Mr. Brendan McCracken reports

OVINTIV REPORTS THIRD QUARTER 2023 FINANCIAL AND OPERATING RESULTS

Ovintiv Inc. has released its third quarter 2023 financial and operating results. The company plans to hold a conference call and webcast at 10 a.m. MT (12 p.m. ET) on Nov. 8, 2023. Please see dial-in details within this news release as well as additional details on the company's website under presentations and events -- Ovintiv.

Highlights:

• Generated net earnings of $406-million, cash from operating activities of $906-million, non-GAAP (generally accepted accounting principles) cash flow of $1,112-million and non-GAAP free cash flow of $278-million after capital expenditures of $834-million;
• Third quarter production was at or above the high end of guidance on every product with average total production volumes of 572,000 barrels of oil equivalent per day (boe/d), including 214,000 barrels per day (bbl/d) of oil and condensate, 87,000 bbl/d of other NGLs (natural gas liquids) (C2 to C4) and 1,625 million cubic feet per day (mmcf/d) of natural gas;
• Increased full-year 2023 production guidance and tightened the range for full-year capital guidance;
• Returned $127-million to shareholders through the combination of base dividend payments and share buybacks;
• Received regulatory approval for the renewal of the company's normal course issuer bid, or NCIB program, enabling the company to purchase up to approximately 26.7 million shares of common stock over a 12-month period ending Oct. 2, 2024.

"Our outstanding third quarter results are a reflection of the momentum we have been building all year," said Ovintiv president and chief executive officer Brendan McCracken. "Strong well performance across the portfolio, combined with the seamless integration of our new Permian assets, has allowed us to significantly exceed our oil and condensate guidance, reflecting both enhanced capital efficiency and higher returns on our invested capital."

Third quarter 2023 financial and operating results:

• The company recorded net earnings of $406-million, or $1.47 per diluted share of common stock. Included in net earnings were net losses on risk management of $282-million, before tax.
• Cash from operating activities was $906-million, non-GAAP cash flow was $1,112-million and capital investment totalled approximately $834-million, resulting in $278-million of non-GAAP free cash flow.
• Third quarter capital investment of $834-million was lower than the third quarter guidance range of $840-million to $890-million resulting from capital efficiencies.
• Third quarter average total production volumes were at the high end or above company guidance on all products at approximately 572,000 boe/d, including 214,000 bbl/d of oil and condensate, 87,000 bbl/d of other NGLs and 1,625 mmcf/d of natural gas.
• Upstream operating expense was $4.48 per barrel of oil equivalent (boe). Upstream transportation and processing costs were $7.40 per barrel of oil equivalent (boe). Production, mineral and other taxes were $1.70 per boe, or 4.3 per cent of upstream revenue. These costs were below the bottom end of guidance on a combined basis.
• Excluding the impact of hedges, third quarter average realized prices were $78.86 per barrel for oil and condensate (96 per cent of WTI (West Texas Intermediate)), $18.39 per barrel for other NGLs (C2 to C4) and $2.33 per thousand cubic feet (mcf) for natural gas (91 per cent of NYMEX), resulting in a total average realized price of $38.95 per boe. Including the impact of hedges, the average realized prices for oil and condensate was $77.94 (95 per cent of WTI), other NGLs were unchanged, and the average realized price for natural gas was $2.51 per mcf (98 per cent of NYMEX), resulting in a total average realized price of $39.12 per boe.

Guidance

The company issued its fourth quarter 2023 guidance and favourably revised its full-year guidance. Full-year production guidance was increased due to strong well productivity across the portfolio and faster-than-expected integration of recently acquired Permian assets. Full-year capital efficiency is expected to improve by approximately six per cent compared with the guidance issued following the completion of the Permian asset acquisition in June. Full-year production volumes are expected to average 550,000 to 560,000 boe/d, with full-year capital investment of $2.745-billion to $2.785-billion.

Ovintiv expects production in the fourth quarter to be the high point for the year, resulting from strong well productivity across the portfolio along with the acceleration of acquired Permian wells turned in line (TIL). The company expects all acquired Permian wells in progress to be on production by the year-end. Total company oil and condensate production is expected to average 220 to 227,000 bbl/d in the fourth quarter.

2024 outlook

In 2024, Ovintiv expects to deliver total company average oil and condensate production volumes of approximately 200,000 bbl/d, with total capital investment of $2.1-billion to $2.5-billion. The company's production profile is expected to stabilize at approximately 200,000 bbl/d by the second quarter of 2024, one quarter sooner than originally planned.

Returns to shareholders

Ovintiv remains committed to its capital allocation framework, which returns at least 50 per cent of postbase dividend non-GAAP free cash flow to shareholders through buybacks and/or variable dividends.

In the third quarter of 2023, the company returned approximately $127-million to shareholders through share buybacks totalling approximately $45-million and its base dividend of approximately $82-million.

On Sept. 13, 2023, the company purchased one million shares of Ovintiv common stock from the 15 million shares offered for sale by NMB Stock Trust, a Delaware statutory trust, in a secondary public offering. The total consideration paid was approximately $45-million, or $45.45 per share, and the shares were cancelled during the third quarter of 2023. The share purchase accelerates Ovintiv's expected fourth quarter share purchases under its existing shareholder return framework. Share buybacks in the fourth quarter are expected to total approximately $53-million.

Continued balance sheet focus

Ovintiv had approximately $3.1-billion in total liquidity as of Sept. 30, 2023, which included available credit facilities of $3.15-billion, available uncommitted demand lines of $273-million, and cash and cash equivalents of $3-million, net of outstanding commercial paper of $359-million.

Ovintiv reported non-GAAP debt to EBITDA (earnings before interest, taxes, depreciation and amortization) of 1.4 times and non-GAAP debt to adjusted EBITDA of 1.5 times as of Sept. 30, 2023.

The company remains committed to maintaining a strong balance sheet and is currently rated investment grade by four credit rating agencies. Ovintiv maintains a long-term leverage target of 1.0 times non-GAAP debt to adjusted EBITDA at mid-cycle prices, with an associated long-term total debt target of $4.0-billion.

Dividend declared

On Nov. 7, 2023, Ovintiv's board declared a quarterly dividend of 30 cents per share of common stock, payable on Dec. 29, 2023, to shareholders of record as of Dec. 15, 2023.

Asset highlights

Permian

Permian production averaged 194,000 boe/d (83 per cent liquids) in the third quarter. The company had 83 net wells TIL. Ovintiv plans to invest approximately $1.43-billion to $1.47-billion in the play in 2023 to bring on 170 to 180 net wells.

Montney

Montney production averaged 229,000 boe/d (21 per cent liquids) in the third quarter. The company had 22 net wells TIL. Ovintiv plans to invest approximately $540-million to $580-million in the play in 2023 to bring on 75 to 80 net wells.

Uinta

Uinta production averaged 24,000 boe/d (84 per cent liquids) in the third quarter. The company had 10 net wells TIL. Ovintiv plans to invest approximately $415-million to $435-million in the play in 2023 to bring on 21 to 26 net wells. Capital investment in 2023 includes drilling and completion expenditures on wells that will not TIL until 2024.

Anadarko

Anadarko production averaged 119,000 boe/d (60 per cent liquids) in the third quarter. The company had one net well TIL. Ovintiv plans to invest approximately $190-million to $210-million in the play in 2023 to bring on 26 net wells.

For additional information, please refer to the third quarter 2023 results presentation available on Ovintiv's website under presentations and events -- Ovintiv. Supplemental information, and non-GAAP definitions and reconciliations, are available on Ovintiv's website under financial documents library.

Conference call information

A conference call and webcast to discuss the company's third quarter results will be held at 10 a.m. MT (12 p.m. ET) on Nov. 8, 2023.

To join the conference call without operator assistance, you may register and enter your phone number to receive an instant automated callback. You can also dial direct to be entered to the call by an operator. Please dial 888-664-6383 (toll-free in North America) or 416-764-8650 (international) approximately 15 minutes prior to the call.

The live audio webcast of the conference call, including slides and financial statements, will be available on Ovintiv's website under investors/presentations and events. The webcast will be archived for approximately 90 days.

Important information

Ovintiv reports in U.S. dollars unless otherwise noted. Production, sales and reserves estimates are reported on an after-royalties basis, unless otherwise noted. Unless otherwise specified or the context otherwise requires, references to Ovintiv include references to subsidiaries of and partnership interests held by Ovintiv and its subsidiaries.

Please visit Ovintiv's website and investor relations page, where Ovintiv often discloses important information about the company, its business and its results of operations.

National Instrument 51-101 exemption

The Canadian securities regulatory authorities have issued a decision document granting Ovintiv exemptive relief from the requirements contained in Canada's National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities. As a result of the decision and provided that certain conditions set out in the decision are met on a continuing basis, Ovintiv will not be required to comply with the Canadian requirements of NI 51-101 and the Canadian Oil and Gas Evaluation Handbook. The decision permits Ovintiv to provide disclosure in respect of its oil and gas activities in the form permitted by, and in accordance with, the legal requirements imposed by the U.S. Securities and Exchange Commission (SEC), the Securities Act of 1933, the Securities and Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the rules of the New York Stock Exchange. The decision also provides that Ovintiv is required to file all such oil and gas disclosures with the Canadian securities regulatory authorities on SEDAR+ as soon as practicable after such disclosure is filed with the U.S. Securities and Exchange Commission (SEC).

Non-GAAP measures

Certain measures in this news release do not have any standardized meaning as prescribed by U.S. GAAP and, therefore, are considered non-GAAP measures. These measures may not be comparable with similar measures presented by other companies and should not be viewed as a substitute for measures reported under U.S. GAAP. These measures are commonly used in the oil and gas industry and/or 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. For additional information regarding non-GAAP measures, see the company's website. This news release contains references to non-GAAP measures as follows:

• Non-GAAP cash flow is a non-GAAP measure defined as cash from (used in) operating activities, excluding net change in other assets and liabilities, and net change in non-cash working capital.
• Non-GAAP free cash flow is a non-GAAP measure defined as non-GAAP cash flow in excess of capital expenditures, excluding net acquisitions and divestitures.
• Non-GAAP adjusted earnings is a non-GAAP measure defined as net earnings (loss) excluding non-cash items that the company's management believes reduces the comparability of the company's financial performance between periods. These items may include, but are not limited to, unrealized gains/losses on risk management, impairments, non-operating foreign exchange gains/losses and gains/losses on divestitures. Income taxes includes adjustments to normalize the effect of income taxes calculated using the estimated annual effective income tax rate. In addition, any valuation allowances are excluded in the calculation of income taxes.
• Adjusted EBITDA, debt to EBITDA and debt to adjusted EBITDA (leverage ratio) are non-GAAP measures. EBITDA is defined as trailing 12-month net earnings (loss) before income taxes, depreciation, depletion and amortization, and interest. Adjusted EBITDA is EBITDA adjusted for impairments, accretion of asset retirement obligation, unrealized gains/losses on risk management, foreign exchange gains/losses, gains/losses on divestitures and other gains/losses. Debt to EBITDA is calculated as long-term debt, including the current portion, divided by EBITDA. Debt to adjusted EBITDA is calculated as long-term debt, including the current portion, divided by adjusted EBITDA. Adjusted EBITDA, debt to EBITDA and debt to adjusted EBITDA are a non-GAAP measures monitored by management as indicators of the company's overall financial strength.

We seek Safe Harbor.