Ovintiv Inc. (de) · NYSE:OVV
Ovintiv Inc. (de) — Q4 2023 Earnings Presentation
26 slides from Ovintiv Inc. (de)'s earnings presentation, Feb 28, 2024
Slide 1: 4Q & FY23 Results Conference Call
4Q & FY23 Results Conference Call 1
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation 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 Exc
Slide 3: Disclaimers and Non-GAAP Definitions
Disclaimers and Non-GAAP Definitions For convenience, references in this presentation to “Ovintiv”, “OVV”, the “Company”, “we”, “us” and “our” may, where applicable, refer only to or include any relevant direct and indirect subsidiary entities and partnerships (“Subsidiaries”) of Ovintiv Inc., and t
Slide 4: Delivering on Durable Returns Strategy
Delivering on Durable Returns Strategy Efficient Execution Beat & Raised Guidance on All Products & Lowered Capex Twice 2023 Seamless Permian Integration & Inventory Additions Returns Boosted by Higher Well Productivity & Lower Costs $450 MM More Free Cash FlowŦ Even at Slightly Lower Prices ~40% Hi
Slide 5: Beat Across The Board in 4Q23
Beat Across The Board in 4Q23 Exceeded Production Expectations 4Q23 Operational Performance Strong well performance across all assets Guidance Actuals Optimized base production Total Production 4Q23 TILs1 concentrated in Oct-Nov (MBOE/d) 560 - 580 605 Oil & Condensate Low End of Capital Guide (Mbb
Slide 6: More Free Cash Flow Expected in 2024
More Free Cash Flow Expected in 2024 More Oil & Condensate Less Capital More Free Cash FlowŦ Mbbls/d $MM $MM $2,744 202 205 ~$1,600 $1,155 $2,300 Actuals Budget WTI ($/Bbl) ~$78 Lower $75 Prices NYMEX ($/MMBTU) ~$2.75 $2.50 2023 2024E 2023 2024E 2023 2024E 6 Ŧ Non-GAAP measures defined in advisories
Slide 7: Our 2024 Plan Has the Right Ingredients
Our 2024 Plan Has the Right Ingredients Focused on Oil & Condensate 20% more oil & condensate vs. 12 months ago1 Capital directed to oil in every asset Driving top oil well results in every basin we operate Substantial Cash FlowŦ Catalysts 18% capital efficiency improvement, FY23-FY24 (vs. original
Slide 8: 2024 Guidance Details
2024 Guidance Details 2024 Production and Capital 1Q24 FY24 Total Production 560 – 575 545 - 575 (MBOE/d) Maximize Capital Efficiency and FCFŦ Oil & Condensate 208 - 212 202 - 208 (Mbbls/d) FY24 FCFŦ to exceed FY23 despite lower prices1 NGLs C2 – C4 86 – 89 85 - 90 Repeatable load-leveled program se
Slide 9: Permian Excellence Grows Ops Free Cash Flow
Permian Excellence Grows Ops Free Cash Flow >$150 MM Trimulfrac Spotlight Incremental Operating Free Cash FlowŦ in 2023 Driven by 2x Cycle time improvement vs. zipper Operational Efficiencies & “Stacked Innovations”: $400k Cost savings simulfrac vs. zipper Trimulfrac & Simulfrac operations On-lo
Slide 10: Demonstrating Consistency in the Permian
Demonstrating Consistency in the Permian Permian Well Performance “End-to-End” OVV Pads Showing Strong Results 2024 OVV Type Curve • 19 wells fully designed & executed by OVV TIL in 4Q23 20 2023 OVV (Includes all OVV & ENCAP wells since 1.1.23) • Delivering same performance as OVV FY23 on legacy acr
Slide 11: OVV Operated Wells Compete for the Top Spot
OVV Operated Wells Compete for the Top Spot 2023 Midland Well Performance Peer 1 Top Tier Wells vs. Midland Basin Peers OVV Peer 2 ~80 Wells Consistent multi-horizon cube development strategy Peer 3 Peer 4 Testing up to 6 horizons on multiple pads in 2023 & 2024 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9
Slide 12: Compelling Montney Oil Returns
Compelling Montney Oil Returns Targeting High Value Top 10 OVV Montney TILs >1,000 >2,170 BOE/d IP30 Avg Oil & Condensate Bbls/d IP30 Oil & C5+ Avg Since 3Q231 High Return Program At $75 WTI & $2.50 NYMEX >60% ‘24 Program IRR $5.5Million D&C Wells (Midpoint 2024 Guide @ 10,000’) FY23 Unhedged Mont
Slide 13: Uinta Returns Continue to Impress
Uinta Returns Continue to Impress Core OVV Uinta Position High Quality Oil Resource & Well Results • Multiple benches & ~1k ft of pay with >80% Oil & Condensate mix1 Duchesne Uintah • OVV oil results outpace similar overpressured basins like the Delaware Primed For Full Field Development • Contiguou
Slide 14: Focused on Oil Weighted Anadarko Locations
Focused on Oil Weighted Anadarko Locations FY24 Program Year 1 Well Production Mix Substantial Operating Free Cash FlowŦ Generation • Shallowing base decline reinforces operating cash flow generation • Strong midstream access drives narrow differentials across all products >55% Oil & Condensate in Y
Slide 15: Inventory Depth Underpins Durable Returns
Inventory Depth Underpins Durable Returns Gaines Dawson Borden ~65 Premium Net 10k Locations1 added in the Permian Mitchell YTD24 • ~$190 MM YTD acquisition spending = <$3 MM / location Andrews Martin Howard Glasscock 100% Adjacent to Existing Acreage Midland Sterling Ector • Locations compete for c
Slide 16: OVV's Keys to Success
OVV’s Keys to Success High-Quality Portfolio • Four top-tier assets with substantial operating scale Montney • Innovations distributed across the portfolio to drive results High-return oil & deep multi- product inventory Operational Excellence Drives Efficiencies • Proven operational flexibility
Slide 17: Int
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Slide 18: Appendix
Appendix
Slide 19: Additional 2024 Guidance & Sensitivities
Additional 2024 Guidance & Sensitivities Operating Expenses Upstream T&P2 Sensitivities FY24 FY24 Sensitivity Upstream T&P2 PMOT F/X Rate 4-5% ~0.75 +/- 0.01 CAD/USD $0.10/BOE (% of Upstream Revenue1) (CAD/USD) Upstream T&P2 WTI $7.50 - $8.00 ~$75 +/- $10/bbl $0.10/BOE ($/BOE) ($/bbl) Upstream Opex2
Slide 20: Hedge Positions as of December 31, 2023
Hedge Positions as of December 31, 2023 Oil and Condensate Hedge Positions1 Natural Gas Hedge Positions1 Oil and Condensate 1Q24 2Q24 3Q24 4Q24 1Q25 Natural Gas 1Q24 2Q24 3Q24 4Q24 1Q25 Volume Mbbls/d 25 25 0 0 0 Volume MMcf/d 200 200 200 200 0 WTI Swaps NYMEX Swaps Price $/bbl $73.69 $73.69 - - - P
Slide 21: Durable Cash Return Framework
Durable Cash Return Framework Committed to Our Proven Framework 1Q24 Cash Returns ($ MM) 4Q23 Results Post Base Dividend $1,237 Non-GAAP Cash FlowŦ Free Cash FlowŦ ($660) Capex $577 Non-GAAP Free Cash FlowŦ ($82) 4Q23 Base Dividend Shareholder Returns $495 Available Capital Allocation Framework $248
Slide 22: Proactive AECO & Waha Risk Management
Proactive AECO & Waha Risk Management Successfully Managing ~100% transport to market secured Gas Flow & Price Risk Minimal exposure to local market prices 2024 - 2025 Montney Price Exposures1 2024 Permian Price Exposures1 ~65% ~60% Physical Transport Outside AECO Physical Transport Outside Waha C
Slide 23: Optimized Long-Term Debt Profile
Optimized Long-Term Debt Profile Long-Term Debt Profile ($MM) Resilient Capital Structure 1,600 $5,737 MM 1,400 $1,368 Debt @ 12.31.23 1,200 $426 MM lower than @ 9.30.23 Investment Grade Rating 1,000 $850 ~10-yr wtd. avg. LT Debt maturity 800 $700 1.0x Mid-Cycle Leverage TargetŦ $600 $600 $599 (~$4B
Slide 24: Canadian Royalty Sensitivity
Canadian Royalty Sensitivity Royalty Sensitivity1 Royalty Rates Vary Based on Commodity Prices 24 – 26% US Basin Average (20 – 25%) • OVV Reports “NRI” volumes after royalties across its US and Canadian assets • Changes in royalty rates seen in changes to reported net production Observed Montney Rat
Slide 25: Liquids-Focused, Multi-Basin Proved Reserves
Liquids-Focused, Multi-Basin Proved Reserves 106% ~11 Reserve Replacement Ratio Total Proved (Incl Acquisition and Price) Reserve Life Index (Years) YE2023 Proved Reserves Mix SEC Proved Reserves (MMBOE) Oil & C5+ 1 ~48% 244 (101) NGLs (C2 – C4) 2,274 (310) 285 (206) 2,186 Liquids Gas (303) MMBOE of
Slide 26: Track Record of Responsible Operations
Track Record of Responsible Operations 50% Scope 1&2 Achieved 42% Reduction Through YE23 GHG Intensity Reduction Target Intensity Reduction1 (from ‘19 – ‘30) Tied to Compensation For All Employees >50% Methane Intensity Reduction2 Inclusion in ’23 Bloomberg Gender Achieved 33% Reduction from