Ovintiv Inc. (de) · NYSE:OVV
Ovintiv Inc. (de) — Q2 2023 Earnings Presentation
24 slides from Ovintiv Inc. (de)'s earnings presentation, Jul 28, 2023
Slide 1: 2Q23 Results Conference Call
2Q23 Results Conference Call 1
Slide 2: 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 3: 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 4: Continuing to Execute
Continuing to Execute Beat 2Q23 Guidance Beat all key guidance items across the board Enhanced FY23 Guidance Raised FY23 production & lowered FY23 capex Seamless Asset Integration Successful Permian acquisition close & integration Continued Operational Execution Another quarter of record Per
Slide 5: Beat Across the Board in 2Q23
Beat Across the Board in 2Q23 2Q23 Operational Performance Strong Well Performance Continues Guidance1 Actuals Seeing outsized performance across all assets Total Production Permian performance leading the way (MBOE/d) 520 – 540 573 Oil & Condensate Base Production Outperformance (Mbbls/d) 175 – 1
Slide 6: 2Q23 Financial Results & Highlights
2Q23 Financial Results & Highlights Committed to Our Cash FlowŦ $699 Limited uplift from mid-June acquisition close $2.79/sh, beating consensus Proven Framework Strong Capex $640 $30 MM below low-end of guidance Efficiencies driving costs lower & showing up in FY23 guide Post Base Dividend Results F
Slide 7: Updated Guides Driven by Strong Operations
Updated Guides Driven by Strong Operations NEW OLD NEW FY 3Q23 FY 20231 FY 2023 Change Total Production 540 - 560 521 – 546 535 – 550 (MBOE/d) Oil & Condensate 202 – 208 186 – 196 190 – 196 (Mbbls/d) NGLs C2 – C4 80 – 85 80 – 85 83 – 87 (Mbbls/d) Natural Gas 1,575 – 1,625 1,525 – 1,575 1,575 – 1,625
Slide 8: Leading Capital Efficiency in 2024
Leading Capital Efficiency in 2024 Reaffirming 2024 Scale >200 Mbbls/d $2.1-$2.5 Billion ~15% Oil & Condensate Production Capex Capital Efficiency Improvement (Stabilizing at 200 Mbbls/d in 2H24) (Oil & C5+ vs. original ’23 Guide) ‘24 Capex ($MM) / Total Production (MBOE/d)1 14 12 Efficiency edge re
Slide 9: Seamless Permian Asset Integration
Seamless Permian Asset Integration Gaines Dawson Borden Integration complete Mitchell Improved FY23 guide driven by strong legacy and Andrews Martin Howard acquired Permian performance Glasscock Ector Closed on June 12, 19 days ahead of June 30 target Midland Sterling OVV operations commence
Slide 10: Strong Permian Well Performance
Strong Permian Well Performance Continued Strong Performance Across the Permian 1H23 Wells Exceeding Expectations1 • Builds on 2H22 & 1Q23 Permian well performance momentum 2023 OVV Permian Type Curve 22 1H23 OVV TILs (44 wells) • Performance driven by optimized completions design and stage architec
Slide 11: Another Record Quarter for Permian Operations
Another Record Quarter for Permian Operations Efficiencies enabling completions innovation that is unlocking higher well productivity & returns 4 000’s Feet / day +40% 3 Completions 2 Speed Faster Completions 1 (2Q23 vs. ’20 – ‘22 avg) 0 2017 2018 2019 2020 2021 2022 1Q23 2Q23 12 MMLBS Sand / day +8
Slide 12: Outstanding Montney Oil/Condensate Execution
Outstanding Montney Oil/Condensate Execution Operational excellence and leading well results OVV Has 36 of Top 50 Montney Wells3 Montney IP90 Cumulative MBOE • Industry leading OVV well results continue across the acreage OVINTIV OVINTIV • Capital program targeting oil & condensate rich areas OVINTI
Slide 13: Uinta Basin Continues Strong Performance
Uinta Basin Continues Strong Performance Core OVV Uinta Position Premier Undeveloped Oil Resource • Multiple horizontal intervals with ~1,000 Ft of collective pay Duchesne Uintah Top Tier North American Hz Oil Wells • Ovintiv well performance in-line with Core Delaware Basin wells Core Oil Acreag
Slide 14: Anadarko Provides Gas/NGL Optionality
Anadarko Provides Gas/NGL Optionality #1 Free Cash FlowŦ in the portfolio expected in FY23 Kunneman Pad 1H23 • Shallowing base decline reinforces cash flow generation and reduces capital intensity • Strong midstream access generates narrow differentials across all products • Both oil & total product
Slide 15: 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 16: Int
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Slide 17: Appendix
Appendix
Slide 18: Projected Activity Allocation
Projected Activity Allocation 2H23 Rigs FY23 Capital FY23 TILs (#) ($MM) (Net) • Capex high-point in 3Q23 due to WIP backlog at closing Permian 5 $1,400 - $1,500 150 – 170 • First fully OVV designed and developed cube online in 4Q23 • Strong well performance continues across the asset • FY23 capital
Slide 19: Additional Guidance
Additional Guidance Operating Expenses Corporate Items (Quarterly Run Rate) 2Q23A 2Q23 Guide 2H23 ($MM unless otherwise noted) 2Q23A 2H23 PMOT Market Optimization3 $31 $30 - $35 4.6% 4% - 5% 4% - 5% Corp. G&A ex LTI & Transaction Costs $704 $64 - $68 (% of Upstream Revenue1) Less Sublease Revenue $1
Slide 20: Hedge Positions as of June 30, 2023
Hedge Positions as of June 30, 2023 Oil and Condensate Hedge Positions1 Natural Gas Hedge Positions1 Oil and Condensate 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Natural Gas 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Volume Mbbls/d 35 35 25 25 0 0 Volume MMcf/d 0 0 200 200 200 200 WTI Swaps NYMEX Swaps Price $/bbl $76.94 $7
Slide 21: Proactive AECO & Waha Risk Management
Proactive AECO & Waha Risk Management Successfully Managing ~100% transport to market secured Gas Flow & Price Risk Minimal exposure to local market prices 2H23-2025 Montney Price Exposures1 2H23 Permian Price Exposures1 ~65% ~60% Physical Transport Outside AECO Physical Transport Outside Waha Chi
Slide 22: Canadian Royalty Sensitivity
Canadian Royalty Sensitivity Royalty Sensitivity1 Royalty Rates Vary Based on Commodity Prices 24 – 26% US Basin Average (20 – 25%) • OVV Reports “NRI” volumes after royalties across its US and Canadian assets • Changes in royalty rates seen in changes to reported net production Observed Montney Rat
Slide 23: Track Record of Responsible Operations
Track Record of Responsible Operations 50% Scope 1&2 Achieved >30% Reduction Through YE22 GHG Intensity Reduction Target Intensity Reduction1 (from ‘19 – ‘30) Tied to Compensation For All Employees >50% Methane Intensity Reduction2 (‘22 vs. ’19) Inclusion in ’23 Bloomberg Gender Achieved 33%
Slide 24: Cost Savings Momentum Continues
Cost Savings Momentum Continues Declining Legacy Costs Legacy Cost Profile ($ 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