美國證券交易委員會
華盛頓特區20549
表格
(標記一)
根據1934年證券交易法第13或15(d)節的季度報告 |
截至季度結束日期的財務報告
or
根據1934年證券交易法第13或15(d)節的轉型報告書 |
委員會檔案編號
(根據其章程規定的註冊人準確名稱)
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(設立或組織的其他管轄區域) |
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(納稅人識別號碼) |
,(主要行政辦公地址)
註冊人的電話號碼,包括區號 (
在法案第12(b)條的規定下注冊的證券:
每一類的名稱 |
交易標誌 |
在其上註冊的交易所的名稱 |
請在以下方框內打勾,以指示註冊人是否(1)已在過去12個月內(或在註冊人需要提交此類報告的較短期間內)提交了交易所法案第13或15(d)條規定的所有要求提交的報告,並且(2)在過去90天內一直需要遵守提交要求。
☑ 否 ☐
請在勾選標誌處表示註冊人是否已經在過去12個月內(或者在註冊人要求提交這些文件的較短時期內)按照規則405 of協議S-T(本章節的§232.405)提交了每個交互式數據文件。 ☒ 沒有 ☐
勾選以下選框,指示申報人是大型加速評估提交人、加速評估提交人、非加速評估提交人、小型報告公司或新興成長型公司。關於「大型加速評估提交人」、「加速評估提交人」、「小型報告公司」和「新興成長型公司」的定義,請參見《交易所法規》第12億.2條。
☒ |
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加速提交者 |
☐ |
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非加速文件提交人 |
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較小的報告公司 |
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新興增長公司 |
如果是新興成長型企業,請勾選複選標記,表明註冊者已選擇不使用延長過渡期來符合根據證券交易法第13(a)條規定提供的任何新財務會計準則。 ☐
請在複選標誌處註明公司是否爲殼公司(根據交易所法令第12b-2條的定義)。
是的 ☐ 沒有
截至2024年11月1日,已註冊的普通股流通數量 |
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1
歐文蒂夫股份有限公司。
10-Q表格
目錄2024年6月4日,Nano Dimension股份有限公司(「註冊人」)發佈了一份新聞稿,題爲「大使喬吉特·莫斯巴赫加盟Nano Dimension董事會」,現附上99.1展覽,併成爲本文檔的一部分。
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2
定義
除非上下文另有要求或另有明示說明,所有在這份第10-Q表格中對「ovintiv」,「公司」,「我們」,「我們」,「我們的」等的引用均指ovintiv股份有限公司及其合併子公司。此外,以下是本季度報告第10-Q中使用的其他縮寫詞和定義:
「AECO」是指艾伯塔能源公司,是加拿大天然氣的基準價格。
「ASU」代表會計準則更新。
「bbl」或「bbls」意味着桶或桶。
「BOE」表示石油當量桶。
「Btu」指的是熱值單位,用來衡量供暖價值。
「CORRA」是指加拿大隔夜拆借利率平均值。
「DD&A」代表折舊、減值與攤銷費用。
「FASB」代表着財務會計準則委員會。
「GHG」指的是溫室氣體。
「Mbbls/d」表示每日一千桶。
「MBOE/d」表示每天千桶油當量。
「Mcf」表示千立方英尺。
「MD&A」 意味着管理層對財務狀況和經營業績的討論和分析。
「MMBOE」代表百萬桶油當量。
「MMBtu」表示百萬英熱單位。
「MMcf/d」表示每天百萬立方英尺。
「NCIB」代表正常 course 發行者 買盤。
「NGL」或「NGLs」表示 天然氣液體。
「nymex」 表示紐約商品交易所。
「紐交所」意指紐約證券交易所。
「石油輸出國組織」意味着石油輸出國組織。
「SEC」指的是美國證券交易委員會。
「S&P 400」是指標準普爾中型企業400指數。
「TSX」指的是多倫多證券交易所。
「美國(U.S.)」,「美利堅合衆國(United States)」或「美國(USA)」是指美利堅合衆國。
「美國通用會計準則」是指美國普遍接受的會計原則。
「WTI」代表西德克薩斯中質油。
轉換
在這份10-Q表格的季度報告中,將天然氣體積轉換爲BOE的基礎是6Mcf等於1桶。BOE基於一種通用的能源等價轉換方法,主要適用於燃燒器前,並不代表井口的經濟價值等同。考慮到當前油價與天然氣相比的價值比例與6:1的能源等價性顯着不同,使用6:1基礎的轉換可能會誤導價值的指示,特別是如果孤立使用。
慣例
除非另有規定,所有金額均以美元表示,「美元」、「$」或「US$」均指美元,「C$」指加拿大元。所有金額均以稅前方式提供,除非另有說明。此外,此處提供的所有信息均以特許權利金後的基礎呈現。
3
術語「包括」、「包括」、「包括」和「包括的」應被解釋爲緊接着是「無限制」這幾個詞,除非另有明確說明。
術語「液體」用於表示原油、天然氣液體和凝析油。術語「液體豐富」用於表示伴生液體含量較高的天然氣流。術語「儲層」用於描述油氣聚集或特定類型前景發生的區域。ovintiv的發展重點是在已知存在大面積和/或厚垂直斷面的油氣聚集地,並使用水力壓裂進行開發。與傳統開發相比,這種類型的開發通常具有較低的地質和/或商業開發風險以及較低的平均遞減率。
關於公司網站上包含的信息,請參閱 www.ovintiv.com 不會納入參考,並不構成這份第10-Q表格季度報告的一部分。
前瞻性陳述與風險
本季度10-Q表所載以及可能被引用的其他文件(如有)包含一些前瞻性的陳述或信息(統稱爲「前瞻性陳述」),依據適用證券立法,包括1933年修訂版的《證券法》第27A條以及1934年修訂版的《交易所法》第21E條。除了歷史事實陳述外,所有涉及公司未來預期活動、計劃、策略、目標或期望的陳述都屬於前瞻性陳述。在本季度10-Q表中使用的詞語和短語,包括「預期」,「相信」,「持續」,「可能」,「估計」,「預計」,「專注於」,「預測」,「指導」,「打算」,「保持」,「可能」,「機遇」,「展望」,「計劃」,「潛力」,「策略」,「目標」,「將」,「將會」等類似術語,旨在識別前瞻性陳述,儘管並非所有前瞻性陳述都含有此類識別詞或短語。在不限制前述內容的前提下,本季度10-Q表中含有的前瞻性陳述包括:公司計劃、戰略和目標的期望,包括預期的儲備開發;公司實施任何未來收購和出售交易的能力;公司成功整合所收購資產到業務的能力;鑽井計劃和方案,包括完成這些計劃和方案所需的資本數量和可用性;公司資產的結構和與其資產相關的預期資本回報;預期石油、天然氣液體和天然氣價格;預期技術和創新的成功和收益,包括正方體開發模型,Trimulfrac和Simulfrac技術以及其他新的或先進的鑽井技術或井完工設計;預期的鑽井和完井活動,包括使用的鑽井平台和壓裂團隊數量;預期來自各種合資企業、合作伙伴關係和其他協議的收益和未來好處;預期的石油、天然氣液體和天然氣產量及商品組合;公司獲取信貸設施、債務和股本市場以及其他流動性來源的能力;公司及時實現其所述環境、社會和治理目標、目標和倡議的能力;聯邦、州、省、地方和部落法律、規則和法規變化的影響;預期遵守現行或擬議的環境立法;公司管理債務和財務比率以及遵守財務契約的能力;風險管理計劃的實施和結果,包括暴露於商品價格、利率和匯率波動以及對油、氣和天然氣產量套期保值的數量;未來分紅的聲明和支付,公司未來回購普通股的預期;公司管理成本通脹和預期成本結構的能力,包括預期的運營、運輸、加工和勞動費用;以及整體石油和天然氣行業展望,包括從地緣政治環境變化中受到的影響。
本季度10-Q表格中包含的未來展望性聲明涉及風險和不確定性,可能導致實際結果與預期結果大不相同。因此,投資者不應過度依賴未來展望性聲明作爲對實際結果的預測。我們基於當前對未來事件的期望和假設,考慮到我們目前所知的所有信息,作出了這些未來展望性聲明。儘管我們認爲這些期望和假設是合理的,但它們本質上受到重大的業務、經濟、競爭、監管和其他風險和不確定性的影響,其中許多是難以預測且超出我們的控制範圍的。可能影響我們業務和未來展望性聲明的運營、表現和結果的風險和不確定性包括,但不限於公司在2023財年截至2023年12月31日的最新年度報告10-K表格中提出的事項1A「公司風險因素」中所述的風險;以及其他可能影響公司業務的風險和不確定性,如其在美國證券交易委員會或加拿大證券監管機構的其他定期備案中不時描述。
4
儘管公司認爲根據其掌握的信息,其前瞻性聲明所代表的預期是合理的,前瞻性聲明僅爲預測,並代表我們當前的信念,不能保證這些預期會被證明正確。在此《表格10-Q季度報告》中包含的所有前瞻性聲明均爲本文件日期(或參照文件的日期)作出,除非法律要求,公司承諾不會公開更新或修訂任何前瞻性聲明。在本《表格10-Q季度報告》中包含或取得參考的前瞻性聲明,以及公司後續的所有前瞻性聲明,無論是書面還是口頭,均受到這些警告性聲明的明確限制。
讀者應仔細閱讀2023年第10‑k表格上的1A項目中描述的風險要素。關於可能導致實際結果與這些前瞻性陳述有所不同的某些風險的描述。
5
部分 I
第一條. 財務報表。財務報表
簡明綜合財務報表收益報表 (未經審計)
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三個月截止 |
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九個月結束 |
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9月30日, |
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(以百萬美元計,每股金額除外) |
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2024 |
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2023 |
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2024 |
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2023 |
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收入 |
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(注3) |
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產品和服務收入 |
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(注4) |
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風險管理的盈利(虧損),淨額 |
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轉租收入 |
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(注11) |
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總營收 |
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研究和開發 |
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生產、礦產和其他稅收 |
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運輸和加工 |
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操作 |
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折舊、減值和攤銷 |
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資產退休責任的累積 |
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營業收入(虧損) |
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其他(收入)支出 |
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利息 |
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(注5) |
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匯率期貨損益,淨額 |
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所得稅費用 |
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每股普通股淨收益(虧損) |
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(注14) |
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基本 |
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普通股權加權平均流通股數(百萬) |
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綜合收益簡明綜合報表綜合收益 (未經審計)
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三個月已結束 |
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九個月已結束 |
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九月三十日 |
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九月三十日 |
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(百萬美元) |
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2024 |
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2023 |
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淨收益(虧損) |
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其他綜合收益(虧損),扣除稅款 |
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外幣折算調整 |
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(註釋 15) |
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養老金和其他離職後福利計劃 |
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(註釋 15) |
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其他綜合收益(虧損) |
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綜合收益(虧損) |
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請查看未經審計的簡明合併基本報表附註
6
簡明綜合資產負債表 B資產負債表 (未經審計)
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下面包括了開多期債務和總債務的對比: |
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下面包括了開多期債務和總債務的對比: |
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9月30日, |
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12月31日, |
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加上或減去以下內容: |
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2024 |
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2023 |
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資產 |
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流動資產 |
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現金及現金等價物 |
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$ |
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$ |
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應收賬款和應計收入(減免後 |
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的 $ |
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(附註4,21) |
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風險管理 |
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(附註18,19) |
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應收所得稅 |
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資產、廠房及設備,按成本計量: |
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(注10) |
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石油和天然氣資產,基於全成本覈算 |
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明證財產 |
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未探明財產 |
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其他 |
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房地產、廠房及設備 |
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減:累計折舊、減值和攤銷 |
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物業、廠房和設備,淨值 |
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(注3) |
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其他資產 |
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風險管理 |
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(18、19 注) |
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遞延所得稅 |
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商譽 |
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(注3) |
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(注3) |
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$ |
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$ |
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負債和股東權益 |
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流動負債 |
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應付賬款及應計費用 |
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$ |
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$ |
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經營租賃負債流動部分 |
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應交所得稅 |
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風險管理 |
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(附註18, 19) |
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開多次數 |
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(附註12) |
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長期債務 |
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(附註12) |
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經營租賃負債 |
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其他負債和準備金 |
(見注13) |
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風險管理 |
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(附註18, 19) |
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資產養老負債 |
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遞延所得稅 |
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(附註21) |
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股東權益 |
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股本 - 授權 |
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2024年發行並流通股數: |
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(注14) |
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現金及現金等價物 |
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(注14) |
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保留盈餘 |
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累計其他綜合收益 |
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(附註15) |
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股東權益合計 |
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$ |
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$ |
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See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
7
Three Months Ended September 30, 2024 (US$ millions) |
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Share |
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Paid in |
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Retained |
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Accumulated |
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Total |
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Balance, June 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net Earnings (Loss) |
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Dividends on Shares of Common Stock ($ |
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(Note 14) |
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Shares of Common Stock Purchased |
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(Note 14) |
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Equity-Settled Compensation Costs |
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Other Comprehensive Income (Loss) |
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(Note 15) |
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Balance, September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Three Months Ended September 30, 2023 (US$ millions) |
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Share |
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Paid in |
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Retained |
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Accumulated |
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Total |
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Balance, June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net Earnings (Loss) |
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Dividends on Shares of Common Stock ($ |
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(Note 14) |
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Shares of Common Stock Purchased |
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(Note 14) |
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Equity-Settled Compensation Costs |
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Other Comprehensive Income (Loss) |
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(Note 15) |
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Balance, September 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
8
Condensed Consolidated Statement of Changes in Shareholders’ Equity (unaudited)
Nine Months Ended September 30, 2024 (US$ millions) |
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Share |
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Paid in |
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Retained |
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Accumulated |
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Total |
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Balance, December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net Earnings (Loss) |
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Dividends on Shares of Common Stock ($ |
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(Note 14) |
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Shares of Common Stock Purchased |
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(Note 14) |
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Equity-Settled Compensation Costs |
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Other Comprehensive Income (Loss) |
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(Note 15) |
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Balance, September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Nine Months Ended September 30, 2023 (US$ millions) |
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Share |
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Paid in |
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Retained |
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Accumulated |
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Total |
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Balance, December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net Earnings (Loss) |
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Dividends on Shares of Common Stock ($ |
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(Note 14) |
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( |
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Shares of Common Stock Purchased |
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(Note 14) |
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Shares of Common Stock Issued |
(Notes 9,14,20) |
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Equity-Settled Compensation Costs |
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Other Comprehensive Income (Loss) |
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(Note 15) |
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( |
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Balance, September 30, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
9
Condensed Consolidated Statement of Cash Flows (unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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(US$ millions) |
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2024 |
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2023 |
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2024 |
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2023 |
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Operating Activities |
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Net earnings (loss) |
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$ |
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$ |
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$ |
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$ |
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Depreciation, depletion and amortization |
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Accretion of asset retirement obligation |
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Deferred income taxes |
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(Note 7) |
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Unrealized (gain) loss on risk management |
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(Note 19) |
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Unrealized foreign exchange (gain) loss |
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(Note 6) |
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( |
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( |
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( |
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Foreign exchange (gain) loss on settlements |
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(Note 6) |
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( |
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( |
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Other |
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(Note 21) |
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( |
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( |
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( |
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Net change in other assets and liabilities |
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( |
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( |
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( |
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Net change in non-cash working capital |
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(Note 20) |
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( |
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( |
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Cash From (Used in) Operating Activities |
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Investing Activities |
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Capital expenditures |
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(Note 3) |
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( |
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( |
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( |
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Acquisitions |
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(Note 8) |
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( |
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( |
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( |
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( |
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Corporate acquisition, net of cash acquired |
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(Note 9) |
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Proceeds from divestitures |
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(Note 8) |
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Net change in investments and other |
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(Note 21) |
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Cash From (Used in) Investing Activities |
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( |
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( |
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( |
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( |
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Financing Activities |
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Net issuance (repayment) of revolving debt |
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(Note 12) |
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Issuance of long-term debt |
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(Note 12) |
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Purchase of shares of common stock |
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(Note 14) |
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( |
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( |
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( |
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( |
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Dividends on shares of common stock |
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(Note 14) |
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( |
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( |
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( |
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( |
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Finance lease payments and other |
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( |
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( |
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( |
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( |
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Cash From (Used in) Financing Activities |
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( |
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( |
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( |
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Foreign Exchange Gain (Loss) on Cash, Cash Equivalents |
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and Restricted Cash Held in Foreign Currency |
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( |
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Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash |
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( |
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( |
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Cash, Cash Equivalents and Restricted Cash, Beginning of Period |
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Cash, Cash Equivalents and Restricted Cash, End of Period |
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$ |
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$ |
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$ |
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$ |
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Cash, End of Period |
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$ |
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$ |
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$ |
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$ |
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Cash Equivalents, End of Period |
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Restricted Cash, End of Period |
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(Note 21) |
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Cash, Cash Equivalents and Restricted Cash, End of Period |
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$ |
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$ |
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$ |
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$ |
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Supplementary Cash Flow Information |
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(Note 20) |
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See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
10
1. |
Basis of Presentation and Principles of Consolidation |
Ovintiv is in the business of the exploration for, the development of, and the production and marketing of oil, NGLs and natural gas.
The interim Condensed Consolidated Financial Statements include the accounts of Ovintiv and entities in which it holds a controlling interest. All intercompany balances and transactions are eliminated on consolidation. Undivided interests in oil and natural gas exploration and production joint ventures and partnerships are consolidated on a proportionate basis. Investments in non-controlled entities over which the Company has the ability to exercise significant influence are accounted for using the equity method.
The interim Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP and the rules and regulations of the SEC. Pursuant to these rules and regulations, certain information and disclosures normally required under U.S. GAAP have been condensed or have been disclosed on an annual basis only. Accordingly, the interim Condensed Consolidated Financial Statements should be read in conjunction with the annual audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2023, which are included in Item 8 of Ovintiv’s 2023 Annual Report on Form 10‑K.
The interim Condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the annual audited Consolidated Financial Statements for the year ended December 31, 2023.
These unaudited interim Condensed Consolidated Financial Statements reflect, in the opinion of Management, all normal and recurring adjustments necessary to present fairly the financial position and results of the Company as at and for the periods presented. Interim condensed consolidated financial results are not necessarily indicative of consolidated financial results expected for the fiscal year.
2. |
Recent Accounting Pronouncements |
Changes in Accounting Policies and Practices
On
New Standards Issued Not Yet Adopted
As of January 1, 2025, Ovintiv will be required to adopt ASU 2023-09 “Improvements to Income Tax Disclosures”. The standard requires disaggregated information about the Company’s effective tax rate reconciliation as well as information on income taxes paid. The amendment requires the tabular rate reconciliation to be presented using both percentages and amounts, with additional separate disclosure for any reconciling items within certain categories equal to or greater than five percent of net earnings or loss before income tax and the applicable statutory federal income tax rate. The amendment also requires the disaggregation of income taxes paid by federal, state, and foreign jurisdictions, as well as additional disaggregated information on income taxes paid to an individual jurisdiction equal to or greater than five percent of total income taxes paid. Amendments will be applied prospectively at the date of adoption and are not expected to have a material impact on the Company’s Consolidated Financial Statements.
11
3. |
Segmented Information |
Ovintiv’s reportable segments are determined based on the following operations and geographic locations:
Corporate and Other mainly includes unrealized gains or losses recorded on derivative financial instruments. Once the instruments are settled, the realized gains and losses are recorded in the reporting segment to which the derivative instruments relate. Corporate and Other also includes amounts related to sublease rentals.
12
Results of Operations (For the three months ended September 30)
Segment and Geographic Information
|
|
USA Operations |
|
|
Canadian Operations |
|
|
Market Optimization |
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and service revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Gains (losses) on risk management, net |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sublease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Income (Loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and service revenues |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Gains (losses) on risk management, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Sublease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Revenues |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accretion of asset retirement obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Income (Loss) |
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange (gain) loss, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||
Other (gains) losses, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Total Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net Earnings (Loss) Before Income Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income tax expense (recovery) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
13
Results of Operations (For the nine months ended September 30)
Segment and Geographic Information
|
|
USA Operations |
|
|
Canadian Operations |
|
|
Market Optimization |
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and service revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Gains (losses) on risk management, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Sublease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Income (Loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and service revenues |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Gains (losses) on risk management, net |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Sublease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Revenues |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accretion of asset retirement obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Income (Loss) |
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange (gain) loss, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Other (gains) losses, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Total Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Earnings (Loss) Before Income Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income tax expense (recovery) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
14
Intersegment Information
|
|
|
|
|
|
|
|
Market Optimization |
|
|
|
|
|
|
|
|||||||||
|
|
Marketing Sales |
|
|
Upstream Eliminations |
|
|
Total |
|
|||||||||||||||
For the three months ended September 30, |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
Operating Income (Loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
Market Optimization |
|
|
|
|
|
|
|
|||||||||
|
|
Marketing Sales |
|
|
Upstream Eliminations |
|
|
Total |
|
|||||||||||||||
For the nine months ended September 30, |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
Operating Income (Loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
Capital Expenditures by Segment
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
|
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate & Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Goodwill, Property, Plant and Equipment and Total Assets by Segment
|
|
Goodwill |
|
|
Property, Plant and Equipment |
|
|
Total Assets |
|
|||||||||||||||
|
|
As at |
|
|
As at |
|
|
As at |
|
|||||||||||||||
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
USA Operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Market Optimization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate & Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
15
4. |
Revenues from Contracts with Customers |
The following table summarizes Ovintiv’s revenues from contracts with customers.
Revenues (For the three months ended September 30)
|
|
USA Operations |
|
|
Canadian Operations |
|
|
Market Optimization |
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product revenues (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gathering and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and Service Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product revenues (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gathering and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and Service Revenues |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Revenues (For the nine months ended September 30)
|
|
USA Operations |
|
|
Canadian Operations |
|
|
Market Optimization |
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product revenues (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gathering and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and Service Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product revenues (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gathering and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and Service Revenues |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
16
The Company’s revenues from contracts with customers consists of product sales including oil, NGLs and natural gas, as well as the provision of gathering and processing services to third parties. Ovintiv had
Ovintiv’s product sales are sold under short-term contracts with terms that are less than one year at either fixed or market index prices or under long-term contracts exceeding one year at market index prices.
The Company’s gathering and processing services are provided on an interruptible basis with transaction prices that are for fixed prices and/or variable consideration. Variable consideration received is related to recovery of plant operating costs or escalation of the fixed price based on a consumer price index. As the service contracts are interruptible, with service provided on an “as available” basis, there are
As at September 30, 2024, all remaining performance obligations are priced at market index prices or are variable volume delivery contracts. As such, the variable consideration is allocated entirely to the wholly unsatisfied performance obligation or promise to deliver units of production, and revenue is recognized at the amount for which the Company has the right to invoice the product delivered.
5. |
Interest |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Expense on: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Finance leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
6. |
Foreign Exchange (Gain) Loss, Net |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized Foreign Exchange (Gain) Loss on: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Translation of U.S. dollar risk management contracts issued from Canada |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Translation of intercompany notes |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Foreign Exchange (Gain) Loss on Settlements of: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. dollar financing debt issued from Canada |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
U.S. dollar risk management contracts issued from Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Intercompany notes |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other Monetary Revaluations |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
17
7. |
Income Taxes |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current Tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Current Tax Expense (Recovery) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred Tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Canada |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total Deferred Tax Expense (Recovery) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Income Tax Expense (Recovery) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Effective Tax Rate |
|
|
% |
|
|
( |
%) |
|
|
% |
|
|
% |
Ovintiv’s interim income tax expense is determined using the estimated annual effective income tax rate applied to year-to-date net earnings before income tax plus the effect of legislative changes and amounts in respect of prior periods. The estimated annual effective income tax rate is impacted by expected annual earnings, changes in valuation allowances, income tax related to foreign operations, state taxes, the effect of legislative changes, non-taxable items and tax differences on transactions, which can produce interim effective tax rate fluctuations.
The effective tax rate of
18
8. |
Acquisitions and Divestitures |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Divestitures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Canadian Operations |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total Divestitures |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net Acquisitions & (Divestitures) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
Acquisitions
For the nine months ended September 30, 2024, acquisitions in the USA Operations were $
For the three and nine months ended September 30, 2023, acquisitions in the USA Operations were $
Divestitures
For the nine months ended September 30, 2024, divestitures in the USA Operations were $
For the nine months ended September 30, 2023, divestitures in the USA Operations were $
Amounts received from the Company’s divestiture transactions have been deducted from the respective U.S. and Canadian full cost pools.
9. |
Business Combination |
Acquisition of Midland Basin Assets (“Permian Acquisition”)
On June 12, 2023, Ovintiv completed a business combination to purchase all of the outstanding equity interests in seven Delaware limited liability companies (“Permian LLCs”) pursuant to the purchase agreement with Black Swan Oil & Gas, LLC, PetroLegacy II Holdings, LLC, Piedra Energy III Holdings, LLC and Piedra Energy IV Holdings, LLC, which were portfolio companies of funds managed by EnCap Investments L.P. (“EnCap”). The Company paid aggregate cash consideration of approximately $
The acquisition was strategically located in close proximity to Ovintiv’s current Permian operations and added approximately
19
Purchase Price Allocation
The Permian LLCs were accounted for under the acquisition method and as a single transaction because the purchase agreement was entered into at the same time with EnCap and in contemplation of one another to achieve an overall economic effect. The purchase price allocations represent the consideration paid and the fair values of the assets acquired, and liabilities assumed as of the acquisition date. The purchase price allocation was finalized during the first quarter of 2024.
Purchase Price Allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration: |
|
|
|
|
|
|
|
|
|
Fair value of shares of Ovintiv common stock issued (1) |
|
|
|
|
|
|
$ |
|
|
Consideration paid in cash (2) |
|
|
|
|
|
|
|
|
|
Total Consideration |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Assets Acquired: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
$ |
|
|
Accounts receivable and accrued revenues (3) |
|
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|
|
|
|
|
|
|
Proved properties (3) |
|
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|
|
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|
|
Unproved properties (3) |
|
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|
|
Other property, plant and equipment (3) |
|
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Liabilities Assumed: |
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|
|
Accounts payable and accrued liabilities (3) |
|
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|
|
( |
) |
Asset retirement obligation |
|
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|
|
|
|
|
( |
) |
Other liabilities and provisions (3) |
|
|
|
|
|
|
|
( |
) |
Total Purchase Price |
|
|
|
|
|
|
$ |
|
The Company used the income approach valuation technique for the fair value of assets acquired and liabilities assumed. The carrying amounts of cash, accounts receivable and accounts payable approximate their fair values due to their nature and/or short-term maturity of the instruments. The fair value of tubular inventory in other property, plant and equipment was based on the fair value approach, which utilized subsequent sales of inventory, asset listings and cost records with consideration for the relative age, condition, utilization and economic support of the inventory. The fair values of the proved properties, unproved properties and asset retirement obligation were categorized within Level 3 and were determined using relevant market assumptions, including discount rates, future commodity prices and costs, timing of development activities, projections of oil and gas reserves, and estimates to abandon and reclaim producing wells. Level 3 inputs require significant judgment and estimates to be made.
For income tax purposes, the Permian Acquisition was treated as an asset purchase, and as a result, the tax basis in the assets and liabilities reflect their allocated fair value.
20
10. |
Property, Plant and Equipment, Net |
|
|
As at September 30, 2024 |
|
|
As at December 31, 2023 |
|
||||||||||||||||||
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|
Accumulated |
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Accumulated |
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||||||
|
|
Cost |
|
|
DD&A |
|
|
Net |
|
|
Cost |
|
|
DD&A |
|
|
Net |
|
||||||
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||||||
USA Operations |
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||||||
Proved properties |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Unproved properties |
|
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||||||
Other |
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||||||
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( |
) |
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( |
) |
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||||
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||||||
Canadian Operations |
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||||||
Proved properties |
|
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|
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( |
) |
|
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|
|
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|
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( |
) |
|
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|
||||
Unproved properties |
|
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||||||
Other |
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|
||||||
|
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( |
) |
|
|
|
|
|
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( |
) |
|
|
|
||||
|
|
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|
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|
||||||
Market Optimization |
|
|
|
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|
( |
) |
|
|
|
|
|
|
|
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( |
) |
|
|
|
||||
Corporate & Other |
|
|
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|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration, development and construction activities of $
11. |
Leases |
The following table outlines Ovintiv’s estimated future sublease income as at September 30, 2024. All subleases are classified as operating leases.
(undiscounted) |
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Sublease Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
For the three and nine months ended September 30, 2024, operating lease income was $
21
12. |
Long-Term Debt |
|
|
|
|
As at |
|
|
As at |
|
||
|
|
|
|
September 30, |
|
|
December 31, |
|
||
|
|
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
|
|
||
U.S. Dollar Denominated Debt |
|
|
|
|
|
|
|
|
||
Revolving credit and term loan borrowings |
|
|
|
$ |
|
|
$ |
|
||
U.S. Unsecured Notes: |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
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|
|||
|
|
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|||
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|||
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|||
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|||
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|||
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|||
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|||
|
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|||
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|
|||
|
|
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|
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|
|||
|
|
|
|
|
|
|
|
|||
Total Principal |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Increase in Value of Debt Acquired |
|
|
|
|
|
|
|
|
||
Unamortized Debt Discounts and Issuance Costs |
|
|
|
|
( |
) |
|
|
( |
) |
Total Long-Term Debt |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Current Portion |
|
|
|
$ |
|
|
$ |
|
||
Long-Term Portion |
|
|
|
|
|
|
|
|
||
|
|
|
|
$ |
|
|
$ |
|
On May 31, 2023, Ovintiv completed a public offering of senior unsecured notes of $
As at September 30, 2024, the Company had outstanding commercial paper of $
As at September 30, 2024, total long-term debt had a carrying value of $
13. |
Other Liabilities and Provisions |
|
|
As at |
|
|
As at |
|
||
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Finance Lease Obligations |
|
$ |
|
|
$ |
|
||
Unrecognized Tax Benefits |
|
|
|
|
|
|
||
Pensions and Other Post-Employment Benefits |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
22
14. |
Share Capital |
Authorized
Ovintiv is authorized to issue
Issued and Outstanding
|
|
As at |
|
|
As at |
|
||||||||||
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Number |
|
|
|
|
|
Number |
|
|
|
|
||||
|
|
(millions) |
|
|
Amount |
|
|
(millions) |
|
|
Amount |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares of Common Stock Outstanding, Beginning of Year |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Shares of Common Stock Purchased |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Shares of Common Stock Issued |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares of Common Stock Outstanding, End of Period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
On June 12, 2023, in accordance with the terms of the Permian Acquisition agreement, Ovintiv issued approximately
Ovintiv’s Performance Share Units (“PSU”) and Restricted Share Units (“RSU”) stock-based compensation plans allow the Company to settle the awards either in cash or in the Company’s common stock. Accordingly, Ovintiv issued
Normal Course Issuer Bid and Other Share Buybacks
On September 26, 2024, 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
During the three and nine months ended September 30, 2024, the Company purchased approximately
During the three and nine months ended September 30, 2023, the Company purchased one million shares and approximately
For the twelve months ended December 31, 2023, the Company purchased approximately
All NCIB purchases were made in accordance with their respective programs at prevailing market prices plus brokerage fees, with consideration allocated to share capital up to the par value of the shares, with any excess allocated to paid in surplus.
23
Dividends
During the three months ended September 30, 2024, the Company declared and paid dividends of $
During the nine months ended September 30, 2024, the Company declared and paid dividends of $
On
Earnings Per Share of Common Stock
The following table presents the calculation of net earnings (loss) per share of common stock:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
(US$ millions, except per share amounts) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Earnings (Loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Number of Shares of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares of common stock outstanding - Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted Average Shares of Common Stock Outstanding - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Earnings (Loss) per Share of Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based Compensation Plans
Shares issued as a result of awards granted from stock-based compensation plans are funded out of the common stock authorized for issuance as approved by the Company’s shareholders. As at September 30, 2024, there were no changes to Ovintiv’s compensation plans and the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans.
15. |
Accumulated Other Comprehensive Income |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign Currency Translation Adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Change in Foreign Currency Translation Adjustment |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Balance, End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension and Other Post-Employment Benefit Plans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amounts Reclassified from Other Comprehensive Income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reclassification of net actuarial (gains) and losses to net earnings |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total Accumulated Other Comprehensive Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
24
16. |
Variable Interest Entities |
Veresen Midstream Limited Partnership
Veresen Midstream Limited Partnership (“VMLP”) provides gathering, compression and processing services under various agreements related to the Company’s development of liquids and natural gas production in the Montney play. As at September 30, 2024, VMLP provides approximately
Ovintiv has determined that VMLP is a variable interest entity and that Ovintiv holds variable interests in VMLP. Ovintiv is not the primary beneficiary as the Company does not have the power to direct the activities that most significantly impact VMLP’s economic performance. These key activities relate to the construction, operation, maintenance and marketing of the assets owned by VMLP. The variable interests arise from certain terms under the various long-term service agreements and include: i) a take or pay for volumes in certain agreements; ii) an operating fee of which a portion can be converted into a fixed fee once VMLP assumes operatorship of certain assets; and iii) a potential payout of minimum costs in certain agreements. The potential payout of minimum costs will be assessed in the of the assets’ service period and is based on whether there is an overall shortfall of total system cash flows from natural gas gathered and compressed under certain agreements. The potential payout amount can be reduced in the event VMLP markets unutilized capacity to third-party users. Ovintiv is not required to provide any financial support or guarantees to VMLP.
As a result of Ovintiv’s involvement with VMLP, the maximum total exposure to loss related to the commitments under the agreements is estimated to be $
25
17. |
Compensation Plans |
As at September 30, 2024, there were no changes to Ovintiv’s compensation plans and the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans.
The Company has recognized the following share-based compensation costs:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Compensation Costs of Transactions Classified as Cash-Settled |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Total Compensation Costs of Transactions Classified as Equity-Settled |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Total Share-Based Compensation Costs Capitalized |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total Share-Based Compensation Expense (Recovery) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recognized in the Condensed Consolidated Statement of Earnings in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
As at September 30, 2024, the liability for cash-settled share-based payment transactions totaled $
The following weighted average assumptions were used to determine the fair value of SAR and TSAR units outstanding:
|
|
As at September 30, 2024 |
|
|
As at September 30, 2023 |
|
||||
|
|
US$ SAR |
|
C$ TSAR |
|
|
US$ SAR |
|
C$ TSAR |
|
|
|
Share Units |
|
Share Units |
|
|
Share Units |
|
Share Units |
|
|
|
|
|
|
|
|
|
|
|
|
Risk Free Interest Rate |
|
|
|
|
|
|
||||
Dividend Yield |
|
|
|
|
|
|
||||
Expected Volatility Rate (1) |
|
|
|
|
|
|
||||
Expected Term |
|
|
|
|
|
|
||||
Market Share Price |
|
US$ |
|
C$ |
|
|
US$ |
|
C$ |
|
Weighted Average Grant Date Fair Value |
|
US$ |
|
C$ |
|
|
US$ |
|
C$ |
|
The following units were granted primarily in conjunction with the Company’s annual grant of long-term incentive awards. The PSUs and RSUs were granted at the volume-weighted average trading price of shares of Ovintiv common stock for the five days prior to the grant date.
Nine Months Ended September 30, 2024 (thousands of units) |
|
|
|
|
|
|
|
|
|
RSUs |
|
|
|
|
PSUs |
|
|
|
|
DSUs |
|
|
|
26
18. |
Fair Value Measurements |
The fair values of cash and cash equivalents, accounts receivable and accrued revenues, and accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of those instruments. The fair values of restricted cash and marketable securities included in other assets approximate their carrying amounts due to the nature of the instruments held.
Recurring fair value measurements are performed for risk management assets and liabilities and other derivative contracts, as discussed further in Note 19. These items are carried at fair value in the Condensed Consolidated Balance Sheet and are classified within the three levels of the fair value hierarchy in the following tables.
Fair value changes and settlements for amounts related to risk management assets and liabilities are recognized in revenues and foreign exchange gains and losses according to their purpose.
As at September 30, 2024 |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
|
Total Fair |
|
|
Netting (1) |
|
|
Carrying |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk Management Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
Foreign Currency Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
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||||||
Risk Management Liabilities |
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||||||
Commodity Derivatives: |
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||||||
|
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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|||||||
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( |
) |
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||||||
As at December 31, 2023 |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
|
Total Fair |
|
|
Netting (1) |
|
|
Carrying |
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|||||||
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||||||
Risk Management Assets |
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||||||
Commodity Derivatives: |
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||||||
|
$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
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||||||
|
|
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( |
) |
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||||||
Foreign Currency Derivatives: |
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||||||
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||||||
Risk Management Liabilities |
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||||||
Commodity Derivatives: |
|
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||||||
|
$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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||||||
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( |
) |
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||||||
Other Derivative Contracts (2) |
|
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||||||
Current in accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
27
The Company’s Level 1 and Level 2 risk management assets and liabilities consist of commodity fixed price contracts, NYMEX three-way options, NYMEX costless collars, WTI three-way options, foreign currency swaps and basis swaps with terms to 2025. The Company uses discounted cash flow and option-pricing models for fair valuing commodity derivatives. The fair value models use inputs such as contracted notional volumes, market future prices, maturities, credit adjusted risk free rates, and market-based implied volatility factors. The fair values of these contracts are estimated using inputs which are either directly or indirectly observable from active markets, such as exchange and other published prices, broker quotes and observable trading activity throughout the term of the instruments.
During the three months ended September 30, 2024, the Company transferred all remaining WTI three-way options from Level 3 into Level 2 as a result of the availability of more observable inputs, such as volatility and comparable contract terms, from independent active markets.
The three-way options are a combination of a sold call, a bought put and a sold put. These contracts allow the Company to participate in the upside of commodity prices to the ceiling of the call option and provide the Company with partial (three-way) downside price protection through the put options.
Level 3 Fair Value Measurements
A summary of changes in Level 3 fair value measurements for risk management positions is presented below:
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
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|
||
Balance, Beginning of Year |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
( |
) |
||
Purchases, Sales, Issuances and Settlements: |
|
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|
||
Purchases, sales and issuances |
|
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|
||
Settlements |
|
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||
Transfers Out of Level 3 (1) |
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( |
) |
|
|
|
|
Balance, End of Period |
|
$ |
|
|
$ |
( |
) |
|
Change in Unrealized Gains (Losses) During the |
|
|
|
|
|
|
||
Period Included in Net Earnings (Loss) |
|
$ |
|
|
$ |
( |
) |
28
19. |
Financial Instruments and Risk Management |
A) Financial Instruments
Ovintiv’s financial assets and liabilities are recognized in cash and cash equivalents, accounts receivable and accrued revenues, other assets, accounts payable and accrued liabilities, risk management assets and liabilities, long-term debt, and other liabilities and provisions.
B) Risk Management Activities
Ovintiv uses derivative financial instruments to manage its exposure to fluctuating commodity prices and foreign currency exchange rates. The Company does not apply hedge accounting to any of its derivative financial instruments. As a result, gains and losses from changes in the fair value are recognized in net earnings (loss).
Commodity Price Risk
Commodity price risk arises from the effect that fluctuations in future commodity prices may have on revenues from production. To partially mitigate exposure to commodity price risk, the Company has entered into various derivative financial instruments. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors.
Oil and NGLs - To partially mitigate oil and NGL commodity price risk, the Company uses WTI- and NGL-based contracts such as fixed price contracts and options. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas, products and price points.
Natural Gas - To partially mitigate natural gas commodity price risk, the Company uses NYMEX-based contracts such as fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas and benchmark price points.
Foreign Exchange Risk
Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at September 30, 2024, the Company has entered into $
29
Risk Management Positions as at September 30, 2024
|
|
Notional Volumes |
|
Term |
|
Average Price |
|
Fair Value |
|
|
|
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|
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|
|
Oil and NGL Contracts |
|
|
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|
|
US$/bbl |
|
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|
|
Fixed Price Contracts |
|
|
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|
|
Ethane Fixed Price |
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
WTI Three-Way Options |
|
|
|
|
|
|
|
|
|
|
Sold call / bought put / sold put |
|
|
|
|
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|
||||
Sold call / bought put / sold put |
|
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|
||||
|
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|
|
Basis Contracts (1) |
|
|
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|
|
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( |
) |
|
Oil and NGLs Fair Value Position |
|
|
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|
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Natural Gas Contracts |
|
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|
|
US$/Mcf |
|
|
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|
|
|
Fixed Price Contracts |
|
|
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|
|
NYMEX Fixed Price |
|
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|
||||
|
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|
NYMEX Three-Way Options |
|
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|
|
Sold call / bought put / sold put |
|
|
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|
||||
Sold call / bought put / sold put |
|
|
|
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|
||||
|
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|
|
NYMEX Costless Collars |
|
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|
Sold call / bought put |
|
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|
||||
|
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|
|
Basis Contracts (2) |
|
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||
|
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|
||
|
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|
Natural Gas Fair Value Position |
|
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|
|
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|
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|
|
Foreign Currency Contracts |
|
|
|
|
|
|
|
|
|
|
Fair Value Position (3) |
|
|
|
- |
|
|
|
|
|
|
Total Fair Value Position |
|
|
|
|
|
|
|
$ |
|
30
Earnings Impact of Realized and Unrealized Gains (Losses) on Risk Management Positions
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity and Other Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Foreign Currency Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Interest Rate Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity and Other Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (3) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Foreign Currency Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Realized and Unrealized , net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity and Other Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (1) (3) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Interest Rate Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
Reconciliation of Unrealized Risk Management Positions from January 1 to September 30
|
|
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
Fair Value |
|
|
Total |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Fair Value of Contracts, Beginning of Year |
|
|
|
$ |
|
|
|
|
|
|
|
|||
Change in Fair Value of Contracts in Place at Beginning of Year |
|
|
|
|
|
|
|
|
|
|
|
|||
and Contracts Entered into During the Period |
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
||
Settlement of Other Derivative Contracts |
|
|
|
|
|
|
|
|
|
|
|
|||
Fair Value of Contracts Realized During the Period |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Fair Value of Contracts, End of Period |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 18 for a discussion of fair value measurements.
31
Unrealized Risk Management Positions
|
|
As at |
|
|
As at |
|
||
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Risk Management Assets |
|
|
|
|
|
|
||
Current |
|
$ |
|
|
$ |
|
||
Long-term |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Risk Management Liabilities |
|
|
|
|
|
|
||
Current |
|
|
|
|
|
|
||
Long-term |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Other Derivative Contract Liabilities |
|
|
|
|
|
|
||
Current in accounts payable and accrued liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net Risk Management Assets (Liabilities) and Other Derivative Contracts |
|
$ |
|
|
$ |
|
C) Credit Risk
Credit risk arises from the potential that the Company may incur a loss if a counterparty to a financial instrument fails to meet its obligation in accordance with agreed terms. While exchange-traded contracts are subject to nominal credit risk due to the financial safeguards established by the exchanges and clearing agencies, over-the-counter traded contracts expose Ovintiv to counterparty credit risk. Counterparties to the Company’s derivative financial instruments consist primarily of major financial institutions and companies within the energy industry. This credit risk exposure is mitigated through the use of credit policies approved by the Board of Directors governing the Company’s credit portfolio including credit practices that limit transactions according to counterparties’ credit quality. Mitigation strategies may include master netting arrangements, requesting collateral, purchasing credit insurance and/or transacting credit derivatives. The Company executes commodity derivative financial instruments under master agreements that have netting provisions that provide for offsetting payables against receivables. Ovintiv actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. As at September 30, 2024, Ovintiv’s maximum exposure of loss due to credit risk from derivative financial instrument assets on a gross and net fair value basis was $
Any cash equivalents include high-grade, short-term securities, placed primarily with financial institutions with investment grade ratings. Any foreign currency agreements entered into are with major financial institutions that have investment grade credit ratings.
A substantial portion of the Company’s accounts receivable are with customers and working interest owners in the oil and gas industry and are subject to normal industry credit risks. As at September 30, 2024, approximately
During 2015 and 2017, the Company entered into agreements resulting from divestitures, which required Ovintiv to fulfill certain payment obligations on the take or pay volume commitments assumed by the purchasers. The circumstances that would require Ovintiv to perform under the agreements included events where a purchaser failed to make payment to the guaranteed party and/or a purchaser was subject to an insolvency event. The agreements had a fair value of $
32
20. |
Supplementary Information |
Supplemental disclosures to the Condensed Consolidated Statement of Cash Flows are presented below:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable and accrued revenues |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Current portion of operating lease liabilities |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Income tax receivable and payable |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-Cash Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ROU operating lease assets and liabilities |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-Cash Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property, plant and equipment accruals |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Capitalized long-term incentives |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Property additions/dispositions, including swaps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-Cash Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common shares issued in conjunction with the Permian |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition (See Note 9) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
21. |
Commitments and Contingencies |
Commitments
The following table outlines the Company’s commitments as at September 30, 2024:
|
|
Expected Future Payments |
|
|||||||||||||||||||||||||
(undiscounted) |
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Transportation and Processing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Drilling and Field Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Building Leases & Other Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Operating leases with terms greater than one year are not included in the commitments table above. The table above includes short-term leases with contract terms less than 12 months, such as drilling rigs and field office leases, as well as non-lease operating cost components associated with building leases.
Included within transportation and processing in the table above are certain commitments associated with midstream service agreements with VMLP as described in Note 16. Divestiture transactions can reduce certain commitments disclosed above.
33
Contingencies
Ovintiv is involved in various legal claims and actions arising in the normal course of the Company’s operations. Although the outcome of these claims cannot be predicted with certainty, the Company does not expect these matters to have a material adverse effect on Ovintiv’s financial position, cash flows or results of operations. Management’s assessment of these matters may change in the future as these matters are subject to a number of uncertainties. For any material matters that the Company believes an unfavorable outcome is reasonably possible, the Company discloses the nature and a range of potential exposures, if reasonably estimable. If an unfavorable outcome were to occur, there exists the possibility of a material impact on the Company’s consolidated net earnings or loss for the period in which the effect becomes reasonably estimable. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. Such accruals are based on the Company’s information known about the matters, estimates of the outcomes of such matters and experience in handling similar matters.
During the second quarter of 2024, Ovintiv resolved a dispute related to the previous disposition of certain legacy assets for approximately $
34
Item 2. 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 condensed consolidated results for the three and nine months ended September 30, 2024, and period-over-period comparison. This MD&A should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and accompanying notes for the period ended September 30, 2024 (“Consolidated Financial Statements”), which are included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and accompanying notes and MD&A for the year ended December 31, 2023, which are included in Items 8 and 7, respectively, of the 2023 Annual Report on Form 10‑K.
Common industry terms and abbreviations are used throughout this MD&A and are defined in the Definitions, Conversions and Conventions sections of this Quarterly Report on Form 10-Q. This MD&A includes the following sections:
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. Ovintiv is committed to delivering quality returns from its capital investment, generating significant cash flows and providing durable cash returns to its shareholders through the commodity price cycle. The Company aims to achieve its strategic priorities through execution excellence, disciplined capital allocation, and commercial acumen and risk management. In addition, the Company is dedicated to driving progress in areas of environmental, social, and governance, aligning with its commitment to corporate responsibility.
In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its capital allocation framework to provide competitive returns to shareholders while strengthening its balance sheet.
Ovintiv continually monitors and evaluates changing market conditions to maximize cash flows, mitigate risks and renew its premium well inventory. The Company’s assets, located in some of the most prolific plays in North America, form a multi-basin, multi-product portfolio which enables flexible and efficient investment of capital that supports the Company’s strategy.
Ovintiv seeks to deliver results in a socially and environmentally responsible manner. Best practices are deployed across its assets, allowing the Company to capitalize on operational efficiencies and decrease emissions intensity. The Company’s sustainability reporting, which outlines its key metrics, targets and relative progress achieved, can be found in the Company Outlook section of this MD&A and on the Company’s sustainability website.
Underpinning Ovintiv’s strategy are core values of one, agile, innovative and driven, which guide the organization to be collaborative, responsive, flexible and determined. The Company is committed to excellence with a passion to drive corporate financial performance and shareholder value.
For additional information on Ovintiv’s strategy, its reporting segments and the plays in which the Company operates, refer to Items 1 and 2 of the 2023 Annual Report on Form 10-K.
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. GAAP. These measures may not be similar to measures presented by other issuers and should not be viewed as a substitute for measures reported under U.S. GAAP. Additional information regarding these measures, including reconciliations to the closest GAAP measure, can be found in the Non-GAAP Measures section of this MD&A.
35
Highlights
During the first nine months of 2024, the Company focused on executing its 2024 capital investment plan aimed at maximizing profitability through operational and capital efficiencies, and delivering cash from operating activities. Lower upstream product revenues in the first nine months of 2024 compared to 2023, primarily resulted from lower average realized natural gas prices, excluding the impact of risk management activities, partially offset by higher total production volumes. Decreases in average realized natural gas prices of 44 percent were primarily due to lower benchmark prices. Total production volumes increased six percent compared to the first nine months of 2023 primarily due to the addition of the Permian assets acquired in the second quarter of 2023. Ovintiv continues to focus on optimizing realized prices from the diversification of the Company’s downstream markets.
Significant Development
Financial Results
Three months ended September 30, 2024
Nine months ended September 30, 2024
Capital Investment
During the nine months ended September 30, 2024
36
Production
During the nine months ended September 30, 2024
Operating Expenses
During the nine months ended September 30, 2024
The Company’s upstream operations refers to the summation of the USA and Canadian operating segments. Additional information on the items above and other expenses can be found in the Results of Operations section of this MD&A.
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.
Oil prices for the remainder of 2024 are expected to be impacted by the interplay between the pace of global economic growth and demand for oil, OPEC+ production levels and continued supply uncertainties resulting from geopolitical events. Recessionary concerns continue to have an impact on global demand outlooks as central banks evaluate and recalibrate their strategies in response to the prevailing economic environment. Supply and the accumulation of global oil inventories are expected to be impacted by changes in OPEC+ production levels, consumer demand behavior and geopolitical volatility.
Natural Gas Markets
Natural gas prices are primarily impacted by structural changes in supply and demand, deviations from seasonally normal weather, as well as volatility in regional markets.
Natural gas benchmark prices for the remainder of 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.
37
Company Outlook
The Company will continue to exercise discretion and discipline, and intends to optimize capital allocation through the remainder of 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. To mitigate price volatility and provide more certainty around cash flows, the Company enters into derivative financial instruments. As at September 30, 2024, the Company has hedged approximately 50.0 Mbbls/d of expected oil production and 800 MMcf/d of expected natural gas production for the remainder of the year. 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.
Additional information on Ovintiv’s hedging program can be found in Note 19 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Capital Investment
The Company continues to execute its 2024 capital investment program, focusing on maximizing returns from high-margin oil and condensate, and generating cash flows in excess of capital expenditures.
During the third quarter of 2024, the Company invested $538 million, near the lower end of its third quarter guidance of $530 million to $570 million. In November, the Company narrowed its full year 2024 capital investment guidance range to $2,275 million to $2,325 million.
Ovintiv continually strives to improve well performance and lower costs through innovative techniques. Ovintiv’s large-scale cube development model utilizes multi-well pads and advanced completion designs to maximize returns and resource recovery from its reservoirs. The Company continues to enhance its multi-frac technology by shifting, where possible, from simultaneously fracing two wells (“Simulfrac”) to fracing three wells (“Trimulfrac”) at the same time. Ovintiv’s disciplined capital program and continuous innovation create flexibility to allocate capital in changing commodity markets to maximize cash flows while preserving the long-term value of the Company’s multi-basin portfolio.
Production
During the third quarter of 2024, total average production volumes were 592.6 MBOE/d, which exceeded the third quarter guidance range of 565.0 MBOE/d to 580.0 MBOE/d, primarily due to the impact of lower than expected royalty rates in the Canadian Operations resulting from lower natural gas benchmark prices. Average oil and plant condensate production volumes were 212.4 Mbbls/d, average other NGL production volumes were 92.6 Mbbls/d and average natural gas production volumes were 1,725 MMcf/d, which exceeded third quarter guidance ranges of 204.0 Mbbls/d to 208.0 Mbbls/d, 88.0 Mbbls/d to 92.0 Mbbls/d and 1,640 MMcf/d to 1,690 MMcf/d, respectively.
In November, the Company further updated its full year 2024 total production guidance range to 583.0 MBOE/d to 587.0 MBOE/d, including oil and plant condensate production volumes of approximately 209.0 Mbbls/d to 211.0 Mbbls/d, other NGLs production volumes of approximately 91.0 Mbbls/d to 92.0 Mbbls/d and natural gas production volumes of approximately 1,700 MMcf/d to 1,715 MMcf/d.
Operating Expenses
Ovintiv promotes a collaborative culture that values knowledge exchange, open communication, continuous improvement and learning. This culture stimulates innovation and fosters the creation of best practices resulting in efficiency improvements and enhanced operational performance for the Company.
The Company is on track to achieve its full year upstream transportation and processing cost guidance range of approximately $7.50 per BOE to $8.00 per BOE, based on commodity price assumptions of $75.00 per barrel for WTI oil and $2.50 per MMBtu for NYMEX natural gas. Upstream transportation and processing costs of $7.31 per BOE during the three months ended September 30, 2024, was lower than guidance, primarily due to lower than expected natural gas commodity prices.
38
The Company is also on track to meet the full year guidance range for 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 product revenues. The Company’s upstream operations refers to the summation of the USA and Canadian operating segments.
Additional information on Ovintiv’s fourth quarter and updated full year 2024 Corporate Guidance can be accessed on the Company’s website at www.ovintiv.com.
Environmental, Social and Governance
Ovintiv recognizes climate change as a global concern and the importance of reducing its environmental footprint as part of the solution. The Company voluntarily participates in emission reduction programs and has adopted a range of strategies to help reduce emissions from its operations. These strategies include incorporating new and proven technologies, optimizing processes in its operations and working closely with third-party providers to develop best practices. The Company continues to look for innovative techniques and efficiencies in support of its commitment to emission reductions.
In May 2024, Ovintiv published its 2023 Sustainability Report. The report highlights the Company’s 2023 environmental, social and governance results, and its progress in emissions intensity reductions with the goal to meet its Scope 1&2 GHG emissions target by 2030. As at the end of 2023, the Company had achieved a greater than 40 percent reduction in the Scope 1&2 GHG emissions intensity from 2019 levels and is on track to meet its emissions intensity reduction target of 50 percent by 2030 measured against the 2019 baseline. The GHG emissions reduction target is tied to the annual compensation program for all employees.
During the second quarter of 2023, the Company acquired assets in Permian which increased both oil production volumes and net premium well inventory. Ovintiv is undergoing an integration period to align the emissions profile of the acquired inventory with the World Bank Zero Routine Flaring initiative. Ovintiv remains committed to its emissions reduction targets.
Ovintiv is committed to diversity, equity and inclusion. The Company’s social commitment framework, which is rooted in the Company’s foundational values of integrity, safety, sustainability, trust and respect, reflects Ovintiv’s positive contributions to the communities where it operates and highlights the Company’s approach to enabling an inclusive culture that embraces diversity of thought, background and experience.
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. Safety performance goals are incorporated into the Company’s annual compensation program. Additional information on talent management and employee safety can be found in the Human Capital section of Items 1 and 2 of the 2023 Annual Report on Form 10-K.
Additional information on Ovintiv’s sustainable business practices are included in its most recent Sustainability Report on the Company’s sustainability website at https://sustainability.ovintiv.com.
39
Results of Operations |
Selected Financial Information
|
Three months ended September 30, |
|
|
|
Nine months ended September 30, |
|
||||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product and Service Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Upstream product revenues |
|
$ |
1,767 |
|
|
$ |
2,049 |
|
|
|
|
$ |
5,538 |
|
|
$ |
5,570 |
|
Market optimization |
|
|
408 |
|
|
|
863 |
|
|
|
|
|
1,214 |
|
|
|
2,282 |
|
Service revenues (1) |
|
|
3 |
|
|
|
1 |
|
|
|
|
|
6 |
|
|
|
5 |
|
Total Product and Service Revenues |
|
|
2,178 |
|
|
|
2,913 |
|
|
|
|
|
6,758 |
|
|
|
7,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gains (Losses) on Risk Management, Net |
|
|
128 |
|
|
|
(282 |
) |
|
|
|
|
151 |
|
|
|
(193 |
) |
Sublease Revenues |
|
|
18 |
|
|
|
18 |
|
|
|
|
|
55 |
|
|
|
53 |
|
Total Revenues |
|
|
2,324 |
|
|
|
2,649 |
|
|
|
|
|
6,964 |
|
|
|
7,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Operating Expenses (2) |
|
|
1,797 |
|
|
|
2,182 |
|
|
|
|
|
5,387 |
|
|
|
6,041 |
|
Operating Income (Loss) |
|
|
527 |
|
|
|
467 |
|
|
|
|
|
1,577 |
|
|
|
1,676 |
|
Total Other (Income) Expenses |
|
|
(31 |
) |
|
|
74 |
|
|
|
|
|
125 |
|
|
|
233 |
|
Net Earnings (Loss) Before Income Tax |
|
|
558 |
|
|
|
393 |
|
|
|
|
|
1,452 |
|
|
|
1,443 |
|
Income Tax Expense (Recovery) |
|
|
51 |
|
|
|
(13 |
) |
|
|
|
|
267 |
|
|
|
214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Earnings (Loss) |
|
$ |
507 |
|
|
$ |
406 |
|
|
|
|
$ |
1,185 |
|
|
$ |
1,229 |
|
Revenues
Ovintiv’s revenues are substantially derived from sales of oil, NGLs and natural gas production. Increases or decreases in Ovintiv’s revenue, profitability and future production are highly dependent on the commodity prices the Company receives. Prices are market driven and fluctuate due to factors beyond the Company’s control, such as supply and demand, seasonality and geopolitical and economic factors. The Company’s realized prices generally reflect WTI, NYMEX, Edmonton Condensate and AECO benchmark prices, as well as other downstream benchmarks, including Houston and Dawn. The Company proactively mitigates price risk and optimizes margins by entering into firm transportation contracts to diversify market access to different sales points. Realized prices, excluding the impact of risk management activities, may differ from the benchmarks for many reasons, including quality, location, or production being sold at different market hubs.
Benchmark prices relevant to the Company are shown in the table below.
Benchmark Prices
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
(average for the period) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil & NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
WTI ($/bbl) |
|
$ |
75.09 |
|
|
$ |
82.26 |
|
|
|
|
$ |
77.54 |
|
|
$ |
77.39 |
|
Houston ($/bbl) |
|
|
76.29 |
|
|
|
83.81 |
|
|
|
|
|
79.11 |
|
|
|
78.78 |
|
Edmonton Condensate (C$/bbl) |
|
|
97.41 |
|
|
|
104.74 |
|
|
|
|
|
100.68 |
|
|
|
103.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Natural Gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NYMEX ($/MMBtu) |
|
$ |
2.16 |
|
|
$ |
2.55 |
|
|
|
|
$ |
2.10 |
|
|
$ |
2.69 |
|
AECO (C$/Mcf) |
|
|
0.81 |
|
|
|
2.39 |
|
|
|
|
|
1.43 |
|
|
|
3.03 |
|
Dawn (C$/MMBtu) |
|
|
2.32 |
|
|
|
3.04 |
|
|
|
|
|
2.67 |
|
|
|
3.16 |
|
40
Production Volumes and Realized Prices
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||||||||||||||||||||
|
Production Volumes (1) |
|
|
|
Realized Prices (2) |
|
|
Production Volumes (1) |
|
|
|
Realized Prices (2) |
|
||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Oil (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
168.0 |
|
|
|
170.8 |
|
|
|
$ |
73.23 |
|
|
$ |
80.69 |
|
|
|
168.3 |
|
|
|
147.0 |
|
|
|
$ |
75.86 |
|
|
$ |
76.26 |
|
Canadian Operations |
|
0.4 |
|
|
|
0.1 |
|
|
|
|
71.07 |
|
|
|
100.64 |
|
|
|
0.4 |
|
|
|
0.1 |
|
|
|
|
72.90 |
|
|
|
85.74 |
|
Total |
|
168.4 |
|
|
|
170.9 |
|
|
|
|
73.23 |
|
|
|
80.70 |
|
|
|
168.7 |
|
|
|
147.1 |
|
|
|
|
75.85 |
|
|
|
76.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
NGLs - Plant Condensate (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
11.7 |
|
|
|
11.2 |
|
|
|
|
56.73 |
|
|
|
59.96 |
|
|
|
11.1 |
|
|
|
10.8 |
|
|
|
|
58.01 |
|
|
|
58.98 |
|
Canadian Operations |
|
32.3 |
|
|
|
32.1 |
|
|
|
|
71.13 |
|
|
|
75.67 |
|
|
|
31.9 |
|
|
|
31.1 |
|
|
|
|
72.88 |
|
|
|
74.48 |
|
Total |
|
44.0 |
|
|
|
43.3 |
|
|
|
|
67.30 |
|
|
|
71.61 |
|
|
|
43.0 |
|
|
|
41.9 |
|
|
|
|
69.05 |
|
|
|
70.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
NGLs - Other (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
77.7 |
|
|
|
71.8 |
|
|
|
|
16.44 |
|
|
|
16.91 |
|
|
|
76.0 |
|
|
|
74.5 |
|
|
|
|
17.52 |
|
|
|
16.29 |
|
Canadian Operations |
|
14.9 |
|
|
|
14.9 |
|
|
|
|
26.97 |
|
|
|
25.50 |
|
|
|
15.0 |
|
|
|
15.4 |
|
|
|
|
27.35 |
|
|
|
25.30 |
|
Total |
|
92.6 |
|
|
|
86.7 |
|
|
|
|
18.13 |
|
|
|
18.39 |
|
|
|
91.0 |
|
|
|
89.9 |
|
|
|
|
19.14 |
|
|
|
17.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Oil & NGLs (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
257.4 |
|
|
|
253.8 |
|
|
|
|
55.35 |
|
|
|
61.73 |
|
|
|
255.4 |
|
|
|
232.3 |
|
|
|
|
57.72 |
|
|
|
56.21 |
|
Canadian Operations |
|
47.6 |
|
|
|
47.1 |
|
|
|
|
57.34 |
|
|
|
59.84 |
|
|
|
47.3 |
|
|
|
46.6 |
|
|
|
|
58.46 |
|
|
|
58.25 |
|
Total |
|
305.0 |
|
|
|
300.9 |
|
|
|
|
55.66 |
|
|
|
61.43 |
|
|
|
302.7 |
|
|
|
278.9 |
|
|
|
|
57.84 |
|
|
|
56.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Natural Gas (MMcf/d, $/Mcf) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
543 |
|
|
|
508 |
|
|
|
|
1.29 |
|
|
|
2.22 |
|
|
|
533 |
|
|
|
515 |
|
|
|
|
1.49 |
|
|
|
2.46 |
|
Canadian Operations |
|
1,182 |
|
|
|
1,117 |
|
|
|
|
1.29 |
|
|
|
2.38 |
|
|
|
1,171 |
|
|
|
1,126 |
|
|
|
|
1.63 |
|
|
|
2.99 |
|
Total |
|
1,725 |
|
|
|
1,625 |
|
|
|
|
1.29 |
|
|
|
2.33 |
|
|
|
1,704 |
|
|
|
1,641 |
|
|
|
|
1.59 |
|
|
|
2.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Production (MBOE/d, $/BOE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
348.0 |
|
|
|
338.5 |
|
|
|
|
42.97 |
|
|
|
49.62 |
|
|
|
344.3 |
|
|
|
318.1 |
|
|
|
|
45.12 |
|
|
|
45.02 |
|
Canadian Operations |
|
244.6 |
|
|
|
233.3 |
|
|
|
|
17.39 |
|
|
|
23.46 |
|
|
|
242.4 |
|
|
|
234.2 |
|
|
|
|
19.29 |
|
|
|
25.95 |
|
Total |
|
592.6 |
|
|
|
571.8 |
|
|
|
|
32.41 |
|
|
|
38.95 |
|
|
|
586.7 |
|
|
|
552.3 |
|
|
|
|
34.45 |
|
|
|
36.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Production Mix (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Oil & Plant Condensate |
|
36 |
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
36 |
|
|
|
34 |
|
|
|
|
|
|
|
|
||||
NGLs - Other |
|
15 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
16 |
|
|
|
16 |
|
|
|
|
|
|
|
|
||||
Total Oil & NGLs |
|
51 |
|
|
|
53 |
|
|
|
|
|
|
|
|
|
|
52 |
|
|
|
50 |
|
|
|
|
|
|
|
|
||||
Natural Gas |
|
49 |
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
48 |
|
|
|
50 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Production Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Period Over Period (%) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Oil & NGLs |
|
1 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
9 |
|
|
|
7 |
|
|
|
|
|
|
|
|
||||
Natural Gas |
|
6 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
12 |
|
|
|
|
|
|
|
|
||||
Total Production |
|
4 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
9 |
|
|
|
|
|
|
|
|
41
Upstream Product Revenues, Excluding Realized Gains (Losses) on Risk Management
|
Three months ended September 30, |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
($ millions) |
Oil |
|
|
NGLs - Plant Condensate |
|
|
NGLs - Other |
|
|
Natural Gas |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2023 Upstream Product Revenues (1) |
$ |
1,269 |
|
|
$ |
287 |
|
|
$ |
145 |
|
|
$ |
347 |
|
|
$ |
2,048 |
|
Increase (decrease) due to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sales prices |
|
(120 |
) |
|
|
(19 |
) |
|
|
1 |
|
|
|
(164 |
) |
|
|
(302 |
) |
Production volumes |
|
(13 |
) |
|
|
4 |
|
|
|
9 |
|
|
|
21 |
|
|
|
21 |
|
2024 Upstream Product Revenues |
$ |
1,136 |
|
|
$ |
272 |
|
|
$ |
155 |
|
|
$ |
204 |
|
|
$ |
1,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Nine months ended September 30, |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
($ millions) |
Oil |
|
|
NGLs - Plant Condensate |
|
|
NGLs - Other |
|
|
Natural Gas |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2023 Upstream Product Revenues (1) |
$ |
3,061 |
|
|
$ |
807 |
|
|
$ |
438 |
|
|
$ |
1,263 |
|
|
$ |
5,569 |
|
Increase (decrease) due to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sales prices |
|
(20 |
) |
|
|
(19 |
) |
|
|
34 |
|
|
|
(577 |
) |
|
|
(582 |
) |
Production volumes |
|
466 |
|
|
|
26 |
|
|
|
6 |
|
|
|
53 |
|
|
|
551 |
|
2024 Upstream Product Revenues |
$ |
3,507 |
|
|
$ |
814 |
|
|
$ |
478 |
|
|
$ |
739 |
|
|
$ |
5,538 |
|
Oil Revenues
Three months ended September 30, 2024 versus September 30, 2023
Oil revenues were lower by $133 million compared to the third quarter of 2023 primarily due to:
Nine months ended September 30, 2024 versus September 30, 2023
Oil revenues were higher by $446 million compared to the first nine months of 2023 primarily due to:
NGL Revenues
Three months ended September 30, 2024 versus September 30, 2023
NGL revenues were lower by $5 million compared to the third quarter of 2023 primarily due to:
42
Nine months ended September 30, 2024 versus September 30, 2023
NGL revenues were higher by $47 million compared to the first nine months of 2023 primarily due to:
Natural Gas Revenues
Three months ended September 30, 2024 versus September 30, 2023
Natural gas revenues were lower by $143 million compared to the third quarter of 2023 primarily due to:
Nine months ended September 30, 2024 versus September 30, 2023
Natural gas revenues were lower by $524 million compared to the first nine months of 2023 primarily due to:
43
Gains (Losses) on Risk Management, Net
As a means of managing commodity price volatility, Ovintiv enters into commodity derivative financial instruments on a portion of its expected oil, NGLs and natural gas production volumes. Additional information on the Company’s commodity price positions as at September 30, 2024, can be found in Note 19 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
The following tables provide the effects of the Company’s risk management activities on revenues.
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized Gains (Losses) on Risk Management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity Price (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil |
|
$ |
- |
|
|
$ |
(19 |
) |
|
|
|
$ |
(33 |
) |
|
$ |
(19 |
) |
NGLs - Other |
|
|
2 |
|
|
|
- |
|
|
|
|
|
4 |
|
|
|
- |
|
Natural Gas |
|
|
95 |
|
|
|
28 |
|
|
|
|
|
237 |
|
|
|
(43 |
) |
Other (2) |
|
|
- |
|
|
|
1 |
|
|
|
|
|
4 |
|
|
|
1 |
|
Total |
|
|
97 |
|
|
|
10 |
|
|
|
|
|
212 |
|
|
|
(61 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized Gains (Losses) on Risk Management |
|
|
31 |
|
|
|
(292 |
) |
|
|
|
|
(61 |
) |
|
|
(132 |
) |
Total Gains (Losses) on Risk Management, Net |
|
$ |
128 |
|
|
$ |
(282 |
) |
|
|
|
$ |
151 |
|
|
$ |
(193 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
(Per-unit) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized Gains (Losses) on Risk Management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity Price (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil ($/bbl) |
|
$ |
- |
|
|
$ |
(1.18 |
) |
|
|
|
$ |
(0.70 |
) |
|
$ |
(0.46 |
) |
NGLs - Other ($/bbl) |
|
$ |
0.20 |
|
|
$ |
- |
|
|
|
|
$ |
0.15 |
|
|
$ |
- |
|
Natural Gas ($/Mcf) |
|
$ |
0.59 |
|
|
$ |
0.18 |
|
|
|
|
$ |
0.50 |
|
|
$ |
(0.09 |
) |
Total ($/BOE) |
|
$ |
1.76 |
|
|
$ |
0.17 |
|
|
|
|
$ |
1.29 |
|
|
$ |
(0.41 |
) |
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. Realized gains or losses on risk management activities related to commodity price mitigation are included in the USA Operations, Canadian Operations and Market Optimization revenues as the contracts are cash settled. Unrealized gains or losses on fair value changes of unsettled contracts are included in the Corporate and Other segment. Additional information on fair value changes can be found in Note 18 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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. Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with the Company’s previous divestitures.
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market Optimization |
|
$ |
408 |
|
|
$ |
863 |
|
|
|
|
$ |
1,214 |
|
|
$ |
2,282 |
|
Three months ended September 30, 2024 versus September 30, 2023
Market Optimization product revenues decreased $455 million compared to the third quarter of 2023 primarily due to:
44
Nine months ended September 30, 2024 versus September 30, 2023
Market Optimization product revenues decreased $1,068 million compared to the first nine months of 2023 primarily due to:
partially offset by:
Sublease Revenues
Sublease revenues primarily include amounts related to the sublease of office space in The Bow office building recorded in the Corporate and Other segment. Additional information on office sublease income can be found in Note 11 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Operating Expenses
Production, Mineral and Other Taxes
Production, mineral and other taxes include production and property taxes. Production taxes are generally assessed as a percentage of oil, NGLs and natural gas production revenues. Property taxes are generally assessed based on the value of the underlying assets.
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
82 |
|
|
$ |
84 |
|
|
|
|
$ |
247 |
|
|
$ |
237 |
|
Canadian Operations |
|
|
4 |
|
|
|
5 |
|
|
|
|
|
11 |
|
|
|
12 |
|
Total |
|
$ |
86 |
|
|
$ |
89 |
|
|
|
|
$ |
258 |
|
|
$ |
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
2.55 |
|
|
$ |
2.71 |
|
|
|
|
$ |
2.62 |
|
|
$ |
2.73 |
|
Canadian Operations |
|
$ |
0.15 |
|
|
$ |
0.24 |
|
|
|
|
$ |
0.17 |
|
|
$ |
0.19 |
|
Production, Mineral and Other Taxes |
|
$ |
1.56 |
|
|
$ |
1.70 |
|
|
|
|
$ |
1.60 |
|
|
$ |
1.65 |
|
Three months ended September 30, 2024 versus September 30, 2023
Production, mineral and other taxes decreased $3 million compared to the third quarter of 2023 primarily due to:
partially offset by:
Nine months ended September 30, 2024 versus September 30, 2023
Production, mineral and other taxes increased $9 million compared to the first nine months of 2023 primarily due to:
partially offset by:
45
Transportation and Processing
Transportation and processing expense includes transportation costs incurred to move product from production points to sales points including gathering, compression, pipeline tariffs, trucking and storage costs. Ovintiv also incurs costs related to processing provided by third parties or through ownership interests in processing facilities.
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
129 |
|
|
$ |
124 |
|
|
|
|
$ |
382 |
|
|
$ |
419 |
|
Canadian Operations |
|
|
270 |
|
|
|
265 |
|
|
|
|
|
781 |
|
|
|
800 |
|
Upstream Transportation and Processing |
|
|
399 |
|
|
|
389 |
|
|
|
|
|
1,163 |
|
|
|
1,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market Optimization |
|
|
9 |
|
|
|
44 |
|
|
|
|
|
77 |
|
|
|
121 |
|
Total |
|
$ |
408 |
|
|
$ |
433 |
|
|
|
|
$ |
1,240 |
|
|
$ |
1,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
4.02 |
|
|
$ |
3.98 |
|
|
|
|
$ |
4.04 |
|
|
$ |
4.82 |
|
Canadian Operations |
|
$ |
12.00 |
|
|
$ |
12.36 |
|
|
|
|
$ |
11.77 |
|
|
$ |
12.51 |
|
Upstream Transportation and Processing |
|
$ |
7.31 |
|
|
$ |
7.40 |
|
|
|
|
$ |
7.24 |
|
|
$ |
8.09 |
|
Three months ended September 30, 2024 versus September 30, 2023
Transportation and processing expense decreased $25 million compared to the third quarter of 2023 primarily due to:
partially offset by:
Nine months ended September 30, 2024 versus September 30, 2023
Transportation and processing expense decreased $100 million compared to the first nine months of 2023 primarily due to:
partially offset by:
46
Operating
Operating expense includes costs paid by the Company, net of amounts capitalized, on oil and natural gas properties in which Ovintiv has a working interest. These costs primarily include labor, service contract fees, chemicals, fuel, water hauling, electricity and workovers.
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
193 |
|
|
$ |
208 |
|
|
|
|
$ |
609 |
|
|
$ |
545 |
|
Canadian Operations |
|
|
36 |
|
|
|
28 |
|
|
|
|
|
87 |
|
|
|
59 |
|
Upstream Operating Expense |
|
|
229 |
|
|
|
236 |
|
|
|
|
|
696 |
|
|
|
604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market Optimization |
|
|
6 |
|
|
|
7 |
|
|
|
|
|
19 |
|
|
|
20 |
|
Total |
|
$ |
235 |
|
|
$ |
243 |
|
|
|
|
$ |
715 |
|
|
$ |
624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
6.02 |
|
|
$ |
6.66 |
|
|
|
|
$ |
6.45 |
|
|
$ |
6.27 |
|
Canadian Operations |
|
$ |
1.55 |
|
|
$ |
1.30 |
|
|
|
|
$ |
1.31 |
|
|
$ |
0.92 |
|
Upstream Operating Expense |
|
$ |
4.17 |
|
|
$ |
4.48 |
|
|
|
|
$ |
4.33 |
|
|
$ |
4.00 |
|
Three months ended September 30, 2024 versus September 30, 2023
Operating expense decreased $8 million compared to the third quarter of 2023 primarily due to:
partially offset by:
Nine months ended September 30, 2024 versus September 30, 2023
Operating expense increased $91 million compared to the first nine months of 2023 primarily due to:
partially offset by:
Purchased Product
Purchased product expense includes purchases of oil, NGLs and natural gas from third parties that are used to provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification. Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with the Company’s previous divestitures.
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
|||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market Optimization |
|
$ |
392 |
|
|
$ |
846 |
|
|
|
|
$ |
1,165 |
|
|
$ |
2,239 |
|
47
Three months ended September 30, 2024 versus September 30, 2023
Purchased product expense decreased $454 million compared to the third quarter of 2023 primarily due to:
Nine months ended September 30, 2024 versus September 30, 2023
Purchased product expense decreased $1,074 million compared to the first nine months of 2023 primarily due to:
partially offset by:
Depreciation, Depletion & Amortization
Proved properties within each country cost center are depleted using the unit-of-production method based on proved reserves as discussed in Note 1 to the Consolidated Financial Statements included in Item 8 of the 2023 Annual Report on Form 10-K. Depletion rates are impacted by impairments, acquisitions, divestitures and foreign exchange rates, as well as fluctuations in 12-month average trailing prices which affect proved reserves volumes. Corporate assets are carried at cost and depreciated on a straight-line basis over the estimated service lives of the assets.
Additional information can be found under Upstream Assets and Reserve Estimates in the Critical Accounting Estimates section of the MD&A included in Item 7 of the 2023 Annual Report on Form 10-K.
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
516 |
|
|
$ |
409 |
|
|
|
|
$ |
1,503 |
|
|
$ |
1,039 |
|
Canadian Operations |
|
|
77 |
|
|
|
72 |
|
|
|
|
|
225 |
|
|
|
215 |
|
Upstream DD&A |
|
|
593 |
|
|
|
481 |
|
|
|
|
|
1,728 |
|
|
|
1,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate & Other |
|
|
6 |
|
|
|
5 |
|
|
|
|
|
17 |
|
|
|
15 |
|
Total |
|
$ |
599 |
|
|
$ |
486 |
|
|
|
|
$ |
1,745 |
|
|
$ |
1,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
16.12 |
|
|
$ |
13.15 |
|
|
|
|
$ |
15.93 |
|
|
$ |
11.97 |
|
Canadian Operations |
|
$ |
3.40 |
|
|
$ |
3.34 |
|
|
|
|
$ |
3.39 |
|
|
$ |
3.36 |
|
Upstream DD&A |
|
$ |
10.87 |
|
|
$ |
9.15 |
|
|
|
|
$ |
10.75 |
|
|
$ |
8.32 |
|
Three months ended September 30, 2024 versus September 30, 2023
DD&A increased $113 million compared to the third quarter of 2023 primarily due to:
The depletion rate in the USA Operations increased $2.97 per BOE compared to the third quarter of 2023 primarily due to a higher depletable base.
48
Nine months ended September 30, 2024 versus September 30, 2023
DD&A increased $476 million compared to the first nine months of 2023 primarily due to:
The depletion rate in the USA Operations increased $3.96 per BOE compared to the first nine months of 2023 primarily due to a higher depletable base.
Full Cost Accounting and Ceiling Test Impairments
Under full cost accounting, the carrying amount of Ovintiv’s oil and natural gas properties within each country cost center is subject to a ceiling test performed quarterly. Ceiling test impairments are recognized when the capitalized costs, net of accumulated depletion and the related deferred income taxes, exceed the sum of the estimated after-tax future net cash flows from proved reserves as calculated under SEC requirements using the 12-month average trailing prices and discounted at 10 percent. The 12‑month average trailing price is calculated as the average of the price on the first day of each month within the trailing 12‑month period.
The Company did not recognize ceiling test impairments during the first nine months of 2024, however during this period, the 12-month average trailing prices have generally declined. Further declines in the 12‑month average trailing commodity prices could reduce proved reserves values and result in the recognition of future ceiling test impairments. Future ceiling test impairments can also result from changes to reserves estimates, future development costs, capitalized costs and unproved property costs. Proceeds received from oil and natural gas divestitures are typically deducted from the Company’s capitalized costs and can reduce the risk of ceiling test impairments.
Administrative
Administrative expense represents costs associated with corporate functions provided by Ovintiv staff. These expenses primarily include salaries and benefits, operating lease, office, information technology, legal and long-term incentive costs.
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Administrative, excluding Long-Term Incentive, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
and Transaction and Legal Costs (1) |
|
$ |
67 |
|
|
$ |
66 |
|
|
|
|
$ |
211 |
|
|
$ |
203 |
|
Long-term incentive costs |
|
|
5 |
|
|
|
12 |
|
|
|
|
|
28 |
|
|
|
9 |
|
Transaction and legal costs |
|
|
- |
|
|
|
2 |
|
|
|
|
|
11 |
|
|
|
94 |
|
Total Administrative |
|
$ |
72 |
|
|
$ |
80 |
|
|
|
|
$ |
250 |
|
|
$ |
306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Administrative, excluding Long-Term Incentive, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
and Transaction and Legal Costs (1) |
|
$ |
1.24 |
|
|
$ |
1.27 |
|
|
|
|
$ |
1.31 |
|
|
$ |
1.34 |
|
Long-term incentive costs |
|
|
0.09 |
|
|
|
0.23 |
|
|
|
|
|
0.17 |
|
|
|
0.06 |
|
Transaction and legal costs |
|
|
- |
|
|
|
0.03 |
|
|
|
|
|
0.07 |
|
|
|
0.63 |
|
Total Administrative |
|
$ |
1.33 |
|
|
$ |
1.53 |
|
|
|
|
$ |
1.55 |
|
|
$ |
2.03 |
|
Three months ended September 30, 2024 versus September 30, 2023
Administrative expense decreased $8 million compared to the third quarter of 2023 primarily due to:
49
Nine months ended September 30, 2024 versus September 30, 2023
Administrative expense decreased $56 million compared to the first nine months of 2023 primarily due to:
partially offset by:
Additional information on the Company’s long-term incentive costs can be found in Note 17 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Other (Income) Expenses
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest |
|
$ |
103 |
|
|
$ |
98 |
|
|
|
|
$ |
306 |
|
|
$ |
249 |
|
Foreign Exchange (Gain) Loss, Net |
|
|
17 |
|
|
|
(22 |
) |
|
|
|
|
(21 |
) |
|
|
- |
|
Other (Gains) Losses, Net |
|
|
(151 |
) |
|
|
(2 |
) |
|
|
|
|
(160 |
) |
|
|
(16 |
) |
Total Other (Income) Expenses |
|
$ |
(31 |
) |
|
$ |
74 |
|
|
|
|
$ |
125 |
|
|
$ |
233 |
|
Interest
Interest expense primarily includes interest on Ovintiv’s short-term and long-term debt. Additional information on changes in interest can be found in Note 5 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Nine months ended September 30, 2024 versus September 30, 2023
Interest expense increased $57 million compared to the first nine months of 2023 primarily due to:
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 6 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Additional information on foreign exchange rates and the effects of foreign exchange rate changes can be found in Part I, Item 3 of this Quarterly Report on Form 10-Q.
Three months ended September 30, 2024 versus September 30, 2023
Net foreign exchange loss of $17 million compared to a gain of $22 million during the third quarter of 2023 primarily due to:
Nine months ended September 30, 2024 versus September 30, 2023
Net foreign exchange gain of $21 million compared to nil during the first nine months of 2023 primarily due to:
partially offset by:
50
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, and adjustments related to other assets.
In the second quarter of 2024, the Company resolved a dispute related to the previous disposition of certain legacy assets for approximately $150 million. On September 30, 2024, the Company received $50 million of the settlement proceeds in escrow as restricted cash and Ovintiv expects to receive the remaining $100 million of the proceeds by the end of the year. Accordingly, during the third quarter of 2024, the Company recognized a gain of $150 million in Other (gains) losses, net related to this dispute resolution.
Income Tax
During the three and nine months ended September 30, 2024, current income tax expense in the U.S. of $16 million and $40 million, respectively, is higher than the comparative periods in 2023 primarily due to the impact of the corporate alternative minimum tax. In Canada, the current income tax expense for the three and nine months ended September 30, 2024, of $14 million and $45 million, respectively, is lower than the comparative periods in 2023 due to lower expected full year taxable earnings.
The determination of income and other tax liabilities of the Company and its subsidiaries requires interpretation of complex domestic and foreign tax laws and regulations, that are subject to change. The Company’s interpretation of tax laws may differ from the interpretation of the tax authorities. As a result, there are tax matters under review for which the timing of resolution is uncertain. The Company believes that the provision for income taxes is adequate.
On June 20, 2024, Canada enacted its Global Minimum Tax Act (“GMTA”), which implements the Organization for Economic Cooperation and Development Pillar II framework, providing a global minimum tax rate of 15 percent. The Company continues to evaluate the GMTA but does not anticipate any material impact in 2024.
Additional information on income taxes can be found in Note 7 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
51
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. Ovintiv closely monitors the accessibility of cost-effective credit and ensures that sufficient liquidity is in place to fund capital expenditures and dividend payments. In addition, the Company may use cash and cash equivalents, cash from operating activities, or proceeds from asset divestitures to fund its operations and capital allocation framework or to manage its capital structure as discussed below.
The Company’s capital structure consists of total shareholders’ equity plus long-term debt, including any current portion. The Company’s objectives when managing its capital structure are to maintain financial flexibility to preserve Ovintiv’s access to capital markets and its ability to meet financial obligations and finance internally generated growth, as well as potential acquisitions. Ovintiv has a practice of maintaining capital discipline and strategically managing its capital structure by adjusting capital spending, adjusting dividends paid to shareholders, issuing new shares of common stock, purchasing shares of common stock for cancellation or return to treasury, issuing new debt and repaying or repurchasing existing debt.
|
|
As at September 30, |
|
|||||
($ millions, except as indicated) |
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Cash and Cash Equivalents |
|
$ |
9 |
|
|
$ |
3 |
|
Available Credit Facilities |
|
|
3,400 |
|
|
|
3,150 |
|
Available Uncommitted Demand Lines (1) |
|
|
232 |
|
|
|
273 |
|
Issuance of U.S. Commercial Paper |
|
|
(324 |
) |
|
|
(359 |
) |
Total Liquidity |
|
$ |
3,317 |
|
|
$ |
3,067 |
|
|
|
|
|
|
|
|
||
Long-Term Debt, including current portion |
|
$ |
5,877 |
|
|
$ |
6,163 |
|
Total Shareholders’ Equity |
|
$ |
10,655 |
|
|
$ |
9,552 |
|
|
|
|
|
|
|
|
||
Debt to Capitalization (%) (2) |
|
|
36 |
|
|
|
39 |
|
Debt to Adjusted Capitalization (%) (2) |
|
|
24 |
|
|
|
26 |
|
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”). The Credit Facilities, which mature in July 2026, provide financial flexibility and allow the Company to fund its operations or capital investment program. At September 30, 2024, $100 million was outstanding under the revolving Credit Facilities.
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 September 30, 2024, the Company had $324 million of commercial paper outstanding under its U.S. CP program maturing at various dates with a weighted average interest rate of approximately 5.67 percent, which is supported by the Company’s Credit Facilities. All of Ovintiv’s credit ratings are investment grade as at September 30, 2024.
The available Credit Facilities, uncommitted demand lines, and cash and cash equivalents, net of outstanding commercial paper, provide Ovintiv with total liquidity of approximately $3.3 billion as at September 30, 2024. At September 30, 2024, Ovintiv also had approximately $72 million in undrawn letters of credit issued in the normal course of business primarily as collateral security related to sales arrangements.
Ovintiv has a U.S. shelf registration statement under which the Company may issue from time to time, debt securities, common stock, preferred stock, warrants, units, share purchase contracts and share purchase units in the U.S. The U.S. shelf registration statement expires in March 2026.
The obligations under the Company’s existing debt securities are fully and unconditionally guaranteed on a senior unsecured basis by Ovintiv Canada ULC, an indirect wholly-owned subsidiary of the Company. Additional information on the Company’s Canadian Operations segment and the Bow office lease can be found in the Results of Operations section in this MD&A and
52
the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the MD&A and audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2023, which are included in Items 7 and 8, respectively, of the 2023 Annual Report on Form 10-K.
Ovintiv is currently in compliance with all financial covenants under the Credit Facilities. 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 September 30, 2024, the Company’s Debt to Adjusted Capitalization was 24 percent. 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 the 2023 Annual Report on Form 10‑K.
Sources and Uses of Cash
The following table summarizes the sources and uses of the Company’s cash and cash equivalents.
|
|
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
Activity Type |
|
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sources of Cash, Cash Equivalents and Restricted Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash from operating activities |
Operating |
|
|
$ |
1,022 |
|
|
$ |
906 |
|
|
|
|
$ |
2,701 |
|
|
$ |
2,805 |
|
Proceeds from divestitures |
Investing |
|
|
|
3 |
|
|
|
12 |
|
|
|
|
|
7 |
|
|
|
741 |
|
Corporate acquisition |
Investing |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
12 |
|
|
|
- |
|
Net issuance of revolving debt |
Financing |
|
|
|
- |
|
|
|
29 |
|
|
|
|
|
140 |
|
|
|
316 |
|
Issuance of long-term debt |
Financing |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
2,278 |
|
Other |
Investing |
|
|
|
26 |
|
|
|
27 |
|
|
|
|
|
16 |
|
|
|
116 |
|
|
|
|
|
|
1,051 |
|
|
|
974 |
|
|
|
|
|
2,876 |
|
|
|
6,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Uses of Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures |
Investing |
|
|
|
538 |
|
|
|
834 |
|
|
|
|
|
1,751 |
|
|
|
2,084 |
|
Acquisitions |
Investing |
|
|
|
7 |
|
|
|
59 |
|
|
|
|
|
202 |
|
|
|
273 |
|
Net repayment of revolving debt |
Financing |
|
|
|
210 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
- |
|
Corporate acquisition, net of cash acquired |
Investing |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
3,225 |
|
Purchase of shares of common stock |
Financing |
|
|
|
163 |
|
|
|
45 |
|
|
|
|
|
597 |
|
|
|
373 |
|
Dividends on shares of common stock |
Financing |
|
|
|
78 |
|
|
|
82 |
|
|
|
|
|
238 |
|
|
|
225 |
|
Other |
Financing |
|
|
|
2 |
|
|
|
3 |
|
|
|
|
|
32 |
|
|
|
75 |
|
|
|
|
|
|
998 |
|
|
|
1,023 |
|
|
|
|
|
2,820 |
|
|
|
6,255 |
|
Foreign Exchange Gain (Loss) on Cash, Cash Equivalents |
|
|
|
(2 |
) |
|
|
- |
|
|
|
|
|
- |
|
|
|
(3 |
) |
|
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash |
|
|
$ |
51 |
|
|
$ |
(49 |
) |
|
|
|
$ |
56 |
|
|
$ |
(2 |
) |
Operating Activities
Net cash from operating activities in the third quarter and first nine months of 2024 was $1,022 million and $2,701 million, respectively, and was primarily a reflection of the impacts from production volumes, average realized commodity prices, realized gains/losses on risk management and changes in non‑cash working capital.
Additional detail on changes in non-cash working capital can be found in Note 20 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Ovintiv expects it will continue to meet the payment terms of its suppliers.
Non-GAAP Cash Flow in the third quarter and first nine months of 2024 was $978 million and $3,038 million, respectively, 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.
53
Three months ended September 30, 2024 versus September 30, 2023
Net cash from operating activities increased $116 million compared to the third quarter of 2023 primarily due to:
partially offset by:
Nine months ended September 30, 2024 versus September 30, 2023
Net cash from operating activities decreased $104 million compared to the first nine months of 2023 primarily due to:
partially offset by:
Investing Activities
Cash used in investing activities in the first nine months of 2024 was $1,918 million primarily due to capital expenditures and acquisitions in the USA Operations. Capital expenditures, and acquisition and divestiture activities are summarized in Notes 3 and 8, respectively, to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Capital expenditures decreased $333 million compared to the first nine months of 2023, primarily due to decreased completions activity in Montney, Anadarko and Permian, the sale of the Bakken assets in the second quarter of 2023, and drilling efficiencies in Uinta, partially offset by increased completions activity in Uinta.
Acquisitions in the first nine months of 2024 were $202 million, which primarily included property purchases with oil and liquids-rich potential in the USA Operations (2023 - $273 million).
Corporate acquisitions in the first nine months of 2024 includes the final cash settlements of $12 million completed in the first quarter of 2024 related to the Permian assets acquired in the second quarter of 2023. Additional information regarding the Permian Acquisition can be found in Note 9 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Financing Activities
Net cash from and/or used in financing activities has been impacted by Ovintiv’s strategic objective to return value to shareholders by repaying or repurchasing existing debt, purchasing shares of common stock and paying dividends.
Net cash used in financing activities in the first nine months of 2024 was $727 million compared to net cash from financing activities in 2023 of $1,921 million. The change was primarily due to the net issuance of long-term debt in 2023 of $2,278 million, increased purchases of shares of common stock in 2024 compared to 2023 ($224 million), and a decrease in the net issuance of revolving debt ($176 million).
From time to time, Ovintiv may seek to retire or purchase the Company’s outstanding debt through cash purchases and/or exchanges for other debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.
54
The Company’s long-term debt, including the current portion of $1,024 million, totaled $5,877 million at September 30, 2024. The Company’s long-term debt at December 31, 2023, including the current portion of $284 million, totaled $5,737 million. As at September 30, 2024, the Company has $600 million of fixed rate long-term debt due within the next year.
In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its capital allocation framework to provide competitive returns to shareholders while strengthening its balance sheet. Ovintiv expects to continue to deliver shareholder returns through share buybacks.
For additional information on long-term debt, refer to Note 12 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Further details on the Company’s debt-based metrics can be found in the Non-GAAP measures section of this MD&A.
Dividends
The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
|||||||||||
($ millions, except as indicated) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividend Payments |
|
$ |
78 |
|
|
$ |
82 |
|
|
|
|
$ |
238 |
|
|
$ |
225 |
|
Dividend Payments ($/share) |
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
|
|
$ |
0.90 |
|
|
$ |
0.85 |
|
On November 7, 2024, the Board of Directors declared a dividend of $0.30 per share of common stock payable on December 31, 2024, to common shareholders of record as of December 13, 2024.
Dividends increased $13 million compared to the first nine months of 2023 as a result of Ovintiv increasing its annualized dividend to $1.20 per share of common stock in the second quarter of 2023. The dividend increase reflects the Company’s commitment to returning capital to shareholders.
Normal Course Issuer Bid
On September 26, 2024, 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 25.9 million shares of common stock over a 12-month period from October 3, 2024 to October 2, 2025. The number of shares authorized for purchase represents 10 percent of Ovintiv’s public float as at September 20, 2024. The Company expects to continue to execute the renewed NCIB program in conjunction with its capital allocation framework.
In the third quarter and first nine months of 2024, under the previous NCIB program, which extended from October 3, 2023 to October 2, 2024, the Company purchased, for cancellation, approximately 3.7 million and 12.7 million shares of common stock, respectively, for total consideration of approximately $163 million and $597 million, respectively. For additional information on the NCIB, refer to Note 14 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Material Cash Requirements
For information on material cash requirements, refer to the Material Cash Requirements section of the MD&A included in Item 7 of the 2023 Annual Report on Form 10-K.
Commitments and Contingencies
For information on commitments and contingencies, refer to Note 21 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
There have been no significant changes to the Company’s critical accounting policies and use of estimates from the disclosures reported in the “Critical Accounting Estimates” section of the MD&A included in Item 7 of the 2023 Annual Report on Form 10-K.
55
Non-GAAP Measures |
Certain measures in this document 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 to similar measures presented by other issuers 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 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. Management’s use of these measures is discussed further below.
Cash from Operating Activities and Non-GAAP Cash Flow
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.
Management believes this measure is useful to the Company and its investors as a measure of operating and financial performance across periods and against other companies in the industry, and is an indication of the Company’s ability to generate cash to finance capital investment programs, to service debt and to meet other financial obligations. This measure is used, along with other measures, in the calculation of certain performance targets for the Company’s management and employees.
|
|
Three months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash From (Used in) Operating Activities |
|
$ |
1,022 |
|
|
$ |
906 |
|
|
|
|
$ |
2,701 |
|
|
$ |
2,805 |
|
(Add back) deduct: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net change in other assets and liabilities |
|
|
19 |
|
|
|
(14 |
) |
|
|
|
|
(35 |
) |
|
|
(31 |
) |
Net change in non-cash working capital |
|
|
25 |
|
|
|
(192 |
) |
|
|
|
|
(302 |
) |
|
|
174 |
|
Non-GAAP Cash Flow |
|
$ |
978 |
|
|
$ |
1,112 |
|
|
|
|
$ |
3,038 |
|
|
$ |
2,662 |
|
Debt to Capitalization and Debt to Adjusted Capitalization
Debt to Adjusted Capitalization is a non-GAAP measure which adjusts capitalization for historical ceiling test impairments that were recorded as at December 31, 2011. Management monitors Debt to Adjusted Capitalization as a proxy for the Company’s financial covenant under the Credit Facilities which require Debt to Adjusted Capitalization to be less than 60 percent. Adjusted Capitalization includes debt, total shareholders’ equity and an equity adjustment for cumulative historical ceiling test impairments recorded as at December 31, 2011 in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP.
($ millions, except as indicated) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
5,877 |
|
|
$ |
5,737 |
|
Total Shareholders’ Equity |
|
|
10,655 |
|
|
|
10,370 |
|
Capitalization |
|
$ |
16,532 |
|
|
$ |
16,107 |
|
Debt to Capitalization |
|
36% |
|
|
36% |
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
5,877 |
|
|
$ |
5,737 |
|
Total Shareholders’ Equity |
|
|
10,655 |
|
|
|
10,370 |
|
Equity Adjustment for Impairments at December 31, 2011 |
|
|
7,746 |
|
|
|
7,746 |
|
Adjusted Capitalization |
|
$ |
24,278 |
|
|
$ |
23,853 |
|
Debt to Adjusted Capitalization |
|
24% |
|
|
24% |
|
56
Debt to EBITDA and Debt to Adjusted EBITDA
Debt to EBITDA and Debt to Adjusted EBITDA 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.
Management believes these measures are useful to the Company and its investors as a measure of financial leverage and the Company’s ability to service its debt and other financial obligations. These measures are used, along with other measures, in the calculation of certain financial performance targets for the Company’s management and employees.
($ millions, except as indicated) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
|
|
|
|
|
||
Debt (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 (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 |
|
57
Item 3: 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. 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.
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 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 Part 1, Item 2 of this Quarterly Report on Form 10‑Q in the Executive Overview section in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Item 1A. “Risk Factors” of the 2023 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. 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. Both exchange traded and over-the-counter traded derivative instruments may be subject to margin-deposit requirements, and the Company may be required from time to time to deposit cash or provide letters of credit with exchange brokers or counterparties to satisfy these margin requirements. For additional information relating to the Company’s derivative and financial instruments, see Note 19 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10‑Q.
The table below summarizes the sensitivity of the fair value of the Company’s risk management positions to fluctuations in commodity prices, with all other variables held constant. The Company has used a 10 percent variability to assess the potential impact of commodity price changes. Fluctuations in commodity prices could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows:
|
|
September 30, 2024 |
|
|||||
(US$ millions) |
|
10% Price |
|
|
10% Price |
|
||
|
|
|
|
|
|
|
||
Oil price |
|
$ |
(47 |
) |
|
$ |
53 |
|
NGL price |
|
|
- |
|
|
|
- |
|
Natural gas price |
|
|
(28 |
) |
|
|
28 |
|
FOREIGN EXCHANGE RISK
Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. 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 table below summarizes selected foreign exchange impacts on Ovintiv’s financial results when compared to the same periods in 2023.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
$ millions |
|
|
$/BOE |
|
|
$ millions |
|
|
$/BOE |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Increase (Decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital Investment |
|
$ |
(3 |
) |
|
|
|
|
$ |
(5 |
) |
|
|
|
||
Transportation and Processing Expense (1) |
|
|
(5 |
) |
|
$ |
(0.08 |
) |
|
|
(9 |
) |
|
$ |
(0.06 |
) |
Operating Expense (1) |
|
|
(1 |
) |
|
|
(0.01 |
) |
|
|
(1 |
) |
|
|
- |
|
Administrative Expense |
|
|
(1 |
) |
|
|
(0.01 |
) |
|
|
(1 |
) |
|
|
- |
|
Depreciation, Depletion and Amortization (1) |
|
|
(2 |
) |
|
|
(0.02 |
) |
|
|
(3 |
) |
|
|
(0.02 |
) |
58
Foreign exchange gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated and settled, and primarily include:
To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at September 30, 2024, Ovintiv has entered into $118 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3697 to US$1, which mature monthly through the remainder of 2024, and $25 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3800 to US$1, which mature monthly throughout the first half of 2025.
As at September 30, 2024, Ovintiv did not have any U.S. dollar denominated financing debt issued from Canada that was subject to foreign exchange exposure.
The table below summarizes the sensitivity to foreign exchange rate fluctuations, with all other variables held constant. The Company has used a 10 percent variability to assess the potential impact from Canadian to U.S. foreign currency exchange rate changes. Fluctuations in foreign currency exchange rates could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows:
|
|
September 30, 2024 |
|
|||||
(US$ millions) |
|
10% Rate |
|
|
10% Rate |
|
||
|
|
|
|
|
|
|
||
Foreign currency exchange |
|
$ |
126 |
|
|
$ |
(153 |
) |
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 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 September 30, 2024, Ovintiv had floating rate revolving credit and term loan borrowings of $424 million. 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.
59
Item 4: Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
Ovintiv’s Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2024.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Company’s internal controls over financial reporting during the third quarter of 2024 that have materially affected, or are reasonably likely to affect, the Company’s internal controls over financial reporting.
60
PART II
Item 1. Legal Proceedings
Please refer to Item 3 of the 2023 Annual Report on Form 10‑K and Note 21 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in Item 1A., "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchase of Equity Securities
On September 26, 2023, the Company announced it had received regulatory approval to purchase, for cancellation or return to treasury, up to approximately 26.7 million shares of common stock pursuant to a NCIB over a 12-month period from October 3, 2023 to October 2, 2024. The number of shares of common stock authorized for purchase represented approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as of such time.
On September 26, 2024, the TSX accepted the Company’s notice of intention to renew its NCIB to purchase up to approximately 25.9 million shares of common stock, during the 12-month period commencing October 3, 2024 and ending October 2, 2025. The number of shares authorized for purchase represents 10 percent of Ovintiv’s public float (as defined in the TSX Company Manual) as of September 20, 2024, which equals approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as at such time.
During the three months ended September 30, 2024, the Company purchased approximately 3.7 million shares of common stock for approximately $162 million, excluding excise tax, at a weighted average price of $43.43. The following table presents the common shares purchased during the three months ended September 30, 2024.
Period |
Total Number of |
|
|
Average |
|
|
Total Number of Shares |
|
|
Maximum Number of Shares |
|
|||||
July 1 to July 31, 2024 |
|
|
1,010,083 |
|
|
$ |
47.05 |
|
|
|
1,010,083 |
|
|
|
15,502,428 |
|
August 1 to August 31, 2024 |
|
|
2,018,875 |
|
|
|
42.68 |
|
|
|
2,018,875 |
|
|
|
13,483,553 |
|
September 1 to September 30, 2024 |
|
|
700,764 |
|
|
|
40.40 |
|
|
|
700,764 |
|
|
|
12,782,789 |
|
Total |
|
|
3,729,722 |
|
|
$ |
43.43 |
|
|
|
3,729,722 |
|
|
|
12,782,789 |
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In the first quarter of 2022, Ovintiv obtained an exemption order (the “NCIB Exemption”) from the Alberta Securities Commission and the Ontario Securities Commission, which permits Ovintiv to make repurchases (the “Proposed Bids”), under its current and any future normal course issuer bids, through the facilities of the NYSE and other U.S.-based trading systems (collectively, “U.S. Markets”), in excess of the maximum allowable purchases under applicable Canadian securities laws. The NCIB Exemption applies to any Proposed Bid commenced within 36 months of the date of the exemption order and is subject to several other conditions, including that Ovintiv remain a U.S. and SEC foreign issuer under applicable Canadian securities laws. The purchases of common stock under a Proposed Bid must also be made in compliance with other applicable Canadian securities laws and applicable U.S. rules. Additionally, the NCIB Exemption imposes restrictions on the number of shares of common stock that may be acquired under the exemption, including that: (a) Ovintiv may not acquire common stock in reliance upon the exemption under subsection 4.8(3) of Canadian National Instrument 62-104 – Take-Over Bids and Issuer Bids (“NI 62-104”) from the requirements applicable to issuer bids (the “Other Published Markets Exemption”) if the aggregate number of shares of common stock purchased by Ovintiv, and any person or company acting jointly or in concert with Ovintiv, in reliance on the NCIB Exemption and the Other Published Markets Exemption within any period of 12 months exceeds 5 percent of the outstanding common stock on the first day of such 12-month period; and (b) the aggregate number of shares of common stock purchased pursuant to (i) a Proposed Bid in reliance on the NCIB Exemption; (ii) exempt issuer bid purchases made in
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the normal course through the facilities of the TSX; and (iii) the Other Published Markets Exemption does not exceed, over the 12-month period of its current NCIB, 10 percent of Ovintiv’s public float. As a result, the NCIB Exemption effectively allows Ovintiv to purchase up to 10 percent of its public float on U.S. Markets under its NCIB. Without the NCIB Exemption this amount would be limited to 5 percent of Ovintiv’s outstanding common stock within a 12-month period under applicable Canadian securities law.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Item 6. Exhibits
Exhibit No |
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Description |
31.1 |
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31.2 |
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32.1* |
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Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |
32.2* |
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Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
101.INS |
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Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document. |
104 |
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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, has been formatted in Inline XBRL. |
* The certifications on Exhibits 32.1 and 32.2 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certifications will not be deemed incorporated by reference to any filings under the Securities Act or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Ovintiv Inc. |
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By: |
/s/ Corey D. Code |
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Name: |
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Corey D. Code |
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Title: |
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Executive Vice-President & Chief Financial Officer |
Dated: November 7, 2024
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