Ovintiv Inc. (de) · NYSE:OVV
Ovintiv Inc. (de) — Q3 2023 Earnings Presentation
27 slides from Ovintiv Inc. (de)'s earnings presentation, Nov 8, 2023
Slide 1: 3Q23 Results Conference Call
3Q23 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 Key Value Drivers
Delivering on Key Value Drivers • Accretive Premium inventory life extension Durable • Acquired 800 Premium & 250 high-potential net 10k locations in our recent Permian Basin acquisition Returns • >750 Premium net 10k locations in last 2-yrs from bolt-ons and organic assessment & appraisal program b
Slide 5: Continued Execution Excellence
Continued Execution Excellence Beat 3Q23 Guidance Beat on all guidance items All production streams, capex and total production costs Production beats driven by well performance and efficient integration Strong well performance continues Continued Execution Seeing outperformance in every asset A
Slide 6: Beat Across the Board in 3Q23
Beat Across the Board in 3Q23 3Q23 Operational Performance Guidance Actuals Realizing Operational Efficiencies Total Production 540 – 560 572 (MBOE/d) Setting efficiency records throughout the portfolio Capex below low-end of guide Oil & Condensate 116 net TILs in 3Q (+16 vs. expectations - primar
Slide 7: 3Q23 Financial Highlights – Strong Cash Flow
3Q23 Financial Highlights – Strong Cash Flow $ MM Cash FlowŦ $1,112 $4.02/sh, beating consensus & up ~45% over 2Q Capex $834 $31 MM below midpoint of guidance Free Cash FlowŦ $278 Providing strong shareholder returns in 4Q23 Shareholder Returns $127 Base dividend & buybacks in 3Q23 1.0 MM shares bou
Slide 8: Seamless Permian Asset Integration
Seamless Permian Asset Integration Integration Completed Ahead of Schedule TIL Acceleration Supporting 3Q23 Beat & FY23 Raise At Level-Loaded Rig & Frac Crew Program Today ~180k 800 5 OVV’s Permian By The Numbers Net Acres Acquired Premium1 Rigs Running 1 Frac Crew Net 10K Locations Today Running
Slide 9: Peer Leading Permian Well Performance
Peer Leading Permian Well Performance Continued Strong Performance Across the Permian Legacy Permian Performance • Builds on 2H22 & 1H23 Permian well performance momentum • Driven by optimized completions design and stage architecture >20% Higher oil productivity / ft in 2023 vs. 2022 2 • Efficiency
Slide 10: Record Permian “Trimulfrac” Performance
Record Permian “Trimulfrac” Performance “Trimulfrac” = 3 wells completed at the same time (next iteration of “Simulfrac”) Relentless Pursuit of Innovation and Efficiencies Permian Completions Speed • Leading Trimulfrac operations in execution across Permian position 4.5 3Q23 Driftwood Pad • Go-forwa
Slide 11: Top Tier Montney Operations and Realizations
Top Tier Montney Operations and Realizations Operational Excellence and Leading Well Results Leading Well Performance Continues4 • Industry leading OVV well results continue across the acreage Montney IP90 Cumulative MBOE ~90% of Gas De-Linked from AECO (’23 – ’25)1 OVINTIV OVINTIV OVINTIV OVINTIV •
Slide 12: Increased Uinta Activity Exceeding Expectations
Increased Uinta Activity Exceeding Expectations Premier Undeveloped Oil Resource • Multiple horizontal intervals with ~1,000 Ft of collective pay OVV Uinta Outperforming Delaware 2023 OVV Uinta TILs (17 Wells) Top Tier North American Hz Oil Wells • Ovintiv well performance exceeding Delaware Basin
Slide 13: Anadarko Provides Gas/NGL Optionality
Anadarko Provides Gas/NGL Optionality Capital Efficient Completions Activity in 4Q23 Kunneman Pad Completions • Sourced attractively priced completions crew to complete 4.4 net DUCs in 4Q23 • ~$30 MM of DUC, base and other capital spend in 4Q23 Substantial Free Cash FlowŦ Generation • Shallowing bas
Slide 14: Updated Guide Driven by Strong Execution
Updated Guide Driven by Strong Execution New Old FY 20231 New FY 2023 4Q23 At Close As of 2Q23 FY 2023 Improvement2 Total Production (MBOE/d) 560 – 580 521 – 546 535 – 550 550 – 560 +4% Oil & Condensate (Mbbls/d) 220 – 227 186 – 196 190 – 196 196 – 198 +3% NGLs C2 – C4 (Mbbls/d) 84 – 88 80-85 83 – 8
Slide 15: Well Positioned Into 2024
Well Positioned Into 2024 Reaffirming 2024 Scale >200 Oil & Condensate Production $2.1-$2.5 Capex ~15% Capital Efficiency Improvement (Mbbls/d) ($ B) (Oil & C5+ vs. pre-acquisition ’23 guide) At Targeted Run-Rate in 2Q24 Seamless Integration Accelerates FY23 Production Oil & Condensate (Mbbls/d) • 2
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 Strong production across all products & advantaged costs Operational Excellence Drives Efficiencies • Proven operational fl
Slide 17: Ovintiv
_ 636 Ovintiv’ “
Slide 18: Appendix
TrD Appendix
Slide 19: Projected Activity Allocation
Projected Activity Allocation Rigs FY23 Capital FY23 TILs (#) ($MM) (Net) • Production peak in 4Q23 Permian 5 $1,430 - $1,470 170 – 180 • First fully OVV designed and developed cube online in late 4Q23 • Strong well performance continues across the asset • Capital program allocated to oil & condensa
Slide 20: Additional Guidance
Additional Guidance Operating Expenses Corporate Items (Quarterly Run Rate) 3Q23A 3Q23 Guide Go Forward ($MM unless otherwise noted) 3Q23A Go Forward PMOT Market Optimization3 $34 $30 - $35 4.3% 4% - 5% 4% - 5% Corp. G&A ex LTI & Transaction Costs $66 $68 - $72 (% of Upstream Revenue1) Lower with Ef
Slide 21: Durable Cash Return Framework
Durable Cash Return Framework Committed to Our 4Q23 Cash Returns ($ MM) Proven Framework 3Q23 Results Post Base Dividend $1,112 Non-GAAP Cash FlowŦ Free Cash FlowŦ ($834) Capex $278 Non-GAAP Free Cash FlowŦ ($82) 3Q23 Base Dividend $196 Available Shareholder Returns $98 50% Allocated to Share Buybac
Slide 22: Long-Term Debt Profile
Long-Term Debt Profile 3Q23 Long-Term Debt Profile ($MM) Resilient Capital Structure $1,368 $6,163 MM Debt @ 9.30.23 $850 Investment Grade Rating $700 ~10-yr wtd. avg. LT Debt maturity $600 $600 $599 $459 1.0x Mid-Cycle Leverage TargetŦ (~$4B Debt) $300 Maturity Profile Optimized for Efficient Debt
Slide 23: Hedge Positions as of September 30, 2023
Hedge Positions as of September 30, 2023 Oil and Condensate Hedge Positions1 Natural Gas Hedge Positions1 Oil and Condensate 4Q23 1Q24 2Q24 3Q24 4Q24 Natural Gas 4Q23 1Q24 2Q24 3Q24 4Q24 Volume Mbbls/d 35 25 25 0 0 Volume MMcf/d 0 200 200 200 200 WTI Swaps NYMEX Swaps Price $/bbl $76.94 $73.69 $73.6
Slide 24: Proactive AECO & Waha Risk Management
Proactive AECO & Waha Risk Management Successfully Managing ~100% transport to market secured Gas Flow & Price Risk Minimal exposure to local market prices 2024 - 2025 Montney Price Exposures1 2024 Permian Price Exposures1 ~65% ~55% Physical Transport Outside AECO Physical Transport Outside Waha A
Slide 25: Canadian Royalty Sensitivity
Canadian Royalty Sensitivity Royalty Sensitivity1 Royalty Rates Vary Based on Commodity Prices 24 – 26% US Basin Average (20 – 25%) • OVV Reports “NRI” volumes after royalties across its US and Canadian assets • Changes in royalty rates seen in changes to reported net production Observed Montney Rat
Slide 26: Track Record of Responsible Operations
Track Record of Responsible Operations 50% Scope 1&2 Achieved >30% Reduction Through YE22 GHG Intensity Reduction Target Intensity Reduction1 (from ‘19 – ‘30) Tied to Compensation For All Employees >50% Methane Intensity Reduction2 (‘22 vs. ’19) Inclusion in ’23 Bloomberg Gender Achieved 33%
Slide 27: Cost Savings Momentum Continues
Cost Savings Momentum Continues Declining Legacy Costs Legacy Cost Profile ($ MM) • Non-GAAP Cash FlowŦ tailwind Declining Legacy Rex Costs • No execution risk, only subject to time $147 $147 • REX commitment declines ~$100 MM from FY23 – FY24, commitment ends May ‘24 ~$250 MM Estimated Cumulative L