Ovintiv (OVV) posts Q1 2026 loss, closes NuVista deal and sells Anadarko assets
Rhea-AI Filing Summary
Ovintiv Inc. reported a net loss of $630 million, or $2.35 per diluted share, for the three months ended March 31, 2026, driven largely by non‑cash ceiling test impairments of $1,485 million before tax. Total revenues rose to $2,532 million from $2,377 million a year earlier as higher plant condensate and natural gas volumes, boosted by the NuVista acquisition, offset lower oil output and weaker NGL pricing.
Cash from operating activities increased to $1,056 million, supporting capital expenditures of $605 million, dividends of $85 million, and share repurchases of $84 million. Ovintiv closed the $2.8 billion NuVista Energy acquisition, adding about 140,000 net acres and 930 net well locations in the condensate‑rich Montney, funded with $1.2 billion of cash and approximately 30.1 million new shares plus a $1.129 billion term loan.
Subsequent to quarter‑end, the company sold its Anadarko Basin assets for approximately $2.9 billion, repaid and terminated the Term Credit Agreement, and redeemed $700 million of 5.65% senior notes, actions expected to reduce interest expense. Average production was 678.9 MBOE/d, split roughly 48% liquids and 52% natural gas.
Positive
- None.
Negative
- None.
Insights
Stronger cash flow and portfolio reshaping offset large non‑cash impairments.
Ovintiv posted a net loss of $630 million mainly from ceiling test impairments of $1,485 million, while cash from operating activities rose to $1,056 million. This highlights the gap between accounting earnings and cash generation in a volatile price environment.
The $2.8 billion NuVista deal deepens exposure to condensate‑rich Montney assets, adding 930 net well locations and 140,000 net acres. Management funded it with new equity, a $1.129 billion term loan and cash, temporarily lifting reported debt to $6,398 million with Debt to EBITDA of 2.4x.
Post‑quarter Anadarko divestiture proceeds of about $2.9 billion were used to retire the term loan and redeem $700 million of 5.65% notes, which the company expects will save roughly $40 million annually in interest. Subsequent filings may clarify how the updated framework to return 50–100% of excess Non‑GAAP Cash Flow is applied over the full year.
Key Figures
Key Terms
ceiling test impairments financial
full cost accounting financial
Normal Course Issuer Bid financial
Debt to EBITDA financial
variable interest entity financial
costless collars financial
Earnings Snapshot
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
(Exact name of registrant as specified in its charter)
|
||
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
Registrant’s telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
☒ |
|
Accelerated filer |
☐ |
|
|
|
|
|
|
Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
Number of registrant’s shares of common stock outstanding as of May 1, 2026 |
|
|
|
1
OVINTIV INC.
FORM 10-Q
TABLE OF CONTENTS
|
PART I |
|
|
|
|
|
|
Item 1. |
Financial Statements |
|
6 |
|
Condensed Consolidated Statement of Earnings |
|
6 |
|
Condensed Consolidated Statement of Comprehensive Income |
|
6 |
|
Condensed Consolidated Balance Sheet |
|
7 |
|
Condensed Consolidated Statement of Changes in Shareholders’ Equity |
|
8 |
|
Condensed Consolidated Statement of Cash Flows |
|
9 |
|
Notes to Condensed Consolidated Financial Statements |
|
10 |
|
|
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
34 |
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
|
56 |
Item 4. |
Controls and Procedures |
|
58 |
|
|
|
|
|
PART II |
|
|
|
|
|
|
Item 1. |
Legal Proceedings |
|
59 |
Item 1A. |
Risk Factors |
|
59 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
|
59 |
Item 3. |
Defaults Upon Senior Securities |
|
60 |
Item 4. |
Mine Safety Disclosures |
|
60 |
Item 5. |
Other Information |
|
60 |
Item 6. |
Exhibits |
|
60 |
Signatures |
|
|
61 |
2
DEFINITIONS
Unless the context otherwise requires or otherwise expressly stated, all references in this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10‑Q:
“AECO” means Alberta Energy Company and is the Canadian benchmark price for natural gas.
“ASU” means Accounting Standards Update.
“bbl” or “bbls” means barrel or barrels.
“BOE” means barrels of oil equivalent.
“Btu” means British thermal units, a measure of heating value.
“CORRA” means Canadian Overnight Repo Rate Average.
“DD&A” means depreciation, depletion and amortization expenses.
“FASB” means Financial Accounting Standards Board.
“GHG” means greenhouse gas.
“Mbbls/d” means thousand barrels per day.
“MBOE/d” means thousand barrels of oil equivalent per day.
“Mcf” means thousand cubic feet.
“MD&A” means Management’s Discussion and Analysis of Financial Condition and Results of Operations.
“MMBOE” means million barrels of oil equivalent.
“MMBtu” means million Btu.
“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.
“SEC” means United States Securities and Exchange Commission.
“SOFR” means Secured Overnight Financial Rate.
“S&P 400” means Standard and Poor’s MidCap 400 index.
“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 Quarterly Report on Form 10-Q, 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.
3
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 Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS AND RISK
This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10‑Q, and the other documents incorporated herein by reference (if any), the use of words and phrases including “aims,” “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “focused on,” “forecast,” “guidance,” “intends,” “maintain,” “may,” “opportunities,” “outlook,” “plans,” “potential,” “seeks,” “strategy,” “strives,” “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 Quarterly Report on Form 10‑Q include: expectations of plans, strategies and objectives of the Company, including anticipated reserves development; the Company’s ability to consummate any future acquisition and divestiture transactions; the Company’s ability to successfully integrate any acquired assets into its business; 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 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 or desired benefits from acquisitions; 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 Company’s ability to timely achieve its stated sustainability goals, targets and initiatives; the impact of changes in federal, state, provincial, local and tribal laws, rules and regulations, including the impact of changes in trade policies and tariffs; anticipated compliance with current or proposed environmental legislation; the Company’s ability to manage debt and financial ratios and comply with financial covenants; the implementation and outcomes of risk management programs, including exposure to commodity prices, interest rate and foreign exchange rate fluctuations and the volume of oil, NGLs and natural gas production hedged; the declaration and payment of future dividends and the anticipated repurchase of 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 Quarterly Report on Form 10-Q 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,
4
but are not limited to, those set forth in Item 1A. Risk Factors of the Company’s most recent Annual Report on Form 10‑K for the fiscal year ended December 31, 2025 (the “2025 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 Quarterly Report on Form 10‑Q 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 Quarterly Report on Form 10‑Q, 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 the 2025 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.
5
PART I
Item 1. Financial Statements
Condensed Consolidated Statement of Earnings (unaudited)
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
|
March 31, |
|
|||||
(US$ millions, except per share amounts) |
|
|
|
2026 |
|
|
2025 |
|
||
Revenues |
|
(Note 3) |
|
|
|
|
|
|
||
Product and service revenues |
|
(Note 4) |
|
$ |
|
|
$ |
|
||
Sales of purchased product |
|
(Note 4) |
|
|
|
|
|
|
||
Gains (losses) on risk management, net |
|
(Note 20) |
|
|
( |
) |
|
|
( |
) |
Sublease revenues |
|
(Note 11) |
|
|
|
|
|
|
||
Total Revenues |
|
|
|
|
|
|
|
|
||
Operating Expenses |
|
(Note 3) |
|
|
|
|
|
|
||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
||
Transportation and processing |
|
|
|
|
|
|
|
|
||
Operating |
(Note 18) |
|
|
|
|
|
|
|||
Purchased product |
|
|
|
|
|
|
|
|
||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
||
Impairments |
|
(Note 10) |
|
|
|
|
|
|
||
Accretion of asset retirement obligation |
|
|
|
|
|
|
|
|
||
Administrative |
(Notes 9, 17, 18) |
|
|
|
|
|
|
|||
Total Operating Expenses |
|
|
|
|
|
|
|
|
||
Operating Income (Loss) |
|
|
|
|
( |
) |
|
|
( |
) |
Other (Income) Expenses |
|
|
|
|
|
|
|
|
||
Interest |
|
(Notes 5, 9) |
|
|
|
|
|
|
||
Foreign exchange (gain) loss, net |
|
(Note 6) |
|
|
( |
) |
|
|
|
|
Other (gains) losses, net |
|
|
|
( |
) |
|
|
( |
) |
|
Total Other (Income) Expenses |
|
|
|
|
|
|
|
|
||
Net Earnings (Loss) Before Income Tax |
|
|
|
|
( |
) |
|
|
( |
) |
Income tax expense (recovery) |
|
(Note 7) |
|
|
( |
) |
|
|
( |
) |
Net Earnings (Loss) |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
Net Earnings (Loss) per Share of Common Stock |
|
(Note 14) |
|
|
|
|
|
|
||
Basic |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
|
|
|
( |
) |
|
|
( |
) |
Weighted Average Shares of Common Stock Outstanding (millions) |
(Note 14) |
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
|
|
|
||
Condensed Consolidated Statement of Comprehensive Income (unaudited)
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
|
March 31, |
|
|||||
(US$ millions) |
|
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
||
Net Earnings (Loss) |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
Other Comprehensive Income (Loss), Net of Tax |
|
|
|
|
|
|
|
|
||
Foreign currency translation adjustment |
|
(Note 15) |
|
|
( |
) |
|
|
|
|
Pension and other post-employment benefit plans |
|
(Note 15) |
|
|
( |
) |
|
|
( |
) |
Other Comprehensive Income (Loss) |
|
|
|
|
( |
) |
|
|
|
|
Comprehensive Income (Loss) |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
6
Condensed Consolidated Balance Sheet (unaudited)
|
|
|
|
As at |
|
|
As at |
|
||
|
|
|
|
March 31, |
|
|
December 31, |
|
||
(US$ millions) |
|
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
||
Assets |
|
|
|
|
|
|
|
|
||
Current Assets |
|
|
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
$ |
|
|
$ |
|
||
Accounts receivable and accrued revenues (net of allowances |
|
|
|
|
|
|
|
|
||
of $ |
|
(Note 4) |
|
|
|
|
|
|
||
Investment in marketable securities |
|
(Note 9) |
|
|
|
|
|
|
||
Risk management |
|
(Notes 19, 20) |
|
|
|
|
|
|
||
Income tax receivable |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Property, Plant and Equipment, at cost: |
|
(Note 10) |
|
|
|
|
|
|
||
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 |
|
(Note 3) |
|
|
|
|
|
|
||
Other Assets |
|
|
|
|
|
|
|
|||
Risk Management |
|
(Notes 19, 20) |
|
|
|
|
|
|
||
Deferred Income Taxes |
|
|
|
|
|
|
|
|
||
Goodwill |
|
(Notes 3, 9) |
|
|
|
|
|
|
||
|
|
(Note 3) |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
||
Current Liabilities |
|
|
|
|
|
|
|
|
||
Accounts payable and accrued liabilities |
|
|
|
$ |
|
|
$ |
|
||
Current portion of operating lease liabilities |
|
|
|
|
|
|
|
|
||
Income tax payable |
|
|
|
|
|
|
|
|
||
Risk management |
|
(Notes 19, 20) |
|
|
|
|
|
|
||
Current portion of long-term debt |
|
(Note 12) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Long-Term Debt |
|
(Note 12) |
|
|
|
|
|
|
||
Operating Lease Liabilities |
|
|
|
|
|
|
|
|
||
Other Liabilities and Provisions |
(Note 13) |
|
|
|
|
|
|
|||
Risk Management |
|
(Notes 19, 20) |
|
|
|
|
|
|
||
Asset Retirement Obligation |
|
|
|
|
|
|
|
|
||
Deferred Income Taxes |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
(Note 22) |
|
|
|
|
|
|
|||
Shareholders’ Equity |
|
|
|
|
|
|
|
|
||
Share capital - authorized |
|
|
|
|
|
|
|
|
||
2026 issued and outstanding: |
|
(Note 14) |
|
|
|
|
|
|
||
Paid in surplus |
|
(Note 14) |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
|
|
||
Accumulated other comprehensive income |
|
(Note 15) |
|
|
|
|
|
|
||
Total Shareholders’ Equity |
|
|
|
|
|
|
|
|
||
|
|
|
|
$ |
|
|
$ |
|
||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
7
Condensed Consolidated Statement of Changes in Shareholders’ Equity (unaudited)
Three Months Ended March 31, 2026 (US$ millions) |
|
|
|
Share |
|
|
Paid in |
|
Retained |
|
Accumulated |
|
Total |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Dividends on Shares of Common Stock ($ |
|
(Note 14) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Shares of Common Stock Purchased |
|
|
|
|
(Note 14) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Shares of Common Stock Issued |
(Notes 9, 14, 21) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity-Settled Compensation Costs |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||||
Other Comprehensive Income (Loss) |
|
(Note 15) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||||
Balance, March 31, 2026 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Three Months Ended March 31, 2025 (US$ millions) |
|
|
|
Share |
|
|
Paid in |
|
Retained |
|
Accumulated |
|
Total |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Dividends on Shares of Common Stock ($ |
|
(Note 14) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Equity-Settled Compensation Costs |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||||
Other Comprehensive Income (Loss) |
|
(Note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, March 31, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
8
Condensed Consolidated Statement of Cash Flows (unaudited)
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
|
March 31, |
|
|||||
(US$ millions) |
|
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
||
Operating Activities |
|
|
|
|
|
|
|
|
||
Net earnings (loss) |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
||
Impairments |
|
(Note 10) |
|
|
|
|
|
|
||
Accretion of asset retirement obligation |
|
|
|
|
|
|
|
|
||
Deferred income taxes |
|
(Note 7) |
|
|
( |
) |
|
|
( |
) |
Unrealized (gain) loss on risk management |
|
(Note 20) |
|
|
|
|
|
|
||
Unrealized foreign exchange (gain) loss |
|
(Note 6) |
|
|
( |
) |
|
|
( |
) |
Foreign exchange (gain) loss on settlements |
|
(Note 6) |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
( |
) |
|
|
|
|
Net change in other assets and liabilities |
|
|
|
|
( |
) |
|
|
( |
) |
Net change in non-cash working capital |
|
(Note 21) |
|
|
( |
) |
|
|
( |
) |
Cash From (Used in) Operating Activities |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Investing Activities |
|
|
|
|
|
|
|
|
||
Capital expenditures |
|
(Note 3) |
|
|
( |
) |
|
|
( |
) |
Acquisitions |
|
(Note 8) |
|
|
( |
) |
|
|
( |
) |
Corporate acquisition, net of cash acquired |
|
(Note 9) |
|
|
( |
) |
|
|
|
|
Proceeds from divestitures |
|
(Note 8) |
|
|
|
|
|
|
||
Net change in investments and other |
|
|
|
|
|
|
|
|
||
Cash From (Used in) Investing Activities |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||
Financing Activities |
|
|
|
|
|
|
|
|
||
Net issuance (repayment) of revolving debt |
|
(Note 12) |
|
|
|
|
|
|
||
Issuance of debt under the Term Credit Agreement |
|
(Notes 9, 12) |
|
|
|
|
|
|
||
Repayment of long-term debt |
|
(Note 12) |
|
|
( |
) |
|
|
|
|
Purchase of shares of common stock |
|
(Note 14) |
|
|
( |
) |
|
|
|
|
Dividends on shares of common stock |
|
(Note 14) |
|
|
( |
) |
|
|
( |
) |
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 Period |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Cash, End of Period |
|
|
|
$ |
|
|
$ |
|
||
Cash Equivalents, End of Period |
|
|
|
|
|
|
|
|
||
Restricted Cash, End of Period |
|
|
|
|
|
|
|
|
||
Cash, Cash Equivalents and Restricted Cash, End of Period |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Supplementary Cash Flow Information |
|
(Note 21) |
|
|
|
|
|
|
||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
9
1. |
Basis of Presentation and Principles of Consolidation |
Ovintiv is in the business of the exploration for, the development of, and the production and marketing of oil, NGLs and natural gas.
The interim Condensed 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 the Company has the ability to exercise significant influence are accounted for using the equity method.
The interim Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP and the rules and regulations of the SEC. Pursuant to these rules and regulations, certain information and disclosures normally required under U.S. GAAP have been condensed or have been disclosed on an annual basis only. Accordingly, the interim Condensed Consolidated Financial Statements should be read in conjunction with the annual audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2025, which are included in Item 8 of Ovintiv’s 2025 Annual Report on Form 10‑K.
The interim Condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the annual audited Consolidated Financial Statements for the year ended December 31, 2025.
These unaudited interim Condensed Consolidated Financial Statements reflect, in the opinion of Management, all normal and recurring adjustments necessary to present fairly the financial position and results of the Company as at and for the periods presented. Interim condensed consolidated financial results are not necessarily indicative of consolidated financial results expected for the fiscal year.
2. |
Recent Accounting Pronouncements |
New Standards Issued Not Yet Adopted
As of January 1, 2027, Ovintiv will be required to adopt ASU 2024-03 “Disaggregation of Income Statement Expenses” for annual disclosures with interim disclosures required beginning in the first quarter of 2028. The new standard requires that an entity disclose tabular information about certain expenses including, but not limited to, purchases of inventory, employee compensation, and depreciation, depletion, and amortization expense that are presented within expense line captions reported in the statement of earnings. A qualitative description of the remaining other amounts within those expense line captions will be required. The Company will also be required to determine and disclose its definition of selling expenses and the total amount of selling expenses. The amendments are to be applied prospectively, with the option for retrospective application, and are not expected to have a material impact on the Company’s Consolidated Financial Statements.
10
3. |
Segmented Information |
Ovintiv’s exploration and production activities are subdivided into
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 and administrative costs not allocated to the operating segments.
The tables below summarize the results of operations and total assets by segment that are provided to the Chief Operating Decision Makers (“CODMs”) which have been identified as the Company’s President & Chief Executive Officer, Executive Vice President & Chief Operating Officer, and the Executive Vice President & Chief Financial Officer.
The Company evaluates the effects of debt financing, interest expense and/or interest income, foreign exchange gains (losses) and other gains (losses) at a consolidated level.
11
Results of Operations (For the three months ended March 31)
Segment Information
|
|
|
|
|
|
USA Operations |
|
|
Canadian Operations |
|
||||||||||
|
|
|
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product and service revenues |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Sales of purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Income (Loss) |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
||||||||||
|
|
|
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product and service revenues |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Sales of purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
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) |
|
|
|
|
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
||
12
Capital Expenditures by Segment
|
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
|
|
|
March 31, |
|
|||||
|
|
|
|
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
USA Operations |
|
|
|
|
|
$ |
|
|
$ |
|
||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
||
Corporate & Other |
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
$ |
|
|
$ |
|
||
Goodwill, Property, Plant and Equipment and Total Assets by Segment
|
|
Goodwill |
|
|
Property, Plant and Equipment |
|
|
Total Assets |
|
|||||||||||||||
|
|
As at |
|
|
As at |
|
|
As at |
|
|||||||||||||||
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
December 31, |
|
||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
USA Operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate & Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
13
4. |
Revenues from Contracts with Customers |
The following table summarizes Ovintiv’s revenues from contracts with customers.
Revenues (For the three months ended March 31)
|
|
|
|
|
|
USA Operations |
|
|
Canadian Operations |
|
||||||||||
|
|
|
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales of purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gathering and processing, and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
||||||||||
|
|
|
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales of purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gathering and processing, and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company’s revenues from contracts with customers consists of product sales including oil, NGLs and natural gas, sales of purchased product, as well as the provision of gathering and processing, and other services to third parties. Ovintiv had
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 at the time of delivery.
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
As at March 31, 2026, 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.
14
5. |
Interest |
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Interest Expense on: |
|
|
|
|
|
|
||
Debt |
|
$ |
|
|
$ |
|
||
Finance leases |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
For the three months ended March 31, 2026, interest expense on debt includes $
For the three months ended March 31, 2025, interest expense on debt includes $
6. |
Foreign Exchange (Gain) Loss, Net |
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Unrealized Foreign Exchange (Gain) Loss on: |
|
|
|
|
|
|
||
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 risk management contracts issued from Canada |
|
|
|
|
|
|
||
Intercompany notes |
|
|
( |
) |
|
|
( |
) |
Other Monetary Revaluations |
|
|
|
|
|
( |
) |
|
|
|
$ |
( |
) |
|
$ |
|
|
In 2024, the Company entered into $
15
7. |
Income Taxes |
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Current Tax |
|
|
|
|
|
|
||
United States |
|
$ |
|
|
$ |
|
||
Canada |
|
|
|
|
|
|
||
Total Current Tax Expense (Recovery) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Deferred Tax |
|
|
|
|
|
|
||
United States |
|
|
( |
) |
|
|
|
|
Canada |
|
|
|
|
|
( |
) |
|
Total Deferred Tax Expense (Recovery) |
|
|
( |
) |
|
|
( |
) |
Income Tax Expense (Recovery) |
|
$ |
( |
) |
|
$ |
( |
) |
Effective Tax Rate |
|
|
% |
|
|
% |
||
Ovintiv’s interim income tax expense is determined using the estimated annual effective income tax rate applied to year-to-date net earnings before income tax plus the effect of legislative changes and amounts in respect of prior periods. The estimated annual effective income tax rate is impacted by expected annual 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, which can produce interim effective tax rate fluctuations.
During the three months ended March 31, 2026, Canadian current income tax expense includes a recovery related to recently enacted Canadian legislation that accelerates capital cost recovery for years beginning in 2025.
The effective tax rate of
The effective tax rate of
16
8. |
Acquisitions and Divestitures |
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Acquisitions |
|
|
|
|
|
|
||
USA Operations |
|
$ |
|
|
$ |
|
||
Canadian Operations |
|
|
( |
) |
|
|
|
|
Total Acquisitions |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Divestitures |
|
|
|
|
|
|
||
USA Operations |
|
|
( |
) |
|
|
( |
) |
Total Divestitures |
|
|
( |
) |
|
|
( |
) |
Net Acquisitions & (Divestitures) |
|
$ |
|
|
$ |
|
||
Acquisitions
On January 31, 2025, the Company completed the acquisition of approximately
Divestitures
For the three months ended March 31, 2025, divestitures in the USA Operations were $
Amounts received from the Company’s divestiture transactions have been deducted from the U.S. full cost pool.
9. |
Business Combination |
Acquisition of NuVista Energy Ltd. (“NuVista Acquisition”)
On February 3, 2026, Ovintiv completed the acquisition of all issued and outstanding common shares of NuVista Energy Ltd. (“NuVista”), a corporation organized under the laws of the Province of Alberta, Canada, in a cash and stock transaction valued at approximately $
The acquisition is strategically located in close proximity to Ovintiv’s current operations and adds approximately
17
Purchase Price Allocation
The NuVista Acquisition has been accounted for under the acquisition method of accounting, which requires that the assets and liabilities assumed be recognized at their fair values as of the acquisition date, with any excess of the purchase price over the estimated fair value of identified net assets acquired recorded as goodwill. The preliminary purchase price allocation represents 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 valuation 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 within 12 months following the acquisition date, during which time the value of net assets and liabilities acquired may be revised as appropriate.
Preliminary Purchase Price Allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration: |
|
|
|
|
|
|
|
|
|
Fair value of shares of Ovintiv common stock issued (1) |
|
|
|
|
|
|
$ |
|
|
Consideration paid in cash (2) |
|
|
|
|
|
|
|
|
|
Total Consideration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of |
|
|
|
|
|
|
|
|
|
Total Consideration and Fair Value of NuVista Shares held by Ovintiv |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Assets Acquired: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
$ |
|
|
Accounts receivable and accrued revenues |
|
|
|
|
|
|
|
|
|
Income tax receivable |
|
|
|
|
|
|
|
|
|
Risk management assets, net |
|
|
|
|
|
|
|
|
|
Proved properties |
|
|
|
|
|
|
|
|
|
Unproved properties |
|
|
|
|
|
|
|
|
|
Other property, plant and equipment |
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities Assumed: |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
|
|
|
|
|
( |
) |
Debt |
|
|
|
|
|
|
|
( |
) |
Operating lease liabilities |
|
|
|
|
|
|
|
( |
) |
Asset retirement obligation |
|
|
|
|
|
|
|
( |
) |
Other long-term liabilities |
|
|
|
|
|
|
|
( |
) |
Deferred income taxes |
|
|
|
|
|
|
|
( |
) |
Total Purchase Price |
|
|
|
|
|
|
$ |
|
|
The Company used the income approach valuation technique for the fair value of assets acquired and liabilities assumed. The carrying amounts of cash and cash equivalents, accounts receivable and accrued revenues, income tax receivable, risk management assets, net, accounts payable and accrued liabilities, and debt approximate their fair values due to their nature and/or short-term maturity of the instruments. The fair values of operating lease assets and liabilities, and other long-term liabilities were classified within Level 2 of the fair value hierarchy and were determined using quoted prices and rates from an available pricing source. The fair values of proved properties, unproved properties, other property, plant and equipment, 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 for abandonment and reclamation. Level 3 inputs require significant judgment and estimates to be made.
18
Goodwill arose from the NuVista Acquisition primarily from the requirement to recognize deferred taxes on the difference between the fair value of the assets acquired and liabilities assumed and the respective carry-over tax basis. Goodwill is not amortized and is not deductible for tax purposes.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information combines the historical financial results of Ovintiv with NuVista and has been prepared as though the acquisition had occurred on January 1, 2025. The pro forma information is not intended to reflect the actual results of operations that would have occurred if the NuVista 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 net earnings were adjusted to exclude transaction-related costs incurred of approximately $
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
|
March 31, |
|
|||||
(US$ millions, except per share amounts) |
|
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
||
Revenues |
|
|
|
$ |
|
|
$ |
|
||
Net Earnings (Loss) |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
||
Net Earnings (Loss) per Share of Common Stock |
|
|
|
|
|
|
|
|
||
Basic |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
|
|
|
( |
) |
|
|
( |
) |
10. |
Property, Plant and Equipment, Net |
|
|
As at March 31, 2026 |
|
|
As at December 31, 2025 |
|
||||||||||||||||||
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||
|
|
Cost |
|
|
DD&A |
|
|
Net |
|
|
Cost |
|
|
DD&A |
|
|
Net |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
USA Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Proved properties |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Unproved properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Proved properties |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Unproved properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate & Other |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration, development and construction activities of $
For the three months ended March 31, 2026, the Company recognized before-tax non-cash ceiling test impairments of $
19
in the USA Operations, and the 12-month average trailing prices used in the ceiling test at March 31, 2026, which were lower than the market prices used for the NuVista Acquisition on February 3, 2026, in the Canadian Operations.
For the three months ended March 31, 2025, the Company recognized a before-tax non-cash ceiling test impairment of $
The non-cash ceiling test impairments are included with accumulated DD&A in the table above.
The 12-month average trailing prices used in the ceiling test calculations were based on the benchmark prices presented below. The benchmark prices were adjusted for basis differentials to determine local reference prices, transportation costs and tariffs, heat content and quality.
|
|
Oil & NGLs |
|
|
Natural Gas |
|
||||||||||
|
|
|
|
|
Edmonton |
|
|
|
|
|
|
|
||||
|
|
WTI |
|
|
Condensate |
|
|
Henry Hub |
|
|
AECO |
|
||||
|
|
($/bbl) |
|
|
(C$/bbl) |
|
|
($/MMBtu) |
|
|
(C$/MMBtu) |
|
||||
12-Month Average Trailing Reserves Pricing (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 31, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
11. |
Leases |
The following table outlines Ovintiv’s estimated future sublease income as at March 31, 2026. All subleases are classified as operating leases.
(undiscounted) |
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Sublease Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
For the three months ended March 31, 2026, operating lease income was $
20
12. |
Long-Term Debt |
|
|
|
|
As at |
|
|
As at |
|
||
|
|
|
|
March 31, |
|
|
December 31, |
|
||
|
|
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Revolving credit and term loan borrowings |
|
|
|
$ |
|
|
$ |
|
||
Term Credit Agreement |
|
|
|
|
|
|
|
|
||
U.S. Unsecured Notes: |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Total Principal |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Increase in Value of Debt Acquired |
|
|
|
|
|
|
|
|
||
Unamortized Debt Discounts and Issuance Costs |
|
|
|
|
( |
) |
|
|
( |
) |
Total Long-Term Debt |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Current Portion |
|
|
|
$ |
|
|
$ |
|
||
Long-Term Portion |
|
|
|
|
|
|
|
|
||
|
|
|
|
$ |
|
|
$ |
|
||
As at March 31, 2026, the Company had outstanding commercial paper of $
On November 25, 2025, the Company entered into a $
As at March 31, 2026, total long-term debt had a carrying value of $
21
13. |
Other Liabilities and Provisions |
|
|
As at |
|
|
As at |
|
||
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Finance Lease Obligations (1) |
|
$ |
|
|
$ |
|
||
Unrecognized Tax Benefits |
|
|
|
|
|
|
||
Pensions and Other Post-Employment Benefits |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
14. |
Share Capital |
Authorized
Ovintiv is authorized to issue
Issued and Outstanding
|
|
As at |
|
|
As at |
|
||||||||||
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Number |
|
|
|
|
|
Number |
|
|
|
|
||||
|
|
(millions) |
|
|
Amount |
|
|
(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 Period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
On February 3, 2026, in accordance with the terms of the NuVista Acquisition agreement, Ovintiv issued approximately
Ovintiv’s Performance Share Units (“PSU”) and Restricted Share Units (“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
Normal Course Issuer Bid
On September 29, 2025, 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
During the three months ended March 31, 2026, the Company purchased approximately
For the twelve months ended December 31, 2025, the Company purchased approximately
22
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 three months ended March 31, 2026, the Company declared and paid dividends of $
On
Earnings Per Share of Common Stock
The following table presents the calculation of net earnings (loss) per share of common stock:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
(US$ millions, except per share amounts) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Net Earnings (Loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Number of Shares of Common Stock: |
|
|
|
|
|
|
||
Weighted average shares of common stock outstanding - Basic |
|
|
|
|
|
|
||
Effect of dilutive securities (1) |
|
|
|
|
|
|
||
Weighted Average Shares of Common Stock Outstanding - Diluted |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net Earnings (Loss) per Share of Common Stock |
|
|
|
|
|
|
||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted (1) |
|
|
( |
) |
|
|
( |
) |
Stock-Based Compensation Plans
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. As at March 31, 2026, the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans.
15. |
Accumulated Other Comprehensive Income |
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Foreign Currency Translation Adjustment |
|
|
|
|
|
|
||
Balance, Beginning of Year |
|
$ |
|
|
$ |
|
||
Change in Foreign Currency Translation Adjustment |
|
|
( |
) |
|
|
|
|
Balance, End of Period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Pension and Other Post-Employment Benefit Plans |
|
|
|
|
|
|
||
Balance, Beginning of Year |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Amounts Reclassified from Other Comprehensive Income: |
|
|
|
|
|
|
||
Reclassification of net actuarial (gains) and losses to net earnings |
|
|
( |
) |
|
|
( |
) |
Income taxes |
|
|
|
|
|
|
||
Balance, End of Period |
|
$ |
|
|
$ |
|
||
Total Accumulated Other Comprehensive Income |
|
$ |
|
|
$ |
|
||
23
16. |
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 March 31, 2026, VMLP provides approximately
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 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 $
17. |
Restructuring Charges |
In , Ovintiv undertook a plan to reduce its workforce by approximately
Restructuring charges are included in administrative expense presented in the Corporate and Other segment in the Condensed Consolidated Statement of Earnings.
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Severance and Outplacement |
|
$ |
|
|
$ |
|
||
Restructuring Expenses |
|
$ |
|
|
$ |
|
||
|
|
As at |
|
|
As at |
|
||
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Outstanding Restructuring Accrual, Beginning of Year |
|
$ |
|
|
$ |
|
||
Restructuring Expenses Incurred |
|
|
|
|
|
|
||
Restructuring Costs Paid |
|
|
( |
) |
|
|
( |
) |
Outstanding Restructuring Accrual, End of Period (1) |
|
$ |
|
|
$ |
|
||
24
18. |
Compensation Plans |
As at March 31, 2026, the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans.
The Company has recognized the following share-based compensation costs:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
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 Condensed Consolidated Statement of Earnings in: |
|
|
|
|
|
|
||
Operating |
|
$ |
|
|
$ |
|
||
Administrative |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
As at March 31, 2026, the liability for cash-settled share-based payment transactions totaled $
The following weighted average assumptions were used to determine the fair value of Stock Appreciation Rights (“SAR”) and Tandem Stock Appreciation Rights (“TSAR”) units outstanding:
|
|
As at March 31, 2026 |
|
|
As at March 31, 2025 |
|
||||
|
|
US$ SAR |
|
C$ TSAR |
|
|
US$ SAR |
|
C$ TSAR |
|
|
|
Share Units |
|
Share Units (1) |
|
|
Share Units |
|
Share Units |
|
|
|
|
|
|
|
|
|
|
|
|
Risk Free Interest Rate |
|
|
|
|
|
|
||||
Dividend Yield |
|
|
|
|
|
|
||||
Expected Volatility Rate (2) |
|
|
|
|
|
|
||||
Expected Term |
|
|
|
|
|
|
||||
Market Share Price |
|
US$ |
|
|
|
US$ |
|
C$ |
|
|
Weighted Average Grant Date Fair Value |
|
US$ |
|
|
|
US$ |
|
C$ |
|
|
The following units were granted primarily in conjunction with the Company’s annual grant of long-term incentive awards. The PSUs and RSUs were granted at the volume-weighted average trading price of shares of Ovintiv common stock for the five days prior to the grant date.
Three Months Ended March 31, 2026 (thousands of units) |
|
|
|
|
|
|
|
|
|
RSUs |
|
|
|
|
PSUs |
|
|
|
|
DSUs (1) |
|
|
|
|
25
19. |
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 investment in marketable securities, and restricted cash and other marketable securities included in other assets approximate their carrying amounts due to the nature of the instruments held.
Recurring fair value measurements are performed for risk management assets and liabilities, as discussed further in Note 20. These items are carried at fair value in the Condensed 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.
As at March 31, 2026 |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
|
Total Fair |
|
|
Netting (1) |
|
|
Carrying |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk Management Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk Management Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As at December 31, 2025 |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
|
Total Fair |
|
|
Netting (1) |
|
|
Carrying |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk Management Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk Management Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
26
The Company’s Level 1 and Level 2 risk management assets and liabilities include contracts with terms to 2033, consisting of commodity fixed price contracts, three-way options, costless collars, basis swaps and physical forward contracts receiving a percentage of the Japan Korea Marker (“JKM”) index price. The Company uses discounted cash flow and option-pricing models for fair valuing commodity derivatives. The fair value models use inputs such as contracted notional volumes, market future prices, maturities, credit adjusted risk free rates, and market-based implied volatility factors. 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.
The three-way options are a combination of a sold call, a bought put and a sold put. The 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.
Level 3 Fair Value Measurements
During 2025, Ovintiv entered into a ten-year physical forward contract, with terms to 2037, to deliver
A summary of changes in Level 3 fair value measurements for risk management positions is presented below:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Balance, Beginning of Year |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|||
Purchases, Sales, Issuances and Settlements: |
|
|
|
|
|
|
||
Purchases, sales and issuances |
|
|
|
|
|
|
||
Settlements |
|
|
|
|
|
|
||
Transfers Out of Level 3 |
|
|
|
|
|
|
||
Balance, End of Period |
|
$ |
|
|
$ |
|
||
Change in Unrealized Gains (Losses) During the |
|
|
|
|
|
|
||
Period Included in Net Earnings (Loss) |
|
$ |
|
|
$ |
|
||
Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at March 31, 2026:
|
|
Valuation Technique |
|
Unobservable Input |
|
Range |
|
Weighted Average |
|
|
|
|
|
|
|
|
|
|
|
Risk Management - Physical Forward Contract |
|
Discounted Cash Flow Model |
|
Forward Prices (1) |
|
$ |
|
$ |
|
A 10 percent increase or decrease in forward price differentials between Chicago and AECO for the physical forward contract would cause an approximate corresponding $
27
20. |
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, investment in marketable securities, 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 among various production areas, products and price points.
Natural Gas - To partially mitigate natural gas commodity price risk, the Company uses NYMEX- and AECO-based contracts such as fixed price contracts, options and costless collars. Ovintiv has also entered into forward contracts to partially manage against widening price differentials among 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 March 31, 2026, the Company does not have any notional U.S. dollar denominated currency swaps.
28
Risk Management Positions as at March 31, 2026
|
|
Notional Volumes |
|
Term |
|
Average Price |
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and NGL Contracts |
|
|
|
|
|
US$/bbl |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Price Contracts |
|
|
|
|
|
|
|
|
|
|
WTI Fixed Price |
|
|
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
WTI Three-Way Options |
|
|
|
|
|
|
|
|
|
|
Sold call / bought put / sold put |
|
|
|
|
|
( |
) |
|||
Sold call / bought put / sold put |
|
|
|
|
|
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
WTI Costless Collars |
|
|
|
|
|
|
|
|
|
|
Sold call / bought put |
|
|
|
|
|
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
Basis Contracts (1) |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Positions |
|
|
|
|
|
|
|
|
( |
) |
Oil and NGLs Fair Value Position |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Contracts |
|
|
|
|
|
US$/Mcf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Price Contracts |
|
|
|
|
|
|
|
|
|
|
NYMEX Fixed Price |
|
|
|
|
|
|
||||
AECO Fixed Price |
|
|
|
|
|
|
||||
AECO Fixed Price |
|
|
|
|
|
|
||||
AECO 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 |
|
|
|
|
|
|
||||
Sold call / bought put |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
AECO Costless Collars |
|
|
|
|
|
|
|
|
|
|
Sold call / bought put |
|
|
|
|
|
|
||||
Sold call / bought put |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
Basis Contracts (2) |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Positions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical Forward Contracts (3) |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
- |
|
|
|
|
|
|
Natural Gas Fair Value Position |
|
|
|
|
|
|
|
|
|
|
Total Fair Value Position |
|
|
|
|
|
|
|
$ |
|
|
29
Earnings Impact of Realized and Unrealized Gains (Losses) on Risk Management Positions
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Realized |
|
|
|
|
|
|
||
Commodity Derivatives: |
|
|
|
|
|
|
||
Revenues |
|
$ |
( |
) |
|
$ |
|
|
Foreign Currency Derivatives: |
|
|
|
|
|
|
||
Foreign exchange (1) |
|
|
|
|
|
( |
) |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Unrealized |
|
|
|
|
|
|
||
Commodity Derivatives: |
|
|
|
|
|
|
||
Revenues |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign Currency Derivatives: |
|
|
|
|
|
|
||
Foreign exchange |
|
|
|
|
|
|
||
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
||
Total Realized and Unrealized , net |
|
|
|
|
|
|
||
Commodity Derivatives: |
|
|
|
|
|
|
||
Revenues |
|
$ |
( |
) |
|
$ |
( |
) |
: |
|
|
|
|
|
|
||
Foreign exchange (1) |
|
|
|
|
|
( |
) |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
Reconciliation of Unrealized Risk Management Positions from January 1 to March 31
|
|
|
|
2026 |
|
|
2025 |
|
||||||
|
|
|
|
Fair Value |
|
|
Total |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
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 Period |
|
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Fair Value of NuVista Contracts Acquired (See Note 9) |
|
|
|
|
|
|
|
|
|
|
|
|||
Settlement of NuVista Contracts from Business Combination |
|
|
|
|
( |
) |
|
|
|
|
|
|
||
Fair Value of Contracts Realized During the Period |
|
|
|
|
|
|
|
|
|
|
|
|||
Fair Value of Contracts, End of Period |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 19 for a discussion of fair value measurements.
30
Unrealized Risk Management Positions
|
|
As at |
|
|
As at |
|
||
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Risk Management Assets |
|
|
|
|
|
|
||
Current |
|
$ |
|
|
$ |
|
||
Long-term |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Risk Management Liabilities |
|
|
|
|
|
|
||
Current |
|
|
|
|
|
|
||
Long-term |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net Risk Management Assets (Liabilities) |
|
$ |
|
|
$ |
|
||
C) Credit Risk
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 March 31, 2026, Ovintiv’s maximum exposure of loss due to credit risk from derivative financial instrument assets on a gross and net fair value basis was $
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 March 31, 2026, approximately
31
21. |
Supplementary Information |
Supplemental disclosures to the Condensed Consolidated Statement of Cash Flows are presented below:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Operating Activities |
|
|
|
|
|
|
||
Accounts receivable and accrued revenues |
|
$ |
( |
) |
|
$ |
( |
) |
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
( |
) |
Current portion of operating lease liabilities |
|
|
|
|
|
|
||
Income tax receivable and payable |
|
|
( |
) |
|
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Non-Cash Operating Activities |
|
|
|
|
|
|
||
ROU operating lease assets and liabilities |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
||
Non-Cash Investing Activities |
|
|
|
|
|
|
||
Property, plant and equipment accruals |
|
$ |
|
|
$ |
|
||
Capitalized long-term incentives |
|
|
( |
) |
|
|
( |
) |
Property additions/dispositions (swaps) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Non-Cash Financing Activities |
|
|
|
|
|
|
||
Finance lease assets and liabilities |
|
$ |
( |
) |
|
$ |
|
|
Common shares issued in conjunction with the NuVista Acquisition (See Note 9) |
|
|
( |
) |
|
|
|
|
22. |
Commitments and Contingencies |
Commitments
The following table outlines the Company’s commitments as at March 31, 2026:
|
|
Expected Future Payments |
|
|||||||||||||||||||||||||
(undiscounted) |
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Transportation and Processing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Drilling and Field Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Building Leases & Other Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
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 well services and equipment, field office leases, as well as non-lease operating cost components associated with building leases.
Included within transportation and processing in the table above are certain commitments associated with midstream service agreements with VMLP as described in Note 16. Divestiture transactions can reduce certain commitments disclosed above.
32
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 these matters are subject to a number of uncertainties. For any material matters that the Company believes an unfavorable outcome is reasonably possible, the Company discloses the nature and a range of potential exposures, if reasonably estimable. 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.
23. |
Subsequent Events |
Divestiture of Anadarko
On April 9, 2026, the Company closed the previously announced divestiture of its Anadarko assets for proceeds of approximately $
Early Redemption of Senior Notes
On April 20, 2026, Ovintiv redeemed its $
33
Item 2. 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 condensed consolidated results for the three months ended March 31, 2026, and period-over-period comparison. This MD&A should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and accompanying notes for the period ended March 31, 2026 (“Consolidated Financial Statements”), which are included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and accompanying notes and MD&A for the year ended December 31, 2025, which are included in Items 8 and 7, respectively, of the 2025 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 Quarterly Report on Form 10-Q. This MD&A includes the following sections:
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. 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 the area of sustainability, aligning with its commitment to corporate responsibility.
In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its shareholder return 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 high-quality assets, located in the United States and Canada, 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 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 the 2025 Annual Report on Form 10-K.
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.
34
Highlights
During the first quarter of 2026, the Company commenced its 2026 capital investment plan aimed at maximizing profitability through operational and capital efficiencies, and delivering cash from operating activities. In conjunction with closing the NuVista Acquisition, as discussed below, the Company was also focused on integrating the new assets into its existing operations.
Higher upstream product revenues in the first quarter of 2026 compared to 2025, primarily resulted from higher average plant condensate and natural gas production volumes, partially offset by lower oil production volumes and lower average realized other NGLs prices, excluding the impact of risk management activities. Plant condensate and natural gas production volumes increased primarily due to the NuVista Acquisition during the quarter. Oil production volumes decreased primarily due to the sale of the Company’s Uinta assets in the first quarter of 2025. Ovintiv continues to focus on optimizing realized prices from the diversification of the Company’s downstream markets.
Significant Developments and Subsequent Events
35
Financial Results
Three months ended March 31, 2026
Capital Investment
During the three months ended March 31, 2026
Production
During the three months ended March 31, 2026
Operating Expenses
During the three months ended March 31, 2026
Additional information on the items above and other expenses can be found in the Results of Operations section of this MD&A.
36
2026 Outlook
Industry Outlook
Oil and Natural Gas 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. Natural gas prices are primarily impacted by structural changes in supply and demand, deviations from seasonally normal weather, as well as volatility in regional markets.
Oil prices for the remainder of 2026 are expected to be impacted by the conflict in the Middle East, the interplay among the pace of global economic growth, global oil demand, OPEC+ and non-OPEC+ production, other geopolitical events, and macroeconomic uncertainties.
Natural gas prices for the remainder of 2026 are expected to be impacted by the interplay among 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. and Canadian liquefied natural gas, impacts from seasonal weather, as well as supply chain constraints or other disruptions resulting from geopolitical events.
Political developments, including trade disputes and policy changes, continue to elevate global uncertainty and financial market volatility. U.S. sanctions and tariffs on select products may disrupt global supply and demand, leading to commodity price volatility. These actions can provoke retaliatory measures from other countries, further increasing economic volatility and the risk of a global recession.
Company Outlook
The Company will continue to exercise discretion and discipline, and intends to optimize capital allocation through the remainder of 2026 as the commodity price environment evolves.
Markets for oil and natural gas are exposed to different price risks and are inherently volatile. The Company enters into derivative financial instruments to mitigate price volatility and provide more certainty around cash flows. As at March 31, 2026, the Company has hedged approximately 52.7 Mbbls/d of expected oil and condensate production and 707 MMcf/d of expected natural gas production for the remainder of the year. In addition, Ovintiv proactively utilizes commodity derivatives and 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 20 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Capital Investment
The Company has commenced its 2026 capital investment program, focusing on maximizing returns from high-margin oil and condensate, and generating cash flows in excess of capital expenditures.
During the first quarter of 2026, the Company invested $605 million, which was in line with its first quarter guidance range of $600 million to $650 million. The Company expects to meet its full year 2026 capital investment guidance range of $2,250 million to $2,350 million.
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. 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.
37
Production
During the first quarter of 2026, total average production volumes were 678.9 MBOE/d, which was at the high end of the first quarter guidance range of 660.0 MBOE/d to 680.0 MBOE/d. Average oil and plant condensate production volumes were 225.3 Mbbls/d, which exceeded the first quarter guidance range of 220.0 Mbbls/d to 225.0 Mbbls/d. Average other NGL production volumes were 99.6 Mbbls/d and average natural gas production volumes were 2,124 MMcf/d, which were at the high end of their first quarter guidance ranges of 96.0 Mbbls/d to 100.0 Mbbls/d and 2,075 MMcf/d to 2,125 MMcf/d, respectively.
The Company expects to meet its full year 2026 total production guidance range of 620.0 MBOE/d to 645.0 MBOE/d, including oil and plant condensate production volumes of approximately 205.0 Mbbls/d to 212.0 Mbbls/d, other NGLs production volumes of approximately 80.0 Mbbls/d to 85.0 Mbbls/d and natural gas production volumes of approximately 2,000 MMcf/d to 2,100 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.
During the first quarter of 2026, upstream transportation and processing expenses were $7.53 per BOE, which was lower than the first quarter guidance range of $8.25 per BOE to $8.75 per BOE primarily due to a settlement related to a downstream transportation contract in the Canadian Operations. Upstream operating expenses were $3.71 per BOE and total production, mineral and other taxes were approximately 3.57 percent of upstream product revenues, which were within the first quarter guidance ranges of $3.50 per BOE to $3.75 per BOE and 3.50 to 4.00 percent, respectively.
Following the close of the Anadarko divestiture, the Company expects to incur upstream transportation and processing costs of approximately $8.75 per BOE to $9.25 per BOE, upstream operating expenses of approximately $3.00 per BOE to $3.50 per BOE, and total production, mineral and other taxes of approximately 3.25 to 3.75 percent of upstream product revenues.
Additional information on Ovintiv’s second quarter and full year 2026 Corporate Guidance can be accessed on the Company’s website at www.ovintiv.com.
38
Sustainability
Ovintiv recognizes the importance of implementing and maintaining sustainable practices to manage its environmental footprint. The Company 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 2026, Ovintiv published its 2025 Sustainability Report. The report highlights the Company’s 2025 sustainability results, and its progress in emissions intensity reductions with the goal to meet its Scope 1&2 GHG emissions target by 2030. As at the end of 2025, the Company had achieved 85 percent of its Scope 1&2 GHG emissions intensity reduction target of 50 percent by 2030, measured against the 2019 baseline. Ovintiv remains committed to its GHG emissions reduction target and has tied the target to the Company’s annual compensation program for all employees. In addition, Ovintiv continues to work towards eliminating routine flaring in its operations.
In conjunction with the Company’s strategy, Ovintiv may acquire assets to strengthen its portfolio. Acquisitions are assessed and evaluated for environmental impacts and alignment with the Company’s GHG emissions intensity target. Ovintiv continues to work to integrate sustainable practices within acquired operations to support company-wide sustainability objectives, while maintaining its 2030 GHG emissions intensity target.
The Company’s social commitment framework, which is rooted in the Company’s foundational values of integrity, safety, sustainability, trust and respect, reflects Ovintiv’s positive contributions to the communities where it operates and highlights the Company’s approach to enabling an inclusive culture.
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 impacts to employees and business continuity. Safety performance goals are incorporated into the Company’s annual compensation program. Additional information on talent management and employee safety can be found in the Human Capital section of Items 1 and 2 of the 2025 Annual Report on Form 10-K.
Additional information on Ovintiv’s sustainable business practices are included in its most recent Sustainability Report on the Company’s website at www.ovintiv.com.
39
Results of Operations |
Selected Financial Information
|
Three months ended March 31, |
|
||||||
($ millions) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Product and Service Revenues |
|
|
|
|
|
|
||
Upstream product revenues |
|
$ |
2,214 |
|
|
$ |
1,962 |
|
Service revenues (1) |
|
|
7 |
|
|
|
3 |
|
Total Product and Service Revenues |
|
|
2,221 |
|
|
|
1,965 |
|
|
|
|
|
|
|
|
||
Sales of Purchased Product |
|
|
356 |
|
|
|
410 |
|
Gains (Losses) on Risk Management, Net |
|
|
(63 |
) |
|
|
(16 |
) |
Sublease Revenues |
|
|
18 |
|
|
|
18 |
|
Total Revenues |
|
|
2,532 |
|
|
|
2,377 |
|
|
|
|
|
|
|
|
||
Total Operating Expenses (2) |
|
|
3,286 |
|
|
|
2,466 |
|
Operating Income (Loss) |
|
|
(754 |
) |
|
|
(89 |
) |
Total Other (Income) Expenses |
|
|
73 |
|
|
|
104 |
|
Net Earnings (Loss) Before Income Tax |
|
|
(827 |
) |
|
|
(193 |
) |
Income Tax Expense (Recovery) |
|
|
(197 |
) |
|
|
(34 |
) |
|
|
|
|
|
|
|
||
Net Earnings (Loss) |
|
$ |
(630 |
) |
|
$ |
(159 |
) |
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
|
|
Three months ended March 31, |
|
|||||
(average for the period) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Oil & NGLs |
|
|
|
|
|
|
||
WTI ($/bbl) |
|
$ |
71.93 |
|
|
$ |
71.42 |
|
Houston ($/bbl) |
|
|
72.88 |
|
|
|
72.68 |
|
Edmonton Condensate (C$/bbl) |
|
|
98.22 |
|
|
|
100.58 |
|
|
|
|
|
|
|
|
||
Natural Gas |
|
|
|
|
|
|
||
NYMEX ($/MMBtu) |
|
$ |
5.04 |
|
|
$ |
3.65 |
|
AECO (C$/Mcf) |
|
|
2.49 |
|
|
|
2.02 |
|
Dawn (C$/MMBtu) |
|
|
6.05 |
|
|
|
5.66 |
|
40
Production Volumes and Realized Prices
|
Three months ended March 31, |
|
||||||||||||||
|
Production Volumes (1) |
|
|
|
Realized Prices (2) |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
141.2 |
|
|
|
150.3 |
|
|
|
$ |
72.62 |
|
|
$ |
71.79 |
|
Canadian Operations |
|
0.6 |
|
|
|
0.2 |
|
|
|
|
71.82 |
|
|
|
71.46 |
|
Total |
|
141.8 |
|
|
|
150.5 |
|
|
|
|
72.62 |
|
|
|
71.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NGLs - Plant Condensate (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
11.3 |
|
|
|
10.3 |
|
|
|
|
57.10 |
|
|
|
58.35 |
|
Canadian Operations |
|
72.2 |
|
|
|
44.9 |
|
|
|
|
71.66 |
|
|
|
68.02 |
|
Total |
|
83.5 |
|
|
|
55.2 |
|
|
|
|
69.69 |
|
|
|
66.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NGLs - Other (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
74.8 |
|
|
|
70.4 |
|
|
|
|
15.54 |
|
|
|
21.70 |
|
Canadian Operations |
|
24.8 |
|
|
|
18.3 |
|
|
|
|
25.90 |
|
|
|
28.92 |
|
Total |
|
99.6 |
|
|
|
88.7 |
|
|
|
|
18.12 |
|
|
|
23.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Oil & NGLs (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
227.3 |
|
|
|
231.0 |
|
|
|
|
53.06 |
|
|
|
55.97 |
|
Canadian Operations |
|
97.6 |
|
|
|
63.4 |
|
|
|
|
60.05 |
|
|
|
56.76 |
|
Total |
|
324.9 |
|
|
|
294.4 |
|
|
|
|
55.16 |
|
|
|
56.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Natural Gas (MMcf/d, $/Mcf) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
520 |
|
|
|
510 |
|
|
|
|
3.03 |
|
|
|
3.15 |
|
Canadian Operations |
|
1,604 |
|
|
|
1,254 |
|
|
|
|
3.19 |
|
|
|
2.91 |
|
Total |
|
2,124 |
|
|
|
1,764 |
|
|
|
|
3.14 |
|
|
|
2.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Production (MBOE/d, $/BOE) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
314.0 |
|
|
|
315.9 |
|
|
|
|
43.41 |
|
|
|
46.02 |
|
Canadian Operations |
|
364.9 |
|
|
|
272.4 |
|
|
|
|
30.06 |
|
|
|
26.59 |
|
Total |
|
678.9 |
|
|
|
588.3 |
|
|
|
|
36.24 |
|
|
|
37.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Production Mix (%) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil & Plant Condensate |
|
33 |
|
|
|
35 |
|
|
|
|
|
|
|
|
||
NGLs - Other |
|
15 |
|
|
|
15 |
|
|
|
|
|
|
|
|
||
Total Oil & NGLs |
|
48 |
|
|
|
50 |
|
|
|
|
|
|
|
|
||
Natural Gas |
|
52 |
|
|
|
50 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Production Change |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Period Over Period (%) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Oil & NGLs |
|
10 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
||
Natural Gas |
|
20 |
|
|
|
7 |
|
|
|
|
|
|
|
|
||
Total Production |
|
15 |
|
|
|
3 |
|
|
|
|
|
|
|
|
||
41
Upstream Product Revenues, Excluding Realized Gains (Losses) on Risk Management
|
Three months ended March 31, |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
($ millions) |
Oil |
|
|
NGLs - Plant Condensate |
|
|
NGLs - Other |
|
|
Natural Gas |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2025 Upstream Product Revenues |
$ |
977 |
|
|
$ |
328 |
|
|
$ |
185 |
|
|
$ |
472 |
|
|
$ |
1,962 |
|
Increase (decrease) due to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sales prices |
|
6 |
|
|
|
23 |
|
|
|
(49 |
) |
|
|
35 |
|
|
|
15 |
|
Production volumes |
|
(55 |
) |
|
|
173 |
|
|
|
25 |
|
|
|
94 |
|
|
|
237 |
|
2026 Upstream Product Revenues |
$ |
928 |
|
|
$ |
524 |
|
|
$ |
161 |
|
|
$ |
601 |
|
|
$ |
2,214 |
|
Oil Revenues
Three months ended March 31, 2026, versus March 31, 2025
Oil revenues were lower by $49 million compared to the first quarter of 2025 primarily due to:
NGL Revenues
Three months ended March 31, 2026, versus March 31, 2025
NGL revenues were higher by $172 million compared to the first quarter of 2025 primarily due to:
Natural Gas Revenues
Three months ended March 31, 2026, versus March 31, 2025
Natural gas revenues were higher by $129 million compared to the first quarter of 2025 primarily due to:
42
Sales of Purchased Product
Revenues from the sale of purchased product relate to activities that provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification within the USA and Canadian Operations segments.
|
|
Three months ended March 31, |
|
|||||
($ millions) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Sales of Purchased Product |
|
$ |
356 |
|
|
$ |
410 |
|
Three months ended March 31, 2026, versus March 31, 2025
Sales of purchased product revenues decreased $54 million compared to the first quarter of 2025 primarily due to:
partially offset by:
Gains (Losses) on Risk Management, Net
As a means of managing commodity price volatility, Ovintiv enters into commodity derivative financial instruments on a portion of its expected oil, NGLs and natural gas production volumes. Additional information on the Company’s commodity price positions as at March 31, 2026, can be found in Note 20 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
The following tables provide the effects of the Company’s risk management activities on revenues.
|
|
Three months ended March 31, |
|
|||||
($ millions) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Realized Gains (Losses) on Risk Management |
|
|
|
|
|
|
||
Commodity Price |
|
|
|
|
|
|
||
Oil |
|
$ |
(23 |
) |
|
$ |
- |
|
NGLs - Plant Condensate |
|
|
(5 |
) |
|
|
- |
|
Natural Gas |
|
|
18 |
|
|
|
30 |
|
Total |
|
|
(10 |
) |
|
|
30 |
|
|
|
|
|
|
|
|
||
Unrealized Gains (Losses) on Risk Management |
|
|
(53 |
) |
|
|
(46 |
) |
Total Gains (Losses) on Risk Management, Net |
|
$ |
(63 |
) |
|
$ |
(16 |
) |
|
|
|
|
|
|
|
||
|
|
Three months ended March 31, |
|
|||||
(Per-unit) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Realized Gains (Losses) on Risk Management |
|
|
|
|
|
|
||
Commodity Price |
|
|
|
|
|
|
||
Oil ($/bbl) |
|
$ |
(1.84 |
) |
|
$ |
- |
|
NGLs - Plant Condensate ($/bbl) |
|
$ |
(0.63 |
) |
|
$ |
- |
|
Natural Gas ($/Mcf) |
|
$ |
0.10 |
|
|
$ |
0.18 |
|
Total ($/BOE) |
|
$ |
(0.16 |
) |
|
$ |
0.56 |
|
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 and Canadian Operations’ 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 19 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
43
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 11 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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.
|
|
$ millions |
|
|
|
$/BOE |
|
||||||||||
Three months ended March 31, |
|
2026 |
|
|
2025 |
|
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
71 |
|
|
$ |
83 |
|
|
|
$ |
2.53 |
|
|
$ |
2.91 |
|
Canadian Operations |
|
|
8 |
|
|
|
4 |
|
|
|
$ |
0.24 |
|
|
$ |
0.16 |
|
Total |
|
$ |
79 |
|
|
$ |
87 |
|
|
|
$ |
1.30 |
|
|
$ |
1.64 |
|
Three months ended March 31, 2026, versus March 31, 2025
Production, mineral and other taxes decreased $8 million compared to the first quarter of 2025 primarily due to:
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.
|
|
$ millions |
|
|
|
$/BOE |
|
||||||||||
Three months ended March 31, |
|
2026 |
|
|
2025 |
|
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Upstream |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
115 |
|
|
$ |
112 |
|
|
|
$ |
4.08 |
|
|
$ |
3.92 |
|
Canadian Operations |
|
|
345 |
|
|
|
279 |
|
|
|
$ |
10.49 |
|
|
$ |
11.37 |
|
Upstream Transportation and Processing |
|
|
460 |
|
|
|
391 |
|
|
|
$ |
7.53 |
|
|
$ |
7.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (1) |
|
|
11 |
|
|
|
7 |
|
|
|
|
|
|
|
|
||
Total |
|
$ |
471 |
|
|
$ |
398 |
|
|
|
|
|
|
|
|
||
Three months ended March 31, 2026, versus March 31, 2025
Transportation and processing expense increased $73 million compared to the first quarter of 2025 primarily due to:
partially offset by:
44
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.
|
|
$ millions |
|
|
|
$/BOE |
|
||||||||||
Three months ended March 31, |
|
2026 |
|
|
2025 |
|
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Upstream |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
176 |
|
|
$ |
169 |
|
|
|
$ |
6.20 |
|
|
$ |
5.97 |
|
Canadian Operations |
|
|
51 |
|
|
|
36 |
|
|
|
$ |
1.56 |
|
|
$ |
1.46 |
|
Upstream Operating Expense |
|
|
227 |
|
|
|
205 |
|
|
|
$ |
3.71 |
|
|
$ |
3.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
||
Total |
|
$ |
227 |
|
|
$ |
205 |
|
|
|
|
|
|
|
|
||
Three months ended March 31, 2026, versus March 31, 2025
Operating expense increased $22 million compared to the first quarter of 2025 primarily due to:
partially offset by:
Purchased Product
Purchased product expense includes purchases of oil, NGLs and natural gas from third parties that are used to provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification within the USA and Canadian Operations segments.
|
Three months ended March 31, |
|
||||||
($ millions) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Purchased Product |
|
$ |
344 |
|
|
$ |
402 |
|
Three months ended March 31, 2026, versus March 31, 2025
Purchased product expense decreased $58 million compared to the first quarter of 2025 primarily due to:
partially offset by:
45
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 the 2025 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 the MD&A included in Item 7 of the 2025 Annual Report on Form 10-K.
|
|
$ millions |
|
|
|
$/BOE |
|
||||||||||
Three months ended March 31, |
|
2026 |
|
|
2025 |
|
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Upstream |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
336 |
|
|
$ |
375 |
|
|
|
$ |
11.88 |
|
|
$ |
13.17 |
|
Canadian Operations |
|
|
220 |
|
|
|
165 |
|
|
|
$ |
6.70 |
|
|
$ |
6.72 |
|
Upstream DD&A |
|
|
556 |
|
|
|
540 |
|
|
|
$ |
9.10 |
|
|
$ |
10.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate & Other |
|
|
5 |
|
|
|
5 |
|
|
|
|
|
|
|
|
||
Total |
|
$ |
561 |
|
|
$ |
545 |
|
|
|
|
|
|
|
|
||
Three months ended March 31, 2026, versus March 31, 2025
DD&A increased $16 million compared to the first quarter of 2025 primarily due to:
partially offset by:
The upstream depletion rate in the USA Operations decreased $1.29 per BOE primarily due to a lower depletable base resulting from the sale of the Uinta assets in the first quarter of 2025. The upstream depletion rate in the Canadian Operations decreased $0.02 per BOE primarily due to a lower depletable base resulting from the ceiling test impairments recognized in the first and third quarters of 2025, partially offset by the NuVista Acquisition during the quarter.
Ceiling Test Impairment
Under full cost accounting, the carrying amount of Ovintiv’s oil and natural gas properties within each country cost center is subject to a ceiling test performed quarterly. Ceiling test impairments are recognized when the capitalized costs, net of accumulated depletion and the related deferred income taxes, exceed the sum of the estimated after-tax future net cash flows from proved reserves as calculated under SEC requirements using the 12-month average trailing prices and discounted at 10 percent. 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.
In the first quarter of 2026, the Company recognized before-tax non-cash ceiling test impairments of $1,485 million, comprising $1,111 million in the USA Operations and $374 million in the Canadian Operations. The non-cash ceiling test impairments primarily resulted from declines in the 12-month average trailing prices which reduced proved reserves in the USA Operations, and the 12-month average trailing prices used in the ceiling test at March 31, 2026, which were lower than the market prices used for the NuVista Acquisition on February 3, 2026, in the Canadian Operations.
46
The 12-month average trailing prices used in the ceiling test calculations were based on the benchmark prices below. The benchmark prices were adjusted for basis differentials to determine local reference prices, transportation costs and tariffs, heat content and quality.
|
|
Oil & NGLs |
|
|
Natural Gas |
|
||||||||||
|
|
WTI |
|
|
Edmonton |
|
|
Henry Hub |
|
|
AECO |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
12-Month Average Trailing Reserves Pricing (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 31, 2026 |
|
$ |
63.31 |
|
|
$ |
86.26 |
|
|
$ |
3.72 |
|
|
$ |
1.80 |
|
December 31, 2025 |
|
|
65.34 |
|
|
|
90.09 |
|
|
|
3.39 |
|
|
|
1.76 |
|
March 31, 2025 |
|
|
74.52 |
|
|
|
100.94 |
|
|
|
2.44 |
|
|
|
1.38 |
|
Further declines in the 12‑month average trailing commodity prices could reduce proved reserves values and result in the recognition of future ceiling test impairments. Future ceiling test impairments can also result from changes to reserves estimates, future development costs, capitalized costs and unproved property costs. Proceeds received from oil and natural gas divestitures are typically deducted from the Company’s capitalized costs and can reduce the risk of ceiling test impairments.
The Company 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. The discounted after-tax future net cash flows do not consider the fair market value of unamortized unproved properties, or probable or possible liquids and natural gas reserves. In addition, there is no consideration given to the effect of future changes in commodity prices. Ovintiv manages its business using estimates of reserves and resources based on forecast prices and costs. Additional information on the ceiling test calculation can be found in Note 10 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.
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, restructuring and long-term incentive costs.
|
$ millions |
|
|
$/BOE |
|
||||||||||||
Three months ended March 31, |
|
2026 |
|
|
2025 |
|
|
|
2026 |
|
|
2025 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Administrative, excluding Long-Term Incentive Costs, |
|
$ |
80 |
|
|
$ |
72 |
|
|
|
$ |
1.31 |
|
|
$ |
1.36 |
|
Restructuring Costs, and Transaction and Legal Costs (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term incentive costs |
|
|
12 |
|
|
|
10 |
|
|
|
|
0.20 |
|
|
|
0.19 |
|
Restructuring costs |
|
|
- |
|
|
|
10 |
|
|
|
|
- |
|
|
|
0.18 |
|
Transaction and legal costs |
|
|
20 |
|
|
|
1 |
|
|
|
|
0.33 |
|
|
|
0.02 |
|
Total Administrative |
|
$ |
112 |
|
|
$ |
93 |
|
|
|
$ |
1.84 |
|
|
$ |
1.75 |
|
Three months ended March 31, 2026, versus March 31, 2025
Administrative expense increased $19 million compared to the first quarter of 2025 primarily due to:
partially offset by:
In 2024, Ovintiv undertook a plan, which extended into 2025, to reduce its workforce by approximately 10 percent as part of a corporate reorganization. Additional information on restructuring charges and long-term incentive costs can be found in Notes 17 and 18 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
47
Other (Income) Expenses
|
|
Three months ended March 31, |
|
|||||
($ millions) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Interest |
|
$ |
104 |
|
|
$ |
97 |
|
Foreign Exchange (Gain) Loss, Net |
|
|
(2 |
) |
|
|
10 |
|
Other (Gains) Losses, Net |
|
|
(29 |
) |
|
|
(3 |
) |
Total Other (Income) Expenses |
|
$ |
73 |
|
|
$ |
104 |
|
Interest
Interest expense primarily includes interest on Ovintiv’s short-term and long-term debt. Additional information on changes in interest and long-term debt can be found in Notes 5 and 12, respectively, to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Three months ended March 31, 2026, versus March 31, 2025
Interest expense increased $7 million compared to the first quarter of 2025 primarily due to:
partially offset by:
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 6 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Additional information on foreign exchange rates and the effects of foreign exchange rate changes can be found in Part I, Item 3 of this Quarterly Report on Form 10-Q.
Three months ended March 31, 2026, versus March 31, 2025
Net foreign exchange gain of $2 million compared to a loss of $10 million during the first quarter of 2025 primarily due to:
partially offset by:
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 and adjustments related to other assets.
In the first quarter of 2026, the Company recognized a gain of approximately $25 million resulting from the fair value remeasurement of the previously acquired 18.5 million NuVista common shares in conjunction with the closing of the NuVista Acquisition.
48
Income Tax
During the first quarter of 2026, the current income tax expense of $13 million was lower than 2025 primarily due to recently enacted Canadian legislation that accelerates capital cost recovery and favorable changes in the calculation of Corporate Alternative Minimum Tax in the U.S.
During the first quarter of 2026, the deferred income tax recovery of $210 million was higher than 2025, primarily due to the impact of the non-cash ceiling test impairment recognized in the U.S. in 2026, partially offset by Canadian deferred tax expense.
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.
Additional information on income taxes can be found in Note 7 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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 shareholder return framework or to manage its capital structure as discussed below. As at March 31, 2026, $22 million in cash and cash equivalents was held by Canadian subsidiaries. The cash held by Canadian subsidiaries is accessible and may be subject to additional U.S. income taxes and Canadian withholding taxes if repatriated.
The Company’s capital structure consists of total shareholders’ equity plus long-term debt, including any current portion. The Company’s objectives when managing its capital structure are to maintain financial flexibility to preserve Ovintiv’s access to capital markets and its ability to meet financial obligations and finance internally generated growth, as well as potential acquisitions. Ovintiv has a practice of maintaining capital discipline and strategically managing its capital structure by adjusting capital spending, adjusting dividends paid to shareholders, issuing new shares of common stock, purchasing shares of common stock for cancellation or return to treasury, issuing new debt and repaying or repurchasing existing debt.
|
|
As at March 31, |
|
|||||
($ millions, except as indicated) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Cash and Cash Equivalents |
|
$ |
26 |
|
|
$ |
8 |
|
Available Credit Facilities |
|
|
3,447 |
|
|
|
3,500 |
|
Available Uncommitted Demand Lines (1) |
|
|
162 |
|
|
|
92 |
|
Available Term Credit Agreement (2) |
|
|
- |
|
|
|
- |
|
Issuance of U.S. Commercial Paper |
|
|
(824 |
) |
|
|
(85 |
) |
Total Liquidity |
|
$ |
2,811 |
|
|
$ |
3,515 |
|
|
|
|
|
|
|
|
||
Long-Term Debt, including current portion |
|
$ |
6,398 |
|
|
$ |
5,538 |
|
Total Shareholders’ Equity |
|
$ |
11,558 |
|
|
$ |
10,080 |
|
|
|
|
|
|
|
|
||
Debt to Capitalization (%) (3) |
|
|
36 |
|
|
|
35 |
|
Debt to Adjusted Capitalization (%) (3) |
|
|
25 |
|
|
|
24 |
|
49
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 December 2029, provide financial flexibility and allow the Company to fund its operations or capital investment program. As at March 31, 2026, $53 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. Commercial Paper (“CP”) programs, which include a $1.5 billion program for Ovintiv Inc. and a $1.0 billion program for a Canadian subsidiary. As at March 31, 2026, the Company had $824 million of commercial paper outstanding under its U.S. CP program maturing at various dates with a weighted average interest rate of approximately 4.34 percent, which is supported by the Company’s Credit Facilities. All of Ovintiv’s credit ratings are investment grade as at March 31, 2026.
On November 25, 2025, the Company entered into a $1.2 billion Two-Year Term Credit Agreement (“Term Credit Agreement”) to fund the cash component of its previously announced NuVista Acquisition. On February 3, 2026, the Company closed the NuVista Acquisition, whereby it issued approximately 30.1 million shares of Ovintiv common stock and paid cash consideration of approximately $1.2 billion (C$1.6 billion), which was primarily funded with proceeds from the Term Credit Agreement. On April 10, 2026, following the closing of the divestiture of its Anadarko assets, the Company repaid the balance under the Term Credit Agreement and the facility was terminated.
Additional information on the NuVista Acquisition and Term Credit Agreement can be found in Notes 9 and 12, respectively, to the Consolidated Financial Statements.
The available Credit Facilities, uncommitted demand lines, and cash and cash equivalents, net of outstanding commercial paper, provide Ovintiv with total liquidity of approximately $2.8 billion as at March 31, 2026. As at March 31, 2026, Ovintiv also had approximately $193 million in undrawn letters of credit issued in the normal course of business as collateral security.
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 2026 and expires in March 2029.
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 in the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the MD&A and audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2025, which are included in Items 7 and 8, respectively, of the 2025 Annual Report on Form 10-K.
Ovintiv is currently in compliance with all financial covenants under the Credit Facilities and Term Credit Agreement. 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 and Term Credit Agreement, which requires Debt to Adjusted Capitalization to be less than 60 percent. As at March 31, 2026, the Company’s Debt to Adjusted Capitalization was 25 percent. The definitions used in the covenant under the Credit Facilities and Term Credit Agreement 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 the 2025 Annual Report on Form 10‑K.
50
Sources and Uses of Cash
The following table summarizes the sources and uses of the Company’s cash and cash equivalents.
|
|
|
|
Three months ended March 31, |
|
|||||
($ millions) |
Activity Type |
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
|
|
||
Sources of Cash and Cash Equivalents |
|
|
|
|
|
|
|
|||
Cash from operating activities |
Operating |
|
|
$ |
1,056 |
|
|
$ |
873 |
|
Proceeds from divestitures |
Investing |
|
|
|
7 |
|
|
|
1,884 |
|
Net issuance of revolving debt |
Financing |
|
|
|
297 |
|
|
|
85 |
|
Issuance of debt under the Term Credit Agreement |
Financing |
|
|
|
1,151 |
|
|
|
- |
|
Other |
Investing |
|
|
|
59 |
|
|
|
148 |
|
|
|
|
|
|
2,570 |
|
|
|
2,990 |
|
|
|
|
|
|
|
|
|
|
||
Uses of Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
||
Capital expenditures |
Investing |
|
|
|
605 |
|
|
|
617 |
|
Acquisitions |
Investing |
|
|
|
7 |
|
|
|
2,310 |
|
Corporate acquisition, net of cash acquired |
Investing |
|
|
|
1,192 |
|
|
|
- |
|
Repayment of long-term debt |
Financing |
|
|
|
459 |
|
|
|
- |
|
Purchase of shares of common stock |
Financing |
|
|
|
84 |
|
|
|
- |
|
Dividends on shares of common stock |
Financing |
|
|
|
85 |
|
|
|
78 |
|
Other |
Financing |
|
|
|
148 |
|
|
|
19 |
|
|
|
|
|
|
2,580 |
|
|
|
3,024 |
|
Foreign Exchange Gain (Loss) on Cash, Cash Equivalents |
|
|
|
1 |
|
|
|
- |
|
|
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash |
|
|
$ |
(9 |
) |
|
$ |
(34 |
) |
|
Operating Activities
Net cash from operating activities in the first quarter of 2026 was $1,056 million and was primarily a reflection of the impacts from production volumes, average realized commodity prices, realized gains/losses on risk management and changes in non‑cash working capital.
Additional detail on changes in non-cash working capital can be found in Note 21 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Ovintiv expects it will continue to meet the payment terms of its suppliers.
Non-GAAP Cash Flow in the first quarter of 2026 was $1,239 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.
Three months ended March 31, 2026, versus March 31, 2025
Net cash from operating activities increased $183 million compared to the first quarter of 2025 primarily due to:
partially offset by:
51
Investing Activities
Cash used in investing activities in the first quarter of 2026 was $1,738 million primarily due to the NuVista Acquisition and capital expenditures.
The corporate acquisition in the first quarter of 2026 was $1,192 million, which reflects the net cash paid to complete the NuVista Acquisition. Additional information regarding the NuVista Acquisition can be found in Note 9 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Capital expenditures decreased $12 million compared to the first quarter of 2025, primarily due to decreased capital activity in Anadarko, partially offset by increased capital activity in Montney primarily due to the NuVista Acquisition during the quarter and increased drilling costs in Permian.
Acquisitions in the first quarter of 2025 were $2,310 million, which primarily included the Montney Acquisition. Divestitures in the first quarter of 2025 were $1,884 million, which primarily included the sale of the Uinta assets in Utah.
Capital expenditures are summarized in Note 3, and acquisition and divestiture activities, including additional information regarding the Montney Acquisition and the sale of the Uinta assets, can be found in Note 8 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Financing Activities
Net cash from and/or used in financing activities has been impacted by Ovintiv’s strategic objective to return value to shareholders by repaying existing debt, purchasing shares of common stock and paying dividends.
Net cash from financing activities was $672 million in the first quarter of 2026 compared to net cash used in financing activities of $12 million in 2025. The change was primarily due to borrowings made under the Term Credit Agreement ($1,151 million) and an increase in the net issuance of revolving debt in 2026 compared to 2025 ($212 million), partially offset by the repayment of the Company’s January 2026 senior notes during the first quarter of 2026 ($459 million), the settlement of a property acquisition payable during the quarter ($123 million) and purchases of shares of common stock during the first quarter of 2026 ($84 million).
In January 2026, Ovintiv redeemed its $459 million, 5.375 percent senior notes due January 1, 2026, with cash on hand and proceeds from short-term borrowings. The Company’s long-term debt, including the current portion of $877 million, totaled $6,398 million at March 31, 2026. The Company’s long-term debt at December 31, 2025, including the current portion of $810 million, totaled $5,202 million.
On April 20, 2026, the Company redeemed its $700 million, 5.65 percent senior notes due May 15, 2028, with proceeds from the divestiture of its Anadarko assets, and is expected to result in annualized interest savings of approximately $40 million. The redemption resulted in a one-time make-whole payment of $20 million. Following this repayment, the Company has no fixed rate long-term debt due until 2030 and beyond.
From time to time, Ovintiv may seek to retire or repurchase the Company’s outstanding debt through cash purchases and/or exchanges for other debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.
In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its shareholder return framework to provide competitive returns to shareholders. As discussed in the Significant Developments and Subsequent Events section of this MD&A, the Company updated its shareholder return framework, which commits to returning between 50 percent and 100 percent of annual Non-GAAP Cash Flow in excess of capital expenditures through base dividends and share buybacks. In accordance with the updated framework, share buybacks resumed in March 2026.
For additional information on long-term debt, refer to Note 12 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Further details on the Company’s debt-based metrics can be found in the Non-GAAP measures section of this MD&A.
52
Dividends
The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.
|
Three months ended March 31, |
|
||||||
($ millions, except as indicated) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Dividend Payments |
|
$ |
85 |
|
|
$ |
78 |
|
Dividend Payments ($/share) |
|
$ |
0.30 |
|
|
$ |
0.30 |
|
On May 11, 2026, the Board of Directors declared a dividend of $0.30 per share of common stock payable on June 30, 2026, to shareholders of record as of June 15, 2026.
Dividends paid in the first quarter of 2026 increased $7 million compared to 2025 due to additional shares of common stock issued as part of the NuVista Acquisition.
Normal Course Issuer Bid
On September 29, 2025, 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 22.3 million shares of common stock over a 12-month period from October 3, 2025, to October 2, 2026. The Company expects to continue to execute the NCIB program in conjunction with its shareholder return framework.
The Company’s share buyback program was temporarily paused in the fourth quarter of 2025 in conjunction with the announcement of the NuVista Acquisition. Following the announcement of the planned divestiture of its Anadarko assets, Ovintiv resumed its share buyback program under the NCIB in March 2026 and purchased, for cancellation, approximately 1.5 million shares of common stock for total consideration of approximately $84 million. For additional information on the NCIB, refer to Note 14 to the Consolidated Financial Statements included in Part I, Item 1 and Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” of this Quarterly Report on Form 10‑Q.
Material Cash Requirements
For information on material cash requirements, refer to the Material Cash Requirements section of the MD&A included in Item 7 of the 2025 Annual Report on Form 10-K.
Commitments and Contingencies
For information on commitments and contingencies, refer to Note 22 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
There have been no significant changes to the Company’s critical accounting policies and use of estimates from the disclosures reported in the Critical Accounting Estimates section of the MD&A included in Item 7 of the 2025 Annual Report on Form 10‑K.
53
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.
|
|
Three months ended March 31, |
|
|||||
($ millions) |
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Cash From (Used in) Operating Activities |
|
$ |
1,056 |
|
|
$ |
873 |
|
(Add back) deduct: |
|
|
|
|
|
|
||
Net change in other assets and liabilities |
|
|
(14 |
) |
|
|
(11 |
) |
Net change in non-cash working capital |
|
|
(169 |
) |
|
|
(120 |
) |
Non-GAAP Cash Flow |
|
$ |
1,239 |
|
|
$ |
1,004 |
|
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 and Term Credit Agreement 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) |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
6,398 |
|
|
$ |
5,202 |
|
Total Shareholders’ Equity |
|
|
11,558 |
|
|
|
11,195 |
|
Capitalization |
|
$ |
17,956 |
|
|
$ |
16,397 |
|
Debt to Capitalization |
|
36% |
|
|
32% |
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
6,398 |
|
|
$ |
5,202 |
|
Total Shareholders’ Equity |
|
|
11,558 |
|
|
|
11,195 |
|
Equity Adjustment for Impairments at December 31, 2011 |
|
|
7,746 |
|
|
|
7,746 |
|
Adjusted Capitalization |
|
$ |
25,702 |
|
|
$ |
24,143 |
|
Debt to Adjusted Capitalization |
|
25% |
|
|
22% |
|
||
The increases to Debt to Capitalization and Debt to Adjusted Capitalization are primarily due to borrowings under the Term Credit Agreement in conjunction with the NuVista Acquisition. On April 10, 2026, following the closing of the divestiture of its Anadarko assets, the Company repaid the balance under the Term Credit Agreement and the facility was terminated.
54
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) |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
6,398 |
|
|
$ |
5,202 |
|
|
|
|
|
|
|
|
||
Net Earnings (Loss) |
|
|
771 |
|
|
|
1,242 |
|
Add back (deduct): |
|
|
|
|
|
|
||
Depreciation, depletion and amortization |
|
|
2,195 |
|
|
|
2,179 |
|
Interest |
|
|
383 |
|
|
|
376 |
|
Income tax expense (recovery) |
|
|
(635 |
) |
|
|
(472 |
) |
EBITDA |
|
$ |
2,714 |
|
|
$ |
3,325 |
|
Debt to EBITDA (times) |
|
|
2.4 |
|
|
|
1.6 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
6,398 |
|
|
$ |
5,202 |
|
|
|
|
|
|
|
|
||
Net Earnings (Loss) |
|
|
771 |
|
|
|
1,242 |
|
Add back (deduct): |
|
|
|
|
|
|
||
Depreciation, depletion and amortization |
|
|
2,195 |
|
|
|
2,179 |
|
Impairments |
|
|
1,675 |
|
|
|
920 |
|
Accretion of asset retirement obligation |
|
|
29 |
|
|
|
28 |
|
Interest |
|
|
383 |
|
|
|
376 |
|
Unrealized (gains) losses on risk management |
|
|
1 |
|
|
|
(6 |
) |
Foreign exchange (gain) loss, net |
|
|
19 |
|
|
|
31 |
|
Other (gains) losses, net |
|
|
(72 |
) |
|
|
(46 |
) |
Income tax expense (recovery) |
|
|
(635 |
) |
|
|
(472 |
) |
Adjusted EBITDA |
|
$ |
4,366 |
|
|
$ |
4,252 |
|
Debt to Adjusted EBITDA (times) |
|
|
1.5 |
|
|
|
1.2 |
|
The increase in Debt is primarily due to borrowings under the Term Credit Agreement in conjunction with the NuVista Acquisition, whereas EBITDA and Adjusted EBITDA only includes the results of operations of the NuVista assets for the post-acquisition period from February 3, 2026, to March 31, 2026. On April 10, 2026, following the closing of the divestiture of its Anadarko assets, the Company repaid the balance under the Term Credit Agreement and the facility was terminated.
55
Item 3: 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 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 Part 1, Item 2 of this Quarterly Report on Form 10‑Q in the Executive Overview section in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Item 1A. “Risk Factors” of the 2025 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 Notes 19 and 20 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10‑Q.
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:
|
|
March 31, 2026 |
|
|||||
(US$ millions) |
|
10% Price |
|
|
10% Price |
|
||
|
|
|
|
|
|
|
||
Oil price |
|
$ |
(120 |
) |
|
$ |
111 |
|
NGL price |
|
|
- |
|
|
|
- |
|
Natural gas price |
|
|
64 |
|
|
|
(65 |
) |
FOREIGN EXCHANGE RISK
Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. 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 period in 2025.
|
|
$ millions |
|
|
$/BOE |
|
||
|
|
|
|
|
|
|
||
Increase (Decrease) in: |
|
|
|
|
|
|
||
Capital Investment (1) |
|
$ |
7 |
|
|
|
|
|
Transportation and Processing Expense (1) |
|
|
13 |
|
|
$ |
0.21 |
|
Operating Expense (1) |
|
|
2 |
|
|
|
0.03 |
|
Administrative Expense |
|
|
2 |
|
|
|
0.04 |
|
Depreciation, Depletion and Amortization (1) |
|
|
8 |
|
|
|
0.13 |
|
56
Foreign exchange gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated and settled, and primarily include:
To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts from time to time. As at March 31, 2026, the Company does not have any notional U.S. dollar denominated currency swaps.
As at March 31, 2026, 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:
|
|
March 31, 2026 |
|
|||||
(US$ millions) |
|
10% Rate |
|
|
10% Rate |
|
||
|
|
|
|
|
|
|
||
Foreign currency exchange |
|
$ |
75 |
|
|
$ |
(91 |
) |
INTEREST RATE RISK
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 March 31, 2026, Ovintiv had floating rate revolving credit and term loan borrowings of $877 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 $9 million.
57
Item 4: Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
Ovintiv’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 were effective as of March 31, 2026.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
For the first quarter ended March 31, 2026, management’s assessment of, and conclusion on, the effectiveness of internal controls over financial reporting did not include the internal controls related to the NuVista Energy Ltd. acquisition that closed on February 3, 2026. Upon closing, NuVista Energy Ltd.’s total assets acquired represented 17 percent of the Company’s consolidated total assets as of March 31, 2026. The assets acquired generated revenues of $159 million for the period from February 3, 2026, to March 31, 2026, which represented six percent of the Company’s consolidated total revenues for the three months ended March 31, 2026. Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal controls over financial reporting for a period of up to one year following an acquisition while integration occurs. The Company is in the process of assessing the internal controls over financial reporting of NuVista Energy Ltd. Except as noted above, there were no changes in the Company’s internal controls over financial reporting during the first quarter of 2026 that have materially affected, or are reasonably likely to affect, the Company’s internal controls over financial reporting.
58
PART II
Item 1. Legal Proceedings
Please refer to Item 3 of the 2025 Annual Report on Form 10‑K and Note 22 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in Item 1A., "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchase of Equity Securities
On September 29, 2025, Ovintiv announced it had received regulatory approval to purchase, for cancellation or return to treasury, up to approximately 22.3 million shares of common stock pursuant to a NCIB over a 12-month period from October 3, 2025, and ending October 2, 2026. The number of shares of common stock authorized for purchase represents 10 percent of Ovintiv’s public float as at September 26, 2025.
During the three months ended March 31, 2026, the Company purchased 1,487,256 shares of common stock for approximately $84 million, at a weighted average price of $56.49. The following table presents the common shares purchased during the three months ended March 31, 2026.
Period |
Total Number of |
|
|
Average |
|
|
Total Number of Shares |
|
|
Maximum Number of Shares |
|
|||||
January 1 to January 31, 2026 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
|
22,287,709 |
|
February 1 to February 28, 2026 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,287,709 |
|
March 1 to March 31, 2026 |
|
|
1,487,256 |
|
|
|
56.49 |
|
|
|
1,487,256 |
|
|
|
20,800,453 |
|
Total |
|
|
1,487,256 |
|
|
$ |
56.49 |
|
|
|
1,487,256 |
|
|
|
20,800,453 |
|
In the second quarter of 2025, Ovintiv renewed its 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 Company’s initial NCIB Exemption was granted in the first quarter of 2022. 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 (i) a Proposed Bid in reliance on the NCIB Exemption; (ii) exempt issuer bid purchases made in the normal course through the facilities of the TSX; and (iii) 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.
59
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Item 6. Exhibits
Exhibit No |
|
Description |
2.1* |
|
Purchase and Sale Agreement, dated as of February 17, 2026, by and between Ovintiv USA Inc., Ovintiv Royalty Holdings LLC and MidCon II BuyerCo, LLC (incorporated by reference to Exhibit 2.1 to Ovintiv's Current Report on Form 8-K filed on February 23, 2026, SEC File No. 001-39191). |
31.1 |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. |
31.2 |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. |
32.1** |
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |
32.2** |
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
101.INS |
|
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. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document. |
104 |
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, has been formatted in Inline XBRL. |
* Certain annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Ovintiv Inc. hereby undertakes to furnish supplemental copies of any of the omitted annexes, schedules and exhibits upon request by the SEC.
** The certifications on Exhibits 32.1 and 32.2 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certifications will not be deemed incorporated by reference to any filings under the Securities Act or the Exchange Act.
60
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Ovintiv Inc. |
|||
|
|||
By: |
/s/ Corey D. Code |
||
|
|||
|
Name: |
|
Corey D. Code |
|
Title: |
|
Executive Vice-President & Chief Financial Officer |
Dated: May 11, 2026
61