Ovintiv

Our products fuel the world— 
we make modern
life possible.

Stock Information

Our common stock is traded on the New York Stock 
Exchange and the Toronto Stock Exchange under 
the symbol “OVV.”

Corporate Headquarters

Ovintiv Inc. 
370 17th Street 
Suite 1700 
Denver, Colorado 80202 
www.ovintiv.com

Investor Contact

888.525.0304 
investor.relations@ovintiv.com

Media Contact

403.645.2252  
media.relations@ovintiv.com  

20 2 1  A NN UA L  R EPO RT

2021 
Highlights

Substantial Free  
Cash Flow

~$1.7 B

Non-GAAP Free Cash 
Flow Generation

Reduced Debt

~$2.3 B

Non-GAAP Net Debt 
Reduction

Driving Shareholder 
Returns

$233 MM

Via Dividends &  
Share Buybacks

Tangible ESG Progress

>50% 

Reduction in Methane 
Emissions Intensity  
From 2019 Levels

Reserve Replacement

269% 

Of Production

(Excluding the impact of 
acquisitions and divestitures)

FEBRUARY 25, 2022

Fellow Shareholders: 
2021 was a banner year for Ovintiv. Our returns-based strategy, disciplined capital 
allocation and execution excellence have positioned us at the forefront of driving 
innovation to produce oil and natural gas from shale—both profitably and sustainably.  
We are deeply committed to translating our leading efficiency into superior returns. 
Looking ahead, we will continue our track record of generating significant free cash  
flow, further reducing debt, increasing our direct returns to shareholders and  
driving ESG progress.

In 2021, we delivered on every aspect of our value proposition. We continued to rapidly 
reduce debt, drove efficiency gains to more than offset cost inflation, implemented 
a new capital allocation framework to enhance returns to shareholders, generated 
significant free cash flow, and substantially lowered emissions. A few of our key 
accomplishments are highlighted below.

CONTINUED DEBT REDUCTION

INCREASED BASE DIVIDEND PAYMENTS

Paying down debt was one of our top priorities 
as we entered 2021. Over the year, through a 
combination of free cash flow and proceeds from 
the sale of non-core assets, our net debt balance 
dropped by approximately $2.3 billion, significantly 
de-levering our balance sheet and improving our 
financial flexibility.

In the third quarter, we increased our base dividend 
by about 50% and with our year-end results we 
announced a further 43% base dividend raise 
to $0.80 per share on an annualized basis. This 
substantial increase reflects our confidence in the 
growing cash flow profile of our business. We have 
now raised our dividend three times since 2019.  

IMPLEMENTED A NEW CAPITAL  
ALLOCATION FRAMEWORK

Over the next 10 years, our business is positioned to 
generate a tremendous amount of free cash flow. 
With this robust outlook, we felt it was important to 
provide the market with a clear, transparent and 
durable roadmap for how we plan to allocate capital. 

Beginning in the fourth quarter of 2021, and until 
the net debt target is met, Ovintiv will return 25% 
of the previous quarter’s free cash flow after base 
dividends to our shareholders through either share 
buybacks or variable dividends. The remaining 
75% will be allocated to the balance sheet, with 
a modest amount allocated to small, low-cost 
property bolt-ons.

Once we hit our net debt milestone, the shareholder 
return allocation will increase to at least 50% of free 
cash flow after base dividends with the remaining 
funds allocated to the balance sheet.

The framework solidifies our commitment to 
maintaining financial strength, generating superior 
returns on capital investments, and returning 
significant cash to our shareholders.

ACHIEVED STRONG FINANCIAL PERFORMANCE

Our full-year net earnings totaled $1.4 billion and 
non-GAAP cash flow was $3.2 billion. With capital 
investment totaling $1.5 billion, we generated non-
GAAP free cash flow of approximately $1.7 billion. 

FOCUSED THE ORGANIZATION ON OFFSETTING  
COST INFLATION 

Our results show that we are the leading E&P 
company on capital efficiency, driven by our  
culture of innovation. From base production 
optimization to supply chain management to 
drilling and completions activities, we are always 
looking at ways to deliver better wells for lower cost.

Despite significant inflationary pressures, our 
teams delivered an 11% reduction year-over-year 
in average well costs and new “pacesetter” results 
were achieved in each of the three core assets.

DELIVERED LEADING SAFETY AND ESG PERFORMANCE 

2021 was our eighth consecutive “safest year 
ever” and it marked our 17th year of Sustainability 
reporting. We made significant strides in emissions 

Ovintiv Inc.

2021 Annual Report  |  i

Ovintiv is one of the largest 
producers of oil and condensate, 
natural gas and natural gas 
liquids in North America. The 
company’s vision is to be at the 
forefront of driving innovation to 
both profitably and sustainably 
produce oil and gas from shale.

2021 
Highlights

Substantial Free  
Cash Flow

~$1.7 B

Non-GAAP Free Cash 
Flow Generation

Reduced Debt

~$2.3 B

Non-GAAP Net Debt 
Reduction

Driving Shareholder 
Returns

$233 MM

Via Dividends &  
Share Buybacks

Tangible ESG Progress

>50% 

Reduction in Methane 
Emissions Intensity  
From 2019 Levels

Reserve Replacement

269% 

Of Production

(Excluding the impact of 
acquisitions and divestitures)

FEBRUARY 25, 2022

Fellow Shareholders: 
2021 was a banner year for Ovintiv. Our returns-based strategy, disciplined capital 
allocation and execution excellence have positioned us at the forefront of driving 
innovation to produce oil and natural gas from shale—both profitably and sustainably.  
We are deeply committed to translating our leading efficiency into superior returns. 
Looking ahead, we will continue our track record of generating significant free cash  
flow, further reducing debt, increasing our direct returns to shareholders and  
driving ESG progress.

In 2021, we delivered on every aspect of our value proposition. We continued to rapidly 
reduce debt, drove efficiency gains to more than offset cost inflation, implemented 
a new capital allocation framework to enhance returns to shareholders, generated 
significant free cash flow, and substantially lowered emissions. A few of our key 
accomplishments are highlighted below.

CONTINUED DEBT REDUCTION

INCREASED BASE DIVIDEND PAYMENTS

Paying down debt was one of our top priorities 
as we entered 2021. Over the year, through a 
combination of free cash flow and proceeds from 
the sale of non-core assets, our net debt balance 
dropped by approximately $2.3 billion, significantly 
de-levering our balance sheet and improving our 
financial flexibility.

In the third quarter, we increased our base dividend 
by about 50% and with our year-end results we 
announced a further 43% base dividend raise 
to $0.80 per share on an annualized basis. This 
substantial increase reflects our confidence in the 
growing cash flow profile of our business. We have 
now raised our dividend three times since 2019.  

IMPLEMENTED A NEW CAPITAL  
ALLOCATION FRAMEWORK

Over the next 10 years, our business is positioned to 
generate a tremendous amount of free cash flow. 
With this robust outlook, we felt it was important to 
provide the market with a clear, transparent and 
durable roadmap for how we plan to allocate capital. 

Beginning in the fourth quarter of 2021, and until 
the net debt target is met, Ovintiv will return 25% 
of the previous quarter’s free cash flow after base 
dividends to our shareholders through either share 
buybacks or variable dividends. The remaining 
75% will be allocated to the balance sheet, with 
a modest amount allocated to small, low-cost 
property bolt-ons.

Once we hit our net debt milestone, the shareholder 
return allocation will increase to at least 50% of free 
cash flow after base dividends with the remaining 
funds allocated to the balance sheet.

The framework solidifies our commitment to 
maintaining financial strength, generating superior 
returns on capital investments, and returning 
significant cash to our shareholders.

ACHIEVED STRONG FINANCIAL PERFORMANCE

Our full-year net earnings totaled $1.4 billion and 
non-GAAP cash flow was $3.2 billion. With capital 
investment totaling $1.5 billion, we generated non-
GAAP free cash flow of approximately $1.7 billion. 

FOCUSED THE ORGANIZATION ON OFFSETTING  
COST INFLATION 

Our results show that we are the leading E&P 
company on capital efficiency, driven by our  
culture of innovation. From base production 
optimization to supply chain management to 
drilling and completions activities, we are always 
looking at ways to deliver better wells for lower cost.

Despite significant inflationary pressures, our 
teams delivered an 11% reduction year-over-year 
in average well costs and new “pacesetter” results 
were achieved in each of the three core assets.

DELIVERED LEADING SAFETY AND ESG PERFORMANCE 

2021 was our eighth consecutive “safest year 
ever” and it marked our 17th year of Sustainability 
reporting. We made significant strides in emissions 

Ovintiv Inc.

2021 Annual Report  |  i

Ovintiv is one of the largest 
producers of oil and condensate, 
natural gas and natural gas 
liquids in North America. The 
company’s vision is to be at the 
forefront of driving innovation to 
both profitably and sustainably 
produce oil and gas from shale.

Ovintiv has a unique combination of  
multi-basin, multi-product optionality  
and a talented team that is highly 
motivated to create value through 
innovation. Our approach delivers  
returns for our shareholders and the 
responsible, reliable and affordable 
energy that fuels the world. 

We appreciate your continued support  
and investment in Ovintiv.

Sincerely,

Brendan McCracken
President &  
Chief Executive Officer

reductions, and I am very proud to report that 
we exceeded our target for a 33% reduction in 
methane emissions intensity—four years ahead of 
schedule—with a total reduction of more than 50% 
compared to our 2019 baseline. Additionally, Ovintiv 
was one of the first E&P companies to declare full 
alignment with the World Bank Zero Routine Flaring 
Initiative, nine years ahead of the 2030 target. 

We also achieved a greater than 20% reduction 
in our Scope 1 & 2 greenhouse gas (GHG) 
emissions intensity, measured against 2019 levels. 
Demonstrating continued, measurable progress in 
this important aspect of our business is a key focus 
for us. As such, we recently announced a target to 
continue to lower Scope 1 & 2 GHG emissions. Our 
new ambitious target is to drop our GHG intensity 
by 50% compared to our 2019 baseline, by 2030.  
This target will be tied to compensation for all 
Ovintiv employees starting in 2022.

ADVANCED PORTFOLIO RENEWAL

We believe it is good business to continuously 
extend our ability to generate superior returns. In 
2021, we made significant progress extending the 
premium resource life across our portfolio. Our 
inorganic bolt-on strategy added 80 net locations 
last year at a modest cost of only $11 million. 
Our organic inventory renewal program saw us 
assess over 500 potential premium well locations 
and generated strong reserve replacement. 
We replaced 269% of annual production with 
the addition of new proved reserves, excluding 
acquisitions and divestitures. 

The successes achieved in 2021 have positioned 
us well for 2022 and our priorities are clear:  

•  Realize our 9th safest year ever

•  Drive efficiency into every aspect of our business 

•  Continue to generate significant free cash flow 
to maximize direct returns to shareholders and 
reduce net debt to $3 billion in the second  
half of 2022 

•  Make disciplined capital investments of 

approximately $1.5 billion to maintain oil and 
condensate production of 180 to 190 Mbbls/d

•  Make tangible progress on our goal to reduce 
Scope 1 & 2 GHG intensity by 50% by 2030 

ii  |  2021 Annual Report

Ovintiv Inc.

10 K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2021
or

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-39191

Ovintiv Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

84-4427672
(I.R.S. Employer Identification No.)

Suite 1700, 370 17th Street, Denver, Colorado, 80202, U.S.A.
(Address of principal executive offices)

Registrant’s telephone number, including area code (303) 623-2300
Securities registered pursuant to Section 12(b) of the Act:

Title of each
class

Common Shares

Trading Symbol

OVV

Name of each exchange
on which registered

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes È No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.

Yes ‘ No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit such files).

Yes È No ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”

Ovintiv Inc.

2021 Annual Report | 1

“accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer È
Non-accelerated filer ‘

Accelerated filer
Smaller reporting company ‘
Emerging growth company ‘

‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act. ‘

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of
the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act
(15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. È

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ‘ No È

Aggregate market value of the voting and non-voting common equity held by non-affiliates of
registrant as of June 30, 2021
Number of registrant’s shares of common stock outstanding as of February 18, 2022, at $0.01 par
value

$ 8,216,326,855

256,769,168

Documents Incorporated by Reference

Portions of registrant’s definitive proxy statement (“Proxy Statement”) for the registrant’s 2022 annual meeting of
shareholders to be held May 4, 2022 (to be filed with the Securities and Exchange Commission prior to May 4, 2022)
are incorporated by reference in Part III of this Annual Report on Form 10-K.

Auditor Firm ID: 271 Auditor Name: PricewaterhouseCoopers LLP Auditor Location: Calgary, Alberta, Canada

2 | 2021 Annual Report

Ovintiv Inc.

Items 1 and 2. Business and Properties
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures

OVINTIV INC.
FORM 10-K
TABLE OF CONTENTS

PART I

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity

Securities

Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.Controls and Procedures
Item 9B.Other Information

PART III

Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services

Item 15. Exhibits and Financial Statement Schedules
Signatures

PART IV

9
32
46
47
47

48
50
51
80
82
144
144
144

145
145
145
145
145

146
153

Ovintiv Inc.

2021 Annual Report | 3

DEFINITIONS

Unless the context otherwise requires or otherwise expressly stated, all references in this Annual Report on Form 10-K
to “Ovintiv,” the “Company,” “us,” “we,” “our” and “ours,” (i) for periods until the Reorganization (as hereinafter
defined), refer to Encana Corporation and its consolidated subsidiaries and (ii) for periods after the Reorganization,
refer to Ovintiv Inc. and its consolidated subsidiaries. In addition, the following are other abbreviations and definitions
of certain terms used within this Annual Report on Form 10-K:

“AECO” means Alberta Energy Company and is the Canadian benchmark price for natural gas.

“ASC” means Accounting Standards Codification.

“ASU” means Accounting Standards Update.

“bbl” or “bbls” means barrel or barrels.

“bbls/d” means barrels per day.

“Bcf” means billion cubic feet.

“Bcf/d” means billion cubic feet per day.

“BOE” means barrels of oil equivalent.

“BOE/d” means barrels of oil equivalent per day.

“Btu” means British thermal units, a measure of heating value.

“DD&A” means depreciation, depletion and amortization expenses.

“ESG” means environmental, social and governance.

“FASB” means Financial Accounting Standards Board.

“GHG” means greenhouse gas.

“LIBOR” means London Interbank Offered Rate.

“Mbbls” means thousand barrels.

“Mbbls/d” means thousand barrels per day.

“MBOE” means thousand barrels of oil equivalent.

“MBOE/d” means thousand barrels of oil equivalent per day.

“Mcf” means thousand cubic feet.

“Mcf/d” means thousand cubic feet per day.

“MD&A” means Management’s Discussion and Analysis of Financial Condition and Results of Operations.

“MMbbls” means million barrels.

“MMbbls/d” means million barrels per day.

“MMBOE” means million barrels of oil equivalent.

“MMBOE/d” means million barrels of oil equivalent per day.

“MMBtu” means million Btu.

“MMcf” means million cubic feet.

“MMcf/d” means million cubic feet per day.

“NCIB” means normal course issuer bid.

“NGL” or “NGLs” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“NYSE” means New York Stock Exchange.

“OPEC” means Organization of the Petroleum Exporting Countries.

“SCOOP” means South Central Oklahoma Oil Province.

“SEC” means United States Securities and Exchange Commission.

4 | 2021 Annual Report

Ovintiv Inc.

“SIB” means substantial issuer bid.

“STACK” means Sooner Trend, Anadarko basin, Canadian and Kingfisher counties

“Standardized measure” means the present value of after-tax future net revenues discounted at 10% per annum.

“S&P 400” means Standard and Poor’s MidCap 400 index.

“S&P 500” means Standard and Poor’s 500 index.

“S&P/TSX Composite Index” means Standard and Poor’s index for Canadian equity markets.

“TSX” means Toronto Stock Exchange.

“U.S.”, “United States” or “USA” means United States of America.

“U.S. GAAP” means U.S. Generally Accepted Accounting Principles.

“WTI” means West Texas Intermediate.

CONVERSIONS

In this Annual Report on Form 10-K, a conversion of natural gas volumes to BOE is on the basis of six Mcf to one bbl.
BOE is based on a generic energy equivalency conversion method primarily applicable at the burner tip and does not
represent economic value equivalency at the wellhead. Given that the value ratio based on the current price of oil as
compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1
basis may be misleading as an indication of value, particularly if used in isolation.

CONVENTIONS

Unless otherwise specified, all dollar amounts are expressed in U.S. dollars, all references to “dollars”, “$” or “US$” are
to U.S. dollars and all references to “C$” are to Canadian dollars. All amounts are provided on a before tax basis, unless
otherwise stated. In addition, all information provided herein is presented on an after royalties basis.

The terms “include”, “includes”, “including” and “included” are to be construed as if they were immediately followed by
the words “without limitation”, except where explicitly stated otherwise.

The term “liquids” is used to represent oil, NGLs and condensate. The term “liquids rich” is used to represent natural
gas streams with associated liquids volumes. The term “play” is used to describe an area in which hydrocarbon
accumulations or prospects of a given type occur. The Company’s focus of development is on hydrocarbon
accumulations known to exist over a large areal expanse and/or thick vertical section and are developed using
hydraulic fracturing. This type of development typically has a lower geological and/or commercial development risk
and lower average decline rate, when compared to conventional development.

The term “Core Assets” refer to plays that have a deep inventory of drilling opportunities and are the primary focus of
Ovintiv’s capital investment and development, providing a competitive and efficient profile. Ovintiv continually reviews
and evaluates its strategy and changing market conditions in order to maximize cash flow generation from the Core
Assets located in some of the best plays in North America.

References to information contained on the Company’s website at www.ovintiv.com are not incorporated by reference
into, and does not constitute a part of, this Annual Report on Form 10-K.

Ovintiv Inc.

2021 Annual Report | 5

FORWARD-LOOKING STATEMENTS AND RISK

This Annual Report on Form 10-K, and the other documents incorporated herein by reference, contain certain forward-
looking statements or information (collectively, “forward-looking statements”) within the meaning of applicable
securities legislation, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements, except for statements of historical fact, that relate to the
anticipated future activities, plans, strategies, objectives or expectations of the Company are forward-looking
statements. When used in this Annual Report on Form 10-K, and the other documents incorporated herein by
reference, the use of words and phrases including “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,”
“focused on,” “forecast,” “guidance,” “intends,” “maintain,” “may,” “opportunities,” “outlook,” “plans,” “potential,”
“strategy,” “targets,” “will,” “would” and other similar terminology is intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words or phrases. Forward-looking statements
include statements regarding: expectations of plans, strategies and objectives of the Company, including anticipated
development activity and investment levels; the Company’s Core Assets, including the composition of Core Assets
and the anticipated capital returns associated with Core Assets; the Company’s capital allocation strategy, capital
structure, anticipated sources of funding, growth in long-term shareholder value and ability to preserve balance sheet
strength; the benefits of the Company’s multi-basin portfolio, including operational and commodity flexibility, and the
ability to repeat and deploy successful operational learnings; the Company’s ability to maximize cash flow and the
application of excess cash flows to reduce long-term debt; the ability of the Company to timely meet and maintain
certain targets contained in the Company’s corporate guidance, including with respect to capital efficiency, cash flow
generation, debt reduction and leverage, the return of capital to shareholders, oil, NGLs and natural gas production,
GHG emissions and ESG performance; the ability of the Company to lower costs and improve capital and operating
efficiencies, and the ability to maintain such cost savings and efficiencies; anticipated oil, NGL and natural gas prices;
the anticipated success of, and benefits from, technology and innovation, including the cube development model,
Simul-Frac techniques and other new or advanced drilling techniques or well completion designs; anticipated drilling
and completions activity, including the number of drilling rigs and frac crews utilized; anticipated well inventory,
drilling costs and cycle times; the Company’s ability to optimize well completion designs, including changes to
horizontal lateral lengths, water and proppant volumes, number of frac stages, and well spacing and stacking;
anticipated proceeds and future benefits from various joint venture, partnership and other agreements; estimates of
the Company’s oil, NGLs and natural gas reserves and recoverable quantities; the Company’s expected oil, NGLs and
natural gas production and commodity mix, including growth of high margin liquids volumes; future interest expense;
the Company’s ability to access credit facilities and other sources of liquidity to meet financial obligations throughout
commodity price cycles; the Company’s ability to manage debt and financial ratios, finance growth and comply with
financial covenants; the implementation and outcomes of risk management programs, including exposure to
commodity price, interest rate and foreign exchange fluctuations, the volume of oil, NGLs and natural gas production
hedged, and the markets or physical sales locations hedged; the impact of changes in federal, state, provincial, local
and tribal laws, rules and regulations; anticipated compliance with current or proposed environmental legislation,
including the costs thereof; adequacy of provisions for abandonment and site reclamation costs; the Company’s
operational and financial flexibility, discipline and ability to respond to evolving market conditions; the declaration and
payment of future dividends and the anticipated repurchase the Company’s outstanding common shares; the
adequacy of the Company’s provision for taxes and legal claims; the Company’s ability to manage cost inflation and
expected cost structures, including expected operating, transportation, processing and labor expenses; the
competitiveness of the Company against its peers, including with respect to capital, materials, people, assets and
production; global oil, NGL and natural gas inventories and global demand for oil, NGL and natural gas; the outlook of
the oil and natural gas industry generally, including impacts from changes to the geopolitical environment; anticipated
staffing levels; anticipated payments related to the Company’s commitments, obligations and contingencies, and the
ability to satisfy the same; and the possible impact of accounting and tax pronouncements, rule changes and
standards.

Readers are cautioned against unduly relying on forward-looking statements which, by their nature, involve numerous
assumptions and are subject to both known and unknown risks and uncertainties (many of which are beyond our
control) that may cause such statements not to occur, or actual results to differ materially and/or adversely from
those expressed or implied. These assumptions include: future commodity prices and basis differentials; future foreign
exchange rates; the ability of the Company to access credit facilities and shelf prospectuses; assumptions contained in
the Company’s corporate guidance; data contained in key modeling statistics; the availability of attractive commodity
or financial hedges and the enforceability of risk management programs; the Company’s ability to capture and
maintain gains in productivity and efficiency; benefits from technology and innovations; expectations that

6 | 2021 Annual Report

Ovintiv Inc.

counterparties will fulfill their obligations pursuant to gathering, processing, transportation and marketing agreements;
access to adequate gathering, transportation, processing and storage facilities; assumed tax, royalty and regulatory
regimes; expectations and projections made in light of, and generally consistent with, the Company’s historical
experience and its perception of historical industry trends, including with respect to the pace of technological
development; and the other assumptions contained herein.

Risks and uncertainties that may affect the Company’s financial or operating performance include: market and
commodity price volatility, including widening price or basis differentials, and the associated impact to the Company’s
stock price, credit rating, financial condition, oil, NGLs and natural gas reserves and access to liquidity; uncertainties,
costs and risks involved in our operations, including hazards and risks incidental to both the drilling and completion of
wells and the production, transportation, marketing and sale of oil, NGL and natural gas; availability of equipment,
services, resources and personnel required to perform the Company’s operating activities; suspension of or changes to
corporate guidance, and associated impacts to production and cash flows; our ability to generate sufficient cash flow
to meet our obligations and reduce debt; the impact of a pandemic, epidemic or other widespread outbreak of an
infectious disease (such as the ongoing COVID-19 pandemic) on commodity prices and the Company’s operations,
including maintaining adequate staffing levels, securing operational inputs, executing all or a portion of our business
plan and managing cyber-security risks associated with remote work; our ability to secure adequate transportation
and storage for oil, NGL and natural gas, as well as access to end markets or physical sales locations; interruptions to
oil, NGLs and natural gas production, including potential curtailments of gathering, transportation or refining
operations; variability and discretion of the Company’s board of directors (the “Board of Directors”) to declare and
pay dividends, if any; the timing and costs associated with drilling and completing wells, and the construction of well
facilities and gathering and transportation pipelines; business interruption, property and casualty losses (including
weather related losses) or unexpected technical difficulties and the extent to which insurance covers any such losses;
risks associated with decommissioning activities, including timing and costs thereof; counterparty and credit risk; the
actions of members of OPEC and other state-controlled oil companies with respect to oil, NGLs and natural gas
production and the resulting impacts on oil, NGLs and natural gas prices; changes in our credit rating and its effect on
our ability to access liquidity, including the costs thereof; changes in political or economic conditions in the U.S. and
Canada, including fluctuations in foreign exchange rates, tariffs, taxes, interest rates and inflation rates; failure to
achieve or maintain our cost and efficiency initiatives; risks associated with technology, including electronic, cyber and
physical security breaches; changes in royalty, tax, environmental, GHG, carbon, accounting and other laws, rules or
regulations or the interpretations thereof; our ability to timely obtain environmental or other necessary government
permits or approvals; the Company’s ability to utilize U.S. net operating loss carryforwards and other tax attributes;
risks associated with existing and potential lawsuits and regulatory actions made against the Company, including with
respect to environmental liabilities and other liabilities that are not adequately covered by an effective indemnity or
insurance; risks related to the purported causes and impact of climate change, and the costs therefrom; the impact of
disputes arising with our partners, including the suspension of certain obligations and the inability to dispose of assets
or interests in certain arrangements; the Company’s ability to acquire or find additional oil, NGLs and natural gas
reserves; imprecision of oil, NGLs and natural gas reserves estimates and estimates of recoverable quantities, including
the impact to future net revenue estimates; land, legal, regulatory and ownership complexities inherent in the U.S.,
Canada and other applicable jurisdictions; risks associated with past and future acquisitions or divestitures of oil and
natural gas assets, including the receipt of any contingent amounts contemplated in the transaction agreements (such
transactions may include third-party capital investments, farm-ins, farm-outs or partnerships, which the Company may
refer to from time to time as “partnerships” or “joint ventures” and the funds received in respect thereof which the
Company may refer to from time to time as “proceeds”, “deferred purchase price” and/or “carry capital”, regardless of
the legal form); our ability to repurchase the Company’s outstanding shares of common stock, including risks
associated with obtaining any necessary stock exchange approvals; the existence of alternative uses for the
Company’s cash resources which may be superior to the payment of dividends or effecting repurchases of the
Company’s outstanding shares of common stock; risks and uncertainties described in Item 1A. Risk Factors of this
Annual Report on Form 10-K; and other risks and uncertainties impacting the Company’s business as described from
time to time in the Company’s other periodic filings with the SEC or Canadian securities regulators.

Readers are cautioned that the assumptions, risks and uncertainties referenced above, and in the other documents
incorporated herein by reference, are not exhaustive. Although the Company believes the expectations represented by
its forward-looking statements are reasonable based on the information available to it as of the date such statements
are made, forward-looking statements are only predictions and statements of our current beliefs and there can be no
assurance that such expectations will prove to be correct. All forward-looking statements contained in this Annual

Ovintiv Inc.

2021 Annual Report | 7

Report on Form 10-K are made as of the date of this document (or in the case of a document incorporated herein by
reference, the date of such document) and, except as required by law, the Company undertakes no obligation to
update publicly or revise any forward-looking statements. The forward-looking statements contained or incorporated
by reference in this Annual Report on Form 10-K, and all subsequent forward-looking statements attributable to the
Company, whether written or oral, are expressly qualified by these cautionary statements.

The reader should carefully read the risk factors described in Item 1A. Risk Factors of this Annual Report on Form 10-K,
and in the other documents incorporated herein by reference, for a description of certain risks that could, among
other things, cause actual results to differ from these forward-looking statements.

8 | 2021 Annual Report

Ovintiv Inc.

Items 1 and 2. Business and Properties

GENERAL

PART I

Ovintiv is a leading North American oil and natural gas exploration and production company that is focused on
developing its multi-basin portfolio of top tier oil and natural gas assets located in the United States and Canada.
Ovintiv’s operations also include the marketing of oil, NGLs and natural gas. As at December 31, 2021, all of the
Company’s reserves and production were located in North America.

Ovintiv’s principal office is located at 370 – 17th Street, Suite 1700, Denver, Colorado 80202, U.S.A. Ovintiv’s shares of
common stock are listed and posted for trading on the NYSE and the TSX under the symbol “OVV”.

Available Information

Ovintiv is subject to the informational requirements of the United States Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and, in accordance with the Exchange Act, it also files reports with and furnishes other
information to the SEC. The public may obtain any document Ovintiv files with or furnishes to the SEC from the SEC’s
Electronic Document Gathering, Analysis, and Retrieval system (“EDGAR”), which can be accessed at www.sec.gov, or
via the System for Electronic Document Analysis and Retrieval (“SEDAR”), which can be accessed at www.sedar.com,
as well as from commercial document retrieval services.

Copies of this Annual Report on Form 10-K and the documents incorporated herein by reference may be obtained on
request without charge from Ovintiv’s Corporate Secretary, 370 – 17th Street, Suite 1700, Denver, Colorado 80202,
U.S.A., telephone: (303) 623-2300. Ovintiv also provides access without charge to all of the Company’s SEC filings,
including copies of this Annual Report on Form 10-K and the documents incorporated herein by reference, current
reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act, as soon as reasonably practicable after filing or furnishing, on Ovintiv’s website located at
www.ovintiv.com.

STRATEGY AND APPROACH

Ovintiv is one of the largest producers of oil, NGLs and natural gas in North America. The Company is committed to
safely producing products to drive progress and improve lives with respect and responsibility. Ovintiv’s products
provide energy, which in turn supports better education, healthcare and equality opportunities. Ovintiv looks to
pioneer innovative ways to provide safe, reliable and affordable energy.

The Company’s culture is unique and underpinned by our values. Ovintiv has a track record of driving efficiency in
every part of its business. The Company manages risk by continuously driving efficiency gains, creating optionality
from a high-quality multi-basin and multi-product portfolio, building flexibility into commercial agreements and an
active fundamentals team that provides commodity price risk management, with results being delivered in a socially
and environmentally responsible manner.

Ovintiv aims to be the leading North American producer of oil, NGLs and natural gas by generating free cash flow and
delivering quality returns of both cash to shareholders and on the capital the Company invests in its multi-basin
portfolio. The pillars that support the execution of the Company’s strategy include:

• Execution Excellence - The Company is a leader in horizontal drilling utilizing cube development and

innovative completions methods that leverage advanced technology. Applicable technologies and operating
practices are quickly deployed across the Company’s multi-basin portfolio to achieve a competitive
advantage. Technology and innovation enable Ovintiv to reduce development risks, enhance capital and
operating efficiencies, and sustainably enhance margins and returns while minimizing its environmental
footprint. Ovintiv strives to be a leading operator and has a historical track record of safely delivering quality
returns through the commodity price cycle.

Ovintiv Inc.

2021 Annual Report | 9

• Disciplined Capital Allocation - Ovintiv’s capital investment strategy focuses on a limited number of Core

Assets to generate cash flow and quality returns. Ovintiv’s investment strategy is flexible, allowing for capital
programs to be quickly right-sized in response to the macro commodity-price environment, which preserves
excess cash flow to return to shareholders and maintains balance sheet strength.

In the fourth quarter of 2021, Ovintiv initiated an innovative capital allocation framework, whereby 25 percent
of the Company’s Non-GAAP Cash Flow in excess of capital expenditures and base dividend is returned to
shareholders. For further information on the capital allocation framework, refer to Item 5 of this Annual Report
on Form 10-K.

• Commercial Acumen & Risk Management - While Ovintiv’s multi-product, multi-basin portfolio and capital

investment strategy provide optionality and flexibility, the Company also leverages its innovative supply chain
and market fundamentals expertise to support capital allocation and quickly respond in a dynamic commodity
price environment. The Company actively monitors and manages market volatility through diversification of
price risks and market access risks to enhance margins and returns.

• Drive Environmental, Social and Corporate Governance Progress - Ovintiv embraces stakeholder and societal
expectations to continue to grow and change in response to climate change, diversity, equity, inclusion and
governance. Ovintiv believes that strong ESG performance can directly contribute to increased efficiency,
economic performance, value creation and sustainability. Since 2005, the Company has published an annual
Sustainability Report which communicates Ovintiv’s ESG performance and tracks progress on key issues
important to stakeholders. Additional information on Ovintiv’s ESG practices can be found on the Company’s
sustainability website at sustainability.ovintiv.com.

As part of the Company’s commitment to foster innovation and drive emissions reductions, Ovintiv has
established an emissions reduction task force chaired by the Company’s Chief Operations Engineer with the
purpose of identifying and evaluating operational emission reduction opportunities and other environmental
improvements. The Company has focused on improving wellsite and completions designs to reduce fluid
usage, methane venting and fugitive emissions. Moreover, Ovintiv has looked to foster collaboration with third
party partners, such as government and other organizations to knowledge share and further advance future
potential emission reduction technology.

In addition, Ovintiv announced a new commitment to reduce Scope 1 and 2 GHG emissions intensity by
50 percent compared to 2019 levels, to be achieved within the next eight years. This new emissions reduction
target is also tied to the Company’s employees’ annual compensation program.

The foundation of the Company’s strategy is built upon the following elements:

• Top Tier Multi-Basin Assets - The Company holds a multi-basin portfolio of prolific oil and liquids rich plays in

North America, including: the Permian in west Texas, the Anadarko in west-central Oklahoma and the
Montney in northeast British Columbia and northwest Alberta. Ovintiv’s multi-basin portfolio both diversifies
risk and provides optionality due to the commodity mix of the Company’s plays and their geographic
locations. As of December 31, 2021, the Company’s estimated net proved reserves comprised approximately
25 percent oil, 27 percent NGLs, which includes seven percent plant condensate, and 48 percent natural gas.

• Financial Strength - The Company has ample access to liquidity to allow the business to be managed through

the commodity price cycles.

Currently, the Company has access to committed credit facilities totaling $4 billion maturing in July 2024, at
attractive rates. During 2021, Ovintiv reduced total long-term debt by over $2.1 billion and is targeting a Net
Debt balance of $3 billion. The Company expects to achieve its Net Debt target in the second half of 2022,
assuming commodity prices of $85.00 per barrel for WTI oil and $4.50 per MMBtu for NYMEX natural gas.

10 | 2021 Annual Report

Ovintiv Inc.

• People and Values - Ovintiv’s core values of one, agile, innovative and driven guide the Company’s actions.

The foundational values of integrity, safety, sustainability, trust and respect guide the organization’s behavior
and define expectations in the workplace. Ovintiv takes pride not only in what the Company achieves, but also
in how its goals are accomplished.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7 of this
Annual Report on Form 10-K for the impact and response of the coronavirus pandemic during 2021 on the Company.

REPORTING SEGMENTS

Ovintiv’s operations are focused on the finding and development of oil, NGLs and natural gas reserves. The Company
is also focused on creating and capturing additional value through its market optimization segment. The Company
conducts a substantial portion of its business through subsidiaries. Ovintiv’s operating and reportable segments are:
(a) USA Operations; (b) Canadian Operations; and (c) Market Optimization.

• USA Operations includes the exploration for, development of, and production of oil, NGLs, natural gas and
other related activities within the U.S. Core Assets that are part of Ovintiv’s strategic development focus
include: Permian in west Texas and Anadarko in west-central Oklahoma. Other Upstream Operations comprise
assets that are not part of Ovintiv’s current strategic focus and primarily include: Bakken in North Dakota and
Uinta in central Utah. The Company’s Eagle Ford assets in south Texas were sold in the second quarter of
2021.

• Canadian Operations includes the exploration for, development of, and production of oil, NGLs, natural gas

and other related activities within Canada. Core Assets that are part of Ovintiv’s strategic development focus
include Montney in northeast British Columbia and northwest Alberta. Other Upstream Operations comprise
assets that are not part of Ovintiv’s current strategic focus and primarily include: Horn River in northeast
British Columbia and Wheatland in southern Alberta. The Company’s Duvernay assets in west-central Alberta
were sold in the second quarter of 2021.

• Market Optimization activities are managed by the Midstream, Marketing & Fundamentals team, which is
primarily responsible for the sale of the Company’s proprietary production to third party customers and
enhancing the associated netback price. Market Optimization activities also include third party purchases and
sales of product to provide operational flexibility and cost mitigation for transportation commitments, product
type, delivery points and customer diversification.

For additional information regarding the reporting segments, see Note 2 to the audited Consolidated Financial
Statements under Item 8 of this Annual Report on Form 10-K.

Ovintiv Inc.

2021 Annual Report | 11

OIL AND NATURAL GAS PROPERTIES AND ACTIVITIES

The following map reflects the location of Ovintiv’s North American landholdings and assets.

“Core Assets” refer to plays that have a deep inventory of drilling opportunities and are the primary focus of Ovintiv’s
capital investment and development, providing a competitive and efficient profile. Other Upstream Operations
comprise base assets that receive limited capital that is directed to maintenance or high margin locations that
generate cash flows and returns.

The Company’s plays including, “Permian”, “Anadarko”, “Bakken”, “Uinta”, “Montney”, “Horn River” and “Wheatland”
refer to the specific areas and locations in which Ovintiv holds an interest in the acreage.

12 | 2021 Annual Report

Ovintiv Inc.

USA Operations

Overview: In 2021, the USA Operations had total capital investment of approximately $1,125 million, drilled
approximately 148 net wells primarily in Permian and Anadarko and production averaged approximately 140.0
Mbbls/d of oil, approximately 78.0 Mbbls/d of NGLs and approximately 490 MMcf/d of natural gas. At
December 31, 2021, the USA Operations had an established land position of approximately 929,000 net acres including
approximately 152,000 net undeveloped acres. The USA Operations accounted for 66 percent of upstream production
revenues, excluding the impacts of hedging, and 63 percent of total proved reserves as at December 31, 2021.

During 2021, the Company divested its Eagle Ford assets, which included approximately 42,000 net acres, for
proceeds of $764 million, after closing adjustments.

The following tables summarize the USA Operations landholdings, producing wells and daily production as at and for
the periods indicated.

Landholdings (1)

Developed
Acreage

Undeveloped
Acreage

Total
Acreage

(thousands of acres at December 31, 2021)

Gross Net Gross

Net Gross Net

Permian
Anadarko
Other Upstream Operations (2)

Bakken
Uinta
Other (3)

Total USA Operations

104
540

99
233
173

1,149

97
345

65
192
78

777

24
16

7
22
267

336

9
7

7
17
112

152

128
556

106
255
440

1,485

106
352

72
209
190

929

Average
Working
Interest

83%
63%

68%
82%
43%

62%

(1) Excludes interests in royalty acreage.
(2) Other Upstream Operations comprises assets that are not part of the Company’s strategic focus.
(3) Other may include assets where the Company may pursue growth opportunities.

Producing Wells

(number of wells at December 31, 2021) (1)

Permian
Anadarko
Other Upstream Operations (2)

Bakken
Uinta
Other (3)

Total USA Operations

Oil

Natural Gas

Total

Gross

Net Gross Net Gross

Net

1,658
1,709

1,560
728

13
457

10
115

1,671
2,166

1,570
843

643
1,432
-

254
1,121
-

32
17
94

1
9
77

675
1,449
94

255
1,130
77

5,442

3,663

613

212

6,055

3,875

(1) Figures exclude wells capable of producing, but not producing.
(2) Other Upstream Operations comprises assets that are not part of the Company’s strategic focus.
(3) Other may include assets where the Company may pursue growth opportunities.

Production

(average daily)

Permian
Anadarko
Other Upstream Operations (1)

Eagle Ford (2)
Bakken
Uinta
Other (3)

Oil
(Mbbls/d)

2021

2020

68.5
39.5

5.8
13.3
12.7
0.2

63.2
43.0

17.7
16.1
10.7
0.2

Plant Condensate
(Mbbls/d)
2021

NGLs

Other
(Mbbls/d)

Total
(Mbbls/d)

Natural Gas
(MMcf/d)

2020 2021

2020 2021

2020 2021

2020

3.0
6.2

0.3
0.8
0.2
-

2.6
6.6

1.0
0.7
0.1
0.1

24.6
35.9

22.7
39.2

27.6
42.1

25.3
45.8

132
301

1.3
5.0
0.6
0.1

4.2
3.6
0.5
0.1

1.6
5.8
0.8
0.1

5.2
4.3
0.6
0.2

10
30
12
5

124
331

31
28
11
4

Total USA Operations

140.0

150.9

10.5

11.1

67.5

70.3

78.0

81.4

490

529

(1) Other Upstream Operations comprises assets that are not part of the Company’s strategic focus.
(2) Eagle Ford was divested during the second quarter of 2021.
(3) Other may include assets where the Company may pursue growth opportunities.

Ovintiv Inc.

2021 Annual Report | 13

Permian

Permian is an oil play located in west Texas in Midland, Martin, Howard, Glasscock and Upton counties. The properties
within the play are characterized by exposure of up to 10 potential producing horizons spanning approximately 3,000
feet of stratigraphy or stacked pay, an extensive production history and developed infrastructure. At December 31,
2021, the Company controlled approximately 106,000 net acres in the play. The current focus of development is on
the Spraberry and Wolfcamp formations in the Midland basin, where Ovintiv holds a large position. During 2021, the
Company drilled 80 horizontal net wells. In 2021, production averaged approximately 68.5 Mbbls/d of oil,
approximately 27.6 Mbbls/d of NGLs and approximately 132 MMcf/d of natural gas.

The Company is focused on capturing efficiency improvements and maximizing liquids and natural gas recovery by
accessing layers of the stacked pay simultaneously using the cube development model. This approach utilizes multi-
well pads, multi-rig spreads and frac spreads running in parallel to optimize cycle times and increase capital efficiency,
while minimizing the surface footprint. Cost reductions and improved cycle times were also achieved through
innovative strategies, including the use of Simul-Frac techniques, which is the process of fracking pairs of wells at the
same time instead of a single well, optimization of facility designs and the use of locally sourced wet sand in
completions activities. The Company’s focus on innovation and efficiency decreased drilling and completions costs by
approximately 10 percent compared to the prior year.

Oil and natural gas facilities include field gathering systems, storage batteries, saltwater disposal systems, separation
equipment and pumping units. The majority of Ovintiv’s acreage and associated oil production is dedicated to a
pipeline gathering agreement, which has a total remaining term of 12 years with optional renewal terms. In the event of
pipeline capacity constraints, Ovintiv’s oil production is trucked by various third parties. Natural gas is delivered by the
Company to the purchaser’s meter and pipeline interconnection point in the field.

Anadarko

Anadarko is a liquids rich play located in west-central Oklahoma in Blaine, Canadian, Custer, Dewey, Garvin, Grady,
Kingfisher, Major, McClain and Stephens counties. The majority of the Anadarko properties are located in the black oil
window of the STACK which comprises the Woodford, Meramec and Osage formations spanning up to 800 feet of
stratigraphy and in the SCOOP which comprises the Woodford, Sycamore, Caney and Springer formations spanning
up to 1,150 feet of stratigraphy. The play is characterized by silt, shale and carbonate formations which provide
multiple potential oil and natural gas targets making the play ideal for cube development and long laterals. At
December 31, 2021, the Company controlled approximately 352,000 net acres in the play, with development currently
targeting liquids rich prospects in the Woodford, Springer, Meramec and Caney formations. During 2021, the Company
drilled 51 horizontal net wells. In 2021, production averaged approximately 39.5 Mbbls/d of oil, approximately 42.1
Mbbls/d of NGLs and approximately 301 MMcf/d of natural gas.

Since acquiring the asset in February 2019, the Company has significantly reduced cycle times; decreased drilling and
completion costs by utilizing cube development, Simul-Frac techniques, and locally sourced wet sand; and enhanced
performance through optimizing artificial gas lift. The Company’s focus on innovation and efficiency decreased drilling
and completions costs by approximately 39 percent since acquiring the asset in February 2019. In addition to reducing
costs, locally sourced wet sand has reduced sand related CO2 emissions as well as airborne silica dust at the
workplace and in surrounding communities.

The play has significant existing infrastructure and has ample access to major pricing hubs, including Cushing,
Oklahoma, the U.S. Gulf Coast, Mont Belvieu, Texas and Conway, Kansas, and a number of Mid-Continent natural gas
pipelines. The Company’s oil and natural gas production is gathered at various production facilities, with the majority
of oil subsequently transported to sales points by pipeline or sold at and trucked from tank batteries. The majority of
Ovintiv’s acreage and associated production is dedicated to long-term gathering and processing agreements with
various third parties, which have remaining terms ranging from three to 10 years.

14 | 2021 Annual Report

Ovintiv Inc.

Other Upstream Operations

Bakken

Bakken is an oil play located primarily in McKenzie and Dunn counties of North Dakota, and in Richland county of
Montana. The focus of development includes targets in the Bakken and Three Forks formations. During 2021, the
Company continued to focus on maximizing liquids and natural gas recovery through spacing and stacking
optimization, improving wellbore design and optimizing completions, which reduced costs and improved well
performance.

At December 31, 2021, the Company controlled approximately 72,000 net acres in the play. During 2021, the Company
drilled 11 horizontal net wells. Production averaged approximately 13.3 Mbbls/d of oil, approximately 5.8 Mbbls/d of
NGLs and approximately 30 MMcf/d of natural gas.

The majority of Ovintiv’s acreage and associated production is dedicated to a gathering and processing agreement,
which has a remaining term of 10 years. Ovintiv uses a combination of pipelines and trucks to transport oil to sales
points.

Uinta

Uinta is an oil play located in northeastern Utah primarily in Duchesne and Uintah counties. The Uinta basin provides a
deep inventory of multiple stacked oil horizons with approximately 2,600 feet of oil saturated reservoir rock. At
December 31, 2021, the Company controlled approximately 209,000 net acres in the play. During 2021, the Company
drilled six horizontal net wells. Production averaged approximately 12.7 Mbbls/d of oil, approximately 0.8 Mbbls/d of
NGLs and approximately 12 MMcf/d of natural gas.

During 2021, the Company drilled six gross wells on two pads utilizing cube development which captured capital
efficiencies.

Oil production from Uinta is waxy, ranging from yellow to black, and is transported primarily by truck due to the high
heat pour point characteristics of the oil. The Company has oil volume minimum delivery commitments with one
refinery in the Salt Lake City area through 2025. Oil production that is not subject to sales commitments is sold
monthly in spot markets or transported by rail to other markets, mainly the Gulf Coast.

Ovintiv Inc.

2021 Annual Report | 15

Canadian Operations

Overview: In 2021, the Canadian Operations had total capital investment of approximately $391 million, drilled
approximately 85 horizontal net wells primarily in Montney and production averaged approximately 56.5 Mbbls/d of
oil and NGLs and approximately 1,066 MMcf/d of natural gas. At December 31, 2021, the Canadian Operations had an
established land position of approximately 1.3 million net acres including approximately 773,000 net undeveloped
acres. The Canadian Operations accounted for 34 percent of upstream production revenues, excluding the impacts of
hedging, and 37 percent of total proved reserves as at December 31, 2021.

During 2021, the Company divested of approximately 264,000 net acres primarily in Duvernay for proceeds of
$238 million, after closing adjustments.

The following tables summarize the Canadian Operations landholdings, producing wells and daily production as at and
for the periods indicated.

Landholdings (1)

Developed
Acreage

Undeveloped
Acreage

Total
Acreage

(thousands of acres at December 31, 2021)

Gross Net

Gross Net Gross

Net

Montney
Other Upstream Operations (2)
Total Canadian Operations

547
174

721

367
123

490

600
518

1,118

385
388

773

1,147
692

752
511

1,839

1,263

Average
Working
Interest

66%
74%

69%

(1) Excludes interests in royalty acreage.
(2) Other primarily includes Wheatland and Horn River, as well as assets where the Company may pursue growth

opportunities.

Producing Wells

(number of wells at December 31, 2021) (1)

Montney
Other Upstream Operations (2)
Total Canadian Operations

(1) Figures exclude wells capable of producing, but not producing.
(2) Other primarily includes Wheatland and Horn River.

Oil

Natural Gas

Total

Gross Net Gross

Net

Gross

Net

7
6

6
5

1,738
557

1,389
466

1,745
563

1,395
471

13

11

2,295

1,855

2,308

1,866

NGLs

Other
(Mbbls/d)

Total
(Mbbls/d)

Natural Gas
(MMcf/d)

Production

(average daily)

Montney
Other Upstream Operations

Duvernay (1)
Other (2)

Total Canadian Operations

Oil
(Mbbls/d)

2021

2020

0.1

0.2
-

0.3

0.1

0.5
-

0.6

Plant Condensate
(Mbbls/d)
2021

2020 2021

2020 2021

2020 2021

2020

39.6

37.1

15.7

13.9

55.3

51.0

1,020

918

0.8
-

40.4

3.9
-

0.1
-

1.1
-

0.9
-

5.0
-

10
36

41
41

41.0

15.8

15.0

56.2

56.0

1,066

1,000

(1) Duvernay was divested during the second quarter of 2021.
(2) Other primarily includes Wheatland and Horn River.

16 | 2021 Annual Report

Ovintiv Inc.

Montney

Montney is primarily a condensate rich natural gas play located in northeast British Columbia and northwest Alberta.
The play includes properties that are primarily located in the Montney formation, where Ovintiv is currently targeting
the development of condensate-rich locations, but also includes landholdings with incremental producing formations
such as Cadomin and Doig. The Montney formation is characterized by up to six stacked horizons spanning over 1,000
feet of stratigraphy and is being developed exclusively with horizontal well technology. In 2021, total production from
the play averaged approximately 55.4 Mbbls/d of oil and NGLs and approximately 1,020 MMcf/d of natural gas. As at
December 31, 2021, the Company controlled approximately 752,000 net acres and 385,000 net undeveloped acres in
the play.

Ovintiv utilizes cube development which has provided sustained efficiencies resulting in reduced cycle times and well
costs. During 2021, cost reductions and efficiencies were obtained through optimizing wellbore casing designs,
improved wellsite design and enhancing gas lift through innovative automation technology. The Company’s focus on
innovation and efficiency decreased drilling and completions costs by approximately 11 percent compared to the prior
year and increased lateral lengths of wells drilled, where the longest lateral well drilled during the year was over 15,200
feet. In 2021, the Company drilled approximately 84 horizontal net wells.

Ovintiv has access to natural gas processing capacity of approximately 1,555 MMcf/d, of which approximately
1,340 MMcf/d is under contract with third parties under varying terms and duration and approximately 215 MMcf/d of
processing capacity which is owned by the Company. In addition, Ovintiv has access to liquids handling capacity of
approximately 125 Mbbls/d of which approximately 93 Mbbls/d is contracted with third parties under varying terms
and duration, and approximately 32 Mbbls/d is owned by the Company.

Other Upstream Operations:

Horn River

Horn River is located in northeast British Columbia, where development was historically in the Horn River Basin shales
(Muskwa, Otter Park and Evie), which are upwards of 500 feet thick. In 2021, the Company’s natural gas production
averaged approximately 32 MMcf/d. As at December 31, 2021, the Company had approximately 48 net producing
horizontal wells and controlled approximately 187,000 net acres in the play. Ovintiv owns an interest in natural gas
compression capacity in Horn River of approximately 285 MMcf/d at various facilities in the area. Ovintiv has a take or
pay commitment under the Cabin plant natural gas processing arrangement with a third party, which has a remaining
term of 12 years.

Wheatland

Wheatland is located in southern Alberta and includes producing horizons primarily in the coals and sands of the
Cretaceous Edmonton and Belly River Groups. As at December 31, 2021, the Company had approximately 423 net
producing wells and controlled approximately 140,000 net acres in the play. In 2021, natural gas production averaged
approximately 4 MMcf/d.

Ovintiv Inc.

2021 Annual Report | 17

PROVED RESERVES AND OTHER OIL AND NATURAL GAS INFORMATION

The process of estimating oil, NGLs and natural gas reserves is complex and requires significant judgment. The
Company’s estimates of proved reserves and associated future net cash flows were evaluated and prepared by the
Company’s internal qualified reserves evaluators (“QREs”) and are the responsibility of management. As a result,
Ovintiv has developed internal policies that prescribe procedures and standards to be followed for preparing,
estimating and recording reserves in compliance with SEC definitions and regulations. Ovintiv’s policies assign
responsibilities for compliance in booking reserves and require that reserve estimates be made by its QREs. QRE is
defined as a registered professional licensed to practice engineering, geology, or geophysics and an individual who
has a minimum of five years practical experience, with at least three recent years of experience in the evaluation of
reserves.

Ovintiv’s Corporate Reserves Group, which consists of five staff, report to the Vice-President, Strategy, Corporate
Reserves and Midstream who reports to Executive Vice-President & Chief Financial Officer. The Corporate Reserves
Group is responsible for overseeing the internal preparation, review and approval of the reserves estimates and is
separate and independent from the preparation of reserves estimates, which are prepared by operations’ teams who
report to Ovintiv’s Executive Vice-President & Chief Operating Officer. The Corporate Reserves Group maintains
Ovintiv’s internal policies that prescribe procedures and standards to be followed for preparing, estimating and
recording reserves, which includes the Company’s reserves manual, and conducting periodic internal audits of the
procedures, records and controls relating to the preparation of reserves estimates. Ovintiv’s QREs receive ongoing
education on the fundamentals of SEC definitions and reserves reporting through the review of the Company’s
reserves manual and internal training programs administered by the Corporate Reserves Group. The Corporate
Reserves Group also oversees the engagement of independent qualified reserves evaluators (“IQREs”) or independent
qualified reserves auditors (“IQRAs”), if any, retained by the Company.

As a member of the Corporate Reserves Group, the Company’s Director, Reserves is primarily responsible for
overseeing the preparation of proved reserves estimates. The Director, Reserves has a Bachelor of Science with a
degree in Petroleum Engineering from Colorado School of Mines and is a member of the Society of Petroleum
Evaluation Engineers (Denver Chapter).

Annually, each play is reviewed in detail by the QREs, the Corporate Reserves Group, the Company’s executive
officers and an internal Reserves Advisory Committee, as appropriate. The Corporate Reserves Group also conducts a
separate review to ensure the effectiveness of the disclosure controls and that the reserves estimates are free from
material misstatement. The final reserves estimates are reviewed by Ovintiv’s Reserves Committee of the Board of
Directors (the “Reserves Committee”), for approval by the Board of Directors. The Reserves Committee comprises
directors that are independent and familiar with estimating oil and natural gas reserves and disclosure requirements.
The Reserves Committee provides additional oversight to the Company’s reserves process, meeting with management
periodically to review the reserves process, the portfolio of properties, results and related disclosures. The Reserves
Committee is also responsible for reviewing the qualifications and appointment of IQREs or IQRAs, if any, retained by
the Company, including recommending the selection of such IQREs or IQRAs to the Board of Directors for its
approval, and meets with such IQREs or IQRAs to review their reports.

For year-ended December 31, 2021, the Company involved IQRAs to audit the Company’s internal oil and natural gas
reserve estimates for certain properties. In 2021, Netherland, Sewell & Associates, Inc. audited 43 percent of the
Company’s estimated U.S. proved reserve volumes and McDaniel & Associates Consultants Ltd. audited 20 percent of
the Company’s estimated Canadian proved reserve volumes. An audit of reserves is an examination of a company’s oil
and natural gas reserves by an independent petroleum consultant that is conducted for the purpose of expressing an
opinion as to whether such estimates, in aggregate, are reasonable and have been estimated and presented in
conformity with generally accepted petroleum engineering and evaluation methods and procedures.

Proved oil and natural gas reserves are those quantities of oil, natural gas and NGLs which, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to be economically producible from known reservoirs
under existing economic conditions, operating methods and government regulations. To be considered proved, oil and
natural gas reserves must be economically producible before contracts providing the right to operate expire, unless
evidence indicates that renewal is reasonably certain. Also, the project to extract the hydrocarbons must have
commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

18 | 2021 Annual Report

Ovintiv Inc.

Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted
indicating that they are scheduled to be drilled within five years.

The Company’s reserve estimates are conducted from fundamental petrophysical, geological, engineering, financial
and accounting data. Data used in reserves assessments may include information obtained directly from the
subsurface through wellbores such as well logs, reservoir core samples, fluid samples, static and dynamic pressure
information, production test data, and surveillance and performance information. Reserves are estimated based on
production decline analysis, analogy to producing offsets, detailed reservoir modeling, volumetric calculations or a
combination of these methods, based on the unique circumstances of each reservoir and the dataset available at the
time of the estimate. The tools used to interpret the data may include proprietary and commercially available reservoir
modeling and simulation software. Reservoir parameters from analogous reservoirs may be used as appropriate. In the
case of producing reserves, the emphasis is on decline analysis where volumetric analysis is considered to limit
forecasts to reasonable levels. Undeveloped reserves are estimated by analogy to producing offsets, with
consideration of volumetric estimates of in place quantities. All locations to which proved undeveloped reserves have
been assigned are subject to a development plan adopted by the Company’s management. In all cases, the Company’s
reserve estimates consider technologies that have been demonstrated in the field to yield repeatable and consistent
results, having regard to economic considerations, as defined in the SEC regulations.

In general, estimates of economically recoverable reserves and the future net cash flows therefrom are based upon a
number of variable factors and assumptions, such as historical production from the properties, production rates,
ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty
rates, the assumed effects of regulation by governmental agencies, and future operating costs, all of which may vary
materially from actual results. For those reasons, among others, estimates of the economically recoverable oil and
natural gas reserves attributable to any particular group of properties and estimates of future net revenues associated
with reserves may vary and such variations may be material. The actual production, revenues, taxes, and development
and operating expenditures with respect to the reserves associated with the Company’s properties may vary from the
information presented herein, and such variations could be material.

The SEC regulations require that proved reserves be estimated using existing economic conditions (constant pricing).
Based on this methodology, the Company’s reserves have been calculated utilizing the 12-month average trailing
historical price for each of the years presented prior to the effective date of the report. The 12-month average is
calculated as an unweighted average of the first-day-of-the-month price for each month. The reserve estimates
provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.

Ovintiv does not file any estimates of total net proved reserves with any U.S. federal authority or agency other than
the SEC and the Department of Energy (“DOE”). Reserve estimates filed with the SEC correspond with the estimates
of the Company’s reserves contained in its reports. Reserve estimates, for the Company’s U.S. assets, are filed with the
DOE and are based upon the same underlying technical and economic assumptions as the estimates of Ovintiv’s
reserves that are filed with the SEC, however, the DOE requires reports to include the interests of all owners in wells
that Ovintiv operates and to exclude all interests in wells that Ovintiv does not operate.

The reserves and other oil and natural gas information set forth below has an effective date of December 31, 2021 and
was prepared as of January 14, 2022. The audit reports prepared by the IQRAs are attached in Exhibits 99.1 and 99.2
of this Annual Report on Form 10-K.

The following table is a summary of the Company’s proved reserves and estimates of future net cash flows and
discounted future net cash flows derived from proved reserves information can also be found in Note 28 to Ovintiv’s
audited Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

Ovintiv Inc.

2021 Annual Report | 19

Proved Reserves

The table below summarizes the Company’s total proved reserves by oil, NGLs and natural gas and by geographic
area for the year ended December 31, 2021 and other summary operating data.

Proved Reserves: (1)

Oil (MMbbls):
Developed
Undeveloped

Total

Natural Gas Liquids (MMbbls):

Developed
Undeveloped

Total

Natural Gas (Bcf):

Developed
Undeveloped

Total

Total Proved Reserves (MMBOE):

Developed
Undeveloped

Total

Percent Proved Developed
Percent Proved Undeveloped

Production (MBOE/d)
Capital Investments (millions)
Total Net Productive Wells (2)
Standardized Measure of Discounted Net Cash Flows: (3)

Pre-Tax (millions)
Taxes (millions)

After-Tax (millions)

2021

U.S.

Canada

Total

291.0
266.6

557.5

264.3
170.5

434.7

1,621
915

2,536

825.5
589.5

1,415.0

58%
42%

299.7
1,125
4,109

16,300
2,009

14,291

0.7
0.3

1.1

84.5
85.4

170.0

2,490
1,543

4,033

500.3
343.0

843.3

59%
41%

234.2
391
1,898

5,454
970

4,484

291.7
266.9

558.6

348.8
255.9

604.7

4,111
2,458

6,570

1,325.7
932.5

2,258.2

59%
41%

533.9
1,516
6,007

21,754
2,979

18,775

(1) Numbers may not add due to rounding.
(2) Total net productive wells includes producing wells and wells mechanically capable of production.
(3) The Pre-Tax standardized measure of discounted cash flows (“standardized measure”) is a non-GAAP measure.

The Company believes the Pre-Tax standardized measure is a useful measure in addition to the After-Tax
standardized measure, as it assists in both the estimation of future cash flows of the current reserves as well as in
making relative value comparisons among peer companies. The After-Tax standardized measure is dependent on
the unique tax situation of each individual company, while the Pre-Tax standardized measure is based on prices
and discount factors, which are more consistent between peer companies. See Note 28 to Ovintiv’s audited
Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for the standardized
measure.

20 | 2021 Annual Report

Ovintiv Inc.

Changes to the Company’s proved reserves during 2021 are summarized in the table below:

Beginning of year

Revisions and improved recovery (2)
Extensions and discoveries
Purchase of reserves in place
Sale of reserves in place
Production

End of year

Developed
Undeveloped
Total

2021 (1)

Oil
(MMbbls)

NGLs
(MMbbls)

Natural Gas
(Bcf)

Total
(MMBOE)

592.3
(78.0)
121.5
2.6
(28.6)
(51.2)

558.6

291.7
266.9

558.6

580.5
(50.3)
142.0
2.5
(21.0)
(49.0)

604.7

348.8
255.9

604.7

4,918
363
1,966
13
(123)
(568)

6,570

4,111
2,458

6,570

1,992.5
(67.8)
591.2
7.3
(70.2)
(194.9)

2,258.2

1,325.7
932.5

2,258.2

(1) Numbers may not add due to rounding.
(2) Changes in reserve estimates resulting from application of improved recovery techniques are included in revisions

of previous estimates.

In 2021, the Company’s proved reserves increased by 265.7 MMBOE from 2020 primarily due to extensions and
discoveries of 591.2 MMBOE from successful drilling and technical delineation, as well as new proved undeveloped
locations resulting from updated development plans in Montney, Permian and Anadarko. Approximately 45 percent of
the 2021 extensions and discoveries were oil, condensate and NGLs. Revisions and improved recovery of previous
estimates were negative 67.8 MMBOE primarily due to changes in the approved development plan of 396.1 MMBOE,
partially offset by positive performance revisions other than price of 160.6 MMBOE, higher 12-month average trailing
prices of 144.5 MMBOE and 23.2 MMBOE from infill drilling locations.

Production for 2021 was 194.9 MMBOE. Purchases of 7.3 MMBOE were primarily properties with oil and liquids rich
potential in the Permian. Sales of 70.2 MMBOE were primarily due to the divestitures of the Eagle Ford assets located
in south Texas and Duvernay assets located in west central Alberta.

Proved reserves are estimated based on the average first-day-of-month prices during the 12-month period for the
respective year. The average prices used to compute proved reserves at December 31, 2021 were WTI: $66.56 per bbl,
Edmonton Condensate: C$83.69 per bbl, Henry Hub: $3.60 per MMBtu, and AECO: C$3.26 per MMBtu. Prices for oil,
NGLs and natural gas are inherently volatile.

Proved Undeveloped Reserves

Changes to the Company’s proved undeveloped reserves during 2021 are summarized in the table below:

(MMBOE)

Beginning of year

Revisions of prior estimates
Extensions and discoveries
Conversions to developed
Purchase of reserves in place
Sale of reserves in place

End of Year *

* Numbers may not add due to rounding.

2021

881.1
(291.6)
502.7
(160.2)
7.1
(6.5)

932.5

As of December 31, 2021, there are no proved undeveloped reserves that will remain undeveloped for five years or
more.

Extensions and discoveries of 502.7 MMBOE of proved undeveloped reserves were the result of successful drilling and
technical delineation, as well as new proved undeveloped locations resulting from updated development plans in the
Permian, Montney and Anadarko. Revisions of prior estimates of proved undeveloped reserves were negative
291.6 MMBOE primarily due to development plan changes of 396.1 MMBOE. Development plan changes relate to
specific locations that were previously planned to be drilled within five years but were subsequently shifted to a later
development timeframe or removed and replaced with different locations that are included in extensions and

Ovintiv Inc.

2021 Annual Report | 21

discoveries. The downward revisions were partly offset by positive revisions of 66.2 MMBOE from improved well
performance, 21.5 MMBOE from infill drilling locations and 16.8 MMBOE as a result of higher 12-month average trailing
price.

Conversions of proved undeveloped reserves to proved developed status were 160.2 MMBOE, equating to 18 percent
of the total prior year-end proved undeveloped reserves. Ovintiv’s five-year rolling average proved undeveloped
conversion ratio is above 20 percent. Approximately 66 percent of proved undeveloped reserves conversions
occurred in the Permian and Anadarko in the U.S. and 30 percent occurred in the Montney in Canada. The Company
spent approximately $1,069 million to develop proved undeveloped reserves in 2021, of which approximately
79 percent related to the U.S. properties and 21 percent related to the Canadian properties.

Purchases of proved undeveloped reserves of 7.1 MMBOE and sales of proved undeveloped reserves of 6.5 MMBOE
relate primarily to properties in the Permian.

Sales Volumes, Prices and Production Costs

The following table summarizes the Company’s production by final product sold, average sales price, and production
cost per BOE for each of the last three years by geographic area:

Production

Average Sales Price (1)

Oil
(MMbbls)

NGLs
(MMbbls)

Natural Gas
(Bcf)

Oil
($/bbl)

NGLs
($/bbl)

Natural Gas
($/Mcf)

51.1
0.1

51.2

55.2
0.2

55.4

59.2
0.2
0.6

60.0

28.5
20.5

49.0

29.8
20.5

50.3

28.6
21.6
-

50.2

179
389

568

194
367

561

200
376
-

576

65.69
56.71

65.67

36.84
32.58

36.83

56.19
53.19
66.37

56.27

30.32
56.48

41.28

11.85
29.37

18.99

15.83
40.25
-

26.33

3.71
3.52

3.58

1.60
2.01

1.87

1.90
2.01
-

1.97

Average
Production
Cost (2)

($/BOE)

9.12
12.37

10.55

7.99
11.45

9.41

8.54
11.76
23.95

9.90

2021
USA (3)
Canada (4)

Total

2020

USA (3)
Canada (4)

Total

2019

USA (3)
Canada (4)
China (5)

Total

(1) Excludes the impact of commodity derivatives.
(2) Excludes ad valorem, severance and property taxes.
(3) As at December 31, 2021, there was no production from fields that comprise greater than 15 percent of the

Company’s total reserves. Annual production from fields that comprise greater than 15 percent of the Company’s
total proved reserves for the respective prior periods ended related to:
- Midland county in Permian: 2020 - 8.1 MMbbls of oil, 4.4 MMbbls of NGLs and 23 Bcf of natural gas; and 2019 -

10.2 MMbbls of oil, 4.2 MMbbls of NGLs and 22 Bcf of natural gas.

- Stack in Anadarko: 2019 - 13.2 MMbbls of oil, 10.0 MMbbls of NGLs and 72 Bcf of natural gas.

(4) Annual production from fields that comprise greater than 15 percent of the Company’s total proved reserves

related to B.C. Montney: 2021 - 9.1 MMbbls of NGLs and 282 Bcf of natural gas; 2020 - 10.2 MMbbls of NGLs and
272 Bcf of natural gas; and 2019 - 12.5 MMbbls of NGLs and 283 Bcf of natural gas.

(5) The Company acquired offshore China operations as part of the Newfield acquisition on February 13, 2019.

Effective July 31, 2019, the Company terminated the production sharing contract with CNOOC and exited China.
Production reported are presented for the period from February 14, 2019 through July 31, 2019.

22 | 2021 Annual Report

Ovintiv Inc.

Drilling and other exploratory and development activities (1, 2)

The following tables summarize the Company’s gross participation and net interest in wells drilled for the periods
indicated by geographic area.

2021

USA

Canada

Total

2020

USA

Canada

Total

2019

USA

Canada

Total

Exploratory

Development

Total

Productive

Dry

Productive

Dry

Productive

Dry

Gross Net Gross Net Gross Net Gross Net Gross Net Gross Net

-

1

1

-

-

-

-

1

1

-

1

1

-

-

-

-

1

1

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

180

114

294

148

84

232

229

208

97

74

326

282

392

125

517

236

91

327

-

-

-

1

-

1

-

-

-

-

-

-

1

-

1

-

-

-

180

115

295

148

85

233

229

208

97

74

326

282

392

126

518

236

92

328

-

-

-

1

-

1

-

-

-

-

-

-

1

-

1

-

-

-

(1) “Gross” wells are the total number of wells in which the Company has a working interest.
(2) “Net” wells are the number of wells obtained by aggregating the Company’s working interest in each of its gross

wells.

Drilling and other exploratory and development activities (1, 2)

The following table summarizes the number of wells in the process of drilling or in active completion stages and the
number of wells suspended or waiting on completion by geographic area at December 31, 2021.

USA

Canada

Total

Wells in the Process of Drilling
or in Active Completion

Wells Suspended or Waiting on
Completion (3)

Exploratory

Development

Exploratory

Development

Gross

Net

Gross

Net

Gross

Net

Gross

Net

-

-

-

-

-

-

29

14

43

26

14

40

-

-

-

-

-

-

18

14

32

15

11

26

(1) “Gross” wells are the total number of wells in which the Company has a working interest.
(2) “Net” wells are the number of wells obtained by aggregating the Company’s working interest in each of its gross

wells.

(3) Wells suspended or waiting on completion include exploratory and development wells where drilling has occurred,

but the wells are awaiting the completion of hydraulic fracturing or other completion activities or the resumption
of drilling in the future.

Oil and natural gas properties, wells, operations, and acreage

The following table summarizes the number of producing wells and wells mechanically capable of production by
geographic area at December 31, 2021.

Productive Wells (1, 2)

USA

Canada

Total

Oil (3)

Natural Gas (4)

Total

Gross

Net

Gross

5,637

3,816

716

Net

293

Gross

Net

6,353

4,109

13

11

2,339

1,887

2,352

1,898

5,650

3,827

3,055

2,180

8,705

6,007

(1) “Gross” wells are the total number of wells in which the Company has a working interest.
(2) “Net” wells are the number of wells obtained by aggregating the Company’s working interest in each of its gross

wells.

(3) Includes 5 gross oil wells (5 net oil wells) containing multiple completions.
(4) Includes 859 gross natural gas wells (746 net natural gas wells) containing multiple completions.

Ovintiv Inc.

2021 Annual Report | 23

The following table summarizes the Company’s developed, undeveloped and total landholdings by geographic area as
at December 31, 2021.

Landholdings (1 - 7)
(thousands of acres)
United States

Total United States

Canada

Total Canada

Total

— Freehold
— Federal
— Fee
— Tribal/Allotted
— State

— Crown (8)
— Freehold
— Fee

Developed

Gross

Net

859
125
61
81
23

1,149

682
38
1

721

577
97
13
70
20

777

463
26
1

490

1,870

1,267

Undeveloped
Gross

Net Gross

Total

27
33
254
20
2

336

18
22
92
18
2

886
158
315
101
25

152

1,485

Net

595
119
105
88
22

929

1,091
24
3

1,118

1,454

757
13
3

773

925

1,773
62
4

1,220
39
4

1,839

1,263

3,324

2,192

(1) Fee lands are those lands in which the Company has a fee simple interest in the mineral rights and has either:

(a) not leased out all the mineral zones; (b) retained a working interest; or (c) one or more substances or products
that have not been leased. The current fee lands acreage summary includes all fee titles owned by the Company
that have one or more zones that remain unleased or available for development.

(2) Crown/Federal/State/Tribal/Allotted lands are those owned by the federal, provincial or state government or First

Nations, in which the Company has purchased a working interest lease.

(3) Freehold lands are owned by individuals (other than a government or the Company), in which the Company holds

a working interest lease.

(4) Excludes interests in royalty acreage.
(5) Gross acres are the total area of properties in which the Company has a working interest.
(6) Net acres are the sum of the Company’s fractional working interest in gross acres.
(7) Undeveloped acreage refers to those acres on which wells have not been drilled or completed to a point that

would permit the production of economic quantities of oil or gas regardless of whether such acreage contains
proved reserves.

(8) Includes acreage related to the Deep Panuke natural gas field located offshore Nova Scotia. The Company has
permanently ceased production and the offshore platform and associated infrastructure was decommissioned.

Of the total 2.2 million net acres, approximately 2.0 million net acres is held by production. The table above includes
acreage subject to leases that will expire over the next three years: 2022 - approximately 161,000 net acres; 2023 -
approximately 15,000 net acres; and 2024 - approximately 3,000 net acres, if the Company does not establish
production or take any other action to extend the terms. For acreage that the Company intends to further develop,
Ovintiv will perform operational and administrative actions to continue the lease terms that are set to expire. As a
result, it is not expected that a significant portion of the Company’s net acreage will expire before such actions occur.

Title to Properties

As is customary in the oil and natural gas industry, a preliminary review of title records, which may include opinions or
reports of appropriate professionals or counsel, is made at the time Ovintiv acquires properties. The Company
believes that title to all of the various interests set forth in the above table is satisfactory and consistent with the
standards generally accepted in the oil and natural gas industry, subject only to immaterial exceptions that do not
detract substantially from the value of the interests or materially interfere with their use in Ovintiv’s operations. The
interests owned by Ovintiv may be subject to one or more royalty, overriding royalty, or other outstanding interests
(including disputes related to such interests) customary in the industry. The interests may additionally be subject to
obligations or duties under applicable laws, ordinances, rules, regulations, and orders of arbitral or governmental
authorities. In addition, the interests may be subject to burdens such as production payments, net profits interests,
liens incident to operating agreements and current taxes, development obligations under oil and natural gas leases,
and other encumbrances, easements, and restrictions, none of which detract substantially from the value of the
interests or materially interfere with their use in the Company’s operations.

24 | 2021 Annual Report

Ovintiv Inc.

MARKETING ACTIVITIES

Market Optimization activities are managed by Ovintiv’s Midstream, Marketing & Fundamentals team, which is
responsible for the sale of the Company’s proprietary production and enhancing the associated netback price. In
marketing its production, Ovintiv looks to minimize market related curtailment, maximize realized prices and manage
concentration of credit-risk exposure. Market Optimization activities include third party purchases and sales of
product to provide operational flexibility and cost mitigation for transportation commitments, product type, delivery
points and customer diversification. In conjunction with certain divestitures, the Company has also agreed to market
and transport certain portions of the acquirer’s production with remaining terms of less than one year.

Ovintiv’s produced oil, NGLs and natural gas, are primarily marketed to refiners, local distributing companies, energy
marketing companies and aggregators. Prices received by Ovintiv are based primarily upon prevailing market index
prices in the region in which it is sold. Prices are impacted by regional and global supply and demand and by
competing fuels in such markets.

Ovintiv’s oil production is sold under short-term and long-term contracts that range up to four years or under
dedication agreements, for which prices received by Ovintiv are based primarily upon the prevailing index prices in
the relevant region where the product is sold. The Company also has firm transport contracts to deliver oil to other
downstream markets. Ovintiv’s NGLs production is sold under short-term and long-term contracts that range up to
seven years, or under dedication arrangements at the relevant market price at the time the product is sold. Ovintiv’s
natural gas production is sold under short-term and long-term delivery contracts with terms ranging up to two years
in duration, at the relevant monthly or daily market price at the time the product is sold. The Company also has firm
transport contracts to deliver natural gas production to other downstream markets, including Dawn.

Ovintiv also seeks to mitigate the market risk associated with future cash flows by entering into various financial
derivative instruments used to manage price risk relating to produced oil, NGLs and natural gas. Details of contracts
related to Ovintiv’s various financial risk management positions are found in Note 25 to Ovintiv’s audited Consolidated
Financial Statements under Item 8 of this Annual Report on Form 10-K.

The Company enters into various contractual agreements to sell oil, NGLs and natural gas, some of which require the
delivery of fixed and determinable quantities. As of December 31, 2021, the Company was committed to deliver
approximately 109,167 Mbbls of oil and approximately 98 MMcf of natural gas in the USA Operations and
approximately 7,990 Mbbls of oil and NGLs and approximately 77 MMcf of natural gas in the Canadian Operations
with varying contract terms. The Company has one oil minimum volume sales contract related to Uinta production in
Utah. Given the limited access to transportation and refining facilities resulting from the paraffin content in Uinta oil
production, volatility in commodity prices and changes in capital and development plans, deficiency fees incurred can
vary and may be incurred on the remaining committed deliveries of 20 Mbbls/d through August 2025.

Certain transportation and processing commitments result in the following financial commitments:

($ millions)
Transportation & Processing
USA Operations
Oil & NGLs
Natural Gas

Total USA Operations

Canadian Operations

Oil & NGLs
Natural Gas

Total Canadian Operations

Total USA and Canadian Operations

1 Year

2-3 Years

4-5 Years

> 5 years

Total

56
191

247

88
415

503

750

113
290

403

173
741

914

1,317

117
87

204

156
498

654

858

74
129

203

178
1,545

1,723

1,926

360
697

1,057

595
3,199

3,794

4,851

In general, Ovintiv expects to fulfill its delivery commitments with oil, NGLs and natural gas production from proved
developed reserves, with longer term delivery commitments to be filled from the Company’s proved undeveloped
reserves. Where proved reserves are not sufficient to satisfy the Company’s delivery commitments, Ovintiv can and
may use spot market purchases to satisfy the respective commitments. In addition, for the Company’s long-term
transportation and processing agreements, Ovintiv also expects to fulfill delivery commitments from the future

Ovintiv Inc.

2021 Annual Report | 25

development of resources not yet characterized as proved reserves. Likewise, where delivery commitments are not
transferred along with property divestitures, Ovintiv may market and transport certain portions of the acquirer’s
production to meet the delivery requirements.

In addition, oil, NGLs and natural gas production from the Company’s reserves are not subject to any priorities or
curtailments that may affect quantities delivered to its customers or any priority allocations or price limitations
imposed by federal or state regulatory agencies, or any other factors beyond the Company’s control that may affect
Ovintiv’s ability to meet contractual obligations other than those discussed in Item 1A. Risk Factors of this Annual
Report on Form 10-K.

MAJOR CUSTOMERS

In connection with the marketing and sale of the Company’s oil, NGLs and natural gas production and purchased
product for the year ended December 31, 2021, the Company had one customer, Vitol Inc., which individually
accounted for more than 10 percent of the Company’s consolidated revenues (2020 - one customer, Vitol Inc. and
2019 - one customer, Vitol Inc.). Ovintiv does not believe that the loss of any single customer would have a material
adverse effect on the Company’s financial condition or results of operations. Further information on Ovintiv’s major
customers is found in Note 2 to Ovintiv’s audited Consolidated Financial Statements under Item 8 of this Annual
Report on Form 10-K.

COMPETITION

The Company’s competitors include national, integrated and independent oil and natural gas companies, as well as oil
and natural gas marketers and other participants in other industries supplying energy and fuel to industrial,
commercial and individual consumers. All aspects of the oil and natural gas industry are highly competitive and
Ovintiv actively competes with other companies in the industry, particularly in the following areas:

• Exploration for and development of new sources of oil, NGLs and natural gas reserves;
• Reserves and property acquisitions;
• Transportation and marketing of oil, NGLs, natural gas and diluents;
• Access to services and equipment to carry out exploration, development and operating activities; and
• Attracting and retaining experienced industry personnel.

The oil and natural gas industry also competes with other industries focused on providing alternative forms of energy
to consumers. Competitive forces can lead to cost increases or result in an oversupply of oil, NGLs or natural gas.

HUMAN CAPITAL

Ovintiv strives to be one of the most competitive energy companies in North America, bringing together the brightest
minds and best technologies to fuel innovation and maximize operational performance and results. Recruiting,
developing and retaining Ovintiv’s workforce is vital to the Company’s future success. Ovintiv has a history of hiring
top industry talent and recruiting individuals from within and outside of the oil and natural gas industry who will thrive
in the Company’s unique culture. The Company’s core values of one, agile, innovative and driven, and foundational
values of integrity, safety, sustainability, trust and respect guide behaviour and define what Ovintiv expects of its
employees in the workplace. These expectations reflect and support the Company’s corporate strategy, culture and
organizational priorities. Ovintiv is committed to fair labor practices in its operations and adheres to all applicable
workplace and employment standards.

At December 31, 2021, the Company employed 1,713 employees. The following table outlines our employees by
geographic area.

U.S.
Canada

Total

The Company also engages a number of contractors and service providers.

Employees

985
728

1,713

26 | 2021 Annual Report

Ovintiv Inc.

Employee Development and Retention

Ovintiv’s success is the direct result of a talented workforce and the Company’s expectation to share ideas and work
together to achieve company goals. Ovintiv’s culture is defined by constant innovation, promoting internal
collaboration as a way for employees to implement successful strategies and best practices across the Company’s
business. Opportunities are provided for Ovintiv’s employees to further develop leadership skills, technical and
business skills through on-the-job work experiences and job rotations, development opportunities, networking and
mentoring circles, as well as formal learning programs and instructor led workshops. The Company also offers new
graduate and intern opportunities in both technical and professional disciplines to support the recruitment of top
talent, hiring an average of 17 new graduates and 44 interns per year over the past three years. In addition, the
Company has a robust approach to succession planning of key personnel which assesses the competencies,
experience, leadership capabilities, and development opportunities of identified succession candidates.

Ovintiv’s compensation and benefits program is designed to attract and retain the talent necessary to achieve the
Company’s business strategy by rewarding individual performance as well as company performance. The Company’s
compensation model is tied to financial and operational metrics which align to Ovintiv’s strategic plan. In addition, the
compensation philosophy is anchored by two key objectives: a) delivering competitive base salaries and benefits and
b) rewarding short and long-term performance through the grant of an annual cash bonus and long-term incentive
awards (“LTI awards”). LTI awards are primarily performance-based and are designed to incentivize delivery of the
Company’s strategy and long-term value creation with the payout of these awards correlating to Ovintiv’s stock price
performance. Settlement of certain awards can be either in shares of common stock or cash at the discretion of the
Human Resources and Compensation Committee of the Board of Directors. Awards that settle in shares of common
stock do not result in beneficial ownership until the awards are settled. See Note 22. Compensation Plans and Note 23.
Pensions and Other Post-Employment Benefits to Ovintiv’s audited Consolidated Financial Statements under Item 8 of
this Annual Report on Form 10-K.

As of December 31, 2021, the average tenure of our employees is over nine years and voluntary turnover is less than
six percent.

Diversity and Inclusion

The Company values diversity and fosters inclusion, believing that diverse perspectives and experience enhances
Ovintiv’s overall effectiveness and performance. As part of the Company’s commitment to diversity and inclusion,
Ovintiv has assembled an internal diversity, equity and inclusion working group accountable to the executive
leadership team and made up of a broad representation of the Company’s workforce. The mandate of the group is to
provide a sounding board for initiatives and communication. Ovintiv has also launched an inclusive network called
Leveraging Inclusion, Networking and Knowledge (“LINK”), to help provide opportunities for all employees to engage,
collaborate, learn and grow, in addition to fostering an environment where diverse perspectives are celebrated. In
addition, formal training and resources have been provided to leaders of all levels on inclusive leadership and
interrupting bias and have taken training on understanding the types of unconscious bias, and how they show up in
the workplace.

Ovintiv strives to provide equal opportunity in recruitment, career development, promotion, training and rewards for
its employees. The Company actively facilitates professional development for women and other minority groups
through its internal diversity network, targeted succession planning and formal mentoring programs. In order to
broaden the diversity of the Company’s talent pipeline, Ovintiv also participates in programs targeting diverse
students in junior and high schools, with the purpose of advancing and strengthening its workforce.

Specific to gender diversity, women at Ovintiv comprised approximately 60 percent of the executive leadership team
reporting to the Chief Executive Officer, approximately 32 percent of the senior leadership group and approximately
31 percent of all employees at December 31, 2021.

Ovintiv Inc.

2021 Annual Report | 27

Employee Safety & Wellness

Safety is a foundational value at Ovintiv. Ensuring safety of employees, suppliers, and the community is a tenet of
managing the Company’s operations. Strong safety performance reflects a well-run business and builds confidence in
the communities where Ovintiv operates. Ovintiv ensures workplace safety with regular comprehensive training and
orientation programs for employees and contractors. Employees and contractors are expected to comply with
Ovintiv’s process safety protocols, regulatory compliance, and are required to report incidents and near-miss events.
As at December 31, 2021, Ovintiv had its eighth consecutive safest year.

As a result, safety metrics under the Company’s Environment, Health and Safety (“EH&S”) scorecard are tied into the
Company’s compensation program, allowing the Board of Directors to adjust annual bonus payouts up or down based
on the Company’s demonstrated EH&S performance. Metrics reflected in the EH&S scorecard include Total
Recordable Injury Frequency, Spill Intensity, Flaring and Venting, and Methane Intensity, all of which are described in
the Proxy Statement relating to the Company’s 2022 annual meeting of shareholders, which is incorporated herein by
reference.

GOVERNMENT AND ENVIRONMENTAL REGULATORY MATTERS

As Ovintiv is an operator of oil and natural gas properties and facilities in the United States and Canada, the Company
is subject to numerous federal, state, provincial, local, tribal and foreign country laws and regulations. These laws and
regulations relate to matters that include: acquisition of seismic data; issuance of permits; location, drilling and casing
of wells; well design; hydraulic fracturing; well production; use, transportation, storage and disposal of fluids and
materials incidental to oil and natural gas operations; surface usage and the restoration of properties upon which wells
have been drilled and facilities have been constructed; plugging and abandoning of wells; pollution, protection of the
environment and the handling of hazardous materials; transportation of production; periodic report submittals during
operations; and calculation and disbursement of royalty payments and production and other taxes. The following are
significant areas of government control and regulation affecting Ovintiv’s operations:

Exploration and Development Activities

Certain of our U.S. oil and natural gas leases are granted or approved by the federal government and administered by
the Bureau of Indian Affairs, the Office of Natural Resources Revenue or the Bureau of Land Management (“BLM”), all
of which are federal agencies. BLM leases contain relatively standardized terms and require compliance with detailed
regulations. Many onshore leases contain stipulations limiting activities that may be conducted on the lease. Some
stipulations are unique to particular geographic areas and may limit the time during which activities on the lease may
be conducted, the manner in which certain activities may be conducted or, in some cases, may ban surface activity.
Under certain circumstances, the BLM may require that our operations on federal leases be suspended or terminated.
Any such suspension or termination could materially and adversely affect Ovintiv’s interests.

In Canada, oil and natural gas mineral rights may be held by individuals, corporations or governments that have
jurisdiction over the area in which such mineral rights are located. Generally, parties holding these mineral rights grant
licenses or leases to third parties to facilitate the exploration and development of these mineral rights. The terms of
these leases and licenses are generally established to require timely development. Notwithstanding the ownership of
mineral rights, the government of the jurisdiction in which the mineral rights are located generally retains authority
over the drilling and operation of oil and natural gas wells.

Drilling and Production

The Company’s operations also are subject to conservation regulations, including the regulation of the location of
wells, size of drilling and spacing units or proration units; the number of wells that may be drilled in a unit; the rate of
production allowable from oil and natural gas wells; and the unitization or pooling of oil and natural gas properties. In
the U.S., some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on
voluntary pooling of lands and leases, which make it more difficult to develop oil and natural gas properties. In
addition, conservation laws generally limit the venting or flaring of natural gas and impose certain requirements
regarding the ratable purchase of production. These regulations limit the amounts of oil and natural gas that can be
produced from the Company’s wells and the number of wells or the locations that can be drilled.

28 | 2021 Annual Report

Ovintiv Inc.

Royalties

Operations on U.S. Federal or Indian oil and natural gas leases must comply with numerous regulatory restrictions,
including various non-discrimination statutes, and certain of such operations must be conducted pursuant to certain
on-site security regulations and other permits issued by various tribal and federal agencies, including the BLM and the
Office of Natural Resources Revenue (“ONRR”). The basis for royalty payments due under federal oil and natural gas
leases are through regulation issued under the applicable statutory authority. State regulatory authorities establish
similar standards for royalty payments due under state oil and natural gas leases. The basis for royalty payments
established by ONRR and the state regulatory authorities is generally applicable to all federal and state oil and natural
gas leases.

The royalty calculation in Canada is a significant factor in the profitability of Canadian oil and natural gas production.
Oil and natural gas crown royalties are determined by provincial and territorial government regulation and are
generally calculated as a percentage of the value of the gross production, net of allowed deductions. The royalty rate
is dependent in part on prescribed references prices, well productivity, geographical locations, recovery methods, as
well as type and quality of the hydrocarbon produced. For pre-payout oil and natural gas projects, the regulations
prescribe lower royalty rates for oil and natural gas projects until allowable capital costs have been recovered. The
calculation for wells post payout is based on a percentage of production net of allowed deductions and varies with
commodity price.

Royalties payable on production from lands other than federal, state or provincial government lands are determined
through negotiations between the parties.

Sales and Transportation

Although oil and natural gas prices are currently unregulated, Congress historically has been active in oil and natural
gas regulation. As a result, the Company cannot predict whether new regulations might be proposed.

The availability, terms and transportation significantly affect sales of oil and natural gas. The interstate transportation
and sale for resale of oil and natural gas is subject to federal regulation, including regulation of terms, conditions and
rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory
Commission (“FERC”). Federal and state regulations govern the price and terms of access to oil and natural gas
pipeline transportation. FERC’s regulations for oil and natural gas transmission in some circumstances may also affect
the intrastate transportation of oil as the transportation of oil in common carrier pipelines is also subject to rate
regulation by the FERC under the Intrastate Commerce Act. To the extent that effective interstate and intrastate rates
are equally applicable to all comparable shippers, the Company believes that the regulation of oil transportation rates
will not affect our operations in any way that is of material difference from those of our competitors.

Project Approvals

Approvals and licenses from relevant provincial or federal government or regulatory bodies are required to carryout
or make modifications to the Company’s oil and natural gas activities. The project approval process can involve
environmental assessment, stakeholder and Indigenous consultation and inputs regarding project concerns and public
hearings and may included various conditions and commitments which may arise throughout the process.

In 2019, the Canadian government implemented a new environmental assessment framework in Canada under the
Impact Assessment Act, which may impact the way large energy projects are approved. Though the Company does
not typical own, operate, permit or construct projects which fall under the scope of the Impact Assessment Act, some
of the Company’s business may rely on these projects owned, operated, permitted and constructed by others.

On June 29, 2021, the Supreme Court of British Columbia declared, among other things, that the province of British
Columbia has unjustifiably infringed on the rights of the Blueberry River First Nation (BRFN) by permitting the
cumulative impacts of industrial development (activities which include forestry, mining, oil and natural gas, agriculture,
land clearing, hydroelectric infrastructure, roads and other industrial developments) to diminish the BRFN’s ability to
meaningfully exercise its treaty rights within an area comprising approximately 9,400,000 acres in northeast British
Columbia. As a result, the court ordered the Province and the BRFN to negotiate to establish ‘timely enforceable
mechanisms’ to assess and manage the cumulative impact of industrial development on the BRFN’s treaty

Ovintiv Inc.

2021 Annual Report | 29

rights. The Province and the BRFNs continue to work towards an agreement with respect to new industrial
development activities. Ovintiv’s Montney properties in northeast British Columbia are within the ‘Blueberry Claim
Area’ referenced in the Judgement. Oil and natural gas projects, which were permitted or authorized prior to the court
decision and where activities have not yet started, will proceed. While the court order has not impacted the
Company’s existing production in the Montney, the Province has ceased issuing new permits, and new amendments to
previously approved permits, associated with oil and natural gas development activity in northeast British Columbia
pending the outcome of negotiations with the BRFN. Should the Province and the BRFN fail to reach an agreement
with respect to new industrial development activities, the Company may be unable to conduct exploration and
development activities on a portion of its Montney acreage located within northeast British Columbia for an extended
period of time.

Investment Canada Act

The Investment Canada Act requires Government of Canada approval, in certain cases, of the acquisition of control of
a Canadian business by an entity that is not controlled by Canadians. In certain circumstances, the acquisition of oil
and natural gas properties may be considered to be a transaction requiring such approval.

Environmental and Occupational Regulations

The Company is subject to many federal, state, provincial, local and tribal laws and regulations concerning
occupational health and safety as well as the discharge of materials into, and the protection of, the environment.
Environmental laws and regulations (as defined herein) relate to:

•
•
•
•
•
•
•
•

•
•

the discharge of pollutants into federal, provincial and state waters;
assessing the environmental impact of seismic acquisition, drilling or construction activities;
the generation, storage, transportation and disposal of waste materials, including hazardous substances;
the emission of certain gases into the atmosphere;
the protection of private and public surface and ground water supplies;
the sourcing and disposal of water;
the protection of endangered species and habitat;
the monitoring, abandonment, reclamation and remediation of well and other sites, including former operating
sites;
the development of emergency response and spill contingency plans; and
employee health and safety.

Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative,
civil, and criminal penalties; the imposition of investigatory, remedial, and corrective action obligations or the
incurrence of capital expenditures; the occurrence of delays in the permitting, development or expansion of projects;
and the issuance of injunctions restricting or prohibiting some or all of the Company’s activities in a particular area.
Further, certain Environmental Regulations contain citizen suit provisions which allow private parties, including
environmental organizations, to directly sue alleged violators or government agencies to enforce Environmental
Regulations. Although environmental requirements have a substantial impact upon the energy industry as a whole,
Ovintiv does not believe that these requirements affect the Company differently, to any material degree, as compared
to other companies in the oil and natural gas industry. For further information regarding regulations relating to
environmental protection, see Item 1A. Risk Factors of this Annual Report on Form 10-K.

Operating and capital costs incurred to comply with the requirements of these laws and regulations are necessary
business costs in the oil and natural gas industry. As a result, Ovintiv has established policies for continuing
compliance with Environmental Regulations. The Environment, Health and Safety Committee of the Board of Directors
reviews and recommends environmental policy to the Board of Directors for approval and oversees compliance with
government laws and regulations. Monitoring and reporting programs for environmental, health and safety
performance in day-to-day operations, as well as inspections and assessments, are designed to provide assurance that
environmental and regulatory standards are met. The Company has established operating procedures and training
programs designed to limit the environmental impact of the Company’s field facilities and identify, communicate and
comply with changes in existing laws and regulations. Contingency plans are in place for a timely response to an
environmental event and remediation/reclamation programs are in place and utilized to restore the environment. In
addition, the Board of Directors is advised of significant contraventions thereof, and receives updates on trends, issues
or events which could have a significant impact on the Company.

30 | 2021 Annual Report

Ovintiv Inc.

The Company believes that the cost of maintaining compliance with these existing laws and regulations will not have a
material adverse effect on its business, financial condition or results of operations. In addition, Ovintiv maintains
insurance coverage for insurable risks against certain environmental and occupational health and safety risks that is
consistent with insurance coverage held by other similarly situated industry participants, but the Company is not fully
insured against all such risks. However, it is possible that developments, such as new or more stringently applied
existing laws and regulations as well as claims for damages to property or persons resulting from the Company’s
operations, could result in substantial costs and liabilities to the Company. As a result, Ovintiv is unable to predict with
any reasonable degree of certainty future exposures concerning such matters.

EXECUTIVE OFFICERS OF THE REGISTRANT

The Company’s Executive Officers are set out in the table below:

Name

Brendan M. McCracken

Corey D. Code

Gregory D. Givens

Rachel M. Moore

Renee E. Zemljak

Years Served
as Executive
Officer (2)

Age (1)

Corporate Office

46

48

48

50

57

3

3

3

2

President & Chief Executive Officer

Executive Vice-President & Chief Financial Officer

Executive Vice-President & Chief Operating Officer

Executive Vice-President, Corporate Services

12

Executive Vice-President, Midstream, Marketing & Fundamentals

(1) As of February 18, 2022.
(2) Includes the years served as executive officer of Encana.

Mr. McCracken was appointed President & Chief Executive Officer in August 2021. Mr. McCracken joined one of the
Company’s predecessor companies in 1997 and assumed a variety of leadership roles, including his previous positions
as President in December 2020, Executive Vice-President, Corporate Development & External Affairs in September
2019 and Vice-President & General Manager of Canadian Operations in 2017.

Mr. Code was appointed Executive Vice-President & Chief Financial Officer of the Company in May 2019. Mr. Code
joined one of the Company’s predecessor companies in 1999 and assumed a variety of leadership roles, including his
previous position as Vice-President, Investor Relations and Strategy in 2018, Vice-President, Investor Relations in 2017,
and Treasurer and Vice President, Portfolio Management in 2013.

Mr. Givens was appointed Executive Vice-President & Chief Operating Officer of the Company in September 2019.
Mr. Givens joined the Company in 2018 serving as Vice-President and General Manager of Texas Operations. Prior to
joining the Company, Mr. Givens was Vice-President Eagle Ford of EP Energy (a public oil and natural gas company)
from 2012 to 2017 and worked in various technical and leadership roles from 1996 onwards for El Paso Exploration &
Production Company and Sonat Exploration Company which were predecessor companies to EP Energy.

Ms. Moore was appointed Executive Vice-President, Corporate Services of the Company in June 2020. Ms. Moore
joined the Company in 2015 serving as Vice-President, Human Resources. Prior to joining the Company, Ms. Moore was
Executive Vice-President, Human Resources of Savanna Energy Services Corporation (a privately held oil and natural
gas services company) from 2010 to 2015 and was Vice President, Human Resources of Enerflex Ltd. (a public oil and
natural gas services company) from 2003 to 2010.

Ms. Zemljak was appointed Executive Vice-President, Midstream, Marketing & Fundamentals of the Company in
November 2009. Ms. Zemljak joined one of the Company’s predecessor companies in 2000 and assumed a variety of
leadership roles, including her previous position as Vice-President of USA Marketing in 2002. Prior to joining the
Company, Ms. Zemljak worked in various roles for Montana Power (formerly a public power company).

Ovintiv Inc.

2021 Annual Report | 31

ITEM 1A. Risk Factors

Our business and operations, and our industry in general, are subject to a variety of risks. If any event arising from the
risk factors set forth below occurs, our business, financial condition, results of operations, liquidity, the trading prices
of our securities and in some cases our reputation could be materially and adversely affected. When assessing the
materiality of the foregoing risk factors, we consider several qualitative and quantitative factors, including, but not
limited to, financial, operational, environmental, regulatory, reputational and safety aspects of the identified risk factor.
The risks described below may not be the only risks we face, as our business, operations and industry may also be
subject to risks that we do not yet know of, or that we currently believe are immaterial.

Market Risks

A substantial or extended decline in oil, NGLs or natural gas prices, or a substantial increase in oil, NGLs and
natural gas price differentials, could have a material adverse effect on our business, financial condition, results of
operations, and the trading prices of our securities.

Our financial performance and condition are substantially dependent on the prevailing prices we receive for the oil,
NGLs and natural gas which we produce. Prices for oil, NGLs and natural gas are inherently volatile and fluctuate in
response to changes in a variety of factors beyond our control, including:

the international and domestic supply and demand for oil, NGLs and natural gas;

•
• volatility and trading patterns in the commodity futures market;
• global economic conditions;
• production levels of members of OPEC, Russia, the United States or other hydrocarbon producing nations;
• geopolitical risks, including political and civil unrest in oil and natural gas producing regions;
• adverse weather conditions, natural disasters and other catastrophic events, such as tornadoes, flooding,

•
•
•

severe heat or cold, earthquakes and hurricanes;
the price and level of North American oil, NGLs and natural gas imports and exports;
the level of global oil, NGLs and natural gas inventories;
the economic and financial impact of epidemics or other public health issues, such as the ongoing COVID-19
pandemic;

• differing quality of production, including the gravity and sulphur content of our oil, the Btu and sulphur

•

•

•

content of our natural gas, and the quantity of NGLs associated with our natural gas;
the price and availability of, and demand for, alternative sources of energy (including coal, nuclear,
hydroelectric, solar and wind);
the effect of energy conservation efforts and technological advances in energy consumption and production,
including with respect to transportation and power generation;
the availability and proximity of gathering, transportation, processing, refining, storage and other
infrastructure facilities;

• changes in trade relations and policies, including the imposition of tariffs by the United States or Canada;
• conservation and environmental protection efforts, including activities by non-governmental organizations to

•

restrict the exploration, development and production of oil, NGLs and natural gas; and
the nature and extent of governmental regulations, including any changes or other actions with respect to
emissions, climate change, tariffs or tax laws.

We also may receive discounted prices for our oil, NGLs and natural gas production relative to certain benchmark
prices (such as Brent and WTI for oil and Henry Hub and AECO for natural gas) due to constraints on our ability to
transport and sell such production to certain markets. A failure to resolve such regional pricing differentials may result
in our continued realization of discounted or reduced oil, NGLs and natural gas prices relative to such benchmarks.

A substantial or extended decline in oil, NGLs and natural gas prices, or a substantial increase in oil, NGLs and natural
gas price differentials with respect to certain benchmarks, could result in, among other things, (a) a delay or
cancellation of existing or future drilling, development or construction programs; (b) the curtailment or shut-in of
production at some or all of our properties; (c) unutilized long-term transportation and drilling commitments; or (d) a
decrease in the value of our oil, NGLs and natural gas reserves, each of which could have a material adverse effect on
our business, financial condition, results of operations and the trading prices of our securities. Additionally, on at least
an annual basis, we assess the carrying value of our oil and natural gas properties in accordance with applicable

32 | 2021 Annual Report

Ovintiv Inc.

accounting standards. If oil, NGLs and natural gas prices decline significantly for a sufficient period, the carrying value
of our properties could be subject to financial impairment, and our net earnings could be materially and adversely
affected.

A pandemic, epidemic or other widespread outbreak of an infectious disease, such as the ongoing COVID-19
pandemic, could materially and adversely affect the operation of our business.

Although we maintain contingency plans to manage the potential workplace impacts of a pandemic, epidemic or
other widespread outbreak of an infectious disease, such as the ongoing COVID-19 pandemic, restrictive measures
implemented by governments in the jurisdictions in which we operate could prevent our employees, contractors or
suppliers from accessing our properties or performing critical services. Such measures may include limitations or
prohibitions on cross-border travel, restrictions on large gatherings, stay-at-home orders, vaccine mandates and
mandatory closures of “non-essential” businesses. In the event such measures remain in place for an extended period
of time, our ability to maintain ordinary staffing levels, secure operational inputs, and execute on portions of our
business could be impacted, and if a significant subset of our employees are required to work remotely, we will face
an increased exposure to vulnerabilities related to digital technologies and may experience a higher rate of cyber-
attacks. Additionally, concerns over the prolonged negative effects of a pandemic, epidemic or other widespread
outbreak of an infectious disease, including the ongoing COVID-19 pandemic, on global economic and business
prospects may contribute to decreased demand for oil, NGLs and natural gas; increased volatility in capital and
commodity markets, including volatility in the prices of oil, NGLs and natural gas; substantial fluctuations in currency
exchange rates, inflation rates and interest rates; increased counterparty credit and performance risk; and reduced
levels of general investing and consumption.

While the full impact of a pandemic, epidemic or other widespread outbreak of an infectious disease, including the
ongoing COVID-19 pandemic, is inherently uncertain, the ultimate impact will depend on several factors, including the
location and severity of the virus’s spread, the effectiveness and adoption rate of vaccines, the emergence of new or
previously unknown variants and the effectiveness of mitigation actions taken by governmental authorities. Any
pandemic, epidemic or other widespread outbreak of an infectious disease, including the ongoing COVID-19
pandemic, may reduce our spending and operating plans; reduce the value and amount of our oil, NGLs or natural gas
reserves and production; cause substantial fluctuations in our stock price and credit ratings; or otherwise materially
and adversely affect our business, financial condition, results of operations, and access to liquidity.

The trading price of our securities, including our common stock, is subject to volatility.

The trading price of our securities, including our common stock, may be volatile. The value of an investment in our
securities may decrease or increase abruptly, and such volatility may bear little or no relation to our financial or
operational performance. The price of our securities may fall in response to market appraisal of our strategy or if our
results of operations and/or prospects are below the expectations of market analysts or stakeholders. In addition,
equity and debt markets have, from time to time, experienced significant price and volume fluctuations that have
affected the market price of securities, and may, in the future, experience similar fluctuations which may be unrelated
to our operating performance and prospects but nevertheless affect the price of our securities. Broad equity and debt
market fluctuations resulting from general economic conditions, as well as our ability to meet or exceed market
expectations, may materially and adversely affect the trading prices of our securities, including our common stock.

Fluctuations in exchange rates could affect expenses or result in realized and unrealized losses.

We currently have operations in Canada and, as a result, a portion of our revenues and expenses are denominated in
Canadian dollars. In addition, our subsidiaries that are domiciled in Canada may hold U.S. dollar denominated assets
and liabilities. Fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar may result in realized
and unrealized losses, which could impact our revenue and expenses and have a material adverse effect on our
business, financial condition and results of operations.

Ovintiv Inc.

2021 Annual Report | 33

Operational Risks

Our ability to operate and complete projects is dependent on numerous factors outside of our control.

We undertake a variety of projects including exploration and development projects and the construction or expansion
of facilities and pipelines. Our ability to operate, generate sufficient cash flows, and timely complete projects depends
upon numerous factors largely beyond our control. These factors include:

• oil, NGLs and natural gas prices;
• global supply and demand for oil, NGLs and natural gas;
•

the overall state of the financial markets, including investor appetite for debt and equity securities issued by
oil and natural gas companies and the effects of economic recessions or depressions;
the ability to secure and maintain financing on acceptable terms;
legislative, environmental and regulatory matters;

the availability of drilling rigs, completions equipment and other facilities and equipment;
the ability to access lands;
the ability to access water for hydraulic fracturing operations;
reliance on vendors, suppliers, contractors and service providers;
shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;

•
•
• oil and natural gas reservoir quality;
•
•
•
•
•
• changes to free trade agreements;
•
• prevailing interest and foreign exchange rates;
•
• physical impacts from adverse weather conditions and natural disasters;
•

inflation and other unexpected cost increases, including with respect to materials and labor;

transportation and processing interruptions or constraints, including the availability and proximity of pipeline
and processing capacity;
technology failures; and

royalty and tax rates;

•
• accidents.

In addition, part of our corporate strategy is focused on a limited number of Core Assets which results in a
concentration of development capital and production. Some of the foregoing risks may be magnified due to the
concentrated nature of our development activities and may result in a relatively greater impact on our financial
condition and results of operations compared to other companies that may have more geographically diversified
operations. Any material delays in a project or project cost overruns could result in delayed revenues and some
projects becoming uneconomic, each of which could have a material and adverse effect on our business, financial
condition and results of operations.

Our operations involve many risks, some of which could result in unforeseen interruptions and expose us to
substantial losses and liabilities, for which our insurance may not fully protect us.

Our business is subject to the operating risks normally associated with (a) the exploration, development and
production of oil, NGLs and natural gas and (b) the operation of midstream facilities, including the gathering,
transportation, processing, storing and marketing of oil, NGLs and natural gas. These risks include:

• blowouts, cratering, explosions and fires;
•
• environmental hazards, such as the uncontrollable release or spill of oil, natural gas, toxic gases (such as

loss of well control;

hydrogen sulfide), produced water (brine), drilling or completion fluids, or other pollutants into the
environment, including the surface, subsurface, air and groundwater;

• pipeline ruptures, vessel ruptures and other equipment malfunctions, failures or accidents;
• mechanical difficulties, such as stuck oilfield drilling and service tools, pipe or cement failures and casing

collapses;

• adverse weather conditions, such as severe heat or cold, flooding, tornados and other natural disasters;
• encountering unexpected or abnormally pressured formations;
• premature declines of reservoir pressure or productivity; and
• acts of vandalism and terrorism, including attacks targeting oil, NGLs and natural gas facilities and

infrastructure.

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If any of the foregoing risks were to materialize, we could sustain material losses as a result of:

injury or loss of life;

•
• damage to, or destruction of, property, natural resources or equipment, including the costs of repair or

replacement;

• pollution or other environmental harm, including the costs associated with remediation, reclamation and

plugging and abandonment;
interruptions to our ongoing operations, including the reduction or shutting-in of existing production;
regulatory investigations and administrative, civil and criminal penalties; and
injunctions resulting in limitation or suspension of current or future operations.

•
•
•

While we maintain insurance against some, but not all, of these risks and losses described above, our insurance may
not be adequate to cover all casualty losses or liabilities, and our insurance does not cover penalties or fines that may
be assessed by a governmental authority. The occurrence of a significant event for which we are not fully insured may
have a material adverse effect on our business, financial position and results of operations.

Oil and natural gas exploration, development and production activities involve substantial costs and risks and may
not result in commercially productive reserves.

Oil and natural gas exploration, development and production activities involve numerous risks, including the risk that
no commercially productive oil or natural gas reservoirs will be encountered. The cost of drilling and completing wells
is often uncertain and operations may be curtailed, delayed or canceled, or become costlier, as a result of a variety of
factors, including:

fracture stimulation accidents or failures;

• unexpected drilling conditions, including abnormal pressures or irregularities in formations;
• equipment failures or accidents;
• construction delays;
•
• adverse weather conditions or natural disasters;
•
•
•
• access to, and the cost and availability of, the equipment, services, resources and personnel required to

title defects or restricted access to land;
lack of available gathering, transportation, processing, fractionation, storage, refining or export facilities;
lack of available capacity on interconnecting transmission pipelines;

complete our drilling, completion and production activities; and

• delays imposed by or resulting from compliance with or changes in environmental and other governmental,

regulatory or contractual requirements.

Additionally, our operations involve utilizing some of the latest horizontal drilling and completion techniques as
developed internally and by our service providers. Risks that we face while drilling and completing horizontal oil and
natural gas wells include the following:

landing the wellbore in the desired zone within the target formation;
staying in the desired zone within the target formation while drilling horizontally for extended lengths;

•
•
• controlling formation pressures during drilling;
•
• being able to run tools and other equipment consistently through the horizontal wellbore;
•
•

the ability to effectively fracture stimulate the reservoir with the desired number of stages; and
the ability to successfully clean out the wellbore after completion of the final fracture stimulation stage.

running casing the entire length of the wellbore;

Our future exploration and development activities may not be successful as a result of, among other things, the risks
set forth above and, if unsuccessful, our proved oil, NGLs and natural gas reserves and production would decline,
which could have a material and adverse effect on our business, financial condition and results of operation. While all
development activities involve these risks, exploratory and extension development activities involve a greater risk of
dry holes or failure to find commercial quantities of hydrocarbons.

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The proved reserves data provided in this Annual Report on Form 10-K is an estimate only and any inaccuracies in
the methodology or assumptions underlying our proved reserves estimates could cause the quantity and net
present value of our oil, NGLs, and natural gas reserves to be materially overstated or understated.

There are numerous uncertainties inherent in estimating economically recoverable quantities of oil, NGLs and natural
gas reserves, including many factors beyond our control. All oil, NGLs and natural gas reserve estimates are uncertain
to some degree, and classifications of oil, NGLs and natural gas reserves are only attempts to define the degree of
uncertainty involved. For those reasons, estimates of the quantity of oil, NGLs and natural gas economically
recoverable from a group of properties and the classification of such oil, NGLs and natural gas reserves, when
prepared by different engineers or by the same engineers at different times, may vary substantially. Additionally,
estimates with respect to oil, NGLs and natural gas reserves are often based upon volumetric calculations and upon
analogy to similar types of reserves, rather than upon actual production history. Oil, NGLs and natural gas reserve
estimates based on these methods are generally less reliable than those based on actual production history.
Subsequent evaluation of the same reserves based upon production history will result in variations in the estimated
reserves and these variations may be material.

Proved reserves data in this Annual Report on Form 10-K and other publications we make publicly available represent
estimates only. In general, estimates of our oil, NGLs and natural gas reserves, and the future net cash flows therefrom,
are based upon a number of factors and assumptions, including commodity prices, future operating and capital costs,
availability of future capital, historical production from the same or similar properties and the assumed effects of
regulation by governmental agencies, including with respect to royalty payments, all of which may vary considerably
from actual results. Our actual production, revenues, taxes and development and operating expenditures with respect
to our proved reserves may vary materially from such estimates.

The estimates of proved reserves included in this Annual Report on Form 10-K are prepared in accordance with SEC
regulations. Subject to limited exceptions, oil, NGLs and natural gas reserves may only be classified as proved
undeveloped reserves if the wells developing such reserves are scheduled to be drilled within five years after the date
of classification. The development timing of our oil, NGLs and natural gas reserves is based upon numerous
expectations and assumptions, including the allocation of development capital; anticipated costs to drill, complete and
operate our wells; and anticipated commodity prices. Our development expectations and assumptions are subject to
change and proved undeveloped reserves may be reclassified to unproved reserves at any time. Additionally,
commodity prices used to estimate proved reserves included in this Annual Report on Form 10-K are calculated as the
unweighted arithmetic average of the price on the first day of each month within the 12-month period. Significant
future price changes can have a material effect on the quantity and value of our proved reserves. The standardized
measure of discounted future net cash flows included in this Annual Report on Form 10-K will not represent the
current market value of our estimated proved reserves. In addition, these proved reserve estimates do not include any
value for probable or possible reserves that may exist, nor do they include any value for unproved undeveloped
acreage.

If we fail to find, develop or acquire additional oil, NGLs and natural gas reserves, our reserves and production will
decline materially from their current levels.

Our future oil, NGLs and natural gas reserves and production, and therefore our future cash flows, are highly
dependent upon our success in developing our current reserves base and exploring for, developing or acquiring
additional oil, NGLs and natural gas reserves. Typically, to maintain an oil and natural gas lease in the United States, we
are required to drill at least one well that is commercially productive within the primary term of the lease and, once
drilled, maintain oil or natural gas production in paying quantities from the lease. If we are unsuccessful in drilling a
commercially productive well during the primary term of the lease or, once drilled, in maintaining oil or natural gas
production in paying quantities from the lease, we could lose our rights to explore for and develop oil and natural gas
under such lease and our right to any oil, NGLs and natural gas reserves associated with the lease. In some cases, the
initial commercially productive well will only maintain the lease as to a portion of the lands covered thereby and
further oil and natural gas development activities are required to maintain the entirety of the lease.

The business of exploring for, developing and acquiring oil and natural gas reserves is capital intensive. Acquisition
opportunities in the oil and natural gas industry are inherently competitive, which can increase the cost of, or cause us
to refrain from, completing acquisitions. To the extent that cash flows from our operations are insufficient and external
sources of capital become limited or undesirable, our ability to make the necessary capital investments to maintain

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and expand our oil, NGLs and natural gas reserves and production will be impaired. In addition, there can be no
certainty that we will be able to find, develop or acquire additional oil, NGLs and natural gas reserves to replace
current reserves and production at acceptable costs. Without additions through exploration, development or
acquisition activities, our oil, NGLs and natural gas reserves and production will decline over time as the reserves are
depleted, which may materially and adversely affect our business, financial condition and results of operations.

Horizontal multi-well pad drilling involves certain risks which may cause volatility in our operating results.

Our operations utilize horizontal multi-well pad drilling. In this type of development, multiple wells are drilled based
upon spacing and completions techniques that evolve over time as learnings are captured and applied. Wells drilled
on a multi-well pad are generally not placed on production until all wells on the pad are drilled and completed. While
the use of this development technique can accelerate the production of our oil, NGLs and natural gas reserves and
increase our observed recovery factor from the reservoir, it can also result in production delays as problems with a
single well can adversely affect the production of all wells on the pad. Additionally, horizontal multi-well pad drilling
increases the risk of unintentional communication or pressure interference between wells which may adversely affect
our production. As a result, multi-well pad drilling can both cause delays in our production schedule and result in oil,
NGLs and natural gas production below expectations. These delays or production interruptions may reduce our
anticipated production volumes from both new and existing wells and this volatility could have a material and adverse
effect on our business, financial condition and results of operations.

We are subject to both known and unknown risks and liabilities from acquisitions and any anticipated or desired
benefits from such acquisitions may not be realized.

Historically, acquisitions of oil and natural gas properties, including through acreage trades, farm-ins and asset- or
corporate-level acquisitions, have contributed to our growth. Acquisition opportunities in the oil and natural gas
industry are inherently competitive, which can increase the cost of, or cause us to refrain from, completing
acquisitions. The success of any acquisition will depend on several factors and involves potential risks and
uncertainties, including, among other things:

•

•
•

•
•

•
•

the inability to accurately forecast and estimate oil, NGLs and natural gas reserves, production volumes,
development costs and the net cash flows attributable to such properties;
the inability to accurately forecast commodity prices;
the assumption of unknown liabilities, including environmental liabilities, for which we may not be indemnified
or for which the indemnity may not be adequate;
the validity of assumptions about asset- and corporate-level synergies;
the effect on our liquidity or financial leverage when using available cash or debt to finance the acquisition or
from the amount of debt assumed as part of the acquisition;
the diversion of management’s attention from other business concerns; and
the inability to hire, train or retain qualified personnel to manage and operate the acquired assets or business.

All of these factors, among others, affect whether an acquisition will ultimately generate cash flows sufficient to
provide a suitable return on investment. Even though we assess and review the properties we seek to acquire in a
manner consistent with what we believe to be industry practice, such reviews are limited in scope, inexact and not
capable of identifying all existing or potentially adverse conditions. This risk is magnified when the acquired properties
are in a geographic area where we have not historically operated. As a result, the anticipated and desired benefits of
an acquisition may not materialize, and this may have a material and adverse effect on our business, financial
performance and results of operations.

We are dependent on partners to fund certain projects conducted through joint ventures and partnerships.

Some of our projects are conducted through joint ventures, partnerships or other arrangements, where we are
dependent on our partners to fund their contractual share of the project’s capital and operating expenditures. If our
partners do not approve their contractual share of capital or operating expenditures, are unable to fulfill their
contractual obligations, or suspend or terminate their contractual arrangements with us, the projects may become
delayed or we may be forced to absorb additional capital or operating expenditures, each of which may materially and
adversely affect the viability of such projects and our business, financial condition and results of operations.

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These partners may also have strategic plans, objectives and interests that do not coincide, and may conflict, with our
plans, objectives and interests. While certain operational decisions may be made solely at our discretion in our
capacity as the operator of certain projects, major capital and strategic decisions affecting such projects may require
agreement among the partners. While we generally seek consensus with our partners regarding major decisions
concerning the direction and operation of a project, no assurance can be provided that future demands or
expectations of any party, including our demands and expectations, relating to such project will be met satisfactorily
or in a timely manner. Failure to satisfactorily meet such demands or expectations may affect our or our partners’
participation in the operation of such project or the timing for undertaking various activities, which could materially
and adversely affect the viability of such project and our business, financial condition and results of operations.
Further, we are involved from time to time in disputes with our partners and, as such, we may be unable to dispose of
certain assets or interests in certain arrangements if such disputes cannot be resolved in a satisfactory or timely
manner.

We do not operate all of our assets, and, in such instances, we may have a limited ability to exercise influence over
the operation and development of such assets.

Third parties operate a portion of the assets in which we have an ownership interest, and, in such instances, we may
have a limited ability to exercise influence over the operation and development of such assets. The success and timing
of our activities on these assets is therefore dependent upon factors that are largely outside of our control. These
factors include (a) the timing and amount of capital, operating and maintenance expenditures related to the project;
(b) the third-party operator’s expertise and financial resources; (c) the third-party operator’s ability to obtain required
approvals from other non-operating partners; and (d) the third-party operator’s selection and implementation of
adequate technology and risk management practices. The failure of one or more third-party operators to effectively
and efficiently operate assets in which we have an ownership interest could result in the inefficient deployment of
capital and the loss of production volumes, each of which could have a material and adverse effect on our business,
financial condition and results of operations.

Our customers, counterparties and lenders may be unable to satisfy their contractual or legal obligations.

We are exposed to certain risks associated with our customers, contractual counterparties and lenders. These risks
include (a) credit risks associated with (i) customers who purchase our oil, NGLs and natural gas production, (ii) the
collection of receivables from our joint interest partners for their proportionate share of expenditures made on
projects we operate, and (iii) counterparties to our derivative financial contracts; (b) performance risks associated
with the non-delivery, or delayed delivery, of contracted products or services, including the transportation and
processing of our oil, NGLs and natural gas production; and (c) liquidity risk in the event one or more lenders under
our existing credit facilities are unable to perform their funding obligations. We utilize a variety of mechanisms to limit
our exposure to these and similar risks, including requiring letters of credit, prepayments or collateral postings under
certain conditions. Despite these mechanisms, in the event a customer, contractual counterparty or lender fails to
satisfy their obligations, our business, financial condition and results of operations could be materially and adversely
affected.

We retain certain indemnification obligations related to our corporate reorganization in November of 2009.

As part of our November 2009 corporate reorganization that split our predecessor, Encana, into two independent
publicly traded energy companies, Encana and Cenovus Energy Inc. (“Cenovus”), Encana and Cenovus each agreed to
indemnify the other for certain liabilities and obligations associated with, among other things, in the case of Encana’s
indemnity, the business and assets retained by Encana, and in the case of Cenovus’s indemnity, the business and
assets transferred to Cenovus. We are unable to predict whether we will be required to indemnify, or seek indemnity
from, Cenovus for any obligations and the magnitude of such obligations. Any indemnification claims against us
pursuant to the various agreements entered with Cenovus, or our failure to obtain indemnity from Cenovus for any
claims we may hold, could have a material and adverse effect on our business, financial condition and results of
operations.

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We may be unable to dispose of certain assets and may be required to retain liabilities for certain matters.

We may identify certain assets for disposition, the proceeds of which could reduce the amount of our existing
indebtedness and/or increase the amount of capital available for other business purposes, including shareholder
returns and acquisitions. Various factors could materially affect our ability to dispose of the identified assets or
complete any announced transactions, including commodity price volatility; the availability of counterparties willing to
acquire oil and natural gas assets at prices and on terms acceptable to us; approval by our Board of Directors;
associated asset retirement obligations; due diligence; general market conditions; the assignability of any associated
contract, joint venture, partnership or other arrangements; and required stock exchange, governmental or third party
approvals.

These factors may also reduce the value of our assets or the proceeds of any asset disposition.

We (including our predecessor entities) have retained, or in the future may retain, liabilities or indemnification
obligations in connection with certain asset dispositions. While we are unable to predict the magnitude of any retained
liabilities or indemnification obligations, any liabilities or indemnification obligations retained could ultimately be
material. For example, under state and federal law, once an oil or natural gas well has permanently ceased production
of oil or natural gas, the operator of such well is obligated to plug and abandon (“P&A”) the well, decommission
production facilities and restore the well site to pre-operating conditions. U.S. state and federal regulations allow the
government to call upon predecessors in interest of oil and natural gas leases associated with such well to pay for
P&A, decommissioning and restoration obligations (together, “P&A Obligations”) if the current operator fails to fulfill
those obligations. If purchasers of any assets previously owned by us or our predecessors (including any offshore
wells or facilities), or any successor owners of those assets, are unable to meet their P&A Obligations due to
bankruptcy, dissolution or other liquidity issues, we may be unable to rely on our arrangements with them, if any, to
fulfill (or provide reimbursement for) those obligations. In those circumstances, the government may seek to impose
the bankrupt entity’s P&A Obligations on us and any other predecessors in interest, and such payments could have a
material adverse effect on our business, financial condition and results of operations.

Further, certain third parties may be unwilling to release us from guarantees or other credit support provided prior to
the disposition of an asset. In those cases, after the asset disposition, we may remain secondarily liable for the
obligations guaranteed or supported to the extent that the acquirer of the assets fails to perform their obligations.

Our operations may be affected by indigenous treaty, title and other rights.

Indigenous peoples have claimed indigenous treaty, title and other rights in respect of areas within the United States
and Canada. The legal basis of an indigenous land claim is a matter of considerable legal complexity and we cannot
predict the impact of such a claim, or the possible effects of a settlement of such claim, with any degree of certainty.
In addition, no assurance can be given that any recognition of indigenous rights or claims whether by way of a
negotiated settlement or by judicial pronouncement (or through the grant of an injunction prohibiting exploration,
development or production activities pending resolution of any such claim) would not delay or even prevent our
exploration, development and production activities. If a material claim were to arise and be successful, such claim
could have a material and adverse effect on our business, financial condition and results of operations. In addition, the
process of addressing such claim, regardless of the outcome, could be expensive and time consuming and could result
in delays which could have a material and adverse effect on our business, financial condition and results of operations.
For more information on the ongoing BRFN Case refer to Government and Environmental Regulatory Matters under
Item 1 and 2 of this Annual Report on Form 10-K.

In addition to the foregoing, we may become subject to various laws and regulations that apply to operators and
other parties operating within the boundaries of Native American reservations in the United States. These laws and
regulations may result in the imposition of certain fees, taxes, environmental standards, lease conditions or
requirements to employ specified contractors or service providers. Any one of these requirements, or any delay in
obtaining the approvals or permits necessary to operate within the boundaries of Native American tribal lands, could
adversely impact our operations and ability to explore, develop and produce new properties.

Further, in Canada, the province of British Columbia enacted legislation to implement the United Nations Declaration
on the Rights of Indigenous Peoples (“UNDRIP”) in the fall of 2019 and the Canadian federal government has
followed suit by adopting the UNDRIP Act on June 21, 2021. The UNDRIP legislation adopted by both British
Columbia and the Canadian federal government provide frameworks for recognizing the constitutional and human

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rights of indigenous peoples and aligning their respective provincial and federal laws with the internationally
recognized standards of UNDRIP. Both pieces of UNDRIP legislation are at an early stage of implementation and we
are unable to predict the total impact of the potential regulations upon our business. Although we do not anticipate
any near-term impacts to our business as a result of such legislation, the implementation of the standards of UNDRIP
has the potential to increase permitting times and change the processes and costs associated with project
development and operations.

Environmental Risks and Risks Associated with Climate Change

We are subject to risks and uncertainties associated with increased Environmental Regulation in all jurisdictions in
which we operate.

Our operations and properties are subject to numerous existing laws, rules and regulations governing our interactions
with the environment that are enacted by U.S. and Canadian federal, state, provincial, territorial, tribal, and municipal
governments (collectively, “Environmental Regulations”). Environmental Regulations impose, among other things,
restrictions, liabilities and obligations in connection with (a) discharges and emissions of various substances into the
environment; (b) the hydraulic fracturing of wells; (c) the handling, use, storage, transportation, treatment and
disposal of chemicals, hazardous substances and waste associated with finding, producing, transmitting and storing
oil, NGLs and natural gas; (d) the availability and management of fresh, potable or brackish water sources that are
being used, or whose use is contemplated, in oil and natural gas operations; and (e) requirements that well sites and
other properties associated with our operations be constructed, operated, maintained, abandoned and reclaimed to
the satisfaction of applicable regulatory authorities. In addition, certain types of operations, including new exploration
and development projects and certain changes to existing exploration and development projects, may require the
submission and approval of environmental impact assessments or permit applications. Expenditures required to
institute and maintain compliance with new or existing Environmental Regulations can be significant. Failure to
comply with Environmental Regulations may result in substantial clean-up and remediation costs arising from
damaged or contaminated properties, the imposition of significant fines and penalties by regulators and costly
litigation or administrative proceedings. Examples of recently proposed and final Environmental Regulations or other
regulatory initiatives include the following:

Emissions - Greenhouse gases (which include, among other things, methane, carbon dioxide, nitrous oxide and
various fluorinated gases; “GHGs”) are typically emitted throughout all phases of the oil and natural gas supply
chain, including production, transportation, processing, refining and storage operations. Additionally, although
beyond our control, end user consumption of oil and natural gas in activities such as power generation and
motorized transportation also results in GHG emissions. In the United States, the U.S. Environmental
Protection Agency (the “EPA”) has determined that GHG emissions present a danger to public health and the
environment and has adopted Environmental Regulations that, among other things, restrict GHG emissions
and require the monitoring and annual reporting of GHG emissions from specified sources. For example, in
November 2021, the EPA proposed New Source Performance Standard Subpart OOOOb that seeks to impose
more stringent methane and volatile organic compound emission standards for new, reconstructed, and
modified sources in the oil and natural gas industry. The EPA also proposed New Source Performance
Standard Subpart OOOOc, which would create, for the first-time, emission guidelines for existing oil and
natural gas sources to be included in individual states’ implementation plans. These Subpart OOOOb and
OOOOc standards expand upon previously issued New Source Performance Standards, Subpart OOOO and
Subpart OOOOa published by the EPA in 2012 and 2016, respectively. In addition, policy makers at both the
federal and state levels continue to propose more stringent Environmental Regulations designed to further
limit GHG and other air emissions. Many state and local officials have stated their intent to intensify efforts to
regulate GHG and other air emissions, including methane, from the oil and natural gas industry and it is
anticipated that the Biden Administration will propose additional Environmental Regulations that may impose
new costs on the oil and natural gas industry in an effort to accelerate reductions of GHG and other air
emissions from both the production and consumption of energy.

The U.S. and Canadian federal governments, along with several provincial and state governments, have also
announced intentions to adhere to certain international protocols regarding GHG emissions and regulate
GHGs and certain air pollutants. In addition to federal action, many state, provincial and local officials have
stated their intent to intensify efforts to regulate GHG emissions, including methane, from the oil and natural
gas industry. These governments are currently developing and/or implementing regulatory and policy

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Ovintiv Inc.

frameworks to deliver on their announcements. For example, effective February 19, 2021, the United States
officially rejoined the Paris Agreement, an international accord to address climate change through voluntary
and non-binding commitments to reduce GHG emissions by signatory nations. Pursuant to its pledge under
the Paris Agreement, the United States has committed to reducing its net GHG emissions by 50-52 percent
below 2005 levels by 2030. In Canada, the Government of Canada (a) has committed to cutting Canada’s net
GHG emissions by 40-45 percent below 2005 levels by 2030 in accordance with its pledge under the Paris
Agreement; (b) is gradually raising the federal carbon tax to C$170/tonne CO2e by 2030; and (c) has
announced its intention to impose a hard cap on GHG emissions from the oil and natural gas industry, seeking
to reduce methane emissions from the oil and natural gas industry by 75 percent below 2012 levels by 2030
and ensure GHG emission reductions are on a pace and scale sufficient to reach net-zero by 2050. We actively
participate in certain provincial industrial emission programs offered by both Alberta and British Columbia
that allow for the generation of offsets and other rebates to incentivize emission reduction projects and
mitigate carbon tax costs. We expect to continue to be able to utilize these provincial programs in the future
to migrate our carbon tax costs.

Hydraulic Fracturing Operations - The U.S. and Canadian federal governments, along with certain U.S. state
and Canadian provincial governments, continue to review aspects of the scientific, regulatory and policy
framework under which hydraulic fracturing operations are conducted. Most of these governments are
primarily engaged in the collection, review and assessment of technical information regarding the hydraulic
fracturing process and have not provided specific details with respect to any significant actual, proposed or
contemplated changes to the hydraulic fracturing regulatory construct. However, certain environmental and
other groups have made claims that hydraulic fracturing techniques are harmful to surface water and drinking
water sources and continue to suggest that additional Environmental Regulations may be needed to more
closely regulate the hydraulic fracturing process. Further, certain governments in jurisdictions where we do
not currently operate have considered or implemented moratoriums on hydraulic fracturing until further
studies can be completed and some governments have adopted, and others have considered adopting,
Environmental Regulations that could impose more stringent permitting, disclosure and well construction
requirements on hydraulic fracturing operations or result in an outright ban of hydraulic fracturing in oil and
natural gas operations.

Seismic Activity - Some areas of North America are experiencing an increased frequency of localized seismic
activity which has been associated with oil and natural gas operations. Although the occurrence and risk of
seismicity in relation to oil and natural gas operations is generally very low, it has been linked to the
underground disposal of produced water and, in some instances, has been correlated with hydraulic fracturing
activities. This has prompted legislative and regulatory initiatives intended to address these concerns. These
initiatives have the potential to (a) require additional seismic monitoring; (b) restrict the volume of produced
water injected in certain disposal wells; (c) restrict the injection of produced water in certain underground
formations; and (d) modify or curtail hydraulic fracturing operations in certain areas.

The cost and effects of complying with existing and emerging Environmental Regulations (including those with
respect to emissions, hydraulic fracturing operations and seismic activity) and proposed carbon taxes are not
currently anticipated to be material to our operations, however federal, state, provincial and local regulations and
programs are either under development or in the early stages of implementation and we are unable to accurately
predict the total future impact of such regulations and programs. Increased Environmental Regulations and/or carbon
taxes could (a) materially increase our cost of compliance and other operating costs; and/or (b) impede or prevent
development of our oil, NGLs and natural gas assets, reducing (i) the amount of oil, NGLs and natural gas we are
ultimately able to produce from our reserves and (ii) our overall quantity of oil, NGLs and natural gas reserves. The
occurrence of any of the foregoing could have have a material adverse effect on our business, financial condition and
results of operations.

We are subject to risks and uncertainties arising out of the threat of climate change that could reduce demand for
the oil, NGLs and natural gas we produce; increase our operating costs; and limit the areas in which we may
explore for, develop, and produce oil, NGLs and natural gas.

Public attention to issues concerning the existence and extent of climate change, and the role of human activity in it,
continues to increase, with the oil and natural gas industry receiving heightened scrutiny regarding GHG emissions.
Internationally this has resulted in existing and pending international agreements to reduce GHG emissions globally,

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2021 Annual Report | 41

while in Canada and the United States this has resulted in both national, regional and local legislation and regulatory
programs. For example, On January 27, 2021, President Biden issued Executive Order 14008 entitled “Tackling the
Climate Crisis at Home and Abroad,” directing the heads of various federal agencies, to the extent consistent with
applicable law and in consultation with other agencies and stakeholders, to, among other things, (a) assess climate
related risks to federal agencies; (b) pause the issuance of new oil and natural gas leases on public lands or in offshore
waters pending completion of a comprehensive review and reconsideration of federal oil and natural gas permitting
and leasing practices; (c) achieve a carbon-pollution free electricity sector by 2035; (d) procure clean and
zero-emission vehicles for federal, state, local and tribal government fleets; and (e) identify and eliminate federal fossil
fuel subsidies. Additionally, an increasing number of states, local municipalities and other groups have made claims in
federal and state courts against oil and natural gas companies, including Ovintiv, alleging that GHG emissions from oil
and natural gas produced by such companies has contributed, and continues to contribute, to climate change. These
allegations have included claims of public and private nuisance, trespass, negligence, strict liability and civil
conspiracy. Some in the investment community (including, among others, shareholders, bondholders, institutional
lenders, investment advisors, pension and sovereign wealth funds and endowments) have also become increasing
concerned with the causes of climate change and the role oil and natural gas companies play in any of its purported
effects. This has led some in the investment community to shift all or part of their investment or funding allocations
away from the oil and natural gas industry and others to modify the terms upon which funding is made available to
the oil and natural gas industry. In other instances, it has led shareholders to initiate lawsuits against the directors and
management of oil and natural gas companies and/or bring shareholder proposals demanding that oil and natural gas
companies increase climate disclosure; change business practices or operations; or appoint new board representation.

If initiatives and actions brought by private parties or additional governmental regulations with respect to climate
change intensify, we could experience (a) a reduction in demand for the oil and natural gas we produce and sell; (b) a
material increase in our cost of compliance and other operating costs; (c) difficulty in developing our oil and natural
gas assets, reducing (i) the amount of oil, NGLs and natural gas we are ultimately able to produce from our reserves
and (ii) our overall quantity of oil, NGLs and natural gas reserves; (d) limitations on our ability to access capital
markets and raise capital on satisfactory terms, or at all; and (e) costly and time consuming litigation. While we are
unable to accurately assess the probability and impact of potential climate change regulations, initiatives and actions,
the occurrence of any one or more of the foregoing could have have a material adverse effect on our business,
financial condition and results of operations.

Financial and Liquidity Risk

Downgrades in our credit ratings could increase our cost of capital and limit our access to capital, suppliers or
counterparties.

Rating agencies regularly evaluate our credit, basing their credit ratings for our long-term and short-term debt
securities on a variety of factors, including factors over which we have some control (e.g., our financial strength), as
well as factors not entirely within our control (e.g., general macroeconomic trends and conditions affecting the oil and
natural gas industry generally). While we currently hold investment grade credit ratings from three of the four major
rating agencies, there is no assurance that our credit ratings will not be downgraded in the future, including below
investment grade.

Our borrowing costs and ability to raise funds are directly impacted by our credit ratings. A credit rating downgrade
may increase the cost of borrowing under our existing credit facilities, limit access to our current commercial paper
programs, limit our access to private and public markets to raise short-term and long-term debt capital, and
negatively impact our overall cost of capital. Credit ratings may also be important to suppliers or counterparties when
they seek to engage in certain transactions. If we experience downgrades in one or more of our credit ratings, we may
be required to post collateral, letters of credit, cash or other forms of security as financial assurance for our
performance under certain contractual arrangements with various counterparties including marketing, midstream
(including gathering, processing and transportation providers), over-the-counter derivative, and construction
counterparties. Additionally, certain of these arrangements contain financial assurance language that may, under
certain circumstances, permit our counterparties to request additional collateral or require that we terminate
transactions based on our credit rating. The occurrence of any of the foregoing could adversely affect our ability to
execute portions of our business strategy, including hedging, and could have a material adverse effect on our liquidity
and capital position.

42 | 2021 Annual Report

Ovintiv Inc.

Our level of indebtedness may limit our financial flexibility.

As of December 31, 2021, we had outstanding long-term unsecured senior notes of $4,741 million. The terms of our
various financing arrangements, including but not limited to the indentures relating to our outstanding senior notes
and the credit agreements relating to our revolving credit facilities, impose restrictions on our ability to take a number
of actions that we may otherwise desire to take, including incurring additional debt (including guarantees of
indebtedness) and selling or creating liens on certain assets.

Our level of indebtedness could affect our operations by:

•

•
•
•
•

requiring us to dedicate a portion of our cash flows from operations to service indebtedness, thereby reducing
the availability of cash flow for other purposes;
reducing our competitiveness compared to similar oil and natural gas companies that have less debt;
limiting our ability to obtain additional financing for working capital, capital investments and acquisitions;
limiting our flexibility in planning for, or reacting to, changes in our business and industry; and
increasing our vulnerability to general adverse economic and industry conditions.

Our ability to meet and service our debt obligations depends on our future operational performance. General
economic conditions; oil, NGLs or natural gas prices; and financial, business and other factors may affect our
operational performance. Many of these factors are beyond our control. If we are unable to satisfy our debt
obligations with cash on hand, we may attempt to refinance or repay portions of our indebtedness, including with
proceeds from a public securities offering or the sale of certain assets. No assurance can be given that we will be able
to generate sufficient cash flows to pay the interest on our debt, or that funds from future borrowings, equity
financings or asset sales will be available to pay or refinance our debt on terms that we consider favorable. Further, if
we incur additional debt to finance asset or business acquisitions, we may decrease our liquidity by using a significant
portion of our available cash or borrowing capacity to finance such acquisitions, and such acquisitions could result in a
significant increase in our interest expense or financial leverage. The occurrence of any of the foregoing could
adversely affect our ability to execute portions of our business strategy and could have a material adverse effect on
our liquidity and capital position.

Our risk management activities may prevent us from fully benefiting from an increase in oil, NGLs and natural gas
prices and expose us to certain other risks.

We are exposed to, among other things, fluctuations in oil, NGLs and natural gas prices and foreign currency
exchange rates. We actively monitor such exposures and, where we deem appropriate, utilize derivative financial
instruments and physical delivery contracts to mitigate the potential impact of declines in oil, NGLs and natural gas
prices and fluctuations in foreign currency exchange rates. Under U.S. GAAP, derivative financial instruments that do
not qualify or are not designated as hedges for accounting purposes are fair valued with the resulting changes
recognized in current period net earnings. The utilization of derivative financial instruments may therefore introduce
significant volatility into our reported net earnings.

The terms of our various risk management agreements and the amount of estimated production hedged may limit the
benefits we receive from an increase in oil, NGLs and natural gas prices. We may also suffer financial loss if (a) we fail
to produce anticipated volumes of oil, NGLs and natural gas, particularly during periods of increasing commodity
prices; or (b) counterparties to our risk management agreements fail to fulfill their obligations under the agreements,
particularly during periods of declining commodity prices. The occurrence of any of the foregoing could adversely
affect our ability to execute portions of our business strategy and could have a material adverse effect on our liquidity
and capital position.

The decision to return capital to shareholders, whether through cash dividends, share buybacks or otherwise, and
the amount and timing of such capital returns is subject to the discretion of the Board of Directors and will vary
from time to time.

Although we currently intend to return capital to shareholders in the form of (a) a base quarterly cash dividend;
(b) variable cash dividends; and/or (c) repurchases of our outstanding common stock (commonly known as share
buybacks), the amount and timing of these returns of capital to shareholders may vary from time to time. The decision
whether to return capital to shareholders, as well as the timing and amount of any return of capital to shareholders, is
subject to the discretion of the Board of Directors, which regularly evaluates our proposed capital returns to

Ovintiv Inc.

2021 Annual Report | 43

shareholders and the requirements, if any, under Delaware General Corporation Law (“DGCL”). Additionally, in the
case of share buybacks, we may be limited in our ability to repurchase shares of our common stock by various
governmental laws, rules and regulations which prevent us from purchasing our common stock during periods when
we are in possession of material non-public information. The level of dividends per share of common stock will also be
affected by the number of outstanding shares of common stock and other securities that may be entitled to receive
cash dividends or other payments.

The amount of cash available to return to shareholders, if any, can vary significantly from period to period for a
number of reasons, including, among other things: our operational and financial performance; fluctuations in the costs
to produce oil, NGLs and natural gas; the amount of cash required or retained for debt service or repayment; amounts
required to fund capital expenditures and working capital requirements; our ability to access capital markets; foreign
currency exchange rates and interest rates; any agreements relating to our indebtedness that restrict our ability to
return capital to shareholders and the other risks set forth in Item 1A. Risk Factors of this Annual Report on Form 10-K.
The trading price of our securities, including our common stock, may deteriorate if we are unable to meet investor
expectations with respect to the timing and amount of capital returns to shareholders, and such deterioration may be
material.

Regulation and Litigation Risk

We are subject to extensive federal, state, provincial and local government laws, rules and regulations that can
adversely affect the cost, manner and feasibility of our business, and increased regulation in the future could
increase costs, impose additional operating restrictions and cause delays.

All of our operations are subject to extensive federal, state, provincial, local and other laws, rules and regulations,
including with respect to drilling operations; completion operations, including the use of hydraulic fracturing; the
production of oil, NGLs and natural gas; the disposal of produced water and other hazardous waste; the gathering and
transportation of oil, NGLs and natural gas; the imposition of taxes; royalty payments; environmental matters,
including air and water emissions or discharges; free trade agreements; worker health and safety; and conservation
policies, including policies related to environmentally sensitive areas and protected species. These laws, rules and
regulations may impose substantial liabilities for our failure to comply, including the assessment of administrative, civil
and criminal penalties and the issuance of injunctions restricting or prohibiting some or all of our activities in a
particular area.

In the normal course of our business, we may be required to make large expenditures to comply with applicable
governmental laws, rules, regulations, permits or orders. While we cannot predict the actions that future laws, rules
and regulations may require or prohibit, our business could be subject to increased operating and other compliance
costs and our operations may be delayed if existing laws, rules and regulations are revised or reinterpreted, or if new
laws, rules and regulations become applicable to our operations. Any such increases or delays could have a material
and adverse effect on our business, financial condition and results of operations.

We currently are, and from time to time in the future may be, subject to claims, litigation, administrative
proceedings and regulatory actions that may not be resolved in our favor.

We currently are, and from time to time in the future may be, subject to claims, litigation, administrative proceedings
and regulatory actions. The outcome of these matters may be difficult to assess or quantify, and there cannot be any
assurance that such matters will be resolved in our favor. If we are unable to resolve such matters favorably, we or our
directors, officers or employees may become involved in legal proceedings that could result in an onerous or
unfavorable decision, including fines, sanctions, monetary damages or the inability to engage in certain operations or
transactions. The defence of such matters may also be costly, time consuming and could divert the attention of
management and key personnel away from our operations. We may also be subject to adverse publicity associated
with such matters, regardless of whether such allegations are valid or whether we are ultimately found liable. As a
result, such matters could have a material adverse effect on our business, reputation, financial condition, results of
operations or liquidity. See Item 3 of this Annual Report on Form 10-K.

44 | 2021 Annual Report

Ovintiv Inc.

The ability of Canadian and other non-resident shareholders to effect service of process or enforce remedies
against Ovintiv, its directors, officers, experts, and assets may be limited.

We are incorporated in the State of Delaware and our principal place of business is in the United States. Most of our
directors and officers are residents of the United States and many of the experts who provide us with services are
residents of the United States. Additionally, most of our oil and natural gas assets and production are located in the
United States. It may be difficult for our shareholders in Canada or other non-U.S. jurisdictions (each a “Foreign
Jurisdiction”) to (a) effect service of process within such Foreign Jurisdiction upon Ovintiv or certain of our directors,
officers and representatives of experts who are not residents of the Foreign Jurisdiction (together, “Non-Residents”)
and (b) enforce the judgments of courts in an applicable Foreign Jurisdiction against Ovintiv and other Non-Residents
based upon liability under the laws of such Foreign Jurisdiction, including the securities laws of any province within
Canada.

Tax Risks

U.S. and Canadian tax laws and regulations may change over time, and such changes may result in increased taxes
on our business.

From time to time, legislation has been proposed that, if enacted into law, would make significant changes to U.S. and
Canadian tax laws and regulations, including those specifically applicable to the oil and natural gas industry (such as
the intangible drilling and development costs deduction under U.S. federal income tax law). While we are unable to
predict the timing, scope and effect of any proposed or enacted tax law changes, elimination of certain tax
deductions, as well as any other changes to, or the imposition of new, federal, state or local U.S. or Canadian taxes
(including the imposition of, or increases in, production, severance or similar taxes), could materially and adversely
affect our business, financial condition and results of operations. We will continue to monitor and assess any proposed
or enacted tax law changes to determine the impact on our business, financial condition and results of operations and
take appropriate actions, where necessary.

Additionally, U.S. and Canadian tax authorities could detrimentally change their administrative practices or may
disagree with the way we calculate our tax liabilities or structure our arrangements and there are certain tax matters
under governmental review for which the timing of resolution is uncertain. While we believe that our current provision
for income taxes is adequate, certain tax authorities may reassess our taxes and such reassessments may be material.

Our corporate reorganization in January of 2020 may result in material Canadian and/or U.S. federal income taxes.

On January 24, 2020, Encana completed a corporate reorganization (the “Reorganization”), which included among
other things, (a) a consolidation of Encana common stock on the basis of one post-consolidation share for each five
pre-consolidation shares; (b) our acquisition of all of the issued and outstanding shares of Encana common stock in
exchange for shares of Ovintiv common stock on a one-for-one basis and becoming the parent company of Encana
and its subsidiaries and (c) our subsequent migration from Canada to the United States, becoming a Delaware
corporation (the “U.S. Domestication”). We continue to carry on the business previously conducted by Encana and its
subsidiaries prior to the completion of the Reorganization. The Reorganization and U.S. Domestication involved
multiple complex U.S. and Canadian tax issues, including numerous assumptions and estimates of fair market value.
While we believe that our analysis and application of both U.S. and Canadian tax laws to the Reorganization was
correct, certain tax authorities may challenge our positions which could materially and adversely affect our business,
financial condition and results of operations.

Ovintiv Inc.

2021 Annual Report | 45

General Risks

The oil and natural gas industry is highly competitive and many of our competitors have available resources in
excess of our own.

The oil and natural gas industry is highly competitive, and many competitors, including major integrated and
independent oil and natural gas companies, as well as national oil companies, are larger and have substantially greater
resources at their disposal than we do. We compete with these companies for the acquisition of oil and natural gas
leases and other properties. Such competition can significantly increase costs and affect the availability of resources,
which could provide our larger competitors a competitive advantage when acquiring equipment, leases and other
properties.

We also compete with these companies for the personnel, including petroleum engineers, geologists, geophysicists
and other key personnel, required to both (a) find, acquire, develop and operate our properties and (b) market our oil,
NGLs and natural gas production. The experience, knowledge and contributions of our existing management team and
directors to our immediate and near-term operations is of central importance for the foreseeable future. As such, the
unexpected loss of services from, or retirement of any, of our key operations or management personnel could have a
material adverse effect on our business and results of operation. In addition, the competition for qualified personnel in
the oil and natural gas industry means there can be no assurance that we will be able to attract and retain key
personnel with the required specialized skills necessary for our business.

We could be adversely affected by security threats, including cyber-security threats and related disruptions.

We have become increasingly dependent upon information technology systems to conduct our daily operations. We
depend on a variety of information technology systems to estimate oil, NGLs and natural gas reserve quantities;
process and record financial and operating data; analyze seismic and drilling information; and communicate with
employees and third-party partners. This growing dependence on technology is accompanied by a greater sensitivity
to cyber-attacks and information systems breaches. Unauthorized access to information systems by employees or
third parties could corrupt or expose confidential, fiduciary, or proprietary information; interrupt our communications
or operations; disrupt our business activities; or interfere with our competitive position. In addition, our vendors,
suppliers and other business partners may separately suffer disruptions as a result of such security breaches which
may directly or indirectly affect our business activities or our competitive position.

To protect our information assets and systems, we apply technical and process controls, which are reviewed by the
appropriate members of senior management with oversight from our Board of Directors. These controls are in line
with industry standards and are reviewed annually with peer companies to guide our focus on information security
initiatives. However, these controls may not adequately prevent cyber-security breaches and we may not adopt all
controls utilized by our peers. As cyber-attacks continue to evolve, we may be required to expend additional
resources to investigate, mitigate and remediate any potential vulnerabilities. We may also be subject to regulatory
investigations or litigation relating to cyber-security issues.

Although we have not suffered any material losses related to a cyber-security breach to date, there is no assurance
that we will not suffer material losses associated with cyber-security breaches in the future. If a cyber-attack were to
successfully breach our information or operating systems, we could incur substantial remediation costs and suffer
other negative consequences, including exposure to significant litigation risks. The potential for such occurrences
subjects our operations to increased risks that could have a material adverse effect on our business, financial condition
and results of operations.

Item 1B. Unresolved Staff Comments

None.

46 | 2021 Annual Report

Ovintiv Inc.

Item 3. Legal Proceedings

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. 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. See Item 1A. Risk Factors of this
Annual Report on Form 10-K, “We currently are, and from time to time in the future may be, subject to claims,
litigation, administrative proceedings and regulatory actions that may not be resolved in the Company’s favor”.

In July 2020, the Company received a Notice of Violation (“NOV”) from the U.S. Environmental Protection Agency
(“EPA”) and the Utah Department of Environmental Quality, Division of Air Quality (“UDAQ”). The NOV alleges
violations under the federal Clean Air Act, the State of Utah’s State Implementation Plan, and the State of Utah’s air
quality regulations for the oil and natural gas industry, at certain of the Company facilities located in the Uinta Basin.
The Company has exchanged information with the EPA and UDAQ and is engaged in discussions aimed at resolving
the allegations. The Company is unable to predict the financial impact of the NOV or the timing of its resolution at this
time. Resolution of the matter may result in monetary sanctions of more than $300,000.

For additional information, see Note 27 to Ovintiv’s audited Consolidated Financial Statements under Item 8 of this
Annual Report on Form 10-K.

Item 4. Mine Safety Disclosures

Not applicable.

Ovintiv Inc.

2021 Annual Report | 47

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities

Market Information

Ovintiv’s shares of common stock are listed and posted for trading on the NYSE and TSX under the symbol “OVV”.

Shareholders

The Company is authorized to issue up to 775,000,000 shares of stock consisting of: (a) 750,000,000 shares of
common stock, par value $0.01 per share, and (b) 25,000,000 shares of preferred stock, par value $0.01 per share. As
at February 18, 2022, there were 256,769,168 shares of common stock outstanding held by 5,230 shareholders of
record, and no shares of preferred stock outstanding.

Capital Return Information

In 2021, the Company paid a quarterly dividend of $0.09375 per share for each of the first two quarters and $0.14 per
share for the third and fourth quarters (2020: $0.09375 per share each quarter) and $0.4675 per share annually
(2020: $0.375 per share annually). On February 24, 2022 the Board of Directors declared a dividend of $0.20 per
share of Ovintiv common stock payable on March 31, 2022 to common shareholders of record as of March 15, 2022.
The Company currently pays dividends quarterly to shareholders of record as of the 15th day (or the previous business
day) of the last month of each calendar quarter, with the last business day of the same month being the
corresponding payment date.

On September 9, 2021 the Company announced a new capital allocation framework commencing in the fourth quarter
of 2021, where the Company is committed to return 25 percent of Non-GAAP Cash Flow in excess of capital
expenditures and base dividends in the form of share buybacks and/or variable dividends at the discretion of the
Board. During the fourth quarter of 2021, the Company elected share buybacks under the capital allocation framework.

Although we currently intend to return capital to shareholders in the form of (a) a base quarterly cash dividend;
(b) variable cash dividends; and/or (c) repurchases of our outstanding common stock (commonly known as share
buybacks), the amount and timing of these returns of capital to shareholders may vary from time to time. The decision
whether to return capital to shareholders, as well as the timing and amount of any return of capital to shareholders, is
subject to the discretion of the Board of Directors, which regularly evaluates our proposed capital returns to
shareholders and the requirements, if any, under DGCL. See Item 1A. Risk Factors of this Annual Report on Form 10-K,
“The decision to return capital to shareholders, whether through cash dividends, share buybacks or otherwise, and the
amount and timing of such capital returns is subject to the discretion of the Board of Directors and will vary from time
to time”.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Information concerning securities authorized for issuance under equity compensation plans is set forth in the Proxy
Statement relating to the Company’s 2022 annual meeting of shareholders, which is incorporated herein by reference.

48 | 2021 Annual Report

Ovintiv Inc.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS

On September 28, 2021, Ovintiv announced it had received regulatory approval to purchase, for cancellation, up to
26 million shares of common stock pursuant to a NCIB over a 12-month period from October 1, 2021 to
September 30, 2022. The number of shares of common stock authorized for purchase represents 10 percent of
Ovintiv’s public float as of September 20, 2021.

During the three months ended December 31, 2021, the Company purchased approximately 3 million shares of
common stock for total consideration of approximately $111 million at a weighted average price of $36.18 per share.
The following table presents the shares of common stock purchased during the three months ended
December 31, 2021.

Period

October 1 to

October 31, 2021

November 1 to

November 30, 2021

December 1 to

December 31, 2021

Total

Total Number of
Shares Purchased

Average
Price Paid
per Share (1)

Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs

Maximum Number of Shares
That May Yet be Purchased
Under the Plans or Programs

791,392 $

37.91

1,786,135

490,766

3,068,293 $

35.94

34.23

36.18

791,392

1,786,135

490,766

3,068,293

25,256,869

23,470,734

22,979,968

22,979,968

(1) Includes commissions.

RECENT SALES OF UNREGISTERED EQUITY SECURITIES

None.

Ovintiv Inc.

2021 Annual Report | 49

PERFORMANCE GRAPH

The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with
the SEC, nor shall information be incorporated by reference into any future filing under the Securities Act of 1933, as
amended (the “Securities Act”) or the Exchange Act, except to the extent that the Company specifically incorporates it
by reference into such filing.

The following graph compares the cumulative five-year total return to shareholders of the Company’s common stock
relative to the cumulative total returns of the S&P 400 and the SPDR Oil & Gas Exploration & Production ETF (“XOP
U.S. Equity”). The graph was prepared assuming $100 was invested on December 31, 2016 in the Company’s common
stock, the S&P 400 and the XOP U.S. Equity, and dividends have been reinvested subsequent to the initial investment.
The graph is included for historical comparative purposes only and should not be considered indicative of future
performance.

Comparison of 5-Year Cumulative Total Return Among
Ovintiv, the S&P 400 and XOP U.S. Equity
(US$100 Invested in Base Period)  

200

180

160

140

120

100

80

60

40

20

-

2016

2017

2018

OVV

2019

2020

2021

XOP

SP400

Fiscal Year Ended December 31

2016

2017

Ovintiv
S&P 400
XOP US Equity

Item 6. [Reserved]

Not Applicable.

$ 100.00
100.00
100.00

$ 114.19
116.23
90.53

$

2018

49.82
103.33
65.10

$

2019

41.03
130.37
58.95

$

2020

26.75
148.16
37.54

$

2021

63.76
184.81
62.61

50 | 2021 Annual Report

Ovintiv Inc.

Item 7. 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 consolidated 2021 results and year-over-year comparisons between 2021 and
2020 results. This MD&A should be read in conjunction with the audited Consolidated Financial Statements and
accompanying notes for the year ended December 31, 2021 (“Consolidated Financial Statements”), which are included
in Item 8 of this Annual Report on Form 10-K. Discussion and analysis of 2019 results and year-over-year comparisons
between 2020 and 2019 results that are not included in this Form 10-K, and can be found in Item 7 of the 2020 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 Annual Report on Form 10-K. This MD&A includes the following sections:

Executive Overview
•
Results of Operations
•
•
Liquidity and Capital Resources
• Accounting Policies and Estimates
• Non-GAAP Measures

Executive Overview

Strategy

Ovintiv is a leading North American energy producer that is focused on developing its multi-basin portfolio of oil,
NGLs and natural gas producing plays as part of its strategy outlined in Items 1 and 2 of this Annual Report on
Form 10-K. Ovintiv is committed to growing long-term shareholder value by delivering on its strategic priorities
through execution excellence, disciplined capital allocation, commercial acumen and risk management, while driving
environmental, social and governance progress. The Company’s strategy is founded on its multi-basin portfolio of top
tier assets, financial strength, as well as its core and foundational values.

In support of the Company’s commitment to growing shareholder value, Ovintiv implemented a capital allocation
framework in 2021 that outlines increasing returns to shareholders as well as continuing the Company’s progress on
debt reduction.

Ovintiv is delivering results in a socially and environmentally responsible manner. Thoughtfully developed 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 and progress achieved
relating to ESG practices can be found on the Company’s website.

Ovintiv continually reviews and evaluates its strategy and changing market conditions in order to maximize cash flow
generation from its Core Assets located in some of the best plays in North America. As at December 31, 2021, the Core
Assets comprised Permian and Anadarko in the U.S., and Montney in Canada. These Core Assets form a multi-basin
portfolio of oil, NGLs and natural gas producing plays enabling flexible and efficient investment of capital that support
the Company’s strategy.

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 succeed as a team.

For additional information on reporting segments and the plays in which the Company operates, refer to Items 1 and 2
of this Annual Report on Form 10-K. For additional information on the segmented results, refer to Note 2 to the
Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Ovintiv Inc.

2021 Annual Report | 51

In evaluating its operations and assessing its leverage, Ovintiv reviews performance-based measures such as
Non-GAAP Cash Flow, Non-GAAP Cash Flow Margin, Total Costs and debt-based metrics such as Debt to Adjusted
Capitalization, Net Debt and Net 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.

Highlights

During 2021, the Company focused on executing its 2021 capital plan aimed at maximizing profitability through
operational and capital efficiencies, delivering cash from operating activities and using excess cash flows to reduce
total long-term debt. Higher upstream product revenues in 2021 compared to 2020 resulted from higher average
realized prices, excluding the impact of risk management activities. Increases in average realized natural gas and
liquids prices of 91 percent and 90 percent, respectively, were primarily due to higher benchmark prices. Ovintiv
continues to focus on optimizing realized prices from the diversification of the Company’s downstream markets.

The Company continued to deliver significant cash from operating activities while reducing its total long-term debt
balance. Cash from operating activities of $3,129 million included a net realized loss of $1,362 million on the settlement
of commodity and foreign exchange risk management positions and a current income tax recovery of $156 million
primarily due to the resolution of prior years’ tax items. The Company used excess cash flows to reduce its total long-
term debt balance by $2.1 billion in 2021.

Significant Developments

• On April 28, 2021, the Company closed the sale of its previously announced Duvernay assets and received

proceeds of approximately $238 million, after closing and other adjustments. The transaction had an effective
date of January 1, 2021.

• On May 19, 2021, the Company closed the sale of its previously announced Eagle Ford assets and received

proceeds of approximately $764 million, after closing and other adjustments. The transaction had an effective
date of January 1, 2021.

• On May 19, 2021, the Company announced its intention to redeem the Company’s $600 million, 5.75 percent

senior notes due January 30, 2022, and its $518 million, 3.90 percent senior notes due November 15, 2021. The
senior notes were redeemed on June 18, 2021 and August 16, 2021, respectively. The combined debt
redemptions will result in annualized interest savings of over $50 million.

• On July 27, 2021, Ovintiv announced an increase of about 50 percent to its quarterly dividend payment
representing an annualized dividend of $0.56 per share of common stock as part of the Company’s
commitment to returning capital to shareholders.

• On September 9, 2021, Ovintiv announced a new capital allocation framework to support the Company’s

strategy of increasing shareholder returns as well as reducing Net Debt.

• On September 28, 2021, in conjunction with the new capital allocation framework, Ovintiv announced it

received regulatory approval to commence a NCIB that enables the Company to purchase, for cancellation, up
to approximately 26 million shares of common stock over a 12-month period from October 1, 2021 to
September 30, 2022. During 2021, Ovintiv purchased for cancellation, approximately 3.1 million shares of
common stock at an average price of $36.18 per share, for total consideration of approximately $111 million.

• On October 6, 2021, Ovintiv launched its sustainability website, which highlights the Company’s progress on

its key ESG metrics and initiatives, and announced several sustainability milestones related to emission
reductions, social responsibility, and corporate governance. As of December 31, 2021, the Company exceeded
its 33 percent methane emissions intensity reduction target, four years ahead of schedule and reduced its
GHG emissions intensity by greater than 20 percent compared to 2019 levels. On February 24, 2022, the
Company announced a further GHG emissions intensity reduction target of 50 percent compared to 2019
levels, to be achieved by 2030.

52 | 2021 Annual Report

Ovintiv Inc.

• On February 24, 2022, Ovintiv announced an increase of about 43 percent to its quarterly dividend payment

representing an annualized dividend of $0.80 per share of common stock as part of the Company’s
commitment to returning capital to shareholders.

Financial Results

• Reported net earnings of $1,416 million, including net losses on risk management in revenues of $1,883 million,

before tax and a current income tax recovery of $156 million.

• Generated cash from operating activities of $3,129 million, Non-GAAP Cash Flow of $3,209 million and

Non-GAAP Cash Flow Margin of $16.46 per BOE. Cash from operating activities exceeded capital
expenditures by $1,610 million.

• Paid dividends of $0.4675 per share of common stock totaling $122 million.

• Had $4.5 billion in total liquidity as at December 31, 2021, which included available credit facilities of
$4.0 billion, available uncommitted demand lines of $300 million, and cash and cash equivalents of
$195 million.

• Reduced total long-term debt by $2.1 billion.

• Reported Net Debt to Adjusted EBITDA of 1.4 times.

Capital Investment

• Reported total capital spending of $1,519 million, which was in line with the full year 2021 investment plan of

$1.5 billion.

• Directed $1,362 million, or 90 percent, of total capital spending to the Core Assets.

• Focused on highly efficient capital activity and short-cycle high margin projects providing flexibility to

respond to fluctuations in commodity prices.

Production

• Produced average liquids volumes of 274.5 Mbbls/d which accounted for 51 percent of total production

volumes. Average oil and plant condensate volumes of 191.2 Mbbls/d, or 70 percent of total liquids production
volumes, was in line with full year 2021 updated guidance of 191.0 Mbbls/d to 194.0 Mbbls/d.

• Produced average natural gas volumes of 1,556 MMcf/d which accounted for 49 percent of total production

volumes and was in line with full year 2021 updated guidance of 1,555 MMcf/d to 1,570 MMcf/d.

Operating Expenses

•

Incurred Total Costs in 2021 of $2,613 million, or $13.42 per BOE, an increase of $300 million or $1.82 per BOE
compared to 2020. Total Costs is defined in the Non-GAAP Measures section of this MD&A. Significant items
in 2021 compared to 2020 impacting Total Costs include:

o Higher upstream transportation and processing expenses of $162 million, primarily due to higher
production volumes in Montney ($95 million) and a higher U.S./Canadian dollar exchange rate
($55 million); and

o Higher production, mineral and other taxes of $120 million, primarily due to higher commodity prices.

• Total Operating Expenses in 2021 of $7,139 million decreased by $4,345 million primarily due to the non-cash

ceiling test impairments of $5,580 million recognized in 2020.

Additional information on Total Costs items and Total Operating Expenses above can be found in the Results of
Operations section of this MD&A.

Ovintiv Inc.

2021 Annual Report | 53

2022 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.

In 2021, OPEC+ production cuts and increased global demand for oil resulted in upward pressures on oil prices and the
tightening of global oil inventories. Oil prices during 2022 will continue to be impacted by the global containment of
the coronavirus (“COVID-19”), pace of economic recovery, OPEC+ production levels, and the potential for higher U.S.
production.

COVID-19 vaccine rollout/uptake continues to drive optimism, however, emerging COVID-19 variants may impact
economic progress while the gradual easing of OPEC+ oil production cuts, the potential for higher U.S. oil production,
and macroeconomic risks could contribute to commodity market uncertainty. Since the second quarter of 2021,
OPEC+ has gradually increased production in response to increases in oil demand. OPEC+ continues to meet regularly
to review the state of global oil supply, demand and inventory levels, and is expected to continue with its planned
production increases in 2022.

Natural Gas Markets

Natural gas prices are primarily affected by structural changes in supply and demand as well as deviations from
seasonally normal weather. In 2021, supportive weather conditions, limited supply growth from U.S. producers and
increased electricity usage contributed to increased drawdowns of natural gas inventory and higher natural gas prices.
Natural gas prices in 2022 are expected to be impacted by the interplay between gas production and associated gas
from oil production, as well as changes in demand from the power generation sector, changes in export levels of
liquified natural gas and impacts from seasonal weather.

Company Outlook

The Company continues to exercise discretion and discipline to optimize capital allocation throughout 2022 as oil
demand recovers and the commodity price environment evolves. Ovintiv pursues innovative ways to reduce upstream
operating and administrative expenses and expects to benefit from durable cost savings and efficiencies to maximize
cash flows.

Markets for crude oil and natural gas are exposed to different price risks and are inherently volatile. While the market
price for crude oil tends to move in the same direction as the global market, regional differentials may develop.
Natural gas prices may vary between geographic regions depending on local supply and demand conditions. To
mitigate price volatility and help sustain revenues, particularly during periods of low commodity prices, the Company
enters into derivative financial instruments. As at December 31, 2021, the Company has hedged approximately 80.0
Mbbls/d of expected oil and condensate production and 1,293 MMcf/d of expected natural gas production for 2022. 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 25 to the Consolidated Financial
Statements included in Item 8 of this Annual Report on Form 10-K.

Capital Investment

The Company plans to spend approximately $1.5 billion on its 2022 capital investment program. The majority of this
capital program is expected to be allocated to the Core Assets with a focus on maximizing returns from high margin
liquids. In 2022, the Company expects to generate cash flows in excess of capital expenditures.

Ovintiv continually strives to improve well performance and lower costs through innovative techniques. Initiatives such
as applying Simul-Frac techniques, a process of fracking pairs of wells at the same time instead of a single well,
increases operational efficiencies and contributes to well cost savings. Ovintiv’s large-scale cube development model

54 | 2021 Annual Report

Ovintiv Inc.

utilizes multi-well pads and advanced completion designs to maximize returns and resource recovery from its
reservoirs. Ovintiv’s disciplined capital program and continuous innovation create flexibility to allocate capital in
changing commodity markets and to maximize cash flows while preserving the long-term value of the Company’s
multi-basin portfolio.

Production

Ovintiv is strategically positioned in the current economic environment to maintain a flat liquids production profile
while generating cash flows in excess of capital expenditures.

In 2022, the Company expects average oil and plant condensate production volumes of approximately 180.0 Mbbls/d
to 190.0 Mbbls/d, other NGLs production volumes of approximately 78.0 Mbbls/d to 82.0 Mbbls/d and natural gas
production volumes of approximately 1,450 MMcf/d to 1,500 MMcf/d.

Operating Expenses

The Company continues to benefit from cost savings measures implemented in 2020 which included workforce
reductions and operating efficiencies. With rising activity in the oil and gas industry and the recovery of commodity
prices, service and supply costs are expected to increase. Ovintiv continues to pursue innovative ways to reduce
upstream operating and administrative expenses, and strives to minimize any inflationary pressures with efficiency
improvements and effective supply chain management.

Total Costs per BOE is expected to increase for 2022 primarily due to higher production taxes resulting from
expected strengthening of commodity prices and higher transportation and processing costs. For 2022, Ovintiv
expects Total Costs of approximately $14.75 per BOE to $15.25 per BOE. Total Costs is defined in the Non-GAAP
Measures section of this MD&A.

Long-Term Debt Reduction

Ovintiv remains focused on strengthening its balance sheet. Since the second quarter of 2020, the Company has
allocated $2,580 million in excess cash flows to reduce its total long-term debt balance, which included proceeds from
the Duvernay and Eagle Ford asset divestitures. The Company expects to achieve its Net Debt balance of $3.0 billion
in the second half of 2022, assuming commodity prices of $85.00 per barrel for WTI oil and $4.50 per MMBtu for
NYMEX natural gas.

In June 2021, the Company redeemed its $600 million, 5.75 percent senior notes due January 30, 2022, and in August
2021, redeemed its $518 million, 3.90 percent senior notes due November 15, 2021. The combined debt redemptions
will result in annualized interest savings of over $50 million.

As at December 31, 2021, the Company had no outstanding balances under its revolving credit facilities and U.S. dollar
commercial paper programs.

Additional information on Ovintiv’s long-term debt and liquidity position can be found in Note 15 to the Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K and the Liquidity and Capital Resources
section of this MD&A, respectively.

Additional information on Ovintiv’s 2022 Corporate Guidance can be accessed on the Company’s website at
www.ovintiv.com.

Environmental, Social and Governance

Ovintiv recognizes the importance of reducing its environmental footprint and voluntarily participates in emission
reduction programs. The Company has adopted a range of strategies to help reduce emissions from its operations.
These strategies include incorporating new and proven technologies and optimizing processes in its drilling and
completions operations, and working closely with third-party providers to develop best practices. The Company
continues to look for innovative techniques and efficiencies to help maintain its commitment to emission reductions.

As of September 1, 2021, the Company is in alignment with the World Bank Zero Routine Flaring initiative, nine years
ahead of the World Bank’s target date of 2030. Ovintiv does not engage in routine flaring by ensuring natural gas
gathering infrastructure is in place for all of its producing wells.

Ovintiv Inc.

2021 Annual Report | 55

As of December 31, 2021, the Company exceeded its targeted 33 percent reduction in methane emissions intensity
four years ahead of schedule and achieved a greater than 20 percent reduction in Scope 1 and 2 GHG emissions
intensity compared to 2019 levels. In 2022, the Company announced a further GHG emissions intensity reduction
target of 50 percent compared to 2019 levels, to be achieved by 2030. This new emissions reduction target is also tied
to its annual compensation program for all employees.

Ovintiv is committed to diversity, equity and inclusion. In 2021, the Company developed a new social commitment
framework, which is rooted in the Company’s foundational values of integrity, safety, sustainability, trust and respect.
The framework focuses on respecting stakeholders, strengthening communities and fostering a culture of inclusion.

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. From the onset of the COVID-19 pandemic, Ovintiv established a
Pandemic Response Team to continually assess the impact of COVID-19 and develop protocols and procedures to
maintain a safe working environment for its staff. Despite the challenges presented by COVID-19, the Company
reported its eighth consecutive safest year in 2021.

Additional information on Ovintiv’s ESG practices are outlined in Items 1 and 2 of this Annual Report on Form 10-K,
and on the Company’s sustainability website at https://sustainability.ovintiv.com.

56 | 2021 Annual Report

Ovintiv Inc.

Results of Operations

Selected Financial Information

($ millions)

2021

2020

Product and Service Revenues

Upstream product revenues
Market optimization
Service revenues (1)

Total Product and Service Revenues

Gains (Losses) on Risk Management, Net
Sublease Revenues

Total Revenues

Total Operating Expenses (2)

Operating Income (Loss)
Total Other (Income) Expenses

Net Earnings (Loss) Before Income Tax
Income Tax Expense (Recovery)

$

$

7,420
3,043
5

10,468

(1,883)
73

8,658

7,139

1,519
280

1,239
(177)

4,044
1,459
6

5,509

507
71

6,087

11,484

(5,397)
333

(5,730)
367

Net Earnings (Loss)

$

1,416

$

(6,097)

(1) Service revenues include amounts related to the USA and Canadian Operations.
(2) Total Operating Expenses include non-cash items such as DD&A, impairments, accretion of asset retirement

obligations and long-term incentive costs.

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 USA Operations realized prices generally reflect WTI
and NYMEX benchmark prices, as well as other downstream oil benchmarks, including Houston. The Canadian
Operations realized prices are linked to Edmonton Condensate and AECO, as well as other downstream natural gas
benchmarks, including Dawn. The other downstream benchmarks reflect the diversification of the Company’s markets.
Recent trends in benchmark prices relevant to the Company are shown in the table below.

Benchmark Prices

(average for the period)

Oil & NGLs

WTI ($/bbl)
Houston ($/bbl)
Edmonton Condensate (C$/bbl)

Natural Gas

NYMEX ($/MMBtu)
AECO (C$/Mcf)
Dawn (C$/MMBtu)

2021

2020

$

$

67.91
68.85
85.48

3.84
3.56
4.60

39.40
41.05
49.45

2.08
2.24
2.50

$

$

Ovintiv Inc.

2021 Annual Report | 57

Production Volumes and Realized Prices

Oil (Mbbls/d, $/bbl)
USA Operations
Canadian Operations
Total

NGLs – Plant Condensate (Mbbls/d, $/bbl)

USA Operations
Canadian Operations
Total

NGLs – Other (Mbbls/d, $/bbl)

USA Operations
Canadian Operations
Total

Total Oil & NGLs (Mbbls/d, $/bbl)

USA Operations
Canadian Operations
Total

Natural Gas (MMcf/d, $/Mcf)

USA Operations
Canadian Operations
Total

Total Production (MBOE/d, $/BOE)

USA Operations
Canadian Operations
Total

Production Mix (%)

Oil & Plant Condensate
NGLs – Other
Total Oil & NGLs
Natural Gas

Production Change – Year Over Year (%) (3)

Total Oil & NGLs
Natural Gas
Total Production

Core Assets Production

Oil (Mbbls/d)
NGLs – Plant Condensate (Mbbls/d)
NGLs – Other (Mbbls/d)
Total Oil & NGLs (Mbbls/d)
Natural Gas (MMcf/d)
Total Production (MBOE/d)
% of Total Production

Production Volumes (1)

Realized Prices (2)

2021

2020

2021

2020

65.69
56.71
65.67

60.18
67.11
65.68

25.66
29.45
26.38

53.04
56.48
53.75

3.71
3.52
3.58

44.65
29.66
38.08

$

36.84
32.58
36.83

26.68
35.87
33.92

9.52
11.53
9.87

28.09
29.40
28.34

1.60
2.01
1.87

23.00
16.42
20.30

140.0
0.3
140.3

10.5
40.4
50.9

67.5
15.8
83.3

218.0
56.5
274.5

490
1,066
1,556

299.7
234.2
533.9

36
15
51
49

(5)
2
(2)

108.1
48.8
76.2
233.1
1,453
475.2
89

$

150.9
0.6
151.5

11.1
41.0
52.1

70.3
15.0
85.3

232.3
56.6
288.9

529
1,000
1,529

320.5
223.3
543.8

37
16
53
47

(4)
(3)
(4)

106.3
46.3
75.8
228.4
1,373
457.2
84

(1) Average daily.
(2) Average per-unit prices, excluding the impact of risk management activities.
(3) Includes production impacts of acquisitions and divestitures.

58 | 2021 Annual Report

Ovintiv Inc.

Upstream Product Revenues

($ millions)

2020 Upstream Product Revenues
Increase (decrease) due to:

Sales prices
Production volumes

NGLs -
Plant
Condensate

Oil

NGLs -
Other

Natural
Gas

Total

$

2,042

$

647

$

308

$

1,047

$

4,044

1,477
(155)

588
(17)

501
(7)

966
19

3,532
(160)

2021 Upstream Product Revenues (1)

$

3,364

$

1,218

$

802

$

2,032

$

7,416

(1) Revenues for 2021 exclude certain other revenue and royalty adjustments with no associated production volumes

of $4 million.

Oil Revenues

2021 versus 2020

Oil revenues increased $1,322 million compared to 2020 primarily due to:

• Higher average realized oil prices of $28.84 per bbl, or 78 percent, increased revenues by $1,477 million. The
increase reflected higher WTI and Houston benchmark prices which were up 72 percent and 68 percent,
respectively, and the strengthening of regional pricing relative to the WTI benchmark price in the USA
Operations; and

• Lower average oil production volumes of 11.2 Mbbls/d decreased revenues by $155 million. Lower volumes were
primarily due to natural declines surpassing incremental production in Eagle Ford, Anadarko and Bakken (11.3
Mbbls/d) and the sale of the Eagle Ford assets in the second quarter of 2021 (8.5 Mbbls/d), partially offset by
successful drilling in Permian (5.4 Mbbls/d) and production shut-ins due to the economic downturn in 2020 (2.9
Mbbls/d).

NGL Revenues

2021 versus 2020

NGL revenues increased $1,065 million compared to 2020 primarily due to:

• Higher average realized plant condensate prices of $31.76 per bbl, or 94 percent, increased revenues by

$588 million. The increase reflected higher Edmonton Condensate and WTI benchmark prices which were up
73 percent and 72 percent, respectively, as well as higher regional pricing relative to the WTI benchmark price;

• Higher average realized other NGL prices of $16.51 per bbl, or 167 percent, increased revenues by $501 million

reflecting higher other NGL benchmark prices and higher regional pricing;

• Lower average plant condensate production volumes of 1.2 Mbbls/d decreased revenues by $17 million. Lower
volumes were primarily due to the sales of the Duvernay and Eagle Ford assets in the second quarter of 2021
(2.3 Mbbls/d) and natural declines in Duvernay and Anadarko (2.0 Mbbls/d), partially offset by successful
drilling in Montney and Permian (3.0 Mbbls/d); and

• Lower average other NGL production volumes of 2.0 Mbbls/d decreased revenues by $7 million. Lower volumes
were primarily due to natural declines in Anadarko and Eagle Ford (4.3 Mbbls/d) and the sale of the Eagle Ford
assets in the second quarter of 2021 (2.2 Mbbls/d), partially offset by successful drilling in Montney and Permian
(4.0 Mbbls/d).

Ovintiv Inc.

2021 Annual Report | 59

Natural Gas Revenues

2021 versus 2020

Natural gas revenues increased $985 million compared to 2020 primarily due to:

•

•

Higher average realized natural gas prices of $1.71 per Mcf, or 91 percent, increased revenues by $966 million.
The increase reflected higher NYMEX, Dawn and AECO benchmark prices which were up 85 percent, 84 percent
and 59 percent, respectively, and higher regional pricing; and

Higher average natural gas production volumes of 27 MMcf/d increased revenues by $19 million primarily due to
successful drilling in Montney (119 MMcf/d), partially offset by natural declines in Anadarko and Duvernay (43
MMcf/d), the sales of the Duvernay and Eagle Ford assets in the second quarter of 2021 (36 MMcf/d) and
increased third-party plant down-time in Montney (10 MMcf/d).

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. The Company’s commodity price mitigation
program reduces volatility and helps sustain revenues during periods of lower prices. Additional information on the
Company’s commodity price positions as at December 31, 2021 can be found in Note 25 to the Consolidated Financial
Statements included in Item 8 of this Annual Report on Form 10-K.

The following table provides the effects of the Company’s risk management activities on revenues.

$ millions

Per-Unit

2021

2020

2021

2020

Realized Gains (Losses) on Risk Management

Commodity Price (1)

Oil ($/bbl)

NGLs - Plant Condensate ($/bbl)

NGLs - Other ($/bbl)

Natural Gas ($/Mcf)

Other (2)

Total ($/BOE)

Unrealized Gains (Losses) on Risk Management

$

(737) $
(155)

(131)

(373)

1

(1,395)

(488)

Total Gains (Losses) on Risk Management, Net

$

(1,883) $

$

$

$

$

$

$

(14.39) $
(8.35) $
(4.31) $
(0.66) $
- $

7.85

6.97

(0.46)

0.26

-

(7.17) $

3.52

435

133

(14)

148

9

711

(204)

507

(1) Includes realized gains and losses related to the USA and Canadian Operations.
(2) Other primarily includes realized gains or losses from Market Optimization and other derivative contracts with no

associated production volumes.

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 24 to
the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

60 | 2021 Annual Report

Ovintiv Inc.

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.

($ millions)

Market Optimization

2021 versus 2020

2021

2020

$

3,043

$

1,459

Market Optimization product revenues increased $1,584 million compared to 2020 primarily due to:

•

Higher oil and natural gas benchmark prices ($1,490 million) and higher sales of third-party purchased liquids
volumes primarily relating to price optimization activities in the USA Operations ($555 million);

partially offset by:

•

Lower sales of third-party purchased natural gas volumes primarily relating to marketing arrangements for
assets divested in prior years ($461 million).

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
14 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

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.

USA Operations
Canadian Operations

Total

2021 versus 2020

$ millions

$/BOE

2021

2020

2021

2020

$

$

278
15

293

$

$

158
15

173

$
$

$

2.54
0.18

1.51

$
$

$

1.34
0.18

0.87

Production, mineral and other taxes increased $120 million compared to 2020 primarily due to:

•

Higher production tax in USA Operations due to higher commodity prices ($144 million), partially offset by the
sale of the Eagle Ford assets in the second quarter of 2021 ($15 million).

Ovintiv Inc.

2021 Annual Report | 61

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.

USA Operations

Canadian Operations

Upstream Transportation and Processing

Market Optimization

Total

2021 versus 2020

$ millions

$/BOE

2021

2020

2021

2020

$

$

507

937

1,444

453

829

1,282

$

$

$

4.64

10.97

7.42

$

$

$

3.86

10.12

6.44

172

220

$

1,616

$

1,502

Transportation and processing expense increased $114 million compared to 2020 primarily due to:

•

Higher volumes in Montney ($95 million), a higher U.S./Canadian dollar exchange rate ($57 million), higher
variable rates in Permian and Anadarko due to higher natural gas prices ($57 million) and higher costs relating
to the diversification of the Company’s downstream markets ($18 million);

partially offset by:

•

The expiration of certain transportation contracts in the USA Operations as well as expired contracts relating to
previously divested assets ($51 million), the sales of the Eagle Ford and Duvernay assets in the second quarter
of 2021 ($40 million), the decommissioning of Deep Panuke ($24 million), lower natural gas volumes in
Anadarko ($16 million) and recoveries of amounts related to certain transportation contracts ($7 million).

Operating

Operating expense includes costs paid by the Company, net of amounts capitalized, on oil and natural gas properties
in which the Company has a working interest. These costs primarily include labor, service contract fees, chemicals,
fuel, water hauling, electricity and workovers.

USA Operations

Canadian Operations

Upstream Operating Expense (1)

Market Optimization
Corporate & Other

Total

$ millions

$/BOE

2021

2020

2021

2020

$

$

$

4.48

1.27

3.07

$

$

$

4.12

1.21

2.92

$

$

490

111

601

25
(1)

485

100

585

22
(2)

$

625

$

605

(1) Upstream Operating Expense per BOE for 2021 includes long-term incentive costs of $0.13/BOE (2020 - long-

term incentive costs of $0.04/BOE).

62 | 2021 Annual Report

Ovintiv Inc.

2021 versus 2020

Operating expense increased $20 million compared to 2020 primarily due to:

•

Increased activity resulting from higher production in Permian and improved commodity prices ($32 million),
lower capitalization of directly attributable internal costs ($26 million), higher long-term incentive costs resulting
from an increase in the Company’s share price in 2021 compared to a decrease in 2020 ($21 million) and a higher
U.S./Canadian dollar exchange rate ($7 million);

partially offset by:

•

The sales of the Eagle Ford and Duvernay assets in the second quarter of 2021 ($43 million) and lower salaries
and benefits due to decreased headcount resulting from workforce reductions in the second quarter of 2020
($23 million).

Additional information on the Company’s long-term incentive costs can be found in Note 22 to the Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K.

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. The Company also purchases and sells third-party volumes under marketing arrangements associated
with the Company’s previous divestitures.

($ millions)

Market Optimization

2021 versus 2020

2021

2020

$

2,951

$

1,366

Purchased product expense increased $1,585 million compared to 2020 primarily due to:

•

Higher oil and natural gas benchmark prices ($1,451 million) and higher third-party purchased liquids volumes
primarily relating to price optimization activities in the USA Operations ($556 million);

partially offset by:

•

Lower third-party purchased natural gas volumes primarily relating to marketing arrangements for assets
divested in prior years ($422 million).

Depreciation, Depletion & Amortization

Proved properties within each country cost centre 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 this 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 this MD&A.

USA Operations

Canadian Operations

Upstream DD&A

Corporate & Other

Total

Ovintiv Inc.

$ millions

$/BOE

2021

2020

2021

2020

$

$

837

332

1,169

21

1,378

427

1,805

29

$

1,190

$

1,834

$

$

$

7.65 $
3.89 $

6.00 $

11.75

5.21

9.06

2021 Annual Report | 63

2021 versus 2020

DD&A decreased $644 million compared to 2020 primarily due to:

• Lower depletion rates in the USA and Canadian Operations ($448 million and $144 million, respectively) and
lower production volumes in USA Operations ($93 million), partially offset by higher U.S./Canadian dollar
exchange rate ($32 million) and higher production volumes in the Canadian Operations ($19 million).

The depletion rate in the USA Operations decreased $4.10 per BOE compared to 2020 primarily due to the ceiling test
impairments recognized in 2020 and the sale of the Eagle Ford assets in the second quarter of 2021. The depletion
rate in the Canadian Operations decreased $1.32 per BOE compared to 2020 primarily due to the sale of the Duvernay
assets in the second quarter of 2021.

Impairments

Under full cost accounting, the carrying amount of Ovintiv’s oil and natural gas properties within each country cost
centre 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.

In 2021, the Company did not recognize ceiling test impairments (2020 - $5,580 million before tax, in the USA
Operations). The non-cash ceiling test impairments in 2020 primarily resulted from the decline in the 12-month
average trailing prices, which reduced proved reserves.

The 12-month average trailing prices used in the ceiling test calculations were based on the benchmark prices below.
The benchmark prices were adjusted for basis differentials to determine local reference prices, transportation costs
and tariffs, heat content and quality.

Oil & NGLs

WTI
($/bbl)

Edmonton
Condensate
(C$/bbl)

Natural Gas

Henry Hub
($/MMBtu)

AECO
(C$/MMBtu)

12-Month Average Trailing Reserves Pricing (1)

2021
2020

66.56
39.62

83.69
49.77

3.60
1.98

3.26
2.13

(1) All prices were held constant in all future years when estimating net revenues and reserves.

The Company believes that the discounted after-tax future net cash flows from proved reserves required to be used in
the ceiling test calculation are not indicative of the fair market value of Ovintiv’s oil and natural gas properties or the
future net cash flows expected to be generated from such properties. The discounted after-tax future net cash flows
do not consider the fair market value of unamortized unproved properties, or probable or possible liquids and natural
gas reserves. In addition, there is no consideration given to the effect of future changes in commodity prices. Ovintiv
manages its business using estimates of reserves and resources based on forecast prices and costs. Additional
information on the ceiling test calculation can be found in Note 10 to the Consolidated Financial Statements included
in Item 8 of this Annual Report on Form 10-K.

64 | 2021 Annual Report

Ovintiv Inc.

Administrative

Administrative expense represents costs associated with corporate functions provided by Ovintiv staff. Costs
primarily include salaries and benefits, operating lease, office, information technology, restructuring and long-term
incentive costs.

Administrative, excluding Long-Term Incentive Costs,

Restructuring and Legal Costs, and Current
Expected Credit Losses (1)

Long-term incentive costs
Restructuring and legal costs
Current expected credit losses

Total Administrative (2)

$ millions

$/BOE

2021

2020

2021

2020

$

$

300
107
34
1

442

$

$

281
23
90
1

395

$

$

1.55
0.55
0.17
-

2.27

$

$

1.41
0.12
0.45
-

1.98

(1) Includes costs related to The Bow office lease of $117 million (2020 - $110 million), half of which is recovered from

sublease revenues.

(2) Total Administrative costs for 2021 reflects a higher U.S./Canadian dollar exchange rate of $13 million.

2021 versus 2020

Administrative expense increased $47 million compared to 2020 primarily due to:

• Higher long-term incentive costs resulting from an increase in the Company’s share price in 2021 compared to a

decrease in 2020 ($84 million) and higher legal and consulting costs ($28 million);

partially offset by:

• A decrease in restructuring costs related to workforce reductions in 2020 ($76 million).

During 2020, the Company completed workforce reductions as part of a company-wide reorganization in response to
the low commodity price environment resulting from the global pandemic and the Company’s planned reductions in
capital spending. Additional information on restructuring charges and long-term incentive costs can be found in
Notes 21 and 22, respectively, to the Consolidated Financial Statements included in Item 8 of this Annual Report on
Form 10-K.

Other (Income) Expenses

($ millions)

Interest
Foreign exchange (gain) loss, net
Other (gains) losses, net

Total Other (Income) Expenses

Interest

2021

2020

$

$

340
(23)
(37)

280

$

$

371
17
(55)

333

Interest expense primarily includes interest on Ovintiv’s long-term debt. Additional information on changes in interest
can be found in Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual Report on
Form 10-K.

2021 versus 2020

Interest expense decreased $31 million compared to 2020 primarily due to:

• The redemption of the Company’s 2021 and 2022 senior notes ($25 million), and open market repurchases of

long-term debt completed in 2020 and decreased amounts drawn from the Company’s credit facilities
($21 million);

Ovintiv Inc.

2021 Annual Report | 65

partially offset by:

• A one-time make-whole interest payment of $19 million resulting from the June 2021 early redemption of the

Company’s $600 million, 5.75 percent senior notes due January 30, 2022.

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 5 to the
Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Additional information on
foreign exchange rates and the effects of foreign exchange rate changes can be found in Item 7A of this Annual
Report on Form 10-K.

Following the completion of the corporate reorganization and U.S. domestication in the first quarter of 2020, the U.S.
dollar denominated unsecured notes issued by Encana Corporation from Canada were assumed by Ovintiv Inc., a
company incorporated in Delaware with a U.S. dollar functional currency. Accordingly, these U.S. dollar denominated
unsecured notes, along with certain intercompany notes, no longer attract foreign exchange translation gains or
losses.

2021 versus 2020

Net foreign exchange gain was $23 million compared to a loss of $17 million in 2020 primarily due to:

• Lower unrealized foreign exchange losses on the translation of U.S. dollar financing debt issued from Canada

compared to 2020 ($50 million), realized foreign exchange gains on the settlement of U.S. dollar risk
management contracts and financing debt issued from Canada compared to losses in 2020 ($34 million and
$9 million, respectively) and realized foreign exchange gains on the settlement of intercompany notes compared
to losses in 2020 ($8 million);

partially offset by:

• Unrealized foreign exchange losses on the translation of U.S. dollar risk management contracts issued from

Canada compared to gains in 2020 ($33 million) and lower unrealized foreign exchange gains on the translation
of intercompany notes ($27 million).

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, transaction costs relating to acquisitions, reclamation
charges relating to decommissioned assets, gains on debt repurchases, government stimulus programs and
adjustments related to other assets.

Other gains in 2021 includes interest income of $14 million primarily associated with the resolution of prior years’ tax
items.

Other gains in 2020 primarily included gains of $30 million relating to the repurchase of the Company’s fixed long-
term debt on the open market and interest income of $5 million.

66 | 2021 Annual Report

Ovintiv Inc.

Income Tax

($ millions)

Current Income Tax Expense (Recovery)
Deferred Income Tax Expense (Recovery)

Income Tax Expense (Recovery)

Effective Tax Rate

Income Tax Expense (Recovery)

2021 versus 2020

2021

2020

$

$

(156)
(21)

(177)

$

$

(14)
381

367

(14.3%)

(6.4%)

In 2021, Ovintiv recorded an income tax recovery of $177 million compared to an income tax expense of $367 million in
2020, primarily due to the resolution of prior years’ tax items and the change in valuation allowances.

Deferred income tax assets are routinely assessed for realizability. During the year ended December 31, 2020, the
Company determined, after weighing both positive and negative evidence, that a valuation allowance should be
recorded to reduce the associated deferred tax assets in the U.S. and in Canada. Accordingly, a valuation allowance of
$568 million was recognized in Canada related to prior years’ deferred tax assets during the year ended December 31,
2020. As at December 31, 2021, the Company continues to be in a cumulative three-year loss position in both the U.S.
and Canada and as such, continues to recognize the valuation allowance against net deferred tax assets. The
cumulative three-year losses and uncertainty in the timing as to when the realization of deferred tax assets will occur,
is significant negative evidence to overcome, and consequently, it is more likely than not that the deferred tax assets
will not be realizable. However, if market conditions continue to improve, it is possible that a portion of the valuation
allowance in Canada may be reversed within the next 12 months.

Effective Tax Rate

The Company’s annual effective income tax rate is primarily impacted by earnings, changes in valuation allowances,
amounts in respect of prior periods, state taxes, income tax related to foreign operations, the effect of legislative
changes, and tax differences on divestitures and transactions.

The Company’s effective tax rate was (14.3) percent for 2021, which is lower than the U.S. federal statutory tax rate of
21 percent primarily due to the resolution of prior years’ tax items and the change in valuation allowances.

The Company’s effective tax rate was (6.4) percent for 2020, which is lower than the U.S. federal statutory tax rate of
21 percent primarily due to valuation allowances recorded relating to net losses arising from ceiling test impairments
and an increase in the valuation allowance of $568 million in Canada related to prior years’ deferred tax assets.

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.

Additional information on income taxes can be found in Note 6 to the Consolidated Financial Statements included in
Item 8 of this Annual Report on Form 10-K.

Ovintiv Inc.

2021 Annual Report | 67

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 or to manage its capital structure as discussed below. At
December 31, 2021, $188 million in cash and cash equivalents was held by Canadian subsidiaries. The cash held by
Canadian subsidiaries is accessible and may be subject to additional U.S. income taxes and Canadian withholding
taxes if repatriated.

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, issuing new debt and repaying or repurchasing
existing debt.

($ millions, except as indicated)

Cash and Cash Equivalents
Available Credit Facilities (1)
Available Uncommitted Demand Lines (2)
Issuance of U.S. Commercial Paper

Total Liquidity

Long-Term Debt, including current portion
Total Shareholders’ Equity (3)

Debt to Capitalization (%) (4)
Debt to Adjusted Capitalization (%) (5)

$

$

$
$

2021

195
4,000
300
-

4,495

4,786
5,074

49
27

$

$

$
$

2020

10
3,402
269
(352)

3,329

6,885
3,837

64
37

(1) Includes available credit facilities of $2.5 billion (2020 - $2.1 billion) in the U.S. and $1.5 billion (2020 - $1.3 billion) in

Canada as at December 31, 2021 (collectively, the “Credit Facilities”).

(2) Includes three uncommitted demand lines totaling $336 million, net of $36 million in related undrawn letters of

credit (2020 - $336 million and $67 million, respectively).

(3) Shareholders’ Equity reflects the shares of common stock purchased, for cancellation, under the Company’s 2021

NCIB program.

(4) Calculated as long-term debt, including the current portion, divided by shareholders’ equity plus long-term debt,

including the current portion.

(5) A non-GAAP measure which is defined in the Non-GAAP Measures section of this MD&A.

The Company has access to two committed revolving U.S. dollar denominated credit facilities totaling $4.0 billion,
which include a $2.5 billion revolving credit facility for Ovintiv Inc. and a $1.5 billion revolving credit facility for a
Canadian subsidiary, both maturing in July 2024. The Credit Facilities provide financial flexibility and allow the
Company to fund its operations or capital program. At December 31, 2021, there were no outstanding amounts under
the revolving Credit Facilities and the Company continues to have full access to its Credit Facilities.

During the fourth quarter of 2021, Ovintiv’s credit rating was upgraded to investment grade by one of its credit rating
agencies driven by Ovintiv’s significant debt reductions and improved commodity price assumptions used by the
rating agency. As a result of the upgrade, most of Ovintiv’s credit ratings are investment grade.

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 December 31, 2021, the Company had no commercial paper outstanding under its U.S. CP programs and continues
to have full access to its U.S. CP programs.

The Credit Facilities, uncommitted demand lines, and cash and cash equivalents provide Ovintiv with total liquidity of
approximately $4.5 billion. At December 31, 2021, Ovintiv also had approximately $36 million in undrawn letters

68 | 2021 Annual Report

Ovintiv Inc.

of credit issued in the normal course of business primarily as collateral security, related to transportation
arrangements and to support future abandonment liabilities.

Ovintiv has a U.S. shelf registration statement and a Canadian shelf prospectus, 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. and/or Canada. At December 31, 2021, $6.0 billion remained accessible under the Canadian
shelf prospectus. The ability to issue securities under the U.S. shelf registration statement or Canadian shelf
prospectus is dependent upon market conditions and securities law requirements.

Ovintiv is currently in compliance with, and expects that it will continue to be 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 December 31,
2021, the Company’s Debt to Adjusted Capitalization was 27 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. Ovintiv does not expect the current COVID-19 pandemic to impact
the Company’s ability to remain in compliance with its financial covenants under the Credit Facilities. Additional
information on financial covenants can be found in Note 15 to the Consolidated Financial Statements included in
Item 8 of this Annual Report on Form 10-K.

Ovintiv Inc.

2021 Annual Report | 69

Sources and Uses of Cash

During 2021, the Company primarily generated cash through operating activities and divestitures. The following table
summarizes the sources and uses of the Company’s cash and cash equivalents.

($ millions)

Activity Type

2021

2020

Sources of Cash, Cash Equivalents and Restricted Cash

Cash from operating activities
Proceeds from divestitures
Net issuance of revolving long-term debt

$

Operating
Investing
Financing

Uses of Cash and Cash Equivalents

Capital expenditures
Acquisitions
Net repayment of revolving long-term debt
Repayment of long-term debt (1)
Purchase of shares of common stock
Dividends on shares of common stock
Other

Investing
Investing
Financing
Financing
Financing
Financing
Financing/Investing

$

3,129
1,025
-

4,154

1,519
11
950
1,137
111
122
119

3,969

1,895
89
252

2,236

1,736
19
-
272
-
97
287

2,411

Foreign Exchange Gain (Loss) on Cash, Cash Equivalents

and Restricted Cash Held in Foreign Currency

Increase (Decrease) in Cash, Cash Equivalents and

Restricted Cash

(1) Includes open market repurchases in 2020.

Operating Activities

-

(5)

$

185

$

(180)

Net cash from operating activities in 2021 was $3,129 million and was primarily a reflection of the impacts from higher
average realized commodity prices, partially offset by the effects of the Company’s commodity price mitigation
program and changes in non-cash working capital.

Additional detail on changes in non-cash working capital can be found in Note 26 to the Consolidated Financial
Statements included in Item 8 of this Annual Report on Form 10-K. Ovintiv expects it will continue to meet the
payment terms of its suppliers.

Non-GAAP Cash Flow in 2021 was $3,209 million 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.

2021 versus 2020

Net cash from operating activities increased $1,234 million compared to 2020 primarily due to:

• Higher realized commodity prices ($3,532 million), a current income tax recovery mainly due to the resolution of
prior years’ tax items ($156 million), lower decommissioning payments primarily related to Deep Panuke ($123
million), lower administrative expenses, excluding non-cash long-term incentive costs and current expected credit
losses ($25 million) and higher interest income ($9 million);

partially offset by:

• Realized losses on risk management in revenues compared to gains in 2020 ($2,106 million), changes in non-cash

working capital ($180 million), lower production volumes ($160 million), higher production, mineral and other taxes
($120 million) and higher transportation and processing expense ($114 million).

70 | 2021 Annual Report

Ovintiv Inc.

Investing Activities

The Company’s primary investing activities are capital expenditures, divestitures and acquisitions, and are summarized
in Notes 2 and 9 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

2021 and 2020

Net cash used in investing activities in 2021 was $525 million primarily due to capital expenditures, partially offset by
proceeds from divestitures. Capital expenditures decreased $217 million compared to 2020 due to the Company’s
reduced capital program in response to the volatile market conditions that commenced at the end of the first quarter
of 2020 as well as the Company’s drive to maintain capital discipline while maximizing efficiency gains.

Acquisitions in 2021 were $11 million (2020 - $19 million), which primarily included property purchases with oil and
liquids rich potential.

Divestitures in 2021 were $1,025 million, which primarily included the sale of the Eagle Ford assets in south Texas and
Duvernay assets in west central Alberta, totaling approximately $1.0 billion, after closing and other adjustments, as
well as certain properties that did not complement Ovintiv’s existing portfolio of assets. Divestitures in 2020 were
$89 million, which primarily included the sale of certain properties that did not complement Ovintiv’s existing portfolio
of assets.

Financing Activities

Net cash used in financing activities has been impacted by the Company’s strategy to enhance liquidity, strengthen its
balance sheet by repaying or repurchasing existing debt, and returning value to shareholders through the purchase of
shares of common stock and paying dividends.

2021 versus 2020

Net cash used in financing activities in 2021 increased $2,213 million compared to 2020. The increase was primarily due
to a net repayment of revolving long-term debt in 2021 of $950 million compared to a net issuance in 2020 of
$252 million, higher repayment of long-term debt associated with the early redemption of the Company’s senior notes
($865 million) and shares of common stock purchased under the 2021 NCIB ($111 million) as discussed below.

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.

The Company’s long-term debt totaled $4,786 million at December 31, 2021. There was no current portion of long-
term debt outstanding at December 31, 2021. The Company’s long-term debt at December 31, 2020 totaled
$6,885 million, which included the current portion of $518 million. In June 2021, the Company redeemed its
$600 million, 5.75 percent senior notes due January 30, 2022, and in August 2021, redeemed its $518 million,
3.90 percent senior notes due November 15, 2021. The combined debt redemptions will result in annualized interest
savings of over $50 million. As at December 31, 2021, the Company has no fixed rate long-term debt due until 2024
and beyond.

Since the second quarter of 2020, the Company has allocated $2,580 million in excess cash flows to reduce its total
long-term debt balance, which includes proceeds from the Duvernay and Eagle Ford asset divestitures. The Company
expects to achieve its Net Debt balance of $3.0 billion in the second half of 2022, assuming commodity prices of
$85.00 per barrel for WTI oil and $4.50 per MMBtu for NYMEX natural gas.

In support of the Company’s commitment to growing shareholder value, Ovintiv announced a new capital allocation
framework in the third quarter that outlines increasing returns to shareholders as well as continuing the Company’s
progress on debt reduction.

For additional information on long-term debt, refer to Note 15 to the Consolidated Financial Statements included in
Item 8 of this Annual Report on Form 10-K.

Ovintiv Inc.

2021 Annual Report | 71

Dividends

The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.

($ millions, except as indicated)

Dividend Payments
Dividend Payments ($/share)

2021

$
$

122
0.4675

$
$

2020

97
0.375

On February 24, 2022, the Board of Directors declared a dividend of $0.20 per share of common stock payable on
March 31, 2022 to common shareholders of record as of March 15, 2022. This represents an increase of about
43 percent to the annualized dividend payment.

Normal Course Issuer Bid

On September 28, 2021, Ovintiv announced it received regulatory approval to commence a NCIB that enables the
Company to purchase, for cancellation, up to approximately 26 million shares of common stock over a 12-month
period from October 1, 2021 to September 30, 2022. The number of shares authorized for purchase represent
approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as at September 20, 2021. The
Company is funding the NCIB through its new capital allocation framework as discussed above. In 2021, the Company
purchased for cancellation, approximately 3.1 million shares of common stock for total consideration of approximately
$111 million.

For additional information on the NCIB, refer to Note 18 to the Consolidated Financial Statements included in Item 8 of
this Annual Report on Form 10-K.

Material Cash Requirements

Ovintiv’s material cash requirements include various contractual obligations arising from long-term debt, operating
leases, risk management liabilities and asset retirement obligations which are recognized on the Company’s
Consolidated Balance Sheet. The Company expects to fund long term material cash requirements primarily with cash
from operating activities.

Interest payments include scheduled cash payments on long-term debt, finance leases and other obligations.
Additional information can be found in Notes 15 and 14 to the Consolidated Financial Statements included in Item 8 of
this Annual Report on Form 10-K.

Operating leases include drilling rigs, compressors, office and buildings, certain land easements and various equipment
utilized in the development and production of oil, NGLs and natural gas, as well as The Bow building. The Company
has subleased approximately 50 percent of The Bow office space under the lease agreement. Additional information
on leases can be found in Note 14 to the Consolidated Financial Statements included in Item 8 of this Annual Report
on Form 10-K.

Risk management liabilities represent Ovintiv’s net liability positions with counterparties. The majority of the
Company’s risk management positions are expected to be settled by the end of 2022. Additional information can be
found in Note 25 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Contractual commitments relating to transportation and processing commitments, and drilling and field services can
be found in Notes 14 and 27 to the Consolidated Financial Statements included in Item 8 of this Annual Report on
Form 10-K.

Further to the commitments discussed above, Ovintiv also has various obligations that become payable if certain
future events occur relating to take or pay arrangements and guarantees on transportation commitments resulting
from completed property divestitures as described in Notes 20, 25 and 27, respectively, to the Consolidated Financial
Statements included in Item 8 of this Annual Report on Form 10-K.

In addition, the Company has obligations to fund its defined benefit pension and other post-employment benefit plans,
as well as obligations to fund the disposal of long-lived assets upon their abandonment as described in Notes 23 and
17, respectively, to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

72 | 2021 Annual Report

Ovintiv Inc.

Other than the items discussed above, there are no other transactions, arrangements, or relationships with
unconsolidated entities or persons that are reasonably likely to materially affect the Company’s liquidity or the
availability of, or requirements for, capital resources.

Contingencies

For information on contingencies, refer to Note 27 to the Consolidated Financial Statements included in Item 8 of this
Annual Report on Form 10-K.

Ovintiv Inc.

2021 Annual Report | 73

Accounting Policies and Estimates

Critical Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make informed
judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. For a
discussion of the Company’s significant accounting policies refer to Note 1 to the Consolidated Financial Statements
included in Item 8 of this Annual Report on Form 10-K. Changes in facts and circumstances or additional information
may result in revised estimates, and actual results may differ from these estimates. Management considers the
following to be its most critical accounting estimates that involve judgment. The following discussion outlines the
accounting policies and practices involving the use of estimates that are critical to determining Ovintiv’s financial
results. Changes in the estimates and assumptions discussed below could materially affect the amount or timing of the
financial results of the Company.

Description

Judgments and Uncertainties

Upstream Assets and Reserve Estimates

As Ovintiv follows full cost accounting for oil, NGLs and
natural gas activities, reserves estimates are a key input
to the Company’s depletion, gain or loss on divestitures
and ceiling test impairment calculations. In addition, these
reserves are the basis for the Company’s supplemental oil
and gas disclosures.

Ovintiv estimates its proved oil and natural gas reserves
according to the definition of proved reserves provided
by the SEC. The Company’s estimates of proved reserves
are made using available geological and reservoir data as
well as production performance data and must
demonstrate with reasonable certainty to be
economically producible in future periods from known
reservoirs under existing economic conditions, operating
methods and government regulations. The estimation of
reserves is a subjective process.

Reserves are calculated using an unweighted arithmetic
average of commodity prices in effect on the first day of
each of the previous 12 months, held flat for the life of the
production, except where prices are defined by
contractual arrangements.

Ovintiv manages its business using estimates of reserves
and resources based on forecast prices and costs as it
gives consideration to probable and possible reserves
and future changes in commodity prices.

Goodwill Impairments

Goodwill is assessed for impairment at least annually in
December, at the reporting unit level which are Ovintiv’s
country cost centres. To assess impairment, the carrying
amount of each reporting unit is determined and
compared to the fair value of each respective reporting
unit. Any excess of the carrying value of the reporting
unit, including goodwill, over its fair value is recognized as
an impairment and charged to net earnings. The
impairment charge measured is limited to the total
amount of goodwill allocated to that reporting unit.
Subsequent measurement of goodwill is at cost less any
accumulated impairments.

Because quoted market prices for the Company’s
reporting units are not available, management applies
judgment in determining the estimated fair value of
reporting units for purposes of performing goodwill
impairment tests. Ovintiv may use a combination of the
income and the market valuation approaches.

Due to the inter-relationship of various judgments
made to reserve estimates and the volatile nature of
commodity prices, it is generally not possible to
predict the timing or magnitude of ceiling test
impairments.

Revisions to reserve estimates are necessary due to
changes in and among other things, development
plans, projected future rates of production, the timing
of future expenditures, reservoir performance,
economic conditions, governmental restrictions as
well as changes in the expected recovery associated
with infill drilling, all of which are subject to numerous
uncertainties and various interpretations. Downward
revisions in proved reserve estimates due to changes
in reserve estimates may increase depletion expense
and may also result in a ceiling test impairment.

Decreases in prices may result in reductions in certain
proved reserves due to reaching economic limits at
an earlier projected date and impact earnings through
depletion expense and ceiling test impairments.

Ovintiv believes that the discounted after-tax future
net cash flows from proved reserves required to be
used in the ceiling test calculation are not indicative
of the fair market value of Ovintiv’s oil and natural gas
properties or the future net cash flows expected to be
generated from such properties.

The most significant assumptions used to determine a
reporting unit’s fair value include estimations of oil
and natural gas reserves, including both proved
reserves and risk-adjusted unproved reserves,
estimates of market prices considering forward
commodity price curves as of the measurement date,
market discount rates and estimates of operating,
administrative, and capital costs adjusted for inflation.
In addition, management may support fair value
estimates determined with comparable companies
that are actively traded in the public market, recent
comparable asset transactions, and transaction
premiums. This would require management to make
certain judgments about the selection of comparable
companies utilized.

Downward revisions of estimated reserves quantities,
increases in future cost estimates, sustained
decreases in oil or natural gas prices, or divestiture of
a significant component of the reporting unit could
reduce expected future cash flows and fair value
estimates of the reporting units and possibly result in
an impairment of goodwill in future periods.

74 | 2021 Annual Report

Ovintiv Inc.

Description

Judgments and Uncertainties

Asset Retirement Obligation

Asset retirement obligations are those legal obligations
where the Company will be required to retire tangible
long-lived assets such as producing well sites, processing
plants, and restoring land at the end of oil and natural gas
production operations. The fair value of estimated asset
retirement obligations is recognized on the Consolidated
Balance Sheet when incurred and a reasonable estimate
of fair value can be made. The asset retirement cost,
equal to the initially estimated fair value of the asset
retirement obligation, is capitalized as part of the cost of
the related long-lived asset. Changes in the estimated
obligation are recognized as a change in the asset
retirement obligation and the related asset retirement
cost. Actual expenditures incurred are charged against
the accumulated asset retirement obligation. Accretion
expense is recognized over time as the discounted
liability is accreted to its expected settlement value.

Derivative Financial Instruments

Ovintiv uses derivative financial instruments to manage its
exposure to market risks relating to commodity prices,
foreign currency exchange rates and interest rates. The
Company’s policy is not to utilize derivative financial
instruments for speculative purposes. Realized gains or
losses from financial derivatives are recognized in net
earnings as the contracts are settled. Unrealized gains
and losses are recognized in net earnings at the end of
each respective reporting period based on the changes in
fair value of the contracts.

Derivative financial instruments are measured at fair value
with changes in fair value recognized in net earnings. Fair
value estimates are determined using quoted prices in
active markets, inferred based on market prices of similar
assets and liabilities or valued using internally developed
estimates. The Company may use various valuation
techniques including the discounted cash flow or option
valuation models.

As Ovintiv has chosen not to elect hedge accounting
treatment for the Company’s derivative financial
instruments, changes in the fair values of derivative
financial instruments can have a significant impact on
Ovintiv’s results of operations. Generally, changes in fair
values of derivative financial instruments do not impact
the Company’s liquidity or capital resources. Settlements
of derivative financial instruments do have an impact on
the Company’s liquidity and results of operation.

Income Taxes

Ovintiv follows the liability method of accounting for
income taxes. Under this method, deferred income taxes
are recorded for the effect of any temporary difference
between the accounting and income tax basis of an asset
or liability, using the enacted income tax rates and laws
expected to apply when the assets are realized and
liabilities are settled. Current income taxes are measured
at the amount expected to be recoverable from or
payable to the taxing authorities based on the income tax
rates and laws enacted at the end of the reporting period.
The effect of a change in the enacted tax rates or laws is
recognized in net earnings in the period of enactment.

Asset removal technologies and costs are constantly
changing, as are regulatory, political, environmental,
safety, and public relations considerations. The asset
retirement obligation is estimated by discounting the
expected future cash flows of the settlement. The
discounted cash flows are based on estimates of such
factors as reserves lives, retirement costs, timing of
settlements, credit-adjusted risk-free rates and
inflation rates. Changes in these estimates impact net
earnings through accretion of the asset retirement
obligation in addition to depletion of the asset
retirement cost included in property, plant and
equipment.

Ovintiv’s derivative financial instruments primarily
relate to commodities including oil, NGLs and natural
gas. The most significant assumptions used in
determining the fair value to the Company’s
commodity derivatives financial instruments include
estimates of future commodity prices, implied
volatilities of commodity prices, discount rates and
estimates of counterparty credit risk. These pricing
and discounting variables are sensitive to the period
of the contract and market volatility as well as
regional price differentials. These inputs may also be
observable and corroborated by market data or
unobservable and sourced from limited market
activity, internally generated estimates or
corroborated by third parties. Changes in these
estimates and assumptions can impact net earnings,
revenues and expenses.

Tax interpretations, regulations, legislation and
potential Treasury Department guidance, in the
various jurisdictions in which the Company and its
subsidiaries operate are subject to change and
interpretation. As such, income taxes are subject to
measurement uncertainty and the interpretations can
impact net earnings through the income tax expense
arising from the changes in deferred income tax
assets or liabilities.

Ovintiv Inc.

2021 Annual Report | 75

Description

Judgments and Uncertainties

Deferred income tax assets are routinely assessed for
realizability. If it is more likely than not that deferred tax
assets will not be realized, a valuation allowance is
recorded to reduce the deferred tax assets.

Ovintiv’s interim income tax expense is determined using
an 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.

Ovintiv recognizes the financial statement effects of a tax
position when it is more likely than not, based on the
technical merits, that the position will be sustained upon
examination by a taxing authority. A recognized tax
position is initially and subsequently measured as the
largest amount of tax benefit that is greater than
50 percent likely of being realized upon settlement with a
taxing authority. Liabilities for unrecognized tax benefits
that are not expected to be settled within the next
12 months are included in other liabilities and provisions.

The Company’s unremitted earnings from its foreign
subsidiaries are considered to be permanently reinvested,
as a result the Company does not calculate a deferred tax
liability for domestic income taxes on these foreign
earnings.

Contingent Liabilities

Ovintiv is subject to various legal proceedings,
environmental remediation, commercial and regulatory
claims and liabilities that arise in the ordinary course of
business. The Company accrues losses when such losses
are probable and reasonably estimable, except for
contingencies acquired in a business combination which
are recorded at fair value at the time of the acquisition. If
a loss is probable but the Company cannot estimate a
specific amount for that loss, the best estimate within the
range is accrued and if no amount is better within the
range, the minimum amount is accrued.

Ovintiv considers available positive and negative
evidence when assessing the realizability of deferred
tax assets, including historic and expected future
taxable earnings, available tax planning strategies and
carry forward periods. Numerous judgments and
assumptions are inherent in the determination of
future taxable income, including factors such as
future operating conditions, particularly related to oil
and gas prices. As a result, the assumptions used in
determining expected future taxable earnings are
consistent with those used in the goodwill impairment
assessment.

The estimated annual effective income tax rate is
impacted by expected annual earnings, changes in
valuation allowances, state taxes, income tax related
to foreign operations, the effect of legislative
changes, and tax differences on divestitures and
transactions.

The Company routinely assesses potential uncertain
tax positions and, if required, establishes accruals for
such amounts. The accruals are adjusted based on
changes in facts and circumstances. Material changes
to Ovintiv’s income tax accruals may occur in the
future based on the progress of ongoing audits,
changes in legislation or resolution of pending
matters.

Determination of unrecognized deferred income tax
liabilities is not practicable due to the significant
uncertainty in assumptions that would be required
including determining the nature of any future
remittances, that could be distributions in the form of
non-taxable returns of capital or taxable earnings and
associated withholding taxes, or determining the tax
rates on any future remittances that could vary
significantly depending on the available approaches
to repatriate the earnings.

The establishment and evaluation of a contingent loss
is based on advice from legal counsel, advisors or
consultants and management’s judgement. Actual
costs can vary from such estimates for various
reasons including: i) differing interpretation of the law,
opinions on responsibility and assessments on the
amount of damages; ii) changes in status of litigation
or claims and information available; iii) differing
interpretation of regulations by regulators or the
courts; iv) changes in laws and regulations; and v)
additional or developing information relating to
extent and nature of environmental remediation and
technology improvements. The Company continually
monitors known and potential legal, environmental
and other claims or contingencies based on available
information. Future changes in facts and
circumstances not currently foreseeable could result
in the actual liabilities recorded exceeding the
estimated amounts accrued.

76 | 2021 Annual Report

Ovintiv Inc.

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, Non-GAAP Cash Flow Margin, Total Costs, Debt to Adjusted
Capitalization, Net Debt and Net Debt to Adjusted EBITDA. Management’s use of these measures is discussed further
below.

Non-GAAP Cash Flow and Non-GAAP Cash Flow Margin

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, net change in non-cash working capital and current tax on sale of assets.

Non-GAAP Cash Flow Margin is a non-GAAP measure defined as Non-GAAP Cash Flow per BOE of production.

Management believes these measures are 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 are an indication of the
Company’s ability to generate cash to finance capital programs, to service debt and to meet other financial
obligations. These measures are used, along with other measures, in the calculation of certain performance targets for
the Company’s management and employees.

($ millions, except as indicated)

Cash From (Used in) Operating Activities
(Add back) deduct:

Net change in other assets and liabilities
Net change in non-cash working capital
Current tax on sale of assets

Non-GAAP Cash Flow (1)

Divided by:
Production Volumes (MMBOE)

Non-GAAP Cash Flow Margin ($/BOE)

(1) 2021 includes restructuring costs of $14 million (2020 - $90 million).

2021

2020

3,129

$

1,895

(39)
(41)
-

3,209

$

194.9

16.46

$

(173)
139
-

1,929

199.0

9.69

$

$

$

Ovintiv Inc.

2021 Annual Report | 77

Total Costs

Total Costs is a non-GAAP measure which includes the summation of production, mineral and other taxes, upstream
transportation and processing expense, upstream operating expense and administrative expense, excluding the
impact of long-term incentive, restructuring and legal costs, and current expected credit losses. It is calculated as total
operating expenses excluding non-upstream operating costs and non-cash items which include operating expenses
from the Market Optimization and Corporate and Other segments, depreciation, depletion and amortization,
impairments, accretion of asset retirement obligation, long-term incentive, restructuring and legal costs, and current
expected credit losses. When presented on a per BOE basis, Total Costs is divided by production volumes.
Management believes this measure is useful to the Company and its investors as a measure of operational efficiency
across periods.

($ millions, except as indicated)

2021

2020

Total Operating Expenses
Deduct (add back):

Market optimization operating expenses
Corporate & other operating expenses
Depreciation, depletion and amortization
Impairments
Accretion of asset retirement obligation
Long-term incentive costs
Restructuring and legal costs
Current expected credit losses

Total Costs

Divided by:
Production Volumes (MMBOE)

Total Costs ($/BOE) (1)

(1) Calculated using whole dollars and volumes.

Debt to Adjusted Capitalization

$

7,139

$

11,484

3,148
(1)
1,190
-
22
132
34
1

2,613

194.9

13.42

$

$

$

$

1,608
(2)
1,834
5,580
29
31
90
1

2,313

199.0

11.60

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)

December 31, 2021

December 31, 2020

Long-Term Debt, including current portion
Total Shareholders’ Equity
Equity Adjustment for Impairments at December 31, 2011

Adjusted Capitalization

Debt to Adjusted Capitalization

$

$

$

4,786
5,074
7,746

17,606

$

27%

6,885
3,837
7,746

18,468

37%

78 | 2021 Annual Report

Ovintiv Inc.

Net Debt and Net Debt to Adjusted EBITDA

Net Debt and Net Debt to Adjusted EBITDA are non-GAAP measures whereby Net Debt is defined as long-term debt,
including the current portion, less cash and cash equivalents and Adjusted EBITDA is defined as trailing 12-month net
earnings (loss) before income taxes, depreciation, depletion and amortization, impairments, accretion of asset
retirement obligation, interest, 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)

December 31, 2021

December 31, 2020

Long-Term Debt, including current portion
Less:

Cash and cash equivalents

Net Debt

Net Earnings (Loss)
Add back (deduct):

Depreciation, depletion and amortization
Impairments
Accretion of asset retirement obligation
Interest
Unrealized (gains) losses on risk management
Foreign exchange (gain) loss, net
(Gain) loss on divestitures, net
Other (gains) losses, net
Income tax expense (recovery)

Adjusted EBITDA

Net Debt to Adjusted EBITDA (times)

$

$

4,786

$

195

4,591

1,416

1,190
-
22
340
488
(23)
-
(37)
(177)

3,219

1.4

$

6,885

10

6,875

(6,097)

1,834
5,580
29
371
204
17
-
(55)
367

2,250

3.1

Ovintiv Inc.

2021 Annual Report | 79

Item 7A: 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 crude 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 Item 1A. “Risk Factors” of this 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 25 under Item 8 of this Annual
Report on Form 10-K.

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:

(US$ millions)

Crude oil price
Natural gas price

FOREIGN EXCHANGE RISK

December 31, 2021

10% Price
Increase

$

(160)
(164)

$

10% Price
Decrease

143
160

Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows
of the Company’s financial assets or liabilities. The following table presents the foreign exchange rates for the
respective years ended December 31.

Foreign Exchange Rates (C$ per US$1)
Average
Period End

2021

2020

1.254
1.268

1.342
1.273

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 the prior
years.

Increase (Decrease) in:
Capital Investment
Transportation and Processing Expense (1)
Operating Expense (1)
Administrative Expense
Depreciation, Depletion and Amortization (1)

(1) Reflects upstream operations.

2021

2020

$ millions

$/BOE

$ millions

$/BOE

$

$

21
55
7
13
30

$

0.28
0.03
0.07
0.15

(6)
(7) $
(1)
(3)
(4)

(0.04)
(0.01)
(0.02)
(0.02)

80 | 2021 Annual Report

Ovintiv Inc.

Foreign exchange gains and losses also arise when monetary assets and monetary liabilities denominated in foreign
currencies are translated and settled, and primarily include:

•
•
•
•

U.S. dollar denominated financing debt issued from Canada
U.S. dollar denominated risk management assets and liabilities held in Canada
U.S. dollar denominated cash and short-term investments held in Canada
Foreign denominated intercompany loans

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 December 31, 2021, Ovintiv has entered into
$400 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.2848 to US$1, which
mature monthly throughout 2022.

As at December 31, 2021, Ovintiv did not have any U.S. dollar denominated financing debt issued from Canada or
foreign denominated intercompany loans that were 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:

(US$ millions)

Foreign currency exchange

INTEREST RATE RISK

December 31, 2021

10% Rate
Increase

10% Rate
Decrease

$

(32)

$

39

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 December 31, 2021, Ovintiv had no floating rate debt and there were no interest rate derivatives outstanding.

Ovintiv Inc.

2021 Annual Report | 81

Item 8: Financial Statements and Supplementary Data

Management Report

Management’s Responsibility for Consolidated Financial Statements

The accompanying Consolidated Financial Statements of the Company are the responsibility of Management. The
Consolidated Financial Statements have been prepared by Management in United States dollars in accordance with
generally accepted accounting principles in the United States and include certain estimates that reflect Management’s
best judgments.

Ovintiv’s Board of Directors has approved the information contained in the Consolidated Financial Statements. The
Board of Directors fulfills its responsibility regarding the financial statements mainly through its Audit Committee,
which has a written mandate that complies with the requirements of United States and Canadian securities legislation
and the Audit Committee guidelines of the New York Stock Exchange. The Audit Committee meets at least on a
quarterly basis.

Management’s Assessment of Internal Control over Financial Reporting

Management is also responsible for establishing and maintaining adequate internal control over the Company’s
financial reporting. The internal control system was designed to provide reasonable assurance to the Company’s
Management regarding the preparation and presentation of the Consolidated Financial Statements.

Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Management has assessed the design and effectiveness of the Company’s internal control over financial reporting as
at December 31, 2021. In making its assessment, Management has used the Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the
effectiveness of the Company’s internal control over financial reporting. Based on our evaluation, Management has
concluded that the Company’s internal control over financial reporting was effective as at that date.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, was appointed by a vote of
shareholders at the Company’s last annual meeting to audit and provide independent opinions on both the
Consolidated Financial Statements and the Company’s internal control over financial reporting as at
December 31, 2021, as stated in their Auditor’s Report. PricewaterhouseCoopers LLP has provided such opinions.

/s/ Brendan M. McCracken
Brendan M. McCracken
President & Chief Executive Officer

February 25, 2022

/s/ Corey D. Code
Corey D. Code
Executive Vice-President &
Chief Financial Officer

82 | 2021 Annual Report

Ovintiv Inc.

Auditor’s Report

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Ovintiv Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Ovintiv Inc. and its subsidiaries (together, the
“Company”) as of December 31, 2021 and 2020, and the related consolidated statements of earnings, comprehensive
income, changes in shareholders’ equity and cash flows for each of the three years in the period ended
December 31, 2021, including the related notes (collectively referred to as the “Consolidated Financial Statements”).
We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”).

In our opinion, the Consolidated Financial Statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these Consolidated Financial Statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Assessment of Internal Control over Financial Reporting. Our
responsibility is to express opinions on the Company’s Consolidated Financial Statements and on the Company’s
internal control over financial reporting based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission (“SEC”) and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the Consolidated Financial Statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.

Our audits of the Consolidated Financial Statements included performing procedures to assess the risks of material
misstatement of the Consolidated Financial Statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the Consolidated Financial Statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the
Consolidated Financial Statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly

Ovintiv Inc.

2021 Annual Report | 83

reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the Consolidated
Financial Statements that was communicated or required to be communicated to the audit committee and that
(i) relates to accounts or disclosures that are material to the Consolidated Financial Statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in
any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating
the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.

The impact of estimates of proved oil, natural gas liquids (“NGL”), and natural gas reserves on net oil and natural gas
proved properties

As described in Notes 1 and 10 to the Consolidated Financial Statements, the Company has a net oil and natural gas
proved properties balance of $6,607 million as of December 31, 2021 and depreciation, depletion, and amortization
(“DD&A”) expense of $1,190 million for the year ended December 31, 2021. The Company uses the full cost method of
accounting for its acquisition, exploration, and development activities. Capitalized costs accumulated within each cost
centre are depleted using the unit-of-production method based on proved oil, NGL and natural gas reserves. Proved
oil, NGL and natural gas reserve estimates are key inputs to the Company’s depletion and ceiling test impairment
calculations. A ceiling test impairment is recognized in net earnings when the carrying amount of a country cost
centre exceeds the country cost centre ceiling. Management estimates its proved oil, NGL and natural gas reserves
according to the definition of proved reserves provided by the SEC. Management’s estimates of proved oil, NGL and
natural gas reserves are made using available geological and reservoir data as well as production performance data.
Proved oil, NGL and natural gas reserves are those quantities of oil and natural gas, which by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to be economically producible in future periods
from known reservoirs under existing economic conditions, operating methods and government regulations. The
assumptions used by management to determine estimates of the proved oil, NGL and natural gas reserves and the
ceiling test impairment calculation include the average beginning-of-the-month prices during the 12-month period for
the year, future production estimates, future production and development costs and estimates for abandonment and
dismantlement costs associated with asset retirement obligations. The estimation of reserves is a subjective process.
In determining the estimates of the proved oil, NGL and natural gas reserves, management utilizes the services of
specialists, specifically petroleum engineers.

The principal considerations for our determination that performing procedures relating to the impact of estimates of
proved oil, NGL and natural gas reserves on net oil and natural gas proved properties is a critical audit matter are
(i) significant judgment used by management, including the use of specialists, when developing the estimates of the
proved oil, NGL and natural gas reserves and performing the ceiling test impairment calculation and (ii) a high degree
of auditor judgment, effort and subjectivity in performing procedures to evaluate the significant assumptions used in
developing those estimates including the average beginning-of-the-month prices during the 12-month period for the
year, future production estimates, future production and development costs, and estimates for abandonment and
dismantlement costs associated with asset retirement obligations.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the Consolidated Financial Statements. These procedures included testing the effectiveness of
controls relating to management’s estimates of proved oil, NGL and natural gas reserves, the calculation of the full

84 | 2021 Annual Report

Ovintiv Inc.

cost ceiling test and the calculation of DD&A expense. These procedures also included, among others, evaluating
management’s ceiling test impairment calculation and testing the unit-of-production depletion rate used to calculate
depletion expense, testing the completeness, accuracy and relevance of underlying data and evaluating the
appropriateness of the significant assumptions used by management in developing these estimates, including
assumptions related to the average beginning-of-the-month prices during the 12-month period for the year, future
production estimates, future production and development costs, and estimates for abandonment and dismantlement
costs associated with asset retirement obligations. The work of management’s specialists was used in performing
procedures to evaluate the reasonableness of the estimates of proved oil, NGL and natural gas reserves. As a basis for
using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was
assessed. The procedures performed also included evaluation of the methods and assumptions used by the
specialists, tests of the data used by the specialists, and an evaluation of the specialists’ findings. Evaluating the
significant assumptions also involved evaluating whether the assumptions used were reasonable considering the past
performance of the Company and whether they were consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants
Calgary, Canada

February 25, 2022

We have served as the Company’s or its predecessors’ auditor since 1958.

Ovintiv Inc.

2021 Annual Report | 85

Consolidated Statement of Earnings

For the years ended December 31 (US$ millions, except per share amounts)

2021

2020

2019

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
Impairments
Accretion of asset retirement obligation
Administrative

Total Operating Expenses

Operating Income (Loss)

Other (Income) Expenses

Interest
Foreign exchange (gain) loss, net
(Gain) loss on divestitures, net
Other (gains) losses, net

Total Other (Income) Expenses

Net Earnings (Loss) Before Income Tax

(Note 2)

(Note 3)
(Note 25)
(Note 14)

$

(Note 2)

(Notes 14, 22, 23)

(Note 10)
(Note 17)
(Notes 14, 21, 22, 23)

(Notes 4, 15)
(Notes 5, 25)

(Notes 6, 8, 15, 23)

Income tax expense (recovery)

(Note 6)

Net Earnings (Loss)

Net Earnings (Loss) per Share of Common Stock

(Note 18)

Basic
Diluted

Weighted Average Shares of Common Stock

Outstanding (millions)

(Note 18)

$

$

Basic
Diluted

Consolidated Statement of Comprehensive Income

$

10,468
(1,883)
73

8,658

293
1,616
625
2,951
1,190
-
22
442

7,139

1,519

340
(23)
-
(37)

280

1,239

(177)

$

5,509
507
71

6,087

173
1,502
605
1,366
1,834
5,580
29
395

11,484

(5,397)

371
17
-
(55)

333

(5,730)

367

1,416

$

(6,097) $

7,013
(361)
74

6,726

254
1,558
732
1,043
2,015
-
37
489

6,128

598

382
(119)
(3)
23

283

315

81

234

$

5.44
5.32

(23.47) $
(23.47)

0.90
0.90

260.4
266.4

259.8
259.8

261.2
261.2

For the years ended December 31 (US$ millions)

2021

2020

2019

Net Earnings (Loss)
Other Comprehensive Income (Loss), Net of Tax
Foreign currency translation adjustment
Pension and other post-employment benefit plans

(Note 19)
(Notes 19, 23)

Other Comprehensive Income (Loss)

Comprehensive Income (Loss)

See accompanying Notes to Consolidated Financial Statements

$

1,416

$

(6,097) $

234

2
14

16

38
(8)

30

28
20

48

$

1,432

$

(6,067) $

282

86 | 2021 Annual Report

Ovintiv Inc.

Consolidated Balance Sheet

As at December 31 (US$ millions)

Assets

Current Assets

2021

2020

Cash and cash equivalents
Accounts receivable and accrued revenues (net of allowances

$

195

$

10

of $5 million (2020: $4 million))

Risk management
Income tax receivable

(Notes 3, 7)
(Notes 24, 25)
(Note 6)

Property, Plant and Equipment, at cost:

(Note 10)

Oil and natural gas properties, based on full cost accounting

Proved properties
Unproved properties

Other
Property, plant and equipment
Less: Accumulated depreciation, depletion and amortization

Property, plant and equipment, net

Other Assets
Risk Management
Goodwill

(Note 2)
(Notes 11, 14)
(Notes 24, 25)
(Notes 2, 8, 12)

1,294
1
97
1,587

55,475
1,944
903

58,322
(49,561)

8,761
1,079
-
2,628

928
37
272
1,247

53,883
2,962
911

57,756
(48,306)

9,450
1,143
4
2,625

Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable and accrued liabilities
Current portion of operating lease liabilities
Income tax payable
Risk management
Current portion of long-term debt

Long-Term Debt
Operating Lease Liabilities
Other Liabilities and Provisions
Risk Management
Asset Retirement Obligation
Deferred Income Taxes

Commitments and Contingencies
Shareholders’ Equity

Share capital - authorized 775 million shares of stock
2021 issued and outstanding: 258.0 million shares
(2020: 259.8 million shares)

Paid in surplus
Retained earnings (Accumulated deficit)
Accumulated other comprehensive income

Total Shareholders’ Equity

(Note 2) $

14,055

$

14,469

(Note 13) $
(Note 14)

(Notes 24, 25)
(Note 15)

(Note 15)
(Note 14)
(Notes 14, 16)
(Notes 24, 25)
(Note 17)
(Note 6)

(Note 27)

(Note 18)
(Note 18)

(Note 19)

$

1,979
62
4
703
-
2,748
4,786
889
190
25
339
4

8,981

3
8,458
(4,479)
1,092

5,074

$

14,055

$

1,704
68
3
130
518
2,423
6,367
938
358
125
401
20

10,632

3
8,531
(5,773)
1,076
3,837
14,469

See accompanying Notes to Consolidated Financial Statements

Approved by the Board of Directors

/s/ Peter A. Dea
Peter A. Dea
Director

/s/ Bruce G. Waterman
Bruce G. Waterman
Director

Ovintiv Inc.

2021 Annual Report | 87

Consolidated Statement of Changes in Shareholders’ Equity

For the year ended December 31, 2021 (US$ millions)

Share
Capital

Paid in
Surplus

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Income

Total
Shareholders’
Equity

Balance, December 31, 2020
Net Earnings (Loss)
Dividends on Shares of Common Stock

($0.4675 per share)

Shares of Common Stock Purchased under

Normal Course Issuer Bid

Equity-Settled Compensation Costs
Other Comprehensive Income (Loss)

Balance, December 31, 2021

$

3 $
-

8,531 $
-

(5,773) $
1,416

1,076 $
-

3,837
1,416

(Note 18)

(Note 18)

(Note 19)

-

-
-
-

-

(122)

(111)
38
-

-
-
-

-

-
-
16

(122)

(111)
38
16

$

3 $

8,458 $

(4,479) $

1,092 $

5,074

For the year ended December 31, 2020 (US$ millions)

Share
Capital

Paid in
Surplus

Retained
Earnings
(Accumulated
Deficit)

Accumulated
Other
Comprehensive
Income

Total
Shareholders’
Equity

Balance, December 31, 2019
Net Earnings (Loss)
Dividends on Shares of Common Stock

($0.375 per share)

Equity-Settled Compensation Costs
Other Comprehensive Income (Loss)
Reclassification of Share Capital due to the

Reorganization

Balance, December 31, 2020

$ 7,061 $

-

-
-
-

(Note 18)

(Note 19)

-
71
-

(Note 18)

(7,058)

7,058

$

1,402
-

421 $

(6,097)

1,046 $
-

9,930
(6,097)

(97)
-
-

-

-
-
30

-

(97)
71
30

-

$

3 $

8,531

$

(5,773) $

1,076 $

3,837

For the year ended December 31, 2019 (US$ millions)

Share
Capital

Paid in
Surplus

Retained
Earnings

Accumulated
Other
Comprehensive
Income

Total
Shareholders’
Equity

Balance, December 31, 2018
Net Earnings (Loss)
Dividends on Common Shares ($0.375

per share)

(Note 18)

$

4,656 $

1,358 $

-

-

-

-

Common Shares Purchased under

Substantial Issuer Bid

Common Shares Purchased under

Normal Course Issuer Bid

Common Shares Issued
Other Comprehensive Income (Loss)
Impact of Adoption of Topic 842,

Leases

(Note 18)

(257)

44

(Note 18)
(Notes 8, 18)
(Note 19)

(816)
3,478
-

-

-
-
-

-

Balance, December 31, 2019

$

7,061 $

1,402 $

See accompanying Notes to Consolidated Financial Statements

435 $
234

998 $
-

(102)

-

(221)
-
-

-

-

-
-
48

75
421 $

-
1,046 $

7,447
234

(102)

(213)

(1,037)
3,478
48

75
9,930

88 | 2021 Annual Report

Ovintiv Inc.

Consolidated Statement of Cash Flows

For the years ended December 31 (US$ millions)

2021

2020

2019

Operating Activities

Net earnings (loss)
Depreciation, depletion and amortization
Impairments
Accretion of asset retirement obligation
Deferred income taxes
Unrealized (gain) loss on risk management
Unrealized foreign exchange (gain) loss
Foreign exchange on settlements
(Gain) loss on divestitures, net
Other
Net change in other assets and liabilities
Net change in non-cash working capital

Cash From (Used in) Operating Activities

Investing Activities

(Note 10)
(Note 17)
(Note 6)
(Note 25)
(Note 5)
(Note 5)

(Note 26)

Capital expenditures
Acquisitions
Corporate acquisition, net of cash and restricted cash acquired
Proceeds from divestitures
Net change in investments and other

(Note 2)
(Note 9)
(Note 8)
(Note 9)

Cash From (Used in) Investing Activities

Financing Activities

Net issuance (repayment) of revolving long-term debt
Repayment of long-term debt
Purchase of shares of common stock
Dividends on shares of common stock
Finance lease payments and other

Cash From (Used in) Financing Activities

Foreign Exchange Gain (Loss) on Cash, Cash Equivalents and

Restricted Cash Held in Foreign Currency

Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash, Beginning of Year

Cash, Cash Equivalents and Restricted Cash, End of Year

(Note 15)
(Note 15)
(Note 18)
(Note 18)
(Note 14)

Cash, End of Year
Cash Equivalents, End of Year
Restricted Cash, End of Year

Cash, Cash Equivalents and Restricted Cash, End of Year

Supplementary Cash Flow Information

(Note 26)

See accompanying Notes to Consolidated Financial Statements

$

$

$

$

$

1,416
1,190
-
22
(21)
488
21
(11)
-
104
(39)
(41)

3,129

(1,519)
(11)
-
1,025
(20)

(525)

(950)
(1,137)
(111)
(122)
(99)

(2,419)

-

185

10

195

26
169
-

195

$

$

$

(6,097) $
1,834
5,580
29
381
204
11
6
-
(19)
(173)
139

1,895

(1,736)
(19)
-
89
(198)

(1,864)

252
(272)
-
(97)
(89)

(206)

(5)

(180)

190

10

9
1
-

$

$

10

$

234
2,015
-
37
94
730
(23)
(96)
(3)
(57)
(97)
87

2,921

(2,626)
(65)
94
197
(156)

(2,556)

698
(500)
(1,250)
(102)
(84)

(1,238)

5

(868)

1,058

190

44
146
-

190

Ovintiv Inc.

2021 Annual Report | 89

1.

Summary of Significant Accounting Policies

A) NATURE OF OPERATIONS

On January 24, 2020, Encana Corporation (“Encana”) completed a corporate reorganization, which included a plan of
arrangement (the “Arrangement”) that involved, among other things, a share consolidation by Encana on the basis of
one post-consolidation share for each five pre-consolidation shares (the “Share Consolidation”), and Ovintiv Inc.
ultimately acquired all of the issued and outstanding common shares of Encana in exchange for shares of common
stock of Ovintiv Inc. on a one-for-one basis. Following completion of the Arrangement, Ovintiv Inc. migrated from
Canada and became a Delaware corporation, domiciled in the U.S. (the “U.S. Domestication”). The Arrangement and
the U.S. Domestication together are referred to as the “Reorganization”. Ovintiv Inc. and its subsidiaries (collectively,
“Ovintiv”) continue to carry on the business of the exploration for, the development of, and the production and
marketing of oil, NGLs and natural gas, which was previously conducted by Encana and its subsidiaries prior to the
completion of the Reorganization.

B) BASIS OF PRESENTATION

The Consolidated Financial Statements include the accounts of Ovintiv and are presented in conformity with U.S.
GAAP and the rules and regulations of the SEC.

In these Consolidated Financial Statements, unless otherwise indicated, all dollar amounts are expressed in U.S. dollars.
Following the U.S. Domestication on January 24, 2020, the functional currency of Ovintiv Inc. became U.S. dollars, and
accordingly, the financial results herein are consolidated and reported in U.S. dollars. All references to US$ or to $ are
to United States dollars and references to C$ are to Canadian dollars.

The Arrangement, as described above, was accounted for as a reorganization of entities under common control.
Accordingly, the resulting transactions were recognized using historical carrying amounts. On January 24, 2020,
Ovintiv became the reporting entity upon completion of the Reorganization.

In accordance with the Share Consolidation, all shares of common stock and per-share amounts disclosed herein
reflect the post-Share Consolidation shares unless otherwise specified. References to shares of common stock refer to
the shares of common stock of Ovintiv Inc. for any periods after the completion of the Arrangement, and to the
common shares of Encana Corporation for any periods before January 24, 2020.

C) PRINCIPLES OF CONSOLIDATION

The 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 Ovintiv has the ability to exercise significant influence are accounted
for using the equity method.

D) FOREIGN CURRENCY TRANSLATION

Monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rates
of exchange in effect at the period end date. Any gains or losses are recorded in the Consolidated Statement of
Earnings. Foreign currency revenues and expenses are translated at the rates of exchange in effect at the time of the
transaction.

Assets and liabilities of foreign operations are translated at period end exchange rates, while the related revenues and
expenses are translated using average rates during the period. Translation gains and losses relating to foreign
operations are included in accumulated other comprehensive income (“AOCI”). Recognition of Ovintiv’s accumulated
translation gains and losses into net earnings occurs upon complete or substantially complete liquidation of the
Company’s investment in the foreign operation.

90 | 2021 Annual Report

Ovintiv Inc.

E) USE OF ESTIMATES

Preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires Management to make
informed estimates and assumptions and use judgments that affect reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported
amounts of revenues and expenses during the period. Such estimates primarily relate to unsettled transactions and
events as of the date of the Consolidated Financial Statements. Accordingly, actual results may differ from estimated
amounts as future events occur.

Significant items subject to estimates and assumptions are:

• Estimates of proved reserves used for depletion and ceiling test impairment calculations

• Estimated fair value of long-term assets used for impairment calculations

• Fair value of reporting units used for the assessment of goodwill

• Estimates of future taxable earnings used to assess the realizable value of deferred tax assets

• Estimates of incremental borrowing rates and lease terms used in the measurement of right-of-use (“ROU”)

assets and lease liabilities

• Fair value of asset retirement costs and related obligations
• Fair value of derivative instruments

• Fair value attributed to assets acquired and liabilities assumed in business combinations

• Tax interpretations, regulations and legislation in the various jurisdictions in which the Company and its

subsidiaries operate

• Accruals for long-term performance-based compensation arrangements, including whether or not the

performance criteria will be met and measurement of the ultimate payout amount

• Recognized values of pension assets and obligations, as well as the pension costs charged to net earnings,

depend on certain actuarial and economic assumptions

• Accruals for legal claims, environmental risks and exposures

F) REVENUES FROM CONTRACTS WITH CUSTOMERS

Revenues from contracts with customers associated with Ovintiv’s oil, NGLs and natural gas and third-party
processing and gathering are recognized when control of the good or service is transferred to the customer, and title
or risk of loss transfers to the customer. Transaction prices are determined at inception of the contract and allocated
to the performance obligations identified. Variable consideration is estimated and included in the transaction price,
unless the variable consideration is constrained.

For product sales, the performance obligations are satisfied at a point in time when the product is delivered to the
customer and control is transferred. Payment from the customer is due when the product is delivered to the custody
point. Revenues for product sales are presented on an after-royalties basis. For arrangements to gather and process
natural gas for third parties, performance obligations are satisfied over time as the service is provided to the
customer. Payment from the customer is due when the customer receives the benefit of the service and the product is
delivered to the custody point or plant tailgate. Revenues associated with services provided where Ovintiv acts as
agent are recorded on a net basis.

G) PRODUCTION, MINERAL AND OTHER TAXES

Costs paid by Ovintiv for taxes based on production or revenues from oil, NGLs and natural gas are recognized when
the product is produced. Costs paid by Ovintiv for taxes on the valuation of upstream assets and reserves are
recognized when incurred.

H) TRANSPORTATION AND PROCESSING

Costs paid by Ovintiv for the transportation and processing of oil, NGLs and natural gas are recognized when the
product is delivered and the services made available or provided.

Ovintiv Inc.

2021 Annual Report | 91

I)

OPERATING

Operating costs paid by Ovintiv, net of amounts capitalized, are recognized for oil and natural gas properties in which
the Company has a working interest.

J)

EMPLOYEE BENEFIT PLANS

The Company sponsors defined contribution and defined benefit plans, providing pension and other post-employment
benefits to its employees in Canada and the U.S. As of January 1, 2003, the defined benefit pension plan was closed to
new entrants.

Pension expense for the defined contribution pension plan is recorded as the benefits are earned by the employees
covered by the plans. Ovintiv accrues for its obligations under its employee defined benefit plans, net of plan assets.
The cost of defined benefit pensions and other post-employment benefits is actuarially determined using the
projected benefit method based on length of service and reflects Management’s best estimate of salary escalation,
mortality rates, retirement ages of employees and expected future health care costs. The expected return on plan
assets is based on historical and projected rates of return for assets in the investment plan portfolio. The actual return
is based on the fair value of plan assets. The projected benefit obligation is discounted using the market interest rate
on high-quality corporate debt instruments as at the measurement date.

Defined benefit pension plan expenses include the cost of pension benefits earned during the current year, the interest
cost on pension obligations, the expected return on pension plan assets, the amortization of adjustments arising from
pension plan amendments, the amortization of net prior service costs, and the amortization of the excess of the net
actuarial gains or losses over 10 percent of the greater of the benefit obligation and the fair value of plan assets.
Amortization is on a straight-line basis over a period covering the expected average remaining service lives of
employees covered by the plans. All components of the net defined periodic benefit cost, excluding the service cost
component, are included in other (gains) losses, net.

K)

INCOME TAXES

Ovintiv follows the liability method of accounting for income taxes. Under this method, deferred income taxes are
recorded for the effect of any temporary difference between the accounting and income tax basis of an asset or
liability, using the enacted income tax rates and laws expected to apply when the assets are realized and liabilities are
settled. Current income taxes are measured at the amount expected to be recoverable from or payable to the taxing
authorities based on the income tax rates and laws enacted at the end of the reporting period. The effect of a change
in the enacted tax rates or laws is recognized in net earnings in the period of enactment. Income taxes are recognized
in net earnings except to the extent that they relate to items recognized directly in shareholders’ equity, in which case
the income taxes are recognized directly in shareholders’ equity.

Deferred income tax assets are assessed routinely for realizability. If it is more likely than not that deferred tax assets
will not be realized, a valuation allowance is recorded to reduce the deferred tax assets. Ovintiv considers available
positive and negative evidence when assessing the realizability of deferred tax assets including historic and expected
future taxable earnings, available tax planning strategies and carry forward periods. The assumptions used in
determining expected future taxable earnings are consistent with those used in the goodwill impairment assessment.

Ovintiv recognizes the financial statement effects of a tax position when it is more likely than not, based on the
technical merits, that the position will be sustained upon examination by a taxing authority. A recognized tax position
is initially and subsequently measured as the largest amount of tax benefit that is greater than 50 percent likely of
being realized upon settlement with a taxing authority. Liabilities for unrecognized tax benefits that are not expected
to be settled within the next 12 months are included in other liabilities and provisions. Interest related to unrecognized
tax benefits is recognized in interest expense.

L)

EARNINGS PER SHARE AMOUNTS

Basic net earnings per share of common stock is computed by dividing the net earnings by the weighted average
number of shares of common stock outstanding during the period. Diluted net earnings per share of common stock is
calculated giving effect to the potential dilution that would occur if stock options were exercised or other contracts to
issue shares of common stock were exercised, fully vested, or converted to shares of common stock. The treasury
stock method is used to determine the dilutive effect of stock options and other dilutive instruments. The treasury

92 | 2021 Annual Report

Ovintiv Inc.

stock method assumes that proceeds received from the exercise of in-the-money stock options and other dilutive
instruments are used to repurchase shares of common stock at the average market price.

M) CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand and short-term investments, such as money market deposits or
similar type instruments, with a maturity of three months or less when purchased. Outstanding disbursements issued
in excess of applicable bank account balances are excluded from cash and cash equivalents and are recorded in
accounts payable and accrued liabilities.

N) PROPERTY, PLANT AND EQUIPMENT

UPSTREAM

Ovintiv uses the full cost method of accounting for its acquisition, exploration and development activities.
Accordingly, all costs directly associated with the acquisition of, the exploration for, and the development of oil, NGLs
and natural gas reserves, including costs of undeveloped leaseholds, dry holes and related equipment, are capitalized
on a country-by-country cost center basis. Capitalized costs exclude costs relating to production, general overhead or
similar activities.

Capitalized costs accumulated within each cost center are depleted using the unit-of-production method based on
proved reserves. Depletion is calculated using the capitalized costs, including estimated retirement costs, plus the
undiscounted future expenditures, based on current costs, to be incurred in developing proved reserves.

Costs associated with unproved properties are excluded from the depletion calculation until it is determined that
proved reserves are attributable or impairment has occurred. Unproved properties are assessed separately for
impairment on a quarterly basis. Costs that have been impaired are included in the costs subject to depletion within
the full cost pool.

Under the full cost method of accounting, the carrying amount of Ovintiv’s oil and natural gas properties within each
country cost center is subject to a ceiling test at the end of each quarter. A ceiling test impairment is recognized in net
earnings when the carrying amount of a country cost center exceeds the country cost center ceiling. The carrying
amount of a cost center includes capitalized costs of proved oil and natural gas properties, net of accumulated
depletion and the related deferred income taxes.

The cost center ceiling is the sum of the estimated after-tax future net cash flows from proved reserves, using the
12-month average trailing prices and unescalated future development and production costs, discounted at 10 percent,
plus unproved property costs. 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. Any excess of the carrying amount over the calculated ceiling
amount is recognized as an impairment in net earnings.

Proceeds from the divestiture of properties are normally deducted from the full cost pool without recognition of a
gain or loss unless the deduction significantly alters the relationship between capitalized costs and proved reserves in
the cost center, in which case a gain or loss is recognized in net earnings. Generally, a gain or loss on a divestiture
would be recognized when 25 percent or more of the Company’s proved reserves quantities are sold in a particular
country cost center. For divestitures that result in the recognition of a gain or loss on the sale and constitute a
business, goodwill is allocated to the divestiture.

CORPORATE

Costs associated with office furniture, fixtures, leasehold improvements, information technology and aircraft are
carried at cost and depreciated on a straight-line basis over the estimated service lives of the assets, which range from
three to 25 years. Assets under construction are not subject to depreciation until put into use. Land is carried at cost.

Ovintiv Inc.

2021 Annual Report | 93

O) CAPITALIZATION OF COSTS

Expenditures related to renewals or betterments that improve the productive capacity or extend the life of an asset
are capitalized. Maintenance and repairs are expensed as incurred. Interest on borrowings associated with major
development projects is capitalized during the construction phase.

P) BUSINESS COMBINATIONS

Business combinations are accounted for using the acquisition method. The acquired identifiable net assets are
measured at fair value at the date of acquisition. Deferred taxes are recognized for any differences between the fair
value of net assets acquired and the related tax bases. Any excess of the purchase price over the fair value of the net
assets acquired is recognized as goodwill. Any deficiency of the purchase price below the fair value of the net assets
acquired is recorded as a gain in net earnings. Associated transaction costs are expensed when incurred.

Q) GOODWILL

Goodwill represents the excess of purchase price over fair value of net assets acquired and is assessed for impairment
at least annually at December 31. Goodwill and all other assets and liabilities are allocated to reporting units, which are
Ovintiv’s country cost centers. To assess impairment, the carrying amount of each reporting unit is determined and
compared to the fair value of each respective reporting unit. Any excess of the carrying value of the reporting unit,
including goodwill, over its fair value is recognized as an impairment and charged to net earnings. The impairment
charge measured is limited to the total amount of goodwill allocated to that reporting unit. Subsequent measurement
of goodwill is at cost less any accumulated impairments.

R)

IMPAIRMENT OF LONG-TERM ASSETS

The carrying value of long-term assets, excluding goodwill and upstream assets included in property, plant and
equipment, is assessed for impairment when indicators suggest that the carrying value of an asset or asset group may
not be recoverable. Individual assets are grouped for impairment purposes at the lowest level for which there are
identifiable cashflows that are largely independent of the cashflows of other groups of assets. If the carrying amount
exceeds the sum of the undiscounted cash flows expected to result from the continued use and eventual disposition
of the asset or asset group, an impairment is recognized for the excess of the carrying amount over its estimated fair
value.

S) ASSET RETIREMENT OBLIGATION

Asset retirement obligations are those legal obligations where the Company will be required to retire tangible long-
lived assets such as producing well sites, processing plants, and restoring land at the end of oil and gas production
operations. The asset retirement obligation is initially measured at its fair value and recorded as a liability with an
offsetting retirement cost that is capitalized as part of the related long-lived asset in the Consolidated Balance Sheet.
The estimated fair value is measured by reference to the expected future cash flows required to satisfy the obligation,
discounted at the Company’s credit-adjusted risk-free rate. Changes in the estimated obligation resulting from
revisions to estimated timing or amount of future cash flows are recognized as a change in the asset retirement
obligation and the related asset retirement cost.

Amortization of asset retirement costs are included in depreciation, depletion and amortization in the Consolidated
Statement of Earnings. Increases in the asset retirement obligations resulting from the passage of time are recorded
as accretion of asset retirement obligation in the Consolidated Statement of Earnings.

Actual expenditures incurred are charged against the accumulated asset retirement obligation.

94 | 2021 Annual Report

Ovintiv Inc.

T)

STOCK-BASED COMPENSATION

Stock-based compensation arrangements are accounted for at fair value. Fair values are determined using observable
share prices and/or pricing models such as the Black-Scholes-Merton option-pricing model. For equity-settled stock-
based compensation plans, fair values are determined at the grant date and are recognized over the vesting period as
compensation costs with a corresponding credit to shareholders’ equity. For cash-settled stock-based compensation
plans, fair values are determined at each reporting date and periodic changes are recognized as compensation costs,
with a corresponding change to liabilities. Compensation costs are recognized over the vesting period using the
accelerated attribution method for awards with a graded vesting feature. Forfeitures are estimated based on the
Company’s historical turnover rates.

U)

LEASES

Leases for the right to use an asset are classified as either an operating or finance lease. Upon commencement of the
lease, a ROU asset and corresponding lease liability are recognized in the Consolidated Balance Sheet for all operating
and finance leases. Ovintiv has elected the short-term lease exemption, which does not require a ROU asset or lease
liability to be recognized in the Consolidated Balance Sheet when the lease term is 12 months or less and does not
include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Upon commencement of the lease, ROU assets are recognized based on the initial measurement of the lease liability
and adjusted for any lease payments made before commencement date of the lease, less any lease incentives and
including any initial direct costs incurred. Lease liabilities are initially measured at the present value of future minimum
lease payments over the lease term. The discount rate used to determine the present value is the rate implicit in the
lease unless that rate cannot be determined, in which case Ovintiv’s incremental borrowing rate is used.

Rights to extend or terminate a lease are included in the lease term when there is reasonable certainty the right will be
exercised. Factors used to assess reasonable certainty of rights to extend or terminate a lease include current and
forecasted drilling plans, anticipated changes in development strategies, historical practice in extending similar
contracts and current market conditions.

Operating lease ROU assets and liabilities are subsequently measured at the present value of the lease payments not
yet paid and discounted at the initial discount rate at commencement of the lease, less any impairments to the ROU
asset. Operating lease expense and revenue from subleases are recognized in the Consolidated Statement of Earnings
on a straight-line basis over the lease term. Finance lease ROU assets are amortized on a straight-line basis over the
estimated useful life of the asset if the lessee is reasonably certain to exercise a purchase option or ownership of the
leased asset transfers at the end of the lease term, otherwise the leased assets are amortized over the lease term.
Amortization of finance lease ROU assets is included in depreciation, depletion and amortization in the Consolidated
Statement of Earnings.

Variable lease payments include changes in index rates, mobilization and demobilization costs related to oil and gas
equipment and certain costs associated with office and building leases. Variable lease payments are recognized when
incurred. Lease and non-lease components are accounted for as a single lease component for compression, coolers
and office subleases.

On January 1, 2019, the Company adopted ASC Topic 842, Leases (“Topic 842”) and related amendments, using the
modified retrospective approach recognizing a cumulative effect adjustment at the beginning of the reporting period
in which Topic 842 was applied. The adoption of Topic 842 did not have a material impact on the Company’s
Consolidated Statements of Earnings or Cash Flows. The effect of the January 1, 2019 adoption of Topic 842 on the
Company’s Consolidated Balance Sheet can be found in Note 1 to the Company’s Consolidated Financial Statements
included in Part II, Item 8 of Ovintiv’s 2019 Annual Report on Form 10-K.

V) FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Valuation techniques include the market, income
and cost approach. The market approach uses information generated by market transactions involving identical or
comparable assets or liabilities; the income approach converts estimated future amounts to a present value; the cost
approach is based on the amount that currently would be required to replace an asset.

Ovintiv Inc.

2021 Annual Report | 95

Inputs used in determining fair value are characterized according to a hierarchy that prioritizes those inputs based on
the degree to which they are observable. The three input levels of the fair value hierarchy are as follows:

•

•

•

Level 1 - Inputs represent quoted prices in active markets for identical assets or liabilities, such as exchange-
traded commodity derivatives.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets or
other market corroborated inputs.

Level 3 - Inputs that are not observable from objective sources, such as forward prices supported by little or
no market activity or internally developed estimates of future cash flows used in a present value model.

In determining fair value, the Company utilizes the most observable inputs available. If a fair value measurement
reflects inputs at multiple levels within the hierarchy, the fair value measurement is characterized based on the lowest
level of input that is significant to the fair value measurement.

The carrying amount of cash and cash equivalents, accounts receivable and accrued revenues, and accounts payable
and accrued liabilities reported in the Consolidated Balance Sheet approximates fair value. The fair value of long-term
debt is disclosed in Note 15. Fair value information related to pension plan assets is included in Note 23. Recurring fair
value measurements are performed for risk management assets and liabilities and other derivative contracts as
discussed in Note 24.

Certain non-financial assets and liabilities are initially measured at fair value, such as asset retirement obligations and
assets and liabilities acquired in business combinations or certain non-monetary exchange transactions.

W) RISK MANAGEMENT ASSETS AND LIABILITIES

Risk management assets and liabilities are derivative financial instruments used by Ovintiv to manage economic
exposure to market risks relating to commodity prices, foreign currency exchange rates and interest rates. The use of
these derivative instruments is governed under formal policies and is subject to limits established by the Board of
Directors.

Derivative instruments that do not qualify for the normal purchases and sales exemption are measured at fair value
with changes in fair value recognized in net earnings. The fair values recorded in the Consolidated Balance Sheet
reflect netting the asset and liability positions where counterparty master netting arrangements contain provisions for
net settlement.

Realized gains or losses from financial derivatives related to oil, NGLs and natural gas commodity prices are presented
in revenues as the contracts are settled. Realized gains or losses from foreign currency exchange swaps are presented
in foreign exchange (gain) loss as the contracts are settled. Realized gains or losses recognized from other derivative
contracts are presented in revenues as the obligations are settled.

Unrealized gains and losses are recognized based on the changes in fair value of the contracts and are presented in
revenues and foreign exchange (gain) loss.

X) COMMITMENTS AND CONTINGENCIES

Liabilities for loss contingencies arising from claims, assessments, litigation, environmental and other sources are
recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These
accruals are adjusted as additional information becomes available or circumstances change.

96 | 2021 Annual Report

Ovintiv Inc.

2.

Segmented Information

Ovintiv’s reportable segments are determined based on the following operations and geographic locations:

• USA Operations includes the exploration for, development of, and production of oil, NGLs and natural gas and

other related activities within the U.S. cost center.

• Canadian Operations includes the exploration for, development of, and production of oil, NGLs and natural gas and

other related activities within the Canadian cost center.

• China Operations included the production of oil and other related activities within the China cost center. Effective

July 31, 2019, the production sharing contract with China National Offshore Oil Corporation (“CNOOC”) was
terminated and the Company exited its China Operations.

• Market Optimization is primarily responsible for the sale of the Company’s proprietary production. These results

are reported in the USA and Canadian Operations. Market optimization activities include third-party purchases and
sales of product to provide operational flexibility and cost mitigation for transportation commitments, product
type, delivery points and customer diversification. These activities are reflected in the Market Optimization
segment. Market Optimization sells substantially all of the Company’s upstream production to third-party
customers. Transactions between segments are based on market values and are eliminated on consolidation.

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.

Ovintiv Inc.

2021 Annual Report | 97

Results of Operations

Segment Information

For the years ended December 31

2021

2020 2019

2021

2020

2019

2021

2020 2019

USA Operations

Canadian Operations

China Operations (1)

Revenues

Product and service revenues
Gains (losses) on risk management,

$4,883

$ 2,701 $4,163

$2,542

$ 1,349 $ 1,654

$

net

Sublease revenues

Total Revenues

(982)
-

497
-

158
-

(413)
-

207
-

211
-

3,901

3,198

4,321

2,129

1,556

1,865

Operating Expenses

Production, mineral and other taxes
Transportation and processing
Operating
Depreciation, depletion and

amortization

Impairments

278
507
490

837
-

158
453
485

238
466
566

1,378
5,580

1,593
-

15
937
111

332
-

15
829
100

427
-

16
859
125

383
-

Total Operating Expenses

2,112

8,054

2,863

1,395

1,371

1,383

Operating Income (Loss)

$1,789

$(4,856) $1,458

$ 734

$ 185 $

482

$

-

-
-

-

-
-
-

-
-

-

-

$

- $

37

-
-

-

-
-
-

-
-

-

$

- $

-
-

37

-
-
16

-
-

16

21

Revenues

Product and service revenues
Gains (losses) on risk management,

net

Sublease revenues

Total Revenues

Operating Expenses

Market Optimization

Corporate & Other

Consolidated

2021

2020 2019

2021

2020

2019

2021

2020 2019

$3,043

$ 1,459 $1,159

$

-

$

- $

-

$10,468

$ 5,509 $7,013

-
-

7
-

-
-

3,043

1,466

1,159

(488)
73

(415)

(204)
71

(133)

(730)
74

(656)

(1,883)
73

8,658

507
71

(361)
74

6,087

6,726

Production, mineral and other taxes
Transportation and processing
Operating
Purchased product
Depreciation, depletion and

amortization

Impairments
Accretion of asset retirement

obligation
Administrative

-
172
25
2,951

-
220
22
1,366

-
233
28
1,043

-
-

-
-

-
-

-
-

-
-

-
-

Total Operating Expenses

3,148

1,608

1,304

-
-
(1)
-

21
-

22
442

484

-
-
(2)
-

29
-

29
395

451

-
-
(3)
-

39
-

37
489

562

Operating Income (Loss)

$ (105) $ (142) $ (145) $ (899) $ (584) $(1,218)

Other (Income) Expenses

Interest
Foreign exchange (gain) loss, net
(Gain) loss on divestitures, net
Other (gains) losses, net

Total Other (Income) Expenses

Net Earnings (Loss) Before Income Tax
Income tax expense (recovery)

Net Earnings (Loss)

293
1,616
625
2,951

1,190
-

22
442

7,139

1,519

340
(23)
-
(37)

280

371
17
-
(55)

333

382
(119)
(3)
23

283

315
81

1,239
(177)

(5,730)
367

$ 1,416

$ (6,097) $ 234

173
1,502
605
1,366

254
1,558
732
1,043

1,834
5,580

2,015
-

29
395

37
489

11,484

6,128

(5,397)

598

(1) Effective July 31, 2019, the production sharing contract with CNOOC was terminated and the Company exited its

China Operations.

98 | 2021 Annual Report

Ovintiv Inc.

Intersegment Information

Marketing Sales

Upstream Eliminations

Total

Market Optimization

For the years ended

December 31

2021

2020

2019

2021

2020

2019

2021

2020

2019

Revenues

$ 10,630

$ 6,108 $ 7,489

$ (7,587) $ (4,642) $ (6,330) $ 3,043

$ 1,466

$ 1,159

Operating Expenses
Transportation and

processing

Operating
Purchased product

571
25
10,140

616
22
5,612

635
28
6,973

(399)
-
(7,189)

(396)
-
(4,246)

(402)
-
(5,930)

172
25
2,951

220
22
1,366

233
28
1,043

Operating Income (Loss)

$

(106) $ (142) $ (147)

$

1

$

-

$

2 $ (105) $ (142) $ (145)

Revenues by Geographic Region

For the years ended December 31

2021

2020

2019

2021

2020

2019

United States

Canada

Revenues

Product revenues (1)

Oil
NGLs
Natural gas

$ 3,357
862
664

$ 2,035
353
310

$ 3,329
452
380

$

$

7
1,158
1,368

Other revenues (2)
Gains (losses) on risk management, net

2,771
(1,160)

1,296
406

966
(142)

354
(723)

7
602
737

240
101

$

10
870
756

287
(219)

Total Revenues

$ 6,494

$ 4,400

$ 4,985

$ 2,164

$ 1,687

$ 1,704

Revenues

Product revenues (1)

Oil
NGLs
Natural gas

Other revenues (2)
Gains (losses) on risk management, net

Total Revenues

China (3)

Total

2021

2020

2019

2021

2020

2019

$

$

-
-
-

-
-

-

$

$

-
-
-

-
-

-

$

37
-
-

-
-

$ 3,364
2,020
2,032

$ 2,042
955
1,047

$ 3,376
1,322
1,136

3,125
(1,883)

1,536
507

1,253
(361)

$

37

$ 8,658

$ 6,087

$ 6,726

(1) Includes intercompany marketing fees transacted between the Company’s operating segments.
(2) Includes market optimization and other revenues such as purchased product sold to third parties, sublease

revenues and gathering and processing services provided to third parties.

(3) Effective July 31, 2019, the production sharing contract with CNOOC was terminated and the Company exited its

China Operations.

Major Customers

In connection with the marketing and sale of Ovintiv’s own and purchased oil, NGLs and natural gas for the year
ended December 31, 2021, the Company had one customer which individually accounted for more than 10 percent of
Ovintiv’s product revenues. Sales to this customer, secured by a financial institution with an investment grade credit
rating, totaled approximately $1,573 million which comprised $1,565 million in the United States and $8 million in
Canada (2020 - one customer with sales of approximately $834 million; 2019 - one customer with sales of
approximately $866 million).

Ovintiv Inc.

2021 Annual Report | 99

Capital Expenditures by Segment

For the years ended December 31

2021

2020

2019

USA Operations
Canadian Operations
Market Optimization
Corporate & Other

$

$

1,125
391
-
3

1,519

$

$

1,353
380
-
3

1,736

$

$

2,134
480
2
10

2,626

Goodwill, Property, Plant and Equipment and Total Assets by Segment

As at December 31

2021

2020

2021

2020

2021

2020

Goodwill

Property, Plant and Equipment

Total Assets

USA Operations
Canadian Operations
Market Optimization
Corporate & Other

$

$

1,938
690
-
-

$

1,938
687
-
-

$

7,623
951
-
187

$

8,103
1,142
2
203

$

10,345
1,932
300
1,478

$

2,628

$

2,625

$

8,761

$

9,450

$

14,055

$

10,646
2,031
233
1,559

14,469

Goodwill, Property, Plant and Equipment and Total Assets by Geographic Region

As at December 31

2021

2020

2021

2020

2021

2020

Goodwill

Property, Plant and Equipment

Total Assets

United States
Canada
Other Countries

$

$

$

1,938
690
-

$

1,938
687
-

$

7,673
1,088
-

$

8,159
1,291
-

$

10,715
3,337
3

2,628

$

2,625

$

8,761

$

9,450

$

14,055

$

10,925
3,540
4

14,469

100 | 2021 Annual Report

Ovintiv Inc.

3. Revenues from Contracts with Customers

The following table summarizes Ovintiv’s revenues from contracts with customers.

Revenues

For the years ended

December 31

Revenues from Customers
Product revenues (2)

Oil
NGLs
Natural gas

Service revenues

Gathering and
processing

Product and Service

Revenues

Revenues from Customers
Product revenues (2)

Oil
NGLs
Natural gas

Service revenues

Gathering and
processing

Product and Service

Revenues

USA Operations

Canadian Operations

China Operations (1)

2021

2020

2019

2021

2020

2019

2021

2020

2019

$ 3,369
864
664

$ 2,045
354
309

$ 3,341
454
379

$

7
1,163
1,377

$

$

7
606
743

10
878
774

$

-

3

2

5

3

5

$ 4,897

$ 2,711

$ 4,176

$ 2,552

$ 1,359

$ 1,667

$

-
-
-

-

-

$

$

-
-
-

-

-

$

37
-
-

-

$

37

Market Optimization

Corporate & Other

Consolidated

2021

2020

2019

2021

2020

2019

2021

2020

2019

$

$ 2,268
42
704

$

616
10
813

$

249
7
877

5

-

-

$ 3,019

$ 1,439

$ 1,133

$

-
-
-

-

-

$

$

-
-
-

-

-

$

$

-
-
-

-

-

$ 5,644
2,069
2,745

$ 2,668
970
1,865

$3,637
1,339
2,030

10

6

7

$10,468

$ 5,509

$7,013

(1) Effective July 31, 2019, the production sharing contract with CNOOC was terminated and the Company exited its

China Operations.

(2) Includes revenues from production and revenues of product purchased from third parties, but excludes

intercompany marketing fees transacted between the Company’s operating segments.

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 no contract asset or liability
balances during the periods presented. As at December 31, 2021, receivables and accrued revenues from contracts
with customers were $1,070 million (2020 - $724 million).

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 no unsatisfied performance obligations
remaining at December 31, 2021.

As at December 31, 2021, 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. As the period between when the product sales are
transferred and Ovintiv receives payments is generally 30 to 60 days, there is no financing element associated with
customer contracts. In addition, Ovintiv does not disclose unsatisfied performance obligations for customer contracts
with terms less than 12 months or for variable consideration related to unsatisfied performance obligations.

Ovintiv Inc.

2021 Annual Report | 101

4.

Interest

For the years ended December 31

2021

2020

2019

Interest Expense on:

Debt
Finance leases (See Note 14)
Other

$

$

323
3
14

340

$

$

350
9
12

371

$

$

359
13
10

382

Interest expense on debt for the year ended December 31, 2021 includes a one-time make-whole interest payment of
$19 million resulting from the June 2021 early redemption of the Company’s $600 million, 5.75 percent senior notes
due January 30, 2022 as discussed in Note 15.

5.

Foreign Exchange (Gain) Loss, Net

For the years ended December 31

2021

2020

2019

Unrealized Foreign Exchange (Gain) Loss on:

Translation of U.S. dollar financing debt issued from Canada
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

$

1

$

51

$

(207)

20
-

21

(8)
(33)
(3)
-

(23)

$

(13)
(27)

11

1
1
5
(1)

(12)
196

(23)

(25)
(3)
(71)
3

$

17

$

(119)

Following the completion of the Reorganization, including the U.S. Domestication, on January 24, 2020 as described in
Note 1, the U.S. dollar denominated unsecured notes issued by Encana Corporation from Canada were assumed by
Ovintiv Inc., a company incorporated in Delaware with a U.S. dollar functional currency. Accordingly, these U.S. dollar
denominated unsecured notes, along with certain intercompany notes, no longer attract foreign exchange translation
gains or losses.

102 | 2021 Annual Report

Ovintiv Inc.

6.

Income Taxes

The provision for income taxes is as follows:

For the years ended December 31

2021

2020

2019

Current Tax

United States
Canada

Total Current Tax Expense (Recovery)

Deferred Tax

United States
Canada

Total Deferred Tax Expense (Recovery)

Income Tax Expense (Recovery)

$

$

-
(156)

(156)

1
(22)

(21)

$

(177)

$

(12) $
(2)

(14)

(187)
568

381

367

$

3
(16)

(13)

147
(53)

94

81

During the year ended December 31, 2021, the current income tax recovery was primarily due to the resolution of prior
years’ tax items. The resolution, along with other items, resulted in a $222 million reduction of unrecognized tax
benefits, offset by a $66 million reduction in valuation allowance. The Company also recognized related interest
income of $12 million in other (gains) losses, net. During the year ended December 31, 2020, the current income tax
recovery was primarily due to certain current year losses being carried back to prior years. During the year ended
December 31, 2019, the current income tax recovery was primarily due to the resolution of prior year tax items.

Deferred income tax assets are routinely assessed for realizability. During the year ended December 31, 2020, the
Company determined, after weighing both positive and negative evidence, that a valuation allowance should be
recorded to reduce the associated deferred tax assets in the U.S. and in Canada. Accordingly, a valuation allowance of
$568 million was recognized in Canada related to prior years’ deferred tax assets during the year ended December 31,
2020. As at December 31, 2021, the Company continues to be in a cumulative three-year loss position in both the U.S.
and Canada and as such, continues to recognize the valuation allowance against net deferred tax assets. The
cumulative three-year losses and uncertainty in the timing as to when the realization of deferred tax assets will occur,
is significant negative evidence to overcome, and consequently, it is more likely than not that the deferred tax assets
will not be realizable.

On June 28, 2019, Alberta Bill 3, the Job Creation Tax Cut (Alberta Corporate Tax Amendment) Act, was signed into
law resulting in a phased in reduction of the Alberta corporate tax rate from 12 percent to eight percent over a period
of four years. During the year ended December 31, 2019, the deferred tax expense of $94 million included an
adjustment of $55 million resulting from the re-measurement of the Company’s deferred tax position due to the
Alberta corporate tax rate reduction.

The following table reconciles income taxes calculated at the applicable statutory rate with the actual income taxes:

For the years ended December 31

2021

2020

2019

Net Earnings (Loss) Before Income Tax
United States Federal Statutory Rate

Expected Income Tax Expense (Recovery)
Effect on Taxes Resulting From:

State tax difference
Income tax related to foreign operations
Effect of legislative changes
Non-taxable capital (gains) losses
Realized capital loss resulting from U.S. Domestication
Partnership tax allocations in excess of funding
Amounts in respect of prior periods
Change in valuation allowance
Other

Effective Tax Rate

Ovintiv Inc.

$

$

1,239

21.0%

260

43
9
-
-
-
-
60
(558)
9

(177)

$

(5,730)

$

21.0%

(1,203)

(147)
(2)
2
3
(1,238)
-
36
2,900
16

$

367

$

315
21.0%

66

18
(7)
55
(11)
-
(20)
(23)
(7)
10

81

(14.3%)

(6.4%)

25.7%

2021 Annual Report | 103

As part of the U.S. Domestication, in the first quarter of 2020 Ovintiv recognized a capital loss and recorded a
deferred income tax benefit in the amount of $1.2 billion for Canadian income tax purposes. Ovintiv assessed the
realizability of these capital losses against capital gains and concluded that it is more likely than not that the deferred
tax asset will not be realizable. Therefore, Ovintiv recorded a corresponding valuation allowance against the deferred
tax asset. If it is determined the capital loss can be utilized at a future date, a reduction in the valuation allowance will
be recorded.

The effective tax rate of (14.3) percent for the year ended December 31, 2021 is lower than the U.S. federal statutory
tax rate of 21 percent primarily due to the resolution of prior years’ tax items and the change in valuation allowances.

For the year ended December 31, 2020, the effective tax rate of (6.4) percent was lower than the U.S. federal statutory
tax rate of 21 percent primarily due to valuation allowances recorded due to net losses arising from ceiling test
impairments and an increase in the valuation allowance of $568 million in Canada related to prior years’ deferred tax
assets. See Note 10 for further discussion related to the ceiling test impairments. For the year ended
December 31, 2019, the effective tax rate of 25.7 percent was higher than the U.S. federal statutory tax rate of
21 percent primarily due to state taxes and the re-measurement of the Company’s deferred tax position resulting from
the Alberta corporate tax rate reduction discussed above, partially offset by partnership tax allocations in excess of
funding in Canada as well as the resolution of prior year tax items.

The net deferred income tax asset (liability) consists of:

As at December 31

Deferred Income Tax Assets

Property, plant and equipment
Risk management
Compensation plans
Interest and other deferred deductions
Net operating and net capital losses carried forward
Foreign tax credits
Other
Less: valuation allowance

Deferred Income Tax Liabilities

Property, plant and equipment
Unrealized foreign exchange gains
Other

Net Deferred Income Tax Asset (Liability)

2021

2020

$

$

36
171
67
19
2,727
119
7
(2,733)

(381)
-
(36)

$

(4)

$

107
48
49
27
2,917
165
8
(3,273)

(24)
(21)
(23)

(20)

As at December 31, 2021, Ovintiv has recorded a valuation allowance against U.S. federal and state losses, U.S. foreign
tax credits and U.S. charitable donations in the amount of $1,044 million (2020 - $1,310 million) and Canadian net
operating losses, net capital losses and other tax basis in the amount of $1,689 million (2020 - $1,963 million) as it is
more likely than not that these benefits will not be realized based on expected future taxable earnings as determined
in accordance with the Company’s accounting policies.

The net deferred income tax asset (liability) for the following jurisdictions is reflected in the Consolidated Balance
Sheet as follows:

As at December 31

Deferred Income Tax Assets

United States
Canada

Deferred Income Tax Liabilities

United States
Canada

Net Deferred Income Tax Asset (Liability)

2021

2020

-
-

-

(4)
-

(4)

(4)

$

$

-
-

-

-
(20)

(20)

(20)

$

$

104 | 2021 Annual Report

Ovintiv Inc.

Tax basis, loss carryforwards, charitable donations and tax credits available are as follows:

As at December 31

2021

Expiration Date

United States
Tax basis
Net operating losses (Federal)
Foreign tax credits
Charitable donations

Canada

Tax basis
Net capital losses
Net operating losses
Charitable donations

$

$

5,676
5,340
111
1

1,035
5,716
807
3

Indefinite
2022 - 2038 (1)
2022 - 2024
2022 - 2024

Indefinite
Indefinite
2027 - 2041
2022

(1) Includes net operating losses of $1,339 million which have an indefinite expiration date.

As at December 31, 2021, approximately $468 million (2020 - nil) of Ovintiv’s unremitted earnings from its foreign
subsidiaries were considered to be permanently reinvested and, accordingly, Ovintiv has not recognized a deferred
income tax liability in respect of such earnings. If such earnings were to be remitted, Ovintiv may be subject to income
taxes and foreign withholding taxes. However, determination of any potential amount of unrecognized deferred
income tax liabilities is not practicable.

The following table presents changes in the balance of Ovintiv’s unrecognized tax benefits excluding interest:

For the years ended December 31

2021

2020

Balance, Beginning of Year

Additions for tax positions taken in the current year
Additions for tax positions of prior years
Settlements
Foreign currency translation

Balance, End of Year

$

$

(232)
(2)
(29)
257
(4)

(10)

$

$

(222)
(4)
(1)
-
(5)

(232)

Ovintiv Inc.

2021 Annual Report | 105

The unrecognized tax benefit is reflected in the Consolidated Balance Sheet as follows:

As at December 31

Income Tax Receivable
Other Liabilities and Provisions (See Note 16)
Deferred Income Tax Asset (1)

Balance, End of Year

2021

2020

$

$

$

(1)
-
(9)

(10)

$

-
(158)
(74)

(232)

(1) As at December 31, 2021 and 2020, the unrealized tax benefit was offset against the valuation allowance

recognized in Canada.

If recognized, all of Ovintiv’s unrecognized tax benefits as at December 31, 2021 would affect Ovintiv’s effective
income tax rate. The nature of the unrecognized tax benefits is highly uncertain. As at December 31, 2021, Ovintiv does
not anticipate that the amount of unrecognized tax benefits will significantly change during the next 12 months.

Ovintiv may recognize interest accrued in respect of unrecognized tax benefits in interest expense. During 2021,
Ovintiv recognized an expense of nil (2020 - nil; 2019 - nil) in interest expense. As at December 31, 2021, Ovintiv had a
liability of nil (2020 - $5 million) for interest accrued in respect of unrecognized tax benefits.

Included below is a summary of the tax years, by jurisdiction, that remain statutorily open for examination by the
taxing authorities.

Jurisdiction

United States - Federal
United States - State
Canada - Federal
Canada - Provincial
Other

Taxation Year

2018 - 2021
2017 - 2021
2015 - 2021
2015 - 2021
2021

Ovintiv and its subsidiaries file income tax returns primarily in the United States and Canada. Issues in dispute for
audited years and audits for subsequent years are ongoing and in various stages of completion.

7.

Accounts Receivable and Accrued Revenues

As at December 31

2021

2020

Trade Receivables and Accrued Revenues

Production accruals
Market optimization
Joint interest and trade receivables
Derivative financial instruments
Corporate and other

Total Trade Receivables and Accrued Revenues
Prepaids
Deposits and Other

Expected Credit Loss Allowance

$

$

832
238
102
9
23

1,204
28
67

1,299
(5)

$

1,294

$

547
177
87
23
37

871
23
38

932
(4)

928

Ovintiv’s trade receivables and accrued revenues primarily consist of production sales of oil, NGLs and natural gas,
product optimization from marketing and recoveries from joint working interest partners. The Company’s receivables
are short dated with payments generally due within 30 to 60 days, with no financing element.

Trade receivables and accrued revenues are subject to credit risk which is the risk of loss from the potential of a
counterparty failing to meet its obligation in accordance with agreed terms. Ovintiv’s credit exposure related to
product sales and derivative financial instruments are mitigated through the use of credit policies approved by the
Board of Directors which govern credit practices that limit transactions according to counterparties’ credit quality,
and regular monitoring and review of counterparties’ credit worthiness. The Company may also request collateral
support, including standby letters of credit, from customers that purchase production. Receivables due from joint

106 | 2021 Annual Report

Ovintiv Inc.

working interest partners include numerous counterparties ranging from large public companies to small private
companies within the oil and gas industry. In the event of non-payment, Ovintiv may be able to mitigate losses
through requiring prepayment of future costs and netting outstanding receivables against associated revenue
payables to the interest owner. The Company monitors ongoing credit exposure through active review of
counterparty balances against contract terms and due dates, timely dispute resolution, payment confirmation,
consideration of the customers’ financial condition and general industry market conditions.

Ovintiv’s estimated credit loss allowance is estimated using historical loss information, current industry conditions and
payment practices, as well as reasonable and supportable forecasts of future economic conditions. Credit risk is
assessed based on days outstanding and utilizes both internal credit assessments and publicly available credit
information. As at December 31, 2021, the current period expected credit loss allowance was $5 million (2020 -
$4 million). See Note 25 for more information on credit risk exposures.

8. Business Combination

Newfield Exploration Company Acquisition

On February 13, 2019, the business combination with Newfield Exploration Company, a Delaware corporation
(“Newfield”) was completed pursuant to an Agreement and Plan of Merger with Newfield (the “Merger”). As a result of
the Merger, Newfield shareholders received 2.6719 Encana common shares, on a pre-Share Consolidation basis, for
each share of Newfield common stock that was issued and outstanding immediately prior to the effective date of the
Merger. The Company issued approximately 543.4 million Encana common shares, on a pre-Share Consolidation basis,
representing a value of $3.5 billion and paid approximately $5 million in cash in respect of Newfield’s cash-settled
incentive awards. Following the acquisition, Newfield’s senior notes totaling $2.45 billion were outstanding. For the
year ended December 31, 2019, transaction costs of approximately $33 million were included in other (gains) losses,
net.

Newfield’s operations focused on the exploration and development of oil and gas properties located in Anadarko and
Arkoma in Oklahoma, Bakken in North Dakota and Uinta in Utah, as well as offshore oil assets located in China. The
results of Newfield’s operations have been included in the Company’s Consolidated Financial Statements as of
February 14, 2019.

Ovintiv Inc.

2021 Annual Report | 107

Purchase Price Allocation

The transaction was accounted for under the acquisition method, which requires that the assets acquired and liabilities
assumed be recognized at their fair values as of the acquisition date, with any excess of the purchase price over the
estimated fair value of identified net assets acquired recorded as goodwill. The purchase price allocation represents
the consideration paid and the fair values of the assets acquired, and liabilities assumed as of the acquisition date.

Purchase Price Allocation

Consideration:

Fair value of Encana’s common shares issued (1)
Fair value of Newfield liability awards paid in cash (2)

Total Consideration

Assets Acquired:

Cash and cash equivalents
Accounts receivable and accrued revenues
Other current assets
Proved properties
Unproved properties
Other property, plant and equipment
Restricted cash
Other assets
Goodwill

Liabilities Assumed:

Accounts payable and accrued liabilities (3)
Long-term debt
Operating lease liabilities
Other long-term liabilities
Asset retirement obligation
Deferred income taxes

Total Purchase Price

$

$

$

$

3,478
5

3,483

46
486
50
5,903
838
22
53
105
25

(795)
(2,603)
(76)
(65)
(184)
(322)

3,483

(1) The fair value was based on the NYSE closing price of the pre-Share Consolidation Encana common shares of

$6.40 on February 13, 2019.

(2) The fair value was based on a price of $6.50 per notional unit which was determined using a volume-weighted

average of the trading price of pre-Share Consolidation Encana common shares on the NYSE on each of the five
consecutive trading days ending on the trading day that was three trading days prior to February 13, 2019.
(3) In conjunction with the acquisition, various legal claims and actions arising in the normal course of Newfield’s

operations were assumed by Ovintiv. On March 29, 2019, Newfield and its wholly-owned subsidiary entered into
an Agreement and Mutual Release with Sapura Energy Berhad, formerly known as SapuraKencana Petroleum
Berhad, and Sapura Exploration and Production Inc., formerly known as SapuraKencana Energy Inc. (collectively,
“Sapura”), and agreed to settle arbitration claims in the amount of $22.5 million arising from Sapura’s purchase of
Newfield’s Malaysian business in February 2014. The settlement amount including legal fees was included in the
purchase price allocation as part of the current liabilities assumed at the acquisition date. Although the outcome
of any remaining legal claims and actions assumed following the acquisition of Newfield 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.

The income approach valuation technique was used for the fair value of assets acquired and liabilities assumed. The
carrying amounts of cash and cash equivalents, accounts receivable and accrued revenues, restricted cash, other
current assets, and accounts payable and accrued liabilities approximate their fair values due to their nature and/or
the short-term maturity of the instruments. The fair values of long-term debt, ROU assets and operating lease liabilities
were categorized within Level 2 of the fair value hierarchy and were determined using quoted prices and rates from
an available pricing source. The fair values of the proved and unproved properties, other property, plant and
equipment, other assets, other long-term liabilities 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 for abandonment and reclamation.

Goodwill arose from the Newfield acquisition primarily from the requirement to recognize deferred taxes on the
difference between the fair value of the assets acquired and liabilities assumed and the respective carry-over tax basis.
Goodwill is not amortized and is not deductible for tax purposes.

108 | 2021 Annual Report

Ovintiv Inc.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information combines the historical financial results of the Company with
Newfield and has been prepared as though the acquisition had occurred on January 1, 2019. The pro forma information
is not intended to reflect the actual results of operations that would have occurred if the business combination had
been completed at the date indicated. In addition, the pro forma information is not intended to be a projection of the
Company’s results of operations for any future period.

Additionally, pro forma earnings were adjusted to exclude transaction-related costs incurred of approximately
$71 million and severance payments made to employees which totaled $138 million for the year ended
December 31, 2019. The pro forma financial information does not include any cost savings or other synergies from the
Merger or any estimated costs that have been incurred to integrate the assets. Ovintiv’s consolidated results for the
years ended December 31, 2021 and 2020 include the results from Newfield.

For the year ended December 31 (US$ millions, except per share amounts)

Revenues
Net Earnings (Loss)

Net Earnings (Loss) per Share

Basic & Diluted

9. Acquisitions and Divestitures

2019

7,005
376

1.44

$
$

$

For the years ended December 31

2021

2020

2019

Acquisitions

USA Operations

Total Acquisitions

Divestitures

USA Operations
Canadian Operations

Total Divestitures

$

$

11

11

$

19

19

65

65

(772)
(253)

(1,025)

(78)
(11)

(89)

(196)
(1)

(197)

(132)

Net Acquisitions & (Divestitures)

$

(1,014)

$

(70) $

ACQUISITIONS

Acquisitions in the USA Operations in 2021 and 2020 primarily included property purchases with oil and liquids rich
potential. Acquisitions in 2019 in the USA Operations primarily included seismic purchases, water rights and property
purchases with oil and liquids rich potential.

DIVESTITURES

In 2021, amounts received from the sale of assets were $1,025 million (2020 - $89 million; 2019 - $197 million).

Amounts received from the Company’s divestiture transactions have been deducted from the respective U.S. and
Canadian full cost pools.

USA Operations

In 2021, divestitures in the USA Operations primarily included the sale of the Eagle Ford assets located in south Texas
for proceeds of approximately $764 million, after closing and other adjustments.

In 2020, divestitures in the USA Operations primarily included the sale of certain properties that did not complement
Ovintiv’s existing portfolio of assets.

In 2019, divestitures in the USA Operations primarily included the sale of the Arkoma natural gas assets located in
Oklahoma.

Ovintiv Inc.

2021 Annual Report | 109

Canadian Operations

In 2021, divestitures in the Canadian Operations primarily included the sale of the Duvernay assets located in west
central Alberta for proceeds of approximately $238 million, after closing and other adjustments.

As part of the Duvernay asset divestiture, the Company agreed to a contingent consideration arrangement, which is
payable to Ovintiv in the amount of C$5 million at the end of 2021 and an additional C$10 million at the end of 2022, if
the annual average of the WTI reference price for each calendar year is greater than $56 per barrel and $62 per barrel,
respectively. The contingent consideration was determined to be an embedded derivative and accordingly, the
Company recorded the contingent consideration at its fair value of $6 million on the closing date. Subsequent
changes in the fair value of the contingent consideration are recognized as a gain or loss and presented in gains
(losses) on risk management, net in the Consolidated Statement of Earnings. The fair value is presented in accounts
receivable and accrued revenues in the Consolidated Balance Sheet. See Notes 24 and 25 for further information on
the contingent consideration.

In 2020, divestitures in the Canadian Operations primarily included the sale of certain properties that did not
complement Ovintiv’s existing portfolio of assets.

10. Property, Plant and Equipment, Net

As at December 31

USA Operations

Proved properties
Unproved properties
Other

Canadian Operations

Proved properties
Unproved properties
Other

Market Optimization
Corporate & Other

2021
Accumulated
DD&A

Cost

Net

Cost

2020
Accumulated
DD&A

Net

$ 39,145
1,884
12

41,041

$ (33,418) $ 5,727
1,884
-
12
-

$ 37,875
2,785
24

$ (32,581) $ 5,294
2,785
-
24
-

(33,418)

7,623

40,684

(32,581)

8,103

16,330
60
11

16,401

7
873

(15,450)
-
-

(15,450)

(7)
(686)

880
60
11

951

-
187

16,008
177
13

16,198

9
865

(15,056)
-
-

(15,056)

(7)
(662)

952
177
13

1,142

2
203

$ 58,322

$ (49,561) $ 8,761

$ 57,756

$ (48,306) $ 9,450

USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration,
development and construction activities of $172 million, which have been capitalized during the year ended
December 31, 2021 (2020 - $180 million).

For the year ended December 31, 2021, Ovintiv did not recognize ceiling test impairments in the USA Operations
(2020 - $5,580 million; 2019 - nil) or in the Canadian Operations (2020 - nil; 2019 - nil). The non-cash ceiling test
impairments recognized in the USA Operations in 2020 are included with accumulated DD&A in the table above and
primarily resulted from the decline in the 12-month average trailing prices, which reduced proved reserves.

The 12-month average trailing prices used in the ceiling test calculations reflect benchmark prices adjusted for basis
differentials to determine local reference prices, transportation costs and tariffs, heat content and quality. The
benchmark prices are disclosed in Note 28.

110 | 2021 Annual Report

Ovintiv Inc.

11. Other Assets

As at December 31

Operating Lease ROU Assets (See Note 14)
Long-Term Investments
Long-Term Receivables
Deferred Charges
Other

12. Goodwill

As at December 31

United States

Balance, beginning and end of year

Canada

Balance, beginning of year
Foreign currency translation adjustment

Balance, end of year

Total Goodwill

2021

2020

$

$

929
27
64
42
17

991
30
64
45
13

$

1,079

$

1,143

2021

2020

$

1,938

$

1,938

687
3

690

673
14

687

$

2,628

$

2,625

The Company had no additions or dispositions relating to goodwill during 2021 or 2020. The change in the Canada
goodwill balance reflects movement due to foreign currency translation.

Goodwill was assessed for impairment as at December 31, 2021 and December 31, 2020. The fair values of the United
States and Canada reporting units were determined to be greater than the respective carrying values of the reporting
units. Accordingly, no goodwill impairments were recognized. The Company has not recognized any historical
cumulative goodwill impairments.

13. Accounts Payable and Accrued Liabilities

As at December 31

2021

2020

Trade Payables
Capital Accruals
Royalty and Production Accruals
Market Optimization Accruals
Outstanding Disbursements
Payroll & Other Accruals
Interest Payable
Current Portion of Long-Term Incentive Costs (See Note 22)
Current Portion of Finance Lease Obligations (See Note 14)
Current Portion of Asset Retirement Obligation (See Note 17)

$

$

328
161
643
292
32
285
108
78
6
46

306
166
463
196
87
215
125
25
82
39

$

1,979

$

1,704

Payables and accruals are non-interest bearing. Interest payable represents amounts accrued related to Ovintiv’s
unsecured notes as disclosed in Note 15.

Ovintiv Inc.

2021 Annual Report | 111

14. Leases

Operating leases include drilling rigs, compressors, office and buildings, certain land easements and various equipment
utilized in the development and production of oil, NGLs and natural gas. The Company has an office building that is
accounted for as a finance lease. Subleases relate to office and building leases.

The tables below summarize Ovintiv’s operating and finance lease costs and include ROU assets and lease liabilities,
amounts recognized in net earnings (loss) during the year and other lease information.

As at December 31 (US$ millions, unless otherwise specified)

2021

2020

Consolidated Balance Sheet (1):
Operating Lease ROU Assets, in Other Assets
Finance Lease ROU Assets, in Other Property Plant and Equipment

$

Operating Lease Liabilities:

Current
Long-term

Finance Lease Liabilities:

Current, in accounts payable and accrued liabilities
Long-term, in other liabilities and provisions

Weighted Average Discount Rate

Operating leases
Finance leases

Weighted Average Remaining Lease Term

Operating leases
Finance leases

$

929
27

62
889

6
33

991
32

68
938

82
39

5.44%
6.11%

5.44%
6.00%

15.3 years
5.5 years

15.9 years
3.0 years

(1) Total ROU assets and liabilities are recorded at the gross contractual amount. A portion of the future lease

payments will be recovered from other working interest owners based on their proportionate share when incurred.

For the years ended December 31

2021

2020

Lease Costs (1):
Operating Lease Costs, Excluding Short-Term Leases

$

145

$

Finance Lease Costs:

Amortization of ROU assets
Interest on lease liabilities

Total Finance Lease Costs

Short-Term Lease Costs
Variable Lease Costs

Sublease Income:

Operating lease income
Variable lease income

Other Information (2):
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:

Operating cash outflows from operating leases
Investing cash outflows from operating leases
Operating cash outflows from finance leases
Financing cash outflows from finance leases

Supplemental Non-Cash Information:

New ROU operating lease assets and liabilities

5
3
8

206
12

55
18

197
147
3
82

23

152

5
9
14

339
11

53
18

215
269
9
89

10

(1) Lease costs include amounts capitalized into property, plant and equipment in the Consolidated Balance Sheet

and lease expense recognized in the Consolidated Statement of Earnings.

(2) Rights to extend or terminate a lease are included in the lease term when there is reasonable certainty the right

will be exercised. Lease contracts include rights to extend leases after the initial term, ranging from
month-to-month to less than 10 years.

112 | 2021 Annual Report

Ovintiv Inc.

Operating lease expense is reflected in the Consolidated Statement of Earnings as follows:

For the years ended December 31

2021

2020

Operating Lease Expense

Transportation and processing
Operating
Administrative

Total Operating Lease Expense

$

$

3
81
120

204

$

$

2
106
114

222

The following table outlines the Company’s future lease payments and lease liabilities related to the Company’s
operating and finance leases as at December 31, 2021:

2022

2023

2024

2025

2026 Thereafter

Total

Operating Leases (1)
Expected Future Lease Payments
Less: Discounting

Present Value of Future Operating

Lease Payments

$

113 $

94 $

90 $

89 $

83

$

957

Sublease Income (undiscounted)

$

(40) $

(39) $

(39) $

(39) $

(39)

$

(474)

$ 1,426
475

$

$

951

(670)

Finance Leases
Expected Future Lease Payments
Less: Discounting

Present Value of Future Finance

Lease Payments

$

8 $

8 $

8 $

9 $

9

$

4

$

46
7

39

(40)

$

$

Sublease Income (undiscounted) (2)

$

(8) $

(8) $

(7) $

(7) $

(7)

$

(3)

(1) Lease payments are presented based on the gross contractual amount. A portion of the future lease payments will

be recovered from other working interest owners based on their proportionate share when incurred.

(2) Classified as operating lease.

There are no material commitments for leases with terms greater than one year that have not yet commenced at
December 31, 2021.

15. Long-Term Debt

As at December 31

U.S. Dollar Denominated Debt

Revolving credit and term loan borrowings
U.S. Unsecured Notes:

3.90% due November 15, 2021
5.75% due January 30, 2022
5.625% due July 1, 2024
5.375% due January 1, 2026
8.125% due September 15, 2030
7.20% due November 1, 2031
7.375% due November 1, 2031
6.50% due August 15, 2034
6.625% due August 15, 2037
6.50% due February 1, 2038
5.15% due November 15, 2041

Total Principal

Increase in Value of Debt Acquired
Unamortized Debt Discounts and Issuance Costs

Total Long-Term Debt

Current Portion
Long-Term Portion

Note

2021

2020

A
B

F

C
D

E

$

-

$

950

-
-
1,000
688
300
350
500
750
462
488
203

4,741

77
(32)

4,786

-
4,786

4,786

$

$

$

518
600
1,000
688
300
350
500
750
462
488
203

6,809

111
(35)

6,885

518
6,367

6,885

$

$

$

Ovintiv Inc.

2021 Annual Report | 113

A) REVOLVING CREDIT AND TERM LOAN BORROWINGS

At December 31, 2021, Ovintiv had in place committed revolving U.S. dollar denominated bank credit facilities totaling
$4.0 billion which included $2.5 billion on a revolving bank credit facility for Ovintiv Inc. and $1.5 billion on a revolving
bank credit facility for a Canadian subsidiary. The facilities are extendible from time to time, but not more than once
per year, for a period not longer than five years plus 90 days from the date of the extension request, at the option of
the lenders and upon notice from Ovintiv. The facilities mature in July 2024, and are fully revolving up to maturity.

The Ovintiv Inc. facility, which remained unused as at December 31, 2021, is unsecured and bears interest at either the
lenders’ U.S. base rate or LIBOR, plus applicable margins. The Canadian subsidiary facility, which remained unused as
at December 31, 2021, bears interest at the lenders’ rates for Canadian prime, U.S. base rate, Bankers’ Acceptances or
LIBOR, plus applicable margins.

Ovintiv is subject to a financial covenant in its credit facility agreements whereby financing debt to adjusted
capitalization cannot exceed 60 percent. Financing debt primarily includes total long-term debt and finance lease
obligations. Adjusted capitalization is calculated as the sum of total financing debt, shareholders’ equity and a
$7.7 billion equity adjustment for cumulative historical ceiling test impairments recorded in conjunction with the
Company’s January 1, 2012 adoption of U.S. GAAP. As at December 31, 2021, the Company is in compliance with all
financial covenants.

Standby fees paid in 2021 relating to revolving credit and term loan agreements were approximately $10 million
(2020 - $8 million; 2019 - $11 million) and were included in interest expense in the Consolidated Statement of Earnings.

B) UNSECURED NOTES

Shelf Prospectuses

In the first quarter of 2020, Ovintiv filed a U.S. shelf registration statement and a Canadian shelf prospectus, 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. and/or Canada. At December 31, 2021, $6.0 billion was
accessible under the Canadian shelf prospectus. The ability to issue securities under the U.S. shelf registration
statement or Canadian shelf prospectus is dependent upon market conditions and security law requirements.

U.S. Unsecured Notes

Unsecured notes include medium-term notes and senior notes that are issued from time to time under trust indentures
and have equal priority with respect to the payment of both principal and interest.

On June 18, 2021, the Company completed the redemption of its $600 million, 5.75 percent senior notes due
January 30, 2022. Ovintiv paid approximately $632 million in cash including accrued and unpaid interest of $13 million
and a one-time make-whole payment of $19 million, which is included in interest expense as discussed in Note 4.

On August 16, 2021, the Company completed the redemption of its $518 million, 3.90 percent senior notes due
November 15, 2021. The Company redeemed the notes at par and paid approximately $523 million in cash including
accrued and unpaid interest of $5 million.

The Company used the net proceeds from its Eagle Ford and Duvernay asset sales, as discussed in Note 9, and cash
on hand to complete the senior note redemptions.

During the year ended December 31, 2020, Ovintiv repurchased approximately $302 million in principal amount of its
senior notes in the open market. The aggregate cash payments related to the note repurchases were $272 million, plus
accrued interest, and a net gain of approximately $30 million was recognized in other (gains) losses, net in the
Consolidated Statement of Earnings.

114 | 2021 Annual Report

Ovintiv Inc.

C)

INCREASE IN VALUE OF DEBT ACQUIRED

Certain of the notes and debentures of the Company were acquired in business combinations and were accounted for
at their fair value at the dates of acquisition. The difference between the fair value and the principal amount of the
debt is being amortized over the remaining life of the outstanding debt acquired, which has a weighted average
remaining life of approximately five years.

D) UNAMORTIZED DEBT DISCOUNTS AND ISSUANCE COSTS

Long-term debt premiums and discounts are capitalized within long-term debt and are being amortized using the
effective interest method. During 2021, no debt premiums or discounts were capitalized. During 2020, $4 million in
issuance costs were capitalized related to the renewal of the Company’s credit facilities. Issuance costs are amortized
over the term of the related debt.

E) CURRENT PORTION OF LONG-TERM DEBT

As at December 31, 2021, the current portion of long-term debt was nil (2020 - $518 million).

F) MANDATORY DEBT PAYMENTS

As at December 31

2022
2023
2024
2025
2026
Thereafter

Total

Principal
Amount

Interest
Amount

$

$

-
-
1,000
-
688
3,053

$

4,741

$

301
301
301
245
227
1,657

3,032

As at December 31, 2021, total long-term debt had a carrying value of $4,786 million and a fair value of $5,804 million
(2020 - carrying value of $6,885 million and a fair value of $7,379 million). The estimated fair value of long-term
borrowings is categorized within Level 2 of the fair value hierarchy and has been determined based on market
information of long-term debt with similar terms and maturity, or by discounting future payments of interest and
principal at interest rates expected to be available to the Company at period end.

16. Other Liabilities and Provisions

As at December 31

Finance Lease Obligations (See Note 14)
Unrecognized Tax Benefits (See Note 6)
Pensions and Other Post-Employment Benefits (See Note 23)
Long-Term Incentive Costs (See Note 22)
Other Derivative Contracts (See Notes 24, 25)
Other

2021

2020

$

$

33
-
104
36
5
12

190

$

$

39
158
129
9
7
16

358

Ovintiv Inc.

2021 Annual Report | 115

17. Asset Retirement Obligation

As at December 31

Asset Retirement Obligation, Beginning of Year
Liabilities Incurred and Acquired
Liabilities Settled and Divested
Change in Estimated Future Cash Outflows
Accretion Expense
Foreign Currency Translation

Asset Retirement Obligation, End of Year

Current Portion (See Note 13)
Long-Term Portion

18. Share Capital

AUTHORIZED

2021

2020

440
8
(91)
5
22
1

385

46
339

385

$

$

$

$

614
7
(160)
(49)
29
(1)

440

39
401

440

$

$

$

$

Subsequent to the Reorganization as described in Note 1 and as at December 31, 2021, Ovintiv is authorized to issue
750 million shares of common stock, par value $0.01 per share, and 25 million shares of preferred stock, par value
$0.01 per share. No shares of preferred stock are outstanding.

ISSUED AND OUTSTANDING

As at December 31

2021

2020

2019

Number
(millions) Amount

Number
(millions) Amount

Number
(millions) Amount

Shares of Common Stock Outstanding,

Beginning of Year

Shares of Common Stock Purchased
Shares of Common Stock Issued
Reclassification of Share Capital due to the

Reorganization (See Note 1)

Shares of Common Stock Outstanding, End of

Year

$

259.8
(3.1)
1.3

-

258.0

$

3
-
-

-

3

259.8
-
-

$ 7,061
-
-

190.5
(39.4)
108.7

$ 4,656
(1,073)
3,478

-

(7,058)

-

-

259.8

$

3

259.8

$ 7,061

In conjunction with the Reorganization, the amount recognized in share capital in excess of Ovintiv’s established par
value of $0.01 per share was reclassified to paid in surplus. Accordingly, approximately $7,058 million was reclassified.

On February 13, 2019, the Company completed the acquisition of all the issued and outstanding shares of common
stock of Newfield whereby Encana issued approximately 543.4 million common shares, on a pre-Share Consolidation
basis, to Newfield shareholders (approximately 108.7 million post-Share Consolidation shares), representing a
pre-Share Consolidation exchange ratio of 2.6719 Encana common shares for each share of Newfield common stock
held. See Note 8 for further information on the business combination.

NORMAL COURSE ISSUER BID

On September 28, 2021, Ovintiv announced it received regulatory approval to commence a NCIB that enables the
Company to purchase, for cancellation, up to approximately 26 million shares of common stock over a 12-month
period from October 1, 2021 to September 30, 2022.

During the year ended December 31, 2021, the Company purchased approximately 3.1 million shares under the current
NCIB for total consideration of approximately $111 million. Of the amount paid, $28 thousand was charged to share
capital and $111 million was charged to paid in surplus.

All purchases were made in accordance with the 2021 NCIB 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.

116 | 2021 Annual Report

Ovintiv Inc.

For the year ended December 31, 2019, the Company purchased the equivalent of approximately 29.9 million post-
Share Consolidation shares under the previous NCIB which was in place from March 4, 2019 to March 3, 2020 for total
consideration of approximately $1,037 million. Of the amount paid, $816 million was charged to share capital and
$221 million was charged to retained earnings.

All purchases were made in accordance with the 2019 NCIB at prevailing market prices plus brokerage fees, with
consideration allocated to share capital up to the average carrying amount of the shares, with any excess allocated to
retained earnings.

SUBSTANTIAL ISSUER BID

On June 10, 2019, the Company announced its intention to purchase, for cancellation, up to $213 million of its common
shares through a substantial issuer bid (“SIB”) which commenced on July 8, 2019. On August 29, 2019, the Company
purchased the equivalent of approximately 9.5 million post-Share Consolidation shares at a converted price of $22.50
per share, for an aggregate purchase price of approximately $213 million, of which $257 million was charged to share
capital and $44 million was credited to paid in surplus.

The purchase was made in accordance with the terms and conditions of the SIB, with consideration allocated to share
capital equivalent to the average carrying amount of the shares, with the excess of the carrying amount over the
purchase consideration credited to paid in surplus.

DIVIDENDS

During the year ended December 31, 2021, the Company declared and paid dividends of $0.4675 per share of common
stock, totaling $122 million (2020 - $0.375 per share of common stock, totaling $97 million; 2019 - $0.375 per common
share on a post-Share Consolidation basis, totaling $102 million).

Ovintiv’s quarterly dividend payment in 2021 was $0.09375 per share of common stock for each of the first two
quarters and $0.14 per share of common stock for the third and fourth quarters. The quarterly dividend payment in
2020 was $0.09375 per share of common stock. On a post-Share Consolidation basis, the Company’s quarterly
dividend payment was $0.09375 per common share in 2019.

On February 24, 2022, the Board of Directors declared a dividend of $0.20 per share of common stock payable on
March 31, 2022 to common shareholders of record as of March 15, 2022.

EARNINGS PER SHARE OF COMMON STOCK

The following table presents the computation of net earnings (loss) per share of common stock:

For the years ended December 31 (US$ millions, except per share amounts)

2021

2020

2019

Net Earnings (Loss)

$

1,416

$

(6,097) $

234

Number of Shares of Common Stock:

Weighted average shares of common stock outstanding - Basic
Effect of dilutive securities (1) (2)

Weighted Average Shares of Common Stock Outstanding - Diluted

260.4
6.0

266.4

259.8
-

259.8

261.2
-

261.2

Net Earnings (Loss) per Share of Common Stock

Basic
Diluted (1) (2)

$

$

5.44
5.32

(23.47) $
(23.47)

0.90
0.90

(1) During the fourth quarter of 2020, Ovintiv’s Board of Directors resolved to settle certain Performance Share Units
(“PSUs”) and Restricted Share Units (“RSUs”) with the issuance of the Company’s common stock. As a result, the
stock-based compensation awards were modified and reclassified as equity-settled awards. See Note 22 for
further information.

(2) As at December 31, 2020, all of Ovintiv’s equity-settled awards were determined to be antidilutive and therefore
are excluded from the calculation of fully diluted net earnings (loss) per share of common stock. See Note 22 for
further information.

Ovintiv Inc.

2021 Annual Report | 117

STOCK-BASED COMPENSATION PLANS

Ovintiv’s PSU and RSU stock-based compensation plans allow the Company to settle the awards either in cash or in
the Company’s common stock. The PSUs and RSUs are classified as equity-settled if the Company has sufficient
common stock held in reserve for issuance. These awards are included in the computation of diluted net earnings
(loss) per share of common stock if dilutive.

Ovintiv’s stock options with associated Tandem Stock Appreciation Rights (“TSARs”) give the employee the right to
purchase shares of common stock of the Company or receive cash. Historically, most holders of options have elected
to exercise their TSARs in exchange for a cash payment. As a result, outstanding options are not considered
potentially dilutive securities.

An aggregate of 7.4 million shares of common stock is authorized and held in reserve for issuance. At
December 31, 2021, 5.2 million shares of common stock remained available for issuance under the Company’s stock-
based compensation plans. Shares issued as a result of awards granted from stock-based compensation plans are
generally funded out of the common stock authorized for issuance as approved by the Company’s shareholders.

See Note 22 for further information on Ovintiv’s outstanding and exercisable TSARs, PSUs and RSUs.

19. Accumulated Other Comprehensive Income

For the years ended December 31

2021

2020

2019

Foreign Currency Translation Adjustment
Balance, Beginning of Year
Change in Foreign Currency Translation Adjustment

Balance, End of Year

Pension and Other Post-Employment Benefit Plans
Balance, Beginning of Year

Other Comprehensive Income Before Reclassifications:
Net actuarial gains and (losses) (See Note 23)

Income taxes

Net prior service costs from plan amendment (See Note 23)

Income taxes

Amounts Reclassified from Other Comprehensive Income:

Reclassification of net actuarial (gains) and losses to net earnings (See

Note 23)

Income taxes

Reclassification of net prior service costs to net earnings (See Note 23)

Income taxes

Curtailment in net defined periodic benefit cost (See Note 23)

Income taxes

Settlement in net defined periodic benefit cost (See Note 23)

Income taxes

Balance, End of Year

Total Accumulated Other Comprehensive Income

$

$

$

1,042
2

1,044

$

$

1,004
38

1,042

$

$

976
28

1,004

34

$

42

$

22

14
(4)
11
(2)

(8)
2
1
-
-
-
-
-

(10)
2
-
-

(9)
2
2
-
5
(1)
2
(1)

58
(12)
(31)
6

(2)
-
1
-
-
-
-
-

$

$

48

1,092

$

$

34

1,076

$

$

42

1,046

During the year ended December 31, 2019, the Company amended the other post-employment benefits arrangements
in conjunction with the integration of the Newfield business acquired. The plan amendment resulted in an increase to
pension liabilities with a corresponding loss recognized in other comprehensive income.

118 | 2021 Annual Report

Ovintiv Inc.

20. 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 December 31, 2021, VMLP provides approximately 1,169 MMcf/d of natural gas gathering and compression and
925 MMcf/d of natural gas processing under long-term service agreements with remaining terms ranging from 10 to
24 years and have various renewal terms providing up to a potential maximum of 10 years.

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 eighth year 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 $1,738 million as at December 31, 2021. The estimate comprises the take or pay
volume commitments and the potential payout of minimum costs. The take or pay volume commitments associated
with certain gathering and processing assets are included in Note 27 under Transportation and Processing. The
potential payout requirement is highly uncertain as the amount is contingent on future production estimates, pace of
development and the amount of capacity contracted to third parties. As at December 31, 2021, accounts payable and
accrued liabilities included $0.2 million related to the take or pay commitment.

21. Restructuring Charges

In February 2019, in conjunction with the Newfield business combination as described in Note 8, the Company
announced workforce reductions to better align staffing levels and organizational structure with the Company’s
strategy. During 2019, the Company incurred total restructuring charges of $138 million, before tax, primarily related to
severance costs.

In June 2020, Ovintiv undertook a plan to reduce its workforce by approximately 25 percent as part of a company-
wide reorganization in response to the low commodity price environment resulting from the global pandemic and the
Company’s planned reductions in capital spending. During 2021, the Company incurred total restructuring charges of
$14 million (2020 - $90 million), before tax, primarily related to severance costs. Of the $104 million in restructuring
charges incurred, $3 million remains accrued as at December 31, 2021. The remaining amounts accrued are expected
to be paid in 2022.

Restructuring charges are included in administrative expense presented in the Corporate and Other segment in the
Consolidated Statement of Earnings.

For the years ended December 31

2021

2020

2019

Severance and Benefits
Outplacement, Moving and Other Expenses

Restructuring Expenses

$

$

14
-

14

$

$

88
2

90

$

$

133
5

138

Ovintiv Inc.

2021 Annual Report | 119

As at December 31

2021

2020

2019

Outstanding Restructuring Accrual, Beginning of Year
Restructuring Expenses Incurred
Restructuring Costs Paid

Outstanding Restructuring Accrual, End of Year (1)

$

$

14
14
(25)

3

$

$

8
90
(84)

14

$

$

-
138
(130)

8

(1) Included in accounts payable and accrued liabilities in the Consolidated Balance Sheet.

22. Compensation Plans

Ovintiv has a number of compensation arrangements under which the Company awards various types of long-term
incentive grants to eligible employees and Directors. They may include TSARs, Stock Appreciation Rights (“SARs”),
PSUs, Deferred Share Units (“DSUs”) and RSUs.

Ovintiv accounts for PSUs and RSUs as equity-settled stock-based payment transactions provided there is sufficient
common stock held in reserve for issuance. TSARs, SARs and DSUs are accounted for as cash-settled stock-based
payment transactions. The Company accrues compensation costs over the vesting period based on the fair value of
the rights determined using the Black-Scholes-Merton or other appropriate fair value models.

During the fourth quarter of 2020, Ovintiv’s Board of Directors resolved to settle certain PSU awards and RSU awards
with the issuance of the Company’s common stock. Historically, the Company settled PSU and RSU awards in cash. As
a result, the respective awards were modified and reclassified as equity-settled share-based payment transactions at
the modification date. The modified awards accrue compensation expense using the modification date fair value of
the awards over the remaining vesting period. The modification impacted all employees and there was no incremental
compensation cost recognized at the modification date.

The Company has recognized the following share-based compensation costs:

For the years ended December 31

2021

2020

2019

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 Consolidated Statement of Earnings in:

Operating
Administrative

$

$

$

$

$

118
47
(27)

$

42
3
(12)

138

$

33

$

31
107

138

$

$

10
23

33

$

$

59
-
(20)

39

16
23

39

As at December 31, 2021, the liability for cash-settled share-based payment transactions totaled $114 million
(2020 - $34 million), of which $78 million (2020 - $25 million) is recognized in accounts payable and accrued liabilities
and $36 million (2020 - $9 million) is recognized in other liabilities and provisions in the Consolidated Balance Sheet.

The following sections outline certain information related to Ovintiv’s compensation plans as at December 31, 2021.

A) TANDEM STOCK APPRECIATION RIGHTS

All options to purchase shares of common stock issued to eligible Canadian-based employees under Ovintiv’s Stock
Option Plan have associated TSARs attached. In lieu of exercising the option, the associated TSARs give the option
holder the right to purchase shares of common stock of the Company or receive a cash payment equal to the excess
of the market price of Ovintiv’s shares of common stock at the time of exercise over the original grant price. TSARs
granted vest and are exercisable at 30 percent of the number granted after one year, an additional 30 percent of the
number granted after two years, are fully exercisable after three years and expire seven years after the date granted.
TSARs are classified as a liability and remeasured at the end of each reporting period.

120 | 2021 Annual Report

Ovintiv Inc.

The following tables summarize information related to the TSARs:

As at December 31

(thousands of units)

Outstanding
TSARs

2021

Weighted
Average
Exercise
Price (C$)

Weighted
Average
Remaining
Contractual
Life (Years)

2020

Weighted
Average
Exercise
Price (C$)

Weighted
Average
Remaining
Contractual
Life (Years)

Outstanding
TSARs

Outstanding, Beginning of Year

Granted
Exercised - SARs (1)
Exercised - Options (1)
Forfeited
Expired

Outstanding, End of Year (2)

Vested and Exercisable, End of

Year (3)

Expected to Vest (4)

1,586
-
(136)
-
(717)
-

733

642

91

48.28
-
28.01
-
46.11
-

54.17

55.38

45.64

2.8

2.2

1.9

4.3

1,606
-
-
-
-
(20)

1,586

1,348

238

48.65
-
-
-
-
78.47

48.28

47.71

51.52

2.8

2.4

5.0

(1) The intrinsic value of option awards exercised and cash-settled during 2021 was $2 million (2020 - nil; 2019 - nil).
(2) The intrinsic value of option awards outstanding during 2021 was $10 million (2020 - $6 million).
(3) The intrinsic value of option awards vested and exercisable during 2021 was $9 million (2020 - $6 million).
(4) The intrinsic value of option awards expected to vest during 2021 was $1 million (2020 - nil).

The following weighted average assumptions were used to determine the fair value of TSARs outstanding:

As at December 31

Risk Free Interest Rate
Dividend Yield
Expected Volatility Rate (1)
Expected Term
Market Share Price
Weighted Average Grant Date Fair Value

(1) Volatility was estimated using historical rates.

C$ Share Units
2020

2021

0.94%
1.65%
104.80%
1.4 yrs
C$42.56
C$54.17

0.20%
2.75%
103.64%
1.8 yrs
C$18.29
C$48.28

2019

1.69%
1.64%
43.61%
2.4 yrs
C$30.40
C$48.65

As at December 31, 2021, there was approximately $0.1 million of unrecognized compensation costs (2020 - $0.1 million)
related to unvested TSARs. The costs are expected to be recognized over a weighted average period of 0.2 years.

B)

STOCK APPRECIATION RIGHTS

U.S. dollar denominated SARs are granted to eligible U.S.-based employees, which entitle the employee to receive a
cash payment equal to the excess of the market price of Ovintiv’s shares of common stock at the time of exercise over
the original grant price of the right. SARs granted vest and are exercisable at 30 percent of the number granted after
one year, an additional 30 percent of the number granted after two years, are fully exercisable after three years and
expire seven years after the date granted. SARs are classified as a liability and remeasured at the end of each
reporting period.

Ovintiv Inc.

2021 Annual Report | 121

The following tables summarize information related to the U.S. dollar denominated SARs:

As at December 31

(thousands of units)

Outstanding
SARs

2021

Weighted
Average
Exercise
Price (US$)

Weighted
Average
Remaining
Contractual
Life (Years)

2020

Weighted
Average
Exercise
Price (US$)

Weighted
Average
Remaining
Contractual
Life (Years)

Outstanding
SARs

Outstanding, Beginning of

Year

Granted
Exercised (1)
Forfeited
Expired

Outstanding, End of Year (2)

Vested and Exercisable, End of

Year (3)

Expected to Vest (4)

660
682
(177)
(15)
-

1,150

1,021

129

38.03
35.11
20.50
45.35
-

38.89

39.54

33.77

3.7

2.2

1.9

4.3

789
-
-
(86)
(43)

660

423

237

39.84
-
-
38.89
69.35

38.03

39.22

35.89

3.7

2.9

5.2

(1) The intrinsic value of option awards exercised and cash-settled during 2021 was $2 million (2020 - nil; 2019 - nil).
(2) The intrinsic value of option awards outstanding during 2021 was $15 million (2020 - $3 million).
(3) The intrinsic value of option awards vested and exercisable during 2021 was $14 million (2020 - $3 million).
(4) The intrinsic value of option awards expected to vest during 2021 was $1 million (2020 - nil).

The following weighted average assumptions were used to determine the fair value of SARs outstanding:

As at December 31

Risk Free Interest Rate
Dividend Yield
Expected Volatility Rate (1)
Expected Term
Market Share Price
Weighted Average Grant Date Fair Value

(1) Volatility was estimated using historical rates.

US$ Share Units
2020

2021

0.94%
1.66%
106.20%
1.4 yrs
US$33.70
US$38.89

0.20%
2.61%
104.53%
2.3 yrs
US$14.36
US$38.03

2019

1.69%
1.60%
44.98%
2.8 yrs
US$23.45
US$39.84

As at December 31, 2021, there was approximately $0.2 million of unrecognized compensation costs
(2020 - $0.2 million) related to unvested SARs. The costs are expected to be recognized over a weighted average
period of 0.3 years.

C) PERFORMANCE SHARE UNITS

PSUs are granted to eligible employees, which entitle the employee to receive, upon vesting, one share of Ovintiv
common stock for each PSU held or a cash equivalent, at the discretion of the Company. PSUs vest three years from
the date granted, provided the employee remains actively employed with Ovintiv on the vesting date. Based on the
performance assessment, up to a maximum of two times the original PSU grant may be eligible to vest in respect of
the year being measured.

The ultimate value of the PSUs will depend upon Ovintiv’s performance relative to predetermined strategic milestones
as well as the performance of a specified peer group over a three-year period.

122 | 2021 Annual Report

Ovintiv Inc.

The following tables summarize information related to the PSUs:

As at December 31

U.S. Dollar Denominated Outstanding
PSUs

Units
(thousands)

2021
Weighted Average
Grant Date
Fair Value (US$)

2020 (1)

Units
(thousands)

Weighted Average
Grant Date
Fair Value (US$)

Unvested and Outstanding, Beginning of

Year

Granted
Vested and Released (2)
Units, in Lieu of Dividends
Forfeited

Unvested and Outstanding, End of Year

As at December 31

1,886
833
(177)
37
(152)

2,427

21.80
25.80
54.65
20.04
32.96

20.04

773
1,317
(155)
125
(174)

1,886

42.66
13.66
58.75
21.80
20.05

21.80

Canadian Dollar Denominated Outstanding
PSUs

Units
(thousands)

Unvested and Outstanding, Beginning of

Year

Granted
Vested and Released (2)
Units, in Lieu of Dividends
Forfeited

Unvested and Outstanding, End of Year

1,308
293
(137)
20
(261)

1,223

2021
Weighted Average
Grant Date
Fair Value (C$)

2020 (1)

Units
(thousands)

Weighted Average
Grant Date
Fair Value (C$)

34.43
29.34
68.80
26.66
46.13

26.75

810
796
(291)
84
(91)

1,308

62.62
21.08
77.08
34.62
32.40

34.43

(1) During the fourth quarter of 2020, Ovintiv’s Board of Directors resolved to settle the PSUs with the issuance of the
Company’s common stock. As a result, the awards were modified and reclassified as equity-settled awards. The
weighted average modification date fair value of the awards was US$14.85 per share and C$18.83 per share for the
U.S. dollar denominated and Canadian dollar denominated PSUs, respectively.

(2) During the year ended December 31, 2021, performance shares that vested and were cash-settled resulted in

payments of $3 million (2020 - $6 million; 2019 - $64 million).

As at December 31, 2021, there was approximately $42 million of unrecognized compensation costs
(2020 - $27 million) related to unvested PSUs. The costs are expected to be recognized over a weighted average
period of 1.1 years.

D) DEFERRED SHARE UNITS

The Company has in place a program whereby Directors and certain key employees are issued DSUs, which vest
immediately, are equivalent in value to a share of Ovintiv common stock and are settled in cash. DSUs are classified as
a liability and remeasured at the end of each reporting period based on the change in fair value of the Company’s
common stock.

Under the DSU Plan, employees have the option to convert either 25 or 50 percent of their annual bonus award into
DSUs. The number of DSUs converted is based on the value of the award divided by the closing value of Ovintiv’s
share price at the end of the performance period of the bonus award.

For both Directors and employees, DSUs can only be redeemed following departure from Ovintiv in accordance with
the terms of the respective DSU Plan and must be redeemed prior to December 15th of the year following the
departure from Ovintiv.

Ovintiv Inc.

2021 Annual Report | 123

The following table summarizes information related to the DSUs:

(thousands of units)

As at December 31

Vested and Outstanding, Beginning of Year

Granted
Converted from bonus awards
Units, in Lieu of Dividends
Redeemed

Vested and Outstanding, End of Year

E) RESTRICTED SHARE UNITS

U.S. Dollar Denominated
Outstanding DSUs

Canadian Dollar Denominated

Outstanding DSUs

2021

2020

2021

2020

-
5
-
-
-

5

-
-
-
-
-

-

211
8
-
4
(17)

206

217
51
-
15
(72)

211

RSUs are granted to eligible employees and Directors. An RSU is a conditional grant to receive a share of Ovintiv
common stock or a cash equivalent at the Company’s discretion upon vesting of the RSUs and in accordance with the
terms and conditions of the RSU Plans and grant agreements.

RSUs issued to employees before February 2020 vest three years from the date granted, provided the employee
remains actively employed with Ovintiv on the vesting date. Beginning with the RSUs issued in February 2020, all RSU
awards issued to employees will vest over their three-year service period. RSUs issued to Directors fully vest on the
grant date and have no required term of service. The RSUs issued to Directors are settled three years from the date
granted or following the Director’s departure from Ovintiv, whichever is earlier.

The following table summarizes information related to the RSUs:

As at December 31

2021 (1)

2020 (2)

U.S. Dollar Denominated Outstanding

RSUs

Units
(thousands)

Weighted Average
Grant Date
Fair Value (US$)

Units
(thousands)

Weighted Average
Grant Date
Fair Value (US$)

Unvested and Outstanding, Beginning of

Year

Granted
Units, in Lieu of Dividends
Vested and Released (3)
Forfeited

Unvested and Outstanding, End of Year

5,486
1,952
83
(1,720)
(400)

5,401

21.26
23.57
20.93
24.74
21.99

20.92

2,270
4,165
384
(449)
(884)

5,486

43.44
12.72
21.48
54.68
21.11

21.26

As at December 31

2021 (1)

2020 (2)

Canadian Dollar Denominated Outstanding

RSUs

Units
(thousands)

Weighted Average
Grant Date
Fair Value (C$)

Units
(thousands)

Weighted Average
Grant Date
Fair Value (C$)

Unvested and Outstanding, Beginning of

Year

Granted
Units, in Lieu of Dividends
Vested and Released (3)
Forfeited

Unvested and Outstanding, End of Year

2,912
953
41
(1,035)
(250)

2,621

31.76
29.30
28.11
37.63
34.43

28.23

1,669
2,029
206
(433)
(559)

2,912

61.35
17.06
32.01
76.82
32.00

31.76

(1) During the third quarter of 2021, the 2021 annual awards were modified and reclassified as equity-settled awards.
The weighted average modification date fair value of the awards was US$25.66 per share and C$32.07 per share
for the U.S. dollar denominated and Canadian dollar denominated RSUs, respectively.

(2) During the fourth quarter of 2020, Ovintiv’s Board of Directors resolved to settle the RSUs with the issuance of
the Company’s common stock. As a result, the awards were modified and reclassified as equity-settled awards.
The weighted average modification date fair value of the awards was US$14.85 per share and C$18.83 per share
for the U.S. dollar denominated and Canadian dollar denominated RSUs, respectively.

(3) During the year ended December 31, 2021, restricted shares that vested and were cash-settled resulted in

payments of $23 million (2020 - $10 million; 2019 - $85 million).

As at December 31, 2021, there was approximately $43 million of unrecognized compensation costs
(2020 - $43 million) related to unvested RSUs. The costs are expected to be recognized over a weighted average
period of 0.7 years.

124 | 2021 Annual Report

Ovintiv Inc.

23. Pension and Other Post-Employment Benefits

Ovintiv sponsors defined benefit and defined contribution plans, providing pension and other post-employment
benefits (“OPEB”) to its employees in the U.S. and Canada. As of January 1, 2003, the defined benefit pension plan was
closed to new entrants. The average remaining service period of active employees participating in the defined benefit
pension plan is five years and the average remaining life expectancy of inactive employees is 13 years. The average
remaining service period of the active employees participating in the OPEB plan is nine years.

The Company is required to file an actuarial valuation of its pension plans with the provincial regulator at least every
three years, or more frequently if directed by the regulator. The most recent filing was dated December 31, 2019 and
the next required filing is expected to be as at December 31, 2022.

The following tables set forth changes in the benefit obligations and fair value of plan assets for the Company’s
defined benefit pension and other post-employment benefit plans for the years ended December 31, 2021 and 2020, as
well as the funded status of the plans and amounts recognized in the Consolidated Financial Statements as at
December 31, 2021 and 2020.

As at December 31

2021

2020

2021

2020

Defined Benefits

OPEB

Change in Benefit Obligations
Projected Benefit Obligation, Beginning of Year
Service Cost
Interest Cost
Actuarial (Gains) Losses
Exchange Differences
Employee Contributions
Benefits Paid
Plan Amendment
Settlement
Curtailment

Projected Benefit Obligation, End of Year

Change in Plan Assets
Fair Value of Plan Assets, Beginning of Year
Actual Return on Plan Assets
Exchange Differences
Employee Contributions
Employer Contributions
Benefits Paid
Transfers to Defined Contribution Plan
Settlement

Fair Value of Plan Assets, End of Year

Funded Status of Plan Assets, End of Year

Total Recognized Amounts in the

Consolidated Balance Sheet Consist of:

Other Assets
Current Liabilities
Non-Current Liabilities

Total

Total Recognized Amounts in Accumulated
Other Comprehensive Income Consist of:

Net Actuarial (Gains) Losses
Net Prior Service Costs

Total Recognized in Accumulated Other
Comprehensive Income, Before Tax

$

$

$

$

$

$

$

$

$

$

211
-
5
(9)
1
-
(17)
-
-
-

$

209
1
6
16
4
-
(17)
-
(8)
-

$

89
3
2
(8)
-
2
(10)
(11)
-
-

191

$

211

$

67

$

$

193
3
1
-
-
(17)
(4)
-

$

200
17
3
-
-
(17)
(2)
(8)

$

-
-
-
2
8
(10)
-
-

176

$

193

$

-

$

87
4
2
4
1
1
(9)
-
-
(1)

89

-
-
-
1
8
(9)
-
-

-

(15) $

(18) $

(67) $

(89)

$

10
-
(25)

(15) $

$

19
(7)

12

$

$

11
-
(29)

(18) $

$

-
(8)
(59)

(67) $

$

26
(7)

(82) $
7

19

$

(75) $

-
(10)
(79)

(89)

(83)
19

(64)

The accumulated defined benefit obligation for all defined benefit plans was $258 million as at December 31, 2021
(2020 - $299 million).

Ovintiv Inc.

2021 Annual Report | 125

The following table sets forth the defined benefit plans with accumulated benefit obligation and projected benefit
obligation in excess of the fair value of the plan assets:

As at December 31

Projected Benefit Obligation
Accumulated Benefit Obligation
Fair Value of Plan Assets (1)

(1) The Company does not aggregate benefit plans.

Defined Benefits

OPEB

2021

2020

2021

2020

$

$

(63)
(63)
38

$

(69)
(69)
40

$

(67)
(67)
-

(89)
(89)
-

Following are the weighted average assumptions used by the Company in determining the defined benefit pension
and other post-employment benefit obligations:

As at December 31

Defined Benefits

OPEB

2021

2020

2021

2020

Discount Rate
Rates of Increase in Compensation Levels

2.80%
3.13%

2.25%
3.11%

2.54%
6.18%

2.09%
6.28%

The following sets forth total benefit plans expense recognized by the Company:

For the years ended December 31

2021

2020

2019

2021

2020

2019

Pension Benefits

OPEB

Net Defined Periodic Benefit Cost
Defined Contribution Plan Expense

Total Benefit Plans Expense

$

$

-
24

24

$

$

3
28

31

$

$

2
29

31

$

$

(3) $

-

(3) $

2
-

2

$

$

16
-

16

Of the total benefit plans expense, $22 million (2020 - $27 million; 2019 - $31 million) was included in operating
expense and $5 million (2020 - $6 million; 2019 - $9 million) was included in administrative expense. Excluding service
costs, net defined periodic benefit gains of $6 million (2020 - nil; 2019 - costs of $7 million) were recorded in other
(gains) losses, net.

The net defined periodic benefit cost is as follows:

For the years ended December 31

2021

2020

2019

2021

2020

2019

Defined Benefits

OPEB

Service Cost
Interest Cost
Expected Return on Plan Assets
Amounts Reclassified from Accumulated

Other Comprehensive Income:

$

$

-
5
(6)

$

1
6
(7)

$

1
7
(7)

Amortization of net actuarial (gains) and

losses

Amortization of net prior service costs
Curtailment of net prior service costs
Settlement from net prior service costs

Curtailment

Total Net Defined Periodic Benefit Cost (1)

$

1
-
-
-
-

-

$

1
-
-
2
-

3

$

1
-
-
-
-

2

$

3
2
-

(9)
1
-
-
-

(3)

$

$

4
2
-

(10)
2
5
-
(1)

$

2

$

10
4
-

(3)
1
-
-
4

16

(1) The components of total net defined periodic benefit cost, excluding the service cost component, are included in

other (gains) losses, net.

Actuarial gains related to changes in the projected benefit obligations were due to an increase in the discount rate
used to measure the obligations.

126 | 2021 Annual Report

Ovintiv Inc.

The amounts recognized in other comprehensive income are as follows:

For the years ended December 31

2021

2020

2019

2021

2020

2019

Defined Benefits

OPEB

Net Actuarial (Gains) Losses
Net Prior Service Costs from Plan Amendment
Amortization of Net Actuarial Gains and (Losses)
Amortization of Net Prior Service Costs
Curtailment of Net Prior Service Costs
Settlement from Net Prior Service Costs

Total Amounts Recognized in Other Comprehensive

(Income) Loss, Before Tax

Total Amounts Recognized in Other Comprehensive

(Income) Loss, After Tax

$

$

$

(6)
-
(1)
-
-
-

(7)

(5)

$

$

$

6
-
(1)
-
-
(2)

3

3

$

$

$

(6)
-
(1)
-
-
-

(7)

(5)

$

(8)
(11)
9
(1)
-
-

$ (11)

$

(9)

$

$

$

4
-
10
(2)
(5)
-

7

5

$ (52)
31
3
(1)
-
-

$ (19)

$ (15)

Following are the weighted average assumptions used by the Company in determining the net periodic pension and
other post-retirement benefit costs:

For the years ended December 31

2021

2020

2019

2021

Defined Benefits

OPEB

2020

2019

Discount Rate
Long-Term Rate of Return on Plan Assets
Rates of Increase in Compensation Levels

2.25%
3.00%
3.13%

3.00%
3.75%
3.12%

3.50%
4.00%
3.12%

2.08%
-
6.33%

2.90%
-
5.92%

4.16%
-
6.53%

The Company’s assumed health care cost trend rates are as follows:

For the years ended December 31

2021

2020

2019

Health Care Cost Trend Rate for Next Year
Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate)
Year that the Rate Reaches the Ultimate Trend Rate

6.15%
5.00%
2026

6.42%
5.00%
2026

6.61%
5.00%
2026

The Company does not expect to contribute to its defined benefit pension plans in 2022. The Company’s OPEB plans
are funded on an as required basis.

The following provides an estimate of benefit payments for the next 10 years. These estimates reflect benefit increases
due to continuing employee service.

2022
2023
2024
2025
2026
2027 - 2031

Defined Benefit
Pension Payments

Other Benefit
Payments

$

$

14
14
14
13
13
59

8
7
7
6
5
20

Ovintiv Inc.

2021 Annual Report | 127

The Company’s registered and other defined benefit pension plan assets are presented by investment asset category
and input level within the fair value hierarchy as follows:

As at December 31

Investments:
Cash and Cash Equivalents
Fixed Income
Equity

Fair Value of Plan Assets, End of Year

As at December 31

Investments:
Cash and Cash Equivalents
Fixed Income
Equity

Fair Value of Plan Assets, End of Year

2021

Level 1

Level 2

Level 3

Total

19
-
-

19

$

$

$

1
94
62

157

$

2020

-
-
-

-

$

$

20
94
62

176

Level 1

Level 2

Level 3

Total

25
-
-

25

$

$

1
107
60

168

$

$

-
-
-

-

$

$

26
107
60

193

$

$

$

$

Fixed Income investments consist of Canadian bonds issued by investment grade companies. Equity investments
consist of international securities and securities held in the U.S. The fair values of these securities are based on dealer
quotes, quoted market prices and net asset values.

Registered pension plan assets were invested by the Company in the following as at December 31, 2021: 67 percent
Bonds (2020 - 69 percent), and 33 percent U.S. and Foreign Equity (2020 - 31 percent). The expected long-term rate
of return is 3.50 percent. The expected rate of return on pension plan assets is based on historical and projected rates
of return for each asset class in the plan investment portfolio. The actual return on plan assets was $3 million
(2020 - $17 million). The asset allocation structure is subject to diversification requirements and constraints, which
reduce risk by limiting exposure to individual equity investment, credit rating categories and foreign currency
exposure.

128 | 2021 Annual Report

Ovintiv Inc.

24. 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. Fair value information related to pension plan assets is included in Note 23.

Recurring fair value measurements are performed for risk management assets and liabilities and other derivative
contracts, as discussed further in Note 25. These items are carried at fair value in the 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 December 31, 2021

Risk Management Assets
Commodity Derivatives:
Current assets
Long-term assets

Foreign Currency Derivatives:

Current assets

Risk Management Liabilities
Commodity Derivatives:
Current liabilities
Long-term liabilities
Foreign Currency Derivatives:

Current liabilities

Other Derivative Contracts (2)

Current in accounts receivable

and accrued revenues

Current in accounts payable and

accrued liabilities

Long-term in other liabilities and

provisions

As at December 31, 2020

Risk Management Assets
Commodity Derivatives:
Current assets
Long-term assets

Foreign Currency Derivatives:

Current assets

Risk Management Liabilities
Commodity Derivatives:
Current liabilities
Long-term liabilities

Other Derivative Contracts (2)

Current in accounts payable and

accrued liabilities

Long-term in other liabilities and

provisions

Level 1
Quoted
Prices in
Active
Markets

Level 2
Other
Observable
Inputs

Level 3
Significant
Unobservable
Inputs

Total Fair

Value Netting (1)

Carrying
Amount

$

$

- $
-

-

- $
-

-

10 $

1

5

536 $

26

-

-
-

-

181
-

-

$

10 $

1

5

(10) $
(1)

(4)

-
-

1

$

717 $

26

-

(10) $
(1)

(4)

707
25

(4)

$

- $

- $

9

$

9 $

-

-

1

5

-

-

1

5

$

-

-

-

9

1

5

Level 1
Quoted
Prices in
Active
Markets

Level 2
Other
Observable
Inputs

Level 3
Significant
Unobservable
Inputs

Total Fair

Value Netting (1)

Carrying
Amount

$

$

$

- $
-

-

70 $

7

26

1 $
-

114 $
128

- $

-

1 $

7

-
-

-

74
-

-

-

$

70 $

7

26

(59) $
(3)

-

11
4

26

$

$

189 $
128

(59) $
(3)

130
125

1 $

7

$

-

-

1

7

(1) Netting to offset derivative assets and liabilities where the legal right and intention to offset exists, or where

counterparty master netting arrangements contain provisions for net settlement.

(2) Includes credit derivatives and contingent consideration associated with certain previous and current year

divestitures, respectively.

Ovintiv Inc.

2021 Annual Report | 129

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, NYMEX call options, foreign currency swaps and basis swaps with
terms to 2025. Level 2 also includes financial guarantee contracts as discussed in Note 25. 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.

Level 3 Fair Value Measurements

As at December 31, 2021, the Company’s Level 3 risk management assets and liabilities consist of WTI three-way
options and contingent consideration derivative contracts tied to WTI with terms to 2022. The WTI three-way options
are a combination of a sold call, 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 downside price
protection through the put options. The fair values of these contracts are determined using an option pricing model
using observable and unobservable inputs such as implied volatility. The unobservable inputs are obtained from third
parties whenever possible and reviewed by the Company for reasonableness.

A summary of changes in Level 3 fair value measurements for risk management positions is presented below:

Balance, Beginning of Year
Total Gains (Losses)
Purchases, Sales, Issuances and Settlements:

Purchases, sales and issuances (1)
Settlements

Transfers Out of Level 3

Balance, End of Year

Change in Unrealized Gains (Losses) During the

Year Included in Net Earnings (Loss)

Risk Management

2021

2020

$

$

$

$

(74)
(708)

6
604
-

(172)

$

(52)
131

-
(153)
-

(74)

(104)

$

(22)

(1) Relates to the contingent consideration associated with the Duvernay divestiture discussed in Note 9.

Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at
December 31, 2021:

Valuation Technique Unobservable Input

Range

Weighted
Average (1)

Risk Management - WTI Options

Option Model

Implied Volatility

40% - 67%

48%

(1) Unobservable inputs were weighted by the relative fair value of the instruments.

A 10 percent increase or decrease in implied volatility for the WTI options would cause an approximate corresponding
$15 million (2020 - $6 million) increase or decrease to net risk management assets and liabilities.

130 | 2021 Annual Report

Ovintiv Inc.

25. 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 cash flow variability from commodity prices
and fluctuating 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 future cash
flows. 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 of 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 December 31, 2021, Ovintiv has entered into $400 million notional U.S. dollar denominated currency
swaps at an average exchange rate of C$1.2848 to US$1, which mature monthly throughout 2022.

Ovintiv Inc.

2021 Annual Report | 131

RISK MANAGEMENT POSITIONS AS AT DECEMBER 31, 2021

Oil and NGL Contracts
Fixed Price Contracts

WTI Fixed Price

WTI Three-Way Options

Notional Volumes

Term

Average Price

Fair Value

5.0 Mbbls/d

2022

60.16

$

(22)

US$/bbl

Sold call / bought put / sold put

75.0 Mbbls/d

70.79 / 60.82 / 49.33

2022

2022

365 MMcf/d

2022

US$/Mcf

2.60

(181)

-

(203)

(144)

Basis Contracts (1)

Oil and NGLs Fair Value Position

Natural Gas Contracts
Fixed Price Contracts

NYMEX Fixed Price

NYMEX Three-Way Options

Sold call / bought put / sold put

398 MMcf/d

2022

3.02 / 2.75 / 2.00

(105)

NYMEX Costless Collars

Sold call / bought put

NYMEX Call Options

Sold call

Basis Contracts (2)

Other Financial Positions

Natural Gas Fair Value Position

Other Derivative Contracts
Fair Value Position (3)

Foreign Currency Contracts
Fair Value Position (4)

Total Fair Value Position

200 MMcf/d

2022

2.85 / 2.55

330 MMcf/d

2022

2.38

2022
2023
2024 - 2025

2022

(64)

(159)

(33)
(13)
(12)

1

(529)

3

5

$

(724)

(1) Ovintiv has entered into oil differential swaps associated with Canadian condensate and WTI.
(2) Ovintiv has entered into natural gas basis swaps associated with AECO, Dawn, Malin, Waha, Houston Ship Channel

and NYMEX.

(3) Includes credit derivatives and contingent consideration associated with certain previous and current year

divestitures, respectively.

(4) Ovintiv has entered into U.S. dollar denominated fixed-for-floating average currency swaps to protect against

fluctuations between the Canadian and U.S. dollars.

132 | 2021 Annual Report

Ovintiv Inc.

EARNINGS IMPACT OF REALIZED AND UNREALIZED GAINS (LOSSES) ON RISK MANAGEMENT POSITIONS

For the years ended December 31

2021

2020

2019

Realized Gains (Losses) on Risk Management
Commodity and Other Derivatives:

Revenues (1)

Foreign Currency Derivatives:

Foreign exchange

Unrealized Gains (Losses) on Risk Management
Commodity and Other Derivatives:

Revenues (2)

Foreign Currency Derivatives:

Foreign exchange

Total Realized and Unrealized Gains (Losses) on Risk Management,

net

Commodity and Other Derivatives:

Revenues (1) (2)

Foreign Currency Derivatives:

Foreign exchange

$

$

$

$

$

$

(1,395)

33

(1,362)

(488)

(21)

(509)

(1,883)

12

(1,871)

$

$

$

$

$

$

711

(1)

710

(204)

13

(191)

507

12

519

$

$

$

$

$

$

369

3

372

(730)

34

(696)

(361)

37

(324)

(1) Includes a realized gain of $1 million for the year ended December 31, 2021 (2020 - gain of $2 million; 2019 - gain of

$6 million) related to other derivative contracts.

(2) Includes an unrealized gain of $4 million for the year ended December 31, 2021 (2020 - loss of $1 million; 2019 -

loss of $1 million) related to other derivative contracts.

RECONCILIATION OF UNREALIZED RISK MANAGEMENT POSITIONS FROM JANUARY 1 TO DECEMBER 31

2021

2020

2019

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 Year

Settlement of Other Derivative Contracts
Fair Value of Other Derivative Contract Assets Entered

into During the Year (See Note 9)

Fair Value of Contracts Realized During the Year

Fair Value

$

(222)

(1,871)
1

6
1,362

Total
Unrealized
Gain (Loss)

Total
Unrealized
Gain (Loss)

Total
Unrealized
Gain (Loss)

$

(1,871)

$

519

$

(324)

Fair Value of Contracts Outstanding, End of Year

$

(724)

$

(509)

$

(191)

$

1,362

(710)

(372)

(696)

Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair
value. See Note 24 for a discussion of fair value measurements.

Ovintiv Inc.

2021 Annual Report | 133

UNREALIZED RISK MANAGEMENT POSITIONS

As at December 31

Risk Management Assets

Current
Long-term

Risk Management Liabilities

Current
Long-term

Other Derivative Contract Assets

Current in accounts receivable and accrued revenues

Other Derivative Contract Liabilities

Current in accounts payable and accrued liabilities
Long-term in other liabilities and provisions

2021

2020

$

$

1
-

1

703
25

728

9

9

1
5

6

37
4

41

130
125

255

-

-

1
7

8

Net Risk Management Assets (Liabilities) and Other Derivative Contracts

$

(724)

$

(222)

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 December 31, 2021, Ovintiv’s maximum exposure of loss due to credit risk from
derivative financial instrument assets on a gross and net fair value basis was $25 million and $10 million, respectively,
as disclosed in Note 24. The Company had no significant credit derivatives in place and held no collateral at
December 31, 2021.

As at December 31, 2021, cash equivalents include high-grade, short-term securities, placed primarily with financial
institutions with strong 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 December 31, 2021, approximately 90 percent
(2020 - 89 percent) of Ovintiv’s accounts receivable and financial derivative credit exposures were with investment
grade counterparties.

During 2015 and 2017, the Company entered into agreements resulting from divestitures, which may require 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 include events where a purchaser fails to
make payment to the guaranteed party and/or a purchaser is subject to an insolvency event. The agreements expire
in June 2024 with a fair value recognized of $6 million as at December 31, 2021 (2020 - $8 million). The maximum
potential amount of undiscounted future payments is $57 million as at December 31, 2021, and is considered unlikely.

134 | 2021 Annual Report

Ovintiv Inc.

26. Supplementary Information

Supplemental disclosures to the Consolidated Statement of Cash Flows are presented below:

A) NET CHANGE IN NON-CASH WORKING CAPITAL

For the years ended December 31

2021

2020

2019

Operating Activities

Accounts receivable and accrued revenues
Accounts payable and accrued liabilities
Current portion of operating lease liabilities
Income tax receivable and payable

B) NON-CASH ACTIVITIES

For the years ended December 31

Non-Cash Operating Activities

ROU operating lease assets and liabilities (See Note 14)

Non-Cash Investing Activities

Asset retirement obligation incurred (See Note 17)
Asset retirement obligation change in estimated future cash

outflows (See Note 17)

Property, plant and equipment accruals
Capitalized long-term incentives
Property additions/dispositions (swaps)
Contingent consideration (See Note 9)

Non-Cash Financing Activities

$

$

$

$

$

(333)
275
(7)
24

$

146
(26)
(11)
30

(41)

$

139

$

109
(44)
49
(27)

87

2021

2020

2019

(23)

8

5
(9)
8
34
6

$

$

(10) $

(20)

7

$

15

(49)
(175)
(16)
229
-

47
(78)
(27)
159
-

Common shares issued in conjunction with the Newfield business

combination (See Note 8)

$

-

$

-

$

(3,478)

On September 1, 2020, Ovintiv closed an agreement with PetroChina Canada Ltd. (“PCC”) to terminate its joint
venture with PCC and transfer the ownership and operation of certain Duvernay shale assets in west central Alberta. In
connection with the closing, Ovintiv and PCC agreed to partition the Duvernay acreage and associated infrastructure.
For the year ended December 31, 2020, property additions/dispositions (swaps) included a $203 million non-cash
swap related to the Duvernay partition.

C)

SUPPLEMENTARY CASH FLOW INFORMATION

For the years ended December 31

2021

2020

2019

Interest Paid
Income Taxes (Recovered), net of Amounts Paid

$
$

370
(176)

$
$

385
$
(52) $

415
(22)

27. Commitments and Contingencies

COMMITMENTS

The following table outlines the Company’s commitments as at December 31, 2021:

(undiscounted)

2022

2023

2024

2025

2026

Thereafter

Total

Expected Future Payments

Transportation and Processing
Drilling and Field Services
Building Leases

Total

Ovintiv Inc.

$

$

750
87
10

847

$

$

736
-
9

745

$

$

581
-
8

589

$

$

436
-
8

444

$

$

422
-
2

424

$

$

1,926
-
-

1,926

$

$

4,851
87
37

4,975

2021 Annual Report | 135

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. See Note 14 for additional disclosures on
leases.

Included within transportation and processing in the table above are certain commitments associated with midstream
service agreements with VMLP as described in Note 20. Divestiture transactions can reduce certain commitments
disclosed above.

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 certain of these matters are in early stages or
are subject to a number of uncertainties. For material matters that the Company believes an unfavorable outcome is
reasonably possible, the Company discloses the nature and a range of potential exposures. 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.

28. Supplementary Oil and Gas Information (unaudited)

The unaudited supplementary information on oil and natural gas exploration and production activities for 2021, 2020
and 2019 has been presented in accordance with the FASB’s ASC Topic 932, “Extractive Activities - Oil and Gas” and
the SEC’s final rule, “Modernization of Oil and Gas Reporting”. Disclosures by geographic area include the United
States and Canada.

Proved Oil and Natural Gas Reserves

The following reserves disclosures reflect estimates of proved reserves, proved developed reserves, and proved
undeveloped reserves, net of third-party royalty interests of oil, NGLs and natural gas owned at each year end and
changes in proved reserves during each of the last three years.

The Company’s estimates of proved reserves are made using available geological and reservoir data as well as
production performance data. These estimates are reviewed annually by internal reservoir engineers and revised,
either upward or downward, as warranted by additional data. The results of infill drilling are treated as positive
revisions due to increases to expected recovery. Other revisions are due to changes in, among other things,
development plans, reservoir performance, commodity prices, economic conditions, and government restrictions.
Estimates of proved reserves are inherently imprecise and are continually subject to revision based on production
history, results of additional exploration and development, price changes and other factors.

The following reference prices were utilized in the determination of reserves and future net revenue:

Reserves Pricing (1)

2021

2020
2019

Oil & NGLs

Natural Gas

WTI
($/bbl)

Edmonton
Condensate
(C$/bbl)

Henry Hub
($/MMBtu)

AECO
(C$/MMBtu)

$

66.56

39.62
55.93

$

83.69

49.77
68.80

$

3.60

1.98
2.58

$

3.26

2.13
1.76

(1) All prices were held constant in all future years when estimating net revenues and reserves.

136 | 2021 Annual Report

Ovintiv Inc.

PROVED RESERVES (1)
(12-MONTH AVERAGE TRAILING PRICES)

2019
Beginning of year

Revisions and improved

recovery (2)

Extensions and discoveries
Purchase of reserves in place
Sale of reserves in place
Production

End of year

Developed
Undeveloped

Total

2020
Beginning of year

Revisions and improved

recovery (2)

Extensions and discoveries
Purchase of reserves in place
Sale of reserves in place
Production

End of year

Developed
Undeveloped

Total

2021
Beginning of year

Revisions and improved

recovery (2)

Extensions and discoveries
Purchase of reserves in place
Sale of reserves in place
Production

End of year

Developed
Undeveloped

Total

Oil
(MMbbls)

NGLs
(MMbbls)

Natural Gas
(Bcf)

Total
(MMBOE)

United
States Canada Total

United
States Canada Total

United
States Canada Total

351.5

0.2 351.8

122.3

158.5 280.8

598

2,901 3,499

1,215.7

(56.4)
230.2
262.0
(5.1)
(59.8)

722.4

291.0
431.4

722.4

0.8
(55.6)
0.4 230.6
- 262.0
(5.1)
-
(60.0)
(0.2)

3.1
96.0
217.2
(0.5)
(28.6)

(20.2) (17.1)
62.4 158.4
- 217.2
(0.5)
-
(21.6) (50.2)

(31)
521
1,904
(351)
(200)

(484)
(515)
777 1,298
- 1,904
(351)
-
(576)
(376)

(158.7)
605.3
796.6
(64.1)
(206.2)

1.3 723.7

409.4

179.1 588.5

2,441

2,818 5,259

2,188.8

1.2 292.2
0.1 431.5

211.3
198.1

68.4 279.8
110.7 308.8

1,375
1,066

1,439 2,815
1,378 2,444

1,041.1
1,147.7

1.3 723.7

409.4

179.1 588.5

2,441

2,818 5,259

2,188.8

722.4

1.3 723.7

409.4

179.1 588.5

2,441

2,818 5,259

2,188.8

(221.5)
144.3
9.9
(9.3)
(55.2)

590.5

279.1
311.4

590.5

(0.5) (222.0)
0.1 144.4
10.9
1.0
(9.3)
-
(55.4)
(0.2)

(29.1)
78.1
8.4
(7.9)
(29.8)

(33.1) (62.2)
27.7 105.8
11.6
20.0
(13.4) (21.4)
(20.5) (50.3)

(323)
392
47
(95)
(194)

(161)
372
94
(106)
(366)

(484)
764
140
(201)
(560)

(364.9)
377.5
54.3
(64.1)
(199.0)

1.7 592.3

429.1

151.4 580.5

2,268

2,650 4,918

1,992.5

1.7 280.9
- 311.4

242.3
186.7

76.9 319.3
74.5 261.2

1,327
941

1,740 3,067
910 1,851

1,111.3
881.1

1.7 592.3

429.1

151.4 580.5

2,268

2,650 4,918

1,992.5

590.5

1.7 592.3

429.1

151.4 580.5

2,268

2,650 4,918

1,992.5

(78.7)
121.2
2.6
(27.0)
(51.1)

557.5

291.0
266.6

557.5

0.7
(78.0)
0.3 121.5
2.6
(28.6)
(51.2)

-
(1.6)
(0.1)

(30.0)
75.1
1.6
(12.6)
(28.5)

(20.3) (50.3)
66.9 142.0
0.9
2.5
(8.4) (21.0)
(20.5) (49.0)

61
428
7
(50)
(179)

302

363
1,538 1,966
13
(123)
(568)

6
(73)
(389)

(67.8)
591.2
7.3
(70.2)
(194.9)

1.1 558.6

434.7

170.0 604.7

2,536

4,033 6,570

2,258.2

0.7 291.7
0.3 266.9

264.3
170.5

84.5 348.8
85.4 255.9

1,621
915

2,490 4,111
1,543 2,458

1,325.7
932.5

1.1 558.6

434.7

170.0 604.7

2,536

4,033 6,570

2,258.2

(1) Numbers may not add due to rounding.
(2) Changes in reserve estimates resulting from application of improved recovery techniques are included in revisions

of previous estimates.

Definitions:
a.

“Proved” oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering
data, can be estimated with reasonable certainty to be economically producible from a given date forward, from
known reservoirs, and under existing economic conditions, operating methods and government regulations.
“Developed” oil and gas reserves are reserves of any category that are expected to be recovered through existing
wells with existing equipment and operating methods or in which the cost of the required equipment is relatively
minor compared to the cost of a new well.
“Undeveloped” oil and gas reserves are reserves of any category that are expected to be recovered from new
wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

b.

c.

Ovintiv Inc.

2021 Annual Report | 137

Total Proved reserves increased 265.7 MMBOE including production of 194.9 MMBOE in 2021 due to the following:

• Revisions and improved recovery of oil, NGLs and natural gas were negative primarily due to changes in the
approved development plan of 396.1 MMBOE, partially offset by positive performance revisions of 160.6
MMBOE, higher 12-month average trailing prices of 144.5 MMBOE and 23.2 MMBOE from infill drilling locations.

• Extensions and discoveries of oil, NGLs and natural gas increased proved reserves by 591.2 MMBOE due to
successful drilling and technical delineation, as well as new proved undeveloped locations resulting from
updated development plans in the Montney, Permian and Anadarko assets.

• Purchases of 7.3 MMBOE were primarily in the Permian asset and a result of acreage trades.

• Sale of reserves in place decreased proved developed reserves by 70.2 MMBOE primarily due to the divestitures

of the Eagle Ford assets located in south Texas and the Duvernay assets located in west central Alberta.

Total Proved reserves decreased 196.3 MMBOE including production of 199.0 MMBOE in 2020 due to the following:

• Revisions and improved recovery of oil, NGLs and natural gas were negative primarily due to changes in the
approved development plan of 382.2 MMBOE and lower 12-month average trailing prices of 167.1 MMBOE,
partially offset by positive revisions from well performance and development strategy changes of 182.0 MMBOE
and from infill drilling locations of 2.4 MMBOE.

• Extensions and discoveries of oil, NGLs and natural gas increased proved reserves by 377.5 MMBOE due to
successful drilling and technical delineation, as well as new proved undeveloped locations resulting from
development plan changes in the Permian, Montney, Anadarko and Uinta assets.

• Purchases of 54.3 MMBOE were primarily in the Permian asset and a result of the partition of certain Duvernay

shale assets between Ovintiv and PCC.

• Sale of reserves in place decreased proved developed reserves by 64.1 MMBOE primarily due to divestitures in
the Anadarko and Permian assets, and the partition of certain Duvernay shale assets between Ovintiv and PCC.

Total Proved reserves increased 973.1 MMBOE including production of 206.2 MMBOE in 2019 due to the following:

• Revisions and improved recovery of oil, NGLs and natural gas were negative primarily due to changes in the
approved development plan of 97.5 MMBOE and lower 12-month average trailing oil and NGL prices of 118.4
MMBOE, partially offset by positive performance revisions of 57.3 MMBOE resulting from well performance and
development strategy.

• Extensions and discoveries of oil, NGLs and natural gas increased proved reserves by 605.3 MMBOE due to the

extension of proved acreage primarily from successful drilling and delineation in the Permian, Anadarko,
Montney, Eagle Ford, Bakken and Duvernay assets.

• Purchases of 796.6 MMBOE were primarily in the acquisition of Newfield Exploration.

• Sale of reserves in place decreased proved developed reserves by 64.1 MMBOE primarily due to the divestiture

of the Arkoma asset located in Oklahoma.

138 | 2021 Annual Report

Ovintiv Inc.

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS
RESERVES

In calculating the standardized measure of discounted future net cash flows, constant price and cost assumptions
were applied to Ovintiv’s annual future production from proved reserves to determine cash inflows. Estimates of
future net cash flows from proved reserves are computed based on the average beginning-of-the-month prices during
the 12-month period for the year. Future production and development costs include estimates for abandonment and
dismantlement costs associated with asset retirement obligations and assume the continuation of existing economic,
operating and regulatory conditions. Future income taxes are calculated by applying statutory income tax rates to
future pre-tax cash flows after provision for the tax cost of the oil and natural gas properties based upon existing laws
and regulations. The effect of tax credits is also considered in determining the income tax expense. The discount was
computed by application of a 10 percent discount factor to the future net cash flows.

Ovintiv cautions that the discounted future net cash flows relating to proved oil and gas reserves are an indication of
neither the fair market value of Ovintiv’s oil and gas properties, nor the future net cash flows expected to be
generated from such properties. The discounted future net cash flows do not include the fair market value of
exploratory properties and probable or possible oil and gas reserves, nor is consideration given to the effect of
anticipated future changes in oil and natural gas prices, development, asset retirement and production costs, and
possible changes to tax and royalty regulations. The prescribed discount rate of 10 percent may not appropriately
reflect future interest rates.

Future Cash Inflows
Less Future:

Production costs
Development costs
Income taxes

Future Net Cash Flows

United States

Canada

2021

2020

2019

2021

2020

2019

$ 51,473

$ 26,093 $ 46,076

$ 18,312

$

7,156 $ 10,404

12,272
5,767
5,480

27,954

8,864
6,187
74

10,968

13,064
10,795
2,262

19,955

7,679
2,061
1,695

6,877

2,393

4,202
1,859
-

1,095

4,791
3,024
-

2,589

246

1,014

Less 10% annual discount for estimated

timing of cash flows

13,663

5,895

9,914

Discounted Future Net Cash Flows

$ 14,291

$

5,073 $ 10,041

$

4,484

$

849 $

1,575

Future Cash Inflows
Less Future:

Production costs
Development costs
Income taxes

Future Net Cash Flows

Less 10% annual discount for

estimated timing of cash flows

Discounted Future Net Cash Flows

Total

2021

2020

2019

$ 69,785

$ 33,249 $ 56,480

19,951
7,828
7,175

34,831

13,066
8,046
74

12,063

17,855
13,819
2,262

22,544

16,056

6,141

10,928

$ 18,775

$

5,922 $ 11,616

Ovintiv Inc.

2021 Annual Report | 139

CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVES

Balance, Beginning of Year
Changes Resulting From:

Sales of oil and gas produced during

the year

Discoveries and extensions, net of

related costs

Purchases of proved reserves in place
Sales and transfers of proved reserves

in place

Net change in prices and production

costs

Revisions to quantity estimates
Accretion of discount
Development costs incurred during

the year

Changes in estimated future

development costs

Other
Net change in income taxes

United States

Canada

2021

2020

2019

2021

2020

2019

$

5,073

$ 10,041

$

6,950

$

849

$ 1,575

$ 2,654

(3,608)

(1,605)

(2,893)

(1,479)

(405)

(654)

3,102
63

1,080
98

2,893
5,581

2,119
13

(199)

(255)

(931)

(38)

10,702
(407)
508

(7,119)
(2,346)
1,064

(2,629)
(850)
749

1,139

1,341

2,115

(83)
1
(2,000)

2,183
-
591

(885)
-
(59)

3,266
201
85

397

41
-
(970)

140
44

(97)

544
-

-

(1,563)
(188)
158

(1,219)
(550)
297

535

652
(2)
-

545

(364)
1
321

Balance, End of Year

$ 14,291

$

5,073

$ 10,041

$ 4,484

$

849

$ 1,575

Balance, Beginning of Year
Changes Resulting From:

Sales of oil and gas produced during

the year

Discoveries and extensions, net of

related costs

Purchases of proved reserves in place
Sales and transfers of proved reserves

in place

Net change in prices and production

costs

Revisions to quantity estimates
Accretion of discount
Development costs incurred during

the year

Changes in estimated future

development costs

Other
Net change in income taxes

Balance, End of Year

Total

2021

2020

2019

$

5,922

$ 11,616

$

9,604

(5,087)

(2,010)

(3,547)

5,221
76

1,220
142

3,437
5,581

(237)

(352)

(931)

13,968
(206)
593

(8,682)
(2,534)
1,222

(3,848)
(1,400)
1,046

1,536

1,876

2,660

(42)
1
(2,970)

2,835
(2)
591

(1,249)
1
262

$ 18,775

$ 5,922

$ 11,616

140 | 2021 Annual Report

Ovintiv Inc.

RESULTS OF OPERATIONS

The following table sets forth revenue and direct cost information relating to the Company’s oil and gas exploration
and production activities.

United States

2021

2020

2019

2021

Canada
2020

2019

Oil, NGL and Natural Gas Revenues (1)
Less:

Production, mineral and other taxes
Transportation and processing
Operating
Depreciation, depletion and amortization
Impairments
Accretion of asset retirement obligation

Operating Income (Loss)
Income Taxes

Results of Operations

$ 4,883

$ 2,701

$

4,163

$ 2,542

$ 1,349

$ 1,654

278
507
490
837
-
11

2,760
673

158
453
485
1,378
5,580
13

(5,366)
(1,309)

238
466
566
1,593
-
15

1,285
313

15
937
111
332
-
11

1,136
272

15
829
100
427
-
16

(38)
(9)

$ 2,087

$ (4,057) $

972

$

864

$

(29) $

16
859
125
383
-
21

250
60

190

2021

China (2)
2020

2019

2021

2020

2019

Total

Oil, NGL and Natural Gas Revenues (1)
Less:

Production, mineral and other taxes
Transportation and processing
Operating
Depreciation, depletion and amortization
Impairments
Accretion of asset retirement obligation

Operating Income (Loss)
Income Taxes

Results of Operations

$

$

-

-
-
-
-
-
-

-
-

-

$

$

-

-
-
-
-
-
-

-
-

-

$

$

37

-
-
16
-
-
1

20
4

16

$ 7,425

$ 4,050

$ 5,854

293
1,444
601
1,169
-
22

3,896
945

173
1,282
585
1,805
5,580
29

(5,404)
(1,318)

254
1,325
707
1,976
-
37

1,555
377

$ 2,951

$ (4,086) $ 1,178

(1) Excludes gains (losses) on risk management.
(2) Effective July 31, 2019, the production sharing contract with CNOOC was terminated and the Company exited its

China Operations.

CAPITALIZED COSTS

Capitalized costs include the cost of properties, equipment and facilities for oil and natural gas producing activities.
Capitalized costs for proved properties include costs for oil and natural gas leaseholds where proved reserves have
been identified, development wells and related equipment and facilities, including development wells in progress.
Capitalized costs for unproved properties include costs for acquiring oil and natural gas leaseholds where no proved
reserves have been identified.

United States

2021

2020

2019

2021

Canada
2020

2019

Proved Oil and Gas Properties
Unproved Oil and Gas Properties

Total Capital Cost

Accumulated DD&A

Net Capitalized Costs

$ 39,145 $ 37,875 $ 35,870
3,491

2,785

1,884

$ 16,330 $ 16,008
177

60

$ 15,284
223

41,029

33,418

40,660

32,581

39,361

25,623

16,390

15,450

16,185

15,056

15,507

14,320

$

7,611 $

8,079 $ 13,738

$

940 $

1,129

$

1,187

Other

Total

2021

2020

2019

2021

2020

2019

Proved Oil and Gas Properties
Unproved Oil and Gas Properties

Total Capital Cost
Accumulated DD&A

Net Capitalized Costs

$

$

- $
-

-
-

- $
-

-
-

56
-

56
56

$ 55,475 $ 53,883
2,962

1,944

$ 51,210
3,714

57,419
48,868

56,845
47,637

54,924
39,999

- $

- $

-

$

8,551 $

9,208

$ 14,925

Ovintiv Inc.

2021 Annual Report | 141

COSTS INCURRED

Costs incurred includes both capitalized costs and costs charged to expense when incurred. Costs incurred also
includes internal costs directly related to acquisition, exploration, and development activities, new asset retirement
costs established in the current year as well as increases or decreases to the asset retirement obligations resulting
from changes to cost estimates during the year.

United States

Canada

2021

2020

2019

2021

2020

2019

$

$

Acquisition Costs
Unproved
Proved

Total Acquisition Costs
Exploration Costs
Development Costs

Total Costs Incurred

Acquisition Costs
Unproved
Proved

Total Acquisition Costs
Exploration Costs
Development Costs

Total Costs Incurred

$

2
9

$

16
3

11
10
1,148

1,169

19
12
1,352

$

843
5,963

6,806
5
2,129

$

1,383

$

8,940

$

$

-
-

-
5
388

393

2021

2
9

11
15
1,536

$

$

$

$

$

$

-
-

-
-
353

353

Total

2020

16
3

19
12
1,705

-
-

-
-
480

480

2019

843
5,963

6,806
5
2,609

$

1,562

$

1,736

$

9,420

COSTS NOT SUBJECT TO DEPLETION OR AMORTIZATION

Upstream costs in respect of significant unproved properties are excluded from the country cost center’s depletable
base as follows:

As at December 31

United States
Canada

2021

1,884
60

1,944

$

$

2020

2,785
177

2,962

$

$

The following is a summary of the costs related to Ovintiv’s unproved properties as at December 31, 2021:

Acquisition Costs
Exploration Costs

2021

2020

2019

Prior to
2019

Total

$

$

2
11

13

$

$

22
7

29

$ 810
3

$ 813

$

$

954
135

$ 1,788
156

1,089

$ 1,944

Acquisition costs primarily include costs incurred to acquire or lease properties. Exploration costs primarily include
costs related to geological and geophysical studies and unevaluated costs associated with drilling and equipping
exploratory wells. Ultimate recoverability of these costs and the timing of inclusion within the applicable country cost
center’s depletable base is dependent upon either the finding of proved oil, NGL and natural gas reserves, expiration
of leases or recognition of impairments.

142 | 2021 Annual Report

Ovintiv Inc.

The $1.9 billion of oil and natural gas properties not subject to depletion or amortization primarily includes leasehold
and mineral costs related to the acquisition of Permian, Anadarko and Bakken. These acquisition costs are associated
with acquired acreage for which proved reserves have yet to be assigned from future development. The Company
continually assesses the development timeline of the acquired acreage. The timing and amount of the transfer of
property acquisition costs into the depletable base are based on several factors and may be subject to changes over
time from drilling plans, drilling results, availability of capital, project economics and other assessments of the
property. The inclusion of these acquisition costs in the depletable base is expected to occur within two to three
years. The remaining costs excluded from depletion are related to properties which are not individually significant.

Ovintiv Inc.

2021 Annual Report | 143

Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The financial statements for the fiscal years ended December 31, 2021, 2020, and 2019, included in this Annual Report
on Form 10-K, have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm,
as stated in their audit report appearing herein. There have been no changes in or disagreements with the accountants
during the periods presented.

Item 9A: Controls and Procedures

EVALUATION AND DISCLOSURE CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer and Chief Financial Officer performed an evaluation 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 are effective as of
December 31, 2021.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

See “Management’s Assessment of Internal Control Over Financial Reporting” under Item 8 of this Annual Report on
Form 10-K.

ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

See “Report of Independent Registered Public Accounting Firm” under Item 8 of this Annual Report on Form 10-K.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in the Company’s internal control over financial reporting during the fourth quarter of
2021 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting. See “Management’s Assessment of Internal Control Over Financial Reporting” under Item 8 of this Annual
Report on Form 10-K.

Item 9B. Other Information

None.

144 | 2021 Annual Report

Ovintiv Inc.

Item 10. Directors, Executive Officers and Corporate Governance

DIRECTORS AND EXECUTIVE OFFICERS

PART III

Information regarding the Board of Directors is set forth in the Proxy Statement relating to the Company’s 2022
annual meeting of shareholders, which is incorporated herein by reference.

Information regarding the Company’s executive officers is set forth in the section entitled “Executive Officers of the
Registrant” under Items 1 and 2 of this Annual Report on Form 10-K.

CODE OF ETHICS

Ovintiv has adopted a code of ethics entitled the “Business Code of Conduct” (the “Code of Ethics”), that applies to its
principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing
similar functions. The Code of Ethics is available for viewing on Ovintiv’s website at
www.ovintiv.com/policies-and-practices, and is available in print to any shareholder who requests it. Requests for copies
of the Code of Ethics should be made by contacting Ovintiv’s Corporate Secretary by mail at Suite 1700, 370 17th Street,
Denver, Colorado, 80202, U.S.A. or by telephone at (303) 623-2300. Ovintiv intends to disclose and summarize any
amendment to, or waiver from, any provision of the Code of Ethics that is required to be so disclosed and summarized,
on its website at www.ovintiv.com/policies-and-practices.

Item 11. Executive Compensation

The information required by this Item 11 is set forth in the Proxy Statement relating to the Company’s 2022 annual
meeting of shareholders, which is incorporated herein by reference.

The executive compensation and related information incorporated by reference herein shall not be deemed “soliciting
material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing
under the Securities Act or Exchange Act, except to the extent that the Company specifically incorporates it by
reference into such filing.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information required by this Item 12 is set forth in the Proxy Statement relating to the Company’s 2022 annual
meeting of shareholders, which is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item 13 is set forth in the Proxy Statement relating to the Company’s 2022 annual
meeting of shareholders, which is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The information required by this Item 14 is set forth in the Proxy Statement relating to the Company’s 2022 annual
meeting of shareholders, which is incorporated herein by reference.

Ovintiv Inc.

2021 Annual Report | 145

Item 15. Exhibits and Financial Statement Schedules

PART IV

The following documents are filed as part of this Annual Report on Form 10-K or incorporated by reference:

1. Consolidated Financial Statements

Reference is made to the Consolidated Financial Statements and notes thereto appearing in Item 8 of this Annual
Report on Form 10-K.

2. Consolidated Financial Statement Schedules

All financial statement schedules are omitted as they are inapplicable, or the required information has been included in
the Consolidated Financial Statements or notes thereto.

3. Exhibits

Exhibits are listed in the exhibit index below. The exhibits include management contracts, compensatory plans and
arrangements required to be filed as exhibits to the Annual Report on Form 10-K by Item 601(b)(10)(iii) of Regulation
S-K.

Exhibit No
2.1

3.1

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

Description
Arrangement and Reorganization Agreement dated October 31, 2019 between Encana Corporation
and 1847432 Alberta ULC (incorporated by reference to Exhibit 2.1 to Encana’s Current Report on
Form 8-K filed on November 5, 2019, SEC File No. 001-15226).
Ovintiv Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Ovintiv’s Current
Report on Form 8-K filed on January 24, 2020, SEC File No. 333-234526).
Ovintiv Bylaws (incorporated by reference to Exhibit 3.2 to Ovintiv’s Current Report on Form 8-K
filed on January 24, 2020, SEC File No. 333-234526).
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Ovintiv’s Current
Report on Form 8-K filed on January 24, 2020, SEC File No. 333-234526).
8.125% Notes due 2030 (incorporated by reference to Exhibit 4.5 to Encana’s Annual Report on
Form 10-K filed on February 27, 2017, SEC File No. 001-15226).
7.2% Notes due 2031 (incorporated by reference to Exhibit 4.6 to Encana’s Annual Report on
Form 10-K filed on February 27, 2017, SEC File No. 001-15226).
7.375% Notes due 2031 (incorporated by reference to Exhibit 4.7 to Encana’s Annual Report on
Form 10-K filed on February 27, 2017, SEC File No. 001-15226).
6.50% Notes due 2034 (incorporated by reference to Exhibit 4.8 to Encana’s Annual Report on
Form 10-K filed on February 27, 2017, SEC File No. 001-15226).
6.625% Notes due 2037 (incorporated by reference to Exhibit 4.9 to Encana’s Annual Report on
Form 10-K filed on February 27, 2017, SEC File No. 001-15226).
6.50% Notes due 2038 (incorporated by reference to Exhibit 4.10 to Encana’s Annual Report on
Form 10-K filed on February 27, 2017, SEC File No. 001-15226).
5.15% Notes due 2041 (incorporated by reference to Exhibit 4.11 to Encana’s Annual Report on
Form 10-K filed on February 27, 2017, SEC File No. 001-15226).
Indenture dated as of August 13, 2007 between Encana Corporation and The Bank of New York
(incorporated by reference to Exhibit 4.12 to Encana’s Annual Report on Form 10-K filed on
February 27, 2017, SEC File No. 001-15226).
First Supplemental Indenture, dated as of March 1, 2019, among Newfield Exploration Company, as
Guarantor, Encana Corporation, as Issuer, and The Bank of New York Mellon to the Indenture, dated
as of August 13, 2007, between Encana Corporation and The Bank of New York Mellon, as Trustee
(incorporated by reference to Exhibit 4.9 to Encana’s Current Report on Form 8-K filed on March 1,
2019, SEC File No. 001-15226).
Second Supplemental Indenture, dated as of January 24, 2020, among Ovintiv Inc., as successor
issuer, Encana Corporation, Newfield Exploration Company, as Guarantor, and The Bank of New York
Mellon to the Indenture, dated as of August 13, 2007, between Encana Corporation and The Bank of
New York Mellon, as Trustee (incorporated by reference to Exhibit 4.4 to Ovintiv’s Current Report on
Form 8-K filed on January 28, 2020, SEC File No. 001-39191).

146 | 2021 Annual Report

Ovintiv Inc.

4.12

4.13

4.14

4.15

4.16

4.17

4.18

4.19

4.20

4.21

4.22

4.23

4.24

4.25

4.26

Third Supplemental Indenture, dated as of January 27, 2020, among Ovintiv Canada ULC, as
Guarantor, Ovintiv Inc., as Issuer, Newfield Exploration Company, as Guarantor, and The Bank of
New York Mellon to the Indenture, dated as of August 13, 2007, between Ovintiv Inc. (as successor
issuer) and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.5 to
Ovintiv’s Current Report on Form 8-K filed on January 28, 2020, SEC File No. 001-39191).
Indenture dated as of November 14, 2011 between Encana Corporation and The Bank of New York
Mellon (incorporated by reference to Exhibit 7.1 to Encana’s Registration Statement on Form F-10
filed on May 7, 2012, SEC File No. 333-181196).
First Supplemental Indenture, dated as of March 1, 2019, among Newfield Exploration Company, as
Guarantor, Encana Corporation, as Issuer, and The Bank of New York Mellon to the Indenture, dated
as of November 14, 2011, between Encana Corporation and The Bank of New York Mellon, as Trustee
(incorporated by reference to Exhibit 4.10 to Encana’s Current Report on Form 8-K filed on March 1,
2019, SEC File No. 001-15226).
Second Supplemental Indenture, dated as of January 24, 2020, among Ovintiv Inc., as successor
issuer, Encana Corporation, Newfield Exploration Company, as Guarantor, and The Bank of New York
Mellon to the Indenture, dated as of November 14, 2011, between Encana Corporation and The Bank
of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.5 to Ovintiv’s Current Report
on Form 8-K filed on January 28, 2020, SEC File No. 001-39191).
Third Supplemental Indenture, dated as of January 27, 2020, among Ovintiv Canada ULC, as
Guarantor, Ovintiv Inc., as Issuer, Newfield Exploration Company, as Guarantor, and The Bank of
New York Mellon to the Indenture, dated as of November 14, 2011, between Ovintiv Inc. (as successor
issuer) and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.6 to
Ovintiv’s Current Report on Form 8-K filed on January 28, 2020, SEC File No. 001-39191).
Indenture dated as of September 15, 2000 between Encana Corporation (as successor by
amalgamation to Alberta Energy Company Ltd.) and The Bank of New York (incorporated by
reference to Exhibit 4.14 to Encana’s Annual Report on Form 10-K filed on February 27, 2017, SEC
File No. 001-15226).
First Supplemental Indenture dated as of January 1, 2003 to the Indenture dated as of September 15,
2000 between Encana Corporation and The Bank of New York (incorporated by reference to
Exhibit 4.15 to Encana’s Annual Report on Form 10-K filed on February 27, 2017, SEC File
No. 001-15226).
Second Supplemental Indenture dated as of November 20, 2012 to the Indenture dated as of
September 15, 2000 between Encana Corporation and The Bank of New York (incorporated by
reference to Exhibit 4.16 to Encana’s Annual Report on Form 10-K filed on February 27, 2017, SEC
File No. 001-15226).
Third Supplemental Indenture, dated as of March 1, 2019, among Newfield Exploration Company, as
Guarantor, Encana Corporation, as Issuer, and The Bank of New York Mellon to the Indenture, dated
as of September 15, 2000, between Encana Corporation (as successor by amalgamation to Alberta
Energy Company Ltd.) and The Bank of New York Mellon (formerly known as The Bank of
New York), as Trustee (incorporated by reference to Exhibit 4.6 to Encana’s Current Report on
Form 8-K filed on March 1, 2019, SEC File No. 001-15226).
Fourth Supplemental Indenture, dated as of January 24, 2020, among Ovintiv Inc., as successor
issuer, Encana Corporation, Newfield Exploration Company, as Guarantor, and The Bank of New York
Mellon to the Indenture, dated as of September 15, 2000, between Encana Corporation (as successor
by amalgamation to Alberta Energy Company Ltd.) and The Bank of New York Mellon (formerly
known as The Bank of New York), as Trustee (incorporated by reference to Exhibit 4.1 to Ovintiv’s
Current Report on Form 8-K filed on January 28, 2020, SEC File No. 001-39191).
Fifth Supplemental Indenture, dated as of January 27, 2020, among Ovintiv Canada ULC, as
Guarantor, Ovintiv Inc., as Issuer, Newfield Exploration Company, as Guarantor, and The Bank of
New York Mellon to the Indenture, dated as of September 15, 2000, between Ovintiv Inc. (as
successor issuer) and The Bank of New York Mellon (formerly known as The Bank of New York), as
Trustee (incorporated by reference to Exhibit 4.2 to Ovintiv’s Current Report on Form 8-K filed on
January 28, 2020, SEC File No. 001-39191).
Indenture dated as of November 5, 2001 between Encana Corporation (as successor by
amalgamation to PanCanadian Petroleum Limited) and The Bank of Nova Scotia Trust Company of
New York (incorporated by reference to Exhibit 4.17 to Encana’s Annual Report on Form 10-K filed on
February 27, 2017, SEC File No. 001-15226).
First Supplemental Indenture dated as of January 1, 2002 to the Indenture dated as of November 5,
2001 between Encana Corporation (as successor by amalgamation to PanCanadian Petroleum
Limited) and The Bank of Nova Scotia Trust Company of New York (incorporated by reference to
Exhibit 4.18 to Encana’s Annual Report on Form 10-K filed on February 27, 2017, SEC File
No. 001-15226).
Second Supplemental Indenture dated as of January 1, 2003 to the Indenture dated as of
November 5, 2001 between Encana Corporation and The Bank of Nova Scotia Trust Company of
New York (incorporated by reference to Exhibit 4.19 to Encana’s Annual Report on Form 10-K filed on
February 27, 2017, SEC File No. 001-15226).
Third Supplemental Indenture dated as of November 20, 2012 to the Indenture dated as of
November 5, 2001 between Encana Corporation and The Bank of Nova Scotia Trust Company of
New York (incorporated by reference to Exhibit 4.20 to Encana’s Annual Report on Form 10-K filed
on February 27, 2017, SEC File No. 001-15226).

Ovintiv Inc.

2021 Annual Report | 147

4.27

4.28

4.29

4.30

4.31

4.32

4.33

4.34

4.35

4.36

4.37

4.38

4.39

Fourth Supplemental Indenture dated as of July 24, 2013 to the Indenture dated as of November 5,
2001 between Encana Corporation and The Bank of Nova Scotia Trust Company of New York
(incorporated by reference to Exhibit 4.21 to Encana’s Annual Report on Form 10-K filed on
February 27, 2017, SEC File No. 001-15226).
Fifth Supplemental Indenture, dated as of March 1, 2019, among Newfield Exploration Company, as
Guarantor, Encana Corporation, as Issuer, and The Bank of New York Mellon to the Indenture, dated
as of November 5, 2001, between Encana Corporation (as successor by amalgamation to
PanCanadian Petroleum Limited) and The Bank of New York Mellon, as successor Trustee to The
Bank of Nova Scotia Trust Company of New York (incorporated by reference to Exhibit 4.8 to
Encana’s Current Report on Form 8-K filed on March 1, 2019, SEC File No. 001-15226).
Sixth Supplemental Indenture, dated as of January 24, 2020, among Ovintiv Inc., as successor issuer,
Encana Corporation, Newfield Exploration Company, as Guarantor, and The Bank of New York Mellon
to the Indenture, dated as of November 5, 2001, between Encana Corporation (as successor by
amalgamation to PanCanadian Petroleum Limited) and The Bank of New York Mellon, as successor
Trustee to The Bank of Nova Scotia Trust Company of New York (incorporated by reference to
Exhibit 4.3 to Ovintiv’s Current Report on Form 8-K filed on January 28, 2020, SEC File
No. 001-39191).
Seventh Supplemental Indenture, dated as of January 27, 2020, among Ovintiv Canada ULC, as
Guarantor, Ovintiv Inc., as Issuer, Newfield Exploration Company, as Guarantor, and The Bank of New
York Mellon to the Indenture, dated as of November 5, 2001, between Ovintiv Inc. (as successor
issuer) and The Bank of New York Mellon, as successor Trustee to The Bank of Nova Scotia Trust
Company of New York (incorporated by reference to Exhibit 4.4 to Ovintiv’s Current Report on
Form 8-K filed on January 28, 2020, SEC File No. 001-39191).
Indenture dated as of October 2, 2003 between Encana Corporation and The Bank of New York
(incorporated by reference to Exhibit 4.22 to Encana’s Annual Report on Form 10-K filed on
February 27, 2017, SEC File No. 001-15226).
First Supplemental Indenture, dated as of March 1, 2019, among Newfield Exploration Company, as
Guarantor, Encana Corporation, as Issuer, and The Bank of New York Mellon to the Indenture, dated
as of October 2, 2003, between Encana Corporation and The Bank of New York Mellon, as Trustee
(incorporated by reference to Exhibit 4.7 to Encana’s Current Report on Form 8-K filed on March 1,
2019, SEC File No. 001-15226).
Second Supplemental Indenture, dated as of January 24, 2020, among Ovintiv Inc., as successor
issuer, Encana Corporation, Newfield Exploration Company, as Guarantor, and The Bank of New York
Mellon to the Indenture, dated as of October 2, 2003, between Encana Corporation and The Bank of
New York Mellon, as Trustee (incorporated by reference to Exhibit 4.2 to Ovintiv’s Current Report on
Form 8-K filed on January 28, 2020, SEC File No. 001-39191).
Third Supplemental Indenture, dated as of January 27, 2020, among Ovintiv Canada ULC, as
Guarantor, Ovintiv Inc., as Issuer, Newfield Exploration Company, as Guarantor, and The Bank of New
York Mellon to the Indenture, dated as of October 2, 2003, between Ovintiv Inc. (as successor issuer)
and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.3 to Ovintiv’s
Current Report on Form 8-K filed on January 28, 2020, SEC File No. 001-39191).
Senior Indenture, dated as of February 28, 2001 between Newfield Exploration Company, as Issuer,
and First Union National Bank, as Trustee (the “Senior Indenture”) (incorporated by reference to
Exhibit 4.1 to Newfield’s Current Report on Form 8-K filed on February 28, 2001, SEC
File No. 001-12534).
Second Supplemental Indenture, dated as of September 30, 2011, to Senior Indenture between
Newfield Exploration Company, as Issuer, and U.S. Bank National Association (as successor to
Wachovia Bank, National Association (formerly First Union National Bank)), as Trustee, to the Senior
Indenture dated as of February 28, 2001 (incorporated by reference to Exhibit 4.2 to Newfield’s
Current Report on Form 8-K filed on September 30, 2011, SEC File No. 001-12534).
Third Supplemental Indenture, dated as of June 26, 2012, to Senior Indenture between Newfield
Exploration Company, as Issuer, and U.S. Bank National Association (as successor to Wachovia Bank,
National Association (formerly First Union National Bank)), as Trustee, to the Senior Indenture dated
as of February 28, 2001 (incorporated by reference to Exhibit 4.2 to Newfield’s Current Report on
Form 8-K filed on June 26, 2012, SEC File No. 001-12534).
Fourth Supplemental Indenture, dated as of March 10, 2015, to Senior Indenture between Newfield
Exploration Company, as Issuer, and U.S. Bank National Association (as successor to Wachovia Bank,
National Association (formerly First Union National Bank)), as Trustee, to the Senior Indenture dated
as of February 28, 2001 (incorporated by reference to Exhibit 4.2 to Newfield’s Current Report on
Form 8-K filed on March 12, 2015, SEC File No. 001-12534).
Fifth Supplemental Indenture, dated as of March 1, 2019, among Encana Corporation, as Guarantor,
Newfield Exploration Company, as Issuer, and U.S. Bank National Association (as successor to
Wachovia Bank, National Association (formerly First Union National Bank)), as Trustee, to the Senior
Indenture dated as of February 28, 2001 (incorporated by reference to Exhibit 4.5 to Encana’s
Current Report on Form 8-K filed on March 1, 2019, SEC File No. 001-15226).

148 | 2021 Annual Report

Ovintiv Inc.

4.40

4.41

4.42

10.1

10.2

10.3

10.4

10.5

10.6

10.7*

10.8*

10.9*

10.10*

10.11*

10.12*

10.13*

10.14*

Sixth Supplemental Indenture, dated as of January 27, 2020, among Ovintiv Inc., as Guarantor,
Newfield Exploration Company, as Issuer, Ovintiv Canada ULC, as Guarantor, and U.S. Bank National
Association (as successor to Wachovia Bank, National Association (formerly First Union National
Bank)), as Trustee, to the Senior Indenture dated as of February 28, 2001 (incorporated by reference
to Exhibit 4.1 to Ovintiv’s Current Report on Form 8-K filed on January 28, 2020, SEC File
No. 001-39191).
Seventh Supplemental Indenture, dated as of April 26, 2021, among Ovintiv Exploration Inc. (formerly
Newfield Exploration Company), as Issuer, Ovintiv Inc., as Guarantor and Successor Issuer, Ovintiv
Canada ULC, as Guarantor, and U.S. Bank National Association (as successor to Wachovia Bank,
National Association (formerly First Union National Bank)), as Trustee, to the Senior Indenture dated
as of February 28, 2001 (incorporated by reference to Exhibit 4.1 to Ovintiv’s Current Report on
Form 8-K filed on April 28, 2021, SEC File No. 001-39191).
Description of Capital Stock (incorporated by reference to Exhibit 99.1 to Ovintiv’s Current Report on
Form 8-K filed on January 24, 2020, SEC File No. 001-39191).
Credit Agreement, dated as of January 27, 2020, between Ovintiv Inc., as Borrower, JPMorgan Chase
Bank, N.A., RBC Capital Markets, Canadian Imperial Bank of Commerce, Citibank, N.A., TD Securities,
as Joint Lead Arrangers and Joint Bookrunners, BMO Capital Markets and The Bank of Nova Scotia,
as Joint Lead Arrangers, Bank of Montreal and The Bank of Nova Scotia, as Documentation Agents,
JPMorgan Chase Bank, N.A., as Administrative Agent, and the initial lenders and initial issuing banks
named therein (the “U.S. Credit Agreement”) (incorporated by reference to Exhibit 4.1 to Ovintiv’s
Current Report on Form 8-K filed on January 29, 2020, SEC File No. 001-39191).
Guarantee of the U.S. Credit Agreement, made as of January 27, 2020, by Newfield Exploration
Company (incorporated by reference to Exhibit 4.2 to Ovintiv’s Current Report on Form 8-K filed on
January 29, 2020, SEC File No. 001-39191).
Guarantee of the U.S. Credit Agreement, made as of January 27, 2020, by Ovintiv Canada ULC
(incorporated by reference to Exhibit 4.3 to Ovintiv’s Current Report on Form 8-K filed on
January 29, 2020, SEC File No. 001-39191).
Credit Agreement, dated as of January 27, 2020, among Ovintiv Canada ULC, as Borrower, Ovintiv
Inc., as Guarantor, the financial institutions party thereto, as lenders, and Royal Bank of Canada, as
administrative agent (incorporated by reference to Exhibit 4.4 to Ovintiv’s Current Report on
Form 8-K filed on January 29, 2020, SEC File No. 001-39191).
Form of Commercial Paper Dealer Agreement between Ovintiv Inc., as Issuer, and the Dealer party
thereto (incorporated by reference to Exhibit 10.1 to Ovintiv’s Current Report on Form 8-K filed on
January 29, 2020, SEC File No. 001-39191).
Form of Commercial Paper Dealer Agreement among Ovintiv Canada ULC, as Issuer, Ovintiv Inc., as
Guarantor, and the Dealer party thereto (incorporated by reference to Exhibit 10.2 to Ovintiv’s
Current Report on Form 8-K filed on January 29, 2020, SEC File No. 001-39191).
Encana Corporation Employee Stock Option Plan reflective with amendments made as of April 27,
2005, as of April 25, 2007, as of April 22, 2008, as of October 22, 2008, as of November 30, 2009, as
of July 20, 2010, as of February 24, 2015 and as of February 22, 2016 (incorporated by reference to
Exhibit 10.6 to Encana’s Annual Report on Form 10-K filed on February 27, 2017, SEC
File No. 001-15226).
Form of Executive Stock Option Grant Agreement for stock options granted under the Encana
Corporation Employee Stock Option Plan (incorporated by reference to Exhibit 10.7 to Encana’s
Annual Report on Form 10-K filed on February 26, 2018, SEC File No. 001-15226).
Encana Corporation Employee Stock Appreciation Rights Plan, adopted with effect from February 12,
2008, as amended December 9, 2008, November 30, 2009, April 20, 2010, July 20, 2010,
February 24, 2015, February 22, 2016 and February 14, 2018 (incorporated by reference to Exhibit 10.8
to Encana’s Annual Report on Form 10-K filed on February 26, 2018, SEC File No. 001-15226).
Form of Executive Stock Appreciation Rights Grant Agreement for stock appreciation rights granted
under the Encana Corporation Employee Stock Appreciation Rights Plan (incorporated by reference
to Exhibit 10.9 to Encana’s Annual Report on Form 10-K filed on February 27, 2017, SEC
File No. 001-15226).
Deferred Share Unit Plan for Employees of Encana Corporation adopted with effect from
December 18, 2002 and reflective of amendments made as of October 23, 2007, October 22, 2008,
and July 20, 2010 (incorporated by reference to Exhibit 10.16 to Encana’s Annual Report on
Form 10-K filed on February 27, 2017, SEC File No. 001-15226).
Deferred Share Unit Plan for Directors of Encana Corporation adopted with effect from December 18,
2002 and reflective with amendments made as of April 26, 2005, October 22, 2008, December 8,
2009, July 20, 2010, February 13, 2013, December 1, 2014 and February 14, 2018 (incorporated by
reference to Exhibit 10.17 to Encana’s Annual Report on Form 10-K filed on February 26, 2018, SEC
File No. 001-15226).
Omnibus Incentive Plan of Encana Corporation adopted with effect from February 13, 2019
(incorporated by reference to Exhibit 10.44 to Encana’s Annual Report on Form 10-K filed on
February 28, 2019, SEC File No. 001-15226).
Form of Stock Option Grant Agreement for stock options granted under the Omnibus Incentive Plan
of Encana Corporation (incorporated by reference to Exhibit 10.45 to Encana’s Annual Report on
Form 10-K filed on February 28, 2019, SEC File No. 001-15226).

Ovintiv Inc.

2021 Annual Report | 149

10.15*

10.16*

10.17*

10.18*

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

10.30*

10.31*

10.32*

10.33*

10.34*

10.35*

10.36*

10.37*

Form of RSU Grant Agreement for restricted share units granted to employees under the Omnibus
Incentive Plan of Encana Corporation (incorporated by reference to Exhibit 10.46 to Encana’s Annual
Report on Form 10-K filed on February 28, 2019, SEC File No. 001-15226).
Form of Director RSU Grant Agreement for restricted share units granted to directors under the
Omnibus Incentive Plan of Encana Corporation (incorporated by reference to Exhibit 10.47 to
Encana’s Annual Report on Form 10-K filed on February 28, 2019, SEC File No. 001-15226).
Form of PSU Grant Agreement for performance share units granted under the Omnibus Incentive
Plan of Encana Corporation (incorporated by reference to Exhibit 10.48 to Encana’s Annual Report on
Form 10-K filed on February 28, 2019, SEC File No. 001-15226).
Form of Stock Appreciation Rights Grant Agreement for stock appreciation rights granted under the
Omnibus Incentive Plan of Encana Corporation (incorporated by reference to Exhibit 10.49 to
Encana’s Annual Report on Form 10-K filed on February 28, 2019, SEC File No. 001-15226).
Encana (USA) Deferred Compensation Plan (“U.S. Deferred Compensation Plan”) amended and
restated effective April 1, 2018 (incorporated by reference to Exhibit 10.2 to Encana’s Quarterly
Report on Form 10-Q filed on August 2, 2018, SEC File No. 001-15226).
Change in Control Agreement between Ovintiv Inc. and Douglas J. Suttles effective January 24, 2020
(incorporated by reference to Exhibit 10.46 to Ovintiv’s Annual Report on Form 10-K filed on
February 21, 2020, SEC File No. 001-39191).
Change in Control Agreement between Ovintiv Inc. and Joanne L. Cox effective January 24, 2020
(incorporated by reference to Exhibit 10.47 to Ovintiv’s Annual Report on Form 10-K filed on
February 21, 2020, SEC File No. 001-39191).
Change in Control Agreement between Ovintiv Inc. and Corey D. Code effective January 24, 2020
(incorporated by reference to Exhibit 10.48 to Ovintiv’s Annual Report on Form 10-K filed on
February 21, 2020, SEC File No. 001-39191).
Change in Control Agreement between Ovintiv Inc. and Gregory D. Givens effective January 24, 2020
(incorporated by reference to Exhibit 10.49 to Ovintiv’s Annual Report on Form 10-K filed on
February 21, 2020, SEC File No. 001-39191).
Change in Control Agreement between Ovintiv Inc. and Brendan M. McCracken effective January 24,
2020 (incorporated by reference to Exhibit 10.52 to Ovintiv’s Annual Report on Form 10-K filed on
February 21, 2020, SEC File No. 001-39191).
Change in Control Agreement between Ovintiv Inc. and Renee E. Zemljak effective January 24, 2020
(incorporated by reference to Exhibit 10.54 to Ovintiv’s Annual Report on Form 10-K filed on
February 21, 2020, SEC File No. 001-39191).
Form of Director and Officer Indemnification Agreement effective as of January 24, 2020 between
Ovintiv Inc. and each of its directors and officers (incorporated by reference to Exhibit 10.1 to
Ovintiv’s Current Report on Form 8-K filed on January 24, 2020, SEC File No. 001-39191).
Amending Agreement to Omnibus Incentive Plan of Encana Corporation (incorporated by reference
to Exhibit 99.9 to Ovintiv’s Post-Effective Amendment No. 1 filed on January 27, 2020, SEC
File No. 333-231248).
Amending Agreement to Encana Corporation Employee Stock Option Plan (incorporated by
reference to Exhibit 99.10 to Ovintiv’s Post-Effective Amendment No. 1 filed on January 27, 2020,
SEC File No. 333-231248).
Amending Agreement to Encana Corporation Employee Stock Appreciation Rights Plan
(incorporated by reference to Exhibit 99.11 to Ovintiv’s Post-Effective Amendment No. 1 filed on
January 27, 2020, SEC File No. 333-231248).
Amending Agreement to Deferred Share Unit Plan for Employees of Encana Corporation
(incorporated by reference to Exhibit 99.14 to Ovintiv’s Post-Effective Amendment No. 1 filed on
January 27, 2020, SEC File No. 333-231248).
Amending Agreement to Deferred Share Unit Plan for Directors of Encana Corporation (incorporated
by reference to Exhibit 99.16 to Ovintiv’s Post-Effective Amendment No. 1 filed on January 27, 2020,
SEC File No. 333-231248).
First Amendment to U.S. Deferred Compensation Plan amended and restated effective April 1, 2018,
dated effective January 24, 2020 (incorporated by reference to Exhibit 10.1 to Ovintiv’s Quarterly
Report on Form 10-Q filed on May 8, 2020, SEC File No. 001-39191).
Ovintiv U.S. Retirement Plan amended and restated effective January 27, 2020 (incorporated by
reference to Exhibit 10.2 to Ovintiv’s Quarterly Report on Form 10-Q filed on May 8, 2020, SEC File
No. 001-39191).
Offer of employment dated June 10, 2013 (incorporated by reference to Exhibit 10.3 to Ovintiv’s
Quarterly Report on Form 10-Q filed on May 8, 2020, SEC File No. 001-39191).
Change in Control Agreement between Ovintiv Inc. and Rachel M. Moore effective June 30, 2020
(incorporated by reference to Exhibit 10.1 to Ovintiv’s Quarterly Report on Form 10-Q filed on July 31,
2020, SEC File No. 001-39191).
Letter agreement between Ovintiv Inc. and David G. Hill (incorporated by reference to Exhibit 10.2 to
Ovintiv’s Quarterly Report on Form 10-Q filed on July 31, 2020, SEC File No. 001-39191).
Ovintiv Canadian Pension Plan amended and restated effective January 24, 2020 (incorporated by
reference to Exhibit 10.49 to Ovintiv’s Annual Report on Form 10-K filed on February 18, 2021, SEC
File No. 001-39191).

150 | 2021 Annual Report

Ovintiv Inc.

10.38*

10.39*

10.40*

10.41*

10.42*

10.43*

10.44*

10.45*

10.46*

10.47*

10.48*

10.49*

14.1

21.1
23.1
23.2
23.3
24.1
31.1

31.2

32.1
32.2
99.1
99.2
101.INS

101.SCH
101.CAL
101.LAB
101.DEF
101.PRE
104

Ovintiv Canadian Supplemental Pension Plan amended and restated effective January 24, 2020
(incorporated by reference to Exhibit 10.50 to Ovintiv’s Annual Report on Form 10-K filed on
February 18, 2021, SEC File No. 001-39191).
Ovintiv Canadian Investment Plan amended and restated effective January 24, 2020 (incorporated
by reference to Exhibit 10.51 to Ovintiv’s Annual Report on Form 10-K filed on February 18, 2021, SEC
File No. 001-39191).
First Amendment to Ovintiv U.S. Retirement Plan amended and restated effective January 27, 2020,
dated effective January 1, 2021 (incorporated by reference to Exhibit 10.52 to Ovintiv’s Annual Report
on Form 10-K filed on February 18, 2021, SEC File No. 001-39191).
Second Amendment to U.S. Deferred Compensation Plan amended and restated effective April 1,
2018, dated effective January 1, 2021 (incorporated by reference to Exhibit 10.53 to Ovintiv’s Annual
Report on Form 10-K filed on February 18, 2021, SEC File No. 001-39191).
Second Amending Agreement to Deferred Share Unit Plan for Employees of Ovintiv Inc.
(incorporated by reference to Exhibit 10.54 to Ovintiv’s Annual Report on Form 10-K filed on
February 18, 2021, SEC File No. 001-39191).
Letter Agreement between Ovintiv Inc. and Brendan M. McCracken dated June 8, 2021 (incorporated
by reference to Exhibit 10.1 to Ovintiv’s Current Report on Form 8-K filed on June 11, 2021, SEC
File No. 001-39191).
Change in Control Agreement between Ovintiv Inc. and Brendan McCracken effective August 1, 2021
(incorporated by reference to Exhibit 10.1 to Ovintiv’s Quarterly Report on Form 10-Q filed on
November 4, 2021, SEC File No. 001-39191).
First Amendment to Change in Control Agreement between Ovintiv Inc. and Corey D. Code effective
November 1, 2021 (incorporated by reference to Exhibit 10.2 to Ovintiv’s Quarterly Report on
Form 10-Q filed on November 4, 2021, SEC File No. 001-39191).
First Amendment to Change in Control Agreement between Ovintiv Inc. and Gregory D. Givens
effective November 1, 2021 (incorporated by reference to Exhibit 10.3 to Ovintiv’s Quarterly Report
on Form 10-Q filed on November 4, 2021, SEC File No. 001-39191).
First Amendment to Change in Control Agreement between Ovintiv Inc. and Joanne L. Cox effective
November 1, 2021 (incorporated by reference to Exhibit 10.4 to Ovintiv’s Quarterly Report on
Form 10-Q filed on November 4, 2021, SEC File No. 001-39191).
First Amendment to Change in Control Agreement between Ovintiv Inc. and Rachel M. Moore
effective November 1, 2021 (incorporated by reference to Exhibit 10.5 to Ovintiv’s Quarterly Report on
Form 10-Q filed on November 4, 2021, SEC File No. 001-39191).
First Amendment to Change in Control Agreement between Ovintiv Inc. and Renee E. Zemljak
effective November 1, 2021 (incorporated by reference to Exhibit 10.6 to Ovintiv’s Quarterly Report
on Form 10-Q filed on November 4, 2021, SEC File No. 001-39191).
Business Code of Conduct effective March 1, 2020 (incorporated by reference to Exhibit 14.1 to
Ovintiv’s Annual Report on Form 10-K filed on February 18, 2021, SEC File No. 001-39191).
Significant Subsidiaries
Consent of PricewaterhouseCoopers LLP.
Consent of McDaniel & Associates Consultants Ltd.
Consent of Netherland, Sewell & Associates, Inc.
Power of Attorney (included on the signature page of this report).
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities
Exchange Act of 1934.
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities
Exchange Act of 1934.
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
Report of McDaniel & Associates Consultants Ltd.
Report of Netherland, Sewell & Associates, Inc.
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.
Inline XBRL Taxonomy Schema Document.
Inline XBRL Calculation Linkbase Document.
Inline XBRL Label Linkbase Document.
Inline XBRL Definition Linkbase Document.
Inline XBRL Presentation Linkbase Document.
The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31,
2021, has been formatted in Inline XBRL.

* Management contract or compensatory arrangement.

Ovintiv Inc.

2021 Annual Report | 151

Item 16. Form 10-K Summary

None.

152 | 2021 Annual Report

Ovintiv Inc.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

SIGNATURES

Dated: February 25, 2022

OVINTIV INC.

By: /s/ Corey D. Code

Name: Corey D. Code
Title: Executive Vice-President & Chief

Financial Officer

Ovintiv Inc.

2021 Annual Report | 153

SIGNATURES WITH RESPECT TO OVINTIV INC.

POWERS OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Brendan M. McCracken and Corey D.
Code, and each of them, any of whom may act without the joinder of the other, the true and lawful attorney-in-fact
and agent of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead
of the undersigned, in any and all capacities, to sign any and all amendments, including any post-effective
amendments, and supplements to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, and hereby grants to such attorney-in-fact and agent,
full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully
to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but
which taken together shall constitute one instrument.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K
has been signed by the following persons in the capacities and on the dates indicated.

Signature

Capacity

Date

/s/ Peter A. Dea

Peter A. Dea

Chairman of the Board
of Directors

/s/ Brendan M. McCracken

Brendan M. McCracken

President & Chief Executive Officer and
Director
(Principal Executive Officer)

February 25, 2022

February 25, 2022

February 25, 2022

/s/ Corey D. Code

Corey D. Code

/s/ Meg A. Gentle

Meg A. Gentle

/s/ Howard J. Mayson

Howard J. Mayson

/s/ Lee A. McIntire

Lee A. McIntire

Executive Vice-President
& Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)

Corporate Director

February 25, 2022

Corporate Director

February 25, 2022

Corporate Director

February 25, 2022

/s/ Katherine L. Minyard

Corporate Director

February 25, 2022

Katherine L. Minyard

/s/ Steven W. Nance

Steven W. Nance

Corporate Director

February 25, 2022

/s/ Suzanne P. Nimocks

Corporate Director

February 25, 2022

Suzanne P. Nimocks

/s/ George L. Pita

George L. Pita

/s/ Thomas G. Ricks

Thomas G. Ricks

/s/ Brian G. Shaw

Brian G. Shaw

Corporate Director

February 25, 2022

Corporate Director

February 25, 2022

Corporate Director

February 25, 2022

/s/ Bruce G. Waterman

Corporate Director

February 25, 2022

Bruce G. Waterman

154 | 2021 Annual Report

Ovintiv Inc.

10 K

Executive Leadership Team  
and Board of Directors

Executive  
Leadership Team

Brendan McCracken 
President &  
Chief Executive Officer

Corey Code 
Executive Vice President  
& Chief Financial Officer

Meghan Eilers  
Executive Vice President,  
General Counsel &  
Corporate Secretary

Greg Givens 
Executive Vice President  
& Chief Operating Officer

Rachel Moore 
Executive Vice President,  
Corporate Services

Renee Zemljak 
Executive Vice President,  
Midstream, Marketing  
& Fundamentals

Board of  
Directors

Peter Dea 
Chairman  
Crested Butte, Colorado

Meg Gentle 
Houston, Texas

Howard Mayson 
Breckenridge, Colorado

Brendan McCracken 
Denver, Colorado

Lee McIntire 
Denver, Colorado

Katherine Minyard 
Denver, Colorado

Steven Nance 
Houston, Texas

Suzanne Nimocks 
Houston, Texas

George Pita 
Miami, Florida

Thomas Ricks 
Austin, Texas

Brian Shaw 
Toronto, Ontario

Bruce Waterman 
Calgary, Alberta

Ovintiv Inc.

2021 Annual Report  |  155

Corporate and Investor Information 

Ovintiv Website

www.ovintiv.com

The Ovintiv website contains a variety of corporate 
and investor information, including, among other 
information, the following:

•  Current stock prices

•  Annual and Interim reports

•  Proxy Statement

•  News releases

• 

Investor presentations

•  Dividend information

•  Shareholder support information

•  Sustainability information

Additional information, including copies of the 
Ovintiv Year-End 2021 Annual Report, may be 
obtained from Ovintiv Inc.

Corporate Headquarters

Ovintiv Inc. 
370 17th Street 
Suite 1700 
Denver, Colorado 80202 
www.ovintiv.com 

Investor Contact

888.525.0304 
investor.relations@ovintiv.com

Media Contact

403.645.2252  
media.relations@ovintiv.com 

Stock Information

Our common stock is traded on the New York Stock 
Exchange and the Toronto Stock Exchange under 
the symbol “OVV.”

Transfer Agents and Registrar

For information regarding change of address or 
other matters concerning your shares, please 
contact our transfer agents at:

American Stock Transfer  
& Trust Company, LLC 
6201 15th Avenue 
Brooklyn, New York 11219
877.361.7965 
help@astfinancial.com

TSX Trust 
P.O. Box 700 
Station B 
Montréal, Quebec H3B 3K3

Canada and United States (English & French):  
800.387.0825

Outside North America: 416.682.3860 
shareholderinquiries@tmx.com

Auditor

PricewaterhouseCoopers LLP  
Chartered Professional Accountants  
Calgary, Alberta 

Independent Qualified Reserves Auditors

Netherland, Sewell & Associates, Inc. 
Dallas, Texas

McDaniel & Associates Consultants Ltd. 
Calgary, Alberta

Annual Report on Form 10-K

Ovintiv’s Annual Report on Form 10-K is filed with  
the securities regulators in the United States  
and Canada.  

156  |  2021 Annual Report

Ovintiv Inc.

Abbreviations

bbls 

barrels

bbls/d  

barrels per day

BOE 

barrels of oil equivalent

BOE/d 

barrels of oil equivalent per day

Bcf  

billion cubic feet

Bcf/d 

billion cubic feet per day

Mbbls 

thousand barrels

Mbbls/d 

thousand barrels per day

MBOE 

thousand barrels of oil equivalent 

MBOE/d 

thousand barrels of oil equivalent per day

MMbbls  

million barrels 

MMbbls/d  million barrels per day

Mcf 

thousand cubic feet

Mcf/d 

thousand cubic feet per day

MM 

million

MMBOE 

million barrels of oil equivalent

MMBOE/d  million barrels of oil equivalent per day

MMBtu  

million British thermal units

MMcf  

million cubic feet

MMcf/d  

million cubic feet per day

NGLs  

natural gas liquids

/d  

per day

Corporate and Investor Information 

Ovintiv Website

www.ovintiv.com

The Ovintiv website contains a variety of corporate 
and investor information, including, among other 
information, the following:

•  Current stock prices

•  Annual and Interim reports

•  Proxy Statement

•  News releases

• 

Investor presentations

•  Dividend information

•  Shareholder support information

•  Sustainability information

Additional information, including copies of the 
Ovintiv Year-End 2021 Annual Report, may be 
obtained from Ovintiv Inc.

Corporate Headquarters

Ovintiv Inc. 
370 17th Street 
Suite 1700 
Denver, Colorado 80202 
www.ovintiv.com 

Investor Contact

888.525.0304 
investor.relations@ovintiv.com

Media Contact

403.645.2252  
media.relations@ovintiv.com 

Stock Information

Our common stock is traded on the New York Stock 
Exchange and the Toronto Stock Exchange under 
the symbol “OVV.”

Transfer Agents and Registrar

For information regarding change of address or 
other matters concerning your shares, please 
contact our transfer agents at:

American Stock Transfer  
& Trust Company, LLC 
6201 15th Avenue 
Brooklyn, New York 11219
877.361.7965 
help@astfinancial.com

TSX Trust 
P.O. Box 700 
Station B 
Montréal, Quebec H3B 3K3

Canada and United States (English & French):  
800.387.0825

Outside North America: 416.682.3860 
shareholderinquiries@tmx.com

Auditor

PricewaterhouseCoopers LLP  
Chartered Professional Accountants  
Calgary, Alberta 

Independent Qualified Reserves Auditors

Netherland, Sewell & Associates, Inc. 
Dallas, Texas

McDaniel & Associates Consultants Ltd. 
Calgary, Alberta

Annual Report on Form 10-K

Ovintiv’s Annual Report on Form 10-K is filed with  
the securities regulators in the United States  
and Canada.  

156  |  2021 Annual Report

Ovintiv Inc.

Abbreviations

bbls 

barrels

bbls/d  

barrels per day

BOE 

barrels of oil equivalent

BOE/d 

barrels of oil equivalent per day

Bcf  

billion cubic feet

Bcf/d 

billion cubic feet per day

Mbbls 

thousand barrels

Mbbls/d 

thousand barrels per day

MBOE 

thousand barrels of oil equivalent 

MBOE/d 

thousand barrels of oil equivalent per day

MMbbls  

million barrels 

MMbbls/d  million barrels per day

Mcf 

thousand cubic feet

Mcf/d 

thousand cubic feet per day

MM 

million

MMBOE 

million barrels of oil equivalent

MMBOE/d  million barrels of oil equivalent per day

MMBtu  

million British thermal units

MMcf  

million cubic feet

MMcf/d  

million cubic feet per day

NGLs  

natural gas liquids

/d  

per day

Our products fuel the world— 
we make modern
life possible.

Stock Information

Our common stock is traded on the New York Stock 
Exchange and the Toronto Stock Exchange under 
the symbol “OVV.”

Corporate Headquarters

Ovintiv Inc. 
370 17th Street 
Suite 1700 
Denver, Colorado 80202 
www.ovintiv.com

Investor Contact

888.525.0304 
investor.relations@ovintiv.com

Media Contact

403.645.2252  
media.relations@ovintiv.com  

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