Ovintiv Reports Third Quarter 2024 Financial and Operating Results
Full Year Production Guidance Increased; Strong Operational Execution and Debt Reduction Continue
Highlights:
Generated net earnings of $507 million, cash from operating activities of $1,022 million, Non-GAAP Cash Flow of $978 million and Non-GAAP Free Cash Flow of $440 million after capital expenditures of $538 million
Third quarter production was above the high-end of the guidance range on every product with average total production volumes of 593 thousand barrels of oil equivalent per day ("MBOE/d"), including 212 thousand barrels per day ("Mbbls/d") of oil and condensate, 93 Mbbls/d of other NGLs (C2 to C4) and 1,725 million cubic feet per day ("MMcf/d") of natural gas
Returned $240 million to shareholders through the combination of base dividend payments and share buybacks
Reduced total debt by $210 million to $5.88 billion, Non-GAAP Debt to Adjusted EBITDA of 1.2 times
Raised full year production guidance range to 583 MBOE/d to 587 MBOE/d, including oil and condensate of 209 Mbbls/d to 211 Mbbls/d and natural gas of 1,700 MMcf/d to 1,715 MMcf/d
Full year capital guidance range narrowed to $2.275 billion to $2.325 billion, midpoint unchanged at $2.3 billion
DENVER, Nov. 7, 2024 /PRNewswire/ - Ovintiv Inc. (NYSE:OVV) (TSX:OVV) ("Ovintiv" or the "Company") today announced its third quarter 2024 financial and operating results. The Company plans to hold a conference call and webcast at 7:00 a.m. MT (09:00 a.m. ET) on November 8, 2024. Please see dial-in details within this release, as well as additional details on the Company's website at www.ovintiv.com under Presentations and Events, Ovintiv.
"Our third quarter results continued to build on our strong track record of operational and financial execution," said Ovintiv President and CEO, Brendan McCracken. "Once again, we exceeded the high end of our production guidance and raised our targets for full year volumes. Our teams continue to be focused on delivering leading returns at the bottom line and I'm pleased to see our third quarter free cash flow move even higher than the second quarter, even though commodity prices were lower."
Third Quarter 2024 Financial and Operating Results
The Company recorded net earnings of $507 million, or $1.92 per diluted share of common stock. Included in net earnings were net gains of $150 million related to the settlement of a legacy asset disposition and net gains on risk management in revenues of $128 million, before tax.
Cash from operating activities was $1,022 million, Non-GAAP Cash Flow was $978 million and capital investment totaled approximately $538 million, resulting in $440 million of Non-GAAP Free Cash Flow.
Third quarter average total production volumes were approximately 593 MBOE/d, including 212 Mbbls/d of oil and condensate, 93 Mbbls/d of other NGLs (C2 to C4) and 1,725 MMcf/d of natural gas.
Upstream operating expense was $4.17 per barrel of oil equivalent ("BOE"). Upstream transportation and processing costs were $7.31 per BOE. Production, mineral and other taxes were $1.56 per BOE, or 4.9% of upstream revenue. These costs were below the low-end of guidance on a combined basis.
Excluding the impact of hedges, third quarter average realized prices were $72.00 per barrel for oil and condensate (96% of WTI), $18.13 per barrel for other NGLs (C2-C4) and $1.29 per thousand cubic feet ("Mcf") for natural gas (60% of NYMEX) resulting in a total average realized price of $32.41 per BOE.
Including the impact of hedges, third quarter average realized prices were $72.00 per barrel for oil and condensate (96% of WTI), $18.33 per barrel for other NGLs (C2-C4) and $1.88 per Mcf for natural gas (87% of NYMEX) resulting in a total average realized price of $34.17 per BOE.
Guidance
The Company issued its fourth quarter 2024 guidance and raised its full year production guidance while narrowing the range for full year capital investment around an unchanged midpoint. Full year production volumes are expected to average 583 to 587 MBOE/d, with full year capital investment of $2.275 billion to $2.325 billion.
Guidance Updates
4Q 2024
Updated Full Year 2024
Total Production (MBOE/d)
575 – 595
583, 587
Oil & Condensate (Mbbls/d)
203, 207
209, 211
NGLs (C2 - C4) (Mbbls/d)
91, 95
91, 92
Natural Gas (MMcf/d)
1,700, 1,750
1,700, 1,715
Capital Investment ($ Millions)
$525, $575
$2,275, $2,325
Returns to Shareholders
Ovintiv remains committed to its capital allocation framework, which returns at least 50% of post base dividend Non-GAAP Free Cash Flow to shareholders through buybacks and/or variable dividends.
In the third quarter of 2024, the Company purchased for cancellation, approximately 3.7 million shares of common stock for consideration of approximately $162 million and paid dividends of $0.30 per share of common stock totaling $78 million. Share buybacks in the fourth quarter are expected to total approximately $181 million.
Continued Balance Sheet Focus
Ovintiv had approximately $3.3 billion in total liquidity as of September 30, 2024, which included available credit facilities of $3.4 billion, available uncommitted demand lines of $232 million, and cash and cash equivalents of $9 million, net of outstanding commercial paper of $324 million.
Total long-term debt including the current portion was $5.88 billion as of September 30, 2024. Debt reduction during the third quarter totaled approximately $210 million. In the fourth quarter, Ovintiv expects to receive cash of approximately $150 million from the settlement of a legacy asset disposition. These proceeds will be allocated entirely to debt repayment.
The Company remains committed to supporting a strong balance sheet and is currently rated investment grade by four credit rating agencies. Ovintiv maintains a long-term leverage target of 1.0 times Non-GAAP Debt to Adjusted EBITDA at mid-cycle prices, with an associated long-term total debt target of $4.0 billion.
As of the end of the third quarter, Ovintiv reported Non-GAAP Debt to EBITDA of 1.1 times and Non-GAAP Debt to Adjusted EBITDA of 1.2 times.
Dividend Declared
On November 7, 2024, Ovintiv's Board declared a quarterly dividend of $0.30 per share of common stock payable on December 31, 2024, to shareholders of record as of December 13, 2024.
Asset Highlights
Permian
Permian production averaged 207 MBOE/d (80% liquids) in the third quarter. The Company had 32 net wells turned in line ("TIL"). Ovintiv plans to invest approximately $1.35 to $1.45 billion in the play in 2024 to bring on 120 to 130 net wells.
Montney
Montney production averaged 245 MBOE/d (19% liquids) in the third quarter. The Company had 11 net wells TIL. Ovintiv plans to invest approximately $425 to $475 million in the play in 2024 to bring on 60 to 70 net wells.
Uinta
Uinta production averaged 37 MBOE/d (85% liquids) in the third quarter. The Company had 11 net wells TIL. Ovintiv plans to invest approximately $300 to $350 million in the play in 2024 to bring on 25 to 30 net wells.
Anadarko
Anadarko production averaged 103 MBOE/d (57% liquids) in the third quarter. The Company had nine net wells TIL during the quarter. Ovintiv plans to invest approximately $100 to $125 million in the play in 2024 to bring on seven to ten net wells.
Conference Call Information
A conference call and webcast to discuss the Company's third quarter results will be held at 7:00 a.m. MT (09:00 a.m. ET) on November 8, 2024.
To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3XEGImx to receive an instant automated call back. You can also dial direct to be entered to the call by an Operator. Please dial 888-510-2154 (toll-free in North America) or 437-900-0527 (international) approximately 15 minutes prior to the call.
The live audio webcast of the conference call, including slides and financial statements, will be available on Ovintiv's website, www.ovintiv.com under Investors/Presentations and Events. The webcast will be archived for approximately 90 days.
Refer to Note 1 Non-GAAP measures and the tables in this release for reconciliation to comparable GAAP financial measures.
Capital Investment and Production
(for the period ended September 30)
3Q 2024
3Q 2023
Capital Expenditures (1) ($ millions)
538
834
Oil (Mbbls/d)
168.4
170.9
NGLs, Plant Condensate (Mbbls/d)
44.0
43.3
Oil & Plant Condensate (Mbbls/d)
212.4
214.2
