Latest News and Analysis
Deals and Transactions
Track Drilling (Rigs by operator) | Completions (Frac Spreads)

Drilling & Completions | Quarterly / Earnings Reports | First Quarter (1Q) Update | Financial Results | Capital Markets | Capital Expenditure

Ovintiv Inc. First Quarter 2023 Results

emailEmail    |    printPrint    |    bookmarkBookmark
   |    Wednesday,May 10,2023

Ovintiv Inc. announced first quarter 2023 results.


  • Generated net earnings of $487 million, cash from operating activities of $1,068 million, Non-GAAP Cash Flow of $851 million and Non-GAAP Free Cash Flow of $241 million after capital expenditures of $610 million
  • Returned $300 million to shareholders through the combination of base dividend payments and share buybacks
  • Commodity marketing strategy delivered total company average realized oil and condensate price of 97% of WTI and realized natural gas price of 111% of NYMEX, including hedges
  • Announced a 20% increase in quarterly dividend payments to $0.30 per share, effective for the June 2023 record date
  • Exceeded Company's first quarter production guidance on every product with average total production volumes of 511 thousand barrels of oil equivalent per day ("MBOE/d"), including 166 thousand barrels per day ("Mbbls/d") of oil and condensate, 86 Mbbls/d of other NGLs (C2 to C4) and 1,555 million cubic feet per day ("MMcf/d") of natural gas

Recent Developments

  • On April 3, announced the acquisition of core Midland Basin assets, including approximately 65,000 net acres of largely undeveloped resource with approximately 1,050 net well locations in a cash and stock transaction valued at approximately $4.275 billion, before closing adjustments
  • On April 3, announced the disposition of the Company's Bakken assets for proceeds of approximately $825 million, in cash, before closing adjustments

Ovintiv President and CEO, Brendan McCracken, Said: "Picking up where we left off in the fourth quarter, our first quarter outperformance reflects the combination of strong well results and cost efficiencies."

"For the past two quarters, our average Permian well performance was among the highest oil volumes per lateral foot in Ovintiv's history in the play."

"The combination of strong wells across the portfolio and our leading capital efficiency are delivering substantial Non-GAAP Free Cash Flow, durable returns on invested capital and substantial cash returns(1) to our shareholders. Our recently announced transactions will further build on our momentum and are expected to drive more than 25% higher cash returns per share over the next twelve months following the close of the transactions and more than 40% higher cash returns per share in 2024."

First Quarter 2023 Financial and Operating Results

  • The Company recorded net earnings of $487 million, or $1.97 per diluted share of common stock.
  • Cash from operating activities was $1,068 million, Non-GAAP Cash Flow was $851 million and capital investment totaled approximately $610 million, resulting in $241 million of Non-GAAP Free Cash Flow.
  • First quarter average total production volumes were above Company guidance on all products at approximately 511 MBOE/d, including 166 Mbbls/d of oil and condensate, 86 Mbbls/d of other NGLs and 1,555 MMcf/d of natural gas.
  • Upstream operating expense was $4.33 per barrel of oil equivalent ("BOE"). Upstream transportation and processing costs were $9.00 per BOE. Production, mineral and other taxes were $1.83 per BOE. These costs were below the midpoint of guidance on a combined basis.
  • Including the impact of hedges, first quarter average realized prices were $73.81 per barrel for oil and condensate (97% of WTI), $21.11 per barrel for other NGLs (C2-C4) and $3.80 per thousand cubic feet ("Mcf") for natural gas (111% of NYMEX) resulting in a total average realized price of $39.08 per BOE. Excluding the impact of hedges, the average realized prices for oil and condensate and other NGLs were unchanged, while the average realized price for natural gas was $4.34 per Mcf (127% of NYMEX).

2023 Guidance

The Company issued its second quarter 2023 guidance and confirmed the full year guidance announced in April. Full year 2023 guidance ranges for oil and condensate, and total production volumes were updated in April to reflect proforma operations assuming integration of the recently announced Midland Basin acquisition and the Bakken divestiture.

2024 Outlook

Ovintiv expects to deliver 2024 total company average oil and condensate production volumes of greater than 200 Mbbls/d with total capital investment of $2.1 billion to $2.5 billion, following the integration of the recently announced Midland Basin acquisition and the Bakken divestiture.

Midland Basin Acquisition

On April 3, Ovintiv announced it had entered into a definitive purchase agreement to acquire substantially all leasehold interest and related assets of Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources which are portfolio companies of funds managed by EnCap Investments L.P. ("EnCap"), in a cash and stock transaction valued at approximately $4.275 billion, before closing adjustments. Upon closing, the acquisition will add approximately 1,050 net 10,000 foot well locations to Ovintiv's Permian inventory and approximately 65,000 net acres in the core of the Midland Basin, strategically located in close proximity to Ovintiv's current Permian operations.

Under the terms of the agreement, the sellers will receive approximately 32.6 million shares of Ovintiv common stock and $3.125 billion of cash. The cash portion of the transaction is expected to be funded through a combination of cash on hand, cash proceeds received from the Company's pending sale of its Bakken assets, as well as proceeds from new debt financing and/or borrowings under the Company's credit facility. If required, Ovintiv has received fully committed bridge financing from Goldman Sachs Bank USA and Morgan Stanley to facilitate the transaction.

Ovintiv's land position in the Permian is expected to increase to approximately 179 thousand net acres; 97% of the acquired acreage is held by production with an average operated working interest of 82%. At the end of June, the Company's pro forma Permian oil and condensate production is expected to nearly double. The Company expects to realize significant well cost savings across its combined Permian assets resulting from optimized operations and economies of scale.

Bakken Disposition

On April 3, Ovintiv announced that it had entered into a definitive agreement to sell the entirety of its Bakken assets located in the Williston Basin of North Dakota to Grayson Mill Bakken, LLC, a portfolio company of funds managed by EnCap for total cash proceeds of approximately $825 million, before closing adjustments. Ovintiv's landholdings in the play totaled 46 thousand net acres as of December 31, 2022. First quarter production from the Bakken totaled approximately 38.8 MBOE/d (59% oil and condensate).

The effective date of the acquisition of the Midland Basin assets and the Bakken disposition is January 1, 2023. The transactions, which are expected to close by the end of the second quarter, are subject to the satisfaction of customary closing conditions and closing adjustments.

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 first quarter of 2023, the Company returned approximately $300 million to shareholders through share buybacks totaling approximately $239 million and its base dividend of approximately $61 million.

During the first quarter, Ovintiv purchased for cancellation, approximately 5.2 million common shares at an average price of $45.74 per share.

Second quarter 2023 cash returns to shareholders are expected to total approximately $173 million, consisting of share buybacks of approximately $90 million and base dividend payments of approximately $83 million, bringing total cash returns since the third quarter of 2021 to approximately $1.6 billion.

Using March 30, 2023 strip pricing, the Company expects the combined Midland Basin acquisition and the Bakken disposition transactions to drive more than 25% higher cash returns per share over the next twelve months following the close of the transactions and more than 40% higher cash returns per share in 2024.

Continued Balance Sheet Focus

Ovintiv had $3.2 billion in total liquidity as at March 31, 2023, which included available credit facilities of $3.2 billion, available uncommitted demand lines of $280 million, and cash and cash equivalents of $26 million, net of outstanding commercial paper of $280 million. The Company's long-term debt totaled $3.8 billion.

The Company reported Debt to EBITDA of 0.6 times and Non-GAAP Debt to Adjusted EBITDA of 0.9 times as of March 31, 2023.

Ovintiv's leverage metrics are expected to remain strong following the close of the transactions. Based on a twelve-month projected Adjusted EBITDA using strip pricing as of March 30, 2023, the Company's leverage ratio is expected to be approximately 1.4 times Debt to Adjusted EBITDA following the close of the transaction. Going forward, Ovintiv will steward towards a 1.0 times leverage ratio and $4.0 billion of total debt.

Ovintiv remains committed to maintaining a strong balance sheet and is currently rated investment grade by four credit rating agencies.

Dividend Declared

On April 2, 2023, Ovintiv's Board declared a quarterly dividend of $0.30 per share of common stock payable on June 30, 2023, to shareholders of record as of June 15, 2023.

Inventory Renewal

The Company continued to add premium drilling locations through low-cost bolt-on acquisitions during the first quarter which totaled $199 million and was largely focused in the Permian and Uinta plays.

Asset Highlights


Permian production averaged 116 MBOE/d (77% liquids) in the first quarter. The Company had 14 net wells turned in line ("TIL").


Montney production averaged 210 MBOE/d (19% liquids) in the first quarter. The Company had 11 net wells TIL.


Uinta production averaged 16 MBOE/d (84% liquids) in the first quarter. No wells were TIL during the quarter.


Bakken production averaged 39 MBOE/d (79% liquids) in the first quarter. The Company had eight net wells TIL.


Anadarko production averaged 124 MBOE/d (62% liquids) in the first quarter. The Company had 13 net wells TIL.

Related Categories :

First Quarter (1Q) Update   

More    First Quarter (1Q) Update News

Mid-Continent News >>>

Mid-Continent - Anadarko Basin News >>>