Company Increases Quarterly Dividend by 43%;
Underpinned by Leading 2022 Capital Efficiency
Highlights:
- Generated full year net earnings of $1.4
billion, cash from operating activities of $3.1 billion, Non-GAAP Cash Flow of $3.2 billion and Non-GAAP Free Cash Flow of
$1.7 billion
- Reduced Net Debt by approximately $2.3
billion; expect to reach $3
billion Net Debt target in the second half of 2022 assuming
$85 per barrel for WTI oil and
$4.50 per thousand cubic feet ("Mcf")
for NYMEX natural gas
- Announced a 43% increase to quarterly dividend payments; now
$0.80 per share annualized
- Continued substantial share buybacks with approximately 4.3
million shares acquired to date since the beginning of the fourth
quarter of 2021
- Reiterated 2022 capital program of approximately $1.5 billion, which is expected to deliver 180 to
190 thousand barrels per day ("Mbbls/d") of oil and condensate
production and approximately $2.9
billion of Non-GAAP Free Cash Flow, assuming commodity
prices of $85 per barrel for WTI oil
and $4.50 per Mcf for NYMEX natural
gas
- Beat targeted 33% reduction in methane emissions intensity four
years ahead of schedule with greater than 50% reduction in 2021
versus 2019 baseline
- Established a 50% Scope 1&2 greenhouse gas (GHG) emissions
intensity reduction target to be achieved by 2030 and using 2019 as
a baseline year; tied to compensation for all Ovintiv
employees
DENVER, Feb. 24, 2022 /PRNewswire/ - Ovintiv Inc. (NYSE:
OVV) (TSX: OVV) ("Ovintiv" or the "Company") today announced its
fourth quarter and year-end 2021 financial and operating results.
The Company plans to hold a conference call and webcast at
9:00 a.m. MT (11:00 a.m. ET) on February
25, 2022. Please see dial-in details within this release, as
well as additional details on the Company's website at
www.ovintiv.com.
Ovintiv CEO Brendan McCracken
said, "Our performance in 2021 demonstrates Ovintiv's unique
strengths – our industry leading capital efficiency, top-tier
multi-basin portfolio, culture of innovation, and disciplined
approach to capital allocation. Our strategy to sustainably deliver
superior returns is resulting in substantial value creation for our
shareholders. Today, we are increasing our base dividend and we
expect to meet our $3 billion net
debt target in the second half of 2022, which will unlock another
significant increase in cash returns."
Full Year and Fourth Quarter 2021 Financial and Operating
Results
- The Company recorded full year net earnings of $1.4 billion, or $5.32 per diluted share of common stock.
- Fourth quarter net earnings totaled $1.4
billion, or $5.21 per diluted
share of common stock.
- Full year cash from operating activities was $3.1 billion, Non-GAAP Cash Flow was $3.2 billion and capital investment totaled
approximately $1.5 billion, resulting
in $1.7 billion of Non-GAAP Free Cash
Flow.
- Fourth quarter cash from operating activities was $740 million, Non-GAAP Cash Flow was $741 million and capital investment totaled
approximately $421 million, resulting
in $320 million of Non-GAAP Free Cash
Flow.
- Average annual total production was approximately 534 thousand
barrels of oil equivalent per day ("MBOE/d"), including 191 Mbbls/d
of oil and condensate, 83 Mbbls/d of other NGLs (C2 to C4) and
1,556 million cubic feet per day ("MMcf/d") of natural gas, all in
line with guidance.
- Fourth quarter total production was approximately 508 MBOE/d,
including 178 Mbbls/d of oil and condensate, 85 Mbbls/d of other
NGLs and 1,476 MMcf/d of natural gas. Production in the quarter was
impacted by unplanned midstream outages and permitting timing
delays in Canada that reduced
fourth quarter production by approximately 3 Mbblsd/d of oil and
condensate, 2 Mbbls/d of other NGLs (C2 to C4) and 90 MMcf/d of
natural gas. The fourth quarter also saw higher Canadian
royalty rates that reduced production by approximately 1.3 Mbbls/d
of oil and condensate, and 40 MMcf/d of natural gas.
- Total Costs for the year were $13.42 per barrel of oil equivalent ("BOE") while
fourth quarter Total Costs were $14.89 per BOE. Total Costs per BOE were impacted
by higher commodity prices and lower production during the
quarter.
2022 Guidance
The Company issued the following 2022
guidance:
|
|
|
|
1Q22
|
2022
|
Capital Investment
($ Millions)
|
$425 -
$440
|
$1,500
|
Oil &
Condensate (Mbbls/d)
|
174 -
178
|
180 -
190
|
Other NGLs
(Mbbls/d)
|
77 –
81
|
78 -
82
|
Natural Gas
(MMcf/d)
|
1,430 -
1,480
|
1,450 -
1,500
|
2022 Outlook
With capital investment of approximately
$1.5 billion in 2022, the Company
expects to maintain oil and condensate production volumes of
approximately 180 to 190 Mbbls/d. This range reflects a maintenance
production program relative to the second half of 2021. Ovintiv
expects to preserve its 2021 capital efficiency and offset
inflationary pressures on capital costs in 2022 with efficiency and
productivity gains. The Company expects its capital investment to
be more weighted to the first half of the year.
"Maintaining our capital efficiency in 2022 will be a
differentiating factor among our peers," said McCracken. "Despite
the inflationary pressures across the economy, our teams continue
to find innovative ways to offset cost inflation and improve well
performance. Our industry-leading well cost and productivity
performance, combined with our demonstrated operational
efficiencies and culture of innovation give us confidence in the
repeatability of our capital program in 2022. With more than a
decade of premium drilling inventory in each of our core three
assets – the Permian, Anadarko and Montney – we are well positioned to continue
delivering industry-leading capital efficiencies for many years to
come."
In the first quarter, through capital investments of
$425 to $440
million, Ovintiv expects to deliver oil and condensate
production of 174 to 178 Mbbls/d, other NGLs production of 77 to 81
Mbbls/d and natural gas production of 1,430 to 1,480
MMcf/d.
Share Buyback Program
As of December 31, 2021, Ovintiv had purchased for
cancellation, approximately 3.1 million common shares outstanding
at an average price of $36.18 per
share, for a total consideration of approximately $111 million. During the first quarter of 2022,
the Company plans to buyback shares equivalent to 25% of its fourth
quarter Non-GAAP Free Cash Flow less base dividend payments, or
approximately $71 million. The first
quarter buyback program is currently underway with an additional
approximately 1.2 million common shares outstanding purchased as of
February 18, 2022.
Continued Net Debt Reduction
During the fourth quarter, Ovintiv reduced Net Debt by $192 million. This represents approximately
$2.3 billion of Net Debt reduction
since year-end 2020.
At year-end, the Company had no outstanding balances under its
revolving credit facilities and commercial paper programs.
Ovintiv's available liquidity totaled $4.5
billion.
The Company has a Net Debt target of $3
billion which, assuming commodity prices of $85 WTI oil and $4.50 NYMEX natural gas, it expects to meet in
the second half of 2022. Once the Company reaches its Net Debt
target, it plans to increase quarterly shareholder returns to at
least 50% of the previous quarter's Non-GAAP Free Cash Flow after
base dividends. The remaining Non-GAAP Free Cash Flow will be
allocated to further Net Debt reduction and small, low-cost
property bolt-ons.
Dividend Increase
On February
24, 2022, Ovintiv's Board declared a quarterly dividend of
$0.20 per share of common stock
payable on March 31, 2022, to
shareholders of record as of March 15,
2022. This represents an increase of 43% from the previous
level and an increase of 113% versus 1-year ago and also marks the
second dividend raise in the last six months.
ESG Performance
Ovintiv continues to deliver
measurable progress on its ESG initiatives. The Company is
committed to advancing its ESG performance, and as such, announced
today a Scope 1&2 GHG emissions intensity reduction target of
50% by 2030, using 2019 as a baseline year. This target will be
tied to compensation for all Ovintiv employees.
Key highlights of the Company's recent sustainability
achievements:
- Achieved the Company's 33% methane intensity reduction target
in 2021, four years ahead of schedule with a greater than 50%
reduction from 2019 levels
- Reduced 2021 Scope 1&2 GHG emissions intensity by more than
20% compared to 2019
- Fully aligned with the World Bank Zero Routine Flaring by 2030
initiative, nine years ahead of the World Bank's target
- Achieved 8th consecutive safest year ever in
2021
- Established a social commitment leadership team and published
inaugural social commitment framework
- Increased the diversity of the Company's Board of
Directors
- Completed the Company's 17th consecutive year of
industry leading sustainability reporting and transparency
Additional details can be found on Ovintiv's Sustainability site
at https://sustainability.ovintiv.com/
Asset Highlights
Ovintiv continued to demonstrate well
cost reductions across its portfolio throughout 2021. Despite
significant industry-wide inflationary pressures, average well
costs were 11% lower than 2020 levels.
Permian
For the year, Permian production averaged 118
MBOE/d (81% liquids). The Company averaged three gross rigs,
drilled 80 net wells, and had 93 net wells turned in line
("TIL").
Permian production averaged 120 MBOE/d (79% liquids) in the
fourth quarter. The Company averaged four gross rigs, drilled 20
net wells, and had 16 net wells TIL. The number of wells TIL were
reduced as the company transitioned to longer laterals and set up a
load-leveled completions program for 2022. Due to this
transition, only three net wells were TIL from September to
November 2021, with the majority of
the fourth quarter wells coming on-line in
December.
Permian drilling and completion ("D&C") costs were 10% lower
than the 2020 program average. The lower costs achieved in 2021
were underpinned by increased operational efficiencies including
faster D&C rates and longer lateral development. Ovintiv
utilized Simul-Frac on 90% of its Permian completions in 2021.
Anadarko
For the year, Anadarko production averaged
132 MBOE/d (62% liquids). The Company averaged two gross rigs,
drilled 51 net wells, and had 53 net wells TIL.
Anadarko production averaged 133 MBOE/d (61% liquids) in the
fourth quarter. The Company averaged two gross rigs, drilled 9 net
wells, and had 14 net wells TIL.
In the STACK area, D&C costs were eight percent lower than
the 2020 program average. In addition to lower costs, 2021 STACK
well performance surpassed expectations as six-month normalized
cumulative oil production was 10% higher compared to the 2020
program. This performance improvement was driven by optimized
completion designs.
Montney
For the year, Montney production averaged 225 MBOE/d (25%
liquids). The Company averaged four gross rigs, drilled 84 net
wells and had 78 net wells TIL.
Montney production averaged 207
MBOE/d (25% liquids) in the fourth quarter. The Company averaged
three gross rigs, drilled 17 net wells and had 14 net wells
TIL.
Montney D&C costs were 11% lower than the 2020 program
average. Ovintiv made a step-change in drilling performance
in the Montney in 2021, drilling
three of the five longest laterals in the basin with an average
drilling rate of over 1,600 feet per day. In the liquids-rich
Pipestone portion of the play,
Ovintiv delivered a 14% year-over-year improvement in six-month,
normalized condensate production. This performance improvement was
driven by optimized completion designs.
Bakken
For the year, Bakken production averaged 24
MBOE/d (79% liquids). The Company averaged one net rig, drilled 11
net wells and had 10 net wells TIL.
Bakken production averaged 25 MBOE/d (79% liquids) in the fourth
quarter. The Company averaged one net rig, drilled four net wells
and had six net wells TIL.
Year-End 2021 Reserves
SEC proved reserves at year-end
2021 were 2.3 billion BOE, of which approximately 52% were liquids
and 59% were proved developed. The strong well performance and
lower costs that the Company realized through the year resulted in
an SEC total proved reserve replacement of 269% of 2021 production
excluding the impacts acquisitions and divestitures. Total proved
reserves replacement excluding the impact of commodity prices and
excluding acquisitions and divestitures was 194% of 2021
production.
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 and, accordingly, will not be required to file Form
51-101F1 Statement of Reserves Data and Other Oil and Gas
Information or related forms and disclosure as part of its annual
filings. In lieu of such filings, 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 New York Stock
Exchange. The Decision also provides that Ovintiv is required to
file all such oil and gas disclosures with the Canadian securities
regulatory authorities on www.sedar.com as soon as practicable
after such disclosure is filed with the SEC.
For additional information, please refer to the fourth quarter
and year-end 2021 Results Presentation at
https://investor.ovintiv.com/presentations-events.
Conference Call Information
A conference call and
webcast to discuss the Company's fourth quarter and year-end
results will be held at 9:00 a.m. MT
(11:00 a.m. ET) on February 25, 2022. To participate in the call,
please dial 888-664-6383 (toll-free in North America) or 416-764-8650 (international)
approximately 15 minutes prior to the conference 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.
Capital Investment and Production
|
|
|
|
|
(for the period ended
December 31)
|
4Q 2021
|
4Q 2020
|
2021
|
2020
|
Capital
Expenditures (1) ($ millions)
|
421
|
343
|
1,519
|
1,736
|
Oil
(Mbbls/d)
|
129.8
|
158.0
|
140.3
|
151.5
|
NGLs – Plant
Condensate (Mbbls/d)
|
47.8
|
56.8
|
50.9
|
52.1
|
Oil & Plant
Condensate (Mbbls/d)
|
177.6
|
214.8
|
191.2
|
203.6
|
NGLs – Other
(Mbbls/d)
|
84.6
|
82.6
|
83.3
|
85.3
|
Total Liquids
(Mbbls/d)
|
262.2
|
297.4
|
274.5
|
288.9
|
Natural gas
(MMcf/d)
|
1,476
|
1,559
|
1,556
|
1,529
|
Total production
(MBOE/d)
|
508.2
|
557.2
|
533.9
|
543.8
|
(1)
|
Including capitalized
directly attributable internal costs.
|
Fourth Quarter and Year-End Summary
|
|
|
|
|
(for the period ended
December 31) ($ millions,
except as indicated)
|
4Q
2021
|
4Q 2020
|
2021
|
2020
|
Cash From (Used
In) Operating Activities
|
740
|
719
|
3,129
|
1,895
|
Deduct (Add
Back):
|
|
|
|
|
Net change in other
assets and liabilities
|
(18)
|
(6)
|
(39)
|
(173)
|
Net change in non-cash
working capital
|
17
|
33
|
(41)
|
139
|
Current tax on sale of
assets
|
-
|
-
|
-
|
-
|
Non-GAAP Cash Flow
(1)
|
741
|
692
|
3,209
|
1,929
|
Non-GAAP Cash Flow
Margin (1) ($/BOE)
|
15.85
|
13.50
|
16.46
|
9.69
|
|
|
|
|
|
Non-GAAP Cash
Flow (1)
|
741
|
692
|
3,209
|
1,929
|
Less: Capital
Expenditures (2)
|
421
|
343
|
1,519
|
1,736
|
Non-GAAP Free Cash
Flow (1)
|
320
|
349
|
1,690
|
193
|
|
|
|
|
|
Net Earnings
(Loss) Before Income Tax
|
1,382
|
(642)
|
1,239
|
(5,730)
|
Before-tax (Addition)
Deduction:
|
|
|
|
|
Unrealized gain (loss)
on risk management
|
938
|
(186)
|
(488)
|
(204)
|
Impairments
|
-
|
(717)
|
-
|
(5,580)
|
Restructuring
charges
|
(1)
|
(2)
|
(14)
|
(90)
|
Non-operating foreign
exchange gain (loss)
|
(1)
|
17
|
(18)
|
(16)
|
Gain (loss) on
divestitures
|
-
|
-
|
-
|
-
|
Gain on debt
retirement
|
-
|
2
|
-
|
30
|
Adjusted Net Earnings
(Loss) Before Income Tax
|
446
|
244
|
1,759
|
130
|
Income tax expense
(recovery)
|
115
|
61
|
454
|
39
|
Non-GAAP Operating
Earnings (Loss) (1)
|
331
|
183
|
1,305
|
91
|
(1)
|
Non-GAAP cash flow,
non-GAAP cash flow margin, Non-GAAP free cash flow and non-GAAP
operating earnings (loss) are non-GAAP measures as defined in Note
1.
|
(2)
|
Including capitalized
directly attributable internal costs.
|
Realized Pricing Summary
|
|
|
|
|
(for the period ended
December 31)
|
4Q 2021
|
4Q 2020
|
2021
|
2020
|
Liquids ($/bbl)
|
|
|
|
|
WTI
|
77.19
|
42.66
|
67.91
|
39.40
|
Realized Liquids
Prices (1)
|
|
|
|
|
Oil
|
53.43
|
47.75
|
51.28
|
44.68
|
NGLs – Plant
Condensate
|
64.04
|
44.81
|
57.33
|
40.89
|
Oil & Plant
Condensate
|
56.27
|
46.96
|
52.89
|
43.70
|
NGLs –
Other
|
26.65
|
10.94
|
22.07
|
9.41
|
Total
NGLs
|
40.15
|
24.73
|
35.44
|
21.35
|
|
|
|
|
|
Natural
Gas
|
|
|
|
|
NYMEX
($/MMBtu)
|
5.83
|
2.66
|
3.84
|
2.08
|
Realized Natural
Gas Price (1) ($/Mcf)
|
2.84
|
2.33
|
2.92
|
2.13
|
(1)
|
Prices include the
impact of realized gain (loss) on risk management.
|
Total Costs
|
|
|
(for the year ended
December 31)
($ millions, except
as indicated)
|
2021
|
2020
|
Total Operating
Expenses
|
7,139
|
11,484
|
Deduct (Add
Back):
|
|
|
Market optimization
operating expenses
|
3,148
|
1,608
|
Corporate & other
operating expenses
|
(1)
|
(2)
|
Depreciation,
depletion and amortization
|
1,190
|
1,834
|
Impairments
|
-
|
5,580
|
Accretion of asset
retirement obligation
|
22
|
29
|
Long-term incentive
costs
|
132
|
31
|
Restructuring and
legal costs
|
34
|
90
|
Current expected
credit losses
|
1
|
1
|
Total Costs
(1)
|
2,613
|
2,313
|
Divided
by:
|
|
|
Production Volumes
(MMBOE)
|
194.9
|
199.0
|
Total Costs
(1) ($/BOE)
|
13.42
|
11.60
|
Drivers Included
in Total Costs
(1) ($/BOE)
|
|
|
Production, mineral
and other taxes
|
1.51
|
0.87
|
Upstream
transportation and processing
|
7.42
|
6.44
|
Upstream operating,
excluding long-term incentive costs
|
2.94
|
2.88
|
Administrative,
excluding long-term incentive, restructuring and legal costs, and
current expected credit losses
|
1.55
|
1.41
|
Total Costs
(1) ($/BOE)
|
13.42
|
11.60
|
(1)
|
Total Costs is a
non-GAAP measure as defined in Note 1. Total Costs per BOE is
calculated using whole dollars and volumes.
|
Debt to Adjusted Capitalization
|
|
|
($ millions, except
as indicated)
|
December 31,
2021
|
December 31,
2020
|
Long-Term Debt,
including current portion
|
4,786
|
6,885
|
Total Shareholders'
Equity
|
5,074
|
3,837
|
Equity Adjustment for
Impairments at December 31, 2011
|
7,746
|
7,746
|
Adjusted
Capitalization
|
17,606
|
18,468
|
Debt to Adjusted
Capitalization (1)
|
27%
|
37%
|
(1)
|
Debt to Adjusted
Capitalization is a non-GAAP measure as defined in Note
1.
|
Year-End 2021 Reserves Estimates
|
2021 Proved
Reserves Estimates – U.S. Protocols (Net, After
Royalties)(1)
|
Using constant prices
and costs; simplified table
|
Oil (MMbbls)
|
NGLs (MMbbls)
|
Natural
Gas (Bcf)
|
Total (MMBOE)
|
December 31,
2020
|
592.3
|
580.5
|
4,918
|
1,992.5
|
Revisions and improved
recovery (2)
|
(78.0)
|
(50.3)
|
363
|
(67.8)
|
Extensions and
discoveries
|
121.5
|
142.0
|
1,966
|
591.2
|
Purchase of reserves
in place
|
2.6
|
2.5
|
13
|
7.3
|
Sale of reserves in
place
|
(28.6)
|
(21.0)
|
(123)
|
(70.2)
|
Production
|
(51.2)
|
(49.0)
|
(568)
|
(194.9)
|
December 31,
2021
|
558.6
|
604.7
|
6,570
|
2,258.2
|
(1)
|
Numbers may not add
due to rounding.
|
(2)
|
Changes in reserve
estimates resulting from application of improved recovery
techniques are included in revisions of previous
estimates.
|
Hedge Volumes as of December 31,
2021
|
|
|
|
|
Oil and Condensate
Hedges ($/bbl)
|
1Q
2022
|
2Q
2022
|
3Q
2022
|
4Q
2022
|
WTI
Swaps
|
5
Mbbls/d
|
5
Mbbls/d
|
5
Mbbls/d
|
5
Mbbls/d
|
Swap Price
|
$60.16
|
$60.16
|
$60.16
|
$60.16
|
WTI 3-Way
Options
|
75
Mbbls/d
|
75
Mbbls/d
|
75
Mbbls/d
|
75
Mbbls/d
|
Short Call
|
$70.79
|
$70.79
|
$70.79
|
$70.79
|
Long Put
|
$60.82
|
$60.82
|
$60.82
|
$60.82
|
Short Put
|
$49.33
|
$49.33
|
$49.33
|
$49.33
|
|
|
|
|
|
Natural Gas Hedges
($/Mcf)
|
1Q
2022
|
2Q
2022
|
3Q
2022
|
4Q
2022
|
NYMEX
Swaps
|
365
MMcf/d
|
365
MMcf/d
|
365
MMcf/d
|
365
MMcf/d
|
Swap Price
|
$2.60
|
$2.60
|
$2.60
|
$2.60
|
NYMEX 3-Way
Options
|
385
MMcf/d
|
370
MMcf/d
|
425
MMcf/d
|
410
MMcf/d
|
Short Call
|
$3.03
|
$3.01
|
$3.03
|
$3.01
|
Long Put
|
$2.75
|
$2.75
|
$2.76
|
$2.75
|
Short Put
|
$2.00
|
$2.00
|
$2.00
|
$2.00
|
NYMEX Costless
Collars
|
200
MMcf/d
|
200
MMcf/d
|
200
MMcf/d
|
200
MMcf/d
|
Short Call
|
$2.85
|
$2.85
|
$2.85
|
$2.85
|
Long Put
|
$2.55
|
$2.55
|
$2.55
|
$2.55
|
NYMEX Short Call
Options
|
330
MMcf/d
|
330
MMcf/d
|
330
MMcf/d
|
330
MMcf/d
|
Sold Call
Strike
|
$2.38
|
$2.38
|
$2.38
|
$2.38
|
Price Sensitivities for WTI Oil (1) ($MM)
|
WTI Oil Hedge
Gains (Losses)
|
|
$60
|
$70
|
$80
|
$90
|
Full Year
2022
|
43
|
(55)
|
(289)
|
(580)
|
(1)
|
Hedge positions and
hedge sensitivity estimates based on hedge positions as at
12/31/2021. Does not include impact of basis positions.
|
Price Sensitivities for NYMEX Natural Gas (1)
($MM)
|
NYMEX Natural Gas
Hedge Gains (Losses)
|
|
$3.00
|
$3.50
|
$4.00
|
$4.50
|
$5.00
|
Full Year
2022
|
(139)
|
(373)
|
(607)
|
(844)
|
(1,080)
|
(1)
|
Hedge positions and
hedge sensitivity estimates based on hedge positions as at
12/31/2021. Does not include impact of basis positions.
|
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 or to the Company includes reference to
subsidiaries of and partnership interests held by Ovintiv Inc. and
its subsidiaries.
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:
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. Non-GAAP Free Cash Flow is a non-GAAP
measure defined as Non-GAAP Cash Flow in excess of capital
expenditures, excluding net acquisitions and divestitures.
Forecasted Non-GAAP free cash flow represents forecasted cash
flow based on $85 WTI and
$4.50 NYMEX utilizes the midpoint of
production guidance. Due to their forward-looking nature,
management cannot reliably predict certain of the necessary
components of the most directly comparable forward-looking GAAP
measures, such as changes in operating assets and
liabilities. Accordingly, Ovintiv is unable to present a
quantitative reconciliation of such forward-looking non-GAAP
financial measures to their most directly comparable
forward-looking GAAP financial measures. Amounts excluded
from this non-GAAP measure in future periods could be
significant.
- Non-GAAP Operating Earnings (Loss) is a non-GAAP
measure defined as net earnings (loss) excluding non-recurring or
non-cash items that Management believes reduces the comparability
of the Company's financial performance between periods. These items
may include, but are not limited to, unrealized gains/losses on
risk management, impairments, restructuring charges, non-operating
foreign exchange gains/losses, gains/losses on divestitures and
gains on debt retirement. Income taxes includes adjustments to
normalize the effect of income taxes calculated using the estimated
annual effective income tax rate. In addition, any valuation
allowances are excluded in the calculation of income taxes.
- 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.
- Net Debt is defined as long-term debt, including
the current portion, less cash and cash equivalents.
- 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
incudes 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.
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.
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 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 is 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, 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; the ability of the Company to
access credit facilities and shelf prospectuses; future
foreign exchange rates; the Company's ability to capture and
maintain gains in productivity and efficiency; data contained in
key modeling statistics; availability of attractive commodity or
financial hedges; benefits from technology and innovation; assumed
tax, royalty and regulatory regimes; expectations and projections
made in light of the Company's historical experience; 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; 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;
service or material cost inflation; our ability to generate
sufficient cash 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
pandemic) on commodity prices and the Company's operations;
our ability to secure adequate transportation and storage for oil,
NGL and natural gas; interruptions to oil, NGL and natural gas
production; discretion of the Company's Board of Directors to
declare and pay dividends; the timing and costs associated with
drilling and completing wells; business interruption, property and
casualty losses (including weather related losses) and the extent
to which insurance covers any such losses; counterparty and credit
risk; the actions of members of OPEC and other state-controlled oil
companies with respect to oil, NGLs and natural gas production; the
impact of changes in our credit rating and access to liquidity;
changes in political or economic conditions in the United States and Canada; risks associated with technology,
including electronic, cyber and physical security breaches; changes
in royalty, tax, environmental, GHG, carbon, accounting and other
laws or regulations or the interpretations thereof; our ability to
timely obtain environmental or other necessary government permits
or approvals; risks associated with existing and potential lawsuits
and regulatory actions; risks related to the purported causes and
impact of climate change; the impact of disputes arising with our
partners; the Company's ability to acquire or find additional oil
and natural gas reserves; imprecision of oil and natural gas
reserves estimates and estimates of recoverable quantities; risks
associated with past and future acquisitions or divestitures; our
ability to repurchase the Company's outstanding shares of common
stock; the existence of alternative uses for the Company's cash
resources which may be superior to the payment of dividends or
share repurchases; land, legal, regulatory and ownership
complexities inherent in the U.S., Canada; failure to achieve or maintain our
cost and efficiency initiatives; risks and uncertainties described
in Item 1A. Risk Factors of the Company's most recent Annual Report
on Form 10-K and Quarterly Report on Form 10-Q; and other risks and
uncertainties impacting the Company's business as described from
time to time in the Company's periodic filings with the SEC or
Canadian securities regulators.
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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SOURCE Ovintiv Inc.