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2023 Highlights
Another Year of Substantial
Free Cash Flow
~$1.2 B
Non-GAAP Free Cash Flow Generation
Substantial Production Scale
566 MBOE/d
52% Liquids
Continued Shareholder Returns
>$730 MM
Via Base Dividends and Share Buybacks
Value Accretive Permian
Acquisition
800
Premium net 10-k Locations
Does not include an additional 250 high-
potential locations.
Premium reflects >35% IRR at $55/Bbl WTI oil and
$2.75/MMbtu NYMEX
Continued Emissions Reduction
42%
Reduction in Scope 1 & 2 GHG Intensity
at Year End 2023 vs. 2019 Baseline
Company is targeting a 50% reduction
vs. 2019 by 2030
FEBRUARY 27, 2024
Fellow Shareholders,
2023 marked a year of exceptionally strong business performance at Ovintiv. We delivered on our
durable-returns strategy and made significant achievements against each of our priorities.
• We continued our focus on safe work always.
• Our team delivered full-year non-GAAP free cash flow of approximately $1.2 billion, of which,
$733 million was returned directly to our shareholders through our base dividend and share
buybacks.
• We boosted our returns on invested capital through our focus on execution excellence, which
led to multiple quarters of positive guidance revisions on both capital and production.
• We extended our premium drilling inventory runway and increased cash flow per share and
free cash flow per share with the acquisition of three high-quality assets in the Permian Basin.
Our durable-returns strategy, disciplined capital allocation, and operational efficiency continue
to position us at the forefront of driving innovation to produce oil and natural gas from shale—
both profitably and sustainably.
CONTINUED FOCUS ON SAFETY
PORTFOLIO ENHANCEMENT
Safety is a foundational value at Ovintiv. We take a “safe
work always” approach that is rooted in preventing serious
injuries. Ensuring the safety of our staff, suppliers, the public
and surrounding communities is a top priority and a basic
tenet of managing our operations.
In 2023, we developed new and updated existing programs
and processes, led by our Safety Task Force, to drive and
sustain safety performance. As we continue to embed
these initiatives into our daily workflows and approach, we
remain intensely focused on safety leadership and culture.
EXECUTION EXCELLENCE
From free cash flow, to production, to capital, to per
unit costs; we beat our 2023 targets and enhanced the
margins and capital efficiency of our business.
Our culture of innovation is a key driver of delivering
superior returns. We continue to set the leading-edge of
the efficiency frontier in each of our assets. Completion
design innovations, record setting execution performance,
leading well performance, and base decline management
are a few of the areas contributing to our return on
invested capital outperformance.
In our industry, depth of premium inventory is critical to
generate durable returns. Over the last few years, we
moved against the broader industry tide and deepened
our premium inventory while demonstrating our ability
to generate superior operational and financial results
to create value for our shareholders. This counter
cyclical result was achieved through a combination of
organic exploration, appraisal, and assessment; smaller
bolt-on transactions; and our larger Permian strategic
acquisitions. Our approach to inventory renewal follows
a rigorous process that allowed us to add depth to the
portfolio while growing cash flow per share, free cash flow
per share and maintaining a strong investment grade
rated balance sheet.
In June, we more than doubled our premium drilling
inventory in the Permian with a set of three highly accretive
acquisitions. Integration of the new assets was seamless,
the well performance has been strong, and we see
opportunities for further improvement going forward.
The Permian acquisitions, combined with our strategic
bolt-on additions and organic assessment and appraisal
programs, have added about 1,650 premium drilling
locations to our portfolio in the last three years.
Ovintiv Inc.
2023 Annual Report | i
STRONG FINANCIAL PERFORMANCE
Our operational success translated into strong financial results during the year. Our full-year net earnings
totaled $2.1 billion and non-GAAP cash flow was $3.9 billion. With capital investment totaling $2.7 billion, we
generated non-GAAP free cash flow of approximately $1.2 billion.
SIGNIFICANT CASH RETURNS TO SHAREHOLDERS
In 2023, we delivered $733 million to our shareholders via share repurchases and base dividends.
Over the course of the year, we repurchased approximately 10 million shares outstanding and increased
our base dividend by 20%. This reflects our commitment to maintaining financial strength, generating
superior returns on capital investment, and returning significant cash to our shareholders.
While debt reduction is a key area of focus for us in the near-term, our shareholder return framework
remains consistent. We will continue to distribute at least 50% of post dividend free cash flow to our
shareholders, with the remaining 50% going to the balance sheet.
2024 OUTLOOK
As we look ahead to 2024, we will continue to execute on our durable-returns strategy,
with the following priorities in mind:
• Work safely always
•
Execute a disciplined program focused on maximizing capital efficiency and margins
• Generate significant free cash flow to enhance returns to shareholders
• Reduce debt and 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 positioned to deliver competitive returns to our shareholders through our focus
on execution, disciplined capital allocation, responsible operations, and leading capital efficiency.
Our products fuel the world, and we take great pride in making modern life possible by producing safe,
affordable, secure, and reliable energy.
We appreciate your continued support and investment in Ovintiv.
Sincerely,
Brendan McCracken
President & Chief Executive Officer
ii | 2023 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, 2023
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.
2023 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, 2023
Number of registrant’s shares of common stock outstanding as of February 16, 2024, at
$0.01 par value
$ 10,425,780,075
269,515,124
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 2024, 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 | 2023 Annual Report
Ovintiv 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 1C. Cybersecurity
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
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
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 Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
PART IV
7
29
47
48
49
49
50
52
53
81
83
144
144
144
145
146
146
146
146
146
147
153
154
Ovintiv Inc.
2023 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,” 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.
“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.
“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.
4 | 2023 Annual Report
Ovintiv Inc.
“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. Ovintiv’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.
2023 Annual Report | 5
FORWARD-LOOKING STATEMENTS AND RISK
This Annual Report on Form 10-K contains 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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). 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 the amount and 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, Trimulfrac and Simulfrac 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 capital markets, 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 for a description of certain risks that could, among other things, cause actual results to differ from these
forward-looking statements.
6 | 2023 Annual Report
Ovintiv Inc.
Items 1 and 2. Business and Properties
GENERAL
PART I
Ovintiv is a leading North American oil and natural gas exploration and production company that is focused on
developing its multi-basin portfolio of high-quality 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, 2023, 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 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, 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 the leading producer of oil and natural gas in North America. The Company strives to be at the
forefront of driving innovation to both profitably and sustainably provide safe, reliable and affordable energy that
makes modern life possible. Ovintiv is committed to delivering quality returns on the capital it invests in its multi-
basin portfolio, generating significant cash flows and providing durable cash returns to its shareholders through the
commodity price cycle.
The Company seeks to maximize returns by harnessing innovation to drive efficiency gains across its business,
leveraging optionality from its high-quality multi-basin and multi-product portfolio, building flexibility into
commercial agreements and actively managing commodity price risk.
The pillars that support the execution of the Company’s strategy include:
(cid:120) Execution Excellence - The Company is a leader in the responsible multi-zone development of North American
shale plays. A commitment to continuously pursue efficiency gains through innovation and technology enable
Ovintiv to enhance well productivity, reduce risks, capture capital and operating cost savings, and sustainably
enhance margins and returns while minimizing its environmental footprint.
(cid:120) Disciplined Capital Allocation - Ovintiv’s capital investment strategy focuses on a limited number of high-
quality assets to generate cash flows and quality returns. Ovintiv’s investment strategy is flexible, allowing for
capital programs to be quickly optimized 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 - The Company leverages its innovative supply chain and market
fundamentals expertise to support capital allocation decisions and quickly respond in a dynamic commodity-
Ovintiv Inc.
2023 Annual Report | 7
price environment. The Company actively monitors and seeks to manage market volatility through
diversification of price exposures and market access with the aim of enhancing margins and returns.
(cid:120) Environmental, Social and Corporate Governance Progress - Ovintiv embraces stakeholder and societal
expectations as it continues to evolve in response to the changing landscape with respect to climate change,
diversity, equity, inclusion and governance matters. Ovintiv believes that strong business practices increase
efficiency, economic performance, value creation and sustainability. Since 2005, the Company has published
an annual Sustainability Report, which communicates Ovintiv’s performance and tracks progress on key issues
important to stakeholders. Additional information can be found on the Company’s sustainability website at
sustainability.ovintiv.com.
Ovintiv’s 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: USA Operations; Canadian Operations; and 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 and Uinta in northeastern 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 and Horn River in northeast British Columbia.
(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 while
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.
8 | 2023 Annual Report
Ovintiv Inc.
OIL AND NATURAL GAS PROPERTIES AND ACTIVITIES
The following map reflects the location of Ovintiv’s North American landholdings and assets.
Montney
Uinta
Anadarko
Permian
Ovintiv Inc.
2023 Annual Report | 9
USA Operations
Overview: In 2023, the USA Operations had total capital investment of approximately $2,189 million, drilled
approximately 168 net wells primarily in Permian and total production averaged approximately 158.8 Mbbls/d of oil,
approximately 85.5 Mbbls/d of NGLs and approximately 517 MMcf/d of natural gas. As of December 31, 2023, the
USA Operations had an established land position of approximately 853,000 net acres, including approximately
162,000 net undeveloped acres. The USA Operations accounted for 72 percent of upstream production revenues,
excluding the impacts of hedging, and 58 percent of total proved reserves as of December 31, 2023.
During 2023, the Company completed an acquisition of Midland basin assets (“Permian Acquisition”) which included
approximately 1,050 net well locations and 65,000 net acres, which are located in close proximity to Ovintiv’s existing
Permian operations, in a cash and stock transaction valued at approximately $4.4 billion, before closing adjustments.
During 2023, the Company divested its Bakken assets, which included approximately 46,000 net acres, for proceeds
of approximately $734 million, after closing adjustments.
The following tables summarize the USA Operations landholdings, producing wells and daily production as of and
for the periods indicated.
Landholdings (1)
Developed
Acreage
Undeveloped
Acreage
Total
Acreage
(thousands of acres as of December 31, 2023)
Permian
Anadarko
Uinta
Other (2)
Total USA Operations
Gross
177
553
124
168
1,022
Net
161
344
115
71
691
Gross
47
18
26
228
319
Net
32
7
22
101
162
Gross
224
571
150
396
1,341
Average
Working
Interest
86%
61%
91%
43%
64%
Net
193
351
137
172
853
(1) Excludes interests in royalty acreage.
(2) Other Operations comprises assets that are not part of the Company’s current focus.
Producing Wells
(number of wells as of December 31, 2023) (1)
Permian
Anadarko
Uinta
Other (2)
Total USA Operations
Oil
Natural Gas
Total
Gross
2,510
1,907
582
1
5,000
Net
2,361
784
454
-
3,599
Gross
2
442
11
49
504
Net
2
113
9
39
163
Gross
2,512
2,349
593
50
5,504
Net
2,363
897
463
39
3,762
(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
Uinta
Other (1) (2)
Total USA Operations
Oil
(Mbbls/d)
Plant Condensate
(Mbbls/d)
NGLs
Other
(Mbbls/d)
Total
(Mbbls/d)
Natural Gas
(MMcf/d)
2023
99.5
30.6
19.1
9.6
158.8
2022
62.7
35.5
17.9
15.4
131.5
2023
4.1
5.9
0.3
0.6
10.9
2022
3.1
5.9
0.2
1.2
10.4
2023
33.0
36.3
1.2
4.1
74.6
2022
26.3
37.3
0.9
7.2
71.7
2023
37.1
42.2
1.5
4.7
85.5
2022
29.4
43.2
1.1
8.4
82.1
2023
185
283
22
27
517
2022
149
286
16
41
492
(1) Other Operations comprises assets that are not part of the Company’s current focus.
(2) Other Operations includes volumes associated with Bakken, which was divested during the second quarter of 2023.
10 | 2023 Annual Report
Ovintiv Inc.
Permian
Permian is an oil play located in west Texas primarily 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. As of December 31, 2023, the Company’s acreage comprises approximately 193,000 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 2023, the Company drilled 113 horizontal net wells. In 2023, production
averaged approximately 99.5 Mbbls/d of oil, approximately 37.1 Mbbls/d of NGLs and approximately 185 MMcf/d
of natural gas.
The Company has primarily developed the play using its cube development model and multi-frac techniques. Cube
development utilizes multi-well pads and frac spreads running in parallel to simultaneously access multiple layers of
stacked pay to maximize product recovery. Multi-frac technology is the process of fracing multiple 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 2023, the Company began fracing three wells
(“Trimulfrac”) at the same time instead of the standard two wells (“Simulfrac”), which lowered well costs by reducing
frac-treating pressure, diesel usage and the cycle time to complete the wells. In addition, during the second half of
2023, the Company focused on integrating the Permian Acquisition, applying Ovintiv standards for well design,
safety, cost management and team culture to the acquired Midland basin assets.
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 under
multiple pipeline gathering agreements, with varying remaining terms of less than 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, while the remaining properties located in the SCOOP 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. As of December 31, 2023, the Company’s acreage comprises approximately 351,000 net acres in
the play, with development currently targeting liquids-rich prospects. During 2023, the Company drilled 11 horizontal
net wells. In 2023, production averaged approximately 30.6 Mbbls/d of oil, approximately 42.2 Mbbls/d of NGLs and
approximately 283 MMcf/d of natural gas.
The Company is developing the play using its cube development model. During 2023, Ovintiv focused on increasing
capital efficiency and well economics by drilling longer laterals, reducing cycle times, and reduced base decline by
four 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 one to eight years.
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. As of
December 31, 2023, the Company’s acreage comprises approximately 137,000 net acres in the play. During 2023, the
Ovintiv Inc.
2023 Annual Report | 11
Company drilled 33 horizontal net wells. Production averaged approximately 19.1 Mbbls/d of oil, approximately 1.5
Mbbls/d of NGLs and approximately 22 MMcf/d of natural gas.
During 2023, the Company drilled 34 gross wells on 10 pads utilizing multi-well pad development which captured
capital cost savings.
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 one oil volume minimum delivery commitment that
expires in 2025. Oil production that is not subject to sales commitments is sold monthly in spot markets or transported
by rail to other markets such as the Gulf Coast.
Canadian Operations
Overview: In 2023, the Canadian Operations had total capital investment of approximately $549 million, drilled
approximately 96 horizontal net wells in Montney and production averaged approximately 47.7 Mbbls/d of oil and
NGLs and approximately 1,125 MMcf/d of natural gas. As of December 31, 2023, the Canadian Operations had an
established land position of approximately 1.1 million net acres including approximately 673,000 net undeveloped
acres. The Canadian Operations accounted for 28 percent of upstream production revenues, excluding the impacts of
hedging, and 42 percent of total proved reserves as of December 31, 2023.
The following tables summarize the Canadian Operations landholdings, producing wells and daily production as of
and for the periods indicated.
Landholdings (1)
Developed
Acreage
Undeveloped
Acreage
Total
Acreage
(thousands of acres as of December 31, 2023)
Montney
Other (2)
Total Canadian Operations
Gross
552
171
723
Net
370
44
414
Gross
655
360
1,015
Net
441
232
673
Gross
1,207
531
1,738
Net
811
276
1,087
(1) Excludes interests in royalty acreage.
(2) Other Operations primarily includes Horn River, as well as assets where the Company may pursue growth opportunities.
Average
Working
Interest
67%
52%
63%
Producing Wells
(number of wells as of December 31, 2023) (1)
Montney
Other (2)
Total Canadian Operations
(1) Figures exclude wells capable of producing, but not producing.
(2) Other Operations primarily includes Horn River.
Oil
Natural Gas
Total
Gross
6
1
7
Net
5
-
5
Gross
1,842
113
1,955
Net
1,462
52
1,514
Gross
1,848
114
1,962
Net
1,467
52
1,519
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
2023
0.1
-
0.1
2022
0.1
-
0.1
2023
32.0
-
32.0
2022
33.6
-
33.6
2023
15.6
-
15.6
2022
13.8
-
13.8
2023
47.6
-
47.6
2022
47.4
-
47.4
2023
1,095
30
1,125
2022
970
32
1,002
(1) Other Operations primarily includes volumes associated with Horn River.
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
12 | 2023 Annual Report
Ovintiv Inc.
of stratigraphy and is being developed exclusively with horizontal well technology. In 2023, total production from the
play averaged approximately 47.7 Mbbls/d of oil and NGLs and approximately 1,095 MMcf/d of natural gas. As of
December 31, 2023, the Company’s acreage comprises approximately 811,000 net acres and 441,000 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 2023, Ovintiv focused on drilling longer laterals and completing wells
faster while improving frac placement efficiency and productivity. Drilling, completions and production efficiencies
were captured by stacking innovation initiatives such as rotary steerable systems, redesigned drill bits, motor
optimization, real time frac optimization and high-rate facilities designs. In 2023, the Company drilled approximately
96 horizontal net wells. Ovintiv also focused on reducing its emissions footprint by implementing well sites with
nitrogen air gas instruments and frac fleets operating on natural gas, which resulted in lower fuel costs, less logistical
complexity of sourcing diesel, and reduced operational footprint.
Ovintiv has access to natural gas processing capacity of approximately 1,562 MMcf/d, of which approximately
1,340 MMcf/d is under contract with third parties under varying terms and duration and approximately 222 MMcf/d
of processing capacity which is owned by the Company. In addition, Ovintiv has access to liquids handling capacity
of approximately 125 Mbbls/d of which approximately 93 Mbbls/d is contracted with third parties under varying terms
and duration, and approximately 32 Mbbls/d is owned by the Company.
Other 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 2023, the Company’s natural gas
production averaged approximately 26 MMcf/d. As of December 31, 2023, the Company had approximately 45 net
producing horizontal wells and its acreage comprises approximately 186,000 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 nine years.
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 Midstream, Marketing
and Corporate Reserves 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.
Ovintiv Inc.
2023 Annual Report | 13
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 24 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, 2023, the Company involved IQRAs to audit the Company’s internal oil and natural
gas reserve estimates for certain properties. In 2023, Netherland, Sewell & Associates, Inc. audited 26 percent of the
Company’s estimated U.S. proved reserve volumes and McDaniel & Associates Consultants Ltd. audited 53 percent
of the Company’s estimated Canadian proved reserve volumes. An audit of reserves is an examination of a company’s
oil and natural gas reserves by an independent petroleum consultant that is conducted for the purpose of expressing
an opinion as to whether such estimates, in aggregate, are reasonable and have been estimated and presented in
conformity with generally accepted petroleum engineering and evaluation methods and procedures.
Proved oil and natural gas reserves are those quantities of oil, natural gas and NGLs which, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to be economically producible from known reservoirs
under existing economic conditions, operating methods and government regulations. To be considered proved, oil and
natural gas reserves must be economically producible before contracts providing the right to operate expire, unless
evidence indicates that renewal is reasonably certain. Also, the project to extract the hydrocarbons must have
commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
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
14 | 2023 Annual Report
Ovintiv Inc.
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. Reserve estimates filed with the SEC correspond with the estimates of the Company’s reserves contained in
its reports. For the Company’s U.S. assets, reserves estimates are filed with the Department of Energy (“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 reserves 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, 2023 and
was prepared as of January 12, 2024. 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.
Ovintiv Inc.
2023 Annual Report | 15
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, 2023 and other summary operating data.
Proved Reserves: (1)
Oil (MMbbls):
Developed
Undeveloped
Total
Natural Gas Liquids (MMbbls):
Developed
Undeveloped
Total
Natural Gas (Bcf):
Developed
Undeveloped
Total
Total Proved Reserves (MMBOE):
Developed
Undeveloped
Total
Percent Proved Developed
Percent Proved Undeveloped
Production (MBOE/d)
Capital Investments (US$ millions)
Total Net Productive Wells (2)
2023
U.S.
Canada
Total
277.6
241.2
518.8
275.7
102.7
378.4
1,695
564
2,259
835.8
437.9
1,273.8
66%
34%
330.4
2,189
3,786
0.1
-
0.1
78.0
68.9
146.9
2,590
2,000
4,591
509.8
402.3
912.1
56%
44%
235.2
549
1,542
277.7
241.2
518.9
353.7
171.6
525.3
4,286
2,565
6,850
1,345.6
840.2
2,185.9
62%
38%
565.6
2,738
5,328
(1) Numbers may not add due to rounding.
(2) Total net productive wells includes producing wells and wells mechanically capable of production.
Changes to the Company’s proved reserves during 2023 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
2023 (1)
Oil
(MMbbls)
NGLs
(MMbbls)
535.3
(134.0 )
64.7
160.0
(49.1 )
(58.0 )
518.9
277.7
241.2
518.9
606.9
(95.4 )
43.6
47.7
(28.9 )
(48.6 )
525.3
353.7
171.6
525.3
Natural Gas
(Bcf)
6,789
(482 )
1,061
218
(137 )
(599 )
6,850
4,286
2,565
6,850
Total
(MMBOE)
2,273.6
(309.6 )
285.3
243.9
(100.8 )
(206.5 )
2,185.9
1,345.6
840.2
2,185.9
(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 2023, the Company’s proved reserves decreased by 87.7 MMBOE from 2022. Revisions and improved recovery
of 309.6 MMBOE were negative primarily due to changes in the approved development plan of 330.0 MMBOE and
revisions other than price of 9.2 MMBOE, partially offset by positive price revisions of 29.6 MMBOE from lower
royalties in Canada due to lower 12-month average trailing prices. Extensions and discoveries of 285.3 MMBOE 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, Permian and Uinta. Extensions and discoveries
16 | 2023 Annual Report
Ovintiv Inc.
include 14.7 MMBOE as a result of drilling wells in 2023 that were not previously classified as proved undeveloped
reserves. Approximately 38 percent of the 2023 extensions and discoveries were oil, condensate and NGLs.
Purchases of 243.9 MMBOE were primarily from the Permian Acquisition. Production for 2023 was 206.5 MMBOE.
Sales of 100.8 MMBOE were primarily due to the divestiture of the Bakken.
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 as of December 31, 2023 were WTI: $78.22 per
bbl, Edmonton Condensate: C$104.61 per bbl, Henry Hub: $2.64 per MMBtu, and AECO: C$2.78 per MMBtu. Prices
for oil, NGLs and natural gas are inherently volatile.
Proved Undeveloped Reserves
Changes to the Company’s proved undeveloped reserves during 2023 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 (1)
(1) Numbers may not add due to rounding.
2023
984.9
(334.3 )
270.5
(179.2 )
137.1
(38.7 )
840.2
As of December 31, 2023, there are no proved undeveloped reserves that are expected to remain undeveloped for
five years or more.
Revisions of prior estimates of proved undeveloped reserves were negative 334.3 MMBOE primarily due to
development plan changes of 330.0 MMBOE, and revisions other than price of 24.5 MMBOE, partially offset by
positive price revisions of 20.2 MMBOE from lower royalties in Canada due to lower 12-month average trailing
prices. Extensions and discoveries of 270.5 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, Permian and Uinta. 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 179.2 MMBOE, equating to 18 percent
of the total prior year-end proved undeveloped reserves. U.S. Operations converted 17 percent of proved undeveloped
reserves and Canadian Operations converted 21 percent of proved undeveloped reserves. The Company spent
approximately $1,666 million to develop proved undeveloped reserves in 2023, of which approximately 74 percent
related to the U.S. properties and 26 percent related to the Canadian properties.
Purchases of proved undeveloped reserves of 137.1 MMBOE relate primarily to the Permian acquisition, while the
sale of proved undeveloped reserves of 38.7 MMBOE relate primarily to the divestiture of the Bakken.
Ovintiv Inc.
2023 Annual Report | 17
Sales Volumes, Prices and Production Costs
The following table summarizes the Company’s production by final product sold, average sales price, and production
cost per BOE for each of the last three years by geographic area:
Oil
(MMbbls)
Production
NGLs
(MMbbls)
Natural Gas
(Bcf)
58.0
-
58.0
48.0
-
48.0
51.1
0.1
51.2
31.2
17.4
48.6
29.9
17.3
47.2
28.5
20.5
49.0
188.7
410.6
599.3
180
366
546
179
389
568
2023
USA (3)
Canada (4)
Total
2022
USA (3)
Canada (4)
Total
2021
USA (3)
Canada (4)
Total
Average Sales Price (1)
Oil
($/bbl)
NGLs
($/bbl)
Natural Gas
($/Mcf)
76.46
81.59
76.46
94.25
87.28
94.25
65.69
56.71
65.67
21.66
58.89
34.98
34.88
78.44
50.84
30.32
56.48
41.28
2.43
2.89
2.74
6.18
5.75
5.89
3.71
3.52
3.58
Average
Production
Cost (2)
($/BOE)
10.69
13.43
11.83
11.79
14.52
12.94
9.12
12.37
10.55
(1) Excludes the impact of commodity derivatives.
(2) Excludes ad valorem, severance and property taxes.
(3) As of December 31, 2023, 2022 and 2021, there was no production from fields that comprise greater than 15 percent of the Company’s total
reserves.
(4) Annual production from fields that comprise greater than 15 percent of the Company’s total proved reserves related to B.C. Montney:
2023 - 7.7 MMbbls of NGLs and 306 Bcf of natural gas; 2022 - 7.2 MMbbls of NGLs and 267 Bcf of natural gas; and 2021 - 9.1 MMbbls of
NGLs and 282 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
215
125
340
194
65
259
180
114
294
168
96
264
153
52
205
148
84
232
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
215
125
340
194
69
263
180
115
295
168
96
264
153
55
208
148
85
233
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2023
USA
Canada
Total
2022
USA
Canada
Total
2021
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.
18 | 2023 Annual Report
Ovintiv Inc.
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 as of December 31, 2023.
USA
Canada
Total
Wells in the Process of Drilling
or in Active Completion
Exploratory Development
Net Gross
Gross
26
-
24
-
50
-
-
-
-
Wells Suspended or Waiting
on Completion (3)
Exploratory Development
Net
26
18
44
Net Gross
26
22
48
-
-
-
Net Gross
-
25
-
12
-
37
(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 as of December 31, 2023.
Productive Wells (1, 2)
USA
Canada
Total
Oil (3)
Natural Gas (4)
Total
Gross
5,044
8
5,052
Net Gross
514
1,989
2,503
3,620
6
3,626
Net Gross
5,558
166
1,997
1,536
7,555
1,702
Net
3,786
1,542
5,328
(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 4 gross oil wells (4 net oil wells) containing multiple completions.
Includes 382 gross natural gas wells (303 net natural gas wells) containing multiple completions.
The following table summarizes the Company’s developed, undeveloped and total landholdings by geographic area
as of December 31, 2023.
Landholdings (1 - 7)
(thousands of acres)
United States
Total United States
Canada
Total Canada
Total
— Freehold
— Federal
— Fee
— Tribal/Allotted
— State
— Crown
— Freehold
— Fee
842
21
59
70
30
1,022
684
38
1
723
1,745
Developed
Gross
Net
577
7
13
68
26
691
406
7
1
414
1,105
Undeveloped
Gross
Net
Total
Gross
32
17
230
24
16
319
989
23
3
1,015
1,334
23
14
89
20
16
162
660
10
3
673
835
874
38
289
94
46
1,341
1,673
61
4
1,738
3,079
Net
600
21
102
88
42
853
1,066
17
4
1,087
1,940
(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.
Ovintiv Inc.
2023 Annual Report | 19
Of the total 1.9 million net acres, approximately 1.8 million net acres is held by production. The table above includes
acreage subject to leases that will expire over the next three years: 2024 - approximately 21,000 net acres;
2025 - approximately 21,000 net acres; and 2026 - approximately 11,000 net acres, if the Company does not establish
production or take any other action to extend the terms. For acreage that the Company intends to further develop,
Ovintiv will perform operational and administrative actions to continue the lease terms that are set to expire. As a
result, it is not expected that a significant portion of the Company’s net acreage will expire before such actions occur.
Title to Properties
As is customary in the oil and natural gas industry, a preliminary review of title records, which may include opinions
or reports of appropriate professionals or counsel, is made at the time Ovintiv acquires properties. The Company
believes that title to all of the various interests set forth in the above table is satisfactory and consistent with the
standards generally accepted in the oil and natural gas industry, subject only to immaterial exceptions that do not
detract substantially from the value of the interests or materially interfere with their use in Ovintiv’s operations. The
interests owned by Ovintiv may be subject to one or more royalty, overriding royalty, or other outstanding interests
(including disputes related to such interests) customary in the industry. The interests may additionally be subject to
obligations or duties under applicable laws, ordinances, rules, regulations, and orders of arbitral or governmental
authorities. In addition, the interests may be subject to burdens such as production payments, net profits interests, liens
incident to operating agreements and current taxes, development obligations under oil and natural gas leases, and other
encumbrances, easements, and restrictions, none of which detract substantially from the value of the interests or
materially interfere with their use in the Company’s operations.
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.
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 two 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 eight 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, 2023, the Company was committed to deliver
approximately 22.7 MMbbls of oil and approximately 40 MMcf of natural gas in the USA Operations and
approximately 7.3 MMbbls of oil and NGLs and approximately 61.9 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
20 | 2023 Annual Report
Ovintiv Inc.
production, volatility in commodity prices and changes in capital and development plans, deficiency fees incurred can
vary and may be incurred on the remaining committed deliveries of 20 Mbbls/d through August 2025.
Certain transportation and processing commitments result in the following financial commitments:
($ millions)
Transportation & Processing
USA Operations
Oil & NGLs
Natural Gas
Total USA Operations
Canadian Operations
Oil & NGLs
Natural Gas
Total Canadian Operations
Total USA and Canadian Operations
1 Year
2-3 Years
4-5 Years
> 5 years
Total
57
104
161
88
485
573
734
117
90
207
165
897
1,062
1,269
74
85
159
110
691
801
960
-
47
47
127
2,006
2,133
2,180
248
326
574
490
4,079
4,569
5,143
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
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, 2023, the Company had one customer, which individually accounted for
more than 10 percent of the Company’s consolidated revenues (2022 and 2021 - one customer). 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 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:
(cid:120) Exploration for and development of new sources of oil, NGLs and natural gas reserves;
(cid:120) Reserves and property acquisitions;
(cid:120) Transportation and marketing of oil, NGLs, natural gas and diluents;
(cid:120) Access to services and equipment to carry out exploration, development and operating activities; and
(cid:120) 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.
Ovintiv Inc.
2023 Annual Report | 21
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 support the Company’s corporate strategy and organizational
priorities and reflect the Company’s culture. 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.
As of December 31, 2023, the Company employed 1,743 employees. The following table outlines our employees by
geographic area.
U.S.
Canada
Total
Employees
988
755
1,743
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 approach to idea sharing and
collaborative work to achieve company goals. Ovintiv’s culture is defined by continuous 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 20 new graduates and 27 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. 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, 2023, the average tenure of our employees is over nine years and voluntary turnover is
approximately six percent.
22 | 2023 Annual Report
Ovintiv Inc.
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. The Company’s approach to diversity and
inclusion is nested within the Company’s social commitment. 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, which helps 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 succession planning and mentoring programs. In order to broaden the diversity of the Company’s
talent pipeline, Ovintiv also participates in programs targeting students in junior and high schools, with the purpose
of advancing and strengthening its workforce.
Specific to gender diversity, women at Ovintiv comprised approximately 60 percent of the executive leadership team
reporting to the Chief Executive Officer, approximately 32 percent of the senior leadership group and approximately
31 percent of all employees as of December 31, 2023.
Employee Safety & Wellness
Safety is a foundational value at Ovintiv. Providing a safe workplace for employees, contractors, 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 Injury
Severity, Total Recordable Injuries Frequency, Spill Intensity, GHG Intensity, all of which are described in the Proxy
Statement relating to the Company’s 2023 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; well locations, 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:
Ovintiv Inc.
2023 Annual Report | 23
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 (“ONRR”) 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. 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 rental rates, enhancing bonding requirements and
applying a more rigorous land-use planning process prior to leasing. The pause on leasing has been subject to a
challenge by 13 states and, following a vacated preliminary injunction in July 2021, was permanently enjoined in
those states by a federal district court in Louisiana in August 2022. In July 2023, the Department of the Interior
announced a proposed rule that would revise outdated fiscal terms of the onshore federal oil and gas leasing program,
including for bonding requirements, royalty rates, and minimum bids. The proposed rule would specifically codify
provisions made by Congress in the Inflation Reduction Act (“IRA”) and the Bipartisan Infrastructure Law, as well
as recommendations from the Department of the Interior’s Report on the Federal Oil and Gas Leasing Program, issued
in November 2021.
Certain other recommendations from the report require Congressional actions. To the extent further rules are
promulgated implementing the recommendations of the November 2021 report or there are 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.
24 | 2023 Annual Report
Ovintiv Inc.
Royalties
Operations on U.S. Federal or Indian oil and natural gas leases must comply with numerous regulatory restrictions,
including various non-discrimination statutes, and certain of such operations must be conducted pursuant to certain
on-site security regulations and other permits issued by various tribal and federal agencies, including the BLM and
the 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 reference 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 incentive programs have been depleted
and 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. The Province of British Columbia introduced a new oil
and gas royalty framework which will take effect September 1, 2024. The new framework is based on revenue-minus-
cost royalty system with price-sensitive royalty rates designed to reflect the value of the resource and achieve a return
of 50 percent of profits after production cost are accounted for. New wells will pay a flat royalty rate of five percent
until the capital spent on drilling and completions is recovered, then they will move to a price-sensitive royalty rate
(between five percent and 40 percent). The specific range of price sensitivity varies by commodity type.
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
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
Bill C-69, the Federal Impact Assessment Act, which may impact the way large energy projects are approved. Though
the Company does not typically 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. Subsequently, in October of 2023, the Supreme Court of Canada ruled that many parts of the
Impact Assessment Act and subsequent regulations were unconstitutional and overreaching. The Supreme Court
decided that a province, not the federal parliament, decides when such developments are in the public interest. The
federal parliament does not have a veto over provincially regulated activities, including developments within a
Ovintiv Inc.
2023 Annual Report | 25
province related to conventional oil and gas, oilsands (mining and in-situ), hard rock mining, coal and other similar
non-renewable resource developments. The Canadian government is currently working on amendments to the Impact
Assessment Act to account for the Supreme Court of Canada decision.
A historic Supreme Court of British Columbia decision in mid-2021 which 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. This has impacted regulatory processes and timelines for natural
resource development in northeast British Columbia, however the province of British Columbia subsequently reached
agreements with BRFN and five other Treaty 8 First Nations in early 2023 which have improved permitting outcomes
in the region. These agreements were negotiated to advance a collaborative approach to land and resource planning
and the province has indicated that agreements with the remaining two Treaty 8 First Nations are moving towards a
resolution. 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. Ovintiv’s landholdings
in Montney that are located in northeast British Columbia are within the ‘Blueberry Claim Area’ subject to the
agreement, however, 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.
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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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.
26 | 2023 Annual Report
Ovintiv Inc.
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 promulgated regulations to address 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
regulations. Contingency plans are
to an environmental event and
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
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.
Ovintiv Inc.
2023 Annual Report | 27
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 16, 2024.
48
50
42
50
52
59
President & Chief Executive Officer
5
5 Executive Vice-President & Chief Financial Officer
2 Executive Vice-President, General Counsel & Corporate Secretary
5 Executive Vice-President & Chief Operating Officer
4 Executive Vice-President, Corporate Services
14 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).
28 | 2023 Annual Report
Ovintiv Inc.
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
(cid:120) 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.
(cid:120) A pandemic, epidemic or other widespread outbreak of an infectious disease could materially and adversely affect
the operation of our business.
(cid:120) The trading price of our securities, including our common stock, is subject to volatility.
(cid:120) Fluctuations in exchange rates could affect expenses or result in realized and unrealized losses.
Operational Risks
(cid:120) Our ability to operate and complete projects is dependent on numerous factors outside of our control.
(cid:120) 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.
(cid:120) Oil and natural gas exploration, development and production activities involve substantial costs and risks and
may not result in commercially productive reserves.
(cid:120) 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.
(cid:120)
(cid:120) Horizontal multi-well pad drilling involves certain risks which may cause volatility in our operating results.
(cid:120) We are subject to risks and liabilities from acquisitions and any anticipated or desired benefits from such
acquisitions may not be realized.
(cid:120) We are dependent on partners to fund certain projects conducted through joint ventures and partnerships.
(cid:120) 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.
(cid:120) Our customers, counterparties and lenders may be unable to satisfy their contractual or legal obligations.
(cid:120) We retain certain indemnification obligations related to our corporate reorganization in November of 2009.
(cid:120) We may be unable to dispose of certain assets and may be required to retain liabilities for certain matters.
(cid:120) Our operations may be affected by indigenous treaty, title and other rights.
Environmental Risks and Risks Associated with Climate Change
(cid:120) We are subject to risks and uncertainties associated with increased environmental regulations in all jurisdictions
in which we operate.
(cid:120) We are subject to risks and uncertainties arising out of government, investor and consumer action in response to
concerns over climate change and the transition to a lower-carbon economy 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.
(cid:120) Estimates used in various scenario planning analyses could differ materially from actual results as the policy and
regulatory environment evolves.
(cid:120) Enhanced scrutiny on sustainability matters could have an adverse effect on our operations.
Ovintiv Inc.
2023 Annual Report | 29
Financial and Liquidity Risk
(cid:120) Downgrades in our credit ratings could increase our cost of capital and limit our access to capital, suppliers or
counterparties.
(cid:120) Our level of indebtedness may limit our financial flexibility.
(cid:120) 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.
(cid:120) 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
(cid:120) 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.
(cid:120) 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.
(cid:120) 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
(cid:120) U.S. and Canadian tax laws and regulations may change over time, and such changes may result in increased
taxes on our business.
(cid:120) Our corporate reorganization in January of 2020 may result in material Canadian and/or U.S. federal income
taxes.
General Risks
(cid:120) The oil and natural gas industry is highly competitive and many of our competitors have available resources in
excess of our own.
(cid:120) 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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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;
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;
30 | 2023 Annual Report
Ovintiv Inc.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the price and availability of, and demand for, alternative sources of energy (including coal, nuclear,
hydroelectric, solar and wind);
the effect of energy conservation efforts and technological advances in energy consumption and production,
including with respect to transportation and power generation;
the availability and proximity of gathering, transportation, processing, refining, storage and other
infrastructure facilities;
changes in trade relations and policies, including the imposition of tariffs by the United States or Canada;
conservation and environmental protection efforts, including activities by non-governmental organizations
to restrict the exploration, development and production of oil, NGLs and natural gas; and
the nature and extent of governmental regulations, including any changes or other actions with respect to
emissions, climate change, tariffs or tax laws.
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, could materially and adversely affect
the operation of our business.
Global or national health concerns, including a pandemic, epidemic or other widespread outbreak of an infectious
disease, can, among other impacts, negatively impact the global economy and business prospects, reduce demand for
crude oil, NGLs and natural gas, increase volatility in commodity prices, lead to operational disruptions and limit our
ability to execute on our business plan, any of which could 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. Furthermore, uncertainty regarding the impact of any outbreak of contagious disease could
also lead to 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.
A pandemic, epidemic or other widespread outbreak of an infectious disease, and resulting restrictive measures
implemented by governments in the jurisdictions in which we operate, could in the future prevent our employees,
contractors or suppliers from accessing our properties or performing critical services. Such measures may include
limitations or prohibitions on cross-border travel, restrictions on large gatherings, stay-at-home orders, vaccine
mandates and mandatory closures of “non-essential” businesses which could remain in place for an extended period
of time. While the full impact of a pandemic, epidemic or other widespread outbreak of an infectious disease is
inherently uncertain, the ultimate impact depends on several factors, including the location, severity, and
contagiousness, the effectiveness and adoption rate of vaccines, the emergence of variant mutations and the
effectiveness of mitigation actions taken by governmental authorities.
Ovintiv Inc.
2023 Annual Report | 31
For example, the novel coronavirus global pandemic, known as COVID-19, had a material adverse impact on our
business, financial condition and results of operations in 2020. Any resurgence of the COVID-19 pandemic, and threat
of new and different strains of the virus and their severity, could again cause disruption of global supply chains,
increase volatility in the financial markets and commodity markets, and have the effect of heightening the other risks
described herein.
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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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 or cyber attacks; and
accidents.
32 | 2023 Annual Report
Ovintiv Inc.
In addition, part of our corporate strategy is focused on a limited number of high-quality assets which results in a
concentration of development capital and production. Some of the foregoing risks may be magnified due to the
concentrated nature of our development activities and may result in a relatively greater impact on our financial
condition and results of operations compared to other companies that may have more geographically diversified
operations. Any material delays in a project or project cost overruns could result in delayed revenues and some projects
becoming uneconomic, each of which could have a material and adverse effect on our business, financial condition
and results of operations.
Our operations involve many risks, some of which could result in unforeseen interruptions and expose us to
substantial losses and liabilities, for which our insurance may not fully protect us.
Our business is subject to the operating risks normally associated with (a) the exploration, development and production
of oil, NGLs and natural gas and (b) the operation of midstream facilities, including the gathering, transportation,
processing, storing and marketing of oil, NGLs and natural gas. These risks include:
(cid:120)
(cid:120)
(cid:120)
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;
(cid:120)
(cid:120) 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, wildfire, 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.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
If any of the foregoing risks were to materialize, we could sustain material losses as a result of:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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.
Ovintiv Inc.
2023 Annual Report | 33
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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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;
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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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.
34 | 2023 Annual Report
Ovintiv Inc.
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
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,
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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:
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the inability to accurately forecast and estimate oil, NGLs and natural gas reserves, production volumes,
development costs and the net cash flows attributable to such properties;
the inability to accurately forecast commodity prices;
the assumption of unknown liabilities, including environmental liabilities, for which we may not be
indemnified or for which the indemnity may not be adequate;
the anticipated growth opportunities, cost savings and synergies from combining the acquired businesses and
operations;
the ability to integrate operations and internal controls, including those related to financial reporting,
disclosure and cybersecurity and data protection;
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.
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Ovintiv Inc.
We do not operate all of our assets, and, in such instances, we may have a limited ability to exercise influence over
the operation and development of such assets.
Third parties operate a portion of the assets in which we have an ownership interest, and, in such instances, we may
have a limited ability to exercise influence over the operation and development of such assets. The success and timing
of our activities on these assets is therefore dependent upon factors that are largely outside of our control. These factors
include (a) the timing and amount of capital, operating and maintenance expenditures related to the project; (b) the
third-party operator’s expertise and financial resources; (c) the third-party operator’s ability to obtain required
approvals from other non-operating partners; and (d) the third-party operator’s selection and implementation of
adequate technology and risk management practices. The failure of one or more third-party operators to effectively
and efficiently operate assets in which we have an ownership interest could result in the inefficient deployment of
capital and the loss of production volumes, each of which could have a material and adverse effect on our business,
financial condition and results of operations.
Our customers, counterparties and lenders may be unable to satisfy their contractual or legal obligations.
We are exposed to certain risks associated with our customers, contractual counterparties and lenders. These risks
include (a) credit risks associated with (i) customers who purchase our oil, NGLs and natural gas production, (ii) the
collection of receivables from our joint interest partners for their proportionate share of expenditures made on projects
we operate, and (iii) counterparties to our derivative financial contracts; (b) performance risks associated with the non-
delivery, or delayed delivery, of contracted products or services, including the transportation and processing of our
oil, NGLs and natural gas production; and (c) liquidity risk in the event one or more lenders under our existing credit
facilities are unable to perform their funding obligations. We utilize a variety of mechanisms to limit our exposure to
these and similar risks, including requiring guarantees, letters of credit, credit insurance 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 Corporation (“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
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P&A, decommissioning and restoration obligations (together, “P&A Obligations”) if the current operator fails to fulfill
those obligations. If purchasers of any assets previously owned by us or our predecessors (including any offshore
wells or facilities), or any successor owners of those assets, are unable to meet their P&A Obligations due to
bankruptcy, dissolution or other liquidity issues, we may be unable to rely on our arrangements with them, if any, to
fulfill (or provide reimbursement for) those obligations. In those circumstances, the government may seek to impose
the bankrupt entity’s P&A Obligations on us and any other predecessors in interest, and such payments could have a
material adverse effect on our business, financial condition and results of operations.
Further, certain third parties may be unwilling to release us from guarantees or other credit support provided prior to
the disposition of an asset. In those cases, after the asset disposition, we may remain secondarily liable for the
obligations guaranteed or supported to the extent that the acquirer of the assets fails to perform their obligations.
Our operations may be affected by indigenous treaty, title and other rights.
Indigenous peoples have claimed indigenous treaty, title and other rights in respect of areas within the United States
and Canada. The legal basis of an indigenous land claim is a matter of considerable legal complexity and we cannot
predict the impact of such a claim, or the possible effects of a settlement of such claim, with any degree of certainty.
In addition, no assurance can be given that any recognition of indigenous rights or claims whether by way of a
negotiated settlement or by judicial pronouncement (or through the grant of an injunction prohibiting exploration,
development or production activities pending resolution of any such claim) would not delay or even prevent our
exploration, development and production activities. If a material claim were to arise and be successful, such claim
could have a material and adverse effect on our business, financial condition and results of operations. In addition, the
process of addressing such claim, regardless of the outcome, could be expensive and time consuming and could result
in delays which could have a material and adverse effect on our business, financial condition and results of operations.
For more information on the BRFN case refer to “Regulatory Matters” under Items 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 Indian 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 Indian reservations or 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.
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Ovintiv Inc.
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 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 December 2023, the EPA announced its intent to finalize New Source Performance Standard
Subpart OOOOb, which will impose more stringent methane and volatile organic compound emission standards for
new, modified or reconstructed sources in the oil and natural gas industry. The EPA also finalized New Source
Performance Standard Subpart OOOOc, which create, for the first-time, emission guidelines for existing oil and
natural gas sources that would 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, in August 2022, President Biden signed the IRA creating a first-ever, phased-in
methane fee that applies to certain oil and gas facilities. The methane fee commences in reporting year 2024. The
proposed implementing regulations were published for public comment in January 2024. 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 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 December 2023, the Government of Canada published draft amendments to the federal regulations respecting
reduction in the release of methane and certain volatile organic compounds concerning the upstream oil and gas sector.
If implemented, the amendments would require the oil and gas sector to achieve a 75 percent reduction in methane
emissions from 2012 levels by 2030. The draft amendments would, among other things, prohibit flaring and venting
with limited exceptions, 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 draft
amendments are passed, regulatory changes in Alberta and British Columbia may be required to maintain equivalency.
The comment period for the draft amendments is open until mid-February 2024. Publication of the finalized
amendments is expected in late 2024 and new requirements would come into force between 2027 and 2030. In
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December 2023, the Government of Canada announced plans to implement a national emissions cap-and-trade system
for GHG emissions from the oil and gas sector through regulations to be made under the Canadian Environmental
Protection Act, 1999 ("CEPA"). The cap-and-trade system is expected to be phased in between 2026 and 2030 and
apply to, among other things, all direct GHG emissions from upstream oil and gas facilities, while also accounting for
indirect emissions and emissions that are captured and permanently stored. It is currently proposed that the 2030
emissions cap (which will inform the number of emission allowances issued to regulated facilities) will be set at
35 percent to 38 percent below 2019 emission levels. The regulatory framework published in December 2023 is open
for comment until February 2024. The Government of Canada has stated it intends to publish draft regulations for the
cap-and-trade system for further comment in mid-2024.
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.
In British Columbia, the government released a series of GHG reduction intention papers that target methane
emissions, carbon pricing mechanisms, permitting of new infrastructure and mechanisms to cap future
emissions. These proposed mechanisms include: an oil and gas sector emissions cap to achieve a 33-38 percent
reduction in emissions below 2007 levels by 2030; the requirement for all new, large industrial facilities to achieve
net-zero emissions by 2050 (2030 for LNG projects) showing how they align with interim 2030 and 2040; and, a new
Output Based Pricing System for large industrial emitters to ensure equivalency with the federal carbon pricing regime.
Implementation will likely take effect on April 1, 2024. While Ovintiv’s proactive approach to electrification in our
Montney operations will shelter its exposure to the Output-Based Pricing System, there is the potential for additional
burden associated with the other proposed policy items.
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 and provincial 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.
Similar regulatory and policy framework efforts were committed to at the 2023 UN Climate Change
Conference (COP28) in late 2023. We actively participate in certain provincial industrial emission programs offered
by both Alberta and British Columbia that allow for the generation of offsets and other rebates to incentivize emission
reduction projects and mitigate carbon tax costs. We expect to continue to be able to utilize these provincial programs
in the future to migrate our carbon tax costs.
Hydraulic Fracturing Operations - The U.S. and Canadian federal governments, along with certain U.S. state and
Canadian provincial governments, continue to review aspects of the scientific, regulatory and policy framework under
which hydraulic fracturing operations are conducted. Most of these governments are primarily engaged in the
collection, review and assessment of technical information regarding the hydraulic fracturing process and have not
provided specific details with respect to any significant actual, proposed or contemplated changes to the hydraulic
fracturing regulatory construct. However, certain environmental and other groups have made claims that hydraulic
fracturing techniques are harmful to surface water and drinking water sources and continue to suggest that additional
Environmental Regulations may be needed to more closely regulate the hydraulic fracturing process. Further, certain
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Ovintiv Inc.
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 a material adverse effect on our business, financial condition and results of operations.
We are subject to risks and uncertainties arising out of government, investor and consumer action in response to
concerns over climate change and the transition to a lower-carbon economy 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.
Policy and Legal Risks - Policy risks include actions seeking to address concerns over climate change, such as the
enactment of climate change-related regulations, policies and initiatives addressing alternative energy requirements,
new fuel consumption standards, energy conservation and emissions reductions measures or responsible energy
development, among other measures that seek to promote adaptation to climate change or lessen activities that
contribute to adverse effects of climate change. 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 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 alternative energy technologies. 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.
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2023 Annual Report | 41
Market Risks - Shifts in supply and demand for certain commodities, including oil and gas (as well as products
dependent on oil and gas) due to concerns over climate change could affect markets. Lower demand for oil and gas
production or products that use oil and gas as fuel or increased demand for lower-emission products and services could
result in lower prices and lower revenues. Market risk may also take the form of limited access to capital as some in
the investment community (including, among others, shareholders, bondholders, institutional lenders, investment
advisors, pension and sovereign wealth funds and endowments) have also become increasing concerned with the
causes of climate change and the role oil and natural gas companies play in any of its purported effects. This has led
some in the investment community to shift all or part of their investment or funding allocations away from the oil and
natural gas industry and others to modify the terms upon which funding is made available to the oil and natural gas
industry. In other instances, it has led shareholders to initiate lawsuits against the directors and management of oil and
natural gas companies and/or bring shareholder proposals demanding that oil and natural gas companies increase
climate disclosure; change business practices or operations; or appoint new board representation.
Reputation Risk - 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. These changing perceptions could lower demand for our oil and gas production, resulting in lower
prices and lower revenues as consumers avoid carbon-intensive industries and could also pressure banks and
investment managers to shift investments and reduce lending as described above.
Technology Risk - The development and deployment of alternative energy sources and emerging technologies in
renewable energy, battery storage and energy efficiency could lower demand for oil and gas, potentially resulting in
decreased revenues within the oil and gas industry and accelerate alternative energy technology.
Physical Risk - Adverse weather conditions such as severe heat or cold, flooding, tornados and other natural disasters
could affect our operations. If any such effects were to occur, they could adversely affect or delay demand for the oil
or natural gas produced or cause us to incur significant costs in preparing for or responding to the effects of climatic
events themselves. Potential adverse effects could include disruption of our and our customers’ operations, including,
for example, damages to our facilities from winds or floods, increases in our costs of operation, or reductions in the
efficiency of our operations, impacts on our personnel, supply chain, or distribution chain, as well as potentially
increased costs for insurance coverages in the aftermath of such effects. Any of these events could have an adverse
effect on our assets and operations.
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) constraints around 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) potential for 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 a material adverse effect on our
business, financial condition and results of operations.
Estimates used in various scenario planning analyses could differ materially from actual results as the policy and
regulatory environment evolves.
Since 2021, we have disclosed 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 performs
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, the scenario analyses we currently perform may
not be comparable to scenario analyses performed by our peers or frameworks established as a result of any future
regulatory requirements. 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 sustainability
initiatives.
42 | 2023 Annual Report
Ovintiv Inc.
Enhanced scrutiny on sustainability 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 sustainability 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 we report. 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. Additionally, concerns over climate change
have resulted in, and are expected to continue to result in, the adoption of regulatory requirements for climate-related
disclosures such as the SEC’s proposed climate-related disclosure rule, which could increase our compliance burden
and costs. Our failure or perceived failure to fulfill emissions goals and targets, to comply with ethical 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.
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
Ovintiv Inc.
2023 Annual Report | 43
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, 2023, we had outstanding long-term unsecured senior notes of $5,476 million, $270 million in
outstanding commercial paper and $14 million drawn on 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:
(cid:120) 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;
(cid:120) reducing our competitiveness compared to similar oil and natural gas companies that have less debt;
(cid:120) limiting our ability to obtain additional financing for working capital, capital investments and acquisitions;
(cid:120) limiting our flexibility in planning for, or reacting to, changes in our business and industry; and
(cid:120) increasing our vulnerability to general adverse economic and industry conditions.
Our ability to meet and service our debt obligations depends on our future operational performance. General economic
conditions; oil, NGLs or natural gas prices; and financial, business and other factors may affect our operational
performance. Many of these factors are beyond our control. If we are unable to satisfy our debt obligations with cash
on hand, we may attempt to refinance or repay portions of our indebtedness, including with proceeds from a public
securities offering or the sale of certain assets. No assurance can be given that we will be able to generate sufficient
cash flows to pay the interest on our debt, or that funds from future borrowings, equity financings or asset sales will
be available to pay or refinance our debt on terms that we consider favorable. Further, if we incur additional debt to
finance asset or business acquisitions, we may decrease our liquidity by using a significant portion of our available
cash or borrowing capacity to finance such acquisitions, and such acquisitions could result in a significant increase in
our interest expense or financial leverage. The occurrence of any of the foregoing could adversely affect our ability to
execute portions of our business strategy and could have a material adverse effect on our liquidity and capital position.
Our risk management activities may prevent us from fully benefiting from an increase in oil, NGLs and natural
gas prices and expose us to certain other risks.
We are exposed to, among other things, fluctuations in oil, NGLs and natural gas prices and foreign currency exchange
rates. We actively monitor such exposures and, where we deem appropriate, utilize derivative financial instruments
and physical delivery contracts to mitigate the potential impact of declines in oil, NGLs and natural gas prices and
fluctuations in foreign currency exchange rates. Under U.S. GAAP, derivative financial instruments that do not qualify
or are not designated as hedges for accounting purposes are fair valued with the resulting changes recognized in current
period net earnings. The utilization of derivative financial instruments may therefore introduce significant volatility
into our reported net earnings.
The terms of our various risk management agreements and the amount of estimated production hedged may limit the
benefits we receive from an increase in oil, NGLs and natural gas prices. We may also suffer financial loss if (a) we
fail to produce anticipated volumes of oil, NGLs and natural gas, particularly during periods of increasing commodity
prices; or (b) counterparties to our risk management agreements fail to fulfill their obligations under the agreements,
particularly during periods of declining commodity prices. The occurrence of any of the foregoing could adversely
affect our ability to execute portions of our business strategy and could have a material adverse effect on our liquidity
and capital position.
44 | 2023 Annual Report
Ovintiv Inc.
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 impacted by a one percent
excise tax on corporate stock repurchases under the IRA. 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 this Item 1A. Risk Factors of this Annual Report on Form 10-K.
The trading price of our securities, including our common stock, may deteriorate if we are unable to meet investor
expectations with respect to the timing and amount of capital returns to shareholders, and such deterioration may be
material.
Regulation and Litigation Risk
We are subject to extensive federal, state, provincial and local government laws, rules and regulations that can
adversely affect the cost, manner and feasibility of our business, and increased regulation in the future could
increase costs, impose additional operating restrictions and cause delays.
All of our operations are subject to extensive federal, state, provincial, local and other laws, rules and regulations,
including with respect to drilling operations; completion operations, including the use of hydraulic fracturing; the
production of oil, NGLs and natural gas; the disposal of produced water and other hazardous waste; the gathering and
transportation of oil, NGLs and natural gas; the imposition of taxes; royalty payments; environmental matters,
including air and water emissions or discharges; free trade agreements; worker health and safety; and conservation
policies, including policies related to environmentally sensitive areas and protected species. These laws, rules and
regulations may impose substantial liabilities for our failure to comply, including the assessment of administrative,
civil and criminal penalties and the issuance of injunctions restricting or prohibiting some or all of our activities in a
particular area.
In the normal course of our business, we may be required to make large expenditures to comply with applicable
governmental laws, rules, regulations, permits or orders. While we cannot predict the actions that future laws, rules
and regulations may require or prohibit, our business could be subject to increased operating and other compliance
costs and our operations may be delayed if existing laws, rules and regulations are revised or reinterpreted, or if new
laws, rules and regulations become applicable to our operations. Any such increases or delays could have a material
and adverse effect on our business, financial condition and results of operations.
We currently are, and from time to time in the future may be, subject to claims, litigation, administrative
proceedings and regulatory actions that may not be resolved in our favor.
We currently are, and from time to time in the future may be, subject to claims, litigation, administrative proceedings
and regulatory actions. The outcome of these matters may be difficult to assess or quantify, and there cannot be any
assurance that such matters will be resolved in our favor. If we are unable to resolve such matters favorably, we or our
directors, officers or employees may become involved in legal proceedings that could result in an onerous or
Ovintiv Inc.
2023 Annual Report | 45
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 exceed the $1 billion threshold to be subject to the CAMT in 2023 but anticipates it will 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.
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.
46 | 2023 Annual Report
Ovintiv Inc.
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. Many of our 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 and may have a competitive advantage when responding to factors that affect
demand and prices for oil, NGLs and natural gas. We compete with these companies in the development and also
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. To help attract, retain, and motivate qualified
employees, we deliver competitive base salaries and benefits and reward short and long-term performance through
the grant of an annual cash bonus and LTI awards. Sustained declines in our stock price, or lower stock price
performance relative to competitors, can reduce the retention value of our LTI awards, which can impact the
competitiveness of our compensation. 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
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.
Ovintiv Inc.
2023 Annual Report | 47
Item 1C. Cybersecurity
Governance
Board of Directors
Ovintiv’s Board of Directors is responsible for the oversight of the Company’s enterprise risk management processes,
and the Board’s committees help discharge this responsibility by managing issues under their purview. The Board has
delegated the primary responsibility to oversee and monitor cybersecurity risks to the Audit Committee and the Audit
Committee has direct oversight, and regularly reviews, the Company’s cybersecurity risks and related mitigations.
The Audit Committee receives periodic updates from the Company’s Vice-President and Chief Information Officer
(the “CIO”) concerning a wide range of topics, including risks from cybersecurity threats, evolving standards,
vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and
information security considerations arising with respect to the Company’s peers and third parties. As part of the
enterprise risk management process, the Audit Committee provides regular updates to the full Board on the risk
categories for which it is responsible, which includes cybersecurity. The Company has processes by which certain
cybersecurity incidents are escalated and where appropriate, reported in a timely manner to the Audit Committee and
the Board.
Management
The Company’s Cybersecurity Group coordinates with business and legal functions to assess and manage the
Company’s risks from cybersecurity threats, including those relating to information systems owned or operated by
third parties that are used by the Company. The Cybersecurity Group is led by the Director, Cybersecurity &
Compliance (the “Cybersecurity Director”). The Cybersecurity Director has extensive cybersecurity knowledge and
skills gained from over 30 years of relevant work experience. The Cybersecurity Director is a Certified Information
Systems Auditor, Chartered Professional Accountant and a Certified Fraud Examiner.
The Cybersecurity Group designs and implements the Company’s administrative and technical controls against risks
from cybersecurity threats. The Cybersecurity Group also maintains the Company’s policies that prescribe procedures
and standards for assessing, identifying and managing cybersecurity threats, which includes the Company’s
Cybersecurity Incident Response Program. The Company’s Internal Audit Group conducts periodic independent
audits of the Company’s cybersecurity procedures, systems, and controls, and also provides independent oversight
into the engagement of cybersecurity resources.
The Cybersecurity Group reports to the CIO, who reports to the Executive Vice-President, Corporate Services. The
CIO is responsible for overseeing the Company’s information technology, enterprise data, and cybersecurity, and, in
conjunction with executive leadership, regularly reviews risk management measures implemented by the Company to
identify and mitigate cybersecurity risk. The CIO receives reports from the Cybersecurity Group regarding
cybersecurity matters on an ongoing basis and administers the Company’s Cybersecurity Incident Response Program.
The CIO is primarily responsible for reporting cybersecurity matters, including cybersecurity incidents, to executive
leadership and the Audit Committee. The CIO has 29 years of relevant information technology work experience with
nine years of cybersecurity oversight at the Company and elsewhere.
Risk Management and Strategy
Ovintiv’s risk management strategy includes identifying risks, and developing and implementing risk management
practices that include mitigation activities, systems, controls and business continuity plans for specific risks, which
are aligned with, and complementary to, Ovintiv’s corporate risk management policy. The identification, analysis and
mitigation strategy of cybersecurity risk is incorporated into the Company’s risk practices and is a component of an
internal Risk Network that is comprised of senior leadership responsible for understanding and reporting each of
Ovintiv’s entity-level risks.
Our cybersecurity program is aligned with the NIST Cybersecurity Framework and is designed to assess, identify, and
manage material risks from cybersecurity threats, and protect and preserve the confidentiality, integrity, and continued
availability of all information owned by, or in the care of, the Company. The Company maintains an Information
48 | 2023 Annual Report
Ovintiv Inc.
Management Policy, which applies to both employees and third-party service providers, for the protection of the
Company’s information. Our information systems are monitored by automated tools and the Cybersecurity Group.
The Cybersecurity Group conducts an initial assessment of cybersecurity incidents and determines whether escalation
is warranted. The Company’s Cybersecurity Incident Response Program (“CIRP”) provides guidelines to assist the
Company in identifying and mitigating cyber risk effectively and efficiently, and sets out a coordinated approach to
investigating, containing, documenting and mitigating incidents, including reporting findings and keeping executive
leadership and other key stakeholders informed and involved as appropriate. The Company has implemented an
incident response team and incident assessment team that includes internal leadership representatives from the
executive, information technology, operational, legal, and corporate teams, as well as third-party experts as
appropriate. Our processes and procedures also encompass oversight and identification of risks from cybersecurity
threats associated with our use of third-party service providers, which includes engagement of a managed security
service provider that performs a security review and ongoing monitoring of our third-party service providers.
The cybersecurity program, including the CIRP, undergoes periodic internal and external review. The Company
engages qualified external auditors and cybersecurity risk assessors to provide independent assessments of our
cybersecurity program and response preparedness along with reviews and audits by the Company’s Internal Audit
Group. The Company conducts annual internal training for employees, and internal and external teams, including the
Cybersecurity Group, as well as periodic penetration testing, red teaming, tabletop exercises and phishing drills. The
results of these tests are measured and assessed for potential improvements.
The Company is not aware of having experienced any risks from cybersecurity threats or incidents through the date
of this Annual Report on Form 10-K that have materially affected or are reasonably likely to materially affect the
Company, its business strategy, results of operation or financial condition. This does not guarantee that future
incidents or threats will not have a material impact or that we are not currently the subject of an undetected incident
or threat that may have such an impact.
Additional information on cybersecurity risks we face is discussed in Item 1A. Risk Factors of this Annual Report on
Form 10-K, which should be read in conjunction with the foregoing information.
Item 3. Legal Proceedings
Ovintiv is involved in various legal claims and actions arising in the normal course of the Company’s operations.
Although the outcome of these claims cannot be predicted with certainty, the Company does not expect these matters
to have a material adverse effect on Ovintiv’s financial position, cash flows or results of operations. If an unfavorable
outcome were to occur, there exists the possibility of a material impact on the Company’s consolidated net earnings
or loss for the period in which the effect becomes reasonably estimable. See Item 1A. Risk Factors of this Annual
Report on Form 10-K, “We currently are, and from time to time in the future may be, subject to claims, litigation,
administrative proceedings and regulatory actions that may not be resolved in the Company’s favor”.
In July 2020, the Company received a Notice of Violation (“NOV”) from the EPA and the Utah Department of
Environmental Quality, Division of Air Quality (“UDAQ”). The NOV alleges violations under the federal Clean Air
Act, the State of Utah’s State Implementation Plan, and the State of Utah’s air quality regulations for the oil and
natural gas industry, at certain of the Company facilities located in the Uinta Basin. The Company has exchanged
information with the EPA and UDAQ and is engaged in discussions aimed at resolving the allegations. Resolution of
the matter may result in monetary sanctions of more than $300,000.
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.
2023 Annual Report | 49
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
of February 16, 2024, there were 269,515,124 shares of common stock outstanding held by 4,953 shareholders of
record, and no shares of preferred stock outstanding.
Capital Return Information
In 2023, the Company paid a quarterly dividend of $0.25 per share of common stock for the first quarter and $0.30 per
share of common stock for each of the second, third and fourth quarters (2022: $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) and $1.15 per
share of common stock annually (2022: $0.95 per share of common stock annually). On February 27, 2024 the Board
of Directors declared a dividend of $0.30 per share of Ovintiv common stock payable on March 28, 2024 to common
shareholders of record as of March 15, 2024. 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.
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”.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS
On September 26, 2023, Ovintiv announced it had received regulatory approval to purchase, for cancellation or return
to treasury, up to approximately 26.7 million shares of common stock pursuant to a NCIB over a 12-month period
from October 3, 2023 to October 2, 2024. The number of shares of common stock authorized for purchase represents
approximately 10 percent of Ovintiv's issued and outstanding shares of common stock as of such time.
During the three months ended December 31, 2023, the Company purchased approximately 1.2 million shares of
common stock for total consideration of approximately $53 million at an average price of $44.00 per share. The
following table presents the shares of common stock purchased during the three months ended December 31, 2023.
Period
October 1 to October 31, 2023
November 1 to November 30, 2023
December 1 to December 31, 2023
Total
Total Number of
Shares Purchased (1)
Average
Price Paid
per Share (2)
-
44.00
-
44.00
Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs
-
1,204,545
-
1,204,545
Maximum Number of Shares
That May Yet be Purchased
Under the Plans or Programs
26,734,819
25,530,274
25,530,274
25,530,274
- $
1,204,545
-
1,204,545 $
(1) For the three months ended December 31, 2023, no shares of common stock were repurchased through our broker in accordance with a
Rule 10b5-1 compliant plan initially adopted by the Company on September 30, 2021.
Includes commissions but excludes excise taxes.
(2)
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Ovintiv Inc.
In the first quarter of 2022, Ovintiv obtained an exemption order (the “NCIB Exemption”) from the Alberta Securities
Commission and the Ontario Securities Commission, which permits Ovintiv to make repurchases (the “Proposed
Bids”), under its current and any future normal course issuer bids, through the facilities of the NYSE and other U.S.-
based trading systems (collectively, “U.S. Markets”), in excess of the maximum allowable purchases under applicable
Canadian securities laws. The NCIB Exemption applies to any Proposed Bid commenced within 36 months of the
date of the exemption order and is subject to several other conditions, including that Ovintiv remain a U.S. and SEC
foreign issuer under applicable Canadian securities laws. The purchases of common stock under a Proposed Bid must
also be made in compliance with other applicable Canadian securities laws and applicable U.S. rules. Additionally,
the NCIB Exemption imposes restrictions on the number of shares of common stock that may be acquired under the
exemption, including that: (a) Ovintiv may not acquire common stock in reliance upon the exemption under subsection
4.8(3) of Canadian National Instrument 62-104 – Take-Over Bids and Issuer Bids (“NI 62-104”) from the
requirements applicable to issuer bids (the “Other Published Markets Exemption”) if the aggregate number of shares
of common stock purchased by Ovintiv, and any person or company acting jointly or in concert with Ovintiv, in
reliance on the NCIB Exemption and the Other Published Markets Exemption within any period of 12 months exceeds
5 percent of the outstanding common stock on the first day of such 12-month period; and (b) the aggregate number of
shares of common stock purchased pursuant to a Proposed Bid in reliance on the NCIB Exemption, exempt issuer bid
purchases made in the normal course through the facilities of the TSX, and the Other Published Markets Exemption
does not exceed, over the 12-month period of its current NCIB, 10 percent of Ovintiv’s public float. As a result, the
NCIB Exemption effectively allows Ovintiv to purchase up to 10 percent of its public float on U.S. Markets under its
NCIB. Without the NCIB Exemption this amount would be limited to 5 percent of Ovintiv’s outstanding common
stock within a 12-month period under applicable Canadian securities law.
RECENT SALES OF UNREGISTERED EQUITY SECURITIES
None.
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 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, 2018 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.
Ovintiv Inc.
2023 Annual Report | 51
Comparison of 5-Year Cumulative Total Return Among
Ovintiv, the S&P 400 and XOP U.S. Equity
(US$100 Invested in Base Period)
(cid:3)(cid:1006)(cid:1009)(cid:1004)
(cid:3)(cid:1006)(cid:1004)(cid:1004)
(cid:3)(cid:1005)(cid:1009)(cid:1004)
(cid:3)(cid:1005)(cid:1004)(cid:1004)
(cid:3)(cid:1009)(cid:1004)
(cid:3)(cid:882)
(cid:1006)(cid:1004)(cid:1005)(cid:1012)
(cid:1006)(cid:1004)(cid:1005)(cid:1013)
(cid:1006)(cid:1004)(cid:1006)(cid:1004)
(cid:1006)(cid:1004)(cid:1006)(cid:1005)
(cid:1006)(cid:1004)(cid:1006)(cid:1006)
(cid:1006)(cid:1004)(cid:1006)(cid:1007)
(cid:75)(cid:115)(cid:115)
(cid:121)(cid:75)(cid:87)
(cid:94)(cid:920)(cid:87)(cid:3)(cid:1008)(cid:1004)(cid:1004)
Fiscal Year Ended December 31
Ovintiv
S&P 400
XOP U.S. Equity
$
2018
100.00 $
100.00
100.00
2019
82.35 $
125.78
90.56
2020
53.69 $
142.80
57.67
2021
127.98 $
177.85
96.18
2022
196.20 $
154.23
139.78
2023
174.74
179.05
144.74
Item 6. [Reserved]
Not Applicable.
52 | 2023 Annual Report
Ovintiv Inc.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The MD&A is intended to provide a narrative description of the Company’s business from management’s perspective,
which includes an overview of Ovintiv’s consolidated 2023 results and year-over-year comparisons between 2023 and
2022 results. This MD&A should be read in conjunction with the audited Consolidated Financial Statements and
accompanying notes for the year ended December 31, 2023 (“Consolidated Financial Statements”), which are included
in Item 8 of this Annual Report on Form 10-K. Discussion and analysis of 2021 results and year-over-year comparisons
between 2022 and 2021 results that are not included in this Form 10-K, can be found in Item 7 of the 2022 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:120)
(cid:120)
(cid:120)
(cid:120)
Executive Overview
Results of Operations
Liquidity and Capital Resources
Accounting Policies and Estimates
Non-GAAP Measures
Executive Overview
Strategy
Ovintiv aims to be a leading North American energy producer and is focused on developing its high-quality multi-
basin portfolio of oil and natural gas producing plays as part of its strategy outlined in Items 1 and 2 of this Annual
Report on Form 10-K.
Ovintiv is committed to delivering quality returns from its capital investment, generating significant cash flows and
providing durable cash returns to its shareholders through the commodity price cycle. The Company aims to achieve
its strategic priorities through execution excellence, disciplined capital allocation, and commercial acumen and risk
management. In addition, the Company is dedicated to driving progress in areas of environmental, social, and
governance, aligning with its commitment to corporate responsibility.
In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its capital allocation
framework to provide competitive returns to shareholders while strengthening its balance sheet.
Ovintiv continually monitors and evaluates changing market conditions to maximize cash flows, mitigate risks and
renew its premium well inventory. The Company’s assets, located in some of the best plays in North America, form
a multi-basin, multi-product portfolio which enables flexible and efficient investment of capital that supports the
Company’s strategy.
Ovintiv seeks to deliver results in a socially and environmentally responsible manner. Best practices are deployed
across its assets, allowing the Company to capitalize on operational efficiencies and decrease emissions intensity. The
Company’s sustainability reporting, which outlines its key metrics, targets and relative progress achieved can be found
in the Company Outlook section of this MD&A and on the Company’s sustainability website.
Underpinning Ovintiv’s strategy are core values of one, agile, innovative and driven, which guide the organization to
be collaborative, responsive, flexible and determined. The Company is committed to excellence with a passion to
drive corporate financial performance and shareholder value.
For additional information on Ovintiv’s strategy, its reporting segments and the plays in which the Company operates,
refer to Items 1 and 2 of 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.
2023 Annual Report | 53
In evaluating its operations and assessing its leverage, Ovintiv reviews performance-based measures such as Non-
GAAP Cash Flow and debt-based metrics such as Debt to Adjusted Capitalization, Debt to EBITDA and Debt to
Adjusted EBITDA, which are non-GAAP measures and do not have any standardized meaning under U.S. GAAP.
These measures may not be similar to measures presented by other issuers and should not be viewed as a substitute
for measures reported under U.S. GAAP. Additional information regarding these measures, including reconciliations
to the closest GAAP measure, can be found in the Non-GAAP Measures section of this MD&A.
Highlights
During 2023, the Company focused on executing its capital investment plan aimed at maximizing profitability through
operational and capital efficiencies, minimizing the impact of inflation and delivering cash from operating activities.
Upstream product revenues in 2023 were impacted by lower average realized prices, excluding the impact of risk
management activities compared to 2022, partially offset by higher production volumes. Decreases in average realized
natural gas and liquids prices of 53 percent and 21 percent, respectively, were primarily due to lower benchmark
prices. In 2023, total production volumes increased by 11 percent compared to 2022 primarily due to the efficient
integration of the assets from the Permian Acquisition, as defined below, during the latter half of the year.
Significant Developments
(cid:120) On November 22, 2023 and September 13, 2023, the Company purchased approximately 1.2 million shares
and one million shares, respectively, of Ovintiv common stock from the secondary public offerings by NMB
Stock Trust, a Delaware statutory trust (“NMB Stock Trust”). The total consideration paid was approximately
$53 million, averaging $44.00 per share, and $45 million, averaging $45.45 per share, respectively. The
shares were canceled during the third and fourth quarters of 2023.
(cid:120) On September 26, 2023, the Company announced it had received regulatory approval for the renewal of its
NCIB program, which enables the Company to purchase, for cancellation or return to treasury, up to
approximately 26.7 million shares of common stock over a 12-month period from October 3, 2023 to October
2, 2024. The number of shares authorized for purchase represents 10 percent of Ovintiv’s public float as at
September 21, 2023. The Company expects to continue to execute the renewed NCIB program in conjunction
with its capital allocation framework.
(cid:120) On June 12, 2023, the Company closed the purchase agreement to acquire substantially all leasehold interest
and related assets from Black Swan Oil & Gas, LLC, PetroLegacy II Holdings, LLC, Piedra Energy III
Holdings, LLC and Piedra Energy IV Holdings, LLC, which were portfolio companies of funds managed by
EnCap Investments L.P. (“Permian Acquisition”). The Company issued approximately 31.8 million shares
of Ovintiv common stock and paid approximately $3.2 billion in cash upon closing, for total consideration
of approximately $4.4 billion, which included preliminary customary closing adjustments of approximately
$85 million. The acquisition added approximately 65,000 net acres in the Midland Basin and approximately
1,050 net well locations to Ovintiv’s Permian inventory. The transaction had an effective date of January 1,
2023.
(cid:120) On June 12, 2023, the Company closed the agreement to sell the entirety of its Bakken assets, comprising
approximately 46,000 net acres in the Williston Basin of North Dakota, to Grayson Mill Bakken, LLC, a
portfolio company managed by EnCap Investments L.P., for proceeds of approximately $734 million after
customary closing adjustments of approximately $91 million. The transaction had an effective date of January
1, 2023.
(cid:120) On June 12, 2023, the Company announced its inclusion on the S&P 400 index effective June 20, 2023.
(cid:120) On May 31, 2023, the Company issued $2.3 billion in senior unsecured notes with varying maturity dates
and interest rates. The net proceeds from the bond offering were used to finance a portion of the Permian
Acquisition.
(cid:120) On April 3, 2023, the Company announced an increase of 20 percent to its quarterly per share dividend
payment representing an annualized dividend of $1.20 per share of common stock as part of Ovintiv’s
commitment to returning capital to shareholders.
54 | 2023 Annual Report
Ovintiv Inc.
Financial Results
(cid:120) Reported net earnings of $2,085 million, including income tax expense of $425 million and net gains on risk
management in revenues of $151 million, before tax.
(cid:120) Generated cash from operating activities of $4,167 million and Non-GAAP Cash Flow of $3,899 million.
Cash from operating activities exceeded capital expenditures by $1,423 million.
(cid:120) Purchased for cancellation, approximately 10 million shares of common stock for total consideration of
approximately $426 million.
(cid:120) Paid dividends of $1.15 per share of common stock totaling $307 million.
(cid:120) Had approximately $3.5 billion in total liquidity as at December 31, 2023, which included available credit
facilities of $3,486 million, available uncommitted demand lines of $234 million, and cash and cash
equivalents of $3 million, net of outstanding commercial paper of $270 million.
(cid:120) Reported Debt to EBITDA of 1.2 times and Non-GAAP Debt to Adjusted EBITDA of 1.3 times.
Capital Investment
(cid:120) Reported total capital spending of $2,744 million, which was below the full year 2023 investment plan range
of approximately $2,745 million to $2,785 million.
(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, as discussed in the Company Outlook section of this MD&A.
Production
(cid:120) Produced average liquids volumes of 292.0 Mbbls/d, which accounted for 52 percent of total production
volumes. Average oil and plant condensate volumes of 201.8 Mbbls/d, or 69 percent of total liquids
production volumes, exceeded full year 2023 guidance of 196.0 Mbbls/d to 198.0 Mbbls/d.
(cid:120) Produced average natural gas volumes of 1,642 MMcf/d, which accounted for 48 percent of total production
volumes. Average natural gas volumes exceeded full year 2023 guidance of 1,615 MMcf/d to 1,630 MMcf/d.
(cid:120) Produced average total volumes of 565.6 MBOE/d, which exceeded full year 2023 guidance of 550.0
MBOE/d to 560.0 MBOE/d.
Operating Expenses
(cid:120)
(cid:120)
(cid:120)
Incurred total upstream transportation and processing expenses of $1,603 million or $7.76 per BOE, a
decrease of $25 million compared to 2022, primarily due to lower variable contract rates in Permian, partially
offset by higher volumes in Permian.
Incurred total upstream operating expenses of $831 million or $4.03 per BOE, an increase of $58 million
compared to 2022, primarily due to the Permian Acquisition in the second quarter of 2023, increased activity
resulting from more wells on production and sustained inflationary pressures, partially offset by the sale of
the Bakken assets in the second quarter of 2023, the sale of portions of Uinta assets in the third quarter of
2022 and higher recoveries from updated operating contract terms.
Incurred total production, mineral and other taxes of $342 million, which represents approximately 4.4
percent of upstream revenues. Total production, mineral and other taxes decreased by $73 million compared
to 2022, primarily due to lower production taxes in the USA Operations as a result of lower commodity
prices.
The Company’s upstream operations refers to the summation of the USA and Canadian operating segments.
Additional information on the items above and other expenses can be found in the Results of Operations section of
this MD&A.
Ovintiv Inc.
2023 Annual Report | 55
2024 Outlook
Industry Outlook
Oil Markets
The oil and gas industry is cyclical and commodity prices are inherently volatile. Oil prices reflect global supply and
demand dynamics as well as the geopolitical and macroeconomic environment.
Oil prices for 2024 are expected to be impacted by the interplay between the pace of global economic growth and
demand for oil, continued OPEC+ production restraint and continued supply uncertainties resulting from geopolitical
events. Recessionary concerns continue to have an impact on global demand as central banks evaluate and recalibrate
their strategies in response to the prevailing economic environment. Supply and the accumulation of global oil
inventories are expected to be impacted by changes in OPEC+ production levels, consumer demand behavior and
geopolitical volatility.
Natural Gas Markets
Natural gas prices are primarily impacted by structural changes in supply and demand as well as deviations from
seasonally normal weather.
Natural gas prices for 2024 are expected to be impacted by the interplay between natural gas production and associated
natural gas from oil production, changes in demand from the power generation sector, changes in export levels of U.S.
liquefied natural gas, impacts from seasonal weather, as well as supply chain constraints or other disruptions resulting
from geopolitical events.
Company Outlook
The Company will continue to exercise discretion and discipline, and intends to optimize capital allocation throughout
2024 as the commodity price environment evolves. Ovintiv pursues innovative ways to maximize cash flows, and to
reduce upstream operating and administrative expenses.
Markets for oil and natural gas are exposed to different price risks and are inherently volatile. To mitigate price
volatility and provide more certainty around cash flows, the Company enters into derivative financial instruments.
With the closing of the Permian Acquisition in the second quarter of 2023 and the associated increase in production
volumes, the Company executed additional oil hedge positions. As at December 31, 2023, the Company has hedged
approximately 70.3 Mbbls/d of expected oil and condensate production and 775 MMcf/d of expected natural gas
production for 2024. 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 $2.2 billion to $2.4 billion on its full year 2024 capital investment
program, focusing on maximizing returns from high-margin oil and condensate. In 2024, the Company expects to
generate cash flows in excess of capital expenditures.
Ovintiv continually strives to improve well performance and lower costs through innovative techniques. Ovintiv's
large-scale cube development model utilizes multi-well pads and advanced completion designs to maximize returns
and resource recovery from its reservoirs. During 2023, the Company further enhanced its multi-frac technology by
fracing three wells (“Trimulfrac”) at the same time compared to its current standard of fracing two wells (“Simulfrac”)
at the same time. Ovintiv’s disciplined capital program and continuous innovation create flexibility to allocate capital
in changing commodity markets to maximize cash flows while preserving the long-term value of the Company’s
multi-basin portfolio.
56 | 2023 Annual Report
Ovintiv Inc.
Production
In 2024, the Company expects full year average total production volumes of approximately 545 MBOE/d to 575
MBOE/d, including oil and plant condensate production volumes of approximately 202 Mbbls/d to 208 Mbbls/d, other
NGLs production volumes of approximately 85 Mbbls/d to 90 Mbbls/d and natural gas production volumes of
approximately 1,550 MMcf/d to 1,650 MMcf/d.
Operating Expenses
Ovintiv promotes a collaborative culture that values knowledge exchange, open communication, continuous
improvement and learning. This culture stimulates innovation and fosters the creation of best practices resulting in
efficiency improvements and enhanced operational performance for the Company.
In 2024, the Company expects to incur full year upstream transportation and processing costs of approximately $7.50
per BOE to $8.00 per BOE, upstream operating expenses of approximately $4.25 per BOE to $4.75 per BOE, and
total production, mineral and other taxes of approximately four to five percent of upstream revenues. The Company’s
upstream operations refers to the summation of the USA and Canadian operating segments.
Long-Term Debt
During the second quarter of 2023, the Company closed the Permian Acquisition and funded the cash portion of the
transaction with net proceeds of $2,278 million from the issuance of senior unsecured notes, cash proceeds received
from the sale of the Company’s Bakken assets, cash on hand and proceeds from short-term borrowings.
As at December 31, 2023, the Company had $270 million of commercial paper outstanding under its U.S. commercial
paper (“U.S. CP”) programs and $14 million outstanding under its revolving credit facilities.
Additional information on Ovintiv’s long-term debt and liquidity position can be found in Note 15 to the Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K, and the Liquidity and Capital Resources
section of this MD&A, respectively.
Additional information on Ovintiv’s 2024 Corporate Guidance can be accessed on the Company’s website at
www.ovintiv.com.
Environmental, Social and Governance
Ovintiv recognizes climate change as a global concern and the importance of reducing its environmental footprint as
part of the solution. The Company voluntarily participates in emission reduction programs and has adopted a range of
strategies to help reduce emissions from its operations. These strategies include incorporating new and proven
technologies, optimizing processes in its operations and working closely with third-party providers to develop best
practices. The Company continues to look for innovative techniques and efficiencies in support of its commitment to
emission reductions.
In May 2023, Ovintiv published its sustainability report, which highlights the Company’s progress in emissions
intensity reductions including an emissions reduction roadmap aimed to meet the Company’s Scope 1&2 GHG
emissions target by 2030. As at the end of 2023, the Company has achieved a greater than 40 percent reduction in the
Scope 1&2 GHG emissions intensity and is on track to meet its emissions intensity reduction target of 50 percent by
2030. The GHG emissions reduction target is tied to the annual compensation program for all employees.
In June 2023, the Company closed the Permian Acquisition, increasing both oil production volumes and net premium
inventory in the Permian. Ovintiv is undergoing an integration period to align the emissions profile of the acquired
inventory with the World Bank Zero Routine Flaring initiative. Ovintiv remains committed to its emissions reduction
targets.
The Company continues to find innovative approaches to reduce its emissions profile and add value to its business.
During 2023, the Company entered into an agreement with a midstream company which will connect Ovintiv’s natural
gas-powered facilities in Montney to British Columbia’s hydro and wind generated electrical grid. This arrangement
will reduce the Company’s GHG emissions while adding processing capacity.
Ovintiv Inc.
2023 Annual Report | 57
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 Items 1 and 2 of this Annual Report on Form 10-K.
Further information on Ovintiv’s sustainable business 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.
58 | 2023 Annual Report
Ovintiv 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)
2023
2022
$
7,778 $
2,876
7
10,661
151
71
10,883
8,019
2,864
354
2,510
425
10,151
4,107
5
14,263
(1,867 )
68
12,464
8,611
3,853
293
3,560
(77 )
3,637
Net Earnings (Loss)
$
2,085 $
(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)
$
$
2023
2022
77.62 $
78.95
103.76
2.74 $
2.93
3.15
94.23
95.89
122.02
6.64
5.56
7.89
Ovintiv Inc.
2023 Annual Report | 59
Production Volumes and Realized Prices
Production Volumes (1)
2023
2022
Realized Prices (2)
2023
2022
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
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
158.8
0.1
158.9
10.9
32.0
42.9
74.6
15.6
90.2
244.3
47.7
292.0
517
1,125
1,642
330.4
235.2
565.6
36
16
52
48
12
10
11
131.5 $
0.1
131.6
76.46 $
81.59
76.46
58.53
74.52
70.46
16.27
26.78
18.09
57.29
58.93
57.55
2.43
2.89
2.74
46.15
25.76
37.67
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 )
(1) Average daily.
(2) Average per-unit prices, excluding the impact of risk management activities.
(3)
Includes production impacts of acquisitions and divestitures. See Notes 8 and 9 to the Consolidated Financial Statements included in Item 8
of this Annual Report on Form 10-K.
60 | 2023 Annual Report
Ovintiv Inc.
Upstream Product Revenues
($ millions)
2022 Upstream Product Revenues (1)
Increase (decrease) due to:
Sales prices
Production volumes
2023 Upstream Product Revenues (1)
NGLs -
Plant
Oil
Condensate
NGLs -
Other
Natural
Gas
Total
$
4,526 $
1,422 $
981 $
3,213 $
10,142
(1,031 )
939
4,434 $
(278 )
(40 )
1,104 $
(445 )
59
595 $
(1,884 )
315
1,644 $
(3,638 )
1,273
7,777
$
(1) Revenues for 2023 exclude certain other revenue and royalty adjustments with no associated production volumes of $1 million (2022 - $9
million).
Oil Revenues
2023 versus 2022
Oil revenues were lower by $92 million compared to 2022 primarily due to:
(cid:120) A decrease of $17.79 per bbl, or 19 percent, in the average realized oil prices which decreased revenues by
$1,031 million. The decrease reflected lower WTI and Houston benchmark prices which were both down 18
percent and the weakening of regional pricing relative to the WTI benchmark price in the USA Operations; and
(cid:120) Higher average oil production volumes of 27.3 Mbbls/d increased revenues by $939 million. Higher volumes
were primarily due to the Permian Acquisition in the second quarter of 2023 (26.5 Mbbls/d) and successful
drilling in Permian and Uinta (12.0 Mbbls/d), partially offset by the sale of the Bakken assets in the second
quarter of 2023 (6.5 Mbbls/d) and natural declines in Anadarko (5.5 Mbbls/d).
NGL Revenues
2023 versus 2022
NGL revenues were lower by $704 million compared to 2022 primarily due to:
(cid:120) A decrease of $13.36 per bbl, or 42 percent, in the average realized other NGL prices which decreased revenues
by $445 million. The decrease reflected lower other NGL benchmark prices and lower regional pricing;
(cid:120) A decrease of $18.06 per bbl, or 20 percent, in the average realized plant condensate prices which decreased
revenues by $278 million. The decrease reflected lower WTI and Edmonton Condensate benchmark prices
which were down 18 percent and 15 percent, respectively, and lower regional pricing relative to the WTI
benchmark price; and
(cid:120) Higher average other NGL production volumes of 4.7 Mbbls/d increased revenues by $59 million. Higher
volumes were primarily due to successful drilling in Permian and Montney (5.1 Mbbls/d), the Permian
Acquisition in the second quarter of 2023 (2.7 Mbbls/d), and lower effective royalty rates resulting from lower
commodity prices in Montney (1.5 Mbbls/d), partially offset by the sale of the Bakken assets in the second
quarter of 2023 (3.4 Mbbls/d) and natural declines in Anadarko (1.4 Mbbls/d).
Ovintiv Inc.
2023 Annual Report | 61
Natural Gas Revenues
2023 versus 2022
Natural gas revenues were lower by $1,569 million compared to 2022 primarily due to:
(cid:120) A decrease of $3.15 per Mcf, or 53 percent, in the average realized natural gas prices which decreased revenues
by $1,884 million. The decrease reflected lower Dawn, NYMEX and AECO benchmark prices which were
down 60 percent, 59 percent and 47 percent, respectively; and
(cid:120) Higher average natural gas production volumes of 148 MMcf/d increased revenues by $315 million. Higher
volumes were primarily due to lower effective royalty rates resulting from lower commodity prices in Montney
(106 MMcf/d) and successful drilling in Montney and Permian (60 MMcf/d).
Gains (Losses) on Risk Management, Net
As a means of managing commodity price volatility, Ovintiv enters into commodity derivative financial instruments
on a portion of its expected oil, NGLs and natural gas production volumes. Additional information on the Company’s
commodity price positions as at December 31, 2023 can be found in Note 24 to the Consolidated Financial Statements
included in Item 8 of this Annual Report on Form 10-K.
The following table provides the effects of the Company’s risk management activities on revenues.
Realized Gains (Losses) on Risk Management
Commodity Price (1)
Oil ($/bbl)
NGLs - Plant Condensate ($/bbl)
NGLs - Other ($/bbl)
Natural Gas ($/Mcf)
Other (2)
Total ($/BOE)
Unrealized Gains (Losses) on Risk Management
Total Gains (Losses) on Risk Management, Net
$ millions
2023
2022
Per-Unit
2023
2022
$
$
(24 ) $
1
-
(21 )
1
(43 )
194
151 $
$
$
$
$
$
$
(594 )
(125 )
-
(1,895 )
6
(2,608 )
741
(1,867 )
(0.40 ) $
0.05 $
- $
(0.03 ) $
- $
(0.21 ) $
(12.37 )
(7.78 )
-
(3.47 )
-
(14.04 )
(1) Primarily includes realized gains and losses related to the USA and Canadian Operations.
(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.
62 | 2023 Annual Report
Ovintiv Inc.
Market Optimization Revenues
Market Optimization product revenues relate to activities that provide operational flexibility and cost mitigation for
transportation commitments, product type, delivery points and customer diversification. Ovintiv also purchases and
sells third-party volumes under marketing arrangements associated with the Company’s previous divestitures.
($ millions)
Market Optimization
2023 versus 2022
2023
$
2,876 $
2022
4,107
Market Optimization product revenues decreased $1,231 million compared to 2022 primarily due to:
(cid:120) Lower oil and natural gas benchmark prices ($885 million), lower sales of third-party purchased liquids
volumes primarily relating to price optimization activities in the USA Operations ($202 million) and lower
sales of third-party purchased natural gas volumes primarily relating to marketing arrangements for assets
divested in prior years ($144 million).
Sublease Revenues
Sublease revenues primarily include amounts related to the sublease of office space in The Bow office building
recorded in the Corporate and Other segment. Additional information on office sublease income can be found in Note
14 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Operating Expenses
Production, Mineral and Other Taxes
Production, mineral and other taxes include production and property taxes. Production taxes are generally assessed as
a percentage of oil, NGLs and natural gas production revenues. Property taxes are generally assessed based on the
value of the underlying assets.
USA Operations
Canadian Operations
Total
2023 versus 2022
$ millions
2023
2022
$
$
327 $
15
342 $
401
14
415
$
$
$
$/BOE
2023
2.71 $
0.18 $
1.66 $
2022
3.72
0.18
2.23
Production, mineral and other taxes decreased $73 million compared to 2022 primarily due to:
(cid:120) Lower production tax in USA Operations due to lower commodity prices ($93 million) and the sale of the
Bakken assets in the second quarter of 2023 ($31 million);
partially offset by:
(cid:120) Higher volumes in Permian primarily due to the Permian Acquisition in the second quarter of 2023 ($48
million).
Ovintiv Inc.
2023 Annual Report | 63
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
2023 versus 2022
$ millions
2023
2022
547 $
1,056
1,603
626
1,002
1,628
$
$
$
$/BOE
2023
4.54 $
12.29 $
7.76 $
2022
5.80
12.80
8.75
163
1,766 $
158
1,786
$
$
Transportation and processing expense decreased $20 million compared to 2022 primarily due to:
(cid:120) Lower variable contract rates in Permian ($139 million), a higher U.S./Canadian dollar exchange rate ($34
million) and the sale of the Bakken assets in the second quarter of 2023 ($24 million);
partially offset by:
(cid:120) Higher volumes in Permian ($91 million), higher costs relating to the diversification of the Company’s
downstream markets ($56 million) and higher third-party plant operating costs in Montney ($28 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
Market Optimization
Total
2023 versus 2022
$ millions
2023
2022
743 $
88
831
28
859 $
$
$
$
646
127
773
29
802
$
$
$/BOE
2023
6.15 $
1.04 $
4.03 $
2022
5.99
1.62
4.15
Operating expense increased $57 million compared to 2022 primarily due to:
(cid:120) The Permian Acquisition in the second quarter of 2023 ($128 million), and increased activity due to more wells
on production and sustained inflationary pressures ($56 million);
partially offset by:
(cid:120) The sale of the Bakken assets in the second quarter of 2023 ($50 million), the sale of portions of Uinta assets
in the third quarter of 2022 ($36 million), updates to operating contract terms, including a recovery of prior
years’ costs ($31 million), and lower long-term incentive costs resulting from a decrease in the Company’s
share price compared to an increase in 2022 ($13 million).
Additional information on the Company’s long-term incentive costs can be found in Note 21 to the Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K.
64 | 2023 Annual Report
Ovintiv Inc.
Purchased Product
Purchased product expense includes purchases of oil, NGLs and natural gas from third parties that are used to provide
operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer
diversification. Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with
the Company’s previous divestitures.
($ millions)
Market Optimization
2023 versus 2022
2023
$
2,815 $
2022
4,055
Purchased product expense decreased $1,240 million compared to 2022 primarily due to:
(cid:120) Lower oil and natural gas benchmark prices ($898 million), lower third-party purchased liquids volumes
primarily relating to price optimization activities in the USA Operations ($202 million) and lower third-party
purchased natural gas volumes primarily relating to marketing arrangements for assets divested in prior years
($140 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
2023 versus 2022
$ millions
2023
2022
$
$
1,519 $
286
1,805
861
235
1,096
$
$
$
20
1,825 $
17
1,113
$/BOE
2023
12.60 $
3.33 $
8.74 $
2022
7.98
3.01
5.89
DD&A increased $712 million compared to 2022 primarily due to:
(cid:120) Higher depletion rates in the USA and Canadian Operations ($556 million and $37 million, respectively) and
higher production volumes in the USA and Canadian Operations ($102 million and $22 million, respectively);
partially offset by:
(cid:120) Higher U.S./Canadian dollar exchange rate ($8 million).
The depletion rate in the USA Operations increased $4.62 per BOE compared to 2022 primarily due to a higher
depletable base associated with the Permian Acquisition in the second quarter of 2023.
Ovintiv Inc.
2023 Annual Report | 65
Administrative
Administrative expense represents costs associated with corporate functions provided by Ovintiv staff. These expenses
primarily include salaries and benefits, operating leases, office, information technology, transaction and long-term
incentive costs.
Administrative, excluding Long-Term Incentive Costs,
Transaction and Legal Costs, and Current
Expected Credit Losses (1)
Long-term incentive costs
Transaction and legal costs
Current expected credit losses
Total Administrative
$ millions
2023
2022
$/BOE
2023
2022
$
$
278 $
22
93
-
393 $
258
164
1
(1 )
422
$
$
1.35 $
0.11
0.45
-
1.91 $
1.39
0.88
-
-
2.27
(1)
Includes costs related to The Bow office lease of $114 million (2022 - $116 million), half of which is recovered from sublease revenues.
2023 versus 2022
Administrative expense decreased $29 million compared to 2022 primarily due to:
(cid:120) Lower long-term incentive costs resulting from a decrease in the Company’s share price in 2023 compared to
an increase in 2022 ($142 million);
partially offset by:
(cid:120) Transaction costs mainly related to the Permian Acquisition in the second quarter of 2023 ($83 million) and
increases in legal, information technology and community investment costs ($16 million).
Additional information on the Company’s long-term incentive costs can be found in Note 21 to the Consolidated
Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Other (Income) Expenses
($ millions)
Interest
Foreign Exchange (Gain) Loss, Net
Other (Gains) Losses, Net
Total Other (Income) Expenses
Interest
2023
2022
355 $
19
(20)
354 $
311
15
(33 )
293
$
$
Interest expense primarily includes interest on Ovintiv’s short-term and long-term debt. Additional information on
changes in interest can be found in Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual
Report on Form 10-K.
2023 versus 2022
Interest expense increased $44 million compared to 2022 primarily due to:
(cid:120)
Interest expense related to senior unsecured notes issued in May 2023 ($83 million), 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 and interest expense related to outstanding balances under the Company’s U.S. CP program and
revolving credit facilities ($35 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, interest savings related to the redemption of certain other senior notes in 2022 ($33
million) and premiums of $22 million related to the Company’s open market repurchases of senior notes in
2022.
66 | 2023 Annual Report
Ovintiv Inc.
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.
2023 versus 2022
Net foreign exchange losses increased $4 million compared to 2022 primarily due to:
(cid:120) Losses on other monetary revaluations compared to gains in 2022 ($23 million), unrealized foreign exchange
losses on the translation of intercompany notes ($14 million) and foreign exchange losses on the settlement of
intercompany notes compared to 2022 ($8 million);
partially offset by:
(cid:120) Unrealized foreign exchange gains on the translation of U.S. dollar risk management contracts and foreign
exchange gains on the settlement of U.S. dollar financing debt issued from Canada compared to losses in 2022
($34 million and $10 million, respectively).
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, government stimulus programs and adjustments related to
other assets.
Other gains in 2023 includes interest income of $11 million primarily generated from short-term investments. Other
gains in 2022 includes interest income of $25 million primarily associated with the resolution of prior years’ tax items.
Income Tax
($ millions)
Current Income Tax Expense (Recovery)
Deferred Income Tax Expense (Recovery)
Income Tax Expense (Recovery)
Effective Tax Rate
Income Tax Expense (Recovery)
2023 versus 2022
$
$
2023
281
144
425
$
$
2022
10
(87 )
(77 )
16.9 %
(2.2 %)
In 2023, Ovintiv recorded an income tax expense of $425 million compared to an income tax recovery of $77 million
in 2022 primarily due to changes in valuation allowances and the expected full utilization of Ovintiv’s operating losses
in Canada, resulting in current tax in 2023, partially offset by the recognition of U.S. federal and state research and
development credits in 2023 of $128 million and $8 million, respectively, associated with eligible drilling and
completion costs incurred in prior years.
The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not the tax position
will be sustained upon audit by the taxing authorities. During 2023, the Company recorded unrecognized U.S. federal
and state tax benefits of $148 million and $36 million, respectively, resulting from research and development
expenditures related to drilling and completions costs incurred in prior years. If all, or a portion of, the unrecognized
tax benefit is sustained upon examination by the taxing authorities, the tax benefit will be recognized as a reduction
to the Company’s deferred tax liability and will affect the Company’s effective tax rate in the period recognized.
Ovintiv Inc.
2023 Annual Report | 67
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, the effect of legislative changes, non-taxable items, and tax
differences on transactions.
The Company’s effective tax rate was 16.9 percent for 2023, which is lower than the U.S. federal statutory tax rate of
21 percent primarily due to the recognition of research and development credits noted above.
The Company’s effective tax rate was (2.2) percent for 2022, which was lower than the U.S. federal statutory tax rate
of 21 percent primarily due to a lower annual effective income tax rate resulting from a reduction 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.
In 2023, Canada released its draft Global Minimum Tax Act (“GMTA”), which implements the Organization for
Economic Cooperation and Development Pillar II framework, providing a global minimum tax of 15 percent. The
legislation, once enacted, will be effective as of January 1, 2024. The Company continues to evaluate the GMTA but
does not anticipate any material impact in 2024.
On August 16, 2022, the Inflation Reduction Act (“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 $1.0 billion for any 3-year period preceding the
tax year. Based on available guidance, the Company does not exceed the $1.0 billion threshold to be subject to the
CAMT in 2023 but anticipates it will be subject to the CAMT in 2024.
Additional information on income taxes can be found in Note 6 to the Consolidated Financial Statements included in
Item 8 of this Annual Report on Form 10-K.
68 | 2023 Annual Report
Ovintiv Inc.
Liquidity and Capital Resources
Sources of Liquidity
The Company has the flexibility to access cash equivalents and a range of funding alternatives at competitive rates
through committed revolving credit facilities as well as debt and equity capital markets. Ovintiv closely monitors the
accessibility of cost-effective credit and ensures that sufficient liquidity is in place to fund capital expenditures and
dividend payments. In addition, the Company may use cash and cash equivalents, cash from operating activities, or
proceeds from asset divestitures to fund its operations and capital allocation framework or to manage its capital
structure as discussed below.
The Company’s capital structure consists of total shareholders’ equity plus long-term debt, including any current
portion. The Company’s objectives when managing its capital structure are to maintain financial flexibility to preserve
Ovintiv’s access to capital markets and its ability to meet financial obligations and finance internally generated growth,
as well as potential acquisitions. Ovintiv has a practice of maintaining capital discipline and strategically managing
its capital structure by adjusting capital spending, adjusting dividends paid to shareholders, issuing new shares of
common stock, purchasing shares of common stock for cancellation or return to treasury, issuing new debt and
repaying or repurchasing existing debt.
($ millions, except as indicated)
Cash and Cash Equivalents
Available Credit Facilities
Available Uncommitted Demand Lines (1)
Issuance of U.S. Commercial Paper
Total Liquidity
Long-Term Debt, including current portion (2)
Total Shareholders’ Equity (2)
Debt to Capitalization (%) (3)
Debt to Adjusted Capitalization (%) (3)
(1)
2023
2022
$
$
$
$
3 $
3,486
234
(270)
3,453 $
5,737 $
10,370 $
36
24
5
3,500
195
(393 )
3,307
3,570
7,689
32
19
Includes three uncommitted demand lines totaling $289 million, net of $55 million in related undrawn letters of credit (2022 - $321 million
and $126 million, respectively).
Includes the impact of long-term debt and shares of common stock issued in conjunction with the Permian Acquisition.
(2)
(3) These measures are defined in the Non-GAAP Measures section of this MD&A.
The Company has full access to two committed revolving U.S. dollar denominated credit facilities totaling $3.5 billion,
which include a $2.2 billion revolving credit facility for Ovintiv Inc. and a $1.3 billion revolving credit facility for a
Canadian subsidiary (collectively, the “Credit Facilities”). The Credit Facilities, which mature in July 2026, provide
financial flexibility and allow the Company to fund its operations or capital investment program. At December 31,
2023, $14 million was outstanding under the revolving Credit Facilities.
Depending on the Company’s credit rating and market demand, the Company may issue from its two U.S. CP
programs, which include a $1.5 billion program for Ovintiv Inc. and a $1.0 billion program for a Canadian subsidiary.
As at December 31, 2023, the Company had $270 million of commercial paper outstanding under its U.S. CP program
maturing at various dates with a weighted average interest rate of approximately 6.17 percent, which is supported by
the Company’s Credit Facilities. All of Ovintiv’s credit ratings are investment grade as at December 31, 2023.
The available Credit Facilities, uncommitted demand lines, and cash and cash equivalents, net of outstanding
commercial paper provide Ovintiv with total liquidity of approximately $3.5 billion. At December 31, 2023, Ovintiv
also had approximately $55 million in undrawn letters of credit issued in the normal course of business primarily as
collateral security, related to sales arrangements.
On June 12, 2023, the Company closed the Permian Acquisition and issued approximately 31.8 million shares of
Ovintiv common stock and paid approximately $3.2 billion in cash, for total consideration of approximately $4.4
billion, which included preliminary customary closing adjustments. The cash portion of the acquisition was funded
through a combination of net proceeds from the issuance of senior unsecured notes, cash proceeds received from the
sale of the Company’s Bakken assets, cash on hand and proceeds from short-term borrowings.
Ovintiv Inc.
2023 Annual Report | 69
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 was renewed in March 2023 and expires in March 2026.
The obligations under the Company’s existing debt securities are fully and unconditionally guaranteed on a senior
unsecured basis by Ovintiv Canada ULC, an indirect wholly-owned subsidiary of the Company. Additional
information on the Company’s Canadian Operations segment and the Bow office lease can be found in the Results of
Operations section in this MD&A and the Consolidated Financial Statements included in Item 8 of this Annual Report
on Form 10-K.
Ovintiv is currently in compliance with all financial covenants under the Credit Facilities. Management monitors Debt
to Adjusted Capitalization, which is a non-GAAP measure defined in the Non-GAAP Measures section of this MD&A,
as a proxy for Ovintiv’s financial covenant under the Credit Facilities, which requires Debt to Adjusted Capitalization
to be less than 60 percent. As at December 31, 2023, the Company’s Debt to Adjusted Capitalization was 24 percent.
The definitions used in the covenant under the Credit Facilities adjust capitalization for cumulative historical ceiling
test impairments recorded in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP. Additional
information on financial covenants can be found in Note 15 to the Consolidated Financial Statements included in Item
8 of this Annual Report on Form 10-K.
The Company’s debt-based metrics have increased over the prior year primarily due to the increase in long-term debt
resulting from the Permian Acquisition in the second quarter of 2023.
70 | 2023 Annual Report
Ovintiv Inc.
Sources and Uses of Cash
During 2023, Ovintiv primarily generated cash through operating activities and received net proceeds from the
Company’s debt issuance to fund a portion of the Permian Acquisition. The following table summarizes the sources
and uses of the Company’s cash and cash equivalents.
($ millions)
Activity Type
2023
2022
Sources of Cash, Cash Equivalents and Restricted Cash
Cash from operating activities
Proceeds from divestitures
Net issuance of revolving debt
Issuance of long-term debt
Other
Uses of Cash and Cash Equivalents
Capital expenditures
Acquisitions
Corporate acquisition, net of cash acquired
Net repayment of revolving debt
Repayment of long-term debt (1)
Purchase of shares of common stock
Dividends on shares of common stock
Other
Operating $
Investing
Financing
Financing
Investing
Investing
Investing
Investing
Financing
Financing
Financing
Financing
Financing/Investing
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 and redemption of the Company’s $1.0 billion senior notes in 2022.
Operating Activities
4,167 $
772
-
2,278
-
7,217
2,744
277
3,225
109
-
426
307
122
7,210
(9 )
(2 ) $
3,866
228
393
-
103
4,590
1,831
286
-
-
1,634
719
239
69
4,778
(2 )
(190 )
Net cash from operating activities in 2023 was $4,167 million and was primarily a reflection of the impacts from
average realized commodity prices, 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 2023 was $3,899 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.
2023 versus 2022
Net cash from operating activities increased $301 million compared to 2022 primarily due to:
(cid:120) Lower realized losses on risk management in revenues compared to 2022 ($2,565 million), higher production
volumes ($1,273 million), changes in non-cash working capital ($517 million), lower production, mineral and
other taxes ($73 million), and lower transportation and processing expense ($20 million);
partially offset by:
(cid:120) Lower realized commodity prices ($3,638 million), increase in current income taxes ($271 million), higher
interest expense ($71 million), higher operating expense, excluding non-cash long-term incentive costs ($68
million), higher administrative expenses, excluding non-cash long-term incentive costs ($67 million) and lower
interest income ($14 million).
Ovintiv Inc.
2023 Annual Report | 71
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.
2023 and 2022
Net cash used in investing activities in 2023 was $5,519 million primarily due to capital expenditures and the Permian
Acquisition. Capital expenditures increased $913 million compared to 2022 primarily due to a higher capital
expenditure plan, additional capital spending associated with the Permian assets acquired in the second quarter of
2023 and sustained inflationary cost pressures.
Acquisitions in 2023, other than the Permian Acquisition, were $277 million, which primarily included property
purchases with oil and liquids-rich potential in the USA Operations (2022 - $286 million).
Corporate acquisition in 2023 was $3,225 million, which relates to the Permian Acquisition in the second quarter of
2023. Additional information regarding the Permian Acquisition can be found in Note 9 to the Consolidated Financial
Statements included in Item 8 of this Annual Report on Form 10-K.
Divestitures in 2023 were $772 million, which primarily included the sale of the Bakken assets in North Dakota and
certain properties that did not complement Ovintiv’s existing portfolio of assets. Divestitures in 2022 were $228
million, which primarily included the sale of portions of the 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.
Financing Activities
Net cash from and/or used in financing activities has been impacted by the Company’s bond offering in the second
quarter of 2023 to finance a portion of the Permian Acquisition and Ovintiv’s strategic objective to return value to
shareholders by repaying or repurchasing existing debt, purchasing shares of common stock and paying dividends.
2023 versus 2022
Net cash from financing activities in 2023 was $1,359 million compared to net cash used in financing activities of
$2,268 million in 2022. The change was primarily due to the net issuance of long-term debt in 2023 of $2,278 million
as discussed below compared to a repayment in 2022 of $1,634 million and decreased purchases of shares of common
stock in 2023 compared to 2022 ($293 million), partially offset by a repayment of revolving debt compared to a net
issuance in 2022 ($502 million) and an increase in dividend payments in 2023 ($68 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.
The Company’s long-term debt, including the current portion of $284 million, totaled $5,737 million at December 31,
2023. The Company’s long-term debt at December 31, 2022 totaled $3,570 million, including the current portion of
$393 million. As at December 31, 2023, the Company has no fixed rate long-term debt due until 2025 and beyond.
On May 31, 2023, Ovintiv completed a public offering of senior unsecured notes of $600 million with a coupon rate
of 5.65 percent due May 15, 2025, $700 million with a coupon rate of 5.65 percent due May 15, 2028, $600 million
with a coupon rate of 6.25 percent due July 15, 2033 and $400 million with a coupon rate of 7.10 percent due July 15,
2053. The net proceeds of the offering, totaling $2,278 million, were used to fund a portion of the Company’s Permian
Acquisition.
In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its capital allocation
framework to provide competitive returns to shareholders while strengthening its balance sheet. Ovintiv expects to
continue to deliver additional shareholder returns through share buybacks.
72 | 2023 Annual Report
Ovintiv Inc.
For additional information on long-term debt, refer to Note 15 to the Consolidated Financial Statements included in
Item 8 of this Annual Report on Form 10-K.
Dividends
The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.
($ millions, except as indicated)
Dividend Payments
Dividend Payments ($/share)
2023
307 $
1.15 $
2022
239
0.95
$
$
On February 27, 2024, the Board of Directors declared a dividend of $0.30 per share of common stock payable on
March 28, 2024 to common shareholders of record as of March 15, 2024.
Dividends increased $68 million compared to 2022 as a result of Ovintiv increasing its annualized dividend to $1.00
per share of common stock in the second quarter of 2022 and a further increase to an annualized dividend of $1.20 per
share of common stock in the second quarter of 2023. The dividend increase reflects the Company’s commitment to
returning capital to shareholders.
Normal Course Issuer Bid and Other Share Buybacks
On September 26, 2023, the Company announced it had received regulatory approval for the renewal of its NCIB
program, which enables the Company to purchase, for cancellation or return to treasury, up to approximately 26.7
million shares of common stock over a 12-month period from October 3, 2023 to October 2, 2024. The number of
shares authorized for purchase represents 10 percent of Ovintiv’s public float as at September 21, 2023. The Company
expects to continue to execute the renewed NCIB program in conjunction with its capital allocation framework.
During 2023, the Company purchased for cancellation, approximately 10 million shares of common stock for total
consideration of approximately $426 million. This includes the Company’s share purchases from the secondary public
offerings by NMB Stock Trust as discussed below.
On September 13, 2023, the Company purchased one million shares of Ovintiv common stock from the 15 million
shares offered for sale in an underwritten secondary public offering by NMB Stock Trust. The total consideration paid
was approximately $45 million, averaging $45.45 per share, and the shares were canceled during the third quarter of
2023.
On November 22, 2023, the Company purchased approximately 1.2 million shares of Ovintiv common stock from the
9.4 million shares offered for sale in an underwritten secondary public offering by NMB Stock Trust. The total
consideration paid was approximately $53 million, averaging $44.00 per share, and the shares were canceled during
the fourth quarter of 2023.
The two share purchases discussed above were completed in contemplation of the shareholder return framework and
were executed under the Company’s U.S. shelf registration statement.
For additional information on the NCIB, refer to Note 18 to the Consolidated Financial Statements included in Item 8
of this Annual Report on Form 10-K.
Material Cash Requirements
Ovintiv’s material cash requirements include various contractual obligations arising from long-term debt, operating
leases, risk management liabilities and asset retirement obligations which are recognized on the Company’s
Consolidated Balance Sheet. The Company expects to fund long-term material cash requirements primarily with cash
from operating activities.
Interest payments include scheduled cash payments on finance leases, long-term debt, and other obligations.
Additional information can be found in Notes 14 and 15 to the Consolidated Financial Statements included in Item 8
of this Annual Report on Form 10-K.
Ovintiv Inc.
2023 Annual Report | 73
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 14 to the Consolidated Financial Statements included in Item 8 of this
Annual Report on Form 10-K.
Risk management liabilities represent Ovintiv’s net liability positions with counterparties. 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 14 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 20, 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 17
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.
74 | 2023 Annual Report
Ovintiv Inc.
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 significant 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.
Business Combinations
Ovintiv follows the acquisition method of accounting for business
combinations. Assets acquired and liabilities assumed are recognized at
the date of acquisition at their respective estimated fair values. Any
excess of the purchase price over the fair value amounts assigned to
assets and liabilities is recorded as goodwill. Any deficiency of the
purchase price over the estimated fair values of the net assets acquired
is recorded as a gain in net earnings.
The most significant assumptions relate to the estimated fair
values assigned to proved and unproved oil and natural gas
properties. The assumptions made in performing these
valuations include discount rates, future commodity prices and
costs, the timing of development activities, projections of oil
and gas reserves, and estimates to abandon and reclaim
producing wells. Changes in key assumptions may cause the
acquisition accounting to be revised, including the recognition
of additional goodwill or discount on acquisition. There is no
assurance the underlying assumptions or estimates associated
with the valuation will occur as initially expected.
Fair value estimates are determined based on information that existed at
the time of the acquisition, utilizing expectations and assumptions that
would be available to and made by a market participant. When market-
observable prices are not available to value assets and liabilities, the
Company may use the cost, income, or market valuation approaches
depending on the quality of information available to support
management’s assumptions.
Estimated fair values assigned to assets acquired can have a
significant effect on results of operations in the future through
impairments of goodwill. In addition, differences between the
future commodity prices when acquiring assets and the
historical 12-month average trailing price to calculate ceiling
test impairments of upstream assets may impact net earnings.
Ovintiv Inc.
2023 Annual Report | 75
Description
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.
Judgments and Uncertainties
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.
The Company has assessed its goodwill for impairment at December 31,
2023 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, 2023.
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.
Asset removal technologies and costs are constantly changing,
as are regulatory, political, environmental, safety, and public
relations considerations. The asset retirement obligation is
estimated by discounting the expected future cash flows of the
settlement. The discounted cash flows are based on estimates
of such factors as reserves lives, retirement costs, timing of
settlements, credit-adjusted risk-free rates and inflation rates.
Changes in these estimates impact net earnings through
accretion of the asset retirement obligation in addition to
depletion of the asset retirement cost included in property, plant
and equipment.
Ovintiv’s derivative financial instruments primarily relate to
commodities including oil, NGLs and natural gas. The most
significant assumptions used in determining the fair value to
the Company’s commodity derivatives financial instruments
implied
include estimates of future commodity prices,
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.
76 | 2023 Annual Report
Ovintiv Inc.
Description
Judgments and Uncertainties
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.
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 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.
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 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 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 2023, the Company recorded unrecognized U.S. federal
and state tax benefits resulting from research and development
(“R&D”) expenditures related to drilling and completions costs
incurred in the prior years. Additional information on R&D
credits can be found in Note 6 to the Consolidated Financial
Statements included in Item 8 of this Annual Report on Form
10-K.
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
Ovintiv has assessed that its unremitted earnings from its
Canadian subsidiaries are permanently reinvested. As at
December 31, 2023, the Company has a taxable temporary
difference of approximately $705 million in respect of
unremitted earnings that continue to be permanently reinvested
for which a deferred income tax liability of $35 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.
Ovintiv Inc.
2023 Annual Report | 77
Description
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.
Judgments and Uncertainties
including:
for various
The establishment and evaluation of a contingent loss is based
on advice from legal counsel, advisors or consultants and
management’s judgment. Actual costs can vary from such
i) differing
reasons
estimates
interpretation of the law, opinions on responsibility and
assessments on the amount of damages; ii) changes in status of
litigation or claims and information available; iii) differing
interpretation of regulations by regulators or the courts; iv)
changes in laws and regulations; and v) additional or
developing information relating to extent and nature of
environmental remediation and technology improvements. The
Company continually monitors known and potential legal,
environmental and other claims or contingencies based on
available
facts and
circumstances not currently foreseeable could result in the
actual liabilities recorded exceeding the estimated amounts
accrued.
Future changes
information.
in
78 | 2023 Annual Report
Ovintiv Inc.
Non-GAAP Measures
Certain measures in this document do not have any standardized meaning as prescribed by U.S. GAAP and, therefore,
are considered non-GAAP measures. These measures may not be comparable to similar measures presented by other
issuers and should not be viewed as a substitute for measures reported under U.S. GAAP. These measures are
commonly used in the oil and gas industry and by Ovintiv to provide shareholders and potential investors with
additional information regarding the Company’s liquidity and its ability to generate funds to finance its operations.
Non-GAAP measures include: Non-GAAP Cash Flow, Debt to Adjusted Capitalization, Debt to EBITDA and Debt
to Adjusted EBITDA. Management’s use of these measures is discussed further below.
Cash from Operating Activities and Non-GAAP Cash Flow
Non-GAAP Cash Flow is a non-GAAP measure defined as cash from (used in) operating activities excluding net
change in other assets and liabilities, and net change in non-cash working capital.
Management believes this measure is useful to the Company and its investors as a measure of operating and financial
performance across periods and against other companies in the industry, and is an indication of the Company’s ability
to generate cash to finance capital investment programs, to service debt and to meet other financial obligations. This
measure is used, along with other measures, in the calculation of certain performance targets for the Company’s
management and employees.
($ 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
2023
4,167 $
(62)
330
3,899 $
2022
3,866
(57 )
(187 )
4,110
$
$
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, 2023 December 31, 2022
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
$
$
$
$
5,737 $
10,370
16,107 $
36%
5,737 $
10,370
7,746
23,853 $
24%
3,570
7,689
11,259
32%
3,570
7,689
7,746
19,005
19%
The increases in Debt to Capitalization and Debt to Adjusted Capitalization are primarily due to the increase in long-
term debt resulting from the Permian Acquisition in the second quarter of 2023.
Ovintiv Inc.
2023 Annual Report | 79
Debt to EBITDA and Debt to Adjusted EBITDA
Debt to EBITDA and Debt to Adjusted EBITDA are non-GAAP measures. EBITDA is defined as trailing 12- month
net earnings (loss) before income taxes, depreciation, depletion and amortization, and interest. Adjusted EBITDA is
EBITDA adjusted for impairments, accretion of asset retirement obligation, unrealized gains/losses on risk
management, foreign exchange gains/losses, gains/losses on divestitures and other gains/losses.
Management believes these measures are useful to the Company and its investors as a measure of financial leverage
and the Company’s ability to service its debt and other financial obligations. These measures are used, along with
other measures, in the calculation of certain financial performance targets for the Company’s management and
employees.
($ millions, except as indicated)
December 31, 2023 December 31, 2022
Debt (Long-Term Debt, including Current Portion)
$
5,737 $
Net Earnings (Loss)
Add back (deduct):
Depreciation, depletion and amortization
Interest
Income tax expense (recovery)
EBITDA
Debt to EBITDA (times)
Debt (Long-Term Debt, including current portion)
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)
2,085
1,825
355
425
4,690 $
1.2
5,737 $
2,085
1,825
19
355
(194)
19
(20)
425
4,514 $
1.3
$
$
$
3,570
3,637
1,113
311
(77 )
4,984
0.7
3,570
3,637
1,113
18
311
(741 )
15
(33 )
(77 )
4,243
0.8
The increases in Debt to EBITDA and Debt to Adjusted EBITDA are primarily due to the increase in long-term debt
resulting from the Permian Acquisition. EBITDA and Adjusted EBITDA only include the results of operations from
the acquired Permian assets for the post-acquisition period from June 12, 2023 to December 31, 2023.
80 | 2023 Annual Report
Ovintiv 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, 2023
10% Price
Increase
10% Price
Decrease
(97 ) $
(2 )
(44 )
95
2
45
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
2023
2022
1.350
1.323
1.301
1.354
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.
2023
2022
$ millions
$/BOE
$ millions
$/BOE
$
(13 )
(34 ) $
(5 )
(9 )
(8 )
$
(0.17 )
(0.02 )
(0.04 )
(0.04 )
(14)
(34) $
(4)
(4)
(11)
(0.18 )
(0.02 )
(0.02 )
(0.06 )
Ovintiv Inc.
2023 Annual Report | 81
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, 2023, Ovintiv has entered into
$400 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3592 to US$1,
which mature monthly throughout 2024.
As at December 31, 2023, Ovintiv did not have any U.S. dollar denominated financing debt issued from Canada that
was subject to foreign exchange exposure.
The table below summarizes the sensitivity to foreign exchange rate fluctuations, with all other variables held constant.
The Company has used a 10 percent variability to assess the potential impact from Canadian to U.S. foreign currency
exchange rate changes. Fluctuations in foreign currency exchange rates could have resulted in unrealized gains (losses)
impacting pre-tax net earnings as follows:
(US$ millions)
Foreign currency exchange
INTEREST RATE RISK
December 31, 2023
10% Rate
Increase
130 $
10% Rate
Decrease
(159 )
$
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, 2023, Ovintiv had floating rate revolving credit and term loan borrowings of $284 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 $3 million (2022 - $4 million).
82 | 2023 Annual Report
Ovintiv 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, 2023. 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, 2023, 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, 2024
/s/ Corey D. Code
Corey D. Code
Executive Vice-President &
Chief Financial Officer
Ovintiv Inc.
2023 Annual Report | 83
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, 2023 and 2022, 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, 2023, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2023 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, 2023, 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
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
84 | 2023 Annual Report
Ovintiv Inc.
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 matters communicated below are matters arising from the current period audit of the Consolidated
Financial Statements that were communicated or required to be communicated to the audit committee and that (i) relate
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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
The impact of estimates of proved oil, natural gas liquids (“NGL”), and natural gas reserves on net oil and natural
gas proved properties
As described in Notes 1 and 10 to the Consolidated Financial Statements, the Company has a net oil and natural gas
proved properties balance of $12,953 million as of December 31, 2023 and depreciation, depletion, and amortization
(“DD&A”) expense of $1,825 million for the year ended December 31, 2023. 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. Proved oil, NGL and natural gas reserves are
those quantities of oil and natural gas, which 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 and future production and development costs. 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 internal reservoir 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) the 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 and future production and development costs.
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
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
reasonableness 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 and future production and development costs. 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.
Ovintiv Inc.
2023 Annual Report | 85
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 evaluating the methods and assumptions used
by the specialists, testing the completeness and accuracy of the data used by the specialists, and evaluating the
specialists’ findings. Evaluating the significant assumptions also involved evaluating whether the assumptions used
were reasonable considering the current and past performance of the Company, external market and industry data and
whether they were consistent with evidence obtained in other areas of the audit, as applicable.
Permian Acquisition - Valuation of proved and unproved oil, NGL, and natural gas properties
As described in Notes 1 and 9 to the Consolidated Financial Statements, on June 12, 2023 the Company completed a
business combination to purchase all outstanding equity interests in seven Delaware limited liability companies (the
“Permian Acquisition”). The transaction was accounted for under the acquisition method, which requires that assets
acquired, and liabilities assumed be recognized at their fair values as of the acquisition date. The purchase price of the
transaction was for total consideration of $4,410 million. The assets acquired included proved and unproved oil, NGL,
and natural gas properties (the “Proved and Unproved Properties”) which were valued at $3,727 million and $933
million, respectively. Management estimated the fair values of the acquired Proved and Unproved Properties at the
acquisition date using an income approach valuation technique. These fair value assessments required the use of
significant estimates and judgments by management including assumptions related to discount rates, future commodity
prices and costs, as well as projections of oil, NGL and natural gas reserves. In determining the estimates of the
reserves for the acquired Proved and Unproved Properties, management utilizes the services of specialists, specifically
internal reservoir engineers.
The principal considerations for our determination that performing procedures relating to the valuation of Proved and
Unproved Properties acquired in the Permian Acquisition is a critical audit matter are (i) the judgment by management,
including the use of management’s specialists, in developing the fair value measurement of Proved and Unproved
Properties acquired, (ii) a high degree of auditor judgment, effort and subjectivity in performing procedures and
evaluating significant assumptions used in developing those estimates including discount rates, future commodity
prices and costs, as well as projections of oil, NGL and natural gas reserves, and (iii) the audit effort involved the use
of professionals with specialized skill and knowledge.
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 determination of the fair values of the acquired Proved and Unproved Properties.
These procedures also included, among others, testing management’s process for determining the fair values of the
acquired Proved and Unproved Properties which included (i) evaluating the appropriateness of the income approach
valuation technique used by management in making the estimates, (ii) testing the completeness and accuracy of
underlying data used in management’s determination of the fair values and (iii) evaluating the reasonableness of
significant assumptions used by management related to future commodity prices and costs as well as projections of
oil, NGL and natural gas reserves. Evaluating the significant assumptions involved assessing whether the assumptions
used were reasonable considering the past performance of similar properties owned by the Company, external market
and industry data and whether they were consistent with evidence obtained in other areas of the audit, as applicable.
The work of management’s specialists was used in performing procedures to evaluate the reasonableness of the
projections of 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
evaluating the methods and assumptions used by the specialists, testing the completeness and accuracy of the data
used by the specialists, and evaluating the specialists’ findings. Professionals with specialized skill and knowledge
were used to assist in evaluating the appropriateness of the income approach valuation technique and the
reasonableness of the discount rates.
/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants
Calgary, Canada
February 27, 2024
We have served as the Company’s or its predecessors’ auditor since 1958.
86 | 2023 Annual Report
Ovintiv Inc.
Consolidated Statement of Earnings
For the years ended December 31 (US$ millions, except per share amounts)
2023
2022
2021
Revenues
Product and service revenues
Gains (losses) on risk management, net
Sublease revenues
Total Revenues
Operating Expenses
Production, mineral and other taxes
Transportation and processing
Operating
Purchased product
Depreciation, depletion and amortization
Accretion of asset retirement obligation
Administrative
Total Operating Expenses
Operating Income (Loss)
Other (Income) Expenses
Interest
Foreign exchange (gain) loss, net
Other (gains) losses, net
Total Other (Income) Expenses
Net Earnings (Loss) Before Income Tax
Income tax expense (recovery)
Net Earnings (Loss)
Net Earnings (Loss) per Share of Common Stock
Basic
Diluted
(Note 2)
(Note 3) $
(Note 24)
(Note 14)
(Note 2)
10,661 $
151
71
10,883
14,263 $
(1,867 )
68
12,464
10,468
(1,883 )
73
8,658
(Notes 14, 21, 22)
(Note 17)
(Notes 9, 14, 21, 22)
(Notes 4, 15)
(Notes 5, 24)
(Notes 6, 22)
(Note 6)
$
(Note 18)
$
342
1,766
859
2,815
1,825
19
393
8,019
2,864
355
19
(20 )
354
2,510
425
2,085 $
8.02 $
7.90
259.9
263.9
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
1,239
(177 )
1,416
5.44
5.32
260.4
266.4
Weighted Average Shares of Common Stock Outstanding (millions)
(Note 18)
Basic
Diluted
Consolidated Statement of Comprehensive Income
For the years ended December 31 (US$ millions)
2023
2022
2021
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
$
2,085
$
3,637
$
1,416
(Note 19)
(Notes 19, 22)
63
(4 )
59
(107 )
6
(101 )
2
14
16
$
2,144
$
3,536
$
1,432
Ovintiv Inc.
2023 Annual Report | 87
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 $5 million (2022: $4 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
2023 issued and outstanding: 271.7 million shares (2022: 245.7 million shares)
Paid in surplus
Retained earnings (Accumulated deficit)
Accumulated other comprehensive income
Total Shareholders’ Equity
2023
2022
$
3
$
(Notes 3, 7)
(Notes 23, 24)
(Note 6)
(Note 10)
(Note 2)
(Notes 11, 14)
(Notes 23, 24)
(Note 6)
(Notes 2, 12)
(Note 2) $
(Note 13) $
(Note 14)
(Note 6)
(Notes 23, 24)
(Note 15)
(Note 15)
(Note 14)
(Notes 14, 16)
(Notes 23, 24)
(Note 17)
(Note 6)
(Note 26)
(Note 18)
(Note 18)
(Note 19)
$
1,442
214
17
1,676
64,084
1,486
907
66,477
(51,837 )
14,640
1,015
4
53
2,599
19,987
$
$
2,209
87
232
-
284
2,812
5,453
832
132
2
276
110
9,617
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
8,620
697
1,050
10,370
19,987
$
3
7,776
(1,081 )
991
7,689
15,056
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
88 | 2023 Annual Report
Ovintiv Inc.
Consolidated Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2023 (US$ millions)
Share
Capital
Paid in
Surplus
Retained
Earnings
(Accumulated
Accumulated
Other
Comprehensive
Total
Shareholders’
Deficit)
Income
Equity
Dividends on Shares of Common Stock ($1.15 per share)
Balance, December 31, 2022
Net Earnings (Loss)
Shares of Common Stock Purchased
Shares of Common Stock Issued
Equity-Settled Compensation Costs
Other Comprehensive Income (Loss)
Balance, December 31, 2023
$
3
$ 7,776
$
(1,081 )
$
991
$
-
-
-
-
-
-
-
-
(426)
1,169
101
-
2,085
(307 )
-
-
-
-
-
-
-
-
-
59
(Note 18)
(Note 18)
(Notes 9, 18, 25)
(Note 19)
$
3
$ 8,620
$
697
$
1,050
$
10,370
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
Equity-Settled Compensation Costs
Other Comprehensive Income (Loss)
Balance, December 31, 2022
Share
Capital
Paid in
Surplus
Retained
Earnings
(Accumulated
Accumulated
Other
Comprehensive
Total
Shareholders’
Deficit)
Income
Equity
$
3
$ 8,458
$
(4,479 )
$
1,092
$
-
-
-
-
-
-
-
(719)
37
-
3,637
(239 )
-
-
-
-
-
-
-
(101 )
(Note 18)
(Note 18)
(Note 19)
$
3
$ 7,776
$
(1,081 )
$
991 $
7,689
For the year ended December 31, 2021 (US$ millions)
Share
Capital
Paid in
Surplus
Retained
Earnings
(Accumulated
Accumulated
Other
Comprehensive
Total
Shareholders’
Deficit)
Income
Equity
Balance, December 31, 2020
Net Earnings (Loss)
Dividends on Shares of Common Stock ($0.4675 per share)
Shares of Common Stock Purchased
Equity-Settled Compensation Costs
Other Comprehensive Income (Loss)
Balance, December 31, 2021
(Note 18)
(Note 18)
(Note 19)
$
$
3
$ 8,531
$
(5,773 )
$
1,076
$
-
-
-
-
-
-
-
(111)
38
-
1,416
(122 )
-
-
-
-
-
-
-
16
3
$ 8,458
$
(4,479 )
$
1,092 $
5,074
7,689
2,085
(307 )
(426 )
1,169
101
59
5,074
3,637
(239 )
(719 )
37
(101 )
3,837
1,416
(122 )
(111 )
38
16
See accompanying Notes to Consolidated Financial Statements
Ovintiv Inc.
2023 Annual Report | 89
Consolidated Statement of Cash Flows
For the years ended December 31 (US$ millions)
2023
2022
2021
Operating Activities
Net earnings (loss)
Depreciation, depletion and amortization
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
Corporate acquisition, net of cash acquired
Proceeds from divestitures
Net change in investments and other
Cash From (Used in) Investing Activities
Financing Activities
Net issuance (repayment) of revolving debt
Issuance of 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
$
3,637
$
$
(Note 17)
(Note 6)
(Note 24)
(Note 5)
(Note 5)
(Note 25)
(Note 2)
(Note 8)
(Note 9)
(Note 8)
(Note 15)
(Note 15)
(Note 15)
(Note 18)
(Note 18)
2,085
1,825
19
144
(194 )
(6 )
6
20
(62 )
330
4,167
(2,744 )
(277 )
(3,225 )
772
(45 )
(5,519 )
(109 )
2,278
-
(426 )
(307 )
(77 )
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 )
1,416
1,190
22
(21)
488
21
(11)
104
(39)
(41)
3,129
(1,519)
(11)
-
1,025
(20)
(525)
(950)
-
(1,137)
(111)
(122)
(99)
1,359
(2,268 )
(2,419)
(9 )
(2 )
5
3
3
-
-
3
$
$
$
(2 )
(190 )
195
5
$
5
-
-
5
$
$
-
185
10
195
26
169
-
195
$
$
$
Supplementary Cash Flow Information
(Note 25)
See accompanying Notes to Consolidated Financial Statements
90 | 2023 Annual Report
Ovintiv 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.
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. Ovintiv’s 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.
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.
Significant items subject to estimates and assumptions are:
(cid:120) Estimates of proved reserves used for depletion and ceiling test impairment calculations
(cid:120) Estimated fair value of long-term assets used for impairment calculations
(cid:120) Fair value of reporting units used for the assessment of goodwill
(cid:120) 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) Fair value of derivative instruments
(cid:120) Fair value attributed to assets acquired and liabilities assumed in business combinations
Ovintiv Inc.
2023 Annual Report | 91
(cid:120) Tax interpretations, regulations and legislation in the various jurisdictions in which the Company and its
subsidiaries operate
(cid:120) 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) 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) 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.
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
92 | 2023 Annual Report
Ovintiv Inc.
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.
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.
Ovintiv Inc.
2023 Annual Report | 93
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. 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.
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.
94 | 2023 Annual Report
Ovintiv Inc.
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
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
Ovintiv Inc.
2023 Annual Report | 95
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) Level 1 - Inputs represent quoted prices in active markets for identical assets or liabilities, such as exchange-
traded commodity derivatives.
(cid:120) 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) Level 3 - Inputs that are not observable from objective sources, such as forward prices supported by little or
no market activity or internally developed estimates of future cash flows used in a present value model.
In determining fair value, the Company utilizes the most observable inputs available. If a fair value measurement
reflects inputs at multiple levels within the hierarchy, the fair value measurement is characterized based on the lowest
level of input that is significant to the fair value measurement.
The carrying amount of cash and cash equivalents, accounts receivable and accrued revenues, and accounts payable
and accrued liabilities reported in the Consolidated Balance Sheet approximates fair value. The fair value of long-term
debt is disclosed in Note 15. Fair value information related to pension plan assets is included in Note 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.
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.
96 | 2023 Annual Report
Ovintiv Inc.
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.
Y) RECENT ACCOUNTING PRONOUNCEMENTS
New Standards Issued Not Yet Adopted
(cid:120) As of January 1, 2024, Ovintiv will be required to adopt ASU 2023-07 “Improvements to Reportable Segment
Disclosures”. The amendments enhance annual disclosure requirements about significant segment expenses
that are regularly provided to the chief operating decision maker and included within reported measures of
segment profit or loss. In addition, all annual disclosures are to be presented in interim periods beginning in
the first quarter of 2025. The amendments will be applied retrospectively to all prior periods presented on the
date of adoption and are not expected to have a material impact on the Company’s Consolidated Financial
Statements.
(cid:120) As of January 1, 2025, Ovintiv will be required to adopt ASU 2023-09 “Improvements to Income Tax
Disclosures”. The standard requires disaggregated information about the Company’s effective tax rate
reconciliation as well as information on income taxes paid. The amendment requires the tabular rate
reconciliation to be presented using both percentages and amounts, with additional separate disclosure for
any reconciling items within certain categories equal to or greater than five percent of net earnings or loss
before income tax and the applicable statutory federal income tax rate. The amendment also requires the
disaggregation of income taxes paid by federal, state, and foreign jurisdictions, as well as additional
disaggregated information on income taxes paid to an individual jurisdiction equal to or greater than
five percent of total income taxes paid. Amendments will be applied prospectively at the date of adoption
and are not expected to have a material impact on the Company’s Consolidated Financial Statements.
Ovintiv Inc.
2023 Annual Report | 97
2. Segmented Information
Ovintiv’s reportable segments are determined based on the following operations and geographic locations:
(cid:120) 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) 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) 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.
98 | 2023 Annual Report
Ovintiv Inc.
Results of Operations
Segment Information
For the years ended December 31
2023
2022
2021
2023
2022
2021
2023
2022
2021
USA Operations
Canadian Operations
Market Optimization
Revenues
Product and service revenues
Gains (losses) on risk management, net
Sublease revenues
Total Revenues
Operating Expenses
$ 5,570 $ 6,680 $ 4,883 $ 2,215 $ 3,476 $ 2,542 $ 2,876 $ 4,107 $ 3,043
-
-
3,043
(413)
(982 )
-
-
5,580 5,557 3,901 2,162 1,991 2,129
(53) (1,485 )
-
10 (1,123 )
-
-
-
4,107
-
-
2,876
-
-
Production, mineral and other taxes
327
Transportation and processing
547
Operating
743
-
Purchased product
Depreciation, depletion and amortization 1,519
Total Operating Expenses
401
626
646
-
861
15
937
111
-
332
3,136 2,534 2,112 1,445 1,378 1,395
$ 2,444 $ 3,023 $ 1,789 $ 717 $ 613 $ 734 $
278
14
15
507 1,056 1,002
127
88
490
-
-
-
235
286
837
Operating Income (Loss)
-
163
28
2,815
-
3,006
(130 ) $
-
158
29
4,055
-
4,242
(135) $
-
172
25
2,951
-
3,148
(105 )
Revenues
Product and service revenues
Gains (losses) on risk management, net
Sublease revenues
Total Revenues
Operating Expenses
Production, mineral and other taxes
Transportation and processing
Operating
Purchased product
Depreciation, depletion and amortization
Accretion of asset retirement obligation
Administrative
Total Operating Expenses
Operating Income (Loss)
Other (Income) Expenses
Interest
Foreign exchange (gain) loss, net
Other (gains) losses, net
Total Other (Income) Expenses
Net Earnings (Loss) Before Income Tax
Income tax expense (recovery)
Net Earnings (Loss)
Corporate & Other
2023
2022
2021
Consolidated
2022
2023
2021
$
- $
194
71
265
- $
741
68
809
(488)
73
- $ 10,661 $ 14,263 $ 10,468
(1,883 )
73
8,658
(1,867)
151
68
71
(415) 10,883 12,464
-
-
-
-
20
19
393
432
-
-
(1)
-
21
22
442
484
$ (167) $ 352 $ (899)
-
-
-
-
17
18
422
457
342
1,766
859
2,815
1,825
19
393
8,019
2,864
415
1,786
802
4,055
1,113
18
422
8,611
3,853
293
1,616
625
2,951
1,190
22
442
7,139
1,519
355
19
(20 )
354
2,510
425
340
(23 )
(37 )
280
1,239
(177 )
$ 2,085 $ 3,637 $ 1,416
311
15
(33)
293
3,560
(77)
Ovintiv Inc.
2023 Annual Report | 99
Intersegment Information
For the years ended December 31
Marketing Sales
2022
2023
2021
Market Optimization
Upstream Eliminations
2023
2022
2021
Total
2023
2022
2021
Revenues
$ 11,474
$ 15,622
$ 10,630
$ (8,598 )
$ (11,515 )
$ (7,587 )
$ 2,876
$ 4,107
$ 3,043
Operating Expenses
Transportation and processing
Operating
Purchased product
Operating Income (Loss)
699
28
10,877
$
(130)
646
29
15,082
(135 )
$
571
25
10,140
(106 )
$
(536 )
-
(8,062 )
-
(488 )
-
(11,027 )
-
$
$
(399 )
-
(7,189 )
1
$
$
163
28
2,815
(130 )
$
158
29
4,055
(135 )
$
172
25
2,951
(105 )
Revenues by Geographic Region
For the years ended December 31
United States
2022
2023
2021
2023
2022
2021
2023
2022
2021
Canada
Total
Revenues
Product revenues (1)
Oil
NGLs
Natural gas
Other revenues (2)
Gains (losses) on risk
management, net
Total Revenues
$ 4,431
676
458
$ 4,524
1,045
1,108
$ 3,357
862
664
$
3
1,023
1,186
$
3
1,358
2,104
$
7
1,158
1,368
$ 4,434
1,699
1,644
$ 4,527
2,403
3,212
$ 3,364
2,020
2,032
2,649
3,679
2,785
306
510
340
2,955
4,189
3,125
104
$ 8,318
(796 )
$ 9,560
(1,160 )
$ 6,508
47
$ 2,565
(1,071 )
$ 2,904
(723 )
$ 2,150
151
$ 10,883
(1,867 )
$ 12,464
(1,883 )
$ 8,658
(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, 2023, the Company had one customer which individually accounted for more than 10 percent of
Ovintiv’s product revenues. Sales to this customer, secured by a financial institution with an investment grade credit
rating, totaled approximately $1,976 million which comprised $1,961 million in the United States and $15 million in
Canada (2022 - one customer with sales of approximately $2,231 million; 2021 - one customer with sales of
approximately $1,573 million).
Capital Expenditures by Segment
For the years ended December 31
2023
2022
2021
USA Operations
Canadian Operations
Corporate & Other
$
$
2,189 $
549
6
2,744 $
1,493 $
334
4
1,831 $
1,125
391
3
1,519
Goodwill, Property, Plant and Equipment and Total Assets by Segment
As at December 31
USA Operations
Canadian Operations
Market Optimization
Corporate & Other
Goodwill
2023
1,938 $
661
-
-
2,599 $
$
$
Property, Plant and Equipment
2022
2023
2022
Total Assets
2023
2022
1,938 $
646
-
-
2,584 $
13,129 $
1,357
-
154
14,640 $
8,259 $
1,044
-
165
9,468 $
16,033 $
2,404
232
1,318
19,987 $
11,043
2,075
446
1,492
15,056
100 | 2023 Annual Report
Ovintiv Inc.
Goodwill, Property, Plant and Equipment and Total Assets by Geographic Region
As at December 31
United States
Canada
Goodwill
2023
Property, Plant and Equipment
2022
2023
2022
Total Assets
2023
2022
$
$
1,938 $
661
2,599 $
1,938 $
646
2,584 $
13,178 $
1,462
14,640 $
8,316 $
1,152
9,468 $
16,500 $
3,487
19,987 $
11,749
3,307
15,056
3. Revenues from Contracts with Customers
The following table summarizes Ovintiv’s revenues from contracts with customers.
Revenues
For the years ended December 31
2023
2022
2021
2023
2022
2021
2023
2022
2021
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
$ 4,444 $ 4,537 $ 3,369 $
3 $
3 $
679 1,049
458 1,107
864 1,029 1,363 1,163
664 1,192 2,119 1,377
7 $ 2,592 $ 3,415 $ 2,268
42
704
19
646
26
231
5
5
$ 5,586 $ 6,696 $ 4,897 $ 2,226 $ 3,487 $ 2,552 $ 2,849 $ 4,080 $ 3,019
2
2
3
-
-
-
5
Corporate & Other
2023
2022
2021
Consolidated
2022
2023
2021
$
$
- $
-
-
-
- $
- $
-
-
-
- $
- $ 7,039 $ 7,955 $ 5,644
- 1,734 2,431 2,069
- 1,881 3,872 2,745
-
10
- $ 10,661 $ 14,263 $ 10,468
7
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, 2023, receivables and accrued revenues from contracts
with customers were $1,070 million (2022 - $1,257 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, 2023.
As at December 31, 2023, all remaining performance obligations are priced at market index prices or are variable
volume delivery contracts. As such, the variable consideration is allocated entirely to the wholly unsatisfied
performance obligation or promise to deliver units of production, and revenue is recognized at the amount for which
the Company has the right to invoice the product delivered. As the period between when the product sales are
transferred and Ovintiv receives payments is generally 30 to 60 days, there is no financing element associated with
Ovintiv Inc.
2023 Annual Report | 101
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 14)
Other
2023
2022
2021
$
$
343 $
2
10
355 $
297 $
2
12
311 $
323
3
14
340
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 as discussed in Note 15. Additionally, interest
expense on debt for the year ended December 31, 2022, includes a make-whole interest payment of $47 million
(2021 - $19 million) resulting from the early redemption of certain of the Company's senior notes and $30 million in
non-cash fair value amortization related to the redemption of those senior notes which were previously acquired
through a business combination (see Note 15).
5. Foreign Exchange (Gain) Loss, Net
For the years ended December 31
2023
2022
2021
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
6.
Income Taxes
The provision for income taxes is as follows:
For the years ended December 31
Current Tax
United States
Canada
Total Current Tax Expense (Recovery)
Deferred Tax
United States
Canada
Total Deferred Tax Expense (Recovery)
Income Tax Expense (Recovery)
$
$
$
$
- $
(20 )
14
(6 )
(2 )
8
8
11
19 $
- $
14
-
14
8
5
-
(12 )
15 $
1
20
-
21
(8 )
(33 )
(3 )
-
(23 )
2023
2022
2021
12 $
269
281
248
(104 )
144
425 $
10 $
-
10
(275 )
188
(87 )
(77 ) $
-
(156 )
(156 )
1
(22 )
(21 )
(177 )
102 | 2023 Annual Report
Ovintiv Inc.
During the year ended December 31, 2023, the current income tax expense was primarily due to the full utilization of
Ovintiv’s operating losses in Canada and recognition of prior year deferred income, resulting in current tax in 2023.
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, 2023, the deferred tax expense was primarily due to taxes on U.S. earnings,
offset by the recognition of U.S. federal and state research and development credits of $128 million and $8 million,
respectively, associated with eligible drilling and completions costs incurred in prior years. In addition, the deferred
tax recovery in Canada is primarily resulting from the recognition of prior year deferred income as discussed above.
The following table reconciles income taxes calculated at the applicable statutory rate with the actual income taxes:
For the years ended December 31
2023
2022
2021
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
Research & development credits
Non-taxable items
Amounts in respect of prior periods
Change in valuation allowance
Other
Effective Tax Rate
$
$
2,510
$
21.0 %
527
23
20
(128 )
10
(19 )
(18 )
10
425
$
16.9 %
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 %)
During the year ended December 31, 2023, a valuation allowance of $18 million was reversed primarily related to
operating losses and Canadian net capital losses. 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.
The effective tax rate of 16.9 percent for the year ended December 31, 2023 is lower than the U.S. federal statutory
tax rate of 21 percent primarily due to the recognition of research and development credits described above.
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. 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.
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.
Ovintiv Inc.
2023 Annual Report | 103
The net deferred income tax asset (liability) consists of:
As at December 31
Deferred Income Tax Assets
Net operating and net capital losses carried forward
General business credits
Compensation plans
Other
Less: valuation allowance
Deferred Income Tax Liabilities
Property, plant and equipment
Risk management
Deferred income
Other
Net Deferred Income Tax Asset (Liability)
2023
2022
1,874 $
146
60
15
(1,340 )
(744 )
(49 )
-
(19 )
(57 ) $
2,290
10
72
8
(1,326 )
(676 )
(10 )
(248 )
(33 )
87
$
$
As at December 31, 2023, Ovintiv has a valuation allowance against certain U.S. federal and state losses as well as
foreign tax credits in the amount of $39 million (2022 - $47 million related to U.S. federal and state losses) and
Canadian net capital losses in the amount of $1,301 million (2022 - $1,279 million) as it is more likely than not that
these benefits will not be realized based on expected future taxable earnings as determined in accordance with the
Company’s accounting policies.
The net deferred income tax asset (liability) for the following jurisdictions is reflected in the Consolidated Balance
Sheet as follows:
As at December 31
Deferred Income Tax Assets
United States
Canada
Deferred Income Tax Liabilities
United States
Canada
Net Deferred Income Tax Asset (Liability)
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
2023
2022
53 $
-
53
(28 ) $
(82 )
(110 )
(57 ) $
271
-
271
-
(184 )
(184 )
87
2023 Expiration Date
9,982
2,500
146
1,065
5,479
Indefinite
2024 - 2038 (1)
2032 - 2044
Indefinite
Indefinite
$
$
$
$
$
(1)
Includes net operating losses of $1,187 million which have an indefinite expiration date.
As at December 31, 2023, the Company had a taxable temporary difference of approximately $705 million
(2022 - $339 million) in respect of unremitted earnings that continue to be permanently reinvested for which a deferred
income tax liability of $35 million (2022 - $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.
104 | 2023 Annual Report
Ovintiv Inc.
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
Settlements
Foreign currency translation
Balance, End of Year
2023
2022
$
$
(9 ) $
(184 )
6
-
(187 ) $
(10 )
-
-
1
(9 )
The unrecognized tax benefit is reflected in the Consolidated Balance Sheet as follows:
As at December 31
Income Tax Payable
Other Liabilities and Provisions
Deferred Income Tax Liability
Balance, End of Year
2023
2022
$
$
(2 ) $
(16 )
(169 )
(187 ) $
(1 )
-
(8 )
(9 )
The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not the tax position
will be sustained upon audit by the taxing authorities. During the year ended December 31, 2023, the Company
recorded unrecognized U.S. federal and state tax benefits of $148 million and $36 million, respectively, resulting from
research and development expenditures related to drilling and completions costs incurred in prior years.
If recognized, all of Ovintiv’s unrecognized tax benefits as at December 31, 2023 would affect Ovintiv’s effective
income tax rate. The nature of the unrecognized tax benefits is highly uncertain. As at December 31, 2023, 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 2023,
Ovintiv recognized an expense of nil (2022 - nil; 2021 - recovery of $6 million) in interest expense. As at
December 31, 2023, Ovintiv had no liability recorded (2022 - 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
2019 - 2023
2018 - 2023
2015 - 2023
2015 - 2023
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.
Ovintiv Inc.
2023 Annual Report | 105
7. Accounts Receivable and Accrued Revenues
As at December 31
2023
2022
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
$
$
900 $
170
244
-
19
1,333
55
59
1,447
(5 )
1,442 $
881
376
200
7
26
1,490
38
70
1,598
(4 )
1,594
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, 2023, the current period expected credit loss allowance was $5 million
(2022 - $4 million). See Note 24 for more information on credit risk exposures.
106 | 2023 Annual Report
Ovintiv Inc.
8. Acquisitions and Divestitures
For the years ended December 31
2023
2022
2021
Acquisitions
USA Operations
Canadian Operations
Total Acquisitions
Divestitures
USA Operations
Canadian Operations
Total Divestitures
Net Acquisitions & (Divestitures)
ACQUISITIONS
$
$
271 $
6
277
(771 )
(1 )
(772 )
(495 ) $
277 $
9
286
(230 )
2
(228 )
58 $
11
-
11
(772 )
(253 )
(1,025 )
(1,014 )
Acquisitions in the USA Operations in 2023 primarily included property purchases in Permian and Uinta with oil and
liquids-rich potential. Acquisitions in the USA Operations in 2022 primarily included property purchases in Permian
with oil and liquids-rich potential.
DIVESTITURES
USA Operations
In 2023, divestitures in the USA Operations primarily included the sale of Bakken located in North Dakota for
proceeds of approximately $734 million, after closing and other adjustments.
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.
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.
Amounts received from the Company’s divestiture transactions have been deducted from the respective U.S. and
Canadian full cost pools.
9. Business Combination
Acquisition of Midland Basin Assets (“Permian Acquisition”)
On June 12, 2023, Ovintiv completed a business combination to purchase all of the outstanding equity interests in
seven Delaware limited liability companies (“Permian LLCs”) pursuant to the purchase agreement with Black Swan
Oil & Gas, LLC, PetroLegacy II Holdings, LLC, Piedra Energy III Holdings, LLC and Piedra Energy IV Holdings,
LLC, which are portfolio companies of funds managed by EnCap Investments L.P (“EnCap”). The Company paid
aggregate cash consideration of approximately $3.2 billion and issued approximately 31.8 million shares of Ovintiv
common stock, representing a value of approximately $1.2 billion, and is subject to final closing adjustments under
the purchase agreement which is expected to be finalized by the end of March 31, 2024. The cash portion of the
Ovintiv Inc.
2023 Annual Report | 107
consideration was funded through a combination of net proceeds from the Company’s May 2023 senior notes offering
(see Note 15), net proceeds from the sale of Bakken (see Note 8), cash on hand and proceeds from short-term
borrowings. Transaction costs of approximately $76 million were included in administrative expense.
The acquisition is strategically located in close proximity to Ovintiv’s current Permian operations and adds
approximately 1,050 net well locations to Ovintiv’s existing Permian inventory and approximately 65,000 net acres.
The assets acquired generated revenues of $1.1 billion and direct operating expenses of $206 million for the period
from June 12, 2023, to December 31, 2023. The results of operations from the acquired Permian assets have been
included in Ovintiv’s consolidated financial statements as of June 12, 2023.
Purchase Price Allocation
The Permian LLCs have been accounted for under the acquisition method and as a single transaction because the
purchase agreement was entered into at the same time with EnCap and in contemplation of one another to achieve an
overall economic effect. The purchase price allocations represent the consideration paid and the fair values of the
assets acquired, and liabilities assumed as of the acquisition date.
The preliminary purchase price allocation was based on the initial valuations from estimates and assumptions that
management believes are reasonable. These will be subject to change based on the determination of the final closing
adjustments and when the remaining information necessary to complete the valuation is obtained. The Company
expects the purchase price allocation to be completed by March 31, 2024, and the value of net assets and liabilities
acquired may be revised as appropriate until it is finalized.
Preliminary Purchase Price Allocation
Consideration:
Fair value of shares of Ovintiv common stock issued (1)
Consideration paid in cash (2)
Total Consideration
Assets Acquired:
Cash and cash equivalents
Accounts receivable and accrued revenues (3)
Proved properties (3)
Unproved properties (3)
Other property, plant and equipment (3)
Liabilities Assumed:
Accounts payable and accrued liabilities (3)
Asset retirement obligation
Other liabilities and provisions
Total Purchase Price
$
$
$
$
1,169
3,241
4,410
16
202
3,727
933
17
(451)
(28)
(6)
4,410
(1) The fair value was based on the issuance of 31.8 million shares of common stock using the NYSE price of $36.78 on June 12, 2023.
(2) The consideration is still subject to final closing adjustments and is expected to be finalized by March 31, 2024.
(3) Since the completion of the business combination on June 12, 2023, additional information related to pre-acquisition assets and liabilities was
obtained resulting in measurement period adjustments. Changes in the fair value estimates comprised an increase in accounts receivable and
accrued revenues of $22 million, an increase in proved properties of $134 million, a decrease in unproved properties of $208 million, a
decrease in other property, plant and equipment of $16 million, and a decrease in accounts payable and accrued liabilities of $68 million.
The Company used the income approach valuation technique for the fair value of assets acquired and liabilities
assumed. The carrying amounts of cash, accounts receivable and accounts payable approximate their fair values due
to their nature and/or short-term maturity of the instruments. The fair value of tubular inventory in other property,
plant and equipment was based on the fair value approach, which utilized recent sales of inventory, asset listings and
records with consideration for the relative age, condition, utilization and economic support of the inventory. The fair
values of the proved properties, unproved properties and asset retirement obligation were categorized within Level 3
and were determined using relevant market assumptions, including discount rates, future commodity prices and costs,
timing of development activities, projections of oil and gas reserves, and estimates to abandon and reclaim producing
wells. Level 3 inputs require significant judgment and estimates to be made.
For income tax purposes, the Permian Acquisition is treated as an asset purchase, and as a result, the tax basis in the
assets and liabilities reflect their allocated fair value.
108 | 2023 Annual Report
Ovintiv Inc.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information combines the historical financial results of Ovintiv with the
Permian LLCs and has been prepared as though the acquisition and the associated debt issuance described in Note 15
had occurred on January 1, 2022. The pro forma information is not intended to reflect the actual results of operations
that would have occurred if the Permian Acquisition had been completed at the date indicated. In addition, the pro
forma information is not intended to be a projection of Ovintiv’s results of operations for any future period.
Additionally, pro forma earnings were adjusted to exclude acquisition-related costs incurred of approximately
$76 million for the years ended December 31, 2023, and 2022. The pro forma financial information does not include
any cost savings or other synergies that may result from the acquisition or any estimated costs that have been or will
be incurred to integrate the assets. The pro forma financial data does not include the results of operations for any other
acquisitions made during the periods presented, as they were primarily acreage acquisitions, and their results were not
deemed material.
For the years ended December 31 (US$ millions, except per share amounts)
Revenues
Net Earnings (Loss)
Net Earnings (Loss) per Share
Basic
Diluted
10. Property, Plant and Equipment, Net
2023
2022
11,485 $
2,315 $
13,363
3,777
8.43 $
8.31
13.19
12.98
$
$
$
As at December 31
USA Operations
Proved properties
Unproved properties
Other
Canadian Operations
Proved properties
Unproved properties
Other
Market Optimization
Corporate & Other
2023
Accumulated
2022
Accumulated
Cost
DD&A
Net
Cost
DD&A
Net
$
47,440 $
1,449
39
48,928
(35,799) $
-
-
(35,799)
11,641
1,449
39
13,129
$
41,382 $
1,127
30
42,539
(34,280 ) $
-
-
(34,280 )
16,644
37
8
16,689
(15,332)
-
-
(15,332)
1,312
37
8
1,357
15,672
45
14
15,731
(14,687 )
-
-
(14,687 )
7
853
66,477 $
(7)
(699)
(51,837) $
-
154
14,640
$
7
831
59,108 $
(7 )
(666 )
(49,640 ) $
$
7,102
1,127
30
8,259
985
45
14
1,044
-
165
9,468
USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration,
development and construction activities of $177 million, which have been capitalized during the year ended
December 31, 2023 (2022 - $178 million).
For the years ended December 31, 2023, December 31, 2022, and December 31, 2021, Ovintiv did not recognize
ceiling test impairments in the USA or Canadian cost centers. 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.
Ovintiv Inc.
2023 Annual Report | 109
11. Other Assets
As at December 31
Operating Lease ROU Assets (See Note 14)
Long-Term Investments
Long-Term Receivables
Deferred Charges
Other
12. Goodwill
As at December 31
United States
Balance, beginning and end of year
Canada
Balance, beginning of year
Foreign currency translation adjustment
Balance, end of year
Total Goodwill
2023
2022
894 $
26
37
44
14
1,015 $
870
21
58
44
11
1,004
$
$
2023
2022
$
1,938 $
1,938
646
15
661
2,599 $
690
(44 )
646
2,584
$
The Company had no additions or dispositions relating to goodwill during 2023 or 2022. The change in the Canada
goodwill balance reflects movement due to foreign currency translation.
Goodwill was assessed for impairment as at December 31, 2023, and December 31, 2022. 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.
13. Accounts Payable and Accrued Liabilities
As at December 31
2023
2022
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)
Other Derivative Contracts (See Notes 23, 24)
Current Portion of Finance Lease Obligations (See Note 14)
Current Portion of Asset Retirement Obligation (See Note 17)
$
$
586 $
239
775
179
45
191
115
-
14
4
7
54
2,209 $
436
196
718
314
74
211
65
17
139
-
6
45
2,221
Payables and accruals are non-interest bearing. Interest payable represents amounts accrued related to Ovintiv’s
unsecured notes as disclosed in Note 15.
110 | 2023 Annual Report
Ovintiv Inc.
14. Leases
Operating leases include drilling rigs, compressors, office and buildings, certain land easements and various
equipment utilized in the development and production of oil, NGLs and natural gas. The Company has an office
building that is accounted for as a finance lease. Subleases relate to office and building leases.
The tables below summarize Ovintiv’s operating and finance lease costs and include ROU assets and lease liabilities,
amounts recognized in net earnings (loss) during the year and other lease information.
As at December 31 (US$ millions, unless otherwise specified)
2023
2022
Consolidated Balance Sheet (1):
Operating Lease ROU Assets, in Other Assets
Finance Lease ROU Assets, in Other Property Plant and Equipment
$
894 $
17
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
87
832
7
20
5.45%
6.11%
5.39%
6.11%
12.8 years
3.5 years
14.0 years
4.5 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
2023
2022
Lease Costs (1):
Operating Lease Costs, Excluding Short-Term Leases
$
180 $
140
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
232
41
50
21
182
225
2
6
113
5
2
7
189
14
48
20
176
151
2
6
75
(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.
2023 Annual Report | 111
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
2023
2022
$
$
4 $
82
101
187 $
3
70
101
174
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, 2023:
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
2024
2025
2026
2027
2028 Thereafter
Total
$
133 $
108 $
93 $
87 $
85 $
793 $
1,299
380
$
$
(44 ) $
(44 ) $
(44 ) $
(44 ) $
(42 ) $
(378 ) $
(596 )
$
919
8 $
9 $
9 $
4 $
- $
- $
$
30
3
27
Sublease Income (undiscounted) (2)
$
(8 ) $
(8 ) $
(8 ) $
(3 ) $
- $
- $
(27 )
(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, 2023.
112 | 2023 Annual Report
Ovintiv Inc.
15. Long-Term Debt
As at December 31
U.S. Dollar Denominated Debt
Revolving credit and term loan borrowings
U.S. Unsecured Notes:
5.65% due May 15, 2025
5.375% due January 1, 2026
5.65% due May 15, 2028
8.125% due September 15, 2030
7.20% due November 1, 2031
7.375% due November 1, 2031
6.25% due July 15, 2033
6.50% due August 15, 2034
6.625% due August 15, 2037
6.50% due February 1, 2038
5.15% due November 15, 2041
7.10% due July 15, 2053
Total Principal
Increase in Value of Debt Acquired
Unamortized Debt Discounts and Issuance Costs
Total Long-Term Debt
Current Portion
Long-Term Portion
Note
2023
2022
A
B
F
C
D
E
$
284 $
600
459
700
300
350
500
600
599
390
430
148
400
5,760
22
(45 )
5,737 $
284 $
5,453
5,737 $
$
$
$
393
-
459
-
300
350
500
-
599
390
430
148
-
3,569
27
(26 )
3,570
393
3,177
3,570
A) REVOLVING CREDIT AND TERM LOAN BORROWINGS
At December 31, 2023, 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, 2023, the Company had $270 million of commercial paper outstanding under its U.S. CP program
maturing at various dates with a weighted average interest rate of approximately 6.17 percent, which is supported by
the Company's credit facilities. The Company also had $14 million drawn on its revolving credit facilities as at
December 31, 2023. 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.
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, 2023, the Company is in compliance with
all financial covenants.
Standby fees paid in 2023 relating to revolving credit and term loan agreements were approximately $8 million
(2022 - $8 million; 2021 - $10 million) and were included in interest expense in the Consolidated Statement of
Earnings.
Ovintiv Inc.
2023 Annual Report | 113
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 was renewed in the first quarter of 2023 and expires in March 2026. 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.
On May 31, 2023, Ovintiv completed a public offering of senior unsecured notes of $600 million with a coupon rate
of 5.65 percent due May 15, 2025, $700 million with a coupon rate of 5.65 percent due May 15, 2028, $600 million
with a coupon rate of 6.25 percent due July 15, 2033, and $400 million with a coupon rate of 7.10 percent due
July 15, 2053. The net proceeds of the offering, totaling $2,278 million, were used to fund a portion of the Company’s
Permian Acquisition. See Note 9 for further information on the business combination.
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.
During the year ended December 31, 2022, the Company repurchased approximately $565 million in principal amount
of its senior notes in the open market. The aggregate cash payments related to the note repurchases were $587 million,
plus accrued interest, and premiums of approximately $22 million were recognized 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.
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.
C)
INCREASE IN VALUE OF DEBT ACQUIRED
Certain of the notes and debentures of the Company were acquired in business combinations and were accounted for
at their fair value at the dates of acquisition. The difference between the fair value and the principal amount of the
debt is being amortized over the remaining life of the outstanding debt acquired, which has a weighted average
remaining life of approximately five years.
D) UNAMORTIZED DEBT DISCOUNTS AND ISSUANCE COSTS
Long-term debt premiums and discounts are capitalized within long-term debt and are being amortized using the
effective interest method. During 2023, $22 million in debt discounts and issuance costs were capitalized related to
the U.S. unsecured notes issued in May 2023. During 2022, $6 million in issuance costs were capitalized related to
the renewal of the Company’s credit facilities. Issuance costs are amortized over the term of the related debt.
114 | 2023 Annual Report
Ovintiv Inc.
E) CURRENT PORTION OF LONG-TERM DEBT
As at December 31, 2023, the current portion of long-term debt was $284 million (2022 - $393 million).
F)
PROJECTED DEBT PAYMENTS
As at December 31
2024
2025
2026
2027
2028
Thereafter
Total
Principal
Amount
Interest
Amount
$
$
284
600
459
-
700
3,717
5,760
$
$
377
334
305
292
273
1,963
3,544
As at December 31, 2023, total long-term debt had a carrying value of $5,737 million and a fair value of $5,989 million
(2022 - carrying value of $3,570 million and a fair value of $3,648 million). The estimated fair value of long-term
borrowings is categorized within Level 2 of the fair value hierarchy and has been determined based on market
information of long-term debt with similar terms and maturity, or by discounting future payments of interest and
principal at interest rates expected to be available to the Company at period end.
16. Other Liabilities and Provisions
As at December 31
Finance Lease Obligations (See Note 14)
Unrecognized Tax Benefits (See Note 6)
Pensions and Other Post-Employment Benefits (See Note 22)
Long-Term Incentive Costs (See Note 21)
Other Derivative Contracts (See Notes 23, 24)
Other
17. Asset Retirement Obligation
As at December 31
Asset Retirement Obligation, Beginning of Year
Liabilities Incurred
Liabilities Acquired (See Note 9)
Liabilities Settled and Divested
Change in Estimated Future Cash Outflows
Accretion Expense
Foreign Currency Translation
Asset Retirement Obligation, End of Year
Current Portion (See Note 13)
Long-Term Portion
2023
2022
20
16
74
-
-
22
132
$
$
27
-
73
14
5
12
131
2023
2022
326
6
28
(66 )
13
19
4
330
54
276
330
$
$
$
$
385
4
-
(128 )
58
18
(11 )
326
45
281
326
$
$
$
$
$
$
Ovintiv Inc.
2023 Annual Report | 115
18. Share Capital
AUTHORIZED
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
2023
2022
Number
(millions) Amount Number
(millions) Amount
2021
Number
(millions) Amount
Shares of Common Stock Outstanding, Beginning of Year
Shares of Common Stock Purchased
Shares of Common Stock Issued
Shares of Common Stock Outstanding, End of Year
245.7 $
(9.9 )
35.9
271.7 $
3
-
-
3
258.0 $
(14.7 )
2.4
245.7 $
3
-
-
3
259.8 $
(3.1 )
1.3
258.0 $
3
-
-
3
On June 12, 2023, in accordance with the terms of the Permian Acquisition agreement, Ovintiv issued approximately
31.8 million shares of common stock as a component of the consideration paid to EnCap as discussed in Note 9. In
conjunction with the share issuance, the Company recognized share capital of $318 thousand and paid in surplus of
$1,169 million.
NORMAL COURSE ISSUER BID AND OTHER SHARE BUYBACKS
On September 26, 2023, 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 26.7 million shares
of common stock over a 12-month period from October 3, 2023 to October 2, 2024.
During the year ended December 31, 2023, under its 2022 NCIB program which extended from October 3, 2022 to
October 2, 2023, the Company purchased approximately 7.7 million shares for total consideration of approximately
$328 million. Of the amount paid, $77 thousand was charged to share capital and $328 million was charged to paid in
surplus.
In addition to the NCIB purchases, during the year ended December 31, 2023, the Company purchased approximately
2.2 million shares of common stock for total consideration of approximately $98 million. Of the amount paid,
$22 thousand was charged to share capital and $98 million was charged to paid in surplus.
During the year ended December 31, 2022, the Company purchased approximately 3.5 million shares under its 2022
NCIB program and 11.2 million shares under its 2021 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 2021
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 NCIB purchases were made in accordance with their respective programs at prevailing market prices plus
brokerage fees, with consideration allocated to share capital up to the par value of the shares, with any excess allocated
to paid in surplus.
DIVIDENDS
During the year ended December 31, 2023, the Company declared and paid dividends of $1.15 per share of common
stock, totaling $307 million (2022 - $0.95 per share of common stock, totaling $239 million; 2021 - $0.4675 per share
of common stock, totaling $122 million).
Ovintiv’s quarterly dividend payment in 2023 was $0.25 per share of common stock in the first quarter and $0.30 per
share of common stock for each of the second, third and fourth quarters. Ovintiv’s quarterly dividend payment in 2022
116 | 2023 Annual Report
Ovintiv Inc.
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 each of the third and fourth quarters.
On February 27, 2024, the Board of Directors declared a dividend of $0.30 per share of common stock payable on
March 28, 2024 to common shareholders of record as of March 15, 2024.
EARNINGS PER SHARE OF COMMON STOCK
The following table presents the calculation of net earnings (loss) per share of common stock:
For the years ended December 31 (US$ millions, except per share amounts)
2023
2022
2021
Net Earnings (Loss)
$
2,085
$
3,637
$
1,416
Number of Shares of Common Stock:
Weighted average shares of common stock outstanding - Basic
Effect of dilutive securities
Weighted Average Shares of Common Stock Outstanding - Diluted
Net Earnings (Loss) per Share of Common Stock
Basic
Diluted
STOCK-BASED COMPENSATION PLANS
259.9
4.0
263.9
253.6
4.8
258.4
$
$
8.02
7.90
$
14.34
14.08
260.4
6.0
266.4
5.44
5.32
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
4.1 million shares of common stock during the year ended December 31, 2023 (2022 - 2.4 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, using the treasury stock method, if dilutive.
Ovintiv’s stock options with associated Tandem Stock Appreciation Rights (“TSARs”) give the employee the right to
purchase shares of common stock of the Company or receive cash. Historically, most holders of options have elected
to exercise their TSARs in exchange for a cash payment. As a result, outstanding options are not considered potentially
dilutive securities.
An aggregate of 7.4 million shares of common stock is authorized and held in reserve for issuance, of which 4.4 million
shares of common stock remain available for issuance under the Company’s stock-based compensation plans as at
December 31, 2023. 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.
Ovintiv Inc.
2023 Annual Report | 117
19. Accumulated Other Comprehensive Income
For the years ended December 31
2023
2022
2021
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
$
$
$
937 $
63
1,000 $
1,044 $
(107 )
937 $
1,042
2
1,044
54 $
48 $
3
(1 )
-
-
(8 )
2
-
-
13
(3 )
-
-
(6 )
2
-
-
34
14
(4 )
11
(2 )
(8 )
2
1
-
Balance, End of Year
Total Accumulated Other Comprehensive Income
$
$
50 $
1,050 $
54 $
991 $
48
1,092
20. Variable Interest Entities
Veresen Midstream Limited Partnership
Veresen Midstream Limited Partnership (“VMLP”) provides gathering, compression and processing services under
various agreements related to the Company’s development of liquids and natural gas production in the Montney play.
As at December 31, 2023, VMLP provides approximately 1,156 MMcf/d of natural gas gathering and compression
and 918 MMcf/d of natural gas processing under long-term service agreements with remaining terms ranging from
eight to 22 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 $1,251 million as at December 31, 2023. 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, 2023, accounts payable and accrued
liabilities included $0.2 million related to the take or pay commitment.
118 | 2023 Annual Report
Ovintiv 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 first quarter of 2023, Ovintiv’s Board of Directors resolved to settle certain PSU awards and RSU awards
with the issuance of the Company’s common stock. Accordingly, these awards were modified and reclassified as
equity-settled share-based payment transactions at the modification date. There was no incremental compensation cost
recognized at the modification date.
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
2023
2022
2021
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
$
$
$
$
(22 ) $
98
(29 )
47 $
25 $
22
47 $
152 $
82
(32 )
202 $
38 $
164
202 $
118
47
(27 )
138
31
107
138
As at December 31, 2023, the liability for cash-settled share-based payment transactions totaled $14 million
(2022 - $153 million), of which $14 million (2022 - $139 million) is recognized in accounts payable and accrued
liabilities and nil (2022 - $14 million) is recognized in other liabilities and provisions in the Consolidated Balance
Sheet.
The following sections outline certain information related to Ovintiv’s compensation plans as at December 31, 2023.
Ovintiv Inc.
2023 Annual Report | 119
A)
STOCK APPRECIATION RIGHTS
U.S. dollar denominated SARs are granted to eligible U.S.-based employees, which entitle the employee to receive a
cash payment equal to the excess of the market price of Ovintiv’s shares of common stock at the time of exercise over
the original grant price of the right. SARs granted vest and are exercisable at 30 percent of the number granted after
one year, an additional 30 percent of the number granted after two years, are fully exercisable after three years and
expire seven years after the date granted. SARs are classified as a liability and remeasured at the end of each reporting
period.
The following table summarizes information related to the U.S. dollar denominated SARs:
As at December 31
2023
2022
Outstanding
SARs
(thousands
of units)
Weighted
Average
Exercise
Price (US$)
530
-
(20 )
(14 )
-
496
496
44.17
-
20.91
56.95
-
44.77
44.77
Weighted
Average
Remaining
Contractual
Life (Years)
2.4
1.5
1.5
Outstanding
SARs
(thousands
of units)
Weighted
Average
Exercise
Price (US$)
Weighted
Average
Remaining
Contractual
Life (Years)
1,150
-
(401 )
-
(219 )
530
530
38.89
-
22.14
-
56.75
44.17
44.17
2.4
2.4
Outstanding, Beginning of Year
Granted
Exercised (1)
Forfeited
Expired
Outstanding, End of Year (2)
Vested and Exercisable, End of Year (3)
(1) The intrinsic value of option awards exercised and cash-settled during 2023 was $1 million (2022 - $11 million; 2021 - $2 million).
(2) The intrinsic value of option awards outstanding at December 31, 2023, was $5 million (2022 - $14 million).
(3) The intrinsic value of option awards vested and exercisable at December 31, 2023, was $5 million (2022 - $14 million).
The following weighted average assumptions were used to determine the fair value of SARs outstanding:
As at December 31
Risk Free Interest Rate
Dividend Yield
Expected Volatility Rate (1)
Expected Term
Market Share Price
Weighted Average Grant Date Fair Value
(1) Volatility was estimated using historical rates.
US$ Share Units
2022
2023
3.95%
2.73%
52.32%
1.1 yrs
US$43.92
US$44.77
4.02%
1.97%
107.80%
1.6 yrs
US$50.71
US$44.17
2021
0.94%
1.66%
106.20%
1.4 yrs
US$33.70
US$38.89
As at December 31, 2023, and 2022, there were no unvested SARs outstanding and no associated unrecognized
compensation costs.
120 | 2023 Annual Report
Ovintiv Inc.
B)
TANDEM STOCK APPRECIATION RIGHTS
All options to purchase shares of common stock issued to eligible Canadian-based employees under Ovintiv’s Stock
Option Plan have associated TSARs attached. In lieu of exercising the option, the associated TSARs give the option
holder the right to purchase shares of common stock of the Company or receive a cash payment equal to the excess of
the market price of Ovintiv’s shares of common stock at the time of exercise over the original grant price. TSARs
granted vest and are exercisable at 30 percent of the number granted after one year, an additional 30 percent of the
number granted after two years, are fully exercisable after three years and expire seven years after the date granted.
TSARs are classified as a liability and remeasured at the end of each reporting period.
The following table summarizes information related to the TSARs:
As at December 31
2023
2022
Outstanding
TSARs
(thousands
of units)
Weighted
Average
Exercise
Price (C$)
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)
290
-
(23 )
-
(5 )
-
262
262
60.31
2.2
-
32.67
-
72.77
-
62.45
62.45
1.3
1.3
733
-
(269 )
-
-
(174 )
290
290
54.17
-
36.16
-
-
71.70
60.31
60.31
2.2
2.2
(1) The intrinsic value of option awards exercised and cash-settled during 2023 was nil (2022 - $6 million; 2021 - $2 million).
(2) The intrinsic value of option awards outstanding at December 31, 2023, was $2 million (2022 - $7 million).
(3) The intrinsic value of option awards vested and exercisable at December 31, 2023, was $2 million (2022 - $7 million).
The following weighted average assumptions were used to determine the fair value of TSARs outstanding:
As at December 31
Risk Free Interest Rate
Dividend Yield
Expected Volatility Rate (1)
Expected Term
Market Share Price
Weighted Average Grant Date Fair Value
(1) Volatility was estimated using historical rates.
C$ Share Units
2023
2022
2021
3.95%
2.78%
48.87%
0.9 yrs
C$58.16
C$62.45
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$54.17
As at December 31, 2023, and 2022, there were no unvested TSARs outstanding and no associated unrecognized
compensation costs.
Ovintiv Inc.
2023 Annual Report | 121
C) PERFORMANCE SHARE UNITS
PSUs are granted to eligible employees, which entitle the employee to receive, upon vesting, one share of Ovintiv
common stock for each PSU held or a cash equivalent, at the discretion of the Company. PSUs vest three years from
the date granted, provided the employee remains actively employed with Ovintiv on the vesting date. Based on the
performance assessment, up to a maximum of two times the original PSU grant may be eligible to vest in respect of
the year being measured.
The ultimate value of the PSUs will depend upon Ovintiv’s performance relative to predetermined strategic milestones
as well as the performance of a specified peer group over a three-year period.
The following tables summarize information related to the PSUs:
As at December 31
U.S. Dollar Denominated Outstanding PSUs
Unvested and Outstanding, Beginning of Year
Granted
Vested and Released (3)
Units, in Lieu of Dividends
Forfeited
Unvested and Outstanding, End of Year
As at December 31
Canadian Dollar Denominated Outstanding PSUs
Unvested and Outstanding, Beginning of Year
Granted
Vested and Released (3)
Units, in Lieu of Dividends
Forfeited
Unvested and Outstanding, End of Year
2023 (1)
2022 (2)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (US$)
Units
Weighted Average
Grant Date
(thousands)
Fair Value (US$)
2,261
1,248
(2,202 )
37
(37 )
1,307
20.17
21.38
12.65
33.41
36.59
33.91
2,427
312
(515 )
44
(7 )
2,261
20.04
45.61
35.05
20.15
16.47
20.17
2023 (1)
2022 (2)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (C$)
Units
Weighted Average
Grant Date
(thousands)
Fair Value (C$)
1,048
614
(1,176 )
14
(13 )
487
24.74
26.20
16.95
43.74
48.70
45.30
1,223
146
(321 )
21
(21 )
1,048
26.75
57.95
47.01
24.94
32.11
24.74
(1) During the first quarter of 2023, Ovintiv’s Board of Directors resolved to settle certain PSU awards and RSU awards with the issuance of the
Company’s common stock. Accordingly, these awards were modified and reclassified as equity-settled awards. The modification date fair
value of the awards was US$43.80 per share and C$59.47 per share for the U.S. dollar denominated and Canadian dollar denominated PSUs,
respectively.
(2) 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.
(3) During the year ended December 31, 2023, performance shares that vested and were cash-settled resulted in payments of $22 million
(2022 - $22 million; 2021 - $3 million).
As at December 31, 2023, there were approximately $25 million of unrecognized compensation costs
(2022 - $43 million) related to unvested PSUs. The costs are expected to be recognized over a weighted average period
of 1.6 years.
122 | 2023 Annual Report
Ovintiv Inc.
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.
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 (1)
Vested and Outstanding, End of Year (2)
U.S. Dollar Denominated
Outstanding DSUs
Canadian Dollar Denominated
Outstanding DSUs
2023
2022
2023
2022
10
7
-
1
-
18
5
5
-
-
-
10
188
-
-
5
(46 )
147
206
3
-
4
(25)
188
(1) During the year ended December 31, 2023, deferred shares that vested and were cash-settled resulted in payments of $2 million
(2022 - $1 million, 2021 - $1 million).
(2) The intrinsic value of deferred shares outstanding at December 31, 2023, was $7 million (2022 - $10 million).
E) RESTRICTED SHARE UNITS
RSUs are granted to eligible employees and Directors. An RSU is a conditional grant to receive a share of Ovintiv
common stock or a cash equivalent at the Company’s discretion upon vesting of the RSUs and in accordance with the
terms and conditions of the RSU Plans and grant agreements.
RSUs issued to employees vest over their three-year service period. RSUs issued to Directors fully vest on the grant
date and have no required term of service. RSUs issued to Directors before May 2022 are settled three years from the
date granted or following the Director’s departure from Ovintiv, whichever is earlier. Beginning with the RSUs issued
in May 2022, all RSU awards issued to Directors are equity-settled immediately upon issuance.
Ovintiv Inc.
2023 Annual Report | 123
The following tables summarize information related to the RSUs:
As at December 31
U.S. Dollar Denominated Outstanding RSUs
Unvested and Outstanding, Beginning of Year
Granted
Units, in Lieu of Dividends
Vested and Released (3)
Forfeited
Unvested and Outstanding, End of Year
As at December 31
Canadian Dollar Denominated Outstanding RSUs
Unvested and Outstanding, Beginning of Year
Granted
Units, in Lieu of Dividends
Vested and Released (3)
Forfeited
Unvested and Outstanding, End of Year
2023 (1)
2022 (2)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (US$)
Units
Weighted Average
Grant Date
(thousands)
Fair Value (US$)
3,369
1,155
64
(2,200 )
(163 )
2,225
25.48
43.72
38.74
20.61
39.61
39.11
5,401
982
67
(2,932 )
(149 )
3,369
20.92
46.14
25.27
23.99
26.02
25.48
2023 (1)
2022 (2)
Units
(thousands)
Weighted Average
Grant Date
Fair Value (C$)
Units
Weighted Average
Grant Date
(thousands)
Fair Value (C$)
1,540
463
28
(1,002 )
(47 )
982
32.65
60.28
51.65
26.23
50.16
51.93
2,621
444
30
(1,484 )
(71 )
1,540
28.23
58.97
32.55
32.68
33.75
32.65
(1) During the first quarter of 2023, Ovintiv’s Board of Directors resolved to settle certain PSU awards and RSU awards with the issuance of the
Company’s common stock. Accordingly, these awards were modified and reclassified as equity-settled awards. The modification date fair
value of the awards was US$43.80 per share and C$59.47 per share for the U.S. dollar denominated and Canadian dollar denominated RSUs,
respectively.
(2) 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.
(3) During the year ended December 31, 2023, restricted shares that vested and were cash-settled resulted in payments of $18 million
(2022 - $51 million; 2021 - $23 million).
As at December 31, 2023, there were approximately $43 million of unrecognized compensation costs
(2022 - $44 million) related to unvested RSUs. The costs are expected to be recognized over a weighted average period
of 1.4 years.
124 | 2023 Annual Report
Ovintiv Inc.
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 four years and the average remaining life expectancy of inactive employees is 13 years. The
average remaining service period of the active employees participating in the OPEB plan is nine years.
The Company is required to file an actuarial valuation of its pension plans with the provincial regulator at least every
three years, or more frequently if directed by the regulator. The most recent filing was dated December 31, 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, 2023 and 2022, as well as
the funded status of the plans and amounts recognized in the Consolidated Financial Statements as at
December 31, 2023 and 2022.
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
Settlement
Projected Benefit Obligation, End of Year
Change in Plan Assets
Fair Value of Plan Assets, Beginning of Year
Actual Return on Plan Assets
Exchange Differences
Employee Contributions
Employer Contributions
Benefits Paid
Transfers to Defined Contribution Plan
Settlement
Fair Value of Plan Assets, End of Year
Funded Status of Plan Assets, End of Year
Total Recognized Amounts in the
Consolidated Balance Sheet Consist of:
Other Assets
Current Liabilities
Non-Current Liabilities
Total
Total Recognized Amounts in Accumulated
Other Comprehensive Income Consist of:
Net Actuarial (Gains) Losses
Net Prior Service Costs
Total Recognized in Accumulated Other Comprehensive
Income, Before Tax
Defined Benefits
2023
2022
OPEB
2023
2022
140 $
-
7
3
4
-
(13 )
(3 )
138 $
124 $
12
3
-
-
(13 )
-
(3 )
123 $
191 $
-
5
(33 )
(10 )
-
(13 )
-
140 $
176 $
(27 )
(10 )
-
-
(13 )
(2 )
-
124 $
50 $
2
2
1
-
1
(8 )
-
48 $
- $
-
-
1
7
(8 )
-
-
- $
67
2
2
(13)
(1)
2
(9)
-
50
-
-
-
2
7
(9)
-
-
-
(15 ) $
(16 ) $
(48 ) $
(50)
5 $
-
(20 )
(15 ) $
2 $
-
(18 )
(16 ) $
- $
(6 )
(42 )
(48 ) $
15 $
(8 )
18 $
(7 )
(79 ) $
7
7 $
11 $
(72 ) $
-
(7)
(43)
(50)
(88)
7
(81)
$
$
$
$
$
$
$
$
$
The accumulated defined benefit obligation for all defined benefit plans was $186 million as at December 31, 2023
(2022 - $190 million).
Ovintiv Inc.
2023 Annual Report | 125
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
2023
2022
2023
2022
$
$
(44 )
(44 )
24
(47 ) $
(47 )
29
$
(48 )
(48 )
-
(50)
(50)
-
Following are the weighted average assumptions used by the Company in determining the defined benefit pension and
other post-employment benefit obligations:
For the years ended December 31
Discount Rate
Rates of Increase in Compensation Levels
Defined Benefits
2023
2022
4.60 %
3.24 %
5.10 %
3.24 %
OPEB
2023
4.90 %
4.93 %
2022
5.25%
4.83%
The following sets forth the total benefit plans expense recognized by the Company:
For the years ended December 31
2023
2022
2021
2023
2022
2021
Pension Benefits
OPEB
Net Defined Periodic Benefit Cost
Defined Contribution Plan Expense
Total Benefit Plans Expense
$
$
2 $
25
27 $
- $
24
24 $
- $
24
24 $
(4 ) $
-
(4 ) $
(3 ) $
-
(3 ) $
(3 )
-
(3 )
Of the total benefit plans expense, $22 million (2022 - $22 million; 2021 - $22 million) was included in operating
expense and $5 million (2022 - $4 million; 2021 - $5 million) was included in administrative expense. Excluding
service costs, net defined periodic benefit gains of $4 million (2022 - gains of $5 million; 2021 - gains of $6 million)
were recorded in other (gains) losses, net.
The net defined periodic benefit cost is as follows:
For the years ended December 31
2023
2022
2021
2023
2022
2021
Defined Benefits
OPEB
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
Total Net Defined Periodic Benefit Cost (1)
$
- $
7
(5 )
-
-
2 $
- $
5
(6 )
1
-
- $
- $
5
(6 )
1
-
- $
2 $
2
-
(8 )
-
(4 ) $
2 $
2
-
(7 )
-
(3 ) $
3
2
-
(9 )
1
(3 )
(1) The components of total net defined periodic benefit cost, excluding the service cost component, are included in other (gains) losses, net.
Actuarial losses related to changes in the projected benefit obligations were due to a decrease in the discount rates
used to measure the obligations.
126 | 2023 Annual Report
Ovintiv Inc.
The amounts recognized in other comprehensive income are as follows:
For the years ended December 31
2023
2022
2021
2023
2022
2021
Defined Benefits
OPEB
Net Actuarial (Gains) Losses
Net Prior Service Costs from Plan Amendment
Amortization of Net Actuarial Gains and (Losses)
Amortization of Net Prior Service Costs
Total Amounts Recognized in Other Comprehensive
(Income) Loss, Before Tax
Total Amounts Recognized in Other Comprehensive
(Income) Loss, After Tax
$
$
$
(4 ) $
-
-
-
- $
-
(1 )
-
$
(6 )
-
(1 )
-
1 $
-
8
-
(13 ) $
-
7
-
(4 ) $
(1 ) $
(7 )
$
9 $
(6 ) $
(3 ) $
(1 ) $
(5 )
$
7 $
(5 ) $
(8 )
(11 )
9
(1 )
(11 )
(9 )
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
2023
2022
2021
2023
Defined Benefits
OPEB
2022
Discount Rate
Long-Term Rate of Return on Plan Assets
Rates of Increase in Compensation Levels
5.10 %
3.85 %
3.24 %
5.10 %
3.85 %
3.24 %
2.25 %
3.00 %
3.13 %
5.30 %
-
4.93 %
2.46 %
-
4.83 %
2021
2.08 %
-
6.33 %
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
2023
2022
2021
6.96 %
5.00 %
2030
6.16 %
5.00 %
2027
6.15 %
5.00 %
2026
The Company does not expect to contribute to its defined benefit pension plans in 2024. 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.
2024
2025
2026
2027
2028
2029 - 2033
Defined Benefit
Pension Payments
Other Benefit
Payments
$
12 $
12
12
11
11
51
6
5
5
4
4
19
Ovintiv Inc.
2023 Annual Report | 127
The Company’s registered and other defined benefit pension plan assets are presented by investment asset category
and input level within the fair value hierarchy as follows:
As at December 31
Investments:
Cash and Cash Equivalents
Fixed Income
Equity
Fair Value of Plan Assets, End of Year
As at December 31
Investments:
Cash and Cash Equivalents
Fixed Income
Equity
Fair Value of Plan Assets, End of Year
Level 1
Level 2
Level 3
Total
2023
15 $
-
-
15 $
2 $
68
38
108 $
2022
- $
-
-
- $
17
68
38
123
Level 1
Level 2
Level 3
Total
17 $
-
-
17 $
- $
66
41
107 $
- $
-
-
- $
17
66
41
124
$
$
$
$
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, 2023: 68 percent
Bonds (2022 - 67 percent), 31 percent U.S. and Foreign Equity (2022 - 33 percent) and one percent Cash Equivalents
(2022 - nil). The expected long-term rate of return is 4.90 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 $12 million (2022 - loss of $27 million). The asset allocation structure is subject to
diversification requirements and constraints, which reduce risk by limiting exposure to individual equity investment,
credit rating categories and foreign currency exposure.
128 | 2023 Annual Report
Ovintiv Inc.
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.
Current in accounts payable and accrued liabilities
$
- $
4 $
- $
4 $
- $
As at December 31, 2023
Risk Management Assets
Commodity Derivatives:
Current assets
Long-term assets
Foreign Currency Derivatives:
Current assets
Risk Management Liabilities
Commodity Derivatives:
Current liabilities
Long-term liabilities
Other Derivative Contracts (2)
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
Level 3
Significant
Unobservable
Total Fair
Inputs
Inputs
Value Netting (1)
Carrying
Amount
$
- $
-
188 $
5
16 $
-
204 $
5
(1) $
(1)
-
11
-
11
-
$
- $
-
1 $
3
- $
-
1 $
3
(1) $
(1)
Level 1
Quoted
Prices in
Active
Markets
Level 2
Other
Observable
Level 3
Significant
Unobservable
Total Fair
Inputs
Inputs
Value Netting (1)
Carrying
Amount
$
- $
-
-
93 $
34
12 $
-
105 $
34
(53) $
-
1
-
1
-
$
- $
128 $
- $
128 $
(53) $
-
11
-
11
-
203
4
11
-
2
4
52
34
1
75
11
5
Long-term in other liabilities and provisions
$
- $
5 $
- $
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.
(2)
Ovintiv Inc.
2023 Annual Report | 129
The Company’s Level 1 and Level 2 risk management assets and liabilities consist of commodity fixed price contracts,
NYMEX three-way options, NYMEX costless collars, 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, 2023, the Company’s Level 3 risk management assets and liabilities consist of WTI three-way
options and WTI costless collars with terms to 2024. The WTI three-way options are a combination of a sold call, a
bought put and a sold put. The WTI costless collars are a combination of a sold call and a bought 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 complete (collars) or partial (three-way) 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
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
2023
2022
12 $
2
-
2
-
16 $
4 $
(172)
(449)
-
633
-
12
184
$
$
$
Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at
December 31, 2023:
Risk Management - WTI Options
Option Model
Implied Volatility
25% - 39%
15%
Valuation Technique
Unobservable Input
Range Weighted Average (1)
(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
$1 million (2022 - $2 million) increase or decrease to net risk management assets and liabilities.
130 | 2023 Annual Report
Ovintiv Inc.
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 fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to
manage against widening price differentials between various production areas, products and price points.
Natural Gas - To partially mitigate natural gas commodity price risk, the Company uses NYMEX-based contracts
such as fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to manage against
widening price differentials between various production areas and benchmark price points.
FOREIGN EXCHANGE RISK
Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future
cash flows from the Company’s financial assets or liabilities. To partially mitigate the effect of foreign exchange
fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative
contracts. As at December 31, 2023, the Company has entered into $400 million notional U.S. dollar denominated
currency swaps at an average exchange rate of C$1.3592 to US$1, which mature monthly throughout 2024.
Ovintiv Inc.
2023 Annual Report | 131
RISK MANAGEMENT POSITIONS AS AT DECEMBER 31, 2023
Notional Volumes
Term
Average Price
Fair Value
Oil and NGL Contracts
Fixed Price Contracts
WTI Fixed Price
Ethane Fixed Price
WTI Three-Way Options
Sold call / bought put / sold put
WTI Costless Collars
Sold call / bought put
Other Financial Positions
Oil and NGLs Fair Value Position
Natural Gas Contracts
Fixed Price Contracts
NYMEX Fixed Price
NYMEX Three-Way Options
Sold call / bought put / sold put
Sold call / bought put / sold put
NYMEX Costless Collars
Sold call / bought put
Basis Contracts (1)
Natural Gas Fair Value Position
Other Derivative Contracts
Fair Value Position (2)
Foreign Currency Contracts
Fair Value Position (3)
Total Fair Value Position
12.4 Mbbls/d
5.0 Mbbls/d
2024
2024
US$/bbl
73.69
10.28
18.1 Mbbls/d
2024
87.80 / 65.00 / 50.00
39.8 Mbbls/d
2024
82.02 / 64.37
US$/Mcf
200 MMcf/d
2024
3.62
175 MMcf/d
74 MMcf/d
400 MMcf/d
2024
2025
2024
2024
2025
2024
4.53 / 3.00 / 2.25
4.99 / 3.00 / 2.25
4.37 / 3.00
$
7
3
9
7
-
26
67
21
(3 )
72
17
5
179
(4 )
11
212
(1) Ovintiv has entered into natural gas basis swaps associated with AECO, Waha and NYMEX.
(2)
(3) 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.
132 | 2023 Annual Report
Ovintiv Inc.
EARNINGS IMPACT OF REALIZED AND UNREALIZED GAINS (LOSSES) ON RISK MANAGEMENT POSITIONS
For the years ended December 31
2023
2022
2021
Realized Gains (Losses) on Risk Management
Commodity and Other Derivatives:
Revenues (1)
Foreign Currency Derivatives:
Foreign exchange
Interest Rate Derivatives:
Interest rate (2)
Unrealized Gains (Losses) on Risk Management
Commodity and Other Derivatives:
Revenues (3)
Foreign Currency Derivatives:
Foreign exchange
Total Realized and Unrealized Gains (Losses) on Risk Management, net
Commodity and Other Derivatives:
Revenues (1) (3)
Foreign Currency Derivatives:
Foreign exchange
Interest Rate Derivatives:
Interest rate (2)
$
(43 ) $
(2,608 ) $
(1,395)
(8 )
(5 )
33
1
(50 ) $
-
(2,613 ) $
-
(1,362)
194 $
741 $
(488)
21
215 $
(15 )
726 $
(21)
(509)
$
$
$
$
151 $
(1,867 ) $
(1,883)
13
(20 )
12
$
1
165 $
-
(1,887 ) $
-
(1,871)
(1)
Includes a realized gain of $1 million for the year ended December 31, 2023 (2022 - gain of $6 million; 2021 - gain of $1 million) related to
other derivative contracts.
(2) The realized interest rate swap in 2023 was executed and settled in relation to the senior notes issuance described in Note 15. The gain was
recognized in interest expense.
(3) There were no unrealized gains or losses related to other derivative contracts for the year ended December 31, 2023 (2022 - loss of $2 million;
2021 - gain of $4 million).
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
2023
Fair Value
$
(4 )
165 $
1
50
212 $
$
Total
Unrealized
Gain (Loss)
2022
Total
Unrealized
Gain (Loss)
2021
Total
Unrealized
Gain (Loss)
165 $
(1,887 ) $
(1,871)
50
215 $
2,613
726 $
1,362
(509)
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.
Ovintiv Inc.
2023 Annual Report | 133
UNREALIZED RISK MANAGEMENT POSITIONS
As at December 31
Risk Management Assets
Current
Long-term
Risk Management Liabilities
Current
Long-term
$
Other Derivative Contract 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
2023
2022
214 $
4
218
-
2
2
4
-
4
212 $
53
34
87
86
-
86
-
5
5
(4 )
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, 2023, Ovintiv’s maximum exposure of loss due to credit risk from
derivative financial instrument assets on a gross and net fair value basis was $220 million and $218 million,
respectively, as disclosed in Note 23. The Company had no significant credit derivatives in place and held no collateral
at December 31, 2023.
Any cash equivalents include high-grade, short-term securities, placed primarily with financial institutions with
investment grade ratings. Any foreign currency agreements entered into are with major financial institutions that have
investment grade credit ratings.
A substantial portion of the Company’s accounts receivable are with customers and working interest owners in the oil
and gas industry and are subject to normal industry credit risks. As at December 31, 2023, approximately 91 percent
(2022 - 88 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 $4 million as at December 31, 2023 (2022 - $5 million). The maximum
potential amount of undiscounted future payments is $11 million as at December 31, 2023, and is considered unlikely.
134 | 2023 Annual Report
Ovintiv Inc.
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
2023
2022
2021
Operating Activities
Accounts receivable and accrued revenues
Accounts payable and accrued liabilities
Current portion of operating lease liabilities
Income tax receivable and payable
B) NON-CASH ACTIVITIES
For the years ended December 31
Non-Cash Operating Activities
ROU operating lease assets and liabilities (See Note 14)
Non-Cash Investing Activities
Asset retirement obligation incurred (See Note 17)
Asset retirement obligation change in estimated future cash outflows (See Note 17)
Property, plant and equipment accruals
Capitalized long-term incentives
Property additions/dispositions, including swaps
Contingent consideration (See Note 8)
Non-Cash Financing Activities
Shares of common stock issued in conjunction with the Permian
Acquisition (See Note 9)
C)
SUPPLEMENTARY CASH FLOW INFORMATION
$
$
$
$
352 $
(304 )
11
271
330 $
(304 ) $
50
14
53
(187 ) $
(333)
275
(7)
24
(41)
2023
2022
2021
(113 ) $
(75 ) $
(23)
6 $
13
26
(3 )
29
-
4 $
58
35
4
126
-
8
5
(9)
8
34
6
$
(1,169 ) $
- $
-
For the years ended December 31
2023
2022
2021
Interest Paid
Income Taxes (Recovered), net of Amounts Paid
$
$
308 $
(19 ) $
376 $
(38 ) $
370
(176)
26. Commitments and Contingencies
COMMITMENTS
The following table outlines the Company’s commitments as at December 31, 2023:
(undiscounted)
2024
2025
Expected Future Payments
2026
2027
2028 Thereafter
Transportation and Processing
Drilling and Field Services
Building Leases & Other Commitments
Total
$
$
734 $
235
7
976 $
668 $
77
10
755 $
601 $
-
6
607 $
507 $
-
4
511 $
453 $
-
4
457 $
2,180 $
-
18
2,198 $
Total
5,143
312
49
5,504
Operating leases with terms greater than one year are not included in the commitments table above. The table above
includes short-term leases with contract terms less than 12 months, such as drilling rigs and field office leases, as well
as non-lease operating cost components associated with building leases. See Note 14 for additional disclosures on
leases.
Ovintiv Inc.
2023 Annual Report | 135
Included within transportation and processing in the table above are certain commitments associated with midstream
service agreements with VMLP as described in Note 20. Divestiture transactions can reduce certain commitments
disclosed above.
CONTINGENCIES
Ovintiv is involved in various legal claims and actions arising in the normal course of the Company’s operations.
Although the outcome of these claims cannot be predicted with certainty, the Company does not expect these matters
to have a material adverse effect on Ovintiv’s financial position, cash flows or results of operations. Management’s
assessment of these matters may change in the future as certain of these matters are in early stages or are subject to a
number of uncertainties. For material matters that the Company believes an unfavorable outcome is reasonably
possible, the Company discloses the nature and a range of potential exposures. If an unfavorable outcome were to
occur, there exists the possibility of a material impact on the Company’s consolidated net earnings or loss for the
period in which the effect becomes reasonably estimable. The Company accrues for such items when a liability is both
probable and the amount can be reasonably estimated. Such accruals are based on the Company’s information known
about the matters, estimates of the outcomes of such matters and experience in handling similar matters.
27. Supplementary Oil and Gas Information (unaudited)
The unaudited supplementary information on oil and natural gas exploration and production activities for 2023, 2022
and 2021 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)
2023
2022
2021
Oil & NGLs
Natural Gas
WTI
($/bbl)
Edmonton
Condensate
(C$/bbl)
Henry Hub
($/MMBtu)
AECO
(C$/MMBtu)
$
78.22 $
93.82
66.56
104.61 $
121.18
83.69
2.64 $
6.36
3.60
2.78
5.65
3.26
(1) All prices were held constant in all future years when estimating net revenues and reserves.
136 | 2023 Annual Report
Ovintiv Inc.
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
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
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
2023
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
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
535.2
(134.0)
64.7
160.0
(49.1)
(58.0)
518.8
277.6
241.2
518.8
(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
363
61
0.7
(78.0)
302
428 1,538 1,966
0.3 121.5
13
-
2.6
(123 )
(1.6 )
(28.6)
(568 )
(0.1 )
(51.2)
1.1 558.6 434.7 170.0 604.7 2,536 4,033 6,570
84.5 348.8 1,621 2,490 4,111
0.7 291.7 264.3
915 1,543 2,458
0.3 266.9 170.5
85.4 255.9
1.1 558.6 434.7 170.0 604.7 2,536 4,033 6,570
(20.3)
(50.3 )
66.9 142.0
2.5
0.9
(21.0 )
(8.4)
(49.0 )
(20.5)
7
(50 )
(179 )
6
(73 )
(389 )
(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
(544 )
38
(0.3 )
(582 )
237 1,005 1,241
-
88
16
72
-
(22 )
(16 )
(5 )
(0.6 )
(545 )
(366 )
(180 )
-
0.1 535.3 457.8 149.0 606.9 2,698 4,090 6,789
71.2 359.5 1,755 2,276 4,031
0.1 257.3 288.3
943 1,814 2,757
77.8 247.4
- 278.0 169.5
0.1 535.3 457.8 149.0 606.9 2,698 4,090 6,789
(33.2 )
68.5
15.4
(1.3 )
(47.3 )
(36.0)
31.3
1.7
(0.6)
(17.3)
(89.1 )
23.3
46.6
(28.9 )
(31.2 )
- (134.0)
-
64.7
- 160.0
(49.1)
-
(58.0)
-
0.1 535.3 457.8 149.0 606.9 2,698 4,090 6,789
(482 )
(21 )
916 1,061
218
17
(137 )
-
(599 )
(411 )
0.1 518.9 378.4 146.9 525.3 2,259 4,591 6,850
78.0 353.7 1,695 2,590 4,286
0.1 277.7 275.7
564 2,000 2,565
68.9 171.6
- 241.2 102.7
0.1 518.9 378.4 146.9 525.3 2,259 4,591 6,850
(95.4 )
43.6
47.7
(28.9 )
(48.6 )
(6.2)
20.4
1.1
-
(17.4)
(460 )
146
201
(137 )
(189 )
1,992.5
(67.8 )
591.2
7.3
(70.2 )
(194.9 )
2,258.2
1,325.7
932.5
2,258.2
2,258.2
(189.2 )
370.6
45.9
(25.7 )
(186.2 )
2,273.6
1,288.7
984.9
2,273.6
2,273.6
(309.6 )
285.3
243.9
(100.8 )
(206.5 )
2,185.9
1,345.6
840.2
2,185.9
(1) Numbers may not add due to rounding.
(2) Changes in reserve estimates resulting from application of improved recovery techniques are included in revisions of previous estimates.
Definitions:
a.
“Proved” oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic
conditions, operating methods and government regulations.
“Developed” oil and gas reserves are reserves of any category that are expected to be recovered through existing wells with existing equipment
and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well.
“Undeveloped” oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or
from existing wells where a relatively major expenditure is required for recompletion.
b.
c.
Ovintiv Inc.
2023 Annual Report | 137
Total Proved reserves decreased 87.7 MMBOE including production of 206.5 MMBOE in 2023 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 330.0 MMBOE and revisions other than price of 9.2 MMBOE, partially offset
by positive price revisions of 29.6 MMBOE from lower royalties in Canada due to lower 12-month average
trailing prices.
(cid:120) Extensions and discoveries of oil, NGLs and natural gas increased proved reserves by 285.3 MMBOE due to
successful drilling leading to increased technical delineation, as well as new proved undeveloped locations
resulting from updated development plans in Montney, Permian and Uinta.
(cid:120) Purchases of 243.9 MMBOE were primarily from the Permian Acquisition.
(cid:120) Sale of reserves in place decreased proved developed reserves by 100.8 MMBOE primarily due to the
divestiture of the Bakken.
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.
138 | 2023 Annual Report
Ovintiv Inc.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND
GAS RESERVES
In calculating the standardized measure of discounted future net cash flows, constant price and cost assumptions were
applied to Ovintiv’s annual future production from proved reserves to determine cash inflows. Estimates of future net
cash flows from proved reserves are computed based on the average beginning-of-the-month prices during the 12-
month period for the year. Future production and development costs include estimates for abandonment and
dismantlement costs associated with asset retirement obligations and assume the continuation of existing economic,
operating and regulatory conditions. Future income taxes are calculated by applying statutory income tax rates to
future pre-tax cash flows after provision for the tax cost of the oil and natural gas properties based upon existing laws
and regulations. The effect of tax credits is also considered in determining the income tax expense. The discount was
computed by application of a 10 percent discount factor to the future net cash flows.
Ovintiv cautions that the discounted future net cash flows relating to proved oil and gas reserves are an indication of
neither the fair market value of Ovintiv’s oil and 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
Less 10% annual discount for estimated
timing of cash flows
Discounted Future Net Cash Flows
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
United States
2022
2023
2021
2023
2022
2021
Canada
$ 47,946 $ 74,567 $ 51,473 $ 19,697 $ 29,149 $
18,312
14,405
8,849
2,735
21,957
17,043
8,951
9,333
39,240
12,272
5,767
5,480
27,954
8,147
2,264
2,016
7,270
8,173
2,142
4,182
14,652
10,182
13,663
$ 11,775 $ 18,968 $ 14,291 $
20,272
2,963
4,307 $
6,121
8,531 $
7,679
2,061
1,695
6,877
2,393
4,484
Total
2023
2022
2021
$ 67,643 $ 103,716 $
69,785
22,552
11,113
4,751
29,227
25,216
11,093
13,515
53,892
19,951
7,828
7,175
34,831
13,145
26,393
$ 16,082 $ 27,499 $
16,056
18,775
Ovintiv Inc.
2023 Annual Report | 139
CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO
PROVED OIL AND GAS RESERVES
Balance, Beginning of Year
Changes Resulting From:
Sales of oil and gas produced during the year
Discoveries and extensions, net of related costs
Purchases of proved reserves in place
Sales and transfers of proved reserves in place
Net change in prices and production costs
Revisions to quantity estimates
Accretion of discount
Development costs incurred during the year
Changes in estimated future development costs
Other
Net change in income taxes
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
Balance, End of Year
United States
2022
2023
2021
2023
2022
2021
Canada
$ 18,968 $ 14,291 $
5,073 $
8,531 $
4,484 $
849
(3,953 )
1,141
2,440
(1,765 )
(5,746 )
(5,250 )
2,290
2,184
(1,384 )
1
2,849
(3,608 )
3,102
63
(199 )
10,702
(407 )
508
1,139
(83 )
1
(2,000 )
$ 11,775 $ 18,968 $ 14,291 $
(5,007 )
2,735
661
(278 )
9,059
(712 )
1,630
1,475
(2,965 )
(2 )
(1,919 )
(1,056 )
1,059
24
-
(6,878 )
(143 )
1,094
575
(120 )
-
1,221
4,307 $
(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
Total
2023
2022
2021
$ 27,499 $ 18,775 $
5,922
(5,009 )
2,200
2,464
(1,765 )
(12,624 )
(5,393 )
3,384
2,759
(1,504 )
1
4,070
(7,340 )
5,370
719
(306 )
14,591
(1,673 )
2,175
1,814
(3,268 )
(2 )
(3,356 )
$ 16,082 $ 27,499 $
(5,087 )
5,221
76
(237 )
13,968
(206 )
593
1,536
(42 )
1
(2,970 )
18,775
140 | 2023 Annual Report
Ovintiv Inc.
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.
Oil, NGL and Natural Gas Revenues (1)
Less:
Production, mineral and other taxes
Transportation and processing
Operating
Depreciation, depletion and amortization
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
Accretion of asset retirement obligation
Operating Income (Loss)
Income Taxes
Results of Operations
(1) Excludes gains (losses) on risk management.
CAPITALIZED COSTS
United States
2022
2023
2021
2023
2022
2021
Canada
$
5,570 $
6,680 $
4,883 $
2,215 $
3,476 $
2,542
327
547
743
1,519
8
2,426
528
1,898 $
401
626
646
861
8
4,138
952
3,186 $
278
507
490
837
11
2,760
673
2,087 $
15
1,056
88
286
11
759
180
579 $
14
1,002
127
235
10
2,088
499
1,589 $
15
937
111
332
11
1,136
272
864
$
Total
2023
2022
2021
$
7,785 $ 10,156 $
7,425
342
1,603
831
1,805
19
3,185
708
2,477 $
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
$
Capitalized costs include the cost of properties, equipment and facilities for oil and natural gas producing activities.
Capitalized costs for proved properties include costs for oil and natural gas leaseholds where proved reserves have
been identified, development wells and related equipment and facilities, including development wells in progress.
Capitalized costs for unproved properties include costs for acquiring oil and natural gas leaseholds where no proved
reserves have been identified.
United States
2022
2023
2021
2023
2022
2021
Canada
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
$ 47,440 $ 41,382 $ 39,145 $ 16,644 $ 15,672 $
45
15,717
14,687
1,030 $
1,449
48,889
35,799
$ 13,090 $
37
16,681
15,332
1,349 $
1,127
42,509
34,280
8,229 $
1,884
41,029
33,418
7,611 $
16,330
60
16,390
15,450
940
Total
2023
2022
2021
$ 64,084 $ 57,054 $
1,172
58,226
48,967
9,259 $
1,486
65,570
51,131
$ 14,439 $
55,475
1,944
57,419
48,868
8,551
Ovintiv Inc.
2023 Annual Report | 141
COSTS INCURRED
Costs incurred includes both capitalized costs and costs charged to expense when incurred. Costs incurred also
includes internal costs directly related to acquisition, exploration, and development activities, new asset retirement
costs established in the current year as well as increases or decreases to the asset retirement obligations resulting from
changes to cost estimates during the year.
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
2022
2023
2021
2023
2022
2021
Canada
$
$
1,063 $
3,868
4,931
3
2,224
7,158 $
154 $
123
277
5
1,530
1,812 $
2 $
9
11
10
1,148
1,169 $
- $
6
6
-
562
568 $
- $
9
9
7
376
392 $
-
-
-
5
388
393
Total
2023
2022
2021
$
$
1,063 $
3,874
4,937
3
2,786
7,726 $
154 $
132
286
12
1,906
2,204 $
2
9
11
15
1,536
1,562
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
2023
2022
$
$
1,449 $
37
1,486 $
1,127
45
1,172
The following is a summary of the costs related to Ovintiv’s unproved properties as at December 31, 2023:
Acquisition Costs
Exploration Costs
2023
2022
2021 Prior to 2021
Total
$
$
1,063 $
3
1,066 $
154 $
5
159 $
2 $
11
13 $
192 $
56
248 $
1,411
75
1,486
Acquisition costs primarily include costs incurred to acquire or lease properties. Exploration costs primarily include
costs related to geological and geophysical studies and unevaluated costs associated with drilling and equipping
exploratory wells. Ultimate recoverability of these costs and the timing of inclusion within the applicable country cost
center’s depletable base is dependent upon either the finding of proved oil, NGL and natural gas reserves, expiration
of leases or recognition of impairments.
142 | 2023 Annual Report
Ovintiv Inc.
The $1.5 billion of oil and natural gas properties not subject to depletion or amortization primarily includes leasehold
and mineral costs related to acquisitions in 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 two to three years. The remaining costs excluded
from depletion are related to properties which are not individually significant.
Ovintiv Inc.
2023 Annual Report | 143
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, 2023.
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
The Company previously limited the scope and design and subsequent evaluation of internal controls over financial
reporting to exclude the controls, policies and procedures of the Permian Acquisition, acquired through a business
combination on June 12, 2023. During the fourth quarter of 2023, the Company completed the evaluation and
integration of the controls, policies and procedures of the Permian Acquisition and no material weaknesses were noted
during the integration. There have been no changes to the Company’s internal control over financial reporting during
the fourth quarter of 2023 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
On February 27, 2024, Ovintiv entered into an amendment to Section 4 of the previously filed Change in Control
Agreement with each of the following executives:
i.
ii.
iii.
iv.
v.
vi.
Brendan M. McCracken, President and Chief Executive Officer
Corey D. Code, Executive Vice President and Chief Financial Officer
Gregory D. Givens, Executive Vice President and Chief Operating Officer
Meghan N. Eilers, Executive Vice President, General Counsel and Corporate Secretary
Rachel M. Moore, Executive Vice President, Corporate Services
Renee E. Zemljak, Executive Vice President, Midstream, Marketing and Fundamentals
The amendments revise the severance payable to each executive following a change in control event at the Company
as follows:
(cid:120)
Increases the lump sum cash severance payable to 2.5 times (or 3.0 times for Mr. McCracken) the sum of the
executive’s base salary, annual allowance, professional membership fees reimbursement, matching
144 | 2023 Annual Report
Ovintiv Inc.
(cid:120)
contributions to investment plan, and annual bonus award (based on average bonus award paid over preceding
three years); and
Increases the continued accrual or crediting of contributions (for defined contribution pension plan
participants) or the cash payment equal to the value thereof from 24 months to 30 months (or 36 months in
the case of Mr. McCracken).
Copies of each amendment are attached as exhibits hereto and incorporated herein by reference.
During the quarter ended December 31, 2023, no director or officer (as defined in Rule 16a-1(f) under the Exchange
Act) of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading
arrangements (in each case, as defined in Item 408 of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Ovintiv Inc.
2023 Annual Report | 145
PART III
Item 10. Directors, Executive Officers and Corporate Governance
DIRECTORS AND EXECUTIVE OFFICERS
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.
Other information required by this Item 10 is set forth in the section entitled “Corporate Governance” included in the
Proxy Statement relating to the Company’s 2024 annual meeting of shareholders, which in incorporated herein by
reference.
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 section entitled “Executive Compensation” included in the
Proxy Statement relating to the Company’s 2024 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 sections entitled “Securities Ownership” and “Securities
Authorized for Issuance Under Equity Compensation Plans” included in the Proxy Statement relating to the
Company’s 2024 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 section entitled “Corporate Governance” included in the
Proxy Statement relating to the Company’s 2024 annual meeting of shareholders, which is incorporated herein by
reference.
Item 14. Principal Accountant Fees and Services
The information required by this Item 14 is set forth in the section entitled “Audit Matters” included in the Proxy
Statement relating to the Company’s 2024 annual meeting of shareholders, which is incorporated herein by reference.
146 | 2023 Annual Report
Ovintiv 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
2.2
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
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).
Securities Purchase Agreement, dated April 3, 2023, by and among Black Swan Oil & Gas, LLC, PetroLegacy II
Holdings, LLC, Piedra Energy III Holdings, LLC, Piedra Energy IV Holdings, LLC, Black Swan Permian, LLC,
Black Swan Operating, LLC, PetroLegacy Energy II, LLC, PearlSnap Midstream, LLC, Piedra Energy III, LLC
and Piedra Energy IV, LLC, solely in its capacity as Sellers’ Representative, NMB Seller Representative, LLC,
and Ovintiv Inc. and Ovintiv USA Inc (incorporated by reference to Exhibit 2.1 to Ovintiv’s Current Report on
Form 8-K filed on April 3, 2023, SEC File No. 001-39191).
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).
Ovintiv Inc.
2023 Annual Report | 147
4.11
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
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).
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).
148 | 2023 Annual Report
Ovintiv Inc.
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
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).
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).
Ovintiv Inc.
2023 Annual Report | 149
4.38
4.39
4.40
4.41
4.42
4.43
4.44
4.45
4.46
10.1
10.2
10.3
10.4
10.5
10.6*
10.7*
10.8*
10.9*
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).
Indenture, dated as of May 31, 2023, between Ovintiv Inc. and the Bank of New York Mellon, as trustee
(incorporated by reference to Exhibit 4.1 to Ovintiv’s Current Report on Form 8-K filed on May 31, 2023, SEC
File No. 001-39191).
First Supplemental Indenture, dated as of May 31, 2023, among Ovintiv Inc., Ovintiv Canada ULC 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 May 31, 2023, SEC File No. 001-39191).
Form of 5.650% Senior Notes due 2025 (incorporated by reference to Exhibit 4.3 to Ovintiv’s Current Report on
Form 8-K filed on May 31, 2023, SEC File No. 001-39191).
Form of 5.650% Senior Notes due 2028 (incorporated by reference to Exhibit 4.4 to Ovintiv’s Current Report on
Form 8-K filed on May 31, 2023, SEC File No. 001-39191).
Form of 6.250% Senior Notes due 2033 (incorporated by reference to Exhibit 4.5 to Ovintiv’s Current Report on
Form 8-K filed on May 31, 2023, SEC File No. 001-39191).
Form of 7.100% Senior Notes due 2053 (incorporated by reference to Exhibit 4.6 to Ovintiv’s Current Report on
Form 8-K filed on May 31, 2023, 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).
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).
150 | 2023 Annual Report
Ovintiv Inc.
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
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).
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).
Ovintiv Inc.
2023 Annual Report | 151
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41
10.42
10.43*
10.44*
10.45*
10.46*
10.47*
10.48*
21.1
23.1
23.2
23.3
24.1
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 (incorporated
by reference to Exhibit 10.40 to Ovintiv’s Annual Report on Form 10-K filed on February 27, 2023, SEC File No.
001-39191).
Term Credit Agreement, dated as of April 26, 2023, Ovintiv, as borrower, Goldman Sachs, as administrative agent,
and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Ovintiv’s Current Report on Form 8-K
filed on April 27, 2023, SEC File No. 001-39191).
Registration Rights Agreement, dated as of June 12, 2023, by and between Ovintiv Inc. and NMB Stock Trust
(incorporated by reference to Exhibit 10.1 to Ovintiv’s Current Report on Form 8-K filed on June 12, 2023, SEC
File No. 001-39191).
First Amendment to Change in Control Agreement between Ovintiv Inc. and Brendan M. McCracken effective
February 27, 2024.
Second Amendment to Change in Control Agreement between Ovintiv Inc. and Corey D. Code effective February
27, 2024.
Second Amendment to Change in Control Agreement between Ovintiv Inc. and Gregory D. Givens effective
February 27, 2024.
Second Amendment to Change in Control Agreement between Ovintiv Inc. and Rachel M. Moore effective
February 27, 2024.
Second Amendment to Change in Control Agreement between Ovintiv Inc. and Renee E. Zemljak effective
February 27, 2024.
First Amendment to Change in Control Agreement between Ovintiv Inc. and Meghan N. Eilers effective February
27, 2024.
List of 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).
152 | 2023 Annual Report
Ovintiv Inc.
31.1
31.2
32.1
32.2
97.1
99.1
99.2
101.INS
101.SCH
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.
Amended and Restated Incentive Compensation Clawback Policy of Ovintiv Inc.
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 Extension Schema With Embedded Linkbases Document.
The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, has
been formatted in Inline XBRL.
* Management contract or compensatory arrangement.
Item 16. Form 10-K Summary
None.
Ovintiv Inc.
2023 Annual Report | 153
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, 2024
OVINTIV INC.
By: /s/ Corey D. Code
Name: Corey D. Code
Title: Executive Vice-President & Chief
Financial Officer
154 | 2023 Annual Report
Ovintiv Inc.
POWERS OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Brendan M. McCracken and Corey D. Code, and each
of them, any of whom may act without the joinder of the other, the true and lawful attorney-in-fact and agent of the undersigned,
with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities,
to sign any and all amendments 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/ Sippy Chhina
Sippy Chhina
/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/ 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, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
Ovintiv Inc.
2023 Annual Report | 155
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
Sippy Chhina
Alberta
Meg Gentle
Texas
Ralph Izzo
New Jersey
Howard Mayson
Colorado
Brendan McCracken
Colorado
Lee McIntire
Colorado
Steven Nance
Texas
Suzanne Nimocks
Texas
George Pita
Florida
Thomas Ricks
Texas
Brian Shaw
Ontario
156 | 2023 Annual ReportOvintiv Inc. 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 Agent and Registrar
For information regarding change of address or other
matters concerning your shares, please contact
our transfer agent at:
Odyssey Transfer and Trust Company
2155 Woodlane Drive
Suite 100
Woodbury, Minnesota 55125
Canada and United States:
855.584.2880
shareholders@odysseytrust.com
Outside North America:
612.453.4531
Auditor
PricewaterhouseCoopers LLP
Chartered Professional Accountants
Calgary, Alberta
Independent Qualified Reserves Auditors
Netherland, Sewell & Associates, Inc.
Dallas, Texas
McDaniel & Associates Consultants Ltd.
Calgary, Alberta
Annual Report on Form 10-K
Ovintiv’s Annual Report on Form 10-K is filed with
the securities regulators in the United States
and Canada.
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 2023 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
Media Contact
403.645.2252
media.relations@ovintiv.com
Ovintiv Inc.
2023 Annual Report | 157
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
158 | 2023 Annual Report
Ovintiv Inc.
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
ovintiv.com
INVESTOR CONTACT
888.525.0304
investor.relations@ovintiv.com
MEDIA CONTACT
403.645.2252
media.relations@ovintiv.com
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