Exhibit 99.1 news release |
Ovintiv Reports Fourth Quarter and Year-End 2023 Financial and Operating Results
Strong 2023 Operational Execution; Enhanced Capital Efficiency Expected in 2024
Highlights:
Full Year 2023
Fourth Quarter 2023
2024 Outlook
DENVER, February 27, 2024 – Ovintiv Inc. (NYSE, TSX: OVV) (“Ovintiv” or the “Company”) today announced its fourth quarter and year-end 2023 financial and operating results. The Company plans to hold a conference call and webcast at 8:00 a.m. MT (10:00 a.m. ET) on February 28, 2024. Please see dial-in details within this release, as well as additional details on the Company's website at www.ovintiv.com under Presentations and Events – Ovintiv.
“2023 marked a year of exceptionally strong execution for our Company,” said President and CEO, Brendan McCracken. “Our focus on operational excellence led to multiple quarters of positive guidance revisions, as we repeatedly outperformed our production targets without increasing spending. From volumes, to capital, to per unit costs, we beat our 2023 targets and enhanced the capital efficiency of the business. Our durable-returns strategy is set to deliver again in 2024, as we plan to produce higher oil and condensate volumes with less capital and generate about $450 million more free cash flow than 2023.”
Full Year and Fourth Quarter 2023 Financial and Operating Results
Ovintiv Inc. | 1 |
2024 Guidance
The Company issued the following first quarter and full year 2024 guidance:
2024 Guidance | 1Q 2024 | Full Year 2024 | ||
Total Production (MBOE/d) | 560 – 575 | 545 – 575 | ||
Oil & Condensate (Mbbls/d) | 208 – 212 | 202 – 208 | ||
NGLs (C2 - C4) (Mbbls/d) | 86 – 89 | 85 – 90 | ||
Natural Gas (MMcf/d) | 1,575 – 1,625 | 1,550 – 1,650 | ||
Capital Investment ($ Millions) | $580 – $620 | $2,200 – $2,400 |
Ovintiv expects production in the first quarter to be the high point for the year, with oil and condensate volumes expected to average 208 to 212 Mbbls/d. This includes the impacts of refinery turnarounds in Salt Lake City, weather and planned maintenance, which are expected to reduce first quarter volumes by approximately 8 Mbbls/d. Oil and condensate production is expected to stabilize in the second quarter and remain largely flat through the end of the year for an annual average of 202 to 208 Mbbls/d. The Company expects to realize a greater than 18% improvement in capital efficiency for its oil and condensate production versus its original 2023 guidance.
Inventory Renewal
Since 2021, Ovintiv has added approximately 1,650 net premium drilling locations to its inventory through the combination of the Permian acquisition in 2023, low-cost strategic bolt-on transactions and its organic inventory appraisal and assessment programs. This represents an addition of more than seven years of drilling inventory based on the number of wells the Company expects to drill in 2024. Approximately two thirds of the inventory additions, or about 1,100 net locations, are located in the Permian.
Returns to Shareholders
Ovintiv remains committed to its capital allocation framework, which returns at least 50% of post base dividend Non-GAAP Free Cash Flow to shareholders through buybacks and/or variable dividends.
In the fourth quarter of 2023, the Company returned approximately $135 million to shareholders through share buybacks totaling approximately $53 million and its base dividend of approximately $82 million.
Full year shareholder returns totaled approximately $733 million, consisting of share buybacks of approximately $426 million, or approximately 10 million shares of common stock, and base dividend payments of approximately $307 million.
Ovintiv Inc. | 2 |
Share buybacks in the first quarter of 2024 are expected to total approximately $248 million.
Continued Balance Sheet Focus
Ovintiv had approximately $3.5 billion in total liquidity as of December 31, 2023, which included available credit facilities of $3,486 million, available uncommitted demand lines of $234 million, and cash and cash equivalents of $3 million, net of outstanding commercial paper of $270 million. Ovintiv reported total debt of $5.7 billion at year-end.
Non-GAAP Debt to EBITDA was 1.2 times and Non-GAAP Debt to Adjusted EBITDA was 1.3 times as of December 31, 2023.
The Company remains committed to maintaining a strong balance sheet and is currently rated investment grade by four credit rating agencies. Ovintiv maintains a long-term leverage target of 1.0 times Non-GAAP Debt to Adjusted EBITDA at mid-cycle prices, with an associated long-term total debt target of $4.0 billion.
Dividend Declared
On February 27, 2024, Ovintiv’s Board declared a quarterly dividend of $0.30 per share of common stock payable on March 28, 2024, to shareholders of record as of March 15, 2024.
Asset Highlights
Permian
Permian production averaged 220 MBOE/d (84% liquids) in the fourth quarter. The Company had 60 net wells turned in line (TIL). Ovintiv plans to invest approximately $1.35 billion to $1.45 billion in the play in 2024 to bring on 120 to 130 net wells.
Montney
Montney production averaged 234 MBOE/d (22% liquids) in the fourth quarter. The Company had 15 net wells TIL. Ovintiv plans to invest approximately $425 million to $475 million in the play in 2024 to bring on 60 to 70 net wells.
Uinta
Uinta production averaged 34 MBOE/d (86% liquids) in the fourth quarter. The Company had eight net wells TIL. Ovintiv plans to invest approximately $300 million to $350 million in the play in 2024 to bring on 25 to 30 net wells.
Anadarko
Anadarko production averaged 113 MBOE/d (59% liquids) in the fourth quarter. The Company had four net wells TIL. Ovintiv plans to invest approximately $100 million to $125 million in the play in 2024 to bring on seven to ten net wells.
Year-End 2023 Reserves
SEC proved reserves at year-end 2023 were 2.2 billion BOE, of which approximately 48% were liquids and 62% were proved developed. Total proved reserves replacement including the impact of commodity prices and acquisitions was 106% of 2023 production. Ovintiv's reserve life index at year-end was approximately 11 years.
For additional information, please refer to the Fourth Quarter and Year-end 2023 Results Presentation available on Ovintiv's website, www.ovintiv.com under Presentations and Events – Ovintiv. Supplemental Information, and Non-GAAP Definitions and Reconciliations, are available on Ovintiv's website under Financial Documents Library.
Conference Call Information
A conference call and webcast to discuss the Company’s fourth quarter and year-end 2023 results will be held at 8:00 a.m. MT (10:00 a.m. ET) on February 28, 2024.
To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3Segm9H to receive an instant automated call back. You can also dial direct to be entered to the call by an Operator. Please dial 888-664-6383 (toll-free in North America) or 416-764-8650 (international) approximately 15 minutes prior to the call.
The live audio webcast of the conference call, including slides and financial statements, will be available on Ovintiv's website, www.ovintiv.com under Investors/Presentations and Events. The webcast will be archived for approximately 90 days.
Refer to Note 1 Non-GAAP measures and the tables in this release for reconciliation to comparable GAAP financial measures.
Ovintiv Inc. | 3 |
Capital Investment and Production
(for the period ended December 31) | 4Q 2023 | 4Q 2022 | 2023 | 2022 |
Capital Expenditures (1) ($ millions) | 660 | 358 | 2,744 | 1,831 |
Oil (Mbbls/d) | 194.1 | 132.0 | 158.9 | 131.6 |
NGLs – Plant Condensate (Mbbls/d) | 46.1 | 42.7 | 42.9 | 44.0 |
Oil & Plant Condensate (Mbbls/d) | 240.2 | 174.7 | 201.8 | 175.6 |
NGLs – Other (Mbbls/d) | 90.9 | 88.7 | 90.2 | 85.5 |
Total Liquids (Mbbls/d) | 331.1 | 263.4 | 292.0 | 261.1 |
Natural gas (MMcf/d) | 1,645 | 1,561 | 1,642 | 1,494 |
Total production (MBOE/d) | 605.2 | 523.6 | 565.6 | 510.0 |
(1) Including capitalized directly attributable internal costs.
Financial Summary
(for the period ended December 31) ($ millions) | 4Q 2023 | 4Q 2022 | 2023 | 2022 |
Cash From (Used In) Operating Activities Deduct (Add Back): Net change in other assets and liabilities Net change in non-cash working capital | 1,362 (31) 156 | 875 (15) (5) | 4,167 (62) 330 | 3,866 (57) (187) |
Non-GAAP Cash Flow (1) | 1,237 | 895 | 3,899 | 4,110 |
Non-GAAP Cash Flow (1) | 1,237 | 895 | 3,899 | 4,110 |
Less: Capital Expenditures (2) | 660 | 358 | 2,744 | 1,831 |
Non-GAAP Free Cash Flow (1) | 577 | 537 | 1,155 | 2,279 |
Net Earnings (Loss) Before Income Tax Before-tax (Addition) Deduction: Unrealized gain (loss) on risk management Non-operating foreign exchange gain (loss) | 1,067 326 (9) | 1,110 530 10 | 2,510 194 (2) | 3,560 741 (14) |
Adjusted Earnings (Loss) Before Income Tax Income tax expense (recovery) | 750 103 | 570 342 | 2,318 508 | 2,833 1,064 |
Non-GAAP Adjusted Earnings (1) | 647 | 228 | 1,810 | 1,769 |
(1) Non-GAAP Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Adjusted Earnings are non-GAAP measures as defined in Note 1.
(2) Including capitalized directly attributable internal costs.
Ovintiv Inc. | 4 |
Realized Pricing Summary (Including the impact of realized gains (losses) on risk management)
(for the period ended December 31) | 4Q 2023 | 4Q 2022 | 2023 | 2022 |
Liquids ($/bbl) | ||||
WTI | 78.32 | 82.65 | 77.62 | 94.23 |
Realized Liquids Prices | ||||
Oil | 76.64 | 75.85 | 76.06 | 81.88 |
NGLs – Plant Condensate | 70.46 | 72.01 | 70.51 | 80.74 |
Oil & Plant Condensate | 75.46 | 74.91 | 74.88 | 81.59 |
NGLs – Other | 18.85 | 22.95 | 18.09 | 31.45 |
Total NGLs | 36.20 | 38.88 | 34.98 | 48.20 |
| ||||
Natural Gas | ||||
NYMEX ($/MMBtu) | 2.88 | 6.26 | 2.74 | 6.64 |
Realized Natural Gas Price ($/Mcf) | 2.65 | 2.49 | 2.71 | 2.42 |
Cost Summary
(for the period ended December 31) ($/BOE, except as indicated) | 2023 | 2022 |
Production, mineral and other taxes | 1.66 | 2.23 |
Upstream transportation and processing | 7.76 | 8.75 |
Upstream operating | 4.03 | 4.15 |
Administrative, excluding long-term incentive, transaction and legal costs, and current expected credit losses | 1.35 | 1.39 |
Debt to EBITDA (1)
($ millions, except as indicated) | December 31, 2023 | December 31, 2022 |
Long-Term Debt, including Current Portion | 5,737 | 3,570 |
Net Earnings (Loss) | 2,085 | 3,637 |
Add back (Deduct): | ||
Depreciation, depletion and amortization | 1,825 | 1,113 |
Interest | 355 | 311 |
Income tax expense (recovery) | 425 | (77) |
EBITDA | 4,690 | 4,984 |
Debt to EBITDA (times) | 1.2 | 0.7 |
Debt to Adjusted EBITDA(1)
($ millions, except as indicated) | December 31, 2023 | December 31, 2022 |
Long-Term Debt, including Current Portion | 5,737 | 3,570 |
Net Earnings (Loss) | 2,085 | 3,637 |
Add back (Deduct): | ||
Depreciation, depletion and amortization | 1,825 | 1,113 |
Accretion of asset retirement obligation | 19 | 18 |
Interest | 355 | 311 |
Unrealized (gains) losses on risk management | (194) | (741) |
Foreign exchange (gain) loss, net | 19 | 15 |
Other (gains) losses, net | (20) | (33) |
Income tax expense (recovery) | 425 | (77) |
Adjusted EBITDA | 4,514 | 4,243 |
Debt to Adjusted EBITDA (times) | 1.3 | 0.8 |
Ovintiv Inc. | 5 |
Hedge Details as of December 31, 2023
Oil and Condensate Hedges ($/bbl) | 1Q 2024 | 2Q 2024 | 3Q 2024 | 4Q 2024 | 1Q 2025 |
WTI Swaps | 25 Mbbls/d $73.69 | 25 Mbbls/d $73.69 | 0 - | 0 - | 0 - |
WTI Collars Call Strike Put Strike | 75 Mbbls/d $82.29 $64.33 | 75 Mbbls/d $80.39 $65.00 | 10 Mbbls/d $92.06 $60.00 | 0 - - | 0 - - |
WTI 3-Way Options Long Put Short Put | 0 - - - | 0 - - - | 40 Mbbls/d $89.76 $65.00 $50.00 | 32 Mbbls/d $85.36 $65.00 $50.00 | 0 - - - |
Natural Gas Hedges ($/Mcf) | 1Q 2024 | 2Q 2024 | 3Q 2024 | 4Q 2024 | 1Q 2025 |
NYMEX Swaps | 200 MMcf/d $3.62 | 200 MMcf/d $3.62 | 200 MMcf/d $3.62 | 200 MMcf/d $3.62 | 0 - |
NYMEX Collars Call Strike Put Strike | 400 MMcf/d $5.10 $3.00 | 400 MMcf/d $3.40 $3.00 | 400 MMcf/d $3.40 $3.00 | 400 MMcf/d $5.57 $3.00 | 0 - - |
NYMEX 3-Way Options Put Strike Sold Put Strike | 100 MMcf/d $4.79 $3.00 $2.25 | 200 MMcf/d $4.44 $3.00 $2.25 | 200 MMcf/d $4.44 $3.00 $2.25 | 200 MMcf/d $4.58 $3.00 $2.25 | 300 MMcf/d $4.99 $3.00 $2.25 |
Waha % of NYMEX Swaps | 50 MMcf/d 71% | 50 MMcf/d 71% | 50 MMcf/d 71% | 50 MMcf/d 71% | 0 - |
AECO Nominal Basis Swaps | 190 MMcf/d ($1.08) | 190 MMcf/d ($1.08) | 190 MMcf/d ($1.08) | 190 MMcf/d ($1.08) | 190 MMcf/d ($1.08) |
AECO % of NYMEX Swaps | 100 MMcf/d 72% | 100 MMcf/d 72% | 100 MMcf/d 72% | 100 MMcf/d 72% | 100 MMcf/d 72% |
Ovintiv Inc. | 6 |
Price Sensitivities for WTI Oil (1) ($MM) (Before-Tax)
WTI Oil Hedge Gains (Losses) | |||||||||
$40 | $50 | $60 | $70 | $80 | $90 | $100 | $110 | $120 | |
1Q 2024 | $243 | $152 | $61 | $8 | ($14) | ($90) | ($181) | ($272) | ($363) |
2Q 2024 | $247 | $156 | $65 | $8 | ($14) | ($103) | ($194) | ($285) | ($376) |
3Q 2024 | $74 | $64 | $18 | - | - | ($2) | ($45) | ($91) | ($137) |
4Q 2024 | $44 | $44 | $15 | - | - | ($14) | ($43) | ($73) | ($102) |
1Q 2025 | - | - | - | - | - | - | - | - | - |
Price Sensitivities for NYMEX Natural Gas (1) ($MM) (Before-Tax)
NYMEX Natural Gas Hedge Gains (Losses) | |||||||||
| $1.50 | $2.00 | $2.50 | $3.00 | $3.50 | $4.00 | $4.50 | $5.00 | $5.50 |
1Q 2024 | $100 | $73 | $43 | $11 | $2 | ($7) | ($16) | ($27) | ($55) |
2Q 2024 | $107 | $79 | $48 | $11 | ($2) | ($29) | ($60) | ($94) | ($130) |
3Q 2024 | $108 | $80 | $48 | $11 | ($2) | ($29) | ($60) | ($95) | ($131) |
4Q 2024 | $108 | $80 | $48 | $11 | $2 | ($7) | ($18) | ($33) | ($52) |
1Q 2025 | $20 | $20 | $14 | - | - | - | ($1) | ($6) | ($14) |
Ovintiv Inc. | 7 |
Important information
Ovintiv reports in U.S. dollars unless otherwise noted. Production, sales and reserves estimates are reported on an after-royalties basis, unless otherwise noted. Unless otherwise specified or the context otherwise requires, references to “Ovintiv,” “we,” “its,” “our” or to “the Company” includes reference to subsidiaries of and partnership interests held by Ovintiv Inc. and its subsidiaries.
Please visit Ovintiv’s website and Investor Relations page at www.ovintiv.com and investor.ovintiv.com, where Ovintiv often discloses important information about the Company, its business, and its results of operations.
NI 51-101 Exemption
The Canadian securities regulatory authorities have issued a decision document (the “Decision”) granting Ovintiv exemptive relief from the requirements contained in Canada’s National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). As a result of the Decision, and provided that certain conditions set out in the Decision are met on an on-going basis, Ovintiv will not be required to comply with the Canadian requirements of NI 51-101 and the Canadian Oil and Gas Evaluation Handbook. The Decision permits Ovintiv to provide disclosure in respect of its oil and gas activities in the form permitted by, and in accordance with, the legal requirements imposed by the U.S. Securities and Exchange Commission (“SEC”), the Securities Act of 1933, the Securities and Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the rules of the NYSE. The Decision also provides that Ovintiv is required to file all such oil and gas disclosures with the Canadian securities regulatory authorities on www.sedarplus.ca as soon as practicable after such disclosure is filed with the SEC.
NOTE 1: Non-GAAP Measures
Certain measures in this news release 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 companies 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/or 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. For additional information regarding non-GAAP measures, see the Company’s website. This news release contains references to non-GAAP measures as follows:
ADVISORY REGARDING OIL AND GAS INFORMATION – The conversion of natural gas volumes to barrels of oil equivalent (BOE) is on the basis of six thousand cubic feet to one barrel. 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. Readers are cautioned that BOE may be misleading, particularly if used in isolation.
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ADVISORY REGARDING FORWARD-LOOKING STATEMENTS – This news release contains 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. All statements, except for statements of historical fact, that relate to the anticipated future activities, plans, strategies, objectives or expectations of the Company, including the first quarter and fiscal year 2024 guidance, the expectation of delivering sustainable durable returns to shareholders in future years, plans regarding share buybacks and debt reduction, and timing and expectations regarding capital efficiencies and well completion and performance, are forward-looking statements. When used in this news release, 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 are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words or phrases. Readers are cautioned against unduly relying on forward-looking statements which, are based on current expectations and by their nature, involve numerous assumptions that 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, without limitation: future commodity prices and basis differentials; the Company's ability to successfully integrate the Midland Basin assets; the ability of the Company to access credit facilities and capital markets; 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; the ability for the Company to generate cash returns and execute on its share buyback plan; expectations of plans, strategies and objectives of the Company, including anticipated production volumes and capital investment; the Company’s ability to manage cost inflation and expected cost structures, including expected operating, transportation, processing and labor expenses; the outlook of the oil and natural gas industry generally, including impacts from changes to the geopolitical environment; and projections made in light of, and generally consistent with, the Company's historical experience and its perception of historical industry trends; and the other assumptions contained herein.
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 news release are made as of the date of this news release and, except as required by law, the Company undertakes no obligation to update publicly; revise or keep current any forward-looking statements. The forward-looking statements contained or incorporated by reference in this news release, and all subsequent forward-looking statements attributable to the Company, whether written or oral, are expressly qualified by these cautionary statements.
The reader should carefully read the risk factors described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in other filings with the SEC or Canadian securities regulators, for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. Other unpredictable or unknown factors not discussed in this news release could also have material adverse effects on forward-looking statements.
Further information on Ovintiv Inc. is available on the Company’s website, www.ovintiv.com, or by contacting:
Investor contact: (888) 525-0304 | Media contact: (403) 645-2252 |
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