01—Abstract
Summary
Summary of the 10-K filed February 27, 2023. Cited figures are marked; the original filing is the authoritative source.
Ovintiv Inc. (NYSE/TSX: OVV) reported 2022 net earnings of $3.637 billiona, up from $1.416 billion in 2021, on total revenues of $12.464 billion.
Cash from operating activities was $3.866 billionb and Non-GAAP Cash Flow was $4.110 billion, which exceeded capital expenditures of $1.831 billion by $2.035 billion. Net losses on risk management of $1.867 billion, including realized losses of $2.613 billion, reduced reported revenues, and the company said the realized losses were offset by higher commodity prices. The company ended 2022 with proved reserves of 2,273.6 MMBOE, up from 2,258.2 MMBOE, with production of 510.0 MBOE/d.
Long-term debt fell to $3.570 billionc from $4.786 billion, and the company reported $3.3 billion of total liquidity. Debt to EBITDA was 0.7 times, and all credit ratings were investment grade at year-end. Shareholder returns increased, with 14.7 million shares repurchased for about $719 million and dividends of $0.95 per share totaling $239 million.
The company raised its cash return target to 50 percent of Non-GAAP Cash Flow in excess of capital expenditures and base dividends. For 2023, Ovintiv guided to capital investment of $2.150 billion to $2.350 billiond and production of 500.0 to 525.0 MBOE/d.
The Board declared a quarterly dividend of $0.25 per share on February 27, 2023. The filing also discloses risk factors related to commodity price volatility, Canadian exchange rates, and indigenous land claims in northeast British Columbia.
02—Key points
Key Highlights
- Net earnings of $3.637 billion in 2022 versus $1.416 billion in 2021; total revenues of $12.464 billion.
- Cash from operating activities of $3.866 billion and Non-GAAP Cash Flow of $4.110 billion, exceeding capital expenditures by $2.035 billion.
- Reported net losses on risk management of $1.867 billion, including realized losses of $2.613 billion.
- Long-term debt reduced by $1.216 billion in 2022 to $3.570 billion; total liquidity of $3.3 billion; Debt to EBITDA of 0.7 times.
- Returned capital through 14.7 million shares repurchased for about $719 million and dividends of $239 million ($0.95 per share); cash return target raised to 50 percent of qualifying Non-GAAP Cash Flow.
- Proved reserves of 2,273.6 MMBOE at year-end 2022 (57 percent proved developed), with 2022 extensions and discoveries of 370.6 MMBOE.
- 2023 guidance: capital investment of $2.150 billion to $2.350 billion and total production of 500.0 to 525.0 MBOE/d.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 27, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $12.46B$8.66B | +44.0% |
| Operating Expenses | $8.61B$7.14B | +20.6% |
| Operating Income | $3.85B$1.52B | +153.7% |
| Interest Expense | $311.00M$340.00M | −8.5% |
| Net Income | $3.64B$1.42B | +156.9% |
| EPS (Basic) | $14.34$5.44 | +163.6% |
| EPS (Diluted) | $14.08$5.32 | +164.7% |
| Shares Outstanding (Basic) | 253.60M260.40M | −2.6% |
| Shares Outstanding (Diluted) | 258.40M266.40M | −3.0% |
05—Questions
Frequently Asked Questions
How profitable was Ovintiv in 2022 compared with 2021?
Net earnings were $3.637 billion in 2022, compared with $1.416 billion in 2021. Total revenues rose to $12.464 billion from $8.658 billion. Upstream product revenues were $10.151 billion, up from $7.420 billion, driven by higher average realized prices.
How much debt has Ovintiv paid down?
Long-term debt including the current portion was $3.570 billion at December 31, 2022, down from $4.786 billion a year earlier. The company said it reduced total long-term debt by over $3.3 billion since the end of 2020, and it redeemed its $1.0 billion 5.625 percent senior notes due 2024 in June 2022.
How is Ovintiv returning capital to shareholders?
In 2022 Ovintiv paid $0.95 per share in dividends, totaling $239 million, and repurchased about 14.7 million shares for about $719 million. In July 2022 it raised its cash return target from 25 to 50 percent of Non-GAAP Cash Flow in excess of capital expenditures and base dividends. On February 27, 2023, the Board declared a quarterly dividend of $0.25 per share.
What are the main risks to Ovintiv's business?
The filing highlights a substantial or extended decline in oil, NGL and natural gas prices, or widening price differentials, as the leading risk. Other risks include exchange rate fluctuations between the U.S. and Canadian dollars, climate-related regulation, reliance on partners for some projects, and indigenous treaty and title claims, including the Blueberry River First Nation case in northeast British Columbia.
What does Ovintiv expect for 2023?
Ovintiv plans capital investment of approximately $2.150 billion to $2.350 billion and expects full-year total production of 500.0 to 525.0 MBOE/d, including oil and plant condensate of 165.0 to 175.0 Mbbls/d and natural gas of 1,525 to 1,575 MMcf/d. The company expects to generate significant cash flows in excess of capital expenditures.
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