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
Investor Contact
888.525.0304
investor.relations@ovintiv.com
Media Contact
403.645.2252
media.relations@ovintiv.com
ovintiv.com
2022 ANNUAL REPORT
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Our products fuel the world—
we make modern life possible.
2022
Highlights
Substantial Free
Cash Flow
$2.3 B
Non-GAAP Free Cash
Flow Generation
Reduced Debt
~$1.2 B
Long-Term Debt Reduction
Driving Shareholder
Returns
~$1 B
Via Dividends &
Share Buybacks
Inventory Renewal
~450
Premium Drilling Locations
Added Across the Porfolio
Reserve Replacement
135%
Of Production
(Excluding the impact of
commodity prices)
FEBRUARY 27, 2023
Fellow Shareholders,
2022 was a record-breaking year for Ovintiv. We delivered on our durable-returns strategy,
as highlighted by several notable achievements. Our team delivered our highest ever non-
GAAP free cash flow of $2.3 billion. This free cash flow was underpinned by our leading capital
efficiency. We returned nearly $1 billion directly to our shareholders through our base dividend
payments and share buybacks. In addition, we reduced long-term debt by $1.2 billion and
continued to strengthen our balance sheet. We also expanded our drilling inventory with
the addition of approximately 450 new premium return locations. These inventory additions
represent approximately 200% of our 2022 drilling program.
In short, we delivered record profitability, increased direct returns to our shareholders,
increased financial strength, and extended our future runway. These results demonstrate that
our strategy is working, and our strong financial performance is translating into increased value
for our shareholders.
Our durable-returns strategy, disciplined capital allocation, and execution excellence continue
to position us at the forefront of driving innovation to produce oil and natural gas from shale—
both profitably and sustainably.
ACCELERATED CASH RETURNS TO SHAREHOLDERS
ACHIEVED STRONG FINANCIAL PERFORMANCE
2022 marked the first full year of our enhanced
shareholder returns framework. In the second quarter,
thanks to significant progress on debt reduction and
strong operational performance, we accelerated our
plan to double cash returns to shareholders to 50% of
post-dividend free cash flow.
Over the course of the year, we repurchased nearly 6% of
our shares outstanding and increased our base dividend
by approximately 80%. This reflects our commitment to
maintaining financial strength, generating superior returns
on capital investments, and returning significant cash to
our shareholders.
CONTINUED DEBT REDUCTION
We continued to significantly reduce our absolute debt,
and associated interest expense. We purchased and
retired approximately $565 million of our senior notes
in the open market. The associated annualized interest
savings are significant, at more than $33 million. Our
strong performance generated a trailing twelve-month
non-GAAP debt to adjusted EBITDA ratio of 0.8 times at the
end of the year.
This balance sheet progress removes substantial fixed
costs from our business, bolsters our resiliency, and
reinforces our ability to withstand market volatility.
Maintaining a strong balance sheet will enable us to be
both resilient and opportunistic in the years to come.
Our full-year net earnings totaled $3.6 billion and non-
GAAP cash flow was $4.1 billion. With capital investment
totaling $1.8 billion, we generated non-GAAP free cash flow
of $2.3 billion.
EXTENDED INVENTORY LIFE
Ovintiv’s substantial inventory runway reflects a uniquely
balanced portfolio of premium North American drilling
opportunities. We have more than 10 years of oil and
condensate locations and more than 20 years of natural
gas locations.
Over the long-term, we believe the most valuable E&Ps will
be the companies that can demonstrate durability in their
cash returns. We are continuously evaluating opportunities
to extend our ability to generate superior returns through a
focus on capital efficiency and portfolio renewal.
Over the last year, we made significant additions to our
premium drilling inventory across our asset base. The
combination of our low-cost bolt-on strategy and our
organic inventory appraisal and assessment efforts cost-
effectively added approximately 450 premium drilling
locations to our portfolio. The bulk of those additions
occurred in our Permian and Montney assets.
ENHANCED FOCUS ON SAFETY
Safety is a foundational value at Ovintiv and an
area where we have a history of industry leadership.
Ensuring the safety of our staff, suppliers, the public and
surrounding communities is a top priority and a basic
tenet of managing our operations.
Ovintiv Inc.
2022 Annual Report | i
Late last year, in response to industry conditions, we took the opportunity to revisit our safety policies
and practices by assembling a Safety Advisory Task Force, reporting directly to the Executive Team and
the Board of Directors. We also engaged an independent third party to conduct a parallel review. The
objective for both groups was to recommend decisive actions which could be immediately executed to
drive sustained, company-wide safety performance improvements, in both the near and long term.
2023 OUTLOOK
As we look ahead to 2023, we will continue to execute on our durable-returns strategy:
• Work safely always
•
Execute a disciplined development program focused on maximizing capital efficiency
• Generate significant free cash flow to enhance returns to shareholders
• Maintain our strong balance sheet
• Continue to enhance our premium return drilling inventory
• Demonstrate continued measurable progress on our Scope 1 & 2 GHG emissions reduction target
As a leading operator with more than a decade of high-quality drilling locations
and a deep commitment to capital discipline, we are set to continue delivering on
our strategy and generating strong financial performance over the long term. We
take great pride in producing safe, affordable, reliable and secure energy to North
Americans while delivering superior durable returns to our shareholders.
We appreciate your continued support and investment in Ovintiv.
Sincerely,
Brendan McCracken
President &
Chief Executive Officer
ii | 2022 Annual Report
Ovintiv Inc.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2022
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 ☒ 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 ☒
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 ☒ 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 ☒ No ☐
Ovintiv Inc.2022 Annual Report | 1
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,”
“accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer ☒
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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period
pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes ☐ No ☒
Aggregate market value of the voting and non-voting common equity held by non-
affiliates of registrant as of June 30, 2022
Number of registrant’s shares of common stock outstanding as of February 17, 2023, at
$0.01 par value
$ 11,306,868,256
243,643,104
Documents Incorporated by Reference
The information required by Part III of this Annual Report on Form 10-K, to the extent not set forth herein, is
incorporated herein by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of
Shareholders to be held in 2023, which definitive proxy statement shall be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates.
Auditor Firm ID: 271 Auditor Name: PricewaterhouseCoopers LLP Auditor Location: Calgary, Alberta, Canada
2 | 2022 Annual ReportOvintiv Inc.
OVINTIV INC.
FORM 10-K
TABLE OF CONTENTS
PART I
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
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
Item 6.
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
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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
Item 16. Form 10-K Summary
Signatures
PART IV
7
30
47
47
47
48
50
51
77
79
137
137
137
137
138
138
138
138
138
139
144
145
Ovintiv Inc.2022 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.
“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.
“SOFR” means Secured Overnight Financial Rate.
4 | 2022 Annual ReportOvintiv Inc.
“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.
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.2022 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. Without
limiting the generality of the foregoing, forward-looking statements contained in this Annual Report on Form 10-K
include: expectations of plans, strategies and objectives of the Company, including anticipated reserves development;
drilling plans and programs, including availability of capital to complete these plans and programs; the composition
of the Company’s assets and the anticipated capital returns associated with its assets; 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 proceeds
and future benefits from various joint venture, partnership and other agreements; anticipated oil, NGLs and natural
gas production and commodity mix; the Company’s ability to access credit facilities and other sources of liquidity;
the impact of changes in federal, state, provincial, local and tribal laws, rules and regulations; anticipated compliance
with current or proposed environmental legislation; the declaration and payment of future dividends and the
anticipated repurchase the Company’s outstanding common shares; the Company’s ability to manage cost inflation
and expected cost structures, including expected operating, transportation, processing and labor expenses; and the
outlook of the oil and natural gas industry generally, including impacts from changes to the geopolitical environment.
The forward-looking statements included in this Annual Report on Form 10-K involve risks and uncertainties that
could cause actual results to differ materially from projected results. Accordingly, investors should not place undue
reliance on forward-looking statements as a prediction of actual results. We have based these forward-looking
statements on current expectations and assumptions about future events, taking into account all information currently
known by us. While we consider these expectations and assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult
to predict and beyond our control. The risks and uncertainties that may affect the operations, performance and results
of our business and forward-looking statements include, but are not limited to, those set forth 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.
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 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.
6 | 2022 Annual ReportOvintiv 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, 2022, 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 aims to be one of the largest producers of oil, NGLs and natural gas in North America. The Company is
committed to producing products safely, respectfully and responsibly to drive progress and improve lives. 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 its core values of one, agile, innovative and driven. The
Company manages risk by driving efficiency gains across its business, creating optionality from a high-quality multi-
basin and multi-product portfolio, building flexibility into commercial agreements and leveraging 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 delivering quality returns on
the capital the Company invests in its multi-basin portfolio, generating free cash flows and providing significant cash
returns to its shareholders. The Company seeks to maximize shareholder returns through its transparent and durable
capital allocation framework, which includes a combination of base dividends, share buybacks and/or variable
dividends, determined on a quarterly basis at the discretion of the Company’s Board of Directors.
The pillars that support the execution of the Company’s strategy include:
(cid:120) 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 with the goal of achieving a
competitive advantage. Technology and innovation enable Ovintiv to reduce development risks, capture capital
and operating efficiencies, and sustainably enhance margins and returns while minimizing its environmental
Ovintiv Inc.2022 Annual Report | 7
footprint. Ovintiv strives to be a leading operator that delivers quality returns through the commodity price
cycle.
(cid:120) Disciplined Capital Allocation - Ovintiv’s capital investment strategy focuses on a limited number of assets to
generate cash flows and quality returns. Ovintiv’s investment strategy is flexible, allowing for capital programs
to be quickly right-sized in response to changes in the macro commodity-price environment, which helps to
preserve excess cash flows to return to shareholders and to maintain balance sheet strength.
(cid:120) 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 seeks to manage market volatility through
diversification of price risks and market access risks with the aim of enhancing margins and returns.
(cid:120) Drive Environmental, Social and Corporate Governance Progress - Ovintiv embraces stakeholder and societal
expectations as it continues to grow and change in response to the evolving landscape with respect to climate
change, diversity, equity, inclusion and governance matters. 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 reducing its environmental footprint, 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 also voluntarily participates in certain emission reduction programs and has
adopted a range of strategies to help reduce emissions from its operations. Strategies include incorporating new
and proven technologies and collaborations with third-party partners, such as governmental and other
organizations, to knowledge share and further advance future potential emission reduction technology. The
Company continues to focus on reducing its Scope 1 and 2 GHG emissions, by adopting strategies intended to
improve wellsite and completions designs that reduce flaring, fluid usage, methane venting and fugitive
emissions. In addition, Ovintiv’s reduction targets for Scope 1 and 2 GHG emissions intensity are tied to the
Company’s employees’ annual compensation program.
The foundation of the Company’s strategy is built upon the following elements:
(cid:120) Top Tier Multi-Basin Assets - The Company holds a multi-basin, multi-product portfolio of prolific North
American plays, including: Permian in west Texas, Anadarko in west-central Oklahoma, Bakken in northwest
North Dakota, Uinta in northeastern Utah and 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, 2022, the Company’s estimated net
proved reserves comprised approximately 24 percent oil, 26 percent NGLs, which includes six percent plant
condensate, and 50 percent natural gas.
(cid:120) Financial Strength - The Company has ample access to liquidity to allow management of its business through
commodity price cycles. Ovintiv works to maximize its financial flexibility by quickly adapting capital
programs to reflect changes in commodity prices and market conditions. The Company leverages its
fundamentals expertise by actively monitoring and managing price volatility as well as diversifying price risk
through market access.
Currently, the Company has access to committed credit facilities totaling $3.5 billion maturing in July 2026, at
attractive rates. In addition, Ovintiv has continued to focus on debt reduction, reducing total long-term debt by
over $3.3 billion since the end of 2020.
8 | 2022 Annual ReportOvintiv Inc.
(cid:120) 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.
REPORTING SEGMENTS
Ovintiv’s operations are focused on the exploration 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.
(cid:120) USA Operations includes the exploration for, development of, and production of oil, NGLs, natural gas and
other related activities within the United States. Plays in the U.S. include Permian in west Texas, Anadarko
in west-central Oklahoma, Bakken in North Dakota and Uinta in central Utah.
(cid:120) Canadian Operations includes the exploration for, development of, and production of oil, NGLs, natural gas
and other related activities within Canada. Plays in Canada include Montney in northeast British Columbia
and northwest Alberta, Horn River in northeast British Columbia and Wheatland in southern Alberta.
(cid:120) 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 Ovintiv’s audited Consolidated Financial
Statements under Item 8 of this Annual Report on Form 10-K.
Ovintiv Inc.2022 Annual Report | 9
OIL AND NATURAL GAS PROPERTIES AND ACTIVITIES
The following map reflects the location of Ovintiv’s North American landholdings and assets.
10 | 2022 Annual ReportOvintiv Inc.
USA Operations
Overview: In 2022, the USA Operations had total capital investment of approximately $1,493 million, drilled
approximately 153 net wells primarily in Permian and Anadarko and total production averaged approximately
131.5 Mbbls/d of oil, approximately 82.1 Mbbls/d of NGLs and approximately 492 MMcf/d of natural gas. At
December 31, 2022, the USA Operations had an established land position of approximately 822,000 net acres,
including approximately 153,000 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, 2022.
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, 2022)
Permian
Anadarko
Bakken
Uinta
Other (2)
Total USA Operations
Gross
108
557
70
127
170
1,032
Net
102
344
45
107
71
669
Gross
25
20
3
30
236
314
Net
12
8
1
23
109
153
Gross
133
577
73
157
406
1,346
(1) Excludes interests in royalty acreage.
(2) Other Operations comprises assets that are not part of the Company’s current focus.
Average
Working
Interest
86%
61%
63%
83%
44%
61%
Net
114
352
46
130
180
822
Producing Wells
(number of wells at December 31, 2022) (1)
Permian
Anadarko
Bakken
Uinta
Other (2)
Total USA Operations
Oil
Natural Gas
Total
Gross
1,726
1,834
576
555
-
4,691
Net
1,643
760
226
381
-
3,010
Gross
3
458
34
2
61
558
Net
3
119
1
-
46
169
Gross
1,729
2,292
610
557
61
5,249
Net
1,646
879
227
381
46
3,179
(1) Figures exclude wells capable of producing, but not producing.
(2) Other Operations comprises assets that are not part of the Company’s current focus.
Production
(average daily)
Permian
Anadarko
Bakken
Uinta
Other (1) (2)
Total USA Operations
Oil
(Mbbls/d)
Plant Condensate
(Mbbls/d)
2022
62.7
35.5
15.3
17.9
0.1
131.5
2021
68.5
39.5
13.3
12.7
6.0
140.0
2022
3.1
5.9
1.1
0.2
0.1
10.4
2021
3.0
6.2
0.8
0.2
0.3
10.5
NGLs
Other
(Mbbls/d)
2022
26.3
37.3
7.1
0.9
0.1
71.7
2021
24.6
35.9
5.0
0.6
1.4
67.5
Total
(Mbbls/d)
Natural Gas
(MMcf/d)
2022
29.4
43.2
8.2
1.1
0.2
82.1
2021
27.6
42.1
5.8
0.8
1.7
78.0
2022
149
286
36
16
5
492
2021
132
301
30
12
15
490
(1) Other Operations comprises assets that are not part of the Company’s current focus.
(2) Other Operations includes volumes associated with Eagle Ford, which was divested during the second quarter of 2021.
Ovintiv Inc.2022 Annual Report | 11
Permian
Permian is an oil play located in west Texas in Midland, Martin, Howard, Glasscock, Andrews 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, 2022, the Company controlled approximately 114,000 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 2022, the Company drilled 62 horizontal net wells. In 2022, production averaged approximately 62.7 Mbbls/d
of oil, approximately 29.4 Mbbls/d of NGLs and approximately 149 MMcf/d of natural gas.
The Company has primarily developed the play using its cube development model and simul-frac technique. Cube
development utilizes multi-well pads and frac spreads running in parallel to simultaneously access multiple layers of
stacked pay to maximize product recovery. Simul-frac technique is the process of fracing pairs of wells at the same
time instead of a single well. These advanced development approaches optimize cycle times and increase capital
efficiency, while minimizing the surface footprint. During 2022, the Company focused on increasing drilling and
completions performance which reduced cycle times, accelerating spud to first sales by approximately 12 percent
compared to the prior year. Further efficiencies were achieved through holding onsite inventory of locally sourced
wet sand. In addition to reducing costs, wet sand has reduced sand related CO2 emissions as well as airborne silica
dust at the workplace and in surrounding communities. During 2022, the Company also focused on expanding its
inventory of drilling locations by drilling 13 percent of the incremental wells in new zones or at greater density within
the standard cube.
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 11 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, 2022, 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 2022, the
Company drilled 54 horizontal net wells. In 2022, production averaged approximately 35.5 Mbbls/d of oil,
approximately 43.2 Mbbls/d of NGLs and approximately 286 MMcf/d of natural gas.
The Company is developing the play using its cube development model and simul-frac technique. During 2022,
Ovintiv focused on increasing drilling performance and well economics by drilling longer laterals and reducing cycle
times which accelerated spud to first sales by approximately 11 percent compared to the prior year.
The play has significant existing infrastructure and 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 two to nine years.
12 | 2022 Annual ReportOvintiv Inc.
Bakken
Bakken is an oil play located primarily in McKenzie and Dunn counties of North Dakota. The focus of development
includes targets in the Bakken and Three Forks formations. During 2022, the Company focused on improving
completions performance and wellbore architecture as well as enhancing well economics by implementing innovative
and successful practices from across the Company’s portfolio.
At December 31, 2022, the Company controlled approximately 46,000 net acres in the play. During 2022, the
Company drilled 25 horizontal net wells. Production averaged approximately 15.3 Mbbls/d of oil, approximately
8.2 Mbbls/d of NGLs and approximately 36 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 nine 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, 2022, the Company controlled approximately 130,000 net acres in the play. During 2022, the Company
drilled 12 horizontal net wells. Production averaged approximately 17.9 Mbbls/d of oil, approximately 1.1 Mbbls/d
of NGLs and approximately 16 MMcf/d of natural gas.
During 2022, the Company drilled 14 gross wells on six pads utilizing multi-well pad development which captured
capital efficiencies.
Oil production from Uinta is waxy, ranging from yellow to black, and is transported from the lease 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.
Canadian Operations
Overview: In 2022, the Canadian Operations had total capital investment of approximately $334 million, drilled
approximately 55 horizontal net wells primarily in Montney and production averaged approximately 47.5 Mbbls/d of
oil and NGLs and approximately 1,002 MMcf/d of natural gas. At December 31, 2022, the Canadian Operations had
an established land position of approximately 1.2 million net acres including approximately 737,000 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, 2022.
The following tables summarize the Canadian Operations landholdings, producing wells and daily production as at
and for the periods indicated.
Landholdings (1)
(thousands of acres at December 31, 2022)
Montney
Other (2)
Total Canadian Operations
Developed
Acreage
Undeveloped
Acreage
Total
Acreage
Gross
543
175
718
Net
364
123
487
Gross
713
366
1,079
Net
497
240
737
Gross
1,256
541
1,797
Net
861
363
1,224
Average
Working
Interest
69%
67%
68%
(1) Excludes interests in royalty acreage.
(2) Other Operations primarily includes Wheatland and Horn River, as well as assets where the Company may pursue growth opportunities.
Ovintiv Inc.2022 Annual Report | 13
Producing Wells
(number of wells at December 31, 2022) (1)
Montney
Other (2)
Total Canadian Operations
(1) Figures exclude wells capable of producing, but not producing.
(2) Other Operations primarily includes Wheatland and Horn River.
Oil
Natural Gas
Total
Gross
6
6
12
Net
4
5
9
Gross
1,758
523
2,281
Net
1,404
435
1,839
Gross
1,764
529
2,293
Net
1,408
440
1,848
Production
Oil
(Mbbls/d)
Plant Condensate
(Mbbls/d)
NGLs
Other
(Mbbls/d)
Total
(Mbbls/d)
Natural Gas
(MMcf/d)
(average daily)
Montney
Other (1)
Total Canadian Operations
2022
0.1
-
0.1
2021
0.1
0.2
0.3
2022
33.6
-
33.6
2021
39.6
0.8
40.4
2022
13.8
-
13.8
2021
15.7
0.1
15.8
2022
47.4
-
47.4
2021
55.3
0.9
56.2
2022
970
32
1,002
2021
1,020
46
1,066
(1) Other Operations primarily includes volumes associated with Duvernay, Wheatland and Horn River. Duvernay was divested during the second
quarter of 2021.
Montney
Montney is primarily a condensate-rich natural gas play located in northeast British Columbia and northwest Alberta.
The play includes properties that are located in the Montney formation where Ovintiv is primarily 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 2022, total production from the
play averaged approximately 47.5 Mbbls/d of oil and NGLs and approximately 970 MMcf/d of natural gas. As at
December 31, 2022, the Company controlled approximately 861,000 net acres and 497,000 net undeveloped acres in
the play.
Ovintiv utilizes cube development to precisely place and space each well drilled to maximize value and resource
extraction within the productive pay. During 2022, Ovintiv focused on drilling longer laterals in less time and
completing wells faster while improving sand proppant efficiency. Drilling, completions and production efficiencies
were captured by stacking innovation initiatives such as redesigned drill bits, motor optimization, real time frac
optimization, simul-frac techniques, multi-coil tubing and integrated service rigs. In 2022, the Company drilled
approximately 52 horizontal net wells. Ovintiv also focused on reducing its emissions footprint by implementing frac
fleets operating on natural gas, which also resulted in lower fuel costs, logistical complexity of sourcing diesel, and
reducing our operational footprint.
Ovintiv has access to natural gas processing capacity of approximately 1,528 MMcf/d, of which approximately
1,313 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 126 Mbbls/d of which approximately 93 Mbbls/d is contracted with third parties under varying terms
and duration, and approximately 33 Mbbls/d is owned by the Company.
Other 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 2022, the Company’s natural gas
production averaged approximately 28 MMcf/d. As at December 31, 2022, the Company had approximately 45 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 10 years.
14 | 2022 Annual ReportOvintiv Inc.
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, 2022, the Company had approximately 395 net
producing wells and controlled approximately 131,000 net acres in the play. In 2022, natural gas production averaged
approximately 4 MMcf/d.
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. A QRE
is an individual who has a minimum of five years practical experience, with at least three recent years of experience
in the evaluation of reserves, and has a degree in petroleum engineering, geology, or other discipline of engineering
or physical science.
Ovintiv’s Corporate Reserves Group, which consists of five staff, report to the Vice-President, Strategy, Corporate
Reserves and Midstream who reports to the 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 done 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. This includes the Company’s reserves manual and conducting 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). The Director, Reserves has over 23 years of experience in upstream oil and
gas and has held numerous positions in reservoir, development and production engineering.
Annually, each play is reviewed in detail by the QREs, the Corporate Reserves Group, subject matter experts and the
Company’s executive officers, 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, 2022, the Company involved IQRAs to audit the Company’s internal oil and natural
gas reserve estimates for certain properties. In 2022, Netherland, Sewell & Associates, Inc. audited 36 percent of the
Company’s estimated U.S. proved reserve volumes and McDaniel & Associates Consultants Ltd. audited 26 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.
Ovintiv Inc.2022 Annual Report | 15
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.
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 on 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 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 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.
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, 2022 and
was prepared as of January 13, 2023. 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. Estimates of future net cash flows and discounted
future net cash flows derived from proved reserves information can be found in Note 27 to Ovintiv’s audited
Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.
16 | 2022 Annual ReportOvintiv Inc.
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, 2022 and other summary operating data.
2022
U.S.
Canada
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
257.2
278.0
535.2
288.3
169.5
457.8
1,755
943
2,698
838.0
604.7
1,442.7
58%
42%
Production (MBOE/d)
Capital Investments (millions)
Total Net Productive Wells (2)
(1) Numbers may not add due to rounding.
(2) Total net productive wells includes producing wells and wells mechanically capable of production.
295.5
1,493
3,341
0.1
-
0.1
71.2
77.8
149.0
2,276
1,814
4,090
450.7
380.1
830.8
54%
46%
214.5
334
1,870
Total
257.3
278.0
535.3
359.5
247.4
606.9
4,031
2,757
6,789
1,288.7
984.9
2,273.6
57%
43%
510.0
1,827
5,211
Changes to the Company’s proved reserves during 2022 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
2022 (1)
Oil
(MMbbls)
NGLs
(MMbbls)
558.6
(65.5 )
95.2
15.8
(20.8 )
(48.0 )
535.3
257.3
278.0
535.3
604.7
(33.2 )
68.5
15.4
(1.3 )
(47.3 )
606.9
359.5
247.4
606.9
Natural Gas
(Bcf)
6,570
(544 )
1,241
88
(22 )
(545 )
6,789
4,031
2,757
6,789
Total
(MMBOE)
2,258.2
(189.2 )
370.6
45.9
(25.7 )
(186.2 )
2,273.6
1,288.7
984.9
2,273.6
(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 2022, the Company’s proved reserves increased by 15.4 MMBOE from 2021 primarily due to extensions and
discoveries of 370.6 MMBOE from successful drilling leading to increased technical delineation, as well as new
proved undeveloped locations resulting from updated development plans primarily in Montney and Permian.
Extensions and discoveries include 26.9 MMBOE as a result of drilling wells in 2022 that were not previously
classified as proved undeveloped reserves. Approximately 44 percent of the 2022 extensions and discoveries were oil,
condensate and NGLs. Revisions and improved recovery of previous estimates were negative 189.2 MMBOE
Ovintiv Inc.2022 Annual Report | 17
primarily due to changes in the approved development plan of 142.5 MMBOE, negative price revisions of
49.6 MMBOE from higher royalties in Canada due to higher 12-month average trailing prices, and 1.5 MMBOE from
revisions other than price, partially offset by 4.4 MMBOE from infill drilling locations.
Production for 2022 was 186.2 MMBOE. Purchases of 45.9 MMBOE were primarily properties with oil and liquids-
rich potential in Permian. Sales of 25.7 MMBOE were primarily due to the divestitures of properties held in Uinta.
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, 2022 were WTI: $93.82 per
bbl, Edmonton Condensate: C$121.18 per bbl, Henry Hub: $6.36 per MMBtu, and AECO: C$5.65 per
MMBtu. Prices for oil, NGLs and natural gas are inherently volatile.
Proved Undeveloped Reserves
Changes to the Company’s proved undeveloped reserves during 2022 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.
2022
932.5
(168.0 )
343.7
(161.3 )
41.1
(3.1 )
984.9
As of December 31, 2022, there are no proved undeveloped reserves that are expected to remain undeveloped for five
years or more.
Extensions and discoveries of 343.7 MMBOE of proved undeveloped reserves were the result of successful drilling
leading to increased technical delineation, as well as new proved undeveloped locations resulting from updated
development plans primarily in Montney and Permian. Revisions of prior estimates of proved undeveloped reserves
were negative 168 MMBOE primarily due to development plan changes of 142.5 MMBOE, downward revision of
26.7 MMBOE from higher royalties in Canada due to higher 12-month average trailing price, and 2.9 MMBOE from
well performance, partially offset by 4.1 MMBOE from infill drilling locations. Development plan changes are driven
by portfolio optimization and changing commodity prices as compared to the prior year.
Conversions of proved undeveloped reserves to proved developed status were 161.3 MMBOE, equating to 17 percent
of the total prior year-end proved undeveloped reserves. Ovintiv’s five-year average proved undeveloped conversion
ratio is above 20 percent. Approximately 56 percent of proved undeveloped reserves conversions occurred in Permian
and Anadarko in the U.S. and 36 percent occurred in Montney in Canada. The Company spent approximately
$1,195 million to develop proved undeveloped reserves in 2022, of which approximately 83 percent related to the
U.S. properties and 17 percent related to the Canadian properties.
Purchases of proved undeveloped reserves of 41.1 MMBOE relate primarily to properties with liquids-rich potential
in Permian, while the sale of proved undeveloped reserves of 3.1 MMBOE relate primarily to properties in Montney.
18 | 2022 Annual ReportOvintiv Inc.
Sales Volumes, Prices and Production Costs
The following table summarizes the Company’s production by final product sold, average sales price, and production
cost per BOE for each of the last three years by geographic area:
Oil
(MMbbls)
Production
NGLs
(MMbbls)
Natural Gas
(Bcf)
48.0
-
48.0
51.1
0.1
51.2
55.2
0.2
55.4
29.9
17.3
47.2
28.5
20.5
49.0
29.8
20.5
50.3
180
366
546
179
389
568
194
367
561
2022
USA (3)
Canada (4)
Total
2021
USA (3)
Canada (4)
Total
2020
USA (3)
Canada (4)
Total
Average Sales Price (1)
Oil
($/bbl)
NGLs
($/bbl)
Natural Gas
($/Mcf)
94.25
87.28
94.25
65.69
56.71
65.67
36.84
32.58
36.83
34.88
78.44
50.84
30.32
56.48
41.28
11.85
29.37
18.99
6.18
5.75
5.89
3.71
3.52
3.58
1.60
2.01
1.87
Average
Production
Cost (2)
($/BOE)
11.47
13.76
12.44
9.12
12.37
10.55
7.99
11.45
9.41
(1) Excludes the impact of commodity derivatives.
(2) Excludes ad valorem, severance and property taxes.
(3) As at December 31, 2022 and 2021, there was no production from fields that comprise greater than 15 percent of the Company’s total reserves.
As at December 31, 2020, annual production from fields that comprise greater than 15 percent of the Company’s total proved reserves related
to Midland county in Permian: 2020 - 8.1 MMbbls of oil, 4.4 MMbbls of NGLs and 23 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:
2022 - 7.2 MMbbls of NGLs and 267 Bcf of natural gas; 2021 - 9.1 MMbbls of NGLs and 282 Bcf of natural gas; and 2020 - 10.2 MMbbls
of NGLs and 272 Bcf of natural gas.
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.
Exploratory
Development
Total
Productive
Dry
Productive
Dry
Productive
Dry
Gross
Net Gross
Net Gross
Net Gross
Net Gross
Net Gross
Net
-
4
4
-
1
1
-
-
-
-
3
3
-
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
194
65
259
180
114
294
229
97
326
153
52
205
148
84
232
208
74
282
-
-
-
-
-
-
1
-
1
-
-
-
-
-
-
1
-
1
194
69
263
180
115
295
229
97
326
153
55
208
148
85
233
208
74
282
-
-
-
-
-
-
1
-
1
-
-
-
-
-
-
1
-
1
2022
USA
Canada
Total
2021
USA
Canada
Total
2020
USA
Canada
Total
(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.
Ovintiv Inc.2022 Annual Report | 19
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, 2022.
Wells in the Process of Drilling
or in Active Completion
Wells Suspended or Waiting on
Completion (3)
USA
Canada
Total
Development
Exploratory
Exploratory
Gross
-
-
-
Net Gross
25
17
42
-
-
-
Net Gross
-
16
3
9
3
25
Development
Net
23
11
34
Net Gross
30
13
43
-
3
3
(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.
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, 2022.
Productive Wells (1, 2)
USA
Canada
Total
Oil (3)
Natural Gas (4)
Total
Gross
4,819
14
4,833
Net Gross
636
2,310
2,946
3,109
11
3,120
Net Gross
5,455
232
2,324
1,859
7,779
2,091
Net
3,341
1,870
5,211
(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)
(4)
Includes 5 gross oil wells (5 net oil wells) containing multiple completions.
Includes 799 gross natural gas wells (692 net natural gas wells) containing multiple completions.
20 | 2022 Annual ReportOvintiv Inc.
The following table summarizes the Company’s developed, undeveloped and total landholdings by geographic area
as at December 31, 2022.
Landholdings (1 - 7)
(thousands of acres)
United States
Total United States
Canada
Total Canada
Total
— Freehold
— Federal
— Fee
— Tribal/Allotted
— State
— Crown
— Freehold
— Fee
856
35
61
68
12
1,032
679
38
1
718
1,750
Developed
Gross
Net
568
15
13
63
10
669
460
26
1
487
1,156
Undeveloped
Gross
Net
Total
Gross
33
19
231
28
3
314
1,051
25
3
1,079
1,393
23
15
89
24
2
153
721
13
3
737
890
889
54
292
96
15
1,346
1,730
63
4
1,797
3,143
Net
591
30
102
87
12
822
1,181
39
4
1,224
2,046
(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.
Of the total 2.0 million net acres, approximately 1.9 million net acres is held by production. The table above includes
acreage subject to leases that will expire over the next three years: 2023 - approximately 16,400 net acres;
2024 - approximately 3,500 net acres; and 2025 - approximately 18,300 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.
Ovintiv Inc.2022 Annual Report | 21
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 three 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
six 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 one year 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 and Chicago.
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 24 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, 2022, the Company was committed to deliver
approximately 38.3 MMbbls of oil and approximately 32 MMcf of natural gas in the USA Operations and
approximately 8.6 MMbbls of oil and NGLs and approximately 38 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 17 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
55
191
246
84
460
544
790
116
143
259
158
840
998
1,257
118
87
205
131
617
748
953
15
85
100
116
1,940
2,056
2,156
304
506
810
489
3,857
4,346
5,156
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
22 | 2022 Annual ReportOvintiv Inc.
development of resources not yet characterized as proved reserves. 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, 2022, the Company had one customer, Vitol Inc., which individually
accounted for more than 10 percent of the Company’s consolidated revenues (2021 and 2020 - 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, along with its
foundational values of integrity, safety, sustainability, trust and respect guide behavior and define what Ovintiv
expects of its employees in the workplace. These values and expectations reflect and support the Company’s corporate
strategy, culture and organizational priorities. The Company’s Board chair and the Human Resources and
Compensation Committee provide strategic oversight to key social issues including diversity, equity and inclusion, as
well as the compensation program and its alignment with the Company’s strategic and business objectives, shareholder
interests and governance developments. Ovintiv is committed to fair labor practices in its operations and adherence to
all applicable workplace and employment standards.
Ovintiv Inc.2022 Annual Report | 23
At December 31, 2022, the Company employed 1,744 employees. The following table outlines our employees by
geographic area.
U.S.
Canada
Total
Employees
997
747
1,744
The Company also engages a number of contractors and service providers.
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, 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 16 new graduates and 26 interns per year over the past three years. In addition, the Company has a robust
approach to succession planning for 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, operational and environmental 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. Awards that settle in shares of common stock
do not result in beneficial ownership until the awards are settled. See Note 21. Compensation Plans and Note 22.
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, 2022, the average tenure of our employees is over nine years and voluntary turnover is
approximately six percent.
Diversity, Equity and Inclusion
The Company values diversity and fosters a culture of equity and inclusion, believing that diverse perspectives and
experience enhances Ovintiv’s overall effectiveness and performance. Diversity and inclusion is nested within the
Company’s social commitment as part of the ESG strategy. The Company takes an integrated approach to this work
by inviting perspectives from various internal functions in order to amplify the impact. As part of the Company’s
commitment to diversity, equity and inclusion, Ovintiv has an employee resource group 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 offered to employees of all levels on inclusive leadership and interrupting bias.
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 underrepresented
groups through its targeted succession planning and 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.
24 | 2022 Annual ReportOvintiv Inc.
Specific to gender diversity, women at Ovintiv comprised approximately 60 percent of the executive leadership team
reporting to the Chief Executive Officer, approximately 18 percent of the senior leadership group and approximately
31 percent of all employees at December 31, 2022.
Employee Safety & Wellness
Safety is a foundational value at Ovintiv. Providing a safe workplace for 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 promotes 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.
Our operations are subject to a number of federal and state laws and regulations, including the federal Occupational
Safety and Health Act (“OSHA”), and comparable state and provincial laws, rules and regulations and have established
a variety of standards related to workplace exposure to hazardous substances, whose purpose is to protect the health
and safety of workers. In addition, in the U.S. the OSHA hazard communication standard, the EPA community right-
to-know regulations under Title III of the federal Superfund Amendments and Reauthorization Act and comparable
state and provincial statutes require that information be maintained concerning hazardous materials used or produced
in operations and that this information be provided to employees, state, provincial and local government authorities
and citizens.
As a result, certain safety metrics are included in the Company’s scorecard and are tied into the Company’s
compensation program. Environmental, Health and Safety (“EH&S”) metrics reflected in the scorecard include Total
Recordable Injury Frequency, Spill Intensity, GHG Intensity, all of which are described in the Proxy Statement relating
to the Company’s 2022 annual meeting of shareholders.
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 addition, President Biden and certain members of his administration have expressed support for, and have taken
steps to implement, additional regulation of oil and gas leasing and permitting on federal lands. For example, President
Biden issued an executive order in January 2021 directing the Secretary of the Interior to pause on entering new oil
and gas leases on public lands to the extent possible and to launch a rigorous review of all existing leasing and
permitting practices related to fossil fuel development on public lands. Although the pause on leasing was lifted in
June 2021, the Department of the Interior subsequently issued its report on the federal leasing program in November
2021. The report recommended various changes to the program, including, among other things, increasing royalty and
Ovintiv Inc.2022 Annual Report | 25
rental rates, enhancing bonding requirements and applying a more rigorous land-use planning process prior to leasing.
However, certain of the report’s recommendations require Congressional actions, and we cannot predict to what
extent, if any, the Department of the Interior may be able to promulgate rules implementing the recommendations of
the November 2021 report. While it is not possible at this time to predict the ultimate impact of these or any other
future regulatory changes, any additional restrictions or burdens on our ability to operate on federal lands could
adversely impact our business in areas where we operate under federal leases.
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.
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 in the U.S., 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 U.S. 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
26 | 2022 Annual ReportOvintiv Inc.
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 state, 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 Province and the BRFN engaged in negotiations to establish ‘timely
enforceable mechanisms’ to assess and manage the cumulative impact of industrial development on the BRFN’s treaty
rights and on January 18, 2023, the Province and BRFN jointly announced that they had reached an agreement, which
if implemented as intended, is agreed to resolve the Treaty infringement identified by the Court. Further, on
January 20, 2023, the Province announced it had signed an agreement (the “Consensus Document”) to advance a
collaborative approach to land and resource planning with an additional four Treaty 8 First Nations in northeast British
Columbia and indicated that agreements with the remaining three Treaty 8 First Nations are moving towards a
resolution. Though the specifics of the agreements have yet to be released, the information available to date indicates
that the agreements will transform how the Province and First Nations steward land, water and resources together, and
address cumulative effects in BRFN’s Claim Area through restoration measures to heal the land, establish new areas
protected from industrial development, and constrain development activities while a new long-term cumulative effects
management regime is implemented. More importantly, the new development constraints are land disturbance focused
and are not intended to cap or constrain production. The new requirements do not apply to existing production, to
private lands, or to lands outside of the claim area identified in the court case. However, authorizations on private
lands will be subject to an enhanced Indigenous consultation process. Although Ovintiv’s landholdings in Montney
that are located in northeast British Columbia are within the “Blueberry Claim Area” subject to the agreement, the
majority of the Company’s current land holdings and operations are on private land. While it is not anticipated the
new agreements will materially impact the Company’s development plans in Montney, final details of the agreements
have yet to be released. Should the agreements impose new, onerous approval requirements, the Company may be
unable to conduct exploration and development activities on a portion of its landholdings in Montney that are located
within northeast British Columbia.
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.
Ovintiv Inc.2022 Annual Report | 27
Environmental and Occupational Health and Safety Regulations
The Company is subject to many federal, state, provincial, local and tribal environmental and occupational health and
safety laws and regulations. These environmental and occupational health and safety laws and regulations include, but
are not limited to, legal requirements relating 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, including any laws or regulations in connection with a
response to climate change;
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
the establishment of workplace standards for the protection of the health and safety of employees, including
the implementation of hazard communications programs designed to inform employees about hazardous
substances in the workplace, potential harmful effects of these substances, and appropriate control
measures.
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 and occupational health and safety laws and regulations contain citizen suit provisions
which allow private parties, including environmental organizations, to directly sue alleged violators or government
agencies to enforce applicable requirements. To address climate change, the United States, Canada, and other
signatories to the Paris Agreement and the Glasgow Climate Pact have agreed to voluntary and non-binding
commitments to limit GHG emissions and fossil fuel subsidies. In June 2021, Canada passed the Net-Zero Emissions
Accountability Act, which formally establishes the country’s 2050 net-zero emissions target. In the United States, no
comprehensive climate change legislation has been implemented at the federal level. However, the U.S.
Environmental Protection Agency (the “EPA”) has determined that GHG emissions present a danger to public health
and the environment and has proposed New Source Performance Standards to more stringently regulate methane and
volatile organic compound emissions from oil and natural gas sources. 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.
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
to an environmental event and
regulations. Contingency plans are
remediation/reclamation programs are in place and utilized to restore the environment. In addition, the Environmental,
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. 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.
in place for a
timely response
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
28 | 2022 Annual ReportOvintiv Inc.
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.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The Company’s Executive Officers are set out in the table below:
Name
Age (1)
Officer Corporate Office
Years Served
as Executive
Brendan M. McCracken
Corey D. Code
Meghan N. Eilers
Gregory D. Givens
Rachel M. Moore
Renee E. Zemljak
(1) As of February 17, 2023.
47
49
41
49
51
58
President & Chief Executive Officer
4
4 Executive Vice-President & Chief Financial Officer
1 Executive Vice-President, General Counsel & Corporate Secretary
4 Executive Vice-President & Chief Operating Officer
3 Executive Vice-President, Corporate Services
13 Executive Vice-President, Midstream, Marketing & Fundamentals
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.
Ms. Eilers was appointed Executive Vice-President, General Counsel & Corporate Secretary in March 2022. Ms.
Eilers joined the Company in 2019, serving as Vice-President, Legal Operations. Prior to joining the Company, Ms.
Eilers served as the Assistant General Counsel at Newfield Exploration from 2018 to 2019, and served in various legal
roles, including Managing Counsel – Domestic Operations, at Noble Energy, Inc. from 2007 to 2018.
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.2022 Annual Report | 29
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.
The Company’s risk factors are summarized as market; operational; environmental; financial; regulatory; tax and
general risks associated with business and industry.
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.
• 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.
• The trading price of our securities, including our common stock, is subject to volatility.
•
Fluctuations in exchange rates could affect expenses or result in realized and unrealized losses.
Operational Risks
• Our ability to operate and complete projects is dependent on numerous factors outside of our control.
• 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.
• Oil and natural gas exploration, development and production activities involve substantial costs and risks and
may not result in commercially productive reserves.
• 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.
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.
•
• Horizontal multi-well pad drilling involves certain risks which may cause volatility in our operating results.
• We are subject to risks and liabilities from acquisitions and any anticipated or desired benefits from such
acquisitions may not be realized.
• We are dependent on partners to fund certain projects conducted through joint ventures and partnerships.
• 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.
• Our customers, counterparties and lenders may be unable to satisfy their contractual or legal obligations.
• We retain certain indemnification obligations related to our corporate reorganization in November of 2009.
• We may be unable to dispose of certain assets and may be required to retain liabilities for certain matters.
• Our operations may be affected by indigenous treaty, title and other rights.
Environmental Risks and Risks Associated with Climate Change
• We are subject to risks and uncertainties associated with increased environmental regulations in all jurisdictions
in which we operate.
• We are subject to risks and uncertainties arising out of government action in response to concerns over 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.
• Enhanced scrutiny on ESG matters could have an adverse effect on our 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.
• Our level of indebtedness may limit our financial flexibility.
30 | 2022 Annual ReportOvintiv Inc.
• 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.
• 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.
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.
• 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.
• 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.
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.
• Our corporate reorganization in January of 2020 may result in material Canadian and/or U.S. federal income
taxes.
General Risks
• The oil and natural gas industry is highly competitive and many of our competitors have available resources in
excess of our own.
• We could be adversely affected by security threats, including cyber-security threats and related disruptions.
The following risk factors should be read in conjunction with the other information contained herein, including the
consolidated financial statements and the related notes. Unless the context requires otherwise, "we," "us," "our" and
"Ovintiv" refer to Ovintiv Inc. and its subsidiaries.
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;
Ovintiv Inc.2022 Annual Report | 31
•
•
•
•
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.
Prices for oil, NGLs and natural gas are particularly sensitive to actual and perceived threats to geopolitical stability
and to changes in production from OPEC+ member states. For example, the ongoing conflict, and the continuation of,
or any increase in the severity of, the conflict between Russia and Ukraine, has led and may continue to lead to an
increase in the volatility of global oil and gas prices.
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
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.
A pandemic, epidemic or other widespread outbreak of an infectious disease, such as the ongoing COVID-19
pandemic, and resulting restrictive measures implemented by governments in the jurisdictions in which we operate,
have at times and could in the future prevent our employees, contractors or suppliers from accessing our properties or
performing critical services. Such measures have included and 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 have at times and may in the
future 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.
32 | 2022 Annual ReportOvintiv Inc.
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 have resulted in and
could in the future result in realized and unrealized losses, which has impacted and could in the future impact our
revenue and expenses and have a material adverse effect on our business, financial condition and results of operations.
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:
•
•
•
•
•
•
•
•
•
•
•
•
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•
•
•
•
•
•
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;
oil and natural gas reservoir quality;
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;
changes to free trade agreements;
inflation and other unexpected cost increases, including with respect to materials and labor;
prevailing interest and foreign exchange rates;
royalty and tax rates;
physical impacts from adverse weather conditions and natural disasters;
transportation and processing interruptions or constraints, including the availability and proximity of pipeline
and processing capacity;
technology failures; and
accidents.
In addition, part of our corporate strategy is focused on a limited number of 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.
Ovintiv Inc.2022 Annual Report | 33
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;
loss of well control;
environmental hazards, such as the uncontrollable release or spill of oil, natural gas, toxic gases (such as
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;
acts of vandalism and terrorism, including attacks targeting oil, NGLs and natural gas facilities and
infrastructure; and
cyber attacks targeting oil and gas infrastructure.
•
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•
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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.
To the extent such weather events or natural disasters become more frequent or more severe, disruptions to our
business and costs to repair damaged facilities could increase.
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. We cannot predict the continued availability of insurance at premium levels
that justify its purchase. 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:
•
•
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•
•
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•
unexpected drilling conditions, including abnormal pressures or irregularities in formations;
equipment failures or accidents;
construction delays;
fracture stimulation accidents or failures;
adverse weather conditions or natural disasters;
title defects or restricted access to land;
lack of available gathering, transportation, processing, fractionation, storage, refining or export facilities;
34 | 2022 Annual ReportOvintiv Inc.
•
•
•
lack of available capacity on interconnecting transmission pipelines;
access to, and the cost and availability of, the equipment, services, resources and personnel required to
complete our drilling, completion and production activities, including as a result of increased inflation, labor
shortages or supply chain issues; 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;
running casing the entire length of the wellbore;
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.
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.
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 can be 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, 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
Ovintiv Inc.2022 Annual Report | 35
the unweighted arithmetic average of the price on the first day of each month within the preceding 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
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 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;
36 | 2022 Annual ReportOvintiv Inc.
•
•
•
•
•
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.
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. 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
Ovintiv Inc.2022 Annual Report | 37
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 guaranty’s, letters of credit or prepayments 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.
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
38 | 2022 Annual ReportOvintiv Inc.
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
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 regulations 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 and supplemented in November
2022, 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
Ovintiv Inc.2022 Annual Report | 39
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.
Furthermore, in November 2022, the BLM proposed regulations limiting the waste of natural gas from venting, flaring
and leaks during operations on existing and new federal and tribal leases. 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.
In Canada, the Environment and Climate Change Canada published, in November 2022, a proposed regulatory
framework for the reduction of methane emissions in the oil and gas sector in order to achieve at least a 75 percent
reduction in oil and gas methane by 2030 relative to 2012. The proposed regulatory amendments would, among other
things, prohibit flaring and venting, require high levels of equipment efficiency and require annual inspections for
non-producing wells. Alberta and British Columbia have equivalency agreements in place with the Government of
Canada, such that the current federal methane regulations generally do not apply in these provinces. However, in the
event that the proposed federal amendments are passed, regulatory changes in Alberta and British Columbia will likely
be required to maintain equivalency. The comment period for the proposed regulatory framework closed in December
2022. Additional details regarding timing and the text of the proposed regulatory amendments have not been released.
On January 1, 2023, material amendments to Alberta's Technology, Innovation and Emissions Reduction Regulation
(“TIER”) came into force. The amendments align TIER with Canada's federal Greenhouse Gas Pollution Pricing Act,
provide price certainty and seek to address a potential surplus of provincial carbon credits in the coming years. As a
result of the amendments, flaring emissions are now included in the total regulated emissions for the Company's
aggregate oil and gas facilities that are subject to TIER.
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 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,
seek 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. In November 2021, the
Unites States, Canada, and other countries entered into the Glasgow Climate Pact, which includes a range of measures
designed to address climate change, including but not limited to the phase-out of fossil fuel subsidies, reducing
methane emissions 30 percent by 2030, and cooperating toward the advancement of the development of clean energy.
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
40 | 2022 Annual ReportOvintiv Inc.
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 government action in response to concerns over 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,
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. On August 16, 2022, President Biden signed into law the Inflation Reduction Act (the “IRA”) which
contains tax inducements and other provisions that incentivize investment, development, and deployment of
alternative energy sources and technologies, which could increase operating costs within the oil and gas industry and
accelerate the transition away from fossil fuels. 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
Ovintiv Inc.2022 Annual Report | 41
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.
During 2021, we initiated scenario planning analysis in alignment with recommendations of the Financial Stability
Board’s Taskforce on Climate-related Financial Disclosures (“TCFD”). This expanded climate-focused scenario
planning framework, included forecasts of future demand and pricing in energy markets, as well as changes in
government regulations and policy. Given the dynamic nature of the Company’s business, the Company generally
performs annual scenario analyses with five-year time horizons. When analyzing longer-term TCFD scenarios, we
rely on external analysis for demand scenarios, carbon pricing, and comparison-pricing scenarios, which are then
compared to our internally prepared base-case pricing analysis. Given the numerous estimates that are required to run
these scenarios, our estimates could differ materially from actual results. Additionally, by electing to set and share
publicly these metrics in our sustainability report and our commitment to expand upon its disclosures, our business
may also face increased scrutiny related to ESG initiatives.
Enhanced scrutiny on ESG matters could have an adverse effect on our operations.
Our efforts to research, establish, accomplish and accurately report on our emissions goals, targets and strategies
expose us to numerous operational, reputational, financial, legal and other risks. Our ability to reach our target
emissions is subject to a multitude of factors and conditions, many of which are out of our control. Examples of such
factors include evolving government regulation, the pace of changes in technology, the successful development and
deployment of existing or new technologies and business solutions on a commercial scale, the availability, timing and
cost of equipment, manufactured goods and services, and the availability of requisite financing and federal and state
incentive programs.
Enhanced scrutiny on ESG matters related to, among other things, concerns raised by advocacy groups about climate
change, hydraulic fracturing, waste disposal, oil spills, and explosions of natural gas transmission pipelines may lead
to increased regulatory scrutiny, which may, in turn, lead to new state, provincial and federal safety and environmental
laws, regulations, guidelines, and enforcement interpretations. These actions may cause operational delays or
restrictions, increased operating costs, additional regulatory burdens, increased risk of litigation, and adverse impacts
on our access to capital. Moreover, governmental authorities exercise considerable discretion in the timing and scope
of permit issuance, and the public may engage in the permitting process, including through intervention in the courts.
Negative public perception could cause the permits we require to conduct our operations to be withheld, delayed, or
burdened by requirements that restrict our ability to profitably conduct our business.
We may face increased scrutiny from the investment community, other stakeholders and the media related to our
emissions goals and strategies. As a result, we could damage our reputation if we fail to act responsibly in the areas
in which it reports. Any harm to our reputation resulting from setting these metrics, expanding our disclosures, or our
failure or perceived failure to meet such metrics or disclosures could adversely affect our business, financial
performance, and growth. If our emissions goals and strategies to achieve them do not meet evolving investor or other
stakeholder expectations or standards, our reputation, ability to attract and retain employees and attractiveness as an
investment, business partner or acquirer could be negatively impacted. Similarly, our failure or perceived failure to
fulfill emissions goals and targets, to comply with ethical ESG or other standards, regulations, or expectations, or to
satisfy various reporting standards with respect to these matters effectively could have the same negative impacts and
further expose us to government enforcement actions and private litigation. Even if we achieve our goals, targets and
objectives, we may not realize all of the benefits that were expected at the time the goals were established.
42 | 2022 Annual ReportOvintiv Inc.
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). There is no assurance that one or more of the Company’s 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 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.
Our level of indebtedness may limit our financial flexibility.
As of December 31, 2022, we had outstanding long-term unsecured senior notes of $3,176 million, $393 million in
outstanding commercial paper and no outstanding balance under its revolving credit facilities. 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.
Ovintiv Inc.2022 Annual Report | 43
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
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. Our repurchases may also be affected by the IRA, which was
enacted in August 2022 and provides for, in part, a one percent excise tax on corporate stock repurchases. 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
44 | 2022 Annual ReportOvintiv Inc.
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.
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). On August 16, 2022, the
IRA was signed into law. The IRA introduced a new 15 percent corporate alternative minimum tax (“CAMT”),
effective for tax years beginning after December 31, 2022 on corporations with average adjusted financial statement
income over $1 billion for any 3-year period preceding the tax year. Based on available guidance, the Company does
not expect to exceed the $1 billion threshold to be subject to the CAMT in 2023 but may be subject to the CAMT in
2024. 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.
Ovintiv Inc.2022 Annual Report | 45
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, 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 our subsequent migration from Canada to the United States, becoming a Delaware corporation (the
“U.S. Domestication”). 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.
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. Cybersecurity threat actors are
becoming more sophisticated and coordinated in their attempts to access a company’s information technology systems
and data, including the information technology systems of cloud providers. Furthermore, geopolitical tensions or
conflicts, such as Russia’s invasion of Ukraine, may further heighten the risk of cybersecurity attacks. 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. However, such 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
46 | 2022 Annual ReportOvintiv Inc.
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.
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”.
For additional information, see Note 26 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.2022 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 17, 2023, there were 243,643,104 shares of common stock outstanding held by 5,144 shareholders of
record, and no shares of preferred stock outstanding.
Capital Return Information
In 2022, the Company paid a quarterly dividend of $0.20 per share of common stock for the first quarter and $0.25 per
share of common stock for each of the second, third and fourth quarters (2021: $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) and $0.95 per
share of common stock annually (2021: $0.4675 per share of common stock annually). On February 27, 2023 the
Board of Directors declared a dividend of $0.25 per share of Ovintiv common stock payable on March 31, 2023 to
common shareholders of record as of March 15, 2023. The Company typically 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; however, the timing and amount of
dividends, if any, is subject to the discretion of the Board of Directors.
On July 6, 2022, the Company announced it will increase cash returns to shareholders from 25 percent to 50 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 2022, 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”.
48 | 2022 Annual ReportOvintiv Inc.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS
On September 28, 2022, Ovintiv announced it had received regulatory approval to purchase, for cancellation or return
to treasury, up to approximately 24.8 million shares of common stock pursuant to a NCIB over a 12-month period
from October 3, 2022 to October 2, 2023. The number of shares of common stock authorized for purchase represents
approximately 10 percent of Ovintiv's issued and outstanding shares of common stock as of September 19, 2022.
During the three months ended December 31, 2022, the Company purchased approximately 3.5 million shares of
common stock for total consideration of approximately $188 million at a weighted average price of $53.94 per share.
The following table presents the shares of common stock purchased during the three months ended
December 31, 2022.
Period
October 1 to October 31, 2022
November 1 to November 30, 2022
December 1 to December 31, 2022
Total
(1)
Includes commissions.
Total Number of
Shares Purchased
957,525 $
1,803,312
724,362
3,485,199 $
Average
Price Paid
per Share (1)
52.22
54.93
53.77
53.94
Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs
957,525
1,803,312
724,362
3,485,199
Maximum Number of Shares
That May Yet be Purchased
Under the Plans or Programs
23,889,330
22,086,018
21,361,656
21,361,656
RECENT SALES OF UNREGISTERED EQUITY SECURITIES
None.
Ovintiv Inc.2022 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, 2017 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)
Fiscal Year Ended December 31
Ovintiv
S&P 400
XOP U.S. Equity
Item 6. [Reserved]
Not Applicable.
2017
2018
2022
$ 100.00 $ 43.63 $ 35.93 $ 23.42 $ 55.84 $ 85.60
138.18
100.51
112.17
65.12
127.48
41.47
159.01
69.16
100.00
100.00
88.90
71.91
2019
2020
2021
50 | 2022 Annual ReportOvintiv 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 2022 results and year-over-year comparisons between 2022 and
2021 results. This MD&A should be read in conjunction with the audited Consolidated Financial Statements and
accompanying notes for the year ended December 31, 2022 (“Consolidated Financial Statements”), which are included
in Item 8 of this Annual Report on Form 10-K. Discussion and analysis of 2020 results and year-over-year comparisons
between 2021 and 2020 results that are not included in this Form 10-K, and can be found in Item 7 of the 2021 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:
(cid:120)(cid:3) Executive Overview
(cid:120)(cid:3) Results of Operations
(cid:120)(cid:3) Liquidity and Capital Resources
(cid:120)(cid:3) Accounting Policies and Estimates
(cid:120)(cid:3) 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 unlocking shareholder value, Ovintiv utilizes its capital allocation
framework to increase returns to shareholders while focusing on continued 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, targets and progress
achieved relating to ESG practices can be found in the Company Outlook section of this MD&A and on the Company’s
sustainability website.
Ovintiv continually reviews and evaluates its strategy and changing market conditions in order to maximize cash flows
from its high-quality assets and renew its premium well inventory locations in some of the best plays in North America.
These 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 shareholder value.
For additional information on Ovintiv’s strategy, its reporting segments and the plays in which the Company operates,
refer to Items 1 and 2 of 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.2022 Annual Report | 51
In evaluating its operations and assessing its leverage, Ovintiv reviews performance-based measures such as Non-
GAAP Cash Flow, Non-GAAP Total Costs and debt-based metrics such as Debt to Adjusted Capitalization, Debt to
EBITDA and Debt to Adjusted EBITDA, which are non-GAAP measures and do not have any standardized meaning
under U.S. GAAP. These measures may not be similar to measures presented by other issuers and should not be
viewed as a substitute for measures reported under U.S. GAAP. Additional information regarding these measures,
including reconciliations to the closest GAAP measure, can be found in the Non-GAAP Measures section of this
MD&A.
Highlights
During 2022, the Company focused on executing its 2022 capital investment plan aimed at maximizing profitability
through operational and capital efficiencies, minimizing the impact of inflation, delivering cash from operating
activities and reducing long-term debt. Higher upstream product revenues in 2022 compared to 2021 resulted from
higher average realized prices, excluding the impact of risk management activities. Increases in average realized
natural gas and liquids prices of 65 percent and 35 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 delivered significant cash from operating activities of $3,866 million which included a net realized loss
of $2,613 million on the settlement of commodity and foreign exchange risk management positions.
Significant Developments
(cid:120) On May 9, 2022, Ovintiv announced an increase of 25 percent to its quarterly dividend payment representing
an annualized dividend of $1.00 per share of common stock as part of the Company’s commitment to
returning capital to shareholders.
(cid:120) On May 9, 2022, Ovintiv issued a notice to the trustee to redeem the Company’s $1.0 billion, 5.625 percent
senior notes due July 1, 2024. The senior notes were redeemed on June 10, 2022 with cash on hand and other
existing sources of liquidity. The debt redemption will result in annualized interest savings of approximately
$55 million.
(cid:120) On July 6, 2022, Ovintiv elected to accelerate the increase in cash returns to shareholders as a result of the
Company’s continued strong financial performance and the previously announced asset sales. During the
third quarter of 2022, the Company increased its cash return to shareholders from 25 percent to 50 percent of
Non-GAAP Cash Flow in excess of capital expenditures and base dividends. Ovintiv delivered the additional
shareholder returns through share buybacks under its NCIB program.
(cid:120) During the third quarter of 2022, the Company closed its previously announced divestitures for portions of
its Uinta and Bakken assets, and received combined proceeds of approximately $215 million, after closing
and other adjustments. Both transactions were effective April 1, 2022.
(cid:120) On September 28, 2022, the Company announced it had received regulatory approval for the renewal of its
NCIB program, that enables the Company to purchase, for cancellation or return to treasury, up to
approximately 24.8 million shares of common stock over a 12-month period from October 3, 2022 to October
2, 2023. The number of shares authorized for purchase represents approximately 10 percent of Ovintiv’s
issued and outstanding shares of common stock as at September 19, 2022. The Company continues to execute
the NCIB program in conjunction with its capital allocation framework.
Financial Results
(cid:120) Reported net earnings of $3,637 million, including net losses on risk management in revenues of $1,867
million, before tax.
(cid:120) Generated cash from operating activities of $3,866 million and Non-GAAP Cash Flow of $4,110 million.
Cash from operating activities exceeded capital expenditures by $2,035 million.
(cid:120) Purchased for cancellation, approximately 14.7 million shares of common stock for total consideration of
approximately $719 million.
52 | 2022 Annual ReportOvintiv Inc.
(cid:120) Paid dividends of $0.95 per share of common stock totaling $239 million.
(cid:120) Repurchased in the open market approximately $565 million in principal amount of the Company’s senior
notes.
(cid:120) Had $3.3 billion in total liquidity as at December 31, 2022, which included available credit facilities of $3.5
billion, available uncommitted demand lines of $195 million, and cash and cash equivalents of $5 million,
net of outstanding commercial paper of $393 million.
(cid:120) Reduced total long-term debt by $1,216 million.
(cid:120) Reported Debt to EBITDA of 0.7 times and Non-GAAP Debt to Adjusted EBITDA of 0.8 times.
Capital Investment
(cid:120) Reported total capital spending of $1,831 million, which was in line with the full year 2022 investment plan
of approximately $1.8 billion.
(cid:120) Focused on highly efficient capital activity to minimize the impact of inflation and to benefit from short-
cycle high margin and/or low-cost projects which provide flexibility to respond to fluctuations in commodity
prices.
Production
(cid:120) Produced average liquids volumes of 261.1 Mbbls/d which accounted for 51 percent of total production
volumes. Average oil and plant condensate volumes of 175.6 Mbbls/d, or 67 percent of total liquids
production volumes, was in line with full year 2022 guidance of 174.0 Mbbls/d to 176.0 Mbbls/d.
(cid:120) Produced average natural gas volumes of 1,494 MMcf/d which accounted for 49 percent of total production
volumes and was in line with full year 2022 guidance of 1,480 MMcf/d to 1,510 MMcf/d.
(cid:120) Produced average total volumes of 510.0 MBOE/d, which was in line with full year 2022 guidance of 505.0
MBOE/d to 515.0 MBOE/d.
Operating Expenses
(cid:120) Total operating expenses in 2022 of $8,611 million increased by $1,472 million compared to 2021.
(cid:120)
Incurred Non-GAAP Total Costs in 2022 of $3,045 million, or $16.36 per BOE, an increase of $432 million
or $2.94 per BOE compared to 2021. Non-GAAP Total Costs per BOE was within the full year 2022 guidance
range of $16.35 per BOE to $16.60 per BOE. Non-GAAP Total Costs is defined in the Non-GAAP Measures
section of this MD&A. Significant items impacting Non-GAAP Total Costs in 2022 compared to 2021
include:
o Higher upstream transportation and processing expenses of $184 million, primarily due to higher
variable contract rates in Permian, Uinta, Anadarko and Bakken resulting from higher commodity
prices;
o Higher upstream operating expenses, excluding long-term incentive costs, of $168 million,
primarily due to inflationary pressures as a result of the higher commodity price environment and
increased activity relating to discretionary workovers;
o Higher production, mineral and other taxes of $122 million, primarily due to higher commodity
prices; and
o Lower administrative expense, excluding long-term incentive, restructuring and legal costs, and
current expected credit losses, of $42 million, primarily due to a decrease in building lease and
consulting costs.
Additional information on total operating expenses above and Non-GAAP Total Costs items can be found in the
Results of Operations section of this MD&A.
Ovintiv Inc.2022 Annual Report | 53
2023 Outlook
Industry Outlook
Oil Markets
The oil and gas industry is cyclical and commodity prices are inherently volatile. Oil prices reflect global supply and
demand dynamics as well as the geopolitical and macroeconomic environment.
Oil prices for 2023 will be impacted by the interplay between recessionary concerns, continued OPEC+ production
restraint, increasing global demand for oil and continued supply uncertainties resulting from the Russian invasion of
Ukraine. Recessionary concerns continue to have an impact on global demand as central banks maintain tight monetary
policies. Supply and the accumulation of global oil inventories will be impacted by changes in OPEC+ production
levels, the extent of decline in oil exports from Russia and changes in production by non-OPEC countries.
Natural Gas Markets
Natural gas prices are primarily impacted by structural changes in supply and demand as well as deviations from
seasonally normal weather.
Natural gas prices for 2023 will be impacted by the interplay between natural gas production and associated natural
gas from oil production, changes in demand from the power generation sector, changes in export levels of U.S.
liquefied natural gas, impacts from seasonal weather, as well as supply chain constraints or other disruptions resulting
from the Russian invasion of Ukraine.
Company Outlook
The Company will continue to exercise discretion and discipline to optimize capital allocation throughout 2023 as the
commodity price environment evolves. Ovintiv pursues innovative ways to maximize cash flows and minimize the
impact of inflation to reduce upstream operating and administrative expenses.
Markets for oil and natural gas are exposed to different price risks and are inherently volatile. While the market price
for 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 provide more certainty around cash flows, the Company may enter into derivative financial instruments. As at
December 31, 2022, the Company has hedged approximately 38.0 Mbbls/d of expected oil and condensate production
and 397 MMcf/d of expected natural gas production for 2023. 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 24 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 $2,150 million to $2,350 million on its full year 2023 capital investment
program, focusing on maximizing returns from high margin liquids. In 2023, the Company expects to generate
significant cash flows in excess of capital expenditures.
Ovintiv continually strives to improve well performance and lower costs through innovative techniques. Ovintiv’s
redesigned wet sand sourcing model, which incorporates on-site sand storage and delivery systems, helps to prevent
mine and trucking delays, thereby increasing truck productivity to enable smooth integration with local mine access.
This model increases operational efficiencies and contributes to well cost savings as well as providing increased
resiliency against winter weather. Ovintiv's large-scale cube development model 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 to minimize
the impact of inflation, and maximize cash flows while preserving the long-term value of the Company’s multi-basin
portfolio.
54 | 2022 Annual ReportOvintiv Inc.
Production
Ovintiv is strategically positioned in the current environment to maintain a relatively flat production profile while
generating significant cash flows in excess of capital expenditures.
In 2023, the Company expects full year average total production volumes of approximately 500.0 MBOE/d to 525.0
MBOE/d, oil and plant condensate production volumes of approximately 165.0 Mbbls/d to 175.0 Mbbls/d, other NGLs
production volumes of approximately 80.0 Mbbls/d to 85.0 Mbbls/d and natural gas production volumes of
approximately 1,525 MMcf/d to 1,575 MMcf/d.
Operating Expenses
With increased activity in the oil and gas industry and strong commodity prices, inflationary pressures are expected
to continue to elevate service and supply costs. Upward pressure on service and supply costs will continue to be
impacted by supply chain disruptions, labor shortages and increased demand for fuel, electricity and steel.
Ovintiv continues to pursue innovative ways to minimize inflationary pressures with efficiency improvements and
effective supply chain management to reduce upstream operating expenses. Efficiency improvements were driven by
Ovintiv’s innovative practices which include using the cube development approach to maximize simul-frac
completions, increasing local wet sand storage, redesigning and re-using equipment, and improving longer lateral
length developments. The Company quickly deployed innovations and best practices across its portfolio, ultimately
maximizing the performance and overall efficiency of its operations.
In 2023, the Company expects to incur full year upstream transportation and processing costs of approximately $9.00
per BOE to $9.50 per BOE, upstream operating expenses of approximately $4.00 per BOE to $4.50 per BOE, and
total production, mineral and other taxes of approximately four to five percent of upstream revenues. The Company’s
upstream operations refers to the summation of the USA and Canadian operating segments.
Long-Term Debt Reduction
Ovintiv remains focused on strengthening its balance sheet, reducing its long-term debt balance by $3.3 billion since
the end of 2020.
In June 2022, Ovintiv redeemed its $1.0 billion, 5.625 percent senior notes due July 1, 2024, with cash on hand and
other existing sources of liquidity. The debt redemption will result in annualized interest savings of approximately
$55 million.
In 2022, the Company also repurchased in the open market, portions of certain senior notes totaling approximately
$565 million in principal, plus accrued interest and premiums. The Company paid premiums of $22 million to
complete the open market repurchases, which will result in annualized interest savings of approximately $33 million.
As at December 31, 2022, the Company had $393 million of commercial paper outstanding under its U.S. commercial
paper (“U.S. CP”) programs and no outstanding balances under its revolving credit facilities.
Additional information on Ovintiv’s long-term debt and liquidity position can be found in Note 14 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 2023 Corporate Guidance can be accessed on the Company’s website at
www.ovintiv.com.
Ovintiv Inc.2022 Annual Report | 55
Environmental, Social and Governance
Ovintiv recognizes climate change as a global concern and the importance of reducing its environmental footprint as
part of the solution. The Company voluntarily participates in emission reduction programs and has adopted a range of
strategies to help reduce emissions from its operations. These strategies include incorporating new and proven
technologies and optimizing processes in its operations and working closely with third-party providers to develop best
practices. The Company continues to look for innovative techniques and efficiencies to help maintain its commitment
to emission reductions.
During the first quarter of 2022, the Company announced a Scope 1&2 GHG emissions intensity reduction target of
50 percent compared to 2019 levels, to be achieved by 2030. The GHG emissions reduction target is tied to the 2022
annual compensation program for all employees.
In May 2022, Ovintiv published its full year 2021 ESG results in its 2022 Sustainability Report which highlights the
Company’s progress in emissions intensity reductions. During 2021, the Company reduced its Scope 1&2 GHG
emissions intensity by 24 percent compared to 2019 and reduced its methane emissions intensity by greater than 50
percent compared to 2019.
Ovintiv’s constant pursuit of efficiencies and continuous improvements allowed the Company to eliminate routine
flaring in its operations. The Company is in full alignment with the World Bank Zero Routine Flaring initiative, well
ahead of the World Bank’s target date of 2030.
Ovintiv is committed to diversity, equity and inclusion (“DEI”). The Company’s social commitment framework,
which is rooted in the Company’s foundational values of integrity, safety, sustainability, trust and respect, fosters a
culture of inclusion that respects stakeholders and strengthens communities.
Ovintiv remains committed to protecting the health and safety of its workforce. Safety is a foundational value at
Ovintiv and plays a critical role in the Company’s belief that a safe workplace is a strong indicator of a well-managed
business. This safety-oriented mindset enables the Company to quickly respond to emergencies and minimize any
impacts to employees and business continuity. Safety performance goals are incorporated into the Company’s annual
compensation program. Additional information on DEI and employee safety can be found in the Human Capital
section of Item 1 and 2 of this Annual Report on Form 10-K.
Further 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 | 2022 Annual ReportOvintiv Inc.
Results of Operations
Selected Financial Information
($ millions)
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)
2022
2021
$
10,151 $
4,107
5
14,263
(1,867 )
68
12,464
8,611
3,853
293
3,560
(77 )
7,420
3,043
5
10,468
(1,883 )
73
8,658
7,139
1,519
280
1,239
(177 )
1,416
Net Earnings (Loss)
$
3,637 $
(1) Service revenues include amounts related to the USA and Canadian Operations.
(2) Total Operating Expenses include non-cash items such as DD&A, 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 Company’s realized prices generally reflect WTI,
NYMEX, Edmonton Condensate and AECO benchmark prices, as well as other downstream benchmarks, including
Houston and Dawn. The Company proactively mitigates price risk and optimizes margins by entering into firm
transportation contracts to diversify market access to different sales points. Realized prices, excluding the impact of
risk management activities, may differ from the benchmarks for many reasons, including quality, location, or
production being sold at different market hubs.
Benchmark prices relevant to the Company are shown in the table below.
Benchmark Prices
(average for the period)
Oil & NGLs
WTI ($/bbl)
Houston ($/bbl)
Edmonton Condensate (C$/bbl)
Natural Gas
NYMEX ($/MMBtu)
AECO (C$/Mcf)
Dawn (C$/MMBtu)
2022
2021
$
$
94.23 $
95.89
122.02
6.64 $
5.56
7.89
67.91
68.85
85.48
3.84
3.56
4.60
Ovintiv Inc.2022 Annual Report | 57
Production Volumes and Realized Prices
Production Volumes (1)
2022
2021
Realized Prices (2)
2022
2021
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
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
131.5
0.1
131.6
140.0 $
0.3
140.3
94.25 $
87.28
94.25
73.22
93.22
88.52
29.35
42.39
31.45
71.44
78.46
72.72
6.18
5.75
5.89
61.91
44.26
54.49
10.4
33.6
44.0
71.7
13.8
85.5
213.6
47.5
261.1
492
1,002
1,494
295.5
214.5
510.0
34
17
51
49
(5 )
(4 )
(4 )
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 )
(1) Average daily.
(2) Average per-unit prices, excluding the impact of risk management activities.
(3)
Includes production impacts of acquisitions and divestitures.
58 | 2022 Annual ReportOvintiv Inc.
Upstream Product Revenues
($ millions)
2021 Upstream Product Revenues
Increase (decrease) due to:
Sales prices
Production volumes
2022 Upstream Product Revenues (1)
NGLs -
Plant
Oil
Condensate
NGLs -
Other
Natural
Gas
Total
$
3,364 $
1,218 $
802 $
2,032 $
7,416
1,370
(208 )
4,526 $
372
(168 )
1,422 $
162
17
981 $
1,259
(78 )
3,213 $
3,163
(437 )
10,142
$
(1) Revenues for 2022 exclude certain other revenue and royalty adjustments with no associated production volumes of $9 million (2021 - $4
million).
Oil Revenues
2022 versus 2021
Oil revenues were higher by $1,162 million compared to 2021 primarily due to:
(cid:120) An increase of $28.58 per bbl, or 44 percent, in the average realized oil prices which increased revenues by
$1,370 million. The increase reflected higher WTI and Houston benchmark prices which were both up 39
percent and the strengthening of regional pricing relative to the WTI benchmark price in the USA Operations;
and
(cid:120) Lower average oil production volumes of 8.7 Mbbls/d decreased revenues by $208 million. Lower volumes
were primarily due to natural declines in Permian and Anadarko (10.2 Mbbls/d) and the sale of Eagle Ford
assets in the second quarter of 2021 (5.8 Mbbls/d), partially offset by successful drilling in Uinta and Bakken
(9.0 Mbbls/d).
NGL Revenues
2022 versus 2021
NGL revenues were higher by $383 million compared to 2021 primarily due to:
(cid:120) An increase of $22.84 per bbl, or 35 percent, in the average realized plant condensate price which increased
revenues by $372 million. The increase reflected higher Edmonton Condensate and WTI benchmark prices
which were up 43 percent and 39 percent, respectively, and changes in regional pricing relative to the WTI
benchmark price;
(cid:120) An increase of $5.07 per bbl, or 19 percent, in the average realized other NGL prices which increased revenues
by $162 million. The increase reflected higher other NGL benchmark prices and higher regional pricing; and
(cid:120) Lower average plant condensate production volumes of 6.9 Mbbls/d decreased revenues by $168 million.
Lower volumes were primarily due to higher royalties resulting from higher commodity prices in Montney (2.8
Mbbls/d) and natural declines in Montney (2.7 Mbbls/d).
Ovintiv Inc.2022 Annual Report | 59
Natural Gas Revenues
2022 versus 2021
Natural gas revenues were higher by $1,181 million compared to 2021 primarily due to:
(cid:120) An increase of $2.31 per Mcf, or 65 percent, in the average realized natural gas prices which increased revenues
by $1,259 million. The increase reflected higher NYMEX, Dawn and AECO benchmark prices which were up
73 percent, 72 percent and 56 percent, respectively; and
(cid:120) Lower average natural gas production volumes of 62 MMcf/d decreased revenues by $78 million primarily due
to higher royalties resulting from higher commodity prices in Montney (95 MMcf/d) and the sales of Duvernay
and Eagle Ford assets in the second quarter of 2021 (20 MMcf/d), partially offset by successful drilling in
Montney (59 MMcf/d).
Gains (Losses) on Risk Management, Net
As a means of managing commodity price volatility, Ovintiv enters into commodity derivative financial instruments
on a portion of its expected oil, NGLs and natural gas production volumes. Additional information on the Company’s
commodity price positions as at December 31, 2022 can be found in Note 24 to the Consolidated Financial Statements
included in Item 8 of this Annual Report on Form 10-K.
The following table provides the effects of the Company’s risk management activities on revenues.
Realized Gains (Losses) on Risk Management
Commodity Price (1)
Oil ($/bbl)
NGLs - Plant Condensate ($/bbl)
NGLs - Other ($/bbl)
Natural Gas ($/Mcf)
Other (2)
Total ($/BOE)
$ millions
2022
2021
Per-Unit
2022
2021
$
(594 ) $
(125 )
-
(1,895 )
6
(2,608 )
(737 )
(155 )
(131 )
(373 )
1
(1,395 )
$
$
$
$
$
$
(12.37 ) $
(7.78 ) $
- $
(3.47 ) $
- $
(14.04 ) $
(14.39 )
(8.35 )
(4.31 )
(0.66 )
-
(7.17 )
Unrealized Gains (Losses) on Risk Management
Total Gains (Losses) on Risk Management, Net
741
(1,867 ) $
(488 )
(1,883 )
$
Includes realized gains and losses related to the USA and Canadian Operations.
(1)
(2) Other primarily includes realized gains or losses from 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 23
to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
60 | 2022 Annual ReportOvintiv 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
2022 versus 2021
2022
$
4,107 $
2021
3,043
Market Optimization product revenues increased $1,064 million compared to 2021 primarily due to:
(cid:120) Higher oil and natural gas benchmark prices ($1,104 million) and higher sales of third-party purchased liquids
volumes primarily relating to price optimization activities in the USA Operations ($151 million);
partially offset by:
(cid:120) Lower sales of third-party purchased natural gas volumes primarily relating to marketing arrangements for
assets divested in prior years ($191 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
13 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
2022 versus 2021
$ millions
2022
2021
$
$
401 $
14
415 $
278
15
293
$
$
$
$/BOE
2022
3.72 $
0.18 $
2.23 $
2021
2.54
0.18
1.51
Production, mineral and other taxes increased $122 million compared to 2021 primarily due to:
(cid:120) Higher production tax in USA Operations due to higher commodity prices ($116 million);
partially offset by:
(cid:120) The sale of Eagle Ford assets in the second quarter of 2021 ($9 million).
Ovintiv Inc.2022 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
2022 versus 2021
$ millions
2022
2021
$
$
626 $
1,002
1,628
507
937
1,444
$
$
$
158
1,786 $
172
1,616
$/BOE
2022
5.80 $
12.80 $
8.75 $
2021
4.64
10.97
7.42
Transportation and processing expense increased $170 million compared to 2021 primarily due to:
(cid:120) Higher variable contract rates in Permian, Uinta, Anadarko and Bakken due to higher commodity prices ($88
million), higher gas volumes in Montney, Permian and Bakken ($44 million), higher downstream transport
costs in Montney ($44 million), higher flow-through rates resulting from increased third-party plant operating
costs and turnarounds, as well as higher capital fees in Montney ($38 million), higher costs relating to the
diversification of the Company’s U.S. downstream markets ($14 million) and higher oil volumes in Uinta ($13
million);
partially offset by:
(cid:120) Higher U.S./Canadian dollar exchange rate ($34 million), the sales of Eagle Ford and Duvernay assets in the
second quarter of 2021 ($18 million), and expired contracts relating to previously divested assets ($13 million).
Operating
Operating expense includes costs paid by the Company, net of amounts capitalized, on oil and natural gas properties
in which Ovintiv has a working interest. These costs primarily include labor, service contract fees, chemicals, fuel,
water hauling, electricity and workovers.
USA Operations
Canadian Operations
Upstream Operating Expense (1)
Market Optimization
Corporate & Other
Total
$ millions
2022
2021
$
$
646 $
127
773
29
-
802 $
$
$
$
490
111
601
25
(1 )
625
$/BOE
2022
5.99 $
1.62 $
4.15 $
2021
4.48
1.27
3.07
(1) Upstream Operating Expense per BOE for 2022 includes long-term incentive costs of $0.16/BOE (2021 - long-term incentive costs of
$0.13/BOE).
62 | 2022 Annual ReportOvintiv Inc.
2022 versus 2021
Operating expense increased $177 million compared to 2021 primarily due to:
(cid:120)
Inflationary pressures as a result of the higher commodity price environment and increased activity relating to
discretionary workovers ($199 million);
partially offset by:
(cid:120) The sales of Eagle Ford and Duvernay assets in the second quarter of 2021 ($26 million).
Additional information on the Company’s long-term incentive costs can be found in Note 21 to the Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Purchased Product
Purchased product expense includes purchases of oil, NGLs and natural gas from third parties that are used to provide
operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer
diversification. Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with
the Company’s previous divestitures.
($ millions)
Market Optimization
2022 versus 2021
2022
$
4,055 $
2021
2,951
Purchased product expense increased $1,104 million compared to 2021 primarily due to:
(cid:120) Higher oil and natural gas benchmark prices ($1,131 million) and higher third-party purchased liquids volumes
primarily relating to price optimization activities in the USA Operations ($150 million);
partially offset by:
(cid:120) Lower third-party purchased natural gas volumes primarily relating to marketing arrangements for assets
divested in prior years ($177 million).
Depreciation, Depletion & Amortization
Proved properties within each country cost center are depleted using the unit-of-production method based on proved
reserves as discussed in Note 1 to the Consolidated Financial Statements included in Item 8 of 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
$ millions
2022
2021
$
$
861 $
235
1,096
837
332
1,169
$
$
$
17
1,113 $
21
1,190
$/BOE
2022
7.98 $
3.01 $
5.89 $
2021
7.65
3.89
6.00
Ovintiv Inc.2022 Annual Report | 63
2022 versus 2021
DD&A decreased $77 million compared to 2021 primarily due to:
(cid:120) Lower depletion rates in the Canadian Operations ($58 million), lower production volumes in the Canadian and
USA Operations ($27 million and $11 million, respectively) and a higher U.S./Canadian dollar exchange rate
($11 million);
partially offset by;
(cid:120) Higher depletion rates in the USA Operations ($36 million).
The depletion rate in the USA Operations increased $0.33 per BOE compared to 2021 primarily due to a higher
depletable base. The depletion rate in the Canadian Operations decreased $0.88 per BOE compared to 2021 primarily
due to higher reserve volumes.
Administrative
Administrative expense represents costs associated with corporate functions provided by Ovintiv staff. Costs primarily
include salaries and benefits, building/operating leases, office, information technology, restructuring and long-term
incentive costs.
$ millions
2022
2021
$/BOE
2022
2021
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
$
$
258 $
164
1
(1 )
422 $
300
107
34
1
442
$
$
1.39 $
0.88
-
-
2.27 $
1.55
0.55
0.17
-
2.27
(1)
Includes costs related to The Bow office lease of $116 million (2021 - $117 million), half of which is recovered from sublease revenues.
2022 versus 2021
Administrative expense decreased $20 million compared to 2021 primarily due to:
(cid:120) Lower legal, building lease, consulting, and office and travel costs ($18 million, $16 million, $13 million and
$7 million, respectively) and a decrease in restructuring costs ($15 million);
partially offset by:
(cid:120) Higher long-term incentive costs mainly due to higher settlement prices related to cash-settled compensation
plans during the first quarter of 2022 and the increase in the Company’s share price compared to 2021 ($57
million).
Additional information on the Company’s long-term incentive costs can be found in Note 21 to the Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Other (Income) Expenses
($ millions)
Interest
Foreign Exchange (Gain) Loss, Net
Other (Gains) Losses, Net
Total Other (Income) Expenses
2022
311 $
15
(33 )
293 $
2021
340
(23 )
(37 )
280
$
$
64 | 2022 Annual ReportOvintiv Inc.
Interest
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.
2022 versus 2021
Interest expense decreased $29 million compared to 2021 primarily due to:
(cid:120)
Interest savings related to the redemption of certain senior notes in 2021 and 2022 ($54 million), and the
acceleration of the fair value amortization related to the early redemption of the Company’s 2024 senior notes
in June 2022 of $30 million;
partially offset by:
(cid:120) A make-whole interest payment of $47 million resulting from the early redemption of the Company’s 2024
senior notes in June 2022, compared to a make-whole interest payment of $19 million resulting from the early
redemption of the Company’s 2022 senior notes in June 2021, and premiums of $22 million related to the
Company’s open market repurchases in 2022.
Additional information on the early debt redemption and open market repurchases can be found in Note 14 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.
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.
2022 versus 2021
Net foreign exchange loss of $15 million compared to a gain of $23 million in 2021 primarily due to:
(cid:120) Realized foreign exchange losses on the settlement of U.S. dollar risk management contracts and U.S. dollar
financing debt issued from Canada compared to gains in 2021 ($38 million and $16 million, respectively);
partially offset by:
(cid:120) Gains on monetary revaluations compared to 2021 ($12 million) and lower unrealized foreign exchange losses
on the translation of U.S. dollar risk management contracts issued from Canada ($6 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, reclamation charges relating to decommissioned assets,
government stimulus programs and adjustments related to other assets.
Other gains in 2022 includes interest income of $25 million (2021 - $14 million) primarily associated with the
resolution of prior years’ tax items.
Ovintiv Inc.2022 Annual Report | 65
Income Tax
($ millions)
Current Income Tax Expense (Recovery)
Deferred Income Tax Expense (Recovery)
Income Tax Expense (Recovery)
Effective Tax Rate
Income Tax Expense (Recovery)
2022 versus 2021
$
$
2022
10 $
(87 )
(77 ) $
2021
(156 )
(21 )
(177 )
(2.2% )
(14.3% )
In 2022, Ovintiv recorded a lower income tax recovery of $100 million compared to 2021, primarily due to the
resolution of prior years’ tax items recognized in 2021 and changes in valuation allowances.
During the year ended December 31, 2022, a valuation allowance of $1,299 million was reversed, of which $1,028
million was recognized as a result of positive earnings in the U.S. and Canada. Deferred income tax assets are routinely
assessed for realizability, and consequently, after weighing both positive and negative evidence, the Company
reversed an additional $271 million of the valuation allowance primarily due to positive forecasted earnings in the
U.S. During the year ended December 31, 2021, a valuation allowance reversal of $558 million was recognized as a
result of positive earnings in the U.S. and Canada.
Effective Tax Rate
The Company’s annual effective income tax rate is primarily impacted by earnings, changes in valuation allowances,
income tax related to foreign operations, state taxes, amounts in respect of prior periods, the effect of legislative
changes, non-taxable items and tax differences on transactions.
The Company’s effective tax rate was (2.2) percent for 2022, which is lower than the U.S. federal statutory tax rate of
21 percent primarily due to reductions in valuation allowances offset by certain non-taxable items.
The Company’s effective tax rate was (14.3) percent for 2021, which was lower than the U.S. federal statutory tax
rate of 21 percent primarily due to the resolution of prior years’ tax items and changes in valuation allowances.
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.
66 | 2022 Annual ReportOvintiv Inc.
Liquidity and Capital Resources
Sources of Liquidity
The Company has the flexibility to access cash equivalents and a range of funding alternatives at competitive rates
through committed revolving credit facilities as well as debt and equity capital markets. Ovintiv closely monitors the
accessibility of cost-effective credit and ensures that sufficient liquidity is in place to fund capital expenditures and
dividend payments. In addition, the Company may use cash and cash equivalents, cash from operating activities, or
proceeds from asset divestitures to fund its operations and capital allocation framework or to manage its capital
structure as discussed below.
The Company’s capital structure consists of total shareholders’ equity plus long-term debt, including any current
portion. The Company’s objectives when managing its capital structure are to maintain financial flexibility to preserve
Ovintiv’s access to capital markets and its ability to meet financial obligations and finance internally generated growth,
as well as potential acquisitions. Ovintiv has a practice of maintaining capital discipline and strategically managing
its capital structure by adjusting capital spending, adjusting dividends paid to shareholders, issuing new shares of
common stock, purchasing shares of common stock for cancellation or return to treasury, issuing new debt and
repaying or repurchasing existing debt.
($ 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)
$
$
$
$
2022
5 $
3,500
195
(393 )
3,307 $
3,570 $
7,689 $
32
19
2021
195
4,000
300
-
4,495
4,786
5,074
49
27
(1) 2022 includes available credit facilities of $2.2 billion in the U.S. and $1.3 billion in Canada (2021 - $2.5 billion and $1.5 billion, respectively).
(2)
Includes three uncommitted demand lines totaling $321 million, net of $126 million in related undrawn letters of credit (2021 - $336 million
and $36 million, respectively).
(3) Shareholders’ Equity reflects the shares of common stock purchased, for cancellation, under the Company’s 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.
In March, the Company commenced negotiations to amend and restate its committed revolving credit facilities.
Effective April 1, 2022, the Company has access to two committed revolving U.S. dollar denominated credit facilities
totaling $3.5 billion, which include a $2.2 billion revolving credit facility for Ovintiv Inc. and a $1.3 billion revolving
credit facility for a Canadian subsidiary (collectively, the “Credit Facilities”). Maturity dates for both credit facilities
were extended to July 2026 and the Company has full access to these Credit Facilities. The Credit Facilities provide
financial flexibility and allow the Company to fund its operations or capital investment program. At December 31,
2022, there were no outstanding amounts under the revolving Credit Facilities.
During the first quarter of 2022, 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. All of Ovintiv’s credit ratings are investment grade as at December 31, 2022.
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, 2022, the Company had approximately $393 million of commercial paper outstanding under its
U.S. CP program maturing at various dates with a weighted average interest rate of approximately 5.24 percent, which
is supported by the Company’s Credit Facilities.
The Credit Facilities, uncommitted demand lines, and cash and cash equivalents, net of outstanding commercial paper
provide Ovintiv with total liquidity of approximately $3.3 billion. At December 31, 2022, Ovintiv also had
Ovintiv Inc.2022 Annual Report | 67
approximately $126 million in undrawn letters of credit issued in the normal course of business primarily as collateral
security related to sales arrangements.
Ovintiv has a U.S. shelf registration statement under which the Company may issue from time to time, debt securities,
common stock, preferred stock, warrants, units, share purchase contracts and share purchase units in the U.S. The U.S.
shelf registration statement expires in March 2023 and is intended to be renewed by the Company. The ability to issue
securities under the U.S. shelf registration statement is dependent upon market conditions and securities law
requirements.
Ovintiv is currently in compliance with, and expects that it will continue to be in compliance with, all financial
covenants under the Credit Facilities. Management monitors Debt to Adjusted Capitalization, which is a non-GAAP
measure defined in the Non-GAAP Measures section of this MD&A, as a proxy for Ovintiv’s financial covenant under
the Credit Facilities, which requires Debt to Adjusted Capitalization to be less than 60 percent. As at December 31,
2022, the Company’s Debt to Adjusted Capitalization was 19 percent. The definitions used in the covenant under the
Credit Facilities adjust capitalization for cumulative historical ceiling test impairments recorded in conjunction with
the Company’s January 1, 2012 adoption of U.S. GAAP. Additional information on financial covenants can be found
in Note 14 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Sources and Uses of Cash
During 2022, Ovintiv primarily generated cash through operating activities. The following table summarizes the
sources and uses of the Company’s cash and cash equivalents.
($ millions)
Activity Type
2022
2021
Sources of Cash, Cash Equivalents and Restricted Cash
Cash from operating activities
Proceeds from divestitures
Net issuance of revolving long-term debt
Other
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
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 2022.
Operating Activities
Operating $
Investing
Financing
Investing
Investing
Investing
Financing
Financing
Financing
Financing
Financing/Investing
$
3,866 $
228
393
103
4,590
1,831
286
-
1,634
719
239
69
4,778
(2 )
(190 ) $
3,129
1,025
-
-
4,154
1,519
11
950
1,137
111
122
119
3,969
-
185
Net cash from operating activities in 2022 was $3,866 million and was primarily a reflection of the impacts from
higher average realized commodity prices, partially offset by the effects of the commodity price mitigation program,
lower production volumes and changes in non-cash working capital.
Additional detail on changes in non-cash working capital can be found in Note 25 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 2022 was $4,110 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.
68 | 2022 Annual ReportOvintiv Inc.
2022 versus 2021
Net cash from operating activities increased $737 million compared to 2021 primarily due to:
(cid:120) Higher realized commodity prices ($3,163 million);
partially offset by:
(cid:120) Higher realized losses on risk management in revenues compared to 2021 ($1,213 million), lower production
volumes ($437 million), higher transportation and processing expense ($170 million), higher operating
expense, excluding non-cash long-term incentive costs ($169 million), current income tax recovery mainly due
to the resolution of prior years’ tax items in 2021 of $156 million, changes in non-cash working capital ($146
million) and higher production, mineral and other taxes ($122 million).
Investing Activities
The Company’s primary investing activities are capital expenditures, acquisitions and divestitures, and are
summarized in Notes 2 and 8 to the Consolidated Financial Statements included in Item 8 of this Annual Report on
Form 10-K.
2022 and 2021
Net cash used in investing activities in 2022 was $1,786 million primarily due to capital expenditures. Capital
expenditures increased $312 million compared to 2021 due to timing of projects and inflationary cost pressures.
Acquisitions in 2022 were $286 million (2021 - $11 million), which primarily included property purchases in Permian
with oil and liquids-rich potential.
Divestitures in 2022 were $228 million, which primarily included the sale of portions of Uinta assets located in
northeastern Utah and Bakken assets located in northeastern Montana, as well as certain properties that did not
complement Ovintiv’s existing portfolio of assets.
Divestitures in 2021 were $1,025 million, which primarily included the sale of Eagle Ford assets in south Texas and
Duvernay assets in west central Alberta, as well as 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 strategic objective to return value to
shareholders by repaying or repurchasing existing debt, purchasing shares of common stock and paying dividends.
2022 versus 2021
Net cash used in financing activities in 2022 decreased $151 million compared to 2021. The decrease was primarily
due to a net issuance of revolving long-term debt compared to a net repayment in 2021 ($1,343 million), partially
offset by increased purchases of shares of common stock under the Company’s NCIB program in 2022 compared to
2021 ($608 million), higher repayment of long-term debt associated with open market repurchases in 2022 and the
early redemption of the Company’s 2024 senior notes in June 2022 compared to the early redemptions of the
Company’s 2022 and 2021 senior notes in June and August 2021, respectively ($497 million), and an increase in
dividend payments in 2022 ($117 million).
From time to time, Ovintiv may seek to retire or purchase the Company’s outstanding debt through cash purchases
and/or exchanges for other debt or equity securities, in open market purchases, privately negotiated transactions or
otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s
liquidity requirements, contractual restrictions and other factors. In 2022, the Company repurchased in the open
market, approximately $565 million in principal, plus accrued interest and premiums, which included a portion of its
5.375 percent senior notes due January 2026, its 6.5 percent senior notes due August 2034, its 6.625 percent senior
notes due August 2037, its 6.5 percent senior notes due February 2038 and its 5.15 percent senior notes due November
2041. The Company paid premiums of $22 million to complete the open market repurchases.
Ovintiv Inc.2022 Annual Report | 69
In June 2022, Ovintiv redeemed its $1.0 billion, 5.625 percent senior notes due July 1, 2024, with cash on hand and
other existing sources of liquidity. The redemption resulted in a make-whole interest payment of $47 million.
The Company’s long-term debt, including the current portion of $393 million, totaled $3,570 million at December 31,
2022. The Company’s long-term debt at December 31, 2021 totaled $4,786 million. As at December 31, 2022, the
Company has no fixed rate long-term debt due until 2026 and beyond.
In support of the Company’s commitment to unlocking shareholder value, Ovintiv utilizes its capital allocation
framework to increase returns to shareholders and maintain the Company’s progress on debt reduction. Since the end
of 2020, the Company reduced its total long-term debt balance by $3.3 billion. On July 6, 2022, Ovintiv elected to
accelerate the increase in cash returns to shareholders as a result of the Company’s continued strong financial
performance and the asset sales that closed during the third quarter of 2022. During the third quarter of 2022, the
Company increased its cash return to shareholders from 25 percent to 50 percent of Non-GAAP Cash Flow in excess
of capital expenditures and base dividends. Ovintiv delivered the additional shareholder returns through share
buybacks under its NCIB program.
For additional information on long-term debt, refer to Note 14 to the Consolidated Financial Statements included in
Item 8 of this Annual Report on Form 10-K.
Dividends
The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.
($ millions, except as indicated)
Dividend Payments
Dividend Payments ($/share)
2022
239 $
0.95 $
2021
122
0.4675
$
$
On February 27, 2023, the Board of Directors declared a dividend of $0.25 per share of common stock payable on
March 31, 2023 to common shareholders of record as of March 15, 2023.
Dividends increased $117 million compared to 2021, as a result of Ovintiv increasing its quarterly dividend payments
to an annualized dividend of $0.80 per share of common stock during the first quarter of 2022 and a further increase
to an annualized dividend of $1.00 per share of common stock in the second quarter of 2022. The dividend increases
reflect the Company’s commitment to returning capital to shareholders.
Normal Course Issuer Bid
On September 28, 2022, the Company announced it had received regulatory approval for the renewal of its NCIB
program, that enables the Company to purchase, for cancellation or return to treasury, up to approximately 24.8 million
shares of common stock over a 12-month period from October 3, 2022 to October 2, 2023. The number of shares
authorized for purchase represents approximately 10 percent of Ovintiv’s issued and outstanding shares of common
stock as at September 19, 2022. The Company will continue to execute the renewed NCIB program in conjunction
with its capital allocation framework.
During 2022, the Company purchased for cancellation, approximately 14.7 million shares of common stock for total
consideration of approximately $719 million.
For additional information on the NCIB, refer to Note 17 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.
70 | 2022 Annual ReportOvintiv Inc.
Interest payments include scheduled cash payments on finance leases, long-term debt, and other obligations.
Additional information can be found in Notes 13 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 subleased approximately 50 percent of The Bow office space under the lease agreement. Additional
information on leases can be found in Note 13 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. Ovintiv expects to
significantly decrease its risk management positions in 2023 as a result of the Company’s strengthened balance sheet
position. Additional information can be found in Note 24 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 13 and 26 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 19, 24 and 26, 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 the disposal of long-lived assets upon their abandonment as well as
its obligations to fund its defined benefit pension and other post-employment benefit plans as described in Notes 16
and 22, respectively, to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-
K.
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 26 to the Consolidated Financial Statements included in Item 8 of this
Annual Report on Form 10-K.
Ovintiv Inc.2022 Annual Report | 71
Accounting Policies and Estimates
Critical Accounting Estimates
The preparation of financial statements in conformity 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.
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.
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.
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 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.
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.
Goodwill Impairments
Goodwill is assessed for impairment at least annually in December, at the
reporting unit level 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.
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
estimates of operating,
and
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.
rates
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.
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.
72 | 2022 Annual ReportOvintiv Inc.
Description
Judgments and Uncertainties
The Company has assessed its goodwill for impairment at December
31, 2022 and no impairment was recognized. The reporting units’ fair
values were substantially in excess of the carrying values and as a result
were not at risk of failing the impairment test as at December 31, 2022.
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
instruments
Company’s commodity derivatives financial
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.2022 Annual Report | 73
Description
Judgments and Uncertainties
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’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 is required to assess whether the unremitted earnings
from its Canadian subsidiaries are considered to be permanently
reinvested. Changes in repatriation plans are evaluated based on the
specific facts and circumstances to determine how those changes affect
the recognition and measurement of income tax liabilities and whether
those changes in plans affect Ovintiv’s ongoing assertions related to the
indefinite reinvestment of basis differences. If
indefinite
reinvestment assertion can no longer be made, a deferred tax liability is
generally required for a book-over-tax outside basis difference
attributable to the foreign subsidiaries.
the
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 natural 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.
During the year ended December 31, 2022, Ovintiv concluded
that a portion of the previously unremitted earnings from its
foreign subsidiaries is no longer considered to be permanently
reinvested. As a result of this change in assertion, the Company
recorded a nominal deferred income tax liability on the
undistributed earnings
that were previously considered
permanently reinvested. The Company has a taxable temporary
difference of approximately $339 million in respect of
unremitted earnings that continue to be permanently reinvested
for which a deferred income tax liability of $17 million has not
been recognized and becomes subject to taxation upon the
remittance of dividends. The deferred tax liability considers
U.S. federal, state and foreign withholding tax implications.
including:
for various
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
i) differing
reasons
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
facts and
available
circumstances not currently foreseeable could result in the
actual liabilities recorded exceeding the estimated amounts
accrued.
Future changes
information.
in
74 | 2022 Annual ReportOvintiv 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 Total Costs, Debt to Adjusted Capitalization and
Debt to Adjusted EBITDA. Management’s use of these measures is discussed further below.
Cash from Operating Activities and Non-GAAP Cash Flow
Non-GAAP Cash Flow is a non-GAAP measure defined as cash from (used in) operating activities excluding net
change in other assets and liabilities, and net change in non-cash working capital.
Management believes this measure is useful to the Company and its investors as a measure of operating and financial
performance across periods and against other companies in the industry, and is an indication of the Company’s ability
to generate cash to finance capital investment programs, to service debt and to meet other financial obligations. This
measure is used, along with other measures, in the calculation of certain performance targets for the Company’s
management and employees.
($ 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
Non-GAAP Cash Flow
2022
$
3,866 $
(57 )
(187 )
4,110 $
$
2021
3,129
(39 )
(41 )
3,209
Total Operating Expenses and Non-GAAP Total Costs
Non-GAAP 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, Non-GAAP 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)
Total Operating Expenses
Deduct (add back):
Market optimization operating expenses
Corporate & other operating expenses
Depreciation, depletion and amortization
Accretion of asset retirement obligation
Long-term incentive costs
Restructuring and legal costs
Current expected credit losses
Non-GAAP Total Costs
Divided by:
Production Volumes (MMBOE)
Non-GAAP Total Costs ($/BOE) (1)
(1) Calculated using whole dollars and volumes.
2022
$
8,611 $
4,242
-
1,113
18
193
1
(1 )
3,045 $
186.2
16.36 $
$
$
2021
7,139
3,148
(1 )
1,190
22
132
34
1
2,613
194.9
13.42
Ovintiv Inc.2022 Annual Report | 75
Debt to Capitalization and Debt to Adjusted Capitalization
Debt to Adjusted Capitalization is a non-GAAP measure which adjusts capitalization for historical ceiling test
impairments that were recorded as at December 31, 2011. Management monitors Debt to Adjusted Capitalization as
a proxy for the Company’s financial covenant under the Credit Facilities which require Debt to Adjusted Capitalization
to be less than 60 percent. Adjusted Capitalization includes debt, total shareholders’ equity and an equity adjustment
for cumulative historical ceiling test impairments recorded as at December 31, 2011 in conjunction with the
Company’s January 1, 2012 adoption of U.S. GAAP.
($ millions, except as indicated)
December 31, 2022 December 31, 2021
Debt (Long-Term Debt, including current portion)
Total Shareholders’ Equity
Capitalization
Debt to Capitalization
Debt (Long-Term Debt, including current portion)
Total Shareholders’ Equity
Equity Adjustment for Impairments at December 31, 2011
Adjusted Capitalization
Debt to Adjusted Capitalization
Debt to EBITDA and Debt to Adjusted EBITDA
$
$
$
$
3,570 $
7,689
11,259 $
32%
3,570 $
7,689
7,746
19,005 $
19%
4,786
5,074
9,860
49%
4,786
5,074
7,746
17,606
27%
Debt to EBITDA and Debt to Adjusted EBITDA are non-GAAP measures. EBITDA is defined as trailing 12-month
net earnings (loss) before income taxes, depreciation, depletion and amortization, and interest. Adjusted EBITDA is
EBITDA adjusted for impairments, accretion of asset retirement obligation, unrealized gains/losses on risk
management, foreign exchange gains/losses, gains/losses on divestitures and other gains/losses.
Management believes these measures are useful to the Company and its investors as a measure of financial leverage
and the Company’s ability to service its debt and other financial obligations. These measures are used, along with
other measures, in the calculation of certain financial performance targets for the Company’s management and
employees.
($ millions, except as indicated)
December 31, 2022 December 31, 2021
Debt (Long-Term Debt, including current portion)
$
3,570 $
Net Earnings (Loss)
Add back (deduct):
Depreciation, depletion and amortization
Interest
Income tax expense (recovery)
EBITDA
Debt to EBITDA (times)
Net Earnings (Loss)
Add back (deduct):
Depreciation, depletion and amortization
Accretion of asset retirement obligation
Interest
Unrealized (gains) losses on risk management
Foreign exchange (gain) loss, net
Other (gains) losses, net
Income tax expense (recovery)
Adjusted EBITDA
Debt to Adjusted EBITDA (times)
3,637
1,113
311
(77 )
4,984 $
0.7
3,637
1,113
18
311
(741 )
15
(33 )
(77 )
4,243 $
0.8
$
$
4,786
1,416
1,190
340
(177 )
2,769
1.7
1,416
1,190
22
340
488
(23 )
(37 )
(177 )
3,219
1.5
76 | 2022 Annual ReportOvintiv Inc.
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 24 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
NGL price
Natural gas price
FOREIGN EXCHANGE RISK
$
December 31, 2022
10% Price
Increase
(28 ) $
-
6
10% Price
Decrease
27
-
(6 )
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
2022
2021
1.301
1.354
1.254
1.268
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.
2022
$ millions
$/BOE $ millions
$/BOE
2021
$
(14 )
(34 ) $
(4 )
(4 )
(11 )
$
(0.18 )
(0.02 )
(0.02 )
(0.06 )
21
55 $
7
13
30
0.28
0.03
0.07
0.15
Ovintiv Inc.2022 Annual Report | 77
Foreign exchange gains and losses also arise when monetary assets and monetary liabilities denominated in foreign
currencies are translated and settled, and primarily include:
(cid:120) U.S. dollar denominated financing debt issued from Canada
(cid:120) U.S. dollar denominated risk management assets and liabilities held in Canada
(cid:120) U.S. dollar denominated cash and short-term investments held in Canada
(cid:120) 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, 2022, Ovintiv has entered into
$400 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3160 to
US$1, which mature monthly throughout 2023.
As at December 31, 2022, Ovintiv did not have any U.S. dollar denominated financing debt issued from Canada or
foreign denominated intercompany loans that were subject to foreign exchange exposure.
The table below summarizes the sensitivity to foreign exchange rate fluctuations, with all other variables held constant.
The Company has used a 10 percent variability to assess the potential impact from Canadian to U.S. foreign currency
exchange rate changes. Fluctuations in foreign currency exchange rates could have resulted in unrealized gains (losses)
impacting pre-tax net earnings as follows:
(US$ millions)
Foreign currency exchange
INTEREST RATE RISK
December 31, 2022
10% Rate
Increase
$
(1 ) $
10% Rate
Decrease
1
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, 2022, Ovintiv had floating rate revolving credit and term loan borrowings of $393 million.
Accordingly, on a before-tax basis, the sensitivity for each one percent change in interest rates on floating rate
revolving credit and term loan borrowings was $4 million (2021 - nil).
78 | 2022 Annual ReportOvintiv Inc.
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, 2022. 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, 2022, 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 27, 2023
/s/ Corey D. Code
Corey D. Code
Executive Vice-President &
Chief Financial Officer
Ovintiv Inc.2022 Annual Report | 79
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, 2022 and 2021, 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, 2022, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2022 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, 2022, 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
80 | 2022 Annual ReportOvintiv Inc.
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 9 to the Consolidated Financial Statements, the Company has a net oil and natural gas
proved properties balance of $8,087 million as of December 31, 2022 and depreciation, depletion, and amortization
(“DD&A”) expense of $1,113 million for the year ended December 31, 2022. 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
Ovintiv Inc.2022 Annual Report | 81
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 27, 2023
We have served as the Company’s or its predecessors’ auditor since 1958.
82 | 2022 Annual ReportOvintiv Inc.
Consolidated Statement of Earnings
For the years ended December 31 (US$ millions, except per share amounts)
2022
2021
2020
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
Other (gains) losses, net
Total Other (Income) Expenses
Net Earnings (Loss) Before Income Tax
Income tax expense (recovery)
Net Earnings (Loss)
Net Earnings (Loss) per Share of Common Stock
Basic
Diluted
(Note 2)
(Note 3) $
(Note 24)
(Note 13)
(Note 2)
14,263 $
(1,867 )
68
12,464
10,468 $
5,509
(1,883 )
73
507
71
8,658
6,087
(Notes 13, 21, 22)
(Note 9)
(Note 16)
(Notes 13, 20, 21, 22)
(Notes 4, 14)
(Notes 5, 24)
(Notes 6, 14, 22)
(Note 6)
$
(Note 17)
$
415
1,786
802
4,055
1,113
-
18
422
8,611
3,853
311
15
(33 )
293
3,560
(77 )
3,637 $
14.34 $
14.08
253.6
258.4
293
1,616
625
2,951
1,190
-
22
442
7,139
1,519
340
(23 )
(37 )
280
173
1,502
605
1,366
1,834
5,580
29
395
11,484
(5,397 )
371
17
(55 )
333
1,239
(5,730 )
(177 )
367
1,416 $
(6,097 )
5.44 $
5.32
(23.47 )
(23.47 )
260.4
266.4
259.8
259.8
Weighted Average Shares of Common Stock Outstanding (millions)
(Note 17)
Basic
Diluted
Consolidated Statement of Comprehensive Income
For the years ended December 31 (US$ millions)
2022
2021
2020
Net Earnings (Loss)
Other Comprehensive Income (Loss), Net of Tax
Foreign currency translation adjustment
Pension and other post-employment benefit plans
Other Comprehensive Income (Loss)
Comprehensive Income (Loss)
See accompanying Notes to Consolidated Financial Statements
$
3,637
$
1,416
$
(6,097 )
(Note 18)
(Notes 18, 22)
$
(107 )
6
(101 )
$
3,536
2
14
16
1,432
$
38
(8 )
30
(6,067 )
Ovintiv Inc.2022 Annual Report | 83
Consolidated Balance Sheet
As at December 31 (US$ millions)
Assets
Current Assets
Cash and cash equivalents
Accounts receivable and accrued revenues (net of allowances
of $4 million (2021: $5 million))
Risk management
Income tax receivable
Property, Plant and Equipment, at cost:
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
Deferred Income Taxes
Goodwill
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
2022 issued and outstanding: 245.7 million shares (2021: 258.0 million shares)
Paid in surplus
Retained earnings (Accumulated deficit)
Accumulated other comprehensive income
Total Shareholders’ Equity
2022
2021
$
(Notes 3, 7)
(Notes 23, 24)
(Note 6)
(Note 9)
5
$
1,594
53
43
1,695
$
$
57,054
1,172
882
59,108
(49,640 )
9,468
1,004
34
271
2,584
15,056
2,221
76
4
86
393
2,780
3,177
814
131
-
281
184
7,367
3
7,776
(1,081 )
991
7,689
15,056
$
(Note 2)
(Notes 10, 13)
(Notes 23, 24)
(Note 6)
(Notes 2, 11)
(Note 2)
$
(Note 12)
(Note 13)
$
(Notes 23, 24)
(Note 14)
(Note 14)
(Note 13)
(Notes 13, 15)
(Notes 23, 24)
(Note 16)
(Note 6)
(Note 26)
(Note 17)
(Note 17)
(Note 18)
$
195
1,294
1
97
1,587
55,475
1,944
903
58,322
(49,561 )
8,761
1,079
-
-
2,628
14,055
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
See accompanying Notes to Consolidated Financial Statements
Approved by the Board of Directors
/s/ Peter A. Dea
Peter A. Dea
Director
/s/ George L. Pita
George L. Pita
Director
84 | 2022 Annual ReportOvintiv Inc.
Consolidated Statement of Changes in Shareholders’ Equity
Retained Accumulated
Other
Earnings
Total
Paid in (Accumulated Comprehensive Shareholders’
Equity
Deficit)
Income
Share
Capital Surplus
For the year ended December 31, 2022 (US$ millions)
Balance, December 31, 2021
Net Earnings (Loss)
Dividends on Shares of Common Stock ($0.95 per share)
Shares of Common Stock Purchased under Normal
Course Issuer Bid
Equity-Settled Compensation Costs
Other Comprehensive Income (Loss)
Balance, December 31, 2022
(Note 17)
(Note 17)
(Note 18)
$
$
3 $
8,458 $
(4,479 ) $
1,092 $
-
-
-
-
-
3 $
-
-
3,637
(239 )
(719 )
37
-
7,776 $
-
-
-
(1,081 ) $
-
-
-
-
(101 )
991 $
For the year ended December 31, 2021 (US$ millions)
Capital Surplus
Share
Retained Accumulated
Earnings
Total
Paid in (Accumulated Comprehensive Shareholders’
Equity
Deficit)
Income
Other
Balance, December 31, 2020
$
3 $
8,531 $
(5,773 ) $
1,076 $
Net Earnings (Loss)
Dividends on Shares of Common Stock ($0.4675 per share) (Note 17)
(Note 17)
Shares of Common Stock Purchased under Normal
Course Issuer Bid
Equity-Settled Compensation Costs
Other Comprehensive Income (Loss)
Balance, December 31, 2021
(Note 18)
$
-
-
-
-
-
-
-
1,416
(122 )
(111 )
38
-
-
-
-
-
-
-
-
16
3 $
8,458 $
(4,479 ) $
1,092 $
5,074
For the year ended December 31, 2020 (US$ millions)
Capital Surplus
Share
Retained Accumulated
Earnings
Total
Paid in (Accumulated Comprehensive Shareholders’
Equity
Deficit)
Income
Other
Balance, December 31, 2019
$
7,061 $
1,402 $
421 $
1,046 $
Net Earnings (Loss)
Dividends on Shares of Common Stock ($0.375 per share) (Note 17)
Equity-Settled Compensation Costs
(Note 18)
Other Comprehensive Income (Loss)
Reclassification of Share Capital due to the Reorganization (Note 17)
$
Balance, December 31, 2020
See accompanying Notes to Consolidated Financial Statements
-
-
-
-
-
-
71
-
(7,058 )
7,058
(6,097 )
(97 )
-
-
-
-
-
-
30
-
3 $
8,531 $
(5,773 ) $
1,076 $
3,837
5,074
3,637
(239 )
(719 )
37
(101 )
7,689
3,837
1,416
(122 )
(111 )
38
16
9,930
(6,097 )
(97 )
71
30
-
Ovintiv Inc.2022 Annual Report | 85
Consolidated Statement of Cash Flows
For the years ended December 31 (US$ millions)
2022
2021
2020
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 (gain) loss on settlements
Other
Net change in other assets and liabilities
Net change in non-cash working capital
Cash From (Used in) Operating Activities
Investing Activities
Capital expenditures
Acquisitions
Proceeds from divestitures
Net change in investments and other
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
Cash, End of Year
Cash Equivalents, End of Year
Restricted Cash, End of Year
Cash, Cash Equivalents and Restricted Cash, End of Year
$
(Note 9)
(Note 16)
(Note 6)
(Note 24)
(Note 5)
(Note 5)
(Note 25)
(Note 2)
(Note 8)
(Note 8)
(Note 14)
(Note 14)
(Note 17)
(Note 17)
(Note 13)
$
$
$
$
3,637
1,113
-
18
(87 )
(741 )
14
8
148
(57 )
(187 )
3,866
(1,831 )
(286 )
228
103
(1,786 )
393
(1,634 )
(719 )
(239 )
(69 )
(2,268 )
(2 )
(190 )
195
$
5
5 $
-
-
5
$
1,416
$
(6,097 )
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
$
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
Supplementary Cash Flow Information
(Note 25)
See accompanying Notes to Consolidated Financial Statements
86 | 2022 Annual ReportOvintiv Inc.
1.
Summary of Significant Accounting Policies
A) NATURE OF OPERATIONS
Ovintiv Inc. and its subsidiaries (collectively, “Ovintiv”) are in the business of the exploration for, the development
of, and the production and marketing of oil, NGLs and natural gas.
On January 24, 2020, Encana Corporation (“Encana”) completed a corporate reorganization, which included a plan of
arrangement (the “Arrangement”) that involved, among other things, Ovintiv Inc. ultimately acquiring 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”.
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.
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.
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.
Ovintiv Inc.2022 Annual Report | 87
Significant items subject to estimates and assumptions are:
(cid:120)(cid:3) Estimates of proved reserves used for depletion and ceiling test impairment calculations
(cid:120)(cid:3) Estimated fair value of long-term assets used for impairment calculations
(cid:120)(cid:3) Fair value of reporting units used for the assessment of goodwill
(cid:120)(cid:3) Estimates of future taxable earnings used to assess the realizable value of deferred tax assets
(cid:120) Estimates of incremental borrowing rates and lease terms used in the measurement of right-of-use (“ROU”)
assets and lease liabilities
(cid:120) Fair value of asset retirement costs and related obligations
(cid:120)(cid:3) Fair value of derivative instruments
(cid:120)(cid:3) Fair value attributed to assets acquired and liabilities assumed in business combinations
(cid:120)(cid:3) Tax interpretations, regulations and legislation in the various jurisdictions in which the Company and its
subsidiaries operate
(cid:120)(cid:3) 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
(cid:120)(cid:3) Recognized values of pension assets and obligations, as well as the pension costs charged to net earnings,
depend on certain actuarial and economic assumptions
(cid:120)(cid:3) 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.
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 the U.S. and Canada. As of January 1, 2003, the defined benefit pension plan was closed
to new entrants.
88 | 2022 Annual ReportOvintiv Inc.
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
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.
Ovintiv Inc.2022 Annual Report | 89
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.
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 development
projects is capitalized during the development 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.
90 | 2022 Annual ReportOvintiv Inc.
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.
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 the 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
Ovintiv Inc.2022 Annual Report | 91
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.
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 cash flows to a present value; the cost
approach is based on the amount that currently would be required to replace an asset.
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:
(cid:120)(cid:3) Level 1 - Inputs represent quoted prices in active markets for identical assets or liabilities, such as exchange-
traded commodity derivatives.
(cid:120)(cid:3) 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.
(cid:120)(cid:3) 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 14. Fair value information related to pension plan assets is included in Note 22. Recurring
fair value measurements are performed for risk management assets and liabilities and other derivative contracts as
discussed in Note 23.
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.
92 | 2022 Annual ReportOvintiv Inc.
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.
2.
Segmented Information
Ovintiv’s reportable segments are determined based on the following operations and geographic locations:
(cid:120)(cid:3) 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.
(cid:120)(cid:3) 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.
(cid:120)(cid:3) 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.2022 Annual Report | 93
Results of Operations
Segment Information
For the years ended December 31
2022
2021
2020
2022
2021
2020
2022
2021
2020
USA Operations
Canadian Operations
Market Optimization
Revenues
Product and service revenues
Gains (losses) on risk management, net
Sublease revenues
Total Revenues
Operating Expenses
$ 6,680 $ 4,883 $ 2,701 $ 3,476 $ 2,542 $ 1,349 $ 4,107 $ 3,043 $ 1,459
7
(1,123 )
-
-
5,557 3,901 3,198 1,991 2,129 1,556 4,107 3,043 1,466
497 (1,485 )
-
(413 )
-
(982 )
-
207
-
-
-
-
-
-
Production, mineral and other taxes
Transportation and processing
Operating
Purchased product
Depreciation, depletion and amortization
Impairments
Total Operating Expenses
278
507
490
-
401
626
646
-
861
-
158
14
453 1,002
127
485
-
-
235
837 1,378
-
- 5,580
-
220
22
- 4,055 2,951 1,366
-
-
2,534 2,112 8,054 1,378 1,395 1,371 4,242 3,148 1,608
(142 )
$ 3,023 $ 1,789 $ (4,856 ) $ 613 $ 734 $ 185 $
15
937
111
-
332
-
15
829
100
-
172
25
-
158
29
427
-
-
-
-
-
(105 ) $
(135 ) $
Operating Income (Loss)
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
Other (gains) losses, net
Total Other (Income) Expenses
Net Earnings (Loss) Before Income Tax
Income tax expense (recovery)
Net Earnings (Loss)
Corporate & Other
2022
2021
2020
Consolidated
2021
2022
2020
$
- $
741
68
809
- $
(488 )
73
(415 )
(204 ) (1,867 ) (1,883 )
73
68
- $ 14,263 $ 10,468 $ 5,509
507
71
(133 ) 12,464 8,658 6,087
71
(2 )
415
802
293
-
-
-
-
17
-
18
422
457
-
173
- 1,786 1,616 1,502
605
- 4,055 2,951 1,366
29 1,113 1,190 1,834
- 5,580
-
29
29
395
395
451 8,611 7,139 11,484
$ 352 $ (899 ) $ (584 ) 3,853 1,519 (5,397 )
-
-
(1 )
-
21
-
22
442
484
-
18
422
22
442
625
311
15
(33 )
293
340
(23 )
(37 )
280
371
17
(55 )
333
3,560 1,239 (5,730 )
367
$ 3,637 $ 1,416 $ (6,097 )
(177 )
(77 )
94 | 2022 Annual ReportOvintiv Inc.
Intersegment Information
For the years ended December 31
Marketing Sales
2021
2022
2020
Market Optimization
Upstream Eliminations
2022
2021
2020
Total
2022
2021
2020
Revenues
$ 15,622 $ 10,630 $ 6,108 $ (11,515 ) $ (7,587 ) $ (4,642 ) $ 4,107 $ 3,043 $ 1,466
Operating Expenses
Transportation and processing
Operating
Purchased product
Operating Income (Loss)
646
29
571
25
15,082 10,140
(106 ) $
$
(135 ) $
616
22
(488 )
-
(399 )
-
5,612 (11,027 ) (7,189 )
1 $
(142 ) $
- $
158
29
(396 )
-
172
25
(4,246 ) 4,055 2,951
(105 ) $
(135 ) $
- $
220
22
1,366
(142 )
Revenues by Geographic Region
For the years ended December 31
United States
2021
2022
2020
2022
2021
2020
2022
2021
2020
Canada
Total
Revenues
Product revenues (1)
Oil
NGLs
Natural gas
Other revenues (2)
Gains (losses) on risk
management, net
Total Revenues
$ 4,524 $ 3,357 $ 2,035 $
1,045
1,108
7 $
353 1,358 1,158
310 2,104 1,368
862
664
3 $
7 $ 4,527 $ 3,364 $ 2,042
955
1,047
602 2,403 2,020
737 3,212 2,032
3,679 2,785
1,310
510
340
226 4,189 3,125
1,536
(796 ) (1,160 )
507
$ 9,560 $ 6,508 $ 4,414 $ 2,904 $ 2,150 $ 1,673 $ 12,464 $ 8,658 $ 6,087
101 (1,867 ) (1,883 )
406 (1,071 )
(723 )
(1)
(2)
Includes intercompany marketing fees transacted between the Company’s operating segments.
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.
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, 2022, 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 $2,231 million which comprised $2,216 million in the United States and $15 million in
Canada (2021 - one customer with sales of approximately $1,573 million; 2020 - one customer with sales of
approximately $834 million).
Capital Expenditures by Segment
For the years ended December 31
2022
2021
2020
USA Operations
Canadian Operations
Corporate & Other
$
$
1,493 $
334
4
1,831 $
1,125 $
391
3
1,519 $
1,353
380
3
1,736
Goodwill, Property, Plant and Equipment and Total Assets by Segment
As at December 31
USA Operations
Canadian Operations
Market Optimization
Corporate & Other
Goodwill
2022
1,938 $
646
-
-
2,584 $
$
$
Property, Plant and Equipment
2021
2022
2021
Total Assets
2022
1,938 $
690
-
-
2,628 $
8,259 $
1,044
-
165
9,468 $
7,623 $
951
-
187
8,761 $
11,043 $
2,075
446
1,492
15,056 $
2021
10,345
1,932
300
1,478
14,055
Ovintiv Inc.2022 Annual Report | 95
Goodwill, Property, Plant and Equipment and Total Assets by Geographic Region
As at December 31
United States
Canada
Other Countries
Goodwill
2022
1,938 $
646
-
2,584 $
$
$
Property, Plant and Equipment
2021
2022
2021
Total Assets
2022
1,938 $
690
-
2,628 $
8,316 $
1,152
-
9,468 $
7,673 $
1,088
-
8,761 $
11,749 $
3,307
-
15,056 $
2021
10,715
3,337
3
14,055
3. Revenues from Contracts with Customers
The following table summarizes Ovintiv’s revenues from contracts with customers.
Revenues
For the years ended December 31
2022
2021
2020
2022
2021
2020
2022
2021
2020
USA Operations
Canadian Operations
Market Optimization
Revenues from Customers
Product revenues (1)
Oil
NGLs
Natural gas
Service revenues
Gathering and processing
Product and Service Revenues
Revenues from Customers
Product revenues (1)
Oil
NGLs
Natural gas
Service revenues
Gathering and processing
Product and Service Revenues
$ 4,537 $ 3,369 $ 2,045 $
1,049
1,107
7 $
354 1,363 1,163
309 2,119 1,377
864
664
3 $
7 $ 3,415 $ 2,268 $
42
19
704
646
606
743
616
10
813
3
-
$ 6,696 $ 4,897 $ 2,711 $ 3,487 $ 2,552 $ 1,359 $ 4,080 $ 3,019 $ 1,439
3
5
3
5
2
-
-
Corporate & Other
2022
2021
2020
Consolidated
2021
2022
2020
$
$
- $
-
-
-
- $
- $
-
-
-
- $
- $ 7,955 $ 5,644 $ 2,668
- 2,431 2,069
970
- 3,872 2,745 1,865
-
6
- $ 14,263 $ 10,468 $ 5,509
10
5
(1)
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, 2022, receivables and accrued revenues from contracts
with customers were $1,257 million (2021 - $1,070 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, 2022.
As at December 31, 2022, 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
96 | 2022 Annual ReportOvintiv Inc.
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.
4.
Interest
For the years ended December 31
Interest Expense on:
Debt
Finance leases (See Note 13)
Other
2022
2021
2020
$
$
297 $
2
12
311 $
323 $
3
14
340 $
350
9
12
371
For the year ended December 31, 2022, interest expense on debt includes $22 million related to premiums paid to
repurchase certain of the Company’s senior notes in the open market and a $47 million (2021 - $19 million) make-
whole interest payment resulting from the early redemption of certain senior notes (see Note 14).
Additionally, interest expense on debt for the year ended December 31, 2022 includes $30 million in non-cash fair
value amortization related to the senior notes, previously acquired through a business combination, which were
redeemed in 2022 (see Note 14).
5.
Foreign Exchange (Gain) Loss, Net
For the years ended December 31
2022
2021
2020
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
$
- $
14
-
14
8
5
-
(12 )
15 $
1 $
20
-
21
(8 )
(33 )
(3 )
-
(23 ) $
51
(13 )
(27 )
11
1
1
5
(1 )
17
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.
Ovintiv Inc.2022 Annual Report | 97
6.
Income Taxes
The provision for income taxes is as follows:
For the years ended December 31
2022
2021
2020
Current Tax
United States
Canada
Total Current Tax Expense (Recovery)
Deferred Tax
United States
Canada
Total Deferred Tax Expense (Recovery)
Income Tax Expense (Recovery)
$
$
10 $
-
10
(275 )
188
(87 )
(77 ) $
- $
(156 )
(156 )
1
(22 )
(21 )
(177 ) $
(12 )
(2 )
(14 )
(187 )
568
381
367
During the year ended December 31, 2022, the current income tax expense was primarily due to state taxes. 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.
The following table reconciles income taxes calculated at the applicable statutory rate with the actual income taxes:
For the years ended December 31
2022
2021
2020
Net Earnings (Loss) Before Income Tax
United States Federal Statutory Rate
Expected Income Tax Expense (Recovery)
Effect on Taxes Resulting From:
State income tax
Income tax related to foreign operations
Effect of legislative changes
Non-taxable capital (gains) losses
Realized capital loss resulting from U.S. Domestication
Non-taxable items
Amounts in respect of prior periods
Change in valuation allowance
Other
Effective Tax Rate
$
$
3,560
$
21.0 %
748
26
60
-
-
-
246
101
(1,299 )
41
(77 )
$
(2.2 %)
1,239
$
21.0 %
260
43
9
-
-
-
-
60
(558 )
9
(177 )
$
(14.3 %)
(5,730 )
21.0 %
(1,203 )
(147 )
(2 )
2
3
(1,238 )
-
36
2,900
16
367
(6.4 %)
During the year ended December 31, 2022, a valuation allowance of $1,299 million was reversed of which
$1,028 million was recognized as a result of positive earnings in the U.S. and Canada. Deferred income tax assets are
routinely assessed for realizability, and consequently, after weighing both positive and negative evidence, the
Company reversed an additional $271 million of the valuation allowance primarily due to positive forecasted earnings
in the U.S.
During the year ended December 31, 2021, a valuation allowance reversal of $558 million was recognized as a result
of positive earnings in the U.S. and Canada. During the year ended December 31, 2020, a valuation allowance of
$2,900 million was recorded as a result of cumulative three-year losses in the U.S. and Canada which was determined
to be significant negative evidence to overcome. Included in the valuation allowance were capital losses in the amount
of $1.2 billion for Canadian tax purposes associated with the U.S. Domestication in the first quarter of 2020. If it is
determined the capital losses can be utilized at a future date, a reduction in the valuation allowance will be recorded.
The effective tax rate of (2.2) percent for the year ended December 31, 2022 is lower than the U.S. federal statutory
tax rate of 21 percent primarily due to reductions in valuation allowances offset by certain non-taxable items.
98 | 2022 Annual ReportOvintiv Inc.
For the year ended December 31, 2021, the effective tax rate of (14.3) percent was lower than the U.S. federal statutory
tax rate of 21 percent primarily due to the resolution of prior years’ tax items and changes 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 9 for further discussion related to the ceiling test impairments.
The 2017 Tax Cuts and Jobs Act no longer allows immediate expensing of research and experimentation expenditures
for tax years beginning after December 31, 2021. Beginning in 2022, these expenditures have been capitalized and
will be amortized over a five-year period.
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
Risk management
Deferred income
Other
$
Net Deferred Income Tax Asset (Liability)
$
2022
2021
- $
-
72
-
2,290
-
18
(1,326 )
(676 )
(10 )
(248 )
(33 )
87 $
36
171
67
19
2,727
119
7
(2,733 )
(381 )
-
-
(36 )
(4 )
As at December 31, 2022, Ovintiv has a valuation allowance against certain U.S. federal and state losses in the amount
of $47 million (2021 - $1,044 million related to U.S. federal and state losses, U.S. foreign tax credits and U.S.
charitable donations) and Canadian net capital losses in the amount of $1,279 million (2021 - $1,689 million related
to net operating losses, net capital losses and other tax basis) 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)
2022
2021
$
$
271 $
-
271
-
(184 )
(184 )
87 $
-
-
-
(4 )
-
(4 )
(4 )
Ovintiv Inc.2022 Annual Report | 99
Tax basis, loss carryforwards and business credits available are as follows:
As at December 31
United States
Tax basis
Net operating losses (Federal)
Business credits
Canada
Tax basis
Net capital losses
Net operating losses
$
$
2022
Expiration Date
5,228
4,034
10
Indefinite
2023 - 2038 (1)
2023 - 2041
938
5,350
381
Indefinite
Indefinite
2039 - 2041
(1)
Includes net operating losses of $1,211 million which have an indefinite expiration date.
During the year ended December 31, 2022, Ovintiv concluded that a portion of the previously unremitted earnings
from its foreign subsidiaries is no longer considered to be permanently reinvested. As a result of this change in
assertion, the Company recorded a nominal deferred income tax liability on the undistributed earnings that were
previously considered permanently reinvested. The Company has a taxable temporary difference of approximately
$339 million in respect of unremitted earnings that continue to be permanently reinvested for which a deferred income
tax liability of $17 million has not been recognized and becomes subject to taxation upon the remittance of dividends.
The deferred tax liability considers U.S. federal, state and foreign withholding tax implications.
The following table presents changes in the balance of Ovintiv’s unrecognized tax benefits excluding interest:
For the years ended December 31
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
2022
(10 ) $
-
-
-
1
(9 ) $
2021
(232 )
(2 )
(29 )
257
(4 )
(10 )
$
$
The unrecognized tax benefit is reflected in the Consolidated Balance Sheet as follows:
As at December 31
Income Tax Receivable
Deferred Income Tax Liability (1)
Balance, End of Year
2022
2021
$
$
(1 ) $
(8 )
(9 ) $
(1 )
(9 )
(10 )
(1) As at December 31, 2021, 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, 2022 would affect Ovintiv’s effective
income tax rate. The nature of the unrecognized tax benefits is highly uncertain. As at December 31, 2022, 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 2022,
Ovintiv recognized an expense of nil (2021 - recovery of $6 million; 2020 - nil) in interest expense. As at
December 31, 2022, Ovintiv had no liability recorded (2021 - nil) 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
Taxation Year
2018 - 2022
2017 - 2022
2015 - 2022
2015 - 2022
100 | 2022 Annual ReportOvintiv Inc.
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
2022
2021
Trade Receivables and Accrued Revenues
Production accruals
Market optimization
Joint interest and trade receivables
Derivative settlements
Corporate and other
Total Trade Receivables and Accrued Revenues
Prepaids
Deposits and Other
Expected Credit Loss Allowance
$
$
881 $
376
200
7
26
1,490
38
70
1,598
(4 )
1,594 $
832
238
102
9
23
1,204
28
67
1,299
(5 )
1,294
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 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, 2022, the current period expected credit loss allowance was $4 million (2021 -
$5 million). See Note 24 for more information on credit risk exposures.
Ovintiv Inc.2022 Annual Report | 101
8. Acquisitions and Divestitures
For the years ended December 31
2022
2021
2020
Acquisitions
USA Operations
Canadian Operations
Total Acquisitions
Divestitures
USA Operations
Canadian Operations
Total Divestitures
Net Acquisitions & (Divestitures)
ACQUISITIONS
$
$
277 $
9
286
(230 )
2
(228 )
58 $
11 $
-
11
(772 )
(253 )
(1,025 )
(1,014 ) $
19
-
19
(78 )
(11 )
(89 )
(70 )
Acquisitions in the USA Operations in 2022 primarily included property purchases in Permian with oil and liquids-rich
potential.
DIVESTITURES
USA Operations
In 2022, divestitures in the USA Operations primarily included the sales of portions of Uinta located in northeastern
Utah and Bakken located in northeastern Montana for combined proceeds of approximately $215 million, after closing
and other adjustments.
In 2021, divestitures in the USA Operations primarily included the sale of Eagle Ford 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.
Canadian Operations
In 2021, divestitures in the Canadian Operations primarily included the sale of Duvernay located in west central
Alberta for proceeds of approximately $238 million, after closing and other adjustments.
As part of the Duvernay divestiture, the Company agreed to a contingent consideration arrangement, 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 was greater than $56 per barrel and $62 per barrel,
respectively. The terms of the contingent consideration for both the 2021 and 2022 calendar years were met.
In 2020, divestitures in the Canadian Operations primarily included the sale of certain properties that did not
complement Ovintiv’s existing portfolio of assets.
Amounts received from the Company’s divestiture transactions have been deducted from the respective U.S. and
Canadian full cost pools.
102 | 2022 Annual ReportOvintiv Inc.
9.
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
2022
Accumulated
2021
Accumulated
Cost
DD&A
Net
Cost
DD&A
Net
$
41,382 $
1,127
30
42,539
(34,280 ) $
-
-
(34,280 )
15,672
45
14
15,731
(14,687 )
-
-
(14,687 )
7
831
59,108 $
(7 )
(666 )
(49,640 ) $
$
7,102
1,127
30
8,259
985
45
14
1,044
-
165
9,468
$
39,145 $
1,884
12
41,041
(33,418 ) $
-
-
(33,418 )
5,727
1,884
12
7,623
16,330
60
11
16,401
(15,450 )
-
-
(15,450 )
880
60
11
951
7
873
58,322 $
(7 )
(686 )
(49,561 ) $
-
187
8,761
$
USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration,
development and construction activities of $178 million, which have been capitalized during the year ended
December 31, 2022 (2021 - $172 million).
For the year ended December 31, 2022, Ovintiv did not recognize ceiling test impairments in the USA Operations
(2021 - nil; 2020 - $5,580 million) or in the Canadian Operations (2021 - nil; 2020 - 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 27.
10. Other Assets
As at December 31
Operating Lease ROU Assets (See Note 13)
Long-Term Investments
Long-Term Receivables
Deferred Charges
Other
2022
870 $
21
58
44
11
1,004 $
2021
929
27
64
42
17
1,079
$
$
Ovintiv Inc.2022 Annual Report | 103
11. Goodwill
As at December 31
United States
2022
2021
Balance, beginning and end of year
$
1,938 $
1,938
Canada
Balance, beginning of year
Foreign currency translation adjustment
Balance, end of year
Total Goodwill
690
(44 )
646
2,584 $
687
3
690
2,628
$
The Company had no additions or dispositions relating to goodwill during 2022 or 2021. The change in the Canada
goodwill balance reflects movement due to foreign currency translation.
Goodwill was assessed for impairment as at December 31, 2022 and December 31, 2021. 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.
12. Accounts Payable and Accrued Liabilities
As at December 31
Trade Payables
Capital Accruals
Royalty and Production Accruals
Market Optimization Accruals
Outstanding Disbursements
Payroll & Other Accruals
Interest Payable
Derivative Settlements
Current Portion of Long-Term Incentive Costs (See Note 21)
Current Portion of Finance Lease Obligations (See Note 13)
Current Portion of Asset Retirement Obligation (See Note 16)
2022
436 $
196
718
314
74
211
65
17
139
6
45
2,221 $
2021
328
161
643
266
32
221
108
90
78
6
46
1,979
$
$
Payables and accruals are non-interest bearing. Interest payable represents amounts accrued related to Ovintiv’s
unsecured notes as disclosed in Note 14.
104 | 2022 Annual ReportOvintiv Inc.
13. 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)
2022
2021
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
870 $
22
76
814
6
27
929
27
62
889
6
33
5.39%
6.11%
5.44%
6.11%
14.0 years
4.5 years
15.3 years
5.5 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
Lease Costs (1):
Operating Lease Costs, Excluding Short-Term Leases
2022
2021
$
140 $
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
2
7
189
14
48
20
176
151
2
6
5
3
8
206
12
55
18
197
147
3
82
75
23
(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.
Ovintiv Inc.2022 Annual Report | 105
Operating lease expense is reflected in the Consolidated Statement of Earnings as follows:
For the years ended December 31
Operating Lease Expense
Transportation and processing
Operating
Administrative
Total Operating Lease Expense
2022
2021
$
$
3 $
70
101
174 $
3
81
120
204
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, 2022:
Operating Leases (1)
Expected Future Lease Payments
Less: Discounting
Present Value of Future Operating
Lease Payments
Sublease Income (undiscounted)
Finance Leases
Expected Future Lease Payments
Less: Discounting
Present Value of Future Finance
Lease Payments
Sublease Income (undiscounted) (2)
2023
2024
2025
2026
2027 Thereafter
Total
$
123 $
104 $
89 $
79 $
76 $
820 $
1,291
401
$
(41 ) $
(43 ) $
(43 ) $
(43 ) $
(44 ) $
$
(414 ) $
890
(628 )
$
8 $
8 $
9 $
9 $
4 $
- $
$
(8 ) $
(7 ) $
(7 ) $
(7 ) $
(3 ) $
$
- $
38
5
33
(32 )
(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, 2022.
14. Long-Term Debt
As at December 31
Note
2022
2021
U.S. Dollar Denominated Debt
Revolving credit and term loan borrowings
U.S. Unsecured Notes:
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
A
B
F
C
D
E
$
393 $
-
-
459
300
350
500
599
390
430
148
3,569
27
(26 )
3,570 $
393 $
3,177
3,570 $
1,000
688
300
350
500
750
462
488
203
4,741
77
(32 )
4,786
-
4,786
4,786
$
$
$
106 | 2022 Annual ReportOvintiv Inc.
A) REVOLVING CREDIT AND TERM LOAN BORROWINGS
At December 31, 2022, Ovintiv had in place committed revolving U.S. dollar denominated bank credit facilities
totaling $3.5 billion which included $2.2 billion on a revolving bank credit facility for Ovintiv Inc. and $1.3 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 2026, and are fully revolving up
to maturity.
At December 31, 2022, the Company had $393 million of commercial paper outstanding under its U.S. CP program
maturing at various dates with a weighted average interest rate of approximately 5.24 percent, which is supported by
the Company’s credit facilities. The Ovintiv Inc. facility is unsecured and bears interest at either the lenders’ U.S. base
rate or SOFR, plus applicable margins. The Canadian subsidiary facility bears interest at the lenders’ rates for
Canadian prime, U.S. base rate, Bankers’ Acceptances or SOFR, plus applicable margins. As at December 31, 2022,
there were no outstanding amounts under the revolving credit facilities.
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, 2022, the Company is in compliance with
all financial covenants.
Standby fees paid in 2022 relating to revolving credit and term loan agreements were approximately $8 million
(2021 - $10 million; 2020 - $8 million) and were included in interest expense in the Consolidated Statement of
Earnings.
B) UNSECURED NOTES
Shelf Prospectus
Ovintiv has a U.S. shelf registration statement under which the Company may issue from time to time, debt securities,
common stock, preferred stock, warrants, units, share purchase contracts and share purchase units in the United States.
The U.S. shelf registration statement expires in March 2023. The ability to issue securities under the U.S. shelf
registration statement is dependent upon market conditions and securities 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.
During the year ended December 31, 2022, the Company repurchased approximately $565 million in principal amount
of its senior notes in the open market, which included approximately $229 million in principal amount of its
5.375 percent senior notes due in January 2026, approximately $151 million in principal amount of its 6.5 percent
senior notes due in August 2034, approximately $72 million in principal amount of its 6.625 percent senior notes due
in August 2037, approximately $58 million in principal amount of its 6.5 percent senior notes due in February 2038
and approximately $55 million in principal amount of its 5.15 percent senior notes due in November 2041. To
complete these open market repurchases, the Company paid premiums of $22 million, which are included in interest
expense as discussed in Note 4.
On June 10, 2022, Ovintiv redeemed the Company’s $1,000 million, 5.625 percent senior notes due July 1, 2024,
using cash on hand and proceeds from short-term borrowings. Ovintiv paid approximately $1,072 million in cash
including accrued and unpaid interest of $25 million and a make-whole payment of $47 million, which is included in
interest expense as discussed in Note 4.
On June 18, 2021, the Company redeemed 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 make-whole
payment of $19 million, which is included in interest expense as discussed in Note 4.
Ovintiv Inc.2022 Annual Report | 107
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 divestitures, as discussed in Note 8, and cash
on hand to complete the senior note redemptions in 2021.
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.
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 six 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 2022, $6 million in issuance costs were capitalized related to the renewal of the
Company’s credit facilities. During 2021, no debt premiums or discounts were capitalized. Issuance costs are
amortized over the term of the related debt.
E) CURRENT PORTION OF LONG-TERM DEBT
As at December 31, 2022, the current portion of long-term debt was $393 million (2021 - nil).
F)
PROJECTED DEBT PAYMENTS
As at December 31
2023
2024
2025
2026
2027
Thereafter
Total
Principal
Amount
Interest
Amount
$
$
393
-
-
459
-
2,717
3,569
$
$
232
211
212
199
187
1,253
2,294
As at December 31, 2022, total long-term debt had a carrying value of $3,570 million and a fair value of $3,648 million
(2021 - carrying value of $4,786 million and a fair value of $5,804 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.
108 | 2022 Annual ReportOvintiv Inc.
15. Other Liabilities and Provisions
As at December 31
Finance Lease Obligations (See Note 13)
Pensions and Other Post-Employment Benefits (See Note 22)
Long-Term Incentive Costs (See Note 21)
Other Derivative Contracts (See Notes 23, 24)
Other
16. 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 12)
Long-Term Portion
17. Share Capital
AUTHORIZED
2022
2021
27
73
14
5
12
131
$
$
33
104
36
5
12
190
2022
2021
385
4
(128 )
58
18
(11 )
326
45
281
326
$
$
$
$
440
8
(91 )
5
22
1
385
46
339
385
$
$
$
$
$
$
Subsequent to the Reorganization as described in Note 1 and as at December 31, 2022, 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
2022
2021
2020
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
258.0 $
(14.7 )
2.4
-
245.7 $
3
-
-
-
3
259.8 $
(3.1 )
1.3
-
258.0 $
3
-
-
-
3
259.8 $
-
-
7,061
-
-
-
259.8 $
(7,058 )
3
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.
NORMAL COURSE ISSUER BID
On September 28, 2022, Ovintiv announced it had received regulatory approval for the renewal of its NCIB program,
that enables the Company to purchase, for cancellation or return to treasury, up to approximately 24.8 million shares
of common stock over a 12-month period from October 3, 2022 to October 2, 2023.
Ovintiv Inc.2022 Annual Report | 109
During the year ended December 31, 2022, the Company purchased approximately 3.5 million shares under its current
NCIB program and 11.2 million shares under its previous NCIB program, which extended from October 1, 2021 to
September 30, 2022. Total consideration of approximately $719 million was paid to complete the share repurchases,
of which $147 thousand was charged to share capital and $719 million was charged to paid in surplus.
During the year ended December 31, 2021, the Company purchased approximately 3.1 million shares under its
previous NCIB program 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 respective NCIB programs at prevailing market prices plus brokerage
fees, with consideration allocated to share capital up to the par value of the shares, with any excess allocated to paid
in surplus.
DIVIDENDS
During the year ended December 31, 2022, the Company declared and paid dividends of $0.95 per share of common
stock, totaling $239 million (2021 - $0.4675 per share of common stock, totaling $122 million; 2020 - $0.375 per
share of common stock, totaling $97 million).
Ovintiv’s quarterly dividend payment in 2022 was $0.20 per share of common stock in the first quarter and $0.25 per
share of common stock for each of the second, third and fourth quarters. 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 February 27, 2023, the Board of Directors declared a dividend of $0.25 per share of common stock payable on
March 31, 2023 to common shareholders of record as of March 15, 2023.
EARNINGS PER SHARE OF COMMON STOCK
The following table presents the calculation of net earnings (loss) per share of common stock:
For the years ended December 31 (US$ millions, except per share amounts)
2022
2021
2020
Net Earnings (Loss)
$
3,637
$
1,416
$
(6,097 )
Number of Shares of Common Stock:
Weighted average shares of common stock outstanding - Basic
Effect of dilutive securities (1)
Weighted Average Shares of Common Stock Outstanding - Diluted
Net Earnings (Loss) per Share of Common Stock
Basic
Diluted (1)
253.6
4.8
258.4
260.4
6.0
266.4
259.8
-
259.8
$
$
14.34
14.08
$
5.44
5.32
(23.47 )
(23.47 )
(1) 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 21 for further information.
STOCK-BASED COMPENSATION PLANS
Ovintiv’s Performance Share Unit (“PSU”) and Restricted Share Unit (“RSU”) stock-based compensation plans allow
the Company to settle the awards either in cash or in the Company’s common stock. Accordingly, Ovintiv issued
2.4 million shares of common stock during the year ended December 31, 2022 (2021 - 1.3 million shares of common
stock) as certain PSU and RSU grants vested during the year. Certain 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 calculation
of fully 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.
110 | 2022 Annual ReportOvintiv Inc.
Following shareholder approval in the second quarter of 2022, the Company added 6.0 million shares of common
stock to its reserve for issuance under its stock-based compensation plans. Subsequent to the shareholder approval, an
aggregate of 13.4 million shares of common stock were authorized and held in reserve for issuance. As at
December 31, 2022, 8.5 million shares of common stock remain 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 21 for further information on Ovintiv’s outstanding and exercisable TSARs, PSUs and RSUs.
18. Accumulated Other Comprehensive Income
For the years ended December 31
2022
2021
2020
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 22)
Income taxes
Net prior service costs from plan amendment (See Note 22)
Income taxes
Amounts Reclassified from Other Comprehensive Income:
Reclassification of net actuarial (gains) and losses to
net earnings (See Note 22)
Income taxes
Reclassification of net prior service costs to net earnings (See Note 22)
Income taxes
Curtailment in net defined periodic benefit cost (See Note 22)
Income taxes
Settlement in net defined periodic benefit cost (See Note 22)
Income taxes
$
$
$
1,044 $
(107 )
937 $
1,042 $
2
1,044 $
1,004
38
1,042
48 $
34 $
42
13
(3 )
-
-
(6 )
2
-
-
-
-
-
-
14
(4 )
11
(2 )
(8 )
2
1
-
-
-
-
-
(10 )
2
-
-
(9 )
2
2
-
5
(1 )
2
(1 )
Balance, End of Year
Total Accumulated Other Comprehensive Income
$
$
54 $
991 $
48 $
1,092 $
34
1,076
Ovintiv Inc.2022 Annual Report | 111
19. 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, 2022, VMLP provides approximately 1,160 MMcf/d of natural gas gathering and compression
and 923 MMcf/d of natural gas processing under long-term service agreements with remaining terms ranging from
nine to 23 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 $1,436 million as at December 31, 2022. 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 26 under Transportation and Processing. The
potential payout requirement is highly uncertain as the amount is contingent on future production estimates, pace of
development and downstream transportation constraints. As at December 31, 2022, accounts payable and accrued
liabilities included $0.4 million related to the take or pay commitment.
20. Restructuring Charges
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. The Company completed its
reorganization work 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
2022
2021
2020
Severance and Benefits
Outplacement, Moving and Other Expenses
Restructuring Expenses
As at December 31
Outstanding Restructuring Accrual, Beginning of Year
Restructuring Expenses Incurred
Restructuring Costs Paid
Outstanding Restructuring Accrual, End of Year (1)
$
$
$
$
- $
-
- $
14 $
-
14 $
88
2
90
2022
2021
2020
3 $
-
(3 )
- $
14 $
14
(25 )
3 $
8
90
(84 )
14
(1)
Included in accounts payable and accrued liabilities in the Consolidated Balance Sheet.
112 | 2022 Annual ReportOvintiv Inc.
21. 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 Stock Appreciation Rights (“SARs”), TSARs,
PSUs, Deferred Share Units (“DSUs”) and RSUs.
Ovintiv accounts for certain PSUs and RSUs as equity-settled stock-based payment transactions provided there is
sufficient common stock held in reserve for issuance. SARs, TSARs 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 second quarter of 2022, Ovintiv’s shareholders approved an increase to the number of shares of common
stock held in reserve for issuance under the Company’s stock-based compensation plans. Accordingly, certain PSU
awards and RSU awards were modified and reclassified as equity-settled share-based payment transactions at the
modification date. 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
2022
2021
2020
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
$
$
$
$
152 $
82
(32 )
202 $
38 $
164
202 $
118 $
47
(27 )
138 $
31 $
107
138 $
42
3
(12 )
33
10
23
33
As at December 31, 2022, the liability for cash-settled share-based payment transactions totaled $153 million
(2021 - $114 million), of which $139 million (2021 - $78 million) is recognized in accounts payable and accrued
liabilities and $14 million (2021 - $36 million) is recognized in other liabilities and provisions in the Consolidated
Balance Sheet.
The following sections outline certain information related to Ovintiv’s compensation plans as at December 31, 2022.
A)
STOCK APPRECIATION RIGHTS
U.S. dollar denominated SARs are granted to eligible U.S.-based employees, which entitle the employee to receive a
cash payment equal to the excess of the market price of Ovintiv’s shares of common stock at the time of exercise over
the original grant price of the right. SARs granted vest and are exercisable at 30 percent of the number granted after
one year, an additional 30 percent of the number granted after two years, are fully exercisable after three years and
expire seven years after the date granted. SARs are classified as a liability and remeasured at the end of each reporting
period.
Ovintiv Inc.2022 Annual Report | 113
The following table summarizes information related to the U.S. dollar denominated SARs:
As at December 31
2022
2021
Outstanding
SARs
(thousands
of units)
Weighted
Average
Exercise
Price (US$)
Weighted
Average
Remaining
Contractual
Life (Years)
Outstanding
SARs
(thousands
of units)
Weighted
Average
Exercise
Price (US$)
Weighted
Average
Remaining
Contractual
Life (Years)
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)
1,150
-
(401 )
-
(219 )
530
530
-
38.89
-
22.14
-
56.75
44.17
44.17
-
2.2
2.4
2.4
-
660
682
(177 )
(15 )
-
1,150
1,021
129
38.03
35.11
20.50
45.35
-
38.89
39.54
33.77
2.2
1.9
4.3
(1) The intrinsic value of option awards exercised and cash-settled during 2022 was $11 million (2021 - $2 million; 2020 - nil).
(2) The intrinsic value of option awards outstanding at December 31, 2022, was $14 million (2021 - $15 million).
(3) The intrinsic value of option awards vested and exercisable at December 31, 2022, was $14 million (2021 - $14 million).
(4) The intrinsic value of option awards expected to vest at December 31, 2021, was $1 million.
The following weighted average assumptions were used to determine the fair value of SARs outstanding:
As at December 31
Risk Free Interest Rate
Dividend Yield
Expected Volatility Rate (1)
Expected Term
Market Share Price
Weighted Average Grant Date Fair Value
(1) Volatility was estimated using historical rates.
US$ Share Units
2022
2021
2020
4.02%
1.97%
107.80%
1.6 yrs
US$50.71
US$44.17
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
As at December 31, 2022, there were no unrecognized compensation costs (2021 - $0.2 million) related to unvested
SARs.
B) TANDEM STOCK APPRECIATION RIGHTS
All options to purchase shares of common stock issued to eligible Canadian-based employees under Ovintiv’s Stock
Option Plan have associated TSARs attached. In lieu of exercising the option, the associated TSARs give the option
holder the right to purchase shares of common stock of the Company or receive a cash payment equal to the excess of
the market price of Ovintiv’s shares of common stock at the time of exercise over the original grant price. TSARs
granted vest and are exercisable at 30 percent of the number granted after one year, an additional 30 percent of the
number granted after two years, are fully exercisable after three years and expire seven years after the date granted.
TSARs are classified as a liability and remeasured at the end of each reporting period.
114 | 2022 Annual ReportOvintiv Inc.
The following table summarizes information related to the TSARs:
As at December 31
2022
2021
Outstanding
TSARs
(thousands
of units)
Weighted
Average
Exercise
Price (C$)
Weighted
Average
Remaining
Contractual
Life (Years)
Outstanding
TSARs
(thousands
of units)
Weighted
Average
Exercise
Price (C$)
Weighted
Average
Remaining
Contractual
Life (Years)
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)
733
-
(269 )
-
-
(174 )
290
290
-
54.17
-
36.16
-
-
71.70
60.31
60.31
-
2.2
2.2
2.2
-
1,586
-
(136 )
-
(717 )
-
733
642
91
48.28
-
28.01
-
46.11
-
54.17
55.38
45.64
2.2
1.9
4.3
(1) The intrinsic value of option awards exercised and cash-settled during 2022 was $6 million (2021 - $2 million; 2020 - nil).
(2) The intrinsic value of option awards outstanding at December 31, 2022, was $7 million (2021 - $10 million).
(3) The intrinsic value of option awards vested and exercisable at December 31, 2022, was $7 million (2021 - $9 million).
(4) The intrinsic value of option awards expected to vest at December 31, 2021, was $1 million.
The following weighted average assumptions were used to determine the fair value of TSARs outstanding:
As at December 31
Risk Free Interest Rate
Dividend Yield
Expected Volatility Rate (1)
Expected Term
Market Share Price
Weighted Average Grant Date Fair Value
(1) Volatility was estimated using historical rates.
C$ Share Units
2022
2021
2020
4.02%
1.90%
106.16%
1.5 yrs
C$68.56
C$60.31
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
As at December 31, 2022, there were no unrecognized compensation costs (2021 - $0.1 million) related to unvested
TSARs.
C) PERFORMANCE SHARE UNITS
PSUs are granted to eligible employees, which entitle the employee to receive, upon vesting, one share of Ovintiv
common stock for each PSU held or a cash equivalent, at the discretion of the Company. PSUs vest three years from
the date granted, provided the employee remains actively employed with Ovintiv on the vesting date. Based on the
performance assessment, up to a maximum of two times the original PSU grant may be eligible to vest in respect of
the year being measured.
The ultimate value of the PSUs will depend upon Ovintiv’s performance relative to predetermined strategic milestones
as well as the performance of a specified peer group over a three-year period.
Ovintiv Inc.2022 Annual Report | 115
The following tables summarize information related to the PSUs:
As at December 31
U.S. Dollar Denominated Outstanding PSUs
Unvested and Outstanding, Beginning of Year
Granted
Vested and Released (2)
Units, in Lieu of Dividends
Forfeited
Unvested and Outstanding, End of Year
As at December 31
Canadian Dollar Denominated Outstanding PSUs
Unvested and Outstanding, Beginning of Year
Granted
Vested and Released (2)
Units, in Lieu of Dividends
Forfeited
Unvested and Outstanding, End of Year
2022 (1)
2021
Units
(thousands)
Weighted Average
Grant Date
Fair Value (US$)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (US$)
2,427
312
(515 )
44
(7 )
2,261
20.04
45.61
35.05
20.15
16.47
20.17
1,886
833
(177 )
37
(152 )
2,427
21.80
25.80
54.65
20.04
32.96
20.04
2022 (1)
2021
Units
(thousands)
Weighted Average
Grant Date
Fair Value (C$)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (C$)
1,223
146
(321 )
21
(21 )
1,048
26.75
57.95
47.01
24.94
32.11
24.74
1,308
293
(137 )
20
(261 )
1,223
34.43
29.34
68.80
26.66
46.13
26.75
(1) During the second quarter of 2022, shareholders approved an increase to the number of shares of common stock held in reserve for issuance
under the Company’s stock-based compensation plans. Accordingly, the 2022 annual awards were modified and reclassified as equity-settled
awards. The modification date fair value of the awards was US$56.72 per share and C$72.17 per share for the U.S. dollar denominated and
Canadian dollar denominated PSUs, respectively.
(2) During the year ended December 31, 2022, performance shares that vested and were cash-settled resulted in payments of $22 million
(2021 - $3 million; 2020 - $6 million).
As at December 31, 2022, there were approximately $43 million of unrecognized compensation costs
(2021 - $42 million) related to unvested PSUs. The costs are expected to be recognized over a weighted average period
of 0.6 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.
116 | 2022 Annual ReportOvintiv Inc.
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
2022
2021
2022
2021
5
5
-
-
-
10
-
5
-
-
-
5
206
3
-
4
(25 )
188
211
8
-
4
(17 )
206
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 vest over their three-year service period. RSUs issued to Directors fully vest on the grant
date and have no required term of service. RSUs issued to Directors before May 2022 are settled three years from the
date granted or following the Director’s departure from Ovintiv, whichever is earlier. Beginning with the RSUs issued
in May 2022, all RSU awards issued to Directors are equity-settled immediately upon issuance.
The following tables summarize information related to the RSUs:
As at December 31
U.S. Dollar Denominated Outstanding RSUs
Unvested and Outstanding, Beginning of Year
Granted
Units, in Lieu of Dividends
Vested and Released (3)
Forfeited
Unvested and Outstanding, End of Year
As at December 31
Canadian Dollar Denominated Outstanding RSUs
Unvested and Outstanding, Beginning of Year
Granted
Units, in Lieu of Dividends
Vested and Released (3)
Forfeited
Unvested and Outstanding, End of Year
2022 (1)
2021 (2)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (US$)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (US$)
5,401
982
67
(2,932 )
(149 )
3,369
20.92
46.14
25.27
23.99
26.02
25.48
5,486
1,952
83
(1,720 )
(400 )
5,401
21.26
23.57
20.93
24.74
21.99
20.92
2022 (1)
2021 (2)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (C$)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (C$)
2,621
444
30
(1,484 )
(71 )
1,540
28.23
58.97
32.55
32.68
33.75
32.65
2,912
953
41
(1,035 )
(250 )
2,621
31.76
29.30
28.11
37.63
34.43
28.23
(1) During the second quarter of 2022, Ovintiv’s shareholders approved an increase to the number of shares of common stock held in reserve for
issuance under the Company’s stock-based compensation plans. Accordingly, the 2022 annual awards were modified and reclassified as
equity-settled awards. The modification date fair value of the awards was US$56.72 per share and C$72.17 per share for the U.S. dollar
denominated and Canadian dollar denominated RSUs, respectively.
(2) During the third quarter of 2021, the 2021 annual awards were modified and reclassified as equity-settled awards. The 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.
(3) During the year ended December 31, 2022, restricted shares that vested and were cash-settled resulted in payments of $51 million
(2021 - $23 million; 2020 - $10 million).
As at December 31, 2022, there were approximately $44 million of unrecognized compensation costs
(2021 - $43 million) related to unvested RSUs. The costs are expected to be recognized over a weighted average period
of 0.6 years.
Ovintiv Inc.2022 Annual Report | 117
22. 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 14 years. The
average remaining service period of the active employees participating in the OPEB plan is eight 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, 2021 and
the next required filing is expected to be as at December 31, 2024.
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, 2022 and 2021, as well as
the funded status of the plans and amounts recognized in the Consolidated Financial Statements as at
December 31, 2022 and 2021.
As at December 31
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
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
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
Defined Benefits
2022
2021
OPEB
2022
2021
$
$
$
$
$
$
$
$
$
191 $
-
5
(33 )
(10 )
-
(13 )
-
140 $
176 $
(27 )
(10 )
-
-
(13 )
(2 )
124 $
211 $
-
5
(9 )
1
-
(17 )
-
191 $
193 $
3
1
-
-
(17 )
(4 )
176 $
67 $
2
2
(13 )
(1 )
2
(9 )
-
50 $
- $
-
-
2
7
(9 )
-
- $
(16 ) $
(15 ) $
(50 ) $
2 $
-
(18 )
(16 ) $
10 $
-
(25 )
(15 ) $
- $
(7 )
(43 )
(50 ) $
18 $
(7 )
19 $
(7 )
(88 ) $
7
11 $
12 $
(81 ) $
89
3
2
(8 )
-
2
(10 )
(11 )
67
-
-
-
2
8
(10 )
-
-
(67 )
-
(8 )
(59 )
(67 )
(82 )
7
(75 )
The accumulated defined benefit obligation for all defined benefit plans was $190 million as at December 31, 2022
(2021 - $258 million).
118 | 2022 Annual ReportOvintiv Inc.
The following table sets forth the defined benefit plans where the accumulated benefit obligation and projected benefit
obligation are 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
2022
2021
2022
2021
$
$
(47 )
(47 )
29
(63 ) $
(63 )
38
$
(50 )
(50 )
-
(67 )
(67 )
-
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
Discount Rate
Rates of Increase in Compensation Levels
Defined Benefits
2022
2021
OPEB
2022
5.10%
3.24%
2.80%
3.13%
5.25%
4.83%
2021
2.54%
6.18%
The following sets forth the total benefit plans expense recognized by the Company:
For the years ended December 31
Net Defined Periodic Benefit Cost
Defined Contribution Plan Expense
Total Benefit Plans Expense
Pension Benefits
2021
2022
2020
2022
2021
2020
OPEB
$
$
- $
24
24 $
- $
24
24 $
3 $
28
31 $
(3 ) $
-
(3 ) $
(3 ) $
-
(3 ) $
2
-
2
Of the total benefit plans expense, $22 million (2021 - $22 million; 2020 - $27 million) was included in operating
expense and $4 million (2021 - $5 million; 2020 - $6 million) was included in administrative expense. Excluding
service costs, net defined periodic benefit gains of $5 million (2021 - gains of $6 million; 2020 - nil) were recorded in
other (gains) losses, net.
The net defined periodic benefit cost is as follows:
For the years ended December 31
Service Cost
Interest Cost
Expected Return on Plan Assets
Amounts Reclassified from Accumulated
Other Comprehensive Income:
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)
Defined Benefits
2021
2022
2020
2022
2021
2020
OPEB
$
$
- $
5
(6 )
1
-
-
-
-
- $
- $
5
(6 )
1
-
-
-
-
- $
1 $
6
(7 )
1
-
-
2
-
3 $
2 $
2
-
(7 )
-
-
-
-
(3 ) $
3 $
2
-
(9 )
1
-
-
-
(3 ) $
4
2
-
(10 )
2
5
-
(1 )
2
(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.
Ovintiv Inc.2022 Annual Report | 119
The amounts recognized in other comprehensive income are as follows:
For the years ended December 31
Defined Benefits
2021
2022
2020
2022
2021
2020
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
$
$
$
- $
-
(1 )
-
-
-
(6 ) $
-
(1 )
-
-
-
$
6
-
(1 )
-
-
(2 )
(13 ) $
-
7
-
-
-
(8 ) $
(11 )
9
(1 )
-
-
(1 ) $
(7 ) $
3
$
(6 ) $
(11 ) $
(1 ) $
(5 ) $
3
$
(5 ) $
(9 ) $
4
-
10
(2 )
(5 )
-
7
5
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
Discount Rate
Long-Term Rate of Return on Plan Assets
Rates of Increase in Compensation Levels
Defined Benefits
2021
2022
2020
2022
2021
2020
OPEB
5.10 %
3.85 %
3.24 %
2.25 %
3.00 %
3.13 %
3.00 %
3.75 %
3.12 %
2.46 %
-
4.83 %
2.08 %
-
6.33 %
2.90 %
-
5.92 %
The Company’s assumed health care cost trend rates are as follows:
For the years ended December 31
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
2022
2021
2020
6.16 %
5.00 %
2027
6.15 %
5.00 %
2026
6.42 %
5.00 %
2026
The Company does not expect to contribute to its defined benefit pension plans in 2023. 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.
2023
2024
2025
2026
2027
2028 - 2032
Defined Benefit
Pension Payments
Other Benefit
Payments
$
13 $
13
13
13
12
56
7
6
6
5
5
18
120 | 2022 Annual ReportOvintiv Inc.
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
Level 1
Level 2
Level 3
Total
2022
17 $
-
-
17 $
- $
66
41
107 $
2021
- $
-
-
- $
17
66
41
124
Level 1
Level 2
Level 3
Total
19 $
-
-
19 $
1 $
94
62
157 $
- $
-
-
- $
20
94
62
176
$
$
$
$
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, 2022: 67 percent
Bonds (2021 - 67 percent), and 33 percent U.S. and Foreign Equity (2021 - 33 percent). The expected long-term rate
of return is 4.70 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 a loss of $27 million
(2021 - gain of $3 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.
Ovintiv Inc.2022 Annual Report | 121
23. 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 22.
Recurring fair value measurements are performed for risk management assets and liabilities and other derivative
contracts, as discussed further in Note 24. 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, 2022
Risk Management Assets
Commodity Derivatives:
Current assets
Long-term assets
Foreign Currency Derivatives:
Current assets
Risk Management Liabilities
Commodity Derivatives:
Current liabilities
Foreign Currency Derivatives:
Current liabilities
Other Derivative Contracts (2)
Level 1
Quoted
Prices in
Active
Markets
Level 2
Other
Observable
Inputs
Level 3
Significant
Unobservable
Inputs
Total Fair
Value Netting (1)
Carrying
Amount
$
- $
-
-
93 $
34
12 $
-
105 $
34
(53 ) $
-
1
-
1
-
$
- $
128 $
- $
128 $
(53 ) $
-
11
-
11
-
52
34
1
75
11
Long-term in other liabilities and provisions
$
- $
5 $
- $
5 $
- $
5
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 (3)
$
$
Current in accounts receivable and accrued revenues
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
- $
-
-
10 $
1
(10 ) $
(1 )
5
(4 )
-
-
1
536 $
26
181 $
-
717 $
26
(10 ) $
(1 )
707
25
-
-
-
(4 )
(4 )
- $
1
5
9 $
-
-
9 $
1
5
- $
-
-
9
1
5
(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.
Includes credit derivatives associated with certain prior years’ divestitures.
Includes credit derivatives and contingent consideration associated with certain prior years’ divestitures.
(2)
(3)
122 | 2022 Annual ReportOvintiv Inc.
The Company’s Level 1 and Level 2 risk management assets and liabilities consist of NYMEX three-way options,
foreign currency swaps and basis swaps with terms to 2025. Level 2 also includes financial guarantee contracts as
discussed in Note 24. 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, 2022, the Company’s Level 3 risk management assets and liabilities consist of WTI three-way
options with terms to 2023. The WTI three-way options are a combination of a sold call, a bought put and a sold put.
These contracts allow the Company to participate in the upside of commodity prices to the ceiling of the call option
and provide the Company with partial 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
2022
2021
(172 ) $
(449 )
-
633
-
12 $
(74 )
(708 )
6
604
-
(172 )
184 $
(104 )
$
$
$
(1) Purchases, sales and issuances for the year ended December 31, 2021, reflects the fair value of the contingent consideration arrangement at
the closing date of the Duvernay divestiture discussed in Note 8.
Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at
December 31, 2022:
Valuation Technique
Unobservable Input
Range
Weighted
Average (1)
Risk Management - WTI Options
Option Model
Implied Volatility
14% - 52%
44%
(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
$2 million (2021 - $15 million) increase or decrease to net risk management assets and liabilities.
Ovintiv Inc.2022 Annual Report | 123
24. Financial Instruments and Risk Management
A) FINANCIAL INSTRUMENTS
Ovintiv’s financial assets and liabilities are recognized in cash and cash equivalents, accounts receivable and accrued
revenues, other assets, accounts payable and accrued liabilities, risk management assets and liabilities, long-term debt,
and other liabilities and provisions.
B) RISK MANAGEMENT ACTIVITIES
Ovintiv uses derivative financial instruments to manage its exposure to fluctuating commodity prices and foreign
currency exchange rates. The Company does not apply hedge accounting to any of its derivative financial instruments.
As a result, gains and losses from changes in the fair value are recognized in net earnings (loss).
COMMODITY PRICE RISK
Commodity price risk arises from the effect that fluctuations in future commodity prices may have on revenues from
production. To partially mitigate exposure to commodity price risk, the Company has entered into various derivative
financial instruments. The use of these derivative instruments is governed under formal policies and is subject to limits
established by the Board of Directors.
Oil and NGLs - To partially mitigate oil and NGL commodity price risk, the Company uses WTI- and NGL-based
contracts such as 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 options. Ovintiv has also entered into basis swaps to manage against widening price differentials between
various production areas and benchmark price points.
FOREIGN EXCHANGE RISK
Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future
cash flows from the Company’s financial assets or liabilities. To partially mitigate the effect of foreign exchange
fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative
contracts. As at December 31, 2022, the Company has entered into $400 million notional U.S. dollar denominated
currency swaps at an average exchange rate of C$1.3160 to US$1, which mature monthly throughout 2023.
124 | 2022 Annual ReportOvintiv Inc.
RISK MANAGEMENT POSITIONS AS AT DECEMBER 31, 2022
Oil and NGL Contracts
WTI Three-Way Options
Sold call / bought put / sold put
Basis Contracts (1)
Oil and NGLs Fair Value Position
Natural Gas Contracts
NYMEX Three-Way Options
Sold call / bought put / sold put
Basis Contracts (2)
Other Financial Positions
Natural Gas Fair Value Position
Other Derivative Contracts
Fair Value Position (3)
Foreign Currency Contracts
Fair Value Position (4)
Total Fair Value Position
Notional Volumes
Term
Average Price
Fair Value
US$/bbl
38.0 Mbbls/d
2023
113.35 / 65.33 / 50.00
$
397 MMcf/d
2023
2023
2023
2024
2025
2023
US$/Mcf
8.27 / 3.68 / 2.63
$
12
-
12
16
(52 )
26
8
1
(1 )
(5 )
(10 )
(4 )
(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, Malin, Waha and NYMEX.
(3)
(4) Ovintiv has entered into U.S. dollar denominated fixed-for-floating average currency swaps to protect against fluctuations between the
Includes credit derivatives associated with certain prior years’ divestitures.
Canadian and U.S. dollars.
Ovintiv Inc.2022 Annual Report | 125
EARNINGS IMPACT OF REALIZED AND UNREALIZED GAINS (LOSSES) ON RISK MANAGEMENT POSITIONS
For the years ended December 31
2022
2021
2020
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
$
(2,608 ) $
(1,395 ) $
$
(5 )
(2,613 ) $
33
(1,362 ) $
711
(1 )
710
$
741 $
(488 ) $
(204 )
$
(15 )
726 $
(21 )
(509 ) $
13
(191 )
$
(1,867 ) $
(1,883 ) $
$
(20 )
(1,887 ) $
12
(1,871 ) $
507
12
519
(1)
(2)
Includes a realized gain of $6 million for the year ended December 31, 2022 (2021 - gain of $1 million; 2020 - gain of $2 million) related to
other derivative contracts.
Includes an unrealized loss of $2 million for the year ended December 31, 2022 (2021 - gain of $4 million; 2020 - loss of $1 million) related
to other derivative contracts.
RECONCILIATION OF UNREALIZED RISK MANAGEMENT POSITIONS FROM JANUARY 1 TO DECEMBER 31
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 Contracts Realized During the Year
Fair Value of Contracts, End of Year
2022
Fair Value
$
(724 )
(1,887 ) $
(6 )
2,613
(4 ) $
$
Total
Unrealized
Gain (Loss)
2021
Total
Unrealized
Gain (Loss)
2020
Total
Unrealized
Gain (Loss)
(1,887 ) $
(1,871 ) $
519
2,613
726 $
1,362
(509 ) $
(710 )
(191 )
Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair
value. See Note 23 for a discussion of fair value measurements.
126 | 2022 Annual ReportOvintiv Inc.
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
$
Net Risk Management Assets (Liabilities) and Other Derivative Contracts
$
C) CREDIT RISK
2022
2021
53 $
34
87
86
-
86
-
-
-
5
5
(4 ) $
1
-
1
703
25
728
9
9
1
5
6
(724 )
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, 2022, Ovintiv’s maximum exposure of loss due to credit risk from
derivative financial instrument assets on a gross and net fair value basis was $140 million and $87 million,
respectively, as disclosed in Note 23. The Company had no significant credit derivatives in place and held no collateral
at December 31, 2022.
Any 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, 2022, approximately 88 percent
(2021 - 90 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 $5 million as at December 31, 2022 (2021 - $6 million). The maximum
potential amount of undiscounted future payments is $34 million as at December 31, 2022, and is considered unlikely.
Ovintiv Inc.2022 Annual Report | 127
25. 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
2022
2021
2020
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 13)
Non-Cash Investing Activities
Asset retirement obligation incurred (See Note 16)
Asset retirement obligation change in estimated future cash outflows (See Note 16)
Property, plant and equipment accruals
Capitalized long-term incentives
Property additions/dispositions, including swaps
Contingent consideration (See Note 8)
$
$
$
$
(304 ) $
50
14
53
(187 ) $
(333 ) $
275
(7 )
24
(41 ) $
146
(26 )
(11 )
30
139
2022
2021
2020
(75 ) $
(23 ) $
(10 )
4 $
58
35
4
126
-
8 $
5
(9 )
8
34
6
7
(49 )
(175 )
(16 )
229
-
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
2022
2021
2020
Interest Paid
Income Taxes (Recovered), net of Amounts Paid
$
$
376 $
(38 ) $
370 $
(176 ) $
385
(52 )
26. Commitments and Contingencies
COMMITMENTS
The following table outlines the Company’s commitments as at December 31, 2022:
(undiscounted)
2023
2024
Expected Future Payments
2025
2026
2027 Thereafter
Transportation and Processing
Drilling and Field Services
Building Leases
Total
$
$
790 $
299
9
1,098 $
687 $
21
9
717 $
570 $
-
8
578 $
490 $
-
2
492 $
463 $
-
-
463 $
2,156 $
-
-
2,156 $
Total
5,156
320
28
5,504
128 | 2022 Annual ReportOvintiv Inc.
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 13 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 19. 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.
27. Supplementary Oil and Gas Information (unaudited)
The unaudited supplementary information on oil and natural gas exploration and production activities for 2022, 2021
and 2020 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)
2022
2021
2020
Oil & NGLs
Natural Gas
WTI
($/bbl)
Edmonton
Condensate
(C$/bbl)
Henry Hub
($/MMBtu)
AECO
(C$/MMBtu)
$
93.82 $
66.56
39.62
121.18 $
83.69
49.77
6.36 $
3.60
1.98
5.65
3.26
2.13
(1) All prices were held constant in all future years when estimating net revenues and reserves.
Ovintiv Inc.2022 Annual Report | 129
PROVED RESERVES (1)
(12-MONTH AVERAGE TRAILING PRICES)
Oil
(MMbbls)
NGLs
(MMbbls)
Natural Gas
(Bcf)
Total
(MMBOE)
United
States Canada Total
United
States Canada Total
United
States Canada Total
2020
Beginning of year
722.4
Revisions and improved recovery (2) (221.5 )
144.3
Extensions and discoveries
9.9
Purchase of reserves in place
(9.3 )
Sale of reserves in place
(55.2 )
Production
590.5
279.1
311.4
590.5
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
2022
Beginning of year
End of year
Developed
Undeveloped
Total
Revisions and improved recovery (2)
Extensions and discoveries
Purchase of reserves in place
Sale of reserves in place
Production
590.5
(78.7 )
121.2
2.6
(27.0 )
(51.1 )
557.5
291.0
266.6
557.5
557.5
(65.1 )
95.2
15.8
(20.2 )
(48.0 )
535.2
257.2
278.0
535.2
(29.1 )
78.1
8.4
(7.9 )
(29.8 )
1.3 723.7 409.4 179.1 588.5 2,441 2,818 5,259 2,188.8
(364.9 )
(33.1 )
(0.5 ) (222.0 )
(62.2 )
377.5
27.7 105.8
0.1 144.4
54.3
20.0
11.6
10.9
1.0
(64.1 )
(21.4 )
(13.4 )
(9.3 )
-
(0.2 )
(199.0 )
(50.3 )
(20.5 )
(55.4 )
1.7 592.3 429.1 151.4 580.5 2,268 2,650 4,918 1,992.5
76.9 319.3 1,327 1,740 3,067 1,111.3
1.7 280.9 242.3
881.1
74.5 261.2
- 311.4 186.7
1.7 592.3 429.1 151.4 580.5 2,268 2,650 4,918 1,992.5
(161 )
372
94
(106 )
(366 )
(323 )
392
47
(95 )
(194 )
(484 )
764
140
(201 )
(560 )
910 1,851
941
(30.0 )
75.1
1.6
(12.6 )
(28.5 )
1.7 592.3 429.1 151.4 580.5 2,268 2,650 4,918 1,992.5
(67.8 )
(20.3 )
0.7
(50.3 )
(78.0 )
591.2
66.9 142.0
0.3 121.5
7.3
2.5
0.9
2.6
-
(70.2 )
(21.0 )
(8.4 )
(28.6 )
(1.6 )
(0.1 )
(194.9 )
(49.0 )
(20.5 )
(51.2 )
1.1 558.6 434.7 170.0 604.7 2,536 4,033 6,570 2,258.2
84.5 348.8 1,621 2,490 4,111 1,325.7
0.7 291.7 264.3
932.5
85.4 255.9
0.3 266.9 170.5
1.1 558.6 434.7 170.0 604.7 2,536 4,033 6,570 2,258.2
61
363
302
428 1,538 1,966
13
6
(123 )
(73 )
(568 )
(389 )
915 1,543 2,458
7
(50 )
(179 )
(65.5 )
95.2
15.8
(20.8 )
(48.0 )
2.9
37.2
13.7
(0.7 )
(29.9 )
1.1 558.6 434.7 170.0 604.7 2,536 4,033 6,570 2,258.2
(189.2 )
(33.2 )
(0.3 )
370.6
68.5
-
45.9
15.4
-
(25.7 )
(1.3 )
(0.6 )
(186.2 )
(47.3 )
-
0.1 535.3 457.8 149.0 606.9 2,698 4,090 6,789 2,273.6
71.2 359.5 1,755 2,276 4,031 1,288.7
0.1 257.3 288.3
984.9
77.8 247.4
- 278.0 169.5
0.1 535.3 457.8 149.0 606.9 2,698 4,090 6,789 2,273.6
38
(544 )
(582 )
237 1,005 1,241
88
16
72
(22 )
(16 )
(5 )
(545 )
(366 )
(180 )
(36.0 )
31.3
1.7
(0.6 )
(17.3 )
943 1,814 2,757
(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.
130 | 2022 Annual ReportOvintiv Inc.
Total Proved reserves increased 15.4 MMBOE including production of 186.2 MMBOE in 2022 due to the following:
(cid:120) Revisions and improved recovery of oil, NGLs and natural gas were negative primarily due to changes in the
approved development plan of 142.5 MMBOE, negative price revisions of 49.6 MMBOE from higher
royalties in Canada due to higher 12-month average trailing prices, and 1.5 MMBOE from revisions other
than price, partially offset by 4.4 MMBOE from infill drilling locations.
(cid:120) Extensions and discoveries of oil, NGLs and natural gas increased proved reserves by 370.6 MMBOE due to
successful drilling leading to increased technical delineation, as well as new proved undeveloped locations
resulting from updated development plans in Montney and Permian.
(cid:120) Purchases of 45.9 MMBOE were primarily properties with oil and liquids-rich potential in Permian.
(cid:120) Sale of reserves in place decreased proved developed reserves by 25.7 MMBOE primarily due to the
divestiture of properties held in Uinta.
Total Proved reserves increased 265.7 MMBOE including production of 194.9 MMBOE in 2021 due to the following:
(cid:120) 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.
(cid:120) 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 Montney, Permian and Anadarko.
(cid:120) Purchases of 7.3 MMBOE were primarily in Permian and a result of acreage trades.
(cid:120) Sale of reserves in place decreased proved developed reserves by 70.2 MMBOE primarily due to the
divestitures of Eagle Ford located in south Texas and Duvernay located in west central Alberta.
Total Proved reserves decreased 196.3 MMBOE including production of 199.0 MMBOE in 2020 due to the following:
(cid:120) 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.
(cid:120) 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 Permian, Montney, Anadarko and Uinta.
(cid:120) Purchases of 54.3 MMBOE were primarily in Permian and a result of the partition of certain Duvernay shale
assets between Ovintiv and PCC.
(cid:120) Sale of reserves in place decreased proved developed reserves by 64.1 MMBOE primarily due to divestitures
in Anadarko and Permian, and the partition of certain Duvernay shale assets between Ovintiv and PCC.
Ovintiv Inc.2022 Annual Report | 131
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 natural 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
2021
2022
2020
2022
2021
2020
Canada
$
74,567 $
51,473 $
26,093 $
29,149 $
18,312 $
7,156
17,043
8,951
9,333
39,240
12,272
5,767
5,480
27,954
8,864
6,187
74
10,968
8,173
2,142
4,182
14,652
7,679
2,061
1,695
6,877
4,202
1,859
-
1,095
Less 10% annual discount for estimated
timing of cash flows
Discounted Future Net Cash Flows
20,272
18,968 $
13,663
14,291 $
5,895
5,073 $
6,121
8,531 $
2,393
4,484 $
$
246
849
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
2022
2021
2020
$ 103,716 $
69,785 $
33,249
25,216
11,093
13,515
53,892
19,951
7,828
7,175
34,831
13,066
8,046
74
12,063
26,393
27,499 $
16,056
18,775 $
6,141
5,922
$
132 | 2022 Annual ReportOvintiv Inc.
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
Balance, End of Year
$
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
2021
2022
2020
2022
2021
2020
Canada
$
14,291 $
5,073 $
10,041 $
4,484 $
849 $
1,575
(5,007 )
2,735
661
(278 )
9,059
(712 )
1,630
1,475
(2,965 )
(2 )
(1,919 )
18,968 $
(3,608 )
3,102
63
(199 )
10,702
(407 )
508
1,139
(83 )
1
(2,000 )
14,291 $
(1,605 )
1,080
98
(255 )
(7,119 )
(2,346 )
1,064
1,341
2,183
-
591
5,073 $
(2,333 )
2,635
58
(28 )
5,532
(961 )
545
339
(303 )
-
(1,437 )
8,531 $
(1,479 )
2,119
13
(38 )
3,266
201
85
397
41
-
(970 )
4,484 $
(405 )
140
44
(97 )
(1,563 )
(188 )
158
535
652
(2 )
-
849
Total
2022
2021
2020
$
18,775 $
5,922 $
11,616
(7,340 )
5,370
719
(306 )
14,591
(1,673 )
2,175
1,814
(3,268 )
(2 )
(3,356 )
27,499 $
(5,087 )
5,221
76
(237 )
13,968
(206 )
593
1,536
(42 )
1
(2,970 )
18,775 $
(2,010 )
1,220
142
(352 )
(8,682 )
(2,534 )
1,222
1,876
2,835
(2 )
591
5,922
Balance, End of Year
$
Ovintiv Inc.2022 Annual Report | 133
RESULTS OF OPERATIONS
The following table sets forth revenue and direct cost information relating to the Company’s oil and natural gas
exploration and production activities.
United States
2021
2022
2020
2022
2021
2020
Canada
$
6,680 $
4,883 $
2,701 $
3,476 $
2,542 $
1,349
401
626
646
861
-
8
4,138
952
3,186 $
278
507
490
837
-
11
2,760
673
2,087 $
158
453
485
1,378
5,580
13
(5,366 )
(1,309 )
(4,057 ) $
14
1,002
127
235
-
10
2,088
499
1,589 $
15
937
111
332
-
11
1,136
272
864 $
15
829
100
427
-
16
(38 )
(9 )
(29 )
$
Total
2022
2021
2020
$
10,156 $
7,425 $
4,050
415
1,628
773
1,096
-
18
6,226
1,451
4,775 $
293
1,444
601
1,169
-
22
3,896
945
2,951 $
173
1,282
585
1,805
5,580
29
(5,404 )
(1,318 )
(4,086 )
$
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
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
(1) Excludes gains (losses) on risk management.
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.
Proved Oil and Gas Properties
Unproved Oil and Gas Properties
Total Capital Cost
Accumulated DD&A
Net Capitalized Costs
Proved Oil and Gas Properties
Unproved Oil and Gas Properties
Total Capital Cost
Accumulated DD&A
Net Capitalized Costs
United States
2021
2022
2020
2022
2021
2020
Canada
$
$
41,382 $
1,127
42,509
34,280
8,229 $
39,145 $
1,884
41,029
33,418
7,611 $
37,875 $
2,785
40,660
32,581
8,079 $
15,672 $
45
15,717
14,687
1,030 $
16,330 $
60
16,390
15,450
940 $
16,008
177
16,185
15,056
1,129
Total
2022
2021
2020
$
$
57,054 $
1,172
58,226
48,967
9,259 $
55,475 $
1,944
57,419
48,868
8,551 $
53,883
2,962
56,845
47,637
9,208
134 | 2022 Annual ReportOvintiv Inc.
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.
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
United States
2021
2022
2020
2022
2021
2020
Canada
$
$
154 $
123
277
5
1,530
1,812 $
2 $
9
11
10
1,148
1,169 $
16 $
3
19
12
1,352
1,383 $
- $
9
9
7
376
392 $
- $
-
-
5
388
393 $
-
-
-
-
353
353
Total
2022
2021
2020
$
$
154 $
132
286
12
1,906
2,204 $
2 $
9
11
15
1,536
1,562 $
16
3
19
12
1,705
1,736
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
2022
1,127 $
45
1,172 $
$
$
The following is a summary of the costs related to Ovintiv’s unproved properties as at December 31, 2022:
Acquisition Costs
Exploration Costs
2022
2021
2020
Prior to
2020
$
$
154 $
5
159 $
2 $
11
13 $
22 $
7
29 $
894 $
77
971 $
2021
1,884
60
1,944
Total
1,072
100
1,172
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.
Ovintiv Inc.2022 Annual Report | 135
The $1.2 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. 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 one to two years. The remaining costs excluded
from depletion are related to properties which are not individually significant.
136 | 2022 Annual ReportOvintiv Inc.
Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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 effectiveness of
the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.
The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed
by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported
within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be
disclosed by the Company in reports that it files or submits under the Exchange Act, is accumulated and communicated
to the Company’s management, including the principal executive officer and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of
December 31, 2022.
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
2022 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.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Ovintiv Inc.2022 Annual Report | 137
PART III
Item 10. Directors, Executive Officers and Corporate Governance
DIRECTORS AND EXECUTIVE OFFICERS
Information regarding the Board of Directors is set forth in the Proxy Statement relating to the Company’s 2023 annual
meeting of shareholders, which is incorporated herein by reference.
Information regarding the Company’s executive officers is set forth in the section entitled “Information About Our
Executive Officers” 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. Any person may request, without charge, a copy of the Code of Ethics 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 2023 annual
meeting of shareholders, which is incorporated herein by reference.
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 2023 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 2023 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 2023 annual
meeting of shareholders, which is incorporated herein by reference.
138 | 2022 Annual ReportOvintiv Inc.
PART IV
Item 15. Exhibits and Financial Statement Schedules
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
The following documents are included as exhibits to this Form 10-K. Exhibits incorporated by reference are duly
noted as such.
Exhibit No Description
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
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-K12B filed on January 24, 2020, SEC File No. 001-39191).
Ovintiv Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Ovintiv's Current Report on
Form 8-K filed on December 19, 2022, SEC File No. 001-39191).
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Ovintiv’s Current Report on Form
8-K12B filed on January 24, 2020, SEC File No. 001-39191).
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).
Ovintiv Inc.2022 Annual Report | 139
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).
140 | 2022 Annual ReportOvintiv Inc.
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
4.40
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).
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).
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-K12B filed on January 24, 2020, SEC File No. 001-39191).
Ovintiv Inc.2022 Annual Report | 141
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*
10.15*
10.16*
10.17*
10.18*
10.19*
Amended and Restated Credit Agreement, dated as of April 1, 2022, between Ovintiv Inc., as Borrower, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the initial lenders and initial issuing banks named therein
(incorporated by reference to Exhibit 4.1 to Ovintiv’s Current Report on Form 8-K filed on April 7, 2022, SEC File
No. 001-39191).
Guarantee of the U.S. Credit Agreement, made as of April 1, 2022, by Ovintiv Canada ULC (incorporated by
reference to Exhibit 4.2 to Ovintiv’s Current Report on Form 8-K filed on April 7, 2022, SEC File No. 001-39191).
Amended and Restated Credit Agreement, dated as of April 1, 2022, 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 4.3 to Ovintiv’s Current Report on Form 8-K filed on
April 7, 2022, 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).
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 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).
142 | 2022 Annual ReportOvintiv Inc.
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*
10.38*
10.39*
10.40*
21.1
23.1
23.2
23.3
24.1
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 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).
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).
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).
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).
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 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).
Change in Control Agreement between Ovintiv Inc. and Meghan N. Eilers effective March 1, 2022.
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).
Ovintiv Inc.2022 Annual Report | 143
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
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.
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The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, has been
formatted in Inline XBRL.
* Management contract or compensatory arrangement.
Item 16. Form 10-K Summary
None.
144 | 2022 Annual ReportOvintiv 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 27, 2023
OVINTIV INC.
By: /s/ Corey D. Code
Name: Corey D. Code
Title: Executive Vice-President & Chief
Financial Officer
Ovintiv Inc.2022 Annual Report | 145
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 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.
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
/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)
/s/ Corey D. Code
Corey D. Code
/s/ Meg A. Gentle
Meg A. Gentle
/s/ Ralph Izzo
Ralph Izzo
/s/ Howard J. Mayson
Howard J. Mayson
/s/ Lee A. McIntire
Lee A. McIntire
/s/ Katherine L. Minyard
Katherine L. Minyard
/s/ Steven W. Nance
Steven W. Nance
/s/ Suzanne P. Nimocks
Suzanne P. Nimocks
/s/ George L. Pita
George L. Pita
/s/ Thomas G. Ricks
Thomas G. Ricks
/s/ Brian G. Shaw
Brian G. Shaw
Executive Vice-President
& Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Date
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
146 | 2022 Annual ReportOvintiv Inc.
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
Colorado
Meg Gentle
Texas
Ralph Izzo
New Jersey
Howard Mayson
Colorado
Brendan McCracken
Colorado
Lee McIntire
Colorado
Katherine Minyard
Colorado
Steven Nance
Texas
Suzanne Nimocks
Texas
George Pita
Florida
Thomas Ricks
Texas
Brian Shaw
Ontario
Ovintiv Inc.
2022 Annual Report | 147
Corporate and Investor Information
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
Ovintiv Website
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 2022 Annual Report, may be obtained from
Ovintiv Inc.
Corporate Headquarters
Ovintiv Inc.
370 17th Street
Suite 1700
Denver, Colorado 80202
Investor Contact
888.525.0304
investor.relations@ovintiv.com
Independent Qualified Reserves Auditors
Media Contact
403.645.2252
media.relations@ovintiv.com
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.
148 | 2022 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
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
Investor Contact
888.525.0304
investor.relations@ovintiv.com
Media Contact
403.645.2252
media.relations@ovintiv.com
ovintiv.com
2022 ANNUAL REPORT
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