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What changed in Ovintiv Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Ovintiv Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+189 added−209 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-27)

Top changes in Ovintiv Inc.'s 2023 10-K

189 paragraphs added · 209 removed · 141 edited across 3 sections

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information Ovintiv’s shares of common stock are listed and posted for trading on the NYSE and TSX under the symbol “OVV”.
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Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 50 Item 6. [Reserved] 52 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 53 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 81 Item 8. Financial Statements and Supplementary Data 83
Removed
Shareholders The Company is authorized to issue up to 775,000,000 shares of stock consisting of: (a) 750,000,000 shares of common stock, par value $0.01 per share, and (b) 25,000,000 shares of preferred stock, par value $0.01 per share.
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As at February 17, 2023, there were 243,643,104 shares of common stock outstanding held by 5,144 shareholders of record, and no shares of preferred stock outstanding.
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Capital Return Information In 2022, the Company paid a quarterly dividend of $0.20 per share of common stock for the first quarter and $0.25 per share of common stock for each of the second, third and fourth quarters (2021: $0.09375 per share of common stock for each of the first two quarters and $0.14 per share of common stock for the third and fourth quarters) and $0.95 per share of common stock annually (2021: $0.4675 per share of common stock annually).
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On February 27, 2023 the Board of Directors declared a dividend of $0.25 per share of Ovintiv common stock payable on March 31, 2023 to common shareholders of record as of March 15, 2023.
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The Company typically pays dividends quarterly to shareholders of record as of the 15 th day (or the previous business day) of the last month of each calendar quarter, with the last business day of the same month being the corresponding payment date; however, the timing and amount of dividends, if any, is subject to the discretion of the Board of Directors.
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On July 6, 2022, the Company announced it will increase cash returns to shareholders from 25 percent to 50 percent of Non-GAAP Cash Flow in excess of capital expenditures and base dividends in the form of share buybacks and/or variable dividends at the discretion of the Board. During 2022, the Company elected share buybacks under the capital allocation framework.
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Although we currently intend to return capital to shareholders in the form of (a) a base quarterly cash dividend; (b) variable cash dividends; and/or (c) repurchases of our outstanding common stock (commonly known as share buybacks), the amount and timing of these returns of capital to shareholders may vary from time to time.
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The decision whether to return capital to shareholders, as well as the timing and amount of any return of capital to shareholders, is subject to the discretion of the Board of Directors, which regularly evaluates our proposed capital returns to shareholders and the requirements, if any, under DGCL. See Item 1A.
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Risk Factors of this Annual Report on Form 10‑K, “The decision to return capital to shareholders, whether through cash dividends, share buybacks or otherwise, and the amount and timing of such capital returns is subject to the discretion of the Board of Directors and will vary from time to time”. 48 PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS On September 28, 2022, Ovintiv announced it had received regulatory approval to purchase, for cancellation or return to treasury, up to approximately 24.8 million shares of common stock pursuant to a NCIB over a 12-month period from October 3, 2022 to October 2, 2023.
Removed
The number of shares of common stock authorized for purchase represents approximately 10 percent of Ovintiv's issued and outstanding shares of common stock as of September 19, 2022.
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During the three months ended December 31, 2022, the Company purchased approximately 3.5 million shares of common stock for total consideration of approximately $188 million at a weighted average price of $53.94 per share. The following table presents the shares of common stock purchased during the three months ended December 31, 2022.
Removed
Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs October 1 to October 31, 2022 957,525 $ 52.22 957,525 23,889,330 November 1 to November 30, 2022 1,803,312 54.93 1,803,312 22,086,018 December 1 to December 31, 2022 724,362 53.77 724,362 21,361,656 Total 3,485,199 $ 53.94 3,485,199 21,361,656 (1) Includes commissions.
Removed
RECENT SALES OF UNREGISTERED EQUITY SECURITIES None. 49 PERFORMANCE GRAPH The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall information be incorporated by reference into any future filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing.
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The following graph compares the cumulative five-year total return to shareholders of the Company’s common stock relative to the cumulative total returns of the S&P 400 and the SPDR Oil & Gas Exploration & Production ETF (“XOP U.S. Equity”).
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The graph was prepared assuming $100 was invested on December 31, 2017 in the Company’s common stock, the S&P 400 and the XOP U.S. Equity, and dividends have been reinvested subsequent to the initial investment. The graph is included for historical comparative purposes only and should not be considered indicative of future performance.
Removed
Comparison of 5-Year Cumulative Total Return Among Ovintiv, the S&P 400 and XOP U.S. Equity (US$100 Invested in Base Period) Fiscal Year Ended December 31 2017 2018 2019 2020 2021 2022 Ovintiv $ 100.00 $ 43.63 $ 35.93 $ 23.42 $ 55.84 $ 85.60 S&P 400 100.00 88.90 112.17 127.48 159.01 138.18 XOP U.S.
Removed
Equity 100.00 71.91 65.12 41.47 69.16 100.51 Item 6. [Reserved] Not Applicable. 50

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

128 edited+47 added−48 removed60 unchanged
Biggest changeOvintiv expects it will continue to meet the payment terms of its suppliers. 68 Non-GAAP Cash Flow in 20 2 2 was $ 4,110 million and was primarily impacted by the items affecting cash from operating activities which are discussed below and in the Results of Operations section of this MD&A. 2022 versus 2021 Net cash from operating activities increased $737 million compared to 2021 primarily due to: • Higher realized commodity prices ($3,163 million); partially offset by: • Higher realized losses on risk management in revenues compared to 2021 ($1,213 million), lower production volumes ($437 million), higher transportation and processing expense ($170 million), higher operating expense, excluding non-cash long-term incentive costs ($169 million), current income tax recovery mainly due to the resolution of prior years’ tax items in 2021 of $156 million, changes in non-cash working capital ($146 million) and higher production, mineral and other taxes ($122 million).
Biggest changeNon-GAAP Cash Flow in 2023 was $3,899 million and was primarily impacted by the items affecting cash from operating activities which are discussed below and in the Results of Operations section of this MD&A. 2023 versus 2022 Net cash from operating activities increased $301 million compared to 2022 primarily due to: • Lower realized losses on risk management in revenues compared to 2022 ($2,565 million), higher production volumes ($1,273 million), changes in non-cash working capital ($517 million), lower production, mineral and other taxes ($73 million), and lower transportation and processing expense ($20 million); partially offset by: • Lower realized commodity prices ($3,638 million), increase in current income taxes ($271 million), higher interest expense ($71 million), higher operating expense, excluding non-cash long-term incentive costs ($68 million), higher administrative expenses, excluding non-cash long-term incentive costs ($67 million) and lower interest income ($14 million). 71 Investing Activities The Company’s primary investing activities are capital expenditures, acquisitions and divestitures, and are summarized in Notes 2 and 8 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 2023 and 2022 Net cash used in investing activities in 2023 was $5,519 million primarily due to capital expenditures and the Permian Acquisition.
Divestitures in 2022 were $228 million, which primarily included the sale of portions of Uinta assets located in northeastern Utah and Bakken assets located in northeastern Montana, as well as certain properties that did not complement Ovintiv’s existing portfolio of assets.
Divestitures in 2022 were $228 million, which primarily included the sale of portions of the Uinta assets located in northeastern Utah and Bakken assets located in northeastern Montana, as well as certain properties that did not complement Ovintiv’s existing portfolio of assets.
Revisions to reserve estimates are necessary due to changes in and among other things, development plans, projected future rates of production, the timing of future expenditures, reservoir performance, economic conditions, governmental restrictions as well as changes in the expected recovery associated with infill drilling, all of which are subject to numerous uncertainties and various interpretations.
Revisions to significant reserve estimates are necessary due to changes in and among other things, development plans, projected future rates of production, the timing of future expenditures, reservoir performance, economic conditions, governmental restrictions as well as changes in the expected recovery associated with infill drilling, all of which are subject to numerous uncertainties and various interpretations.
Additional information on income taxes can be found in Note 6 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 66 Liquidity and Capital Resources Sources of Liquidity The Company has the flexibility to access cash equivalents and a range of funding alternatives at competitive rates through committed revolving credit facilities as well as debt and equity capital markets.
Additional information on income taxes can be found in Note 6 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 68 Liquidity and Capital Resources Sources of Liquidity The Company has the flexibility to access cash equivalents and a range of funding alternatives at competitive rates through committed revolving credit facilities as well as debt and equity capital markets.
Further to the commitments discussed above, Ovintiv also has various obligations that become payable if certain future events occur relating to take or pay arrangements and guarantees on transportation commitments resulting from completed property divestitures as described in Notes 19, 24 and 26, respectively, to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Further to the commitments discussed above, Ovintiv also has various obligations that become payable if certain future events occur relating to take or pay arrangements and guarantees on transportation commitments resulting from completed property divestitures as described in Notes 20, 24 and 26, respectively, to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
The Company continually monitors known and potential legal, environmental and other claims or contingencies based on available information. Future changes in facts and circumstances not currently foreseeable could result in the actual liabilities recorded exceeding the estimated amounts accrued. 74 Non-GAAP Measures Certain measures in this document do not have any standardized meaning as prescribed by U.S.
The Company continually monitors known and potential legal, environmental and other claims or contingencies based on available information. Future changes in facts and circumstances not currently foreseeable could result in the actual liabilities recorded exceeding the estimated amounts accrued. 78 Non-GAAP Measures Certain measures in this document do not have any standardized meaning as prescribed by U.S.
The definitions used in the covenant under the Credit Facilities adjust capitalization for cumulative historical ceiling test impairments recorded in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP. Additional information on financial covenants can be found in Note 14 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
The definitions used in the covenant under the Credit Facilities adjust capitalization for cumulative historical ceiling test impairments recorded in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP. Additional information on financial covenants can be found in Note 15 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Additional information on fair value changes can be found in Note 23 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 60 Market Optimization Revenues Market Optimization product revenues relate to activities that provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification.
Additional information on fair value changes can be found in Note 23 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 62 Market Optimization Revenues Market Optimization product revenues relate to activities that provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification.
In addition, the Company has obligations to fund the disposal of long-lived assets upon their abandonment as well as its obligations to fund its defined benefit pension and other post-employment benefit plans as described in Notes 16 and 22, respectively, to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
In addition, the Company has obligations to fund the disposal of long-lived assets upon their abandonment as well as its obligations to fund its defined benefit pension and other post-employment benefit plans as described in Notes 17 and 22, respectively, to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Sublease Revenues Sublease revenues primarily include amounts related to the sublease of office space in The Bow office building recorded in the Corporate and Other segment. Additional information on office sublease income can be found in Note 13 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Sublease Revenues Sublease revenues primarily include amounts related to the sublease of office space in The Bow office building recorded in the Corporate and Other segment. Additional information on office sublease income can be found in Note 14 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
These measures are commonly used in the oil and gas industry and 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. Non-GAAP measures include: Non-GAAP Cash Flow, Non-GAAP Total Costs, Debt to Adjusted Capitalization and Debt to Adjusted EBITDA.
These measures are commonly used in the oil and gas industry and 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. Non-GAAP measures include: Non-GAAP Cash Flow, Debt to Adjusted Capitalization, Debt to EBITDA and Debt to Adjusted EBITDA.
This MD&A should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2022 (“Consolidated Financial Statements”), which are included in Item 8 of this Annual Report on Form 10-K.
This MD&A should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2023 (“Consolidated Financial Statements”), which are included in Item 8 of this Annual Report on Form 10-K.
If a loss is probable but the Company cannot estimate a specific amount for that loss, the best estimate within the range is accrued and if no amount is better within the range, the minimum amount is accrued. The establishment and evaluation of a contingent loss is based on advice from legal counsel, advisors or consultants and management’s judgement.
If a loss is probable but the Company cannot estimate a specific amount for that loss, the best estimate within the range is accrued and if no amount is better within the range, the minimum amount is accrued. The establishment and evaluation of a contingent loss is based on advice from legal counsel, advisors or consultants and management’s judgment.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The MD&A is intended to provide a narrative description of the Company’s business from management’s perspective which includes an overview of Ovintiv’s consolidated 2022 results and year-over-year comparisons between 2022 and 2021 results.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The MD&A is intended to provide a narrative description of the Company’s business from management’s perspective, which includes an overview of Ovintiv’s consolidated 2023 results and year-over-year comparisons between 2023 and 2022 results.
For additional information on the NCIB, refer to Note 17 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 70 Material Cash Requirements Ovintiv’s material cash requirements include various contractual obligations arising from long-term debt, operating leases, risk management liabilities and asset retirement obligations which are recognized on the Company’s Consolidated Balance Sheet.
For additional information on the NCIB, refer to Note 18 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Material Cash Requirements Ovintiv’s material cash requirements include various contractual obligations arising from long-term debt, operating leases, risk management liabilities and asset retirement obligations which are recognized on the Company’s Consolidated Balance Sheet.
Contingencies For information on contingencies, refer to Note 26 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 71 Accounting Policies and Estimates Critical Accounting Estimates The preparation of financial statements in conformity with U.S.
Contingencies For information on contingencies, refer to Note 26 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 74 Accounting Policies and Estimates Critical Accounting Estimates The preparation of financial statements in conformity with U.S.
Additional information on the Company’s commodity price positions as at December 31, 2022 can be found in Note 24 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Additional information on the Company’s commodity price positions as at December 31, 2023 can be found in Note 24 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Contractual commitments relating to transportation and processing commitments, and drilling and field services can be found in Notes 13 and 26 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Contractual commitments relating to transportation and processing commitments, and drilling and field services can be found in Notes 14 and 26 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
For additional information on the segmented results, refer to Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 51 In evaluating its operations and assessing its leverage, Ovintiv reviews performance-based measures such as Non-GAAP Cash Flow , Non-GAAP Total Costs and debt-based metrics such as Debt to Adjusted Capitalization , Debt to EBITDA and Debt to Adjusted EBITDA, which are non-GAAP measures and do not have any standardized meaning under U.S.
For additional information on the segmented results, refer to Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 53 In evaluating its operations and assessing its leverage, Ovintiv reviews performance-based measures such as Non-GAAP Cash Flow and debt-based metrics such as Debt to Adjusted Capitalization, Debt to EBITDA and Debt to Adjusted EBITDA, which are non-GAAP measures and do not have any standardized meaning under U.S.
Discussion and analysis of 2020 results and year-over-year comparisons between 2021 and 2020 results that are not included in this Form 10-K, and can be found in Item 7 of the 2021 Annual Report on Form 10-K.
Discussion and analysis of 2021 results and year-over-year comparisons between 2022 and 2021 results that are not included in this Form 10-K, can be found in Item 7 of the 2022 Annual Report on Form 10-K.
Management monitors Debt to Adjusted Capitalization, which is a non-GAAP measure defined in the Non-GAAP Measures section of this MD&A, as a proxy for Ovintiv’s financial covenant under the Credit Facilities, which requires Debt to Adjusted Capitalization to be less than 60 percent. As at December 31, 2022, the Company’s Debt to Adjusted Capitalization was 19 percent.
Management monitors Debt to Adjusted Capitalization, which is a non-GAAP measure defined in the Non-GAAP Measures section of this MD&A, as a proxy for Ovintiv’s financial covenant under the Credit Facilities, which requires Debt to Adjusted Capitalization to be less than 60 percent. As at December 31, 2023, the Company’s Debt to Adjusted Capitalization was 24 percent.
Changes in these estimates and assumptions can impact net earnings, revenues and expenses. As Ovintiv has chosen not to elect hedge accounting treatment for the Company’s derivative financial instruments, changes in the fair values of derivative financial instruments can have a significant impact on Ovintiv’s results of operations.
Changes in these estimates and assumptions can impact net earnings, revenues and expenses. 76 Description Judgments and Uncertainties As Ovintiv has chosen not to elect hedge accounting treatment for the Company’s derivative financial instruments, changes in the fair values of derivative financial instruments can have a significant impact on Ovintiv’s results of operations.
Effective April 1, 2022, the Company has access to two committed revolving U.S. dollar denominated credit facilities totaling $3.5 billion, which include a $2.2 billion revolving credit facility for Ovintiv Inc. and a $1.3 billion revolving credit facility for a Canadian subsidiary (collectively, the “Credit Facilities”).
The Company has full access to two committed revolving U.S. dollar denominated credit facilities totaling $3.5 billion, which include a $2.2 billion revolving credit facility for Ovintiv Inc. and a $1.3 billion revolving credit facility for a Canadian subsidiary (collectively, the “Credit Facilities”).
This MD&A includes the following sections: • Executive Overview • Results of Operations • Liquidity and Capital Resources • Accounting Policies and Estimates • Non-GAAP Measures Executive Overview Strategy Ovintiv is a leading North American energy producer that is focused on developing its multi-basin portfolio of oil, NGLs and natural gas producing plays as part of its strategy outlined in Items 1 and 2 of this Annual Report on Form 10-K.
This MD&A includes the following sections: • Executive Overview • Results of Operations • Liquidity and Capital Resources • Accounting Policies and Estimates • Non-GAAP Measures Executive Overview Strategy Ovintiv aims to be a leading North American energy producer and is focused on developing its high-quality multi-basin portfolio of oil and natural gas producing plays as part of its strategy outlined in Items 1 and 2 of this Annual Report on Form 10-K.
Company Outlook The Company will continue to exercise discretion and discipline to optimize capital allocation throughout 2023 as the commodity price environment evolves. Ovintiv pursues innovative ways to maximize cash flows and minimize the impact of inflation to reduce upstream operating and administrative expenses. Markets for oil and natural gas are exposed to different price risks and are inherently volatile.
Company Outlook The Company will continue to exercise discretion and discipline, and intends to optimize capital allocation throughout 2024 as the commodity price environment evolves. Ovintiv pursues innovative ways to maximize cash flows, and to reduce upstream operating and administrative expenses. Markets for oil and natural gas are exposed to different price risks and are inherently volatile.
As at December 31, 2022, the Company has hedged approximately 38.0 Mbbls/d of expected oil and condensate production and 397 MMcf/d of expected natural gas production for 2023. In addition, Ovintiv proactively utilizes transportation contracts to diversify the Company’s sales markets, thereby reducing significant exposure to any given market and regional pricing.
As at December 31, 2023, the Company has hedged approximately 70.3 Mbbls/d of expected oil and condensate production and 775 MMcf/d of expected natural gas production for 2024. In addition, Ovintiv proactively utilizes transportation contracts to diversify the Company’s sales markets, thereby reducing significant exposure to any given market and regional pricing.
In 2023, the Company expects to incur full year upstream transportation and processing costs of approximately $9.00 per BOE to $9.50 per BOE, upstream operating expenses of approximately $4.00 per BOE to $4.50 per BOE, and total production, mineral and other taxes of approximately four to five percent of upstream revenues.
In 2024, the Company expects to incur full year upstream transportation and processing costs of approximately $7.50 per BOE to $8.00 per BOE, upstream operating expenses of approximately $4.25 per BOE to $4.75 per BOE, and total production, mineral and other taxes of approximately four to five percent of upstream revenues.
Additional information on Ovintiv’s hedging program can be found in Note 24 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Capital Investment The Company plans to spend approximately $2,150 million to $2,350 million on its full year 2023 capital investment program, focusing on maximizing returns from high margin liquids.
Additional information on Ovintiv’s hedging program can be found in Note 24 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Capital Investment The Company plans to spend approximately $2.2 billion to $2.4 billion on its full year 2024 capital investment program, focusing on maximizing returns from high-margin oil and condensate.
Natural gas prices for 2023 will be impacted by the interplay between natural gas production and associated natural gas from oil production, changes in demand from the power generation sector, changes in export levels of U.S. liquefied natural gas, impacts from seasonal weather, as well as supply chain constraints or other disruptions resulting from the Russian invasion of Ukraine.
Natural gas prices for 2024 are expected to be impacted by the interplay between natural gas production and associated natural gas from oil production, changes in demand from the power generation sector, changes in export levels of U.S. liquefied natural gas, impacts from seasonal weather, as well as supply chain constraints or other disruptions resulting from geopolitical events.
Normal Course Issuer Bid On September 28, 2022, the Company announced it had received regulatory approval for the renewal of its NCIB program, that enables the Company to purchase, for cancellation or return to treasury, up to approximately 24.8 million shares of common stock over a 12-month period from October 3, 2022 to October 2, 2023.
Normal Course Issuer Bid and Other Share Buybacks On September 26, 2023, the Company announced it had received regulatory approval for the renewal of its NCIB program, which enables the Company to purchase, for cancellation or return to treasury, up to approximately 26.7 million shares of common stock over a 12-month period from October 3, 2023 to October 2, 2024.
As at December 31, 2022, the Company had $393 million of commercial paper outstanding under its U.S. commercial paper (“U.S. CP”) programs and no outstanding balances under its revolving credit facilities.
As at December 31, 2023, the Company had $270 million of commercial paper outstanding under its U.S. commercial paper (“U.S. CP”) programs and $14 million outstanding under its revolving credit facilities.
The Company’s long-term debt, including the current portion of $393 million, totaled $3,570 million at December 31, 2022. The Company’s long-term debt at December 31, 2021 totaled $4,786 million. As at December 31, 2022, the Company has no fixed rate long-term debt due until 2026 and beyond.
The Company’s long-term debt, including the current portion of $284 million, totaled $5,737 million at December 31, 2023. The Company’s long-term debt at December 31, 2022 totaled $3,570 million, including the current portion of $393 million. As at December 31, 2023, the Company has no fixed rate long-term debt due until 2025 and beyond.
Additional information on Ovintiv’s long-term debt and liquidity position can be found in Note 14 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K and the Liquidity and Capital Resources section of this MD&A, respectively.
Additional information on Ovintiv’s long-term debt and liquidity position can be found in Note 15 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, and the Liquidity and Capital Resources section of this MD&A, respectively. Additional information on Ovintiv’s 2024 Corporate Guidance can be accessed on the Company’s website at www.ovintiv.com .
($ millions, except as indicated) 2022 2021 Dividend Payments $ 239 $ 122 Dividend Payments ($/share) $ 0.95 $ 0.4675 On February 27, 2023, the Board of Directors declared a dividend of $0.25 per share of common stock payable on March 31, 2023 to common shareholders of record as of March 15, 2023.
($ millions, except as indicated) 2023 2022 Dividend Payments $ 307 $ 239 Dividend Payments ($/share) $ 1.15 $ 0.95 On February 27, 2024, the Board of Directors declared a dividend of $0.30 per share of common stock payable on March 28, 2024 to common shareholders of record as of March 15, 2024.
Further information on Ovintiv’s ESG practices are outlined in Items 1 and 2 of this Annual Report on Form 10-K, and on the Company’s sustainability website at https://sustainability.ovintiv.com . 56 Results of Operations Selected Financial Information ($ millions) 2022 2021 Product and Service Revenues Upstream product revenues $ 10,151 $ 7,420 Market optimization 4,107 3,043 Service revenues (1) 5 5 Total Product and Service Revenues 14,263 10,468 Gains (Losses) on Risk Management, Net (1,867 ) (1,883 ) Sublease Revenues 68 73 Total Revenues 12,464 8,658 Total Operating Expenses (2) 8,611 7,139 Operating Income (Loss) 3,853 1,519 Total Other (Income) Expenses 293 280 Net Earnings (Loss) Before Income Tax 3,560 1,239 Income Tax Expense (Recovery) (77 ) (177 ) Net Earnings (Loss) $ 3,637 $ 1,416 (1) Service revenues include amounts related to the USA and Canadian Operations.
Further information on Ovintiv’s sustainable business practices are outlined in Items 1 and 2 of this Annual Report on Form 10-K, and on the Company’s sustainability website at https://sustainability.ovintiv.com . 58 Results of Operations Selected Financial Information ($ millions) 2023 2022 Product and Service Revenues Upstream product revenues $ 7,778 $ 10,151 Market optimization 2,876 4,107 Service revenues (1) 7 5 Total Product and Service Revenues 10,661 14,263 Gains (Losses) on Risk Management, Net 151 (1,867 ) Sublease Revenues 71 68 Total Revenues 10,883 12,464 Total Operating Expenses (2) 8,019 8,611 Operating Income (Loss) 2,864 3,853 Total Other (Income) Expenses 354 293 Net Earnings (Loss) Before Income Tax 2,510 3,560 Income Tax Expense (Recovery) 425 (77 ) Net Earnings (Loss) $ 2,085 $ 3,637 (1) Service revenues include amounts related to the USA and Canadian Operations.
For additional information on long-term debt, refer to Note 14 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Dividends The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.
Ovintiv expects to continue to deliver additional shareholder returns through share buybacks. 72 For additional information on long-term debt, refer to Note 15 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Dividends The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.
Additional detail on changes in non-cash working capital can be found in Note 25 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Additional detail on changes in non-cash working capital can be found in Note 25 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Ovintiv expects it will continue to meet the payment terms of its suppliers.
($ millions, except as indicated) 2022 2021 Cash and Cash Equivalents $ 5 $ 195 Available Credit Facilities (1) 3,500 4,000 Available Uncommitted Demand Lines (2) 195 300 Issuance of U.S.
($ millions, except as indicated) 2023 2022 Cash and Cash Equivalents $ 3 $ 5 Available Credit Facilities 3,486 3,500 Available Uncommitted Demand Lines (1) 234 195 Issuance of U.S.
Highlights During 2022, the Company focused on executing its 2022 capital investment plan aimed at maximizing profitability through operational and capital efficiencies, minimizing the impact of inflation, delivering cash from operating activities and reducing long-term debt. Higher upstream product revenues in 2022 compared to 2021 resulted from higher average realized prices, excluding the impact of risk management activities.
Highlights During 2023, the Company focused on executing its capital investment plan aimed at maximizing profitability through operational and capital efficiencies, minimizing the impact of inflation and delivering cash from operating activities. Upstream product revenues in 2023 were impacted by lower average realized prices, excluding the impact of risk management activities compared to 2022, partially offset by higher production volumes.
Additional information on foreign exchange rates and the effects of foreign exchange rate changes can be found in Item 7A of this Annual Report on Form 10-K. 2022 versus 2021 Net foreign exchange loss of $15 million compared to a gain of $23 million in 2021 primarily due to: • Realized foreign exchange losses on the settlement of U.S. dollar risk management contracts and U.S. dollar financing debt issued from Canada compared to gains in 2021 ($38 million and $16 million, respectively); partially offset by: • Gains on monetary revaluations compared to 2021 ($12 million) and lower unrealized foreign exchange losses on the translation of U.S. dollar risk management contracts issued from Canada ($6 million).
Additional information on foreign exchange rates and the effects of foreign exchange rate changes can be found in Item 7A of this Annual Report on Form 10-K. 2023 versus 2022 Net foreign exchange losses increased $4 million compared to 2022 primarily due to: • Losses on other monetary revaluations compared to gains in 2022 ($23 million), unrealized foreign exchange losses on the translation of intercompany notes ($14 million) and foreign exchange losses on the settlement of intercompany notes compared to 2022 ($8 million); partially offset by: • Unrealized foreign exchange gains on the translation of U.S. dollar risk management contracts and foreign exchange gains on the settlement of U.S. dollar financing debt issued from Canada compared to losses in 2022 ($34 million and $10 million, respectively).
Safety is a foundational value at Ovintiv and plays a critical role in the Company’s belief that a safe workplace is a strong indicator of a well-managed business. This safety-oriented mindset enables the Company to quickly respond to emergencies and minimize any impacts to employees and business continuity. Safety performance goals are incorporated into the Company’s annual compensation program.
Ovintiv remains committed to protecting the health and safety of its workforce. Safety is a foundational value at Ovintiv and plays a critical role in the Company’s belief that a safe workplace is a strong indicator of a well-managed business. This safety-oriented mindset enables the Company to quickly respond to emergencies and minimize any impacts to employees and business continuity.
Dividends increased $117 million compared to 2021, as a result of Ovintiv increasing its quarterly dividend payments to an annualized dividend of $0.80 per share of common stock during the first quarter of 2022 and a further increase to an annualized dividend of $1.00 per share of common stock in the second quarter of 2022.
Dividends increased $68 million compared to 2022 as a result of Ovintiv increasing its annualized dividend to $1.00 per share of common stock in the second quarter of 2022 and a further increase to an annualized dividend of $1.20 per share of common stock in the second quarter of 2023.
Downward revisions of estimated reserves quantities, increases in future cost estimates, sustained decreases in oil or natural gas prices, or divestiture of a significant component of the reporting unit could reduce expected future cash flows and fair value estimates of the reporting units and possibly result in an impairment of goodwill in future periods. 72 Description Judgments and Uncertainties The Company has assessed its goodwill for impairment at December 31, 2022 and no impairment was recognized.
Downward revisions of estimated reserves quantities, increases in future cost estimates, sustained decreases in oil or natural gas prices, or divestiture of a significant component of the reporting unit could reduce expected future cash flows and fair value estimates of the reporting units and possibly result in an impairment of goodwill in future periods.
Property taxes are generally assessed based on the value of the underlying assets. $ millions $/BOE 2022 2021 2022 2021 USA Operations $ 401 $ 278 $ 3.72 $ 2.54 Canadian Operations 14 15 $ 0.18 $ 0.18 Total $ 415 $ 293 $ 2.23 $ 1.51 2022 versus 2021 Production, mineral and other taxes increased $122 million compared to 2021 primarily due to: • Higher production tax in USA Operations due to higher commodity prices ($116 million); partially offset by: • The sale of Eagle Ford assets in the second quarter of 2021 ($9 million). 61 Transportation and Processing Transportation and processing expense includes transportation costs incurred to move product from production points to sales points including gathering, compression, pipeline tariffs, trucking and storage costs.
Property taxes are generally assessed based on the value of the underlying assets. $ millions $/BOE 2023 2022 2023 2022 USA Operations $ 327 $ 401 $ 2.71 $ 3.72 Canadian Operations 15 14 $ 0.18 $ 0.18 Total $ 342 $ 415 $ 1.66 $ 2.23 2023 versus 2022 Production, mineral and other taxes decreased $73 million compared to 2022 primarily due to: • Lower production tax in USA Operations due to lower commodity prices ($93 million) and the sale of the Bakken assets in the second quarter of 2023 ($31 million); partially offset by: • Higher volumes in Permian primarily due to the Permian Acquisition in the second quarter of 2023 ($48 million). 63 Transportation and Processing Transportation and processing expense includes transportation costs incurred to move product from production points to sales points including gathering, compression, pipeline tariffs, trucking and storage costs.
Additional information on DEI and employee safety can be found in the Human Capital section of Item 1 and 2 of this Annual Report on Form 10-K.
Safety performance goals are incorporated into the Company’s annual compensation program. Additional information on DEI and employee safety can be found in the Human Capital section of Items 1 and 2 of this Annual Report on Form 10-K.
Other (Gains) Losses, Net Other (gains) losses, net, primarily includes other non-recurring revenues or expenses and may also include items such as interest income, interest received from tax authorities, reclamation charges relating to decommissioned assets, government stimulus programs and adjustments related to other assets.
Other (Gains) Losses, Net Other (gains) losses, net, primarily includes other non-recurring revenues or expenses and may also include items such as interest income, interest received from tax authorities, government stimulus programs and adjustments related to other assets. Other gains in 2023 includes interest income of $11 million primarily generated from short-term investments.
The following table provides the effects of the Company’s risk management activities on revenues. $ millions Per-Unit 2022 2021 2022 2021 Realized Gains (Losses) on Risk Management Commodity Price (1) Oil ($/bbl) $ (594 ) $ (737 ) $ (12.37 ) $ (14.39 ) NGLs - Plant Condensate ($/bbl) (125 ) (155 ) $ (7.78 ) $ (8.35 ) NGLs - Other ($/bbl) - (131 ) $ - $ (4.31 ) Natural Gas ($/Mcf) (1,895 ) (373 ) $ (3.47 ) $ (0.66 ) Other (2) 6 1 $ - $ - Total ($/BOE) (2,608 ) (1,395 ) $ (14.04 ) $ (7.17 ) Unrealized Gains (Losses) on Risk Management 741 (488 ) Total Gains (Losses) on Risk Management, Net $ (1,867 ) $ (1,883 ) (1) Includes realized gains and losses related to the USA and Canadian Operations.
The following table provides the effects of the Company’s risk management activities on revenues. $ millions Per-Unit 2023 2022 2023 2022 Realized Gains (Losses) on Risk Management Commodity Price (1) Oil ($/bbl) $ (24 ) $ (594 ) $ (0.40 ) $ (12.37 ) NGLs - Plant Condensate ($/bbl) 1 (125 ) $ 0.05 $ (7.78 ) NGLs - Other ($/bbl) - - $ - $ - Natural Gas ($/Mcf) (21 ) (1,895 ) $ (0.03 ) $ (3.47 ) Other (2) 1 6 $ - $ - Total ($/BOE) (43 ) (2,608 ) $ (0.21 ) $ (14.04 ) Unrealized Gains (Losses) on Risk Management 194 741 Total Gains (Losses) on Risk Management, Net $ 151 $ (1,867 ) (1) Primarily includes realized gains and losses related to the USA and Canadian Operations.
($ millions) 2022 2021 Market Optimization $ 4,055 $ 2,951 2022 versus 2021 Purchased product expense increased $1,104 million compared to 2021 primarily due to: • Higher oil and natural gas benchmark prices ($1,131 million) and higher third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($150 million); partially offset by: • Lower third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($177 million).
($ millions) 2023 2022 Market Optimization $ 2,815 $ 4,055 2023 versus 2022 Purchased product expense decreased $1,240 million compared to 2022 primarily due to: • Lower oil and natural gas benchmark prices ($898 million), lower third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($202 million) and lower third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($140 million).
If the indefinite reinvestment assertion can no longer be made, a deferred tax liability is generally required for a book-over-tax outside basis difference attributable to the foreign subsidiaries. During the year ended December 31, 2022, Ovintiv concluded that a portion of the previously unremitted earnings from its foreign subsidiaries is no longer considered to be permanently reinvested.
If the indefinite reinvestment assertion can no longer be made, a deferred tax liability is generally required for a book-over-tax outside basis difference attributable to the foreign subsidiaries. Ovintiv has assessed that its unremitted earnings from its Canadian subsidiaries are permanently reinvested.
Benchmark Prices (average for the period) 2022 2021 Oil & NGLs WTI ($/bbl) $ 94.23 $ 67.91 Houston ($/bbl) 95.89 68.85 Edmonton Condensate (C$/bbl) 122.02 85.48 Natural Gas NYMEX ($/MMBtu) $ 6.64 $ 3.84 AECO (C$/Mcf) 5.56 3.56 Dawn (C$/MMBtu) 7.89 4.60 57 Production Volumes and Realized Prices Production Volumes (1) Realized Prices (2) 2022 2021 2022 2021 Oil (Mbbls/d, $/bbl) USA Operations 131.5 140.0 $ 94.25 $ 65.69 Canadian Operations 0.1 0.3 87.28 56.71 Total 131.6 140.3 94.25 65.67 NGLs – Plant Condensate (Mbbls/d, $/bbl) USA Operations 10.4 10.5 73.22 60.18 Canadian Operations 33.6 40.4 93.22 67.11 Total 44.0 50.9 88.52 65.68 NGLs – Other (Mbbls/d, $/bbl) USA Operations 71.7 67.5 29.35 25.66 Canadian Operations 13.8 15.8 42.39 29.45 Total 85.5 83.3 31.45 26.38 Total Oil & NGLs (Mbbls/d, $/bbl) USA Operations 213.6 218.0 71.44 53.04 Canadian Operations 47.5 56.5 78.46 56.48 Total 261.1 274.5 72.72 53.75 Natural Gas (MMcf/d, $/Mcf) USA Operations 492 490 6.18 3.71 Canadian Operations 1,002 1,066 5.75 3.52 Total 1,494 1,556 5.89 3.58 Total Production (MBOE/d, $/BOE) USA Operations 295.5 299.7 61.91 44.65 Canadian Operations 214.5 234.2 44.26 29.66 Total 510.0 533.9 54.49 38.08 Production Mix (%) Oil & Plant Condensate 34 36 NGLs – Other 17 15 Total Oil & NGLs 51 51 Natural Gas 49 49 Production Change – Year Over Year (%) (3) Total Oil & NGLs (5 ) (5 ) Natural Gas (4 ) 2 Total Production (4 ) (2 ) (1) Average daily.
Benchmark Prices (average for the period) 2023 2022 Oil & NGLs WTI ($/bbl) $ 77.62 $ 94.23 Houston ($/bbl) 78.95 95.89 Edmonton Condensate (C$/bbl) 103.76 122.02 Natural Gas NYMEX ($/MMBtu) $ 2.74 $ 6.64 AECO (C$/Mcf) 2.93 5.56 Dawn (C$/MMBtu) 3.15 7.89 59 Production Volumes and Realized Prices Production Volumes (1) Realized Prices (2) 2023 2022 2023 2022 Oil (Mbbls/d, $/bbl) USA Operations 158.8 131.5 $ 76.46 $ 94.25 Canadian Operations 0.1 0.1 81.59 87.28 Total 158.9 131.6 76.46 94.25 NGLs – Plant Condensate (Mbbls/d, $/bbl) USA Operations 10.9 10.4 58.53 73.22 Canadian Operations 32.0 33.6 74.52 93.22 Total 42.9 44.0 70.46 88.52 NGLs – Other (Mbbls/d, $/bbl) USA Operations 74.6 71.7 16.27 29.35 Canadian Operations 15.6 13.8 26.78 42.39 Total 90.2 85.5 18.09 31.45 Total Oil & NGLs (Mbbls/d, $/bbl) USA Operations 244.3 213.6 57.29 71.44 Canadian Operations 47.7 47.5 58.93 78.46 Total 292.0 261.1 57.55 72.72 Natural Gas (MMcf/d, $/Mcf) USA Operations 517 492 2.43 6.18 Canadian Operations 1,125 1,002 2.89 5.75 Total 1,642 1,494 2.74 5.89 Total Production (MBOE/d, $/BOE) USA Operations 330.4 295.5 46.15 61.91 Canadian Operations 235.2 214.5 25.76 44.26 Total 565.6 510.0 37.67 54.49 Production Mix (%) Oil & Plant Condensate 36 34 NGLs – Other 16 17 Total Oil & NGLs 52 51 Natural Gas 48 49 Production Change – Year Over Year (%) (3) Total Oil & NGLs 12 (5 ) Natural Gas 10 (4 ) Total Production 11 (4 ) (1) Average daily.
Production • Produced average liquids volumes of 261.1 Mbbls/d which accounted for 51 percent of total production volumes.
Production • Produced average liquids volumes of 292.0 Mbbls/d, which accounted for 52 percent of total production volumes.
($ millions) 2022 2021 Market Optimization $ 4,107 $ 3,043 2022 versus 2021 Market Optimization product revenues increased $1,064 million compared to 2021 primarily due to: • Higher oil and natural gas benchmark prices ($1,104 million) and higher sales of third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($151 million); partially offset by: • Lower sales of third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($191 million).
($ millions) 2023 2022 Market Optimization $ 2,876 $ 4,107 2023 versus 2022 Market Optimization product revenues decreased $1,231 million compared to 2022 primarily due to: • Lower oil and natural gas benchmark prices ($885 million), lower sales of third-party purchased liquids volumes primarily relating to price optimization activities in the USA Operations ($202 million) and lower sales of third-party purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years ($144 million).
Foreign Exchange (Gain) Loss, Net Foreign exchange gains and losses primarily result from the impact of fluctuations in the Canadian to U.S. dollar exchange rate. Additional information on changes in foreign exchange gains or losses can be found in Note 5 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Additional information on changes in foreign exchange gains or losses can be found in Note 5 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
The Company has a taxable temporary difference of approximately $339 million in respect of unremitted earnings that continue to be permanently reinvested for which a deferred income tax liability of $17 million has not been recognized and becomes subject to taxation upon the remittance of dividends. The deferred tax liability considers U.S. federal, state and foreign withholding tax implications.
As at December 31, 2023, the Company has a taxable temporary difference of approximately $705 million in respect of unremitted earnings that continue to be permanently reinvested for which a deferred income tax liability of $35 million has not been recognized and becomes subject to taxation upon the remittance of dividends.
The reporting units’ fair values were substantially in excess of the carrying values and as a result were not at risk of failing the impairment test as at December 31, 2022.
The Company has assessed its goodwill for impairment at December 31, 2023 and no impairment was recognized. The reporting units’ fair values were substantially in excess of the carrying values and as a result were not at risk of failing the impairment test as at December 31, 2023.
Both transactions were effective April 1, 2022. • On September 28, 2022, the Company announced it had received regulatory approval for the renewal of its NCIB program, that enables the Company to purchase, for cancellation or return to treasury, up to approximately 24.8 million shares of common stock over a 12-month period from October 3, 2022 to October 2, 2023.
The shares were canceled during the third and fourth quarters of 2023. • On September 26, 2023, the Company announced it had received regulatory approval for the renewal of its NCIB program, which enables the Company to purchase, for cancellation or return to treasury, up to approximately 26.7 million shares of common stock over a 12-month period from October 3, 2023 to October 2, 2024.
Lower volumes were primarily due to natural declines in Permian and Anadarko (10.2 Mbbls/d) and the sale of Eagle Ford assets in the second quarter of 2021 (5.8 Mbbls/d), partially offset by successful drilling in Uinta and Bakken (9.0 Mbbls/d).
Higher volumes were primarily due to the Permian Acquisition in the second quarter of 2023 (26.5 Mbbls/d) and successful drilling in Permian and Uinta (12.0 Mbbls/d), partially offset by the sale of the Bakken assets in the second quarter of 2023 (6.5 Mbbls/d) and natural declines in Anadarko (5.5 Mbbls/d).
Other (Income) Expenses ($ millions) 2022 2021 Interest $ 311 $ 340 Foreign Exchange (Gain) Loss, Net 15 (23 ) Other (Gains) Losses, Net (33 ) (37 ) Total Other (Income) Expenses $ 293 $ 280 64 Interest Interest expense primarily includes interest on Ovintiv’s long-term debt.
Other (Income) Expenses ($ millions) 2023 2022 Interest $ 355 $ 311 Foreign Exchange (Gain) Loss, Net 19 15 Other (Gains) Losses, Net (20 ) (33 ) Total Other (Income) Expenses $ 354 $ 293 Interest Interest expense primarily includes interest on Ovintiv’s short-term and long-term debt.
Depending on the Company’s credit rating and market demand, the Company may issue from its two U.S. CP programs, which include a $1.5 billion program for Ovintiv Inc. and a $1.0 billion program for a Canadian subsidiary. As at December 31, 2022, the Company had approximately $393 million of commercial paper outstanding under its U.S.
CP programs, which include a $1.5 billion program for Ovintiv Inc. and a $1.0 billion program for a Canadian subsidiary. As at December 31, 2023, the Company had $270 million of commercial paper outstanding under its U.S.
The dividend increases reflect the Company’s commitment to returning capital to shareholders.
The dividend increase reflects the Company’s commitment to returning capital to shareholders.
The increase reflected higher WTI and Houston benchmark prices which were both up 39 percent and the strengthening of regional pricing relative to the WTI benchmark price in the USA Operations; and • Lower average oil production volumes of 8.7 Mbbls/d decreased revenues by $208 million.
The decrease reflected lower WTI and Houston benchmark prices which were both down 18 percent and the weakening of regional pricing relative to the WTI benchmark price in the USA Operations; and • Higher average oil production volumes of 27.3 Mbbls/d increased revenues by $939 million.
($ millions, except as indicated) December 31, 2022 December 31, 2021 Debt (Long-Term Debt, including current portion) $ 3,570 $ 4,786 Net Earnings (Loss) 3,637 1,416 Add back (deduct): Depreciation, depletion and amortization 1,113 1,190 Interest 311 340 Income tax expense (recovery) (77 ) (177 ) EBITDA $ 4,984 $ 2,769 Debt to EBITDA (times) 0.7 1.7 Net Earnings (Loss) 3,637 1,416 Add back (deduct): Depreciation, depletion and amortization 1,113 1,190 Accretion of asset retirement obligation 18 22 Interest 311 340 Unrealized (gains) losses on risk management (741 ) 488 Foreign exchange (gain) loss, net 15 (23 ) Other (gains) losses, net (33 ) (37 ) Income tax expense (recovery) (77 ) (177 ) Adjusted EBITDA $ 4,243 $ 3,219 Debt to Adjusted EBITDA (times) 0.8 1.5 76
($ millions, except as indicated) December 31, 2023 December 31, 2022 Debt (Long-Term Debt, including Current Portion) $ 5,737 $ 3,570 Net Earnings (Loss) 2,085 3,637 Add back (deduct): Depreciation, depletion and amortization 1,825 1,113 Interest 355 311 Income tax expense (recovery) 425 (77 ) EBITDA $ 4,690 $ 4,984 Debt to EBITDA (times) 1.2 0.7 Debt (Long-Term Debt, including current portion) $ 5,737 $ 3,570 Net Earnings (Loss) 2,085 3,637 Add back (deduct): Depreciation, depletion and amortization 1,825 1,113 Accretion of asset retirement obligation 19 18 Interest 355 311 Unrealized (gains) losses on risk management (194 ) (741 ) Foreign exchange (gain) loss, net 19 15 Other (gains) losses, net (20 ) (33 ) Income tax expense (recovery) 425 (77 ) Adjusted EBITDA $ 4,514 $ 4,243 Debt to Adjusted EBITDA (times) 1.3 0.8 The increases in Debt to EBITDA and Debt to Adjusted EBITDA are primarily due to the increase in long-term debt resulting from the Permian Acquisition.
Capital Investment • Reported total capital spending of $1,831 million, which was in line with the full year 2022 investment plan of approximately $1.8 billion. • Focused on highly efficient capital activity to minimize the impact of inflation and to benefit from short-cycle high margin and/or low-cost projects which provide flexibility to respond to fluctuations in commodity prices.
Capital Investment • Reported total capital spending of $2,744 million, which was below the full year 2023 investment plan range of approximately $2,745 million to $2,785 million. • Focused on highly efficient capital activity to minimize the impact of inflation and to benefit from short-cycle high margin and/or low-cost projects which provide flexibility to respond to fluctuations in commodity prices, as discussed in the Company Outlook section of this MD&A.
($ millions) Activity Type 2022 2021 Sources of Cash, Cash Equivalents and Restricted Cash Cash from operating activities Operating $ 3,866 $ 3,129 Proceeds from divestitures Investing 228 1,025 Net issuance of revolving long-term debt Financing 393 - Other Investing 103 - 4,590 4,154 Uses of Cash and Cash Equivalents Capital expenditures Investing 1,831 1,519 Acquisitions Investing 286 11 Net repayment of revolving long-term debt Financing - 950 Repayment of long-term debt (1) Financing 1,634 1,137 Purchase of shares of common stock Financing 719 111 Dividends on shares of common stock Financing 239 122 Other Financing/Investing 69 119 4,778 3,969 Foreign Exchange Gain (Loss) on Cash, Cash Equivalents and Restricted Cash Held in Foreign Currency (2 ) - Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash $ (190 ) $ 185 (1) Includes open market repurchases in 2022.
($ millions) Activity Type 2023 2022 Sources of Cash, Cash Equivalents and Restricted Cash Cash from operating activities Operating $ 4,167 $ 3,866 Proceeds from divestitures Investing 772 228 Net issuance of revolving debt Financing - 393 Issuance of long-term debt Financing 2,278 - Other Investing - 103 7,217 4,590 Uses of Cash and Cash Equivalents Capital expenditures Investing 2,744 1,831 Acquisitions Investing 277 286 Corporate acquisition, net of cash acquired Investing 3,225 - Net repayment of revolving debt Financing 109 - Repayment of long-term debt (1) Financing - 1,634 Purchase of shares of common stock Financing 426 719 Dividends on shares of common stock Financing 307 239 Other Financing/Investing 122 69 7,210 4,778 Foreign Exchange Gain (Loss) on Cash, Cash Equivalents and Restricted Cash Held in Foreign Currency (9 ) (2 ) Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash $ (2 ) $ (190 ) (1) Includes open market repurchases and redemption of the Company’s $1.0 billion senior notes in 2022.
Additional information can be found under Upstream Assets and Reserve Estimates in the Critical Accounting Estimates section of this MD&A. $ millions $/BOE 2022 2021 2022 2021 USA Operations $ 861 $ 837 $ 7.98 $ 7.65 Canadian Operations 235 332 $ 3.01 $ 3.89 Upstream DD&A 1,096 1,169 $ 5.89 $ 6.00 Corporate & Other 17 21 Total $ 1,113 $ 1,190 63 2022 versus 2021 DD&A decreased $77 million compared to 2021 primarily due to: • Lower depletion rates in the Canadian Operations ($58 million), lower production volumes in the Canadian and USA Operations ($27 million and $11 million, respectively) and a higher U.S./Canadian dollar exchange rate ($11 million); partially offset by; • Higher depletion rates in the USA Operations ($36 million).
Additional information can be found under Upstream Assets and Reserve Estimates in the Critical Accounting Estimates section of this MD&A. $ millions $/BOE 2023 2022 2023 2022 USA Operations $ 1,519 $ 861 $ 12.60 $ 7.98 Canadian Operations 286 235 $ 3.33 $ 3.01 Upstream DD&A 1,805 1,096 $ 8.74 $ 5.89 Corporate & Other 20 17 Total $ 1,825 $ 1,113 2023 versus 2022 DD&A increased $712 million compared to 2022 primarily due to: • Higher depletion rates in the USA and Canadian Operations ($556 million and $37 million, respectively) and higher production volumes in the USA and Canadian Operations ($102 million and $22 million, respectively); partially offset by: • Higher U.S./Canadian dollar exchange rate ($8 million).
The Company’s effective tax rate was (2.2) percent for 2022, which is lower than the U.S. federal statutory tax rate of 21 percent primarily due to reductions in valuation allowances offset by certain non-taxable items.
The Company’s effective tax rate was (2.2) percent for 2022, which was lower than the U.S. federal statutory tax rate of 21 percent primarily due to a lower annual effective income tax rate resulting from a reduction in valuation allowances.
Ovintiv recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority.
As a result, the assumptions used in determining expected future taxable earnings are consistent with those used in the goodwill impairment assessment. Ovintiv recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority.
Financing Activities Net cash used in financing activities has been impacted by the Company’s strategic objective to return value to shareholders by repaying or repurchasing existing debt, purchasing shares of common stock and paying dividends. 2022 versus 2021 Net cash used in financing activities in 2022 decreased $151 million compared to 2021.
Financing Activities Net cash from and/or used in financing activities has been impacted by the Company’s bond offering in the second quarter of 2023 to finance a portion of the Permian Acquisition and Ovintiv’s strategic objective to return value to shareholders by repaying or repurchasing existing debt, purchasing shares of common stock and paying dividends. 2023 versus 2022 Net cash from financing activities in 2023 was $1,359 million compared to net cash used in financing activities of $2,268 million in 2022.
The number of shares authorized for purchase represents approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as at September 19, 2022. The Company will continue to execute the renewed NCIB program in conjunction with its capital allocation framework.
The number of shares authorized for purchase represents 10 percent of Ovintiv’s public float as at September 21, 2023. The Company expects to continue to execute the renewed NCIB program in conjunction with its capital allocation framework. During 2023, the Company purchased for cancellation, approximately 10 million shares of common stock for total consideration of approximately $426 million.
(2) Average per-unit prices, excluding the impact of risk management activities.
(2) Average per-unit prices, excluding the impact of risk management activities. (3) Includes production impacts of acquisitions and divestitures.
Operating Activities Net cash from operating activities in 2022 was $3,866 million and was primarily a reflection of the impacts from higher average realized commodity prices, partially offset by the effects of the commodity price mitigation program, lower production volumes and changes in non-cash working capital.
Operating Activities Net cash from operating activities in 2023 was $4,167 million and was primarily a reflection of the impacts from average realized commodity prices, production volumes and changes in non-cash working capital.
Cash from operating activities exceeded capital expenditures by $2,035 million. • Purchased for cancellation, approximately 14.7 million shares of common stock for total consideration of approximately $719 million. 52 • Paid dividends of $ 0. 95 per share of common stock totaling $ 239 million. • Repurchased in the open market approximately $565 million in principal amount of the Company’s senior notes. • Had $3.3 billion in total liquidity as at December 31, 2022, which included available credit facilities of $3.5 billion, available uncommitted demand lines of $195 million, and cash and cash equivalents of $5 million, net of outstanding commercial paper of $393 million. • Reduced total long-term debt by $1,216 million. • Reported Debt to EBITDA of 0.7 times and Non-GAAP Debt to Adjusted EBITDA of 0.8 times.
Cash from operating activities exceeded capital expenditures by $1,423 million. • Purchased for cancellation, approximately 10 million shares of common stock for total consideration of approximately $426 million. • Paid dividends of $1.15 per share of common stock totaling $307 million. • Had approximately $3.5 billion in total liquidity as at December 31, 2023, which included available credit facilities of $3,486 million, available uncommitted demand lines of $234 million, and cash and cash equivalents of $3 million, net of outstanding commercial paper of $270 million. • Reported Debt to EBITDA of 1.2 times and Non-GAAP Debt to Adjusted EBITDA of 1.3 times.
Any excess of the carrying value of the reporting unit, including goodwill, over its fair value is recognized as an impairment and charged to net earnings. The impairment charge measured is limited to the total amount of goodwill allocated to that reporting unit. Subsequent measurement of goodwill is at cost less any accumulated impairments.
The impairment charge measured is limited to the total amount of goodwill allocated to that reporting unit. Subsequent measurement of goodwill is at cost less any accumulated impairments.
The depletion rate in the USA Operations increased $0.33 per BOE compared to 2021 primarily due to a higher depletable base. The depletion rate in the Canadian Operations decreased $0.88 per BOE compared to 2021 primarily due to higher reserve volumes. Administrative Administrative expense represents costs associated with corporate functions provided by Ovintiv staff.
The depletion rate in the USA Operations increased $4.62 per BOE compared to 2022 primarily due to a higher depletable base associated with the Permian Acquisition in the second quarter of 2023. 65 Administrative Administrative expense represents costs associated with corporate functions provided by Ovintiv staff.
The Company’s social commitment framework, which is rooted in the Company’s foundational values of integrity, safety, sustainability, trust and respect, fosters a culture of inclusion that respects stakeholders and strengthens communities. Ovintiv remains committed to protecting the health and safety of its workforce.
This arrangement will reduce the Company’s GHG emissions while adding processing capacity. 57 Ovintiv is committed to diversity, equity and inclusion (“DEI”). The Company’s social commitment framework, which is rooted in the Company’s foundational values of integrity, safety, sustainability, trust and respect, fosters a culture of inclusion that respects stakeholders and strengthens communities.
( 2 ) Other primarily includes realized gains or losses from other derivative contracts with no associated production volumes. Ovintiv recognizes fair value changes from its risk management activities each reporting period.
(2) Other primarily includes realized gains or losses from other derivative contracts with no associated production volumes. Ovintiv recognizes fair value changes from its risk management activities each reporting period. The changes in fair value result from new positions and settlements that occur during each period, as well as the relationship between contract prices and the associated forward curves.
Contingent Liabilities Ovintiv is subject to various legal proceedings, environmental remediation, commercial and regulatory claims and liabilities that arise in the ordinary course of business. The Company accrues losses when such losses are probable and reasonably estimable, except for contingencies acquired in a business combination which are recorded at fair value at the time of the acquisition.
The Company accrues losses when such losses are probable and reasonably estimable, except for contingencies acquired in a business combination which are recorded at fair value at the time of the acquisition.
Additional information on total operating expenses above and Non-GAAP Total Costs items can be found in the Results of Operations section of this MD&A. 53 20 2 3 Outlook Industry Outlook Oil Markets The oil and gas industry is cyclical and commodity prices are inherently volatile.
Additional information on the items above and other expenses can be found in the Results of Operations section of this MD&A. 55 2024 Outlook Industry Outlook Oil Markets The oil and gas industry is cyclical and commodity prices are inherently volatile. Oil prices reflect global supply and demand dynamics as well as the geopolitical and macroeconomic environment.
Additional information on changes in interest can be found in Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 2022 versus 2021 Interest expense decreased $29 million compared to 2021 primarily due to: • Interest savings related to the redemption of certain senior notes in 2021 and 2022 ($54 million), and the acceleration of the fair value amortization related to the early redemption of the Company’s 2024 senior notes in June 2022 of $30 million; partially offset by: • A make-whole interest payment of $47 million resulting from the early redemption of the Company’s 2024 senior notes in June 2022, compared to a make-whole interest payment of $19 million resulting from the early redemption of the Company’s 2022 senior notes in June 2021, and premiums of $22 million related to the Company’s open market repurchases in 2022.
Additional information on changes in interest can be found in Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 2023 versus 2022 Interest expense increased $44 million compared to 2022 primarily due to: • Interest expense related to senior unsecured notes issued in May 2023 ($83 million), the acceleration of the fair value amortization related to the early redemption of the Company’s 2024 senior notes in June 2022 of $30 million and interest expense related to outstanding balances under the Company’s U.S.
Sources and Uses of Cash During 2022, Ovintiv primarily generated cash through operating activities. The following table summarizes the sources and uses of the Company’s cash and cash equivalents.
The following table summarizes the sources and uses of the Company’s cash and cash equivalents.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+0 added−2 removed3 unchanged
Biggest changeForeign exchange gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated and settled, and primarily include: • U.S. dollar denominated financing debt issued from Canada • U.S. dollar denominated risk management assets and liabilities held in Canada • U.S. dollar denominated cash and short-term investments held in Canada • Foreign denominated intercompany loans To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts.
Biggest changeThe table below summarizes selected foreign exchange impacts on Ovintiv’s financial results when compared to the same periods in the prior years. 2023 2022 $ millions $/BOE $ millions $/BOE Increase (Decrease) in: Capital Investment $ (13 ) $ (14 ) Transportation and Processing Expense (1) (34 ) $ (0.17 ) (34 ) $ (0.18 ) Operating Expense (1) (5 ) (0.02 ) (4 ) (0.02 ) Administrative Expense (9 ) (0.04 ) (4 ) (0.02 ) Depreciation, Depletion and Amortization (1) (8 ) (0.04 ) (11 ) (0.06 ) (1) Reflects upstream operations. 81 Foreign exchange gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated and settled, and primarily include: • U.S. dollar denominated financing debt issued from Canada • U.S. dollar denominated risk management assets and liabilities held in Canada • U.S. dollar denominated cash and short-term investments held in Canada • Foreign denominated intercompany loans To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts.
The Company may partially mitigate its exposure to interest rate changes by holding a mix of both fixed and floating rate debt and may also enter into interest rate derivatives to partially mitigate effects of fluctuations in market interest rates. As at December 31, 2022, Ovintiv had floating rate revolving credit and term loan borrowings of $393 million.
The Company may partially mitigate its exposure to interest rate changes by holding a mix of both fixed and floating rate debt and may also enter into interest rate derivatives to partially mitigate effects of fluctuations in market interest rates. As at December 31, 2023, Ovintiv had floating rate revolving credit and term loan borrowings of $284 million.
Fluctuations in foreign currency exchange rates could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows: December 31, 2022 (US$ millions) 10% Rate Increase 10% Rate Decrease Foreign currency exchange $ (1 ) $ 1 INTEREST RATE RISK Interest rate risk arises from changes in market interest rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities.
Fluctuations in foreign currency exchange rates could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows: December 31, 2023 (US$ millions) 10% Rate Increase 10% Rate Decrease Foreign currency exchange $ 130 $ (159 ) INTEREST RATE RISK Interest rate risk arises from changes in market interest rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities.
The following table presents the foreign exchange rates for the respective years ended December 31. 2022 2021 Foreign Exchange Rates (C$ per US$1) Average 1.301 1.254 Period End 1.354 1.268 77 As Ovintiv operates primarily in the United States and Canada, fluctuations in the exchange rate between the U.S. and Canadian dollars can have a significant effect on the Company’s reported results.
The following table presents the foreign exchange rates for the respective years ended December 31. 2023 2022 Foreign Exchange Rates (C$ per US$1) Average 1.350 1.301 Period End 1.323 1.354 As Ovintiv operates primarily in the United States and Canada, fluctuations in the exchange rate between the U.S. and Canadian dollars can have a significant effect on the Company’s reported results.
Fluctuations in commodity prices could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows: December 31, 2022 10% Price 10% Price (US$ millions) Increase Decrease Crude oil price $ (28 ) $ 27 NGL price - - Natural gas price 6 (6 ) FOREIGN EXCHANGE RISK Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows of the Company’s financial assets or liabilities.
Fluctuations in commodity prices could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows: December 31, 2023 10% Price 10% Price (US$ millions) Increase Decrease Crude oil price $ (97 ) $ 95 NGL price (2 ) 2 Natural gas price (44 ) 45 FOREIGN EXCHANGE RISK Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows of the Company’s financial assets or liabilities.
Accordingly, on a before-tax basis, the sensitivity for each one percent change in interest rates on floating rate revolving credit and term loan borrowings was $4 million (2021 - nil). 78
Accordingly, on a before-tax basis, the sensitivity for each one percent change in interest rates on floating rate revolving credit and term loan borrowings was $3 million (2022 - $4 million). 82
The Company has used a 10 percent variability to assess the potential impact from Canadian to U.S. foreign currency exchange rate changes.
The table below summarizes the sensitivity to foreign exchange rate fluctuations, with all other variables held constant. The Company has used a 10 percent variability to assess the potential impact from Canadian to U.S. foreign currency exchange rate changes.
As at December 31, 2022, Ovintiv has entered into $400 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3160 to US$1, which mature monthly throughout 2023.
As at December 31, 2023, Ovintiv has entered into $400 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3592 to US$1, which mature monthly throughout 2024. As at December 31, 2023, Ovintiv did not have any U.S. dollar denominated financing debt issued from Canada that was subject to foreign exchange exposure.
The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors and may vary from time to time.
To partially mitigate exposure to commodity price risk, the Company may enter into various derivative financial instruments including futures, forwards, swaps, options and costless collars. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors and may vary from time to time.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk The primary objective of the following information is to provide forward-looking quantitative and qualitative information about Ovintiv’s potential exposure to market risks. The term “market risk” refers to the Company’s risk of loss arising from adverse changes in oil, NGL and natural gas prices, foreign currency exchange rates and interest rates.
Item 7A: Quantitative and Qualitat ive Disclosures About Market Risk The primary objective of the following information is to provide forward-looking quantitative and qualitative information about Ovintiv’s potential exposure to market risks.
COMMODITY PRICE RISK Commodity price risk arises from the effect fluctuations in future commodity prices, including oil, NGLs and natural gas, may have on future revenues, expenses and cash flows. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot market prices applicable to the Company’s natural gas production.
The forward-looking information provides indicators of how the Company views and manages ongoing market risk exposures. COMMODITY PRICE RISK Commodity price risk arises from the effect fluctuations in future commodity prices, including oil, NGLs and natural gas, may have on future revenues, expenses and cash flows.
Pricing for oil, NGLs and natural gas production is volatile and unpredictable as discussed in Item 1A. “Risk Factors” of this Annual Report on Form 10-K. To partially mitigate exposure to commodity price risk, the Company may enter into various derivative financial instruments including futures, forwards, swaps, options and costless collars.
Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot market prices applicable to the Company’s natural gas production. Pricing for oil, NGLs and natural gas production is volatile and unpredictable as discussed in Item 1A. “Risk Factors” of this Annual Report on Form 10-K.
The following disclosures are not meant to be precise indicators of expected future losses but rather indicators of reasonably possible losses. The forward-looking information provides indicators of how the Company views and manages ongoing market risk exposures.
The term “market risk” refers to the Company’s risk of loss arising from adverse changes in oil, NGL and natural gas prices, foreign currency exchange rates and interest rates. The following disclosures are not meant to be precise indicators of expected future losses but rather indicators of reasonably possible losses.
Removed
The table below summarizes selected foreign exchange impacts on Ovintiv’s financial results when compared to the same periods in the prior years. 2022 2021 $ millions $/BOE $ millions $/BOE Increase (Decrease) in: Capital Investment $ (14 ) $ 21 Transportation and Processing Expense (1) (34 ) $ (0.18 ) 55 $ 0.28 Operating Expense (1) (4 ) (0.02 ) 7 0.03 Administrative Expense (4 ) (0.02 ) 13 0.07 Depreciation, Depletion and Amortization (1) (11 ) (0.06 ) 30 0.15 (1) Reflects upstream operations.
Removed
As at December 31, 2022, Ovintiv did not have any U.S. dollar denominated financing debt issued from Canada or foreign denominated intercompany loans that were subject to foreign exchange exposure. The table below summarizes the sensitivity to foreign exchange rate fluctuations, with all other variables held constant.

Other OVV 10-K year-over-year comparisons