An anonymous director reports

OVINTIV ANNOUNCES CLOSING OF MIDLAND AND BAKKEN TRANSACTIONS & INCLUSION IN S&P 400 INDEX

Ovintiv Inc. has closed the previously announced acquisition of core Midland basin assets, adding approximately 1,050 net 10,000-foot well locations and approximately 65,000 net acres of largely undeveloped land adjacent to Ovintiv's existing Permian operations. The company has acquired substantially all the leasehold interest and related assets of Black Swan Oil & Gas, PetroLegacy Energy, and Piedra Resources, which are portfolio companies of funds managed by EnCap Investments LP, in a cash and stock transaction valued at $4,275-million.

The company also closed the previously announced all-cash sale of its Bakken assets, located in the Williston basin of North Dakota, to Grayson Mill Bakken LLC, a portfolio company of funds managed by EnCap for $825-million. The sale represents the entirety of Ovintiv's Bakken position.

The combined transactions are expected to enhance capital efficiency by 15 per cent and durably increase cash returns per share by more than 25 per cent (1).

Updated 2023 guidance

The company revised its second quarter and full year 2023 guidance to reflect the early close of the Midland basin and Bakken transactions.

2024 outlook

In 2024, Ovintiv expects to deliver total company oil and condensate production of greater than 200,000 barrels per day (Mbbl/d) with total capital investment of $2.1-billion to $2.5-billion. The company's production profile is expected to normalize by mid-year 2024 with second-half 2024 oil and condensate production stabilizing at 200 Mbbl/d.

S&P 400 inclusion

Separately, it was recently announced that Ovintiv will be added to the S&P 400 Index effective prior to market open on June 20, 2023. Ovintiv is not currently included in any of the S&P 500/400/600 indices.

Additional transaction details

Ovintiv will use cash and issue approximately 31.8 million shares of Ovintiv common stock in conjunction with the transaction, down from the original 32.6 million shares estimated at the transaction announcement date. Customary closing adjustments are expected to result in an upward adjustment of approximately $85-million associated with the Midland basin acquisition and a $110-million reduction in Bakken sale proceeds. One-time transaction-related costs, including financing costs, bridge loan costs, fees, insurance costs and restructuring costs, are expected to total approximately $80-million to $85-million.

(1) Non-international financial reporting standards measures.

We seek Safe Harbor.