Ovintiv Reports Third Quarter 2024 Financial and Operating Results
Full Year Production Guidance Increased; Strong Operational Execution and Debt Reduction Continue
Highlights:
- Generated net earnings of
$507 million , cash from operating activities of$1,022 million , Non-GAAP Cash Flow of$978 million and Non-GAAP Free Cash Flow of$440 million after capital expenditures of$538 million - Third quarter production was above the high-end of the guidance range on every product with average total production volumes of 593 thousand barrels of oil equivalent per day ("MBOE/d"), including 212 thousand barrels per day ("Mbbls/d") of oil and condensate, 93 Mbbls/d of other NGLs (C2 to C4) and 1,725 million cubic feet per day ("MMcf/d") of natural gas
- Returned
$240 million to shareholders through the combination of base dividend payments and share buybacks - Reduced total debt by
$210 million to$5.88 billion , Non-GAAP Debt to Adjusted EBITDA of 1.2 times - Raised full year production guidance range to 583 MBOE/d to 587 MBOE/d, including oil and condensate of 209 Mbbls/d to 211 Mbbls/d and natural gas of 1,700 MMcf/d to 1,715 MMcf/d
- Full year capital guidance range narrowed to
$2.275 billion to$2.325 billion , midpoint unchanged at$2.3 billion
"Our third quarter results continued to build on our strong track record of operational and financial execution," said
Third Quarter 2024 Financial and Operating Results
- The Company recorded net earnings of
$507 million , or$1.92 per diluted share of common stock. Included in net earnings were net gains of$150 million related to the settlement of a legacy asset disposition and net gains on risk management in revenues of$128 million , before tax. - Cash from operating activities was
$1,022 million , Non-GAAP Cash Flow was$978 million and capital investment totaled approximately$538 million , resulting in$440 million of Non-GAAP Free Cash Flow. - Third quarter average total production volumes were approximately 593 MBOE/d, including 212 Mbbls/d of oil and condensate, 93 Mbbls/d of other NGLs (C2 to C4) and 1,725 MMcf/d of natural gas.
- Upstream operating expense was
$4.17 per barrel of oil equivalent ("BOE"). Upstream transportation and processing costs were$7.31 per BOE. Production, mineral and other taxes were$1.56 per BOE, or 4.9% of upstream revenue. These costs were below the low-end of guidance on a combined basis. - Excluding the impact of hedges, third quarter average realized prices were
$72.00 per barrel for oil and condensate (96% of WTI),$18.13 per barrel for other NGLs (C2-C4) and$1.29 per thousand cubic feet ("Mcf") for natural gas (60% of NYMEX) resulting in a total average realized price of$32.41 per BOE. - Including the impact of hedges, third quarter average realized prices were
$72.00 per barrel for oil and condensate (96% of WTI),$18.33 per barrel for other NGLs (C2-C4) and$1.88 per Mcf for natural gas (87% of NYMEX) resulting in a total average realized price of$34.17 per BOE.
Guidance
The Company issued its fourth quarter 2024 guidance and raised its full year production guidance while narrowing the range for full year capital investment around an unchanged midpoint. Full year production volumes are expected to average 583 to 587 MBOE/d, with full year capital investment of
Guidance Updates |
|
4Q 2024 |
Updated Full Year 2024 |
Total Production (MBOE/d) |
|
575 – 595 |
583 – 587 |
Oil & Condensate (Mbbls/d) |
|
203 – 207 |
209 – 211 |
NGLs (C2 - C4) (Mbbls/d) |
|
91 – 95 |
91 – 92 |
Natural Gas (MMcf/d) |
|
1,700 – 1,750 |
1,700 – 1,715 |
|
|
$525 – |
|
Returns to Shareholders
In the third quarter of 2024, the Company purchased for cancellation, approximately 3.7 million shares of common stock for consideration of approximately
Continued Balance Sheet Focus
Total long-term debt including the current portion was
The Company remains committed to supporting a strong balance sheet and is currently rated investment grade by four credit rating agencies.
As of the end of the third quarter,
Dividend Declared
On
Asset Highlights
Permian
Permian production averaged 207 MBOE/d (80% liquids) in the third quarter. The Company had 32 net wells turned in line ("TIL").
Montney
Uinta
Uinta production averaged 37 MBOE/d (85% liquids) in the third quarter. The Company had 11 net wells TIL.
Conference Call Information
A conference call and webcast to discuss the Company's third quarter results will be held at
To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3XEGImx to receive an instant automated call back. You can also dial direct to be entered to the call by an Operator. Please dial 888-510-2154 (toll-free in
The live audio webcast of the conference call, including slides and financial statements, will be available on
Refer to Note 1 Non-GAAP measures and the tables in this release for reconciliation to comparable GAAP financial measures.
(for the period ended |
3Q 2024 |
3Q 2023 |
Capital Expenditures (1) ($ millions) |
538 |
834 |
Oil (Mbbls/d) |
168.4 |
170.9 |
NGLs – Plant Condensate (Mbbls/d) |
44.0 |
43.3 |
Oil & Plant Condensate (Mbbls/d) |
212.4 |
214.2 |
NGLs – Other (Mbbls/d) |
92.6 |
86.7 |
Total Liquids (Mbbls/d) |
305.0 |
300.9 |
Natural gas (MMcf/d) |
1,725 |
1,625 |
Total production (MBOE/d) |
592.6 |
571.8 |
(1) Including capitalized directly attributable internal costs. |
Third Quarter Financial Summary
(for the period ended ($ millions) |
3Q 2024 |
3Q 2023 |
Cash From (Used In) Operating Activities Deduct (Add Back): Net change in other assets and liabilities Net change in non-cash working capital |
1,022
19 25 |
906
(14) (192) |
Non-GAAP Cash Flow (1) |
978 |
1,112 |
|
|
|
Non-GAAP Cash Flow (1) |
978 |
1,112 |
Less: Capital Expenditures (2) |
538 |
834 |
Non-GAAP Free Cash Flow (1) |
440 |
278 |
|
|
|
Net Earnings (Loss) Before Income Tax Before-tax (Addition) Deduction: Unrealized gain (loss) on risk management Non-operating foreign exchange gain (loss) |
558
31 (16) |
393
(292) 17 |
Adjusted Earnings (Loss) Before Income Tax Income tax expense (recovery) |
543 54 |
668 187 |
Non-GAAP Adjusted Earnings (1) |
489 |
481 |
(1) Non-GAAP Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Adjusted Earnings are non-GAAP measures as defined in Note 1. |
(2) Including capitalized directly attributable internal costs. |
Realized Pricing Summary (Including the impact of realized gains (losses) on risk management)
(for the period ended |
3Q 2024 |
3Q 2023 |
Liquids ($/bbl) |
|
|
WTI |
75.09 |
82.26 |
Realized Liquids Prices |
|
|
Oil |
73.23 |
79.52 |
NGLs – Plant Condensate |
67.30 |
71.61 |
Oil & Plant Condensate |
72.00 |
77.94 |
NGLs – Other |
18.33 |
18.39 |
Total NGLs |
34.12 |
36.11 |
|
|
|
Natural Gas |
|
|
NYMEX ($/MMBtu) |
2.16 |
2.55 |
Realized Natural Gas Price ($/Mcf) |
1.88 |
2.51 |
Cost Summary
(for the period ended ($/BOE) |
3Q 2024 |
3Q 2023 |
Production, mineral and other taxes |
1.56 |
1.70 |
Upstream transportation and processing |
7.31 |
7.40 |
Upstream operating |
4.17 |
4.48 |
Administrative, excluding long-term incentive, transaction |
1.24 |
1.27 |
Debt to EBITDA (1)
($ millions, except as indicated) |
|
|
Long-Term Debt, including Current Portion |
5,877 |
5,737 |
|
|
|
Net Earnings (Loss) |
2,041 |
2,085 |
Add back (Deduct): |
|
|
Depreciation, depletion and amortization |
2,301 |
1,825 |
Interest |
412 |
355 |
Income tax expense (recovery) |
478 |
425 |
EBITDA |
5,232 |
4,690 |
Debt to EBITDA (times) |
1.1 |
1.2 |
Debt to Adjusted EBITDA (1)
($ millions, except as indicated) |
|
|
Long-Term Debt, including Current Portion |
5,877 |
5,737 |
|
|
|
Net Earnings (Loss) |
2,041 |
2,085 |
Add back (Deduct): |
|
|
Depreciation, depletion and amortization |
2,301 |
1,825 |
Accretion of asset retirement obligation |
19 |
19 |
Interest |
412 |
355 |
Unrealized (gains) losses on risk management |
(265) |
(194) |
Foreign exchange (gain) loss, net |
(2) |
19 |
Other (gains) losses, net |
(164) |
(20) |
Income tax expense (recovery) |
478 |
425 |
Adjusted EBITDA |
4,820 |
4,514 |
Debt to Adjusted EBITDA (times) |
1.2 |
1.3 |
1) Debt to EBITDA and Debt to Adjusted EBITDA are non-GAAP measures as defined in Note 1. |
Hedge Details as of
Oil and Condensate Hedges ($/bbl) |
4Q 2024 |
1Q 2025 |
2Q 2025 |
3Q 2025 |
4Q 2025 |
WTI 3-Way Options
Put Strike Sold Put Strike |
50 Mbbls/d
|
50 Mbbls/d
|
50 Mbbls/d
|
50 Mbbls/d
|
0 - - - |
Natural Gas Hedges ($/Mcf) |
4Q 2024 |
1Q 2025 |
2Q 2025 |
3Q 2025 |
4Q 2025 |
NYMEX Swaps |
200 MMcf/d
|
0 - |
0 - |
0 - |
0 - |
NYMEX Collars Call Strike Put Strike |
400 MMcf/d
|
0 - - |
0 - - |
0 - - |
0 - - |
NYMEX 3-Way Options
Put Strike Sold Put Strike |
200 MMcf/d
|
500 MMcf/d
|
500 MMcf/d
|
500 MMcf/d
|
500 MMcf/d
|
Waha % of NYMEX Swaps |
50 MMcf/d 71% |
0 - |
0 - |
0 - |
0 - |
AECO Nominal Basis Swaps |
190 MMcf/d
( |
190 MMcf/d
( |
190 MMcf/d
( |
190 MMcf/d
( |
190 MMcf/d
( |
AECO % of NYMEX Swaps |
100 MMcf/d 72% |
100 MMcf/d 72% |
100 MMcf/d 72% |
100 MMcf/d 72% |
100 MMcf/d 72% |
Important information
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NI 51-101 Exemption
The Canadian securities regulatory authorities have issued a decision document (the "Decision") granting
NOTE 1: Non-GAAP Measures
Certain measures in this news release do not have any standardized meaning as prescribed by
- 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 Target/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 non-GAAP measures monitored by management as indicators of the Company's overall financial strength.
ADVISORY REGARDING OIL AND GAS INFORMATION – The conversion of natural gas volumes to barrels of oil equivalent (BOE) is on the basis of six thousand cubic feet to one barrel. BOE is based on a generic energy equivalency conversion method primarily applicable at the burner tip and does not represent economic value equivalency at the wellhead. Readers are cautioned that BOE may be misleading, particularly if used in isolation.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS – This news release contains forward-looking statements or information (collectively, "forward-looking statements") within the meaning of applicable securities legislation, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, except for statements of historical fact, that relate to the anticipated future activities, plans, strategies, objectives or expectations of the Company, including third quarter and fiscal year 2024 guidance and expected free cash flow, the expectation of delivering sustainable durable returns to shareholders in future years, plans regarding share buybacks and debt reduction, and the anticipated timing of bringing wells online, are forward-looking statements. When used in this news release, the use of words and phrases including "anticipates," "believes," "continue," "could," "estimates," "expects," "focused on," "forecast," "guidance," "intends," "maintain," "may," "opportunities," "outlook," "plans," "potential," "strategy," "targets," "will," "would" and other similar terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words or phrases. Readers are cautioned against unduly relying on forward-looking statements which, are based on current expectations and by their nature, involve numerous assumptions that are subject to both known and unknown risks and uncertainties (many of which are beyond our control) that may cause such statements not to occur, or actual results to differ materially and/or adversely from those expressed or implied. These assumptions include, without limitation: future commodity prices and basis differentials; the ability of the Company to access credit facilities, debt and equity markets and other sources of liquidity to fund operations or acquisitions and manage debt; the availability of attractive commodity or financial hedges and the enforceability of risk management programs; the Company's ability to capture and maintain gains in productivity and efficiency; the ability for the Company to generate cash returns and execute on its share buyback plan; expectations of plans, strategies and objectives of the Company, including anticipated production volumes and capital investment; the Company's ability to manage cost inflation and expected cost structures, including expected operating, transportation, processing and labor expenses; the outlook of the oil and natural gas industry generally, including impacts from changes to the geopolitical environment; and projections made in light of, and generally consistent with, the Company's historical experience and its perception of historical industry trends; and the other assumptions contained herein.
Although the Company believes the expectations represented by its forward-looking statements are reasonable based on the information available to it as of the date such statements are made, forward-looking statements are only predictions and statements of our current beliefs and there can be no assurance that such expectations will prove to be correct. All forward-looking statements contained in this news release are made as of the date of this news release and, except as required by law, the Company undertakes no obligation to update publicly; revise or keep current any forward-looking statements. The forward-looking statements contained or incorporated by reference in this news release, and all subsequent forward-looking statements attributable to the Company, whether written or oral, are expressly qualified by these cautionary statements.
The reader should carefully read the risk factors described in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in other filings with the
Further information on
Investor contact: (888) 525-0304 |
Media contact: (403) 645-2252 |
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