)		(2	)		-
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	$	(114	)	$	(7	)	$	(2	)	$	(158	)	Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	$	10	$	(114	)	$	(177	)	$	(2	)

(1)	Includes open market repurchases in ~~2020.~~2022.

Operating Activities

Net cash from operating activities in the third quarter and first nine months of ~~2021~~2022 was ~~$812~~$962 million and ~~$2,389~~$2,991 million, respectively, and was primarily a reflection of the impacts from higher average realized commodity prices, partially offset by 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 2019 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 third quarter and first nine months of ~~2021~~2022 was ~~$845~~$948 million and ~~$2,468~~$3,215 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.

Three months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Net cash from operating activities increased ~~$319~~$150 million compared to the third quarter of ~~2020~~2021 primarily due to:

•

Higher realized commodity prices ($~~936~~780 million), ~~lower decommissioning payments primarily related to Deep Panuke~~changes in non-cash working capital ($3754 million) and ~~higher production volumes~~lower administrative expenses, excluding non-cash long-term incentive costs and current expected credit losses ($326 million);

partially offset by:

•

~~Realized~~Higher realized losses on risk management in revenues compared to ~~gains in 2020~~2021 ($~~460~~450 million), ~~changes in non-cash working capital~~lower production volumes ($~~165~~76 million), ~~higher transportation and processing expense ($32 million), higher production, mineral and other taxes ($30 million) and~~ higher operating expense, excluding non-cash long-term incentive costs ($1374 million), higher transportation and processing expense ($71 million), and higher production, mineral and other taxes ($32 million).

Nine months ended September 30, ~~2021~~2022 versus September 30, ~~2020~~2021

Net cash from operating activities increased ~~$1,213~~$602 million compared to the first nine months of ~~2020~~2021 primarily due to:

•

Higher realized commodity prices ($2,479 million), a current income tax recovery mainly due to the resolution of certain tax items relating to prior taxation years ($156 million), lower decommissioning payments primarily related to Deep Panuke ($134 million), lower administrative expenses, excluding non-cash long-term incentive costs and current expected credit losses ($38 million), lower operating expense, excluding non-cash long-term incentive costs ($15 million) and higher interest income ($93,026 million);

partially offset by:

•

~~Realized~~Higher realized losses on risk management in revenues compared to ~~gains~~2021 ($1,325 million), lower production volumes ($430 million), current income tax recovery mainly due to the resolution of prior years’ tax items in ~~2020~~2021 of $156 million, higher transportation and processing expense ($~~1,355~~133 million), higher operating expense, excluding non-cash long-term incentive costs ($126 million), changes in non-cash working capital ($~~164~~124 million), and higher production, mineral and other taxes ($~~84 million), higher transportation and processing expense ($65 million) and lower production volumes ($21~~111 million).

Investing Activities

Cash used in investing activities in the first nine months of ~~2021~~2022 was ~~$120~~$1,195 million primarily due to capital ~~expenditures, partially offset by proceeds from divestitures.~~expenditures. Capital expenditures ~~decreased $295~~increased $375 million compared to the first nine months of ~~2020~~2021, primarily due to ~~the Company’s reduced capital program in response to the volatile market conditions that commenced at the end~~timing of ~~the first quarter of 2020.~~projects and inflationary cost pressures.

Acquisitions in the first nine months of ~~2021~~2022 were $3$34 million ~~(2020~~(2021 - ~~$19~~$3 million), which primarily included property purchases with oil and liquids rich potential.

Divestitures in the first nine months of 2022 were $230 million, which primarily included the sale of portions of the Uinta assets located in northeastern Utah and Bakken assets location in northeastern Montana, as well as certain properties that did not complement Ovintiv’s existing portfolio of assets.

Divestitures in the first nine months of 2021 were $1,017 million, ~~(2020 - $69 million),~~ which primarily included the sale of the Eagle Ford assets in south Texas and Duvernay assets in west central Alberta, ~~totaling approximately $1.0 billion, after closing and other adjustments,~~ as well as certain properties that did not complement Ovintiv’s existing portfolio of assets.

Capital expenditures and acquisition and divestiture activity are summarized in Notes 2 and 7 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Financing Activities

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

Net cash used in financing activities in the first nine months of ~~2021 was $2,271~~2022 decreased by $300 million compared to ~~net cash from financing activities of $88 million in 2020.~~2021. The ~~change~~decrease was primarily due to a net ~~repayment~~issuance of revolving long-term debt ~~in 2021 of $950 million~~ compared to a net ~~issuance~~repayment in ~~2020~~2021 ($1,390 million), partially offset by increased purchases of ~~$452 million and~~shares of common stock under the Company’s NCIB program in 2022 compared to 2021 ($531 million), higher repayment of long-term debt ~~($913 million)~~ associated with open market repurchases in 2022 and the early redemption of the Company’s 2024 senior notes ~~as discussed below.~~in June 2022 compared to the early redemption of the Company’s 2022 senior notes in June 2021 ($497 million) and an increase in dividend payments in 2022 ($92 million).

From time to time, Ovintiv may seek to retire or purchase the Company’s outstanding debt through cash purchases and/or exchanges for other debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.In the first nine months of 2022, the Company repurchased in the open market, approximately $565 million in principal, plus accrued interest and premiums, which included a portion of its 5.375 percent senior notes due January 2026, its 6.5 percent senior notes due August 2034, its 6.625 percent senior notes due August 2037, its 6.5 percent senior notes due February 2038 and its 5.15 percent senior notes due November 2041. The Company paid premiums of $22 million to complete the open market repurchases.

In June 2022, Ovintiv redeemed its $1.0 billion, 5.625 percent senior notes due July 1, 2024, with cash on hand and other existing sources of liquidity. The redemption resulted in a one-time make-whole payment of $47 million.

The Company’s long-term debt, including the current portion of $440 million, totaled ~~$4,791~~$3,618 million at September 30, ~~2021.~~2022. The Company’s long-term debt at December 31, 2021 totaled $4,786 million. There was no current portion outstanding at ~~September 30, 2021. The Company’s long-term debt at~~ December 31, 2020 totaled $6,885 million, which included the current portion of $518 million. In June 2021, the Company redeemed its $600 million, 5.75 percent senior notes due January 30, 2022, and in August 2021, redeemed its $518 million, 3.90 percent senior notes due November 15, 2021. ~~The combined debt redemptions are expected to result in annualized interest savings of over $50 million.~~ As at September 30, ~~2021,~~2022, the Company has no fixed rate long-term debt due until ~~2024~~2026 and beyond.

In support of the Company’s commitment to unlocking shareholder value, Ovintiv utilizes its capital allocation framework to increase returns to shareholders and maintain the Company’s progress on debt reduction. Since the second quarter of 2020, the Company has allocated ~~$2,575~~$3,748 million in excess cash flows to reduce its total long-term debt ~~balance, which includes proceeds from~~balance. On July 6, 2022, Ovintiv elected to accelerate the ~~Duvernay and Eagle Ford asset divestitures. The Company is targeting a Net Debt balance of approximately $3.0 billion by the end of 2023.~~

~~In support of the Company’s commitment to growing shareholder value, Ovintiv announced a new capital allocation framework~~increase in ~~the third quarter that outlines increasing~~cash returns to shareholders as ~~well as continuing~~a result of the Company’s ~~progress on debt reduction.~~continued strong financial performance and the asset sales that closed during the third quarter of 2022. During the third quarter of 2022, the Company increased its cash return to shareholders from 25 percent to 50 percent of Non-GAAP Cash Flow in excess of capital expenditures and base dividends. Ovintiv delivered the additional shareholder returns through share buybacks under its NCIB program.

For additional information on long-term debt, refer to Note 10 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Dividends

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

	Three months ended September 30,					Nine months ended September 30,				Three months ended September 30,					Nine months ended September 30,
($ millions, except as indicated)		2021		2020		2021		2020			2022		2021		2022		2021

Dividend Payments		$	37	$	24	$	86	$	73		$	62	$	37	$	178	$	86
Dividend Payments ($/share)		$	0.14	$	0.09375	$	0.3275	$	0.28125		$	0.25	$	0.14	$	0.70	$	0.3275

On November ~~2, 2021,~~8, 2022, the Board of Directors declared a dividend of ~~$0.14~~$0.25 per share of common stock payable on December ~~31, 2021~~30, 2022 to common ~~stockholders~~shareholders of record as of December 15, ~~2021.~~2022.

Dividends increased $92 million compared to the first nine months of 2021, as a result of Ovintiv increasing its quarterly dividend payments to an annualized dividend of $0.80 per share of common stock during the first quarter of 2022 and a further increase to an annualized dividend of $1.00 per share of common stock in the second quarter of 2022. The dividend increases reflect the Company’s commitment to returning capital to shareholders.

Normal Course Issuer Bid

On September 28, ~~2021, Ovintiv~~2022, the Company announced it had received regulatory approval ~~to commence a~~for the renewal of its NCIB program, that enables the Company to purchase, for cancellation or return to treasury, up to approximately 2624.8 million shares of common stock over a 12-month period from October ~~1, 2021~~3, 2022 to ~~September 30, 2022.~~October 2, 2023. The number of shares authorized for purchase ~~represent~~represents approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as at September ~~20, 2021.~~19, 2022. The Company ~~plans~~will continue to ~~fund~~execute the renewed NCIB ~~through~~program in conjunction with its ~~new~~ capital allocation ~~framework as discussed above.~~framework.

~~Off-Balance Sheet Arrangements~~In the third quarter and first nine months of 2022, under the previous NCIB program, which extended from October 1, 2021 to September 30, 2022, the Company purchased, for cancellation, approximately 6.7 million and 11.2 million shares of common stock for total consideration of approximately $325 million and $531 million, respectively.

Material Cash Requirements

For information on ~~off-balance sheet arrangements and transactions,~~material cash requirements, refer to the ~~Off-Balance Sheet Arrangements~~Material Cash Requirements section of the MD&A included in Item 7 of the ~~2020~~2021 Annual Report on Form 10-K.

Commitments and Contingencies

For information on commitments and contingencies, refer to Note 2120 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

6058

Non-GAAP Measures

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

Non-GAAP Cash Flow and Non-GAAP Cash Flow Margin

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 investment 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 September 30,

Nine months ended September 30,

($ millions, except as indicated)

2021

2020

2021

2020

Cash From (Used in) Operating Activities

$
812

$
493

$
2,389

$
1,176

(Add back) deduct:

Net change in other assets and liabilities

(10
)

(47
)

(21
)

(167
)
Net change in non-cash working capital

(23
)

142

(58
)

106

Current tax on sale of assets

-

-

-

-

Non-GAAP Cash Flow ⁽¹⁾

$
845

$
398

$
2,468

$
1,237

Divided by:

Production Volumes (MMBOE)

49.2

46.9

148.1

147.8

Non-GAAP Cash Flow Margin ($/BOE)

$
17.17

$
8.49

$
16.66

$
8.37

~~(1)~~

~~The third quarter and first nine months of 2021 include restructuring costs of $2 million and $13 million, respectively (2020 - $7 million and $88 million, respectively).~~

	Three months ended September 30,						Nine months ended September 30,
($ millions, except as indicated)	2022			2021			2022			2021

Cash From (Used in) Operating Activities	$	962		$	812		$	2,991		$	2,389
(Add back) deduct:
Net change in other assets and liabilities		(17	)		(10	)		(42	)		(21	)
Net change in non-cash working capital		31			(23	)		(182	)		(58	)
Current tax on sale of assets		-			-			-			-
Non-GAAP Cash Flow	$	948		$	845		$	3,215		$	2,468
Divided by:
Production Volumes (MMBOE)		47.5			49.2			138.0			148.1
Non-GAAP Cash Flow Margin ($/BOE)	$	19.96		$	17.17		$	23.30		$	16.66

6159

Total Costs

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, restructuring and legal 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, restructuring and legal 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 September 30,					Nine months ended September 30,						Three months ended September 30,				Nine months ended September 30,
($ millions, except as indicated)	2021		2020			2021			2020			2022		2021		2022			2021

Total Operating Expenses	$	1,789	$	2,696		$	5,245		$	9,365		$	2,176	$	1,789	$	6,563		$	5,245
Deduct (add back):
Market optimization operating expenses		808		380			2,245			1,224			1,021		808		3,298			2,245
Corporate & other operating expenses		1		-			1			(2	)		-		1		-			1
Depreciation, depletion and amortization		297		406			916			1,433			291		297		833			916
Impairments		-		1,336			-			4,863
Accretion of asset retirement obligation		5		8			17			26			4		5		14			17
Long-term incentive costs		31		2			112			(8	)		44		31		145			112
Restructuring and legal costs		6		7			37			88			-		6		(1	)		37
Current expected credit losses		-		(1	)		(1	)		1			-		-		2			(1	)
Total Costs	$	641	$	558		$	1,918		$	1,740		$	816	$	641	$	2,272		$	1,918
Divided by:
Production Volumes (MMBOE)		49.2		46.9			148.1			147.8			47.5		49.2		138.0			148.1
Total Costs ($/BOE) ⁽¹⁾	$	13.03	$	11.85		$	12.97		$	11.77		$	17.16	$	13.03	$	16.45		$	12.97

(1)	Calculated using whole dollars and volumes.

Debt to Adjusted Capitalization

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

($ millions, except as indicated)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Long-Term Debt, including current portion	$	4,791	$	6,885	$	3,618	$	4,786
Total Shareholders’ Equity		3,797		3,837		6,550		5,074
Equity Adjustment for Impairments at December 31, 2011		7,746		7,746		7,746		7,746
Adjusted Capitalization	$	16,334	$	18,468	$	17,914	$	17,606
Debt to Adjusted Capitalization	29%		37%		20%		27%

6260

Net Debt and Net Debt to Adjusted EBITDA

Net Debt and Net Debt to Adjusted EBITDA are non-GAAP measures 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, depreciation, depletion and amortization, 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~~these measures are useful to the Company and its investors as a measure of financial leverage and the Company’s ability to service its debt and other financial obligations. ~~This measure is~~These measures are used, along with other measures, in the calculation of certain financial performance targets for the Company’s management and employees.

($ millions, except as indicated)	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021

Long-Term Debt, including current portion	$	4,791		$	6,885		$	3,618		$	4,786
Less:
Cash and cash equivalents		8			10			18			195
Net Debt		4,783			6,875			3,600			4,591

Net Earnings (Loss)		(582	)		(6,097	)		3,686			1,416
Add back (deduct):
Depreciation, depletion and amortization		1,317			1,834			1,107			1,190
Impairments		717			5,580
Accretion of asset retirement obligation		20			29			19			22
Interest		355			371			325			340
Unrealized (gains) losses on risk management		1,612			204			(1,149	)		488
Foreign exchange (gain) loss, net		(49	)		17			13			(23	)
(Gain) loss on divestitures, net		-			-
Other (gains) losses, net		(38	)		(55	)		(36	)		(37	)
Income tax expense (recovery)		(203	)		367			146			(177	)
Adjusted EBITDA (trailing 12-month)	$	3,149		$	2,250		$	4,111		$	3,219
Net Debt to Adjusted EBITDA (times)		1.5			3.1			0.9			1.4

6361

Item 3: Quantitative and Qualitative Disclosures About Market Risk

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

COMMODITY PRICE RISK

Commodity price risk arises from the effect fluctuations in future commodity prices, including oil, NGLs and natural gas, may have on future revenues, expenses and cash flows. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot market prices applicable to the Company’s natural gas production. Pricing for oil, NGLs and natural gas production is volatile and unpredictable as discussed in Part 1, Item 2 of this Quarterly Report on Form ~~10-Q~~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 ~~2020~~2021 Annual Report on Form ~~10-K.~~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 1918 under Part I, Item 1 of this Quarterly Report on Form ~~10-Q.~~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:

	September 30, 2021					September 30, 2022
(US$ millions)	10% Price Increase			10% Price Decrease		10% Price Increase			10% Price Decrease

Crude oil price	$	(241	)	$	221	$	(78	)	$	70
NGL price		(12	)		12
Natural gas price		(260	)		256		(77	)		75

FOREIGN EXCHANGE RISK

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

The table below summarizes selected foreign exchange impacts on Ovintiv’s financial results when compared to the same periods in ~~2020.~~2021.

	Three Months Ended September 30,				Nine Months Ended September 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			$	19			$	(4	)				$	(7	)
Transportation and Processing Expense ⁽¹⁾		11	$	0.22		49	$	0.33		(8	)	$	(0.17	)		(17	)	$	(0.13	)
Operating Expense ⁽¹⁾		1		0.03		6		0.04		(1	)		(0.02	)		(2	)		(0.01	)
Administrative Expense		3		0.06		13		0.09		(2	)		(0.04	)		(4	)		(0.03	)
Depreciation, Depletion and Amortization ⁽¹⁾		6		0.12		27		0.18		(3	)		(0.06	)		(6	)		(0.04	)

(1)	Reflects upstream operations.

6462

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

•

U.S. dollar denominated financing debt issued from Canada

•

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

•

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

•

Foreign denominated intercompany loans

To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at September 30, ~~2021,~~2022, Ovintiv has entered into ~~$88 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3720 to US$1, which mature monthly through the remainder of 2021 and~~ $100 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$~~1.2820~~1.2848 to US$1, which mature monthly through the remainder of 2022 and $350 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3083 to US$1, which mature monthly throughout ~~2022.~~2023.

As at September 30, ~~2021,~~2022, Ovintiv ~~did not have any~~had $18 million of U.S. dollar denominated ~~long-term~~financing debt ~~or finance lease obligations~~ issued from Canada that ~~were~~was subject to foreign exchange exposure.

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

	September 30, 2021					September 30, 2022
(US$ millions)	10% Rate Increase			10% Rate Decrease		10% Rate Increase			10% Rate Decrease

Foreign currency exchange	$	(83	)	$	102	$	(31	)	$	38

INTEREST RATE RISK

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

As at September 30, ~~2021, the Company~~2022, Ovintiv had no floating rate ~~debt~~revolving credit and ~~there were no~~term loan borrowings of $440 million. Accordingly, on a before-tax basis, the sensitivity for each one percent change in interest rates on floating rate ~~derivatives outstanding.~~revolving credit and term loan borrowings was $4 million.

6563

Item 4: Controls and Procedures

DISCLOSURE CONTROLS AND PROCEDURES

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”).~~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 September 30, ~~2021.~~2022.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in Ovintiv’s internal control over financial reporting during the third quarter of ~~2021~~2022 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

6664

PART II

Item 1. Legal Proceedings

Please refer to Item 3 of the ~~2020~~2021 Annual Report on Form ~~10-K~~10‑K and Note 2120 of Ovintiv’s Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form ~~10-Q.~~10‑Q.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in Item 1A. Risk Factors in the ~~2020~~2021 Annual Report on Form ~~10-K.~~10‑K.

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

~~None.~~Issuer Purchase of Equity Securities

On September 28, 2021, the Company announced it had received regulatory approval to purchase, for cancellation, up to approximately 26 million shares of common stock pursuant to a NCIB over a 12-month period from October 1, 2021 to September 30, 2022. The number of shares of common stock authorized for purchase represents 10 percent of Ovintiv’s public float as at September 20, 2021.

During the three months ended September 30, 2022, the Company purchased approximately 6.7 million shares of common stock for total consideration of approximately $325 million at a weighted average price of $48.86. The following table presents the common shares purchased during the three months ended September 30, 2022.

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid per Share ⁽²⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
July 1 to July 31, 2022		1,784,477	$	44.23		1,784,477		16,679,528
August 1 to August 31, 2022		3,813,079		50.32		3,813,079		12,866,449
September 1 to September 30, 2022		1,053,477		51.45		1,053,477		11,812,972
Total		6,651,033	$	48.86		6,651,033		11,812,972

(1)	2,227,310 shares of common stock were repurchased through our broker in accordance with a Rule 10b5-1 compliant plan initially adopted by the Company on September 30, 2021.

(2)	Includes commissions.

On September 28, 2022, the TSX accepted the Company’s notice of intention to renew its NCIB to purchase up to 24,846,855 common shares, or ten percent of its public float as calculated pursuant to TSX rules (approximately 10% of the Company’s issued and outstanding shares), during the 12-month period commencing October 3, 2022 and ending October 2, 2023. The number of shares authorized for purchase represents 10 percent of Ovintiv’s public float as of September 19, 2022.

In the first quarter of 2022, Ovintiv obtained an exemption order (the “NCIB Exemption”) from the Alberta Securities Commission and the Ontario Securities Commission, which permits Ovintiv to make repurchases (the “Proposed Bids”), under its current and any future normal course issuer bids, through the facilities of the NYSE and other U.S.-based trading systems (collectively, “U.S. Markets”), in excess of the maximum allowable purchases under applicable Canadian securities laws. The NCIB Exemption applies to any Proposed Bid commenced within 36 months of the date of the exemption order and is subject to several other conditions, including that Ovintiv remain a U.S. and SEC foreign issuer under applicable Canadian securities laws. The purchases of common stock under a Proposed Bid must also be made in compliance with other applicable Canadian securities laws and applicable U.S. rules. Additionally, the NCIB Exemption imposed restrictions on the number of shares of common stock that may be acquired under the exemption, including that: (a) Ovintiv may not acquire common stock in reliance upon the exemption under subsection 4.8(3) of Canadian National Instrument 62-104 – Take-Over Bids and Issuer Bids (“NI 62-104”) from the requirements applicable to issuer bids (the “Other Published Markets Exemption”) if the aggregate number of shares of common stock purchased by Ovintiv, and any person or company acting jointly or in concert with Ovintiv, in reliance on the NCIB Exemption and the Other Published Markets Exemption within any period of 12 months exceeds 5% of the outstanding common stock on the first day of such 12-month period; and (b) the aggregate number of shares of common stock purchased pursuant to (i) a Proposed Bid in reliance on the NCIB Exemption;

(ii) exempt issuer bid purchases made in the normal course through the facilities of the TSX; and (iii) the Other Published Markets Exemption does not exceed, over the 12-month period of its current NCIB, 10% of Ovintiv's public float. As a result, the NCIB Exemption effectively allows Ovintiv to purchase up to 10% of its public float on U.S. Markets under its NCIB. Without the NCIB Exemption this amount would be limited to 5% of Ovintiv’s outstanding common stock under applicable Canadian securities law.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On November 1, 2021, Ovintiv entered into that certain Change in Control Agreement (effective August 1, 2021) with Brendan M. McCracken, President and Chief Executive Officer. A copy of the Change in Control Agreement is attached as an exhibit hereto and incorporated herein by reference.

~~On November 1, 2021, Ovintiv entered into an amendment to Section 4 of the previously filed Change in Control Agreement with each of the following executives:~~

~~Corey D. Code, Executive Vice President and Chief Financial Officer~~

~~ii.~~

~~Gregory D. Givens, Executive Vice President and Chief Operating Officer~~

~~iii.~~

~~Joanne L. Cox, Executive Vice President, General Counsel and Corporate Secretary~~

~~iv.~~

~~Rachel M. Moore, Executive Vice President, Corporate Services~~

~~Renee E. Zemljak, Executive Vice President, Midstream, Marketing and Fundamentals~~

~~Each amendment, among other things, modifies the calculation of the lump sum bonus payment entitled to each executive, as applicable, following a change in control eventat the Corporation. Copies of each amendment are attached as exhibits hereto and incorporated herein by reference.~~

None.

Item 6. Exhibits

Exhibit No		Description
10.1*		~~Change in Control Agreement between Ovintiv Inc. and Brendan M. McCracken effective August 1, 2021.~~
10.2*		~~First Amendment to Change in Control Agreement between Ovintiv Inc. and Corey D. Code effective November 1, 2021.~~
10.3*		~~First Amendment to Change in Control Agreement between Ovintiv Inc. and Gregory D. Givens effective November 1, 2021.~~
10.4*		~~First Amendment to Change in Control Agreement between Ovintiv Inc. and Joanne L. Cox effective November 1, 2021.~~
10.5*		~~First Amendment to Change in Control Agreement between Ovintiv Inc. and Rachel M. Moore effective November 1, 2021.~~
10.6*		~~First Amendment to Change in Control Agreement between Ovintiv Inc. and Renee E. Zemljak effective November 1, 2021.~~
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 September 30, ~~2021,~~2022, has been formatted in Inline XBRL.

* Management contract or compensatory arrangement

6866

SIGNATURES

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

Ovintiv Inc.

By:	/s/ Corey D. Code

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

Dated: November ~~4, 2021~~8, 2022

6967

	Oil & NGLs				Natural Gas
	WTI		Edmonton Condensate		Henry Hub		AECO
	($/bbl)		(C$/bbl)		($/MMBtu)		(C$/MMBtu)
12-Month Average Trailing Reserves Pricing ⁽¹⁾
September 30, 2021	$	57.69	$	72.45	$	2.94	$	2.79
December 31, 2020		39.62		49.77		1.98		2.13
September 30, 2020		43.69		53.93		1.97		2.01

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

12-Month Average Trailing Reserves Pricing ⁽¹⁾
September 30, 2021		57.69		72.45		2.94		2.79
December 31, 2020		39.62		49.77		1.98		2.13
September 30, 2020		43.69		53.93		1.97		2.01