Mr. Brendan McCracken reports

OVINTIV REPORTS FOURTH QUARTER AND YEAR-END 2023 FINANCIAL AND OPERATING RESULTS

Ovintiv Inc. has released its fourth quarter and year-end 2023 financial and operating results. The company plans to hold a conference call and webcast at 8 a.m. MT (10 a.m. ET) on Feb. 28, 2024. Please see dial-in details within this release, as well as additional details on the company's website under presentations and events -- Ovintiv. All figures are in United States dollars unless otherwise stated.

Highlights:

Full year 2023

• Generated net earnings of $2.1-billion, cash from operating activities of $4.2-billion, non-GAAP (generally accepted accounting principles) cash flow of $3.9-billion and non-GAAP free cash flow of $1.2-billion after capital expenditures of $2.7-billion.
• Exceeded high end of full year production guidance on every product with average total volumes of 566,000 barrels of oil equivalent per day (MBOE/d), including 202,000 barrels per day (Mbbl/d) of oil and condensate, 90 Mbbl/d of other NGLs (natural gas liquids) (C2 to C4) and 1,642-million cubic feet per day (MMcf/d) of natural gas.
• Returned $733-million to shareholders through the combination of base dividend payments and share buybacks.
• Acquired and seamlessly integrated high-quality Permian assets comprising approximately 65,000 net acres of largely undeveloped land directly adjacent to the company's existing Permian operations.
• Closed the sale of the company's Bakken assets, representing Ovintiv's exit from the play.
• Announced the company's inclusion on the S&P 400 index effective June 20, 2023.

Fourth quarter 2023

• Generated fourth quarter net earnings of $856-million, cash from operating activities of $1.4-billion, non-GAAP cash flow of $1.2-billion and non-GAAP free cash flow of $577-million after capital expenditures of $660-million.
• Delivered average quarterly production volumes of 605 MBOE/d, including 240 Mbbl/d of oil and condensate, 91 Mbbl/d of other NGLs and 1,645 MMcf/d of natural gas; all exceeding the high end of company guidance.
• Reduced total debt by $426-million.

2024 outlook

• Announced 2024 capital program of approximately $2.2-billion to $2.4-billion, which is expected to deliver total production volumes of 545 to 575 MBOE/d, including oil and condensate volumes of 202 to 208 Mbbl/d.

"Two thousand twenty-three marked a year of exceptionally strong execution for our company," said president and chief executive officer Brendan McCracken. "Our focus on operational excellence led to multiple quarters of positive guidance revisions, as we repeatedly outperformed our production targets without increasing spending. From volumes, to capital, to per-unit costs, we beat our 2023 targets and enhanced the capital efficiency of the business. Our durable-returns strategy is set to deliver again in 2024, as we plan to produce higher oil and condensate volumes with less capital and generate about $450-million more free cash flow than 2023."

Full year and fourth quarter 2023 financial and operating results

• The company recorded full year net earnings of $2,085-million, or $7.90 per diluted share of common stock. Included in net earnings were income tax expense of $425-million and net gains on risk management of $151-million, before tax.
• Fourth quarter net earnings totalled $856-million, or $3.11 per diluted share of common stock. Included in net earnings were income tax expense of $211-million and net gains on risk management of $344-million, before tax.
• Full year capital investment of $2,744-million was below the full year 2023 guidance range of approximately $2,745-million to $2,785-million.
• Fourth quarter capital investment of $660-million was at the low end of the guidance range of approximately $660-million to $700-million.
• Full year upstream operating expense was $4.03 per barrel of oil equivalent (BOE). Upstream transportation and processing costs were $7.76 per BOE. Production, mineral and other taxes were $1.66 per BOE, or 4.4 per cent of upstream revenue. These costs were below the bottom end of guidance on a combined basis.
• Fourth quarter upstream operating expense was $4.09 per BOE. Upstream transportation and processing costs were $6.89 per BOE. Production, mineral and other taxes were $1.67 per BOE, or 4.2 per cent of upstream revenue. These costs were below the bottom end of guidance on a combined basis.
• Excluding the impact of hedges, full year average realized prices were $75.19 per barrel for oil and condensate (97 per cent of WTI (West Texas Intermediate)), $18.09 per barrel for other NGLs (C2-C4) and $2.74 per,000 cubic feet (Mcf) for natural gas (100 per cent of NYMEX) resulting in a total average realized price of $37.67 per BOE.
• Including the impact of hedges, full year average realized prices for oil and condensate was $74.88 (96 per cent of WTI), other NGLs was unchanged and the average realized price for natural gas was $2.71 per Mcf (99 per cent of NYMEX) resulting in a total average realized price of $37.46 per BOE.
• Excluding the impact of hedges, fourth quarter average realized prices were $75.66 per barrel for oil and condensate (97 per cent of WTI), $18.85 per barrel for other NGLs (C2-C4), and $2.50 per Mcf for natural gas (87 per cent of NYMEX) resulting in a total average realized price of $39.66 per BOE.
• Including the impact of hedges, fourth quarter average realized prices for oil and condensate was $75.46 (96 per cent of WTI), other NGLs was unchanged and the average realized price for natural gas was $2.65 per Mcf (92 per cent of NYMEX) resulting in a total average realized price of $39.99 per BOE.

2024 guidance

The company issued first quarter and full year 2024 guidance as shown in the attached table.

Ovintiv expects production in the first quarter to be the high point for the year, with oil and condensate volumes expected to average 208 to 212 Mbbl/d. This includes the impacts of refinery turnarounds in Salt Lake City, weather and planned maintenance, which are expected to reduce first quarter volumes by approximately eight Mbbl/d. Oil and condensate production is expected to stabilize in the second quarter and remain largely flat through the end of the year for an annual average of 202 to 208 Mbbl/d. The company expects to realize a greater than 18-per-cent improvement in capital efficiency for its oil and condensate production versus its original 2023 guidance.

Inventory renewal

Since 2021, Ovintiv has added approximately 1,650 net premium drilling locations to its inventory through the combination of the Permian acquisition in 2023, low-cost strategic bolt-on transactions, and its organic inventory appraisal and assessment programs. This represents an addition of more than seven years of drilling inventory based on the number of wells the company expects to drill in 2024. Approximately two-thirds of the inventory additions, or about 1,100 net locations, are located in the Permian.

Returns to shareholders

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

In the fourth quarter of 2023, the company returned approximately $135-million to shareholders through share buybacks totalling approximately $53-million and its base dividend of approximately $82-million.

Full year shareholder returns totalled approximately $733-million, consisting of share buybacks of approximately $426-million, or approximately 10 million shares of common stock, and base dividend payments of approximately $307-million.

Share buybacks in the first quarter of 2024 are expected to total approximately $248-million.

Continued balance sheet focus

Ovintiv had approximately $3.5-billion in total liquidity as of Dec. 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. Ovintiv reported total debt of $5.7-billion at year-end.

Non-GAAP debt to EBITDA (earnings before interest, taxes, depreciation and amortization) was 1.2 times and non-GAAP debt to adjusted EBITDA was 1.3 times as of Dec. 31, 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 Feb. 27, 2024, Ovintiv's board declared a quarterly dividend of 30 cents per share of common stock payable on March 28, 2024, to shareholders of record as of March 15, 2024.

Asset highlights

Permian

Permian production averaged 220 MBOE/d (84 per cent liquids) in the fourth quarter. The company had 60 net wells turned in line (TIL). Ovintiv plans to invest approximately $1.35-billion to $1.45-billion in the play in 2024 to bring on 120 to 130 net wells.

Montney

Montney production averaged 234 MBOE/d (22 per cent liquids) in the fourth quarter. The company had 15 net wells TIL. Ovintiv plans to invest approximately $425-million to $475-million in the play in 2024 to bring on 60 to 70 net wells.

Uinta

Uinta production averaged 34 MBOE/d (86 per cent liquids) in the fourth quarter. The company had eight net wells TIL. Ovintiv plans to invest approximately $300-million to $350-million in the play in 2024 to bring on 25 to 30 net wells.

Anadarko

Anadarko production averaged 113 MBOE/d (59 per cent liquids) in the fourth quarter. The company had four net wells TIL. Ovintiv plans to invest approximately $100-million to $125-million in the play in 2024 to bring on seven to ten net wells.

Year-end 2023 reserves

SEC proved reserves at year-end 2023 were 2.2 billion BOE, of which approximately 48 per cent were liquids and 62 per cent were proved developed. Total proved reserves replacement including the impact of commodity prices and acquisitions was 106 per cent of 2023 production. Ovintiv's reserve life index at year-end was approximately 11 years.

For additional information, please refer to the fourth quarter and year-end 2023 results presentation available on Ovintiv's website.

Conference call information

A conference call and webcast to discuss the company's fourth quarter and year-end 2023 results will be held at 8 a.m. MT (10 a.m. ET) on Feb. 28, 2024.

To join the conference call without operator assistance, you may register and enter your phone number on-line to receive an instant automated call back. 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.

We seek Safe Harbor.