How did Ovintiv perform financially in fiscal 2023?

Ovintiv reported full year 2023 net earnings of $2,085 million, or $7.90 per diluted share, compared with $3,637 million in 2022 as reported in the filing's comparative figures. Cash from operating activities was $4,167 million, Non-GAAP Cash Flow was $3,899 million, and Non-GAAP Free Cash Flow was $1,155 million after capital expenditures of $2,744 million.

What is the company's 2024 outlook?

For 2024, Ovintiv announced a capital program of approximately $2.2 to $2.4 billion, expected to deliver total production of 545 to 575 MBOE/d, including oil and condensate of 202 to 208 Mbbls/d. First quarter 2024 production is expected to be the high point of the year, with oil and condensate of 208 to 212 Mbbls/d, and the company expects a greater than 18% improvement in capital efficiency for oil and condensate production versus its original 2023 guidance.

How is Ovintiv returning cash to shareholders?

Ovintiv states it remains committed to returning at least 50% of post base dividend Non-GAAP Free Cash Flow to shareholders through buybacks and/or variable dividends. In 2023 it returned about $733 million, including about $426 million of buybacks (about 10 million shares) and about $307 million of base dividends. The company expects first quarter 2024 buybacks of about $248 million and declared a quarterly dividend of $0.30 per share payable March 28, 2024.

What is the state of Ovintiv's balance sheet?

At December 31, 2023, Ovintiv had approximately $3.5 billion in total liquidity and total debt of $5.7 billion. Non-GAAP Debt to EBITDA was 1.2 times and Non-GAAP Debt to Adjusted EBITDA was 1.3 times. The company is rated investment grade by four credit rating agencies and targets long-term leverage of 1.0 times Non-GAAP Debt to Adjusted EBITDA at mid-cycle prices, with a long-term total debt target of $4.0 billion.

What drove the company's inventory and asset changes in 2023?

The filing states Ovintiv acquired Permian assets comprising approximately 65,000 net acres in 2023 and closed the sale of its Bakken assets, representing its exit from the play. Since 2021, the company says it has added approximately 1,650 net premium drilling locations to inventory, representing more than seven years of drilling inventory based on expected 2024 drilling, with about 1,100 of those locations in the Permian.

OVV 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 27, 2024. Cited figures are marked; the original filing is the authoritative source.

Ovintiv Inc. (NYSE, TSX: OVV) reported fourth quarter and full year 2023 results on February 27, 2024, as described in a news release (Exhibit 99.1) and selected and supplemental financial information (Exhibit 99.2).

For full year 2023, the company generated net earnings of $2.085 billion^a ($7.90 per diluted share), cash from operating activities of $4.167 billion, Non-GAAP Cash Flow of $3.899 billion and Non-GAAP Free Cash Flow of $1.155 billion after capital expenditures of $2.744 billion. Fourth quarter net earnings were $856 million ($3.11 per diluted share), with Non-GAAP Free Cash Flow of $577 million. Full year production averaged 566 MBOE/d, and the company reported exceeding the high end of its full year production guidance on every product.

The company returned $733 million^b to shareholders in 2023 through dividends and buybacks, and reduced total debt by $426 million in the fourth quarter. For 2024, Ovintiv plans a capital program of approximately $2.2 to $2.4 billion, with full year production guidance of 545 to 575 MBOE/d, including 202 to 208 Mbbls/d of oil and condensate. The company expects first quarter 2024 to be the production high point of the year, and it expects a greater than 18% improvement in capital efficiency for its oil and condensate production versus its original 2023 guidance.

The company stated it generated about $450 million^c more free cash flow expected in 2024 than in 2023 based on its CEO's comments in the release. Its balance sheet included total debt of $5.7 billion, a Non-GAAP Debt to Adjusted EBITDA ratio of 1.3 times, and a quarterly dividend of $0.30 per share declared February 27, 2024.

02—Key points

Key Highlights

Full year 2023 net earnings of $2,085 million ($7.90 per diluted share), with cash from operating activities of $4,167 million and Non-GAAP Free Cash Flow of $1,155 million
Fourth quarter 2023 net earnings of $856 million ($3.11 per diluted share) and Non-GAAP Free Cash Flow of $577 million after capital expenditures of $660 million
Full year 2023 average production of 565.6 MBOE/d, with the company exceeding the high end of full year production guidance on every product
2024 capital program of approximately $2.2 to $2.4 billion, targeting total production of 545 to 575 MBOE/d and oil and condensate of 202 to 208 Mbbls/d
Returned $733 million to shareholders in 2023 through base dividends (about $307 million) and share buybacks (about $426 million); $248 million of buybacks expected in Q1 2024
Total debt of $5.7 billion at year-end 2023 with Non-GAAP Debt to Adjusted EBITDA of 1.3 times; total liquidity of approximately $3.5 billion
Year-end 2023 SEC proved reserves of 2.2 billion BOE, with proved reserves replacement of 106% of 2023 production

03—Questions

Frequently Asked Questions

How did Ovintiv perform financially in fiscal 2023?
Ovintiv reported full year 2023 net earnings of $2,085 million, or $7.90 per diluted share, compared with $3,637 million in 2022 as reported in the filing's comparative figures. Cash from operating activities was $4,167 million, Non-GAAP Cash Flow was $3,899 million, and Non-GAAP Free Cash Flow was $1,155 million after capital expenditures of $2,744 million.
What is the company's 2024 outlook?
For 2024, Ovintiv announced a capital program of approximately $2.2 to $2.4 billion, expected to deliver total production of 545 to 575 MBOE/d, including oil and condensate of 202 to 208 Mbbls/d. First quarter 2024 production is expected to be the high point of the year, with oil and condensate of 208 to 212 Mbbls/d, and the company expects a greater than 18% improvement in capital efficiency for oil and condensate production versus its original 2023 guidance.
How is Ovintiv returning cash to shareholders?
Ovintiv states it remains committed to returning at least 50% of post base dividend Non-GAAP Free Cash Flow to shareholders through buybacks and/or variable dividends. In 2023 it returned about $733 million, including about $426 million of buybacks (about 10 million shares) and about $307 million of base dividends. The company expects first quarter 2024 buybacks of about $248 million and declared a quarterly dividend of $0.30 per share payable March 28, 2024.
What is the state of Ovintiv's balance sheet?
At December 31, 2023, Ovintiv had approximately $3.5 billion in total liquidity and total debt of $5.7 billion. Non-GAAP Debt to EBITDA was 1.2 times and Non-GAAP Debt to Adjusted EBITDA was 1.3 times. The company is rated investment grade by four credit rating agencies and targets long-term leverage of 1.0 times Non-GAAP Debt to Adjusted EBITDA at mid-cycle prices, with a long-term total debt target of $4.0 billion.
What drove the company's inventory and asset changes in 2023?
The filing states Ovintiv acquired Permian assets comprising approximately 65,000 net acres in 2023 and closed the sale of its Bakken assets, representing its exit from the play. Since 2021, the company says it has added approximately 1,650 net premium drilling locations to inventory, representing more than seven years of drilling inventory based on expected 2024 drilling, with about 1,100 of those locations in the Permian.

04—Continue

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