Ovintiv Inc. (de) · NYSE:OVV
Ovintiv Inc. (de) — FY2020 Earnings Presentation
25 slides from Ovintiv Inc. (de)'s earnings presentation, Feb 18, 2021
Slide 1: 4Q & YE20 Results Conference Call
4Q & YE20 Results Conference Call 14Q & YE20 Results Conference Call 1
Slide 2: 2020 Highlights
2020 Highlights Through Cycle Stability Reduced Debt ~$285 >$480 Ŧ Debt Reduction Since 2Q20 ($ MM) 2020 Free Cash Flow Generation ($ MM) $257 MM reduction in 4Q20 Third consecutive year of Free Cash Flow Generation Excludes ~$90 MM of one-time costs associated with work force reduction Drove Capita
Slide 3: Today's Key Highlights
Today’s Key Highlights Continuing to prove position as “New E&P” leader • Focused on free cash generation across our world-class, multi-basin portfolio • Culture of innovation and leadership drives industry leading efficiencies • Today’s announcements continue our track record of leading edge ESG an
Slide 4: Positioned for Success
Positioned for Success Our Priorities Our Key Ingredients Debt Reduction “NEW” $4.5B Total debt target (YE22) Ŧ ~$1B Free Cash Flow in ’21 @ $50 / $2.75 Strong Capital Discipline Drive Down Emissions 33% methane intensity reduction target Transparent sustainability reporting since ’05 Return of Cash
Slide 5: Priority #1 - Debt Reduction
Priority #1 - Debt Reduction Total Debt ($B) Debt Reduction Drives Through Cycle Strength • Significant progress on debt reduction, ~$0.5B completed in 2H20 $7.4 • Diminishing legacy costs provide “riskless” margin improvement $6.9 Ŧ • Stay-flat plan generates substantial free cash flow • Scale of b
Slide 6: Cost Savings Momentum Continues
Cost Savings Momentum Continues Legacy Cost Profile Accelerates Debt Reduction Declining Legacy Costs boost cash flow Declining Legacy Costs ($ MM) Panuke decommissioning, T&P & Opex • No execution risk, only subject to time Panuke Lease • ~$1.8B of cumulative savings in ’21 – ’25 vs. ’20 run-rate $
Slide 7: Track Record of Environmental Leadership
Track Record of Environmental Leadership Proven Track Record Industry leading reporting and performance • Alignment to Task Force on Climate-related Financial Disclosure (TCFD) th • Utilizing Sustainability Accounting Standards Board (SASB) guidance 7 16yrs Consecutive “Safest Sustainability reporti
Slide 8: Aligned Compensation Program
Aligned Compensation Program Performance Driven New for 2021 • Focused on short- and long-term performance objectives • Building blocks for value creation Annual Bonus (AIP) New Targets Focused on Alignment Debt Reduction & Methane Intensity P • Transparent annual Board Outreach solicits >2/3rds of
Slide 9: Continuous Board Refreshment
Continuous Board Refreshment Director assessment conducted on an ongoing basis P 3 New Directors added since 2019 Engaged highly regarded executive search firm to assist with renewal process P 3 New independent chair appointed in 2020; independent chair unique P New Committee Chairs in 2020 Committe
Slide 10: Multi-Basin Scale Drives Stability & Optionality
Multi-Basin Scale Drives Stability & Optionality Ŧ ’21 Upstream FCF 5% 10% Anadarko Industry Leading Portfolio Permian Stability through cycle 25% 60% Montney Commodity optionality Base Assets @ $50 & $2.75 Multi basin risk diversification Rapid cross-basin learnings Capital discipline Permian Montn
Slide 11: Permian: Delivering Record Performance
Permian: Delivering Record Performance Record Setting 4Q20 Sets Up Strong ‘21 4Q pacesetter: $390 D&C ($/ft) Record drilling performance $680 • 4Q20 company record lateral length: 15,202’ • 1 million feet drilled without a sidetrack (55 wells) • Record 4Q20 performance of >2k ft/d $560 Innovation de
Slide 12: Anadarko: Lower Costs Drive Cash Generation
Anadarko: Lower Costs Drive Cash Generation Efficiencies Driving Lower Costs 4Q pacesetter: $380 STACK D&C ($/ft) Record drilling performance $790 • Multiple pacesetters with new $3.8 MM D&C in 4Q20 • >50% below $7.9 MM legacy Newfield D&C • $6.1 MM SCOOP Springer D&C $640 • ~$3.5 MM lower than Jan
Slide 13: Anadarko: Lower Costs Change the Game
Anadarko: Lower Costs Change the Game Basin Wide Performance Drives Investment • Contiguous & fully HBP’d acreage position (<1% federal exposure) • Low operating costs drive cash flow generation (~$2/BOE in 4Q20) • Access to premium oil markets (realized >98% of WTI in 4Q20) 65% ’21 Program IRR @ $5
Slide 14: Montney: Quick Cycle Capital and Flexibility
Montney: Quick Cycle Capital and Flexibility Low Cost, Quick Cycle Wells 4Q pacesetter: $290 D&C ($/ft) Record drilling performance • New drilling pacesetter of ~2.1 kft/day $500 $500 • 8% faster drilling performance • Pacesetter D&C of $290 / ft $380 Multi-Basin learnings transferred to Montney • ~
Slide 15: We are the "New E&P"
We are the “New E&P” We have a history of leading the industry towards the era of the “New E&P” Focus on execution efficiency, disciplined capital allocation, and generating free cash flow – Doug Suttles, October 2017 Key Ingredients Track Record Path Forward Ŧ 2020 was 3rd consecutive year of FCF S
Slide 16: Future Oriented Information
Future Oriented Information This presentation contains forward-looking statements or information (collectively, “FLS”) 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
Slide 17: Advisory Regarding Oil & Gas Information
Advisory Regarding Oil & Gas Information All reserves estimates referenced in this presentation are effective as of December 31, 2020, prepared by qualified reserves evaluators in accordance with procedures and standards contained in the Canadian Oil and Gas Evaluation ( COGE ) Handbook, National In
Slide 18: Non-GAAP Measures
Non-GAAP Measures Certain measures in this presentation 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. These measures have been provided for meani
Slide 19: Solicitation of Proxies & Information Regarding Participants
Solicitation of Proxies & Information Regarding Participants SOLICITATION OF PROXIES – Ovintiv intends to file a proxy statement and WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) and Canadian securities regulatory authorities in connection with its solicitation of pro
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Slide 21: Appendix
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Slide 22: Liquids-Focused, Multi-Basin Proved Reserves
Liquids-Focused, Multi-Basin Proved Reserves YE20 Proved Reserves by Asset • Core 3 make up >90% of YE20 proved reserves • Proved developed reserves 56% of total proved • 10-year total proved reserve life index Anadarko >90% Permian • Excluding price and A&D, 2020 reserve replacement ratio was 90% M
Slide 23: Culture of Innovation – Permian Case Study
Culture of Innovation – Permian Case Study Regularly turning pacesetters into the program average 4Q20 Results vs. 1Q20 Pacesetter • Culture of innovation drives learnings and efficiencies • History or turning pacesetter costs into recurring program results 40% • Multi-Basin portfolio generates cros
Slide 24: Financial & Operational Detail
Financial & Operational Detail Ŧ Total Costs 2021 Guidance Details FY21 Upstream T&P $12.59 Crude & Condensate (Mbbls/d) ~200 $12.25 – $12.50 $11.60 PMOT NGLs C2 – C4 (Mbbls/d) ~80 Natural Gas (MMcf/d) ~1,550 Upstream Opex Capital Expenditures ($ MM) ~$1,500 G&A Ŧ Total Costs ($ / BOE) ~$12.25 – $12
Slide 25: Key Modeling Assumptions
Key Modeling Assumptions Hedge Positions (January 31, 2021) FY Consolidated Sensitivities Oil and Condensate $ rounded Unhedged $ rounded F/X +0.05 1Q21 2Q21 3Q21 4Q21 2021 90 74 69 69 75 Volume Mbbls/d Oil: +/- $5 $375 MM Cash Flow $(50) MM WTI 3-Way Call Strike $/bbl $50.03 $51.05 $52.65 $52.65 $5