Ovintiv Inc. Q3 FY2024 earnings call

• Delivered net earnings of $507 million or $1.92 per share and cash flow of $978 million or $3.70 per share, beating consensus. Cash flow beat due to production and cost outperformance. Generated free cash flow of $440 million, higher than Q2 despite lower oil prices. On track for incremental $200 million more free cash flow. Returned 60% of Q2 free cash flow to shareholders. Repaid $210 million in debt during Q3, ending Q3 with total debt at $5.88 billion. - Operational performance: Strong across portfolio, oil and condensate volumes averaged ~212,000 bpd, total production ~593,000 BOE/day beat guidance. Capital investment ~$538 million, almost at bottom end of guidance. Returned $240 million to shareholders via repurchases and dividends. - Permian: Fastest quarter ever for drilling speed, average >2,170 feet per day, 28% faster than 2023. Completions average ~3,875 feet per day, 21% faster. Pacesetter well cost <$600 per foot. Held Permian volumes flat q-o-q at ~124,000 bpd. - Montney: Drilled average 1,820 feet per day, 6% faster than 2023. Drilled longest well in play >18,000 feet. Completions average over 5,100 feet per day, 24% faster than 2023. Oil and condensate production averaged 32,000 bpd. - Anadarko: Benefiting from strong free cash flow generation. Early production from wells has >55% first year oil cuts, ~85% first year revenue from oil. Drilling speed average over 2,600 feet per day, 28% faster than 2023. - Uinta: Strong well performance and cost reductions. Oil and condensate production 29,000 bpd. Brought online 27 net wells.

Ovintiv delivered strong operational performance. Third quarter oil and condensate volumes averaged approximately 212,000 barrels per day, total production was about 593,000 barrels of equivalent per day, beating the high end of guidance. Oil and condensate volumes are expected to be 210,000 barrels a day, up 5,000 barrels a day from the start of the year and 10,000 barrels a day from last June's outlook. Fourth quarter production is set to average 575,000 to 595,000 BOEs per day with oil and condensate volumes of about 205,000 barrels a day at the midpoint. Revenue contribution isn't explicitly broken down by segment in terms of percentage, but production across all products exceeded guidance ranges.

• Increased production guidance across all product streams. Expected to deliver 210,000 barrels a day of oil and condensate, up 5,000 barrels a day from start of year and 10,000 barrels a day from last June. Fourth quarter production average 575,000-595,000 BOEs per day, oil and condensate ~205,000 bpd at midpoint. Fourth quarter capital investment ~$550 million at midpoint. Full year guide midpoint $2.3 billion. 2025 program repeatable, aiming for ~205,000 bpd oil and condensate production with $2.3 billion capital investment.

Q: Gabe Daoud asked about capital budget and M&A.

A: Brendan McCracken said guidance stepped up due to EnCap acquisition integration, production landing pushed to Q4. Acquisitions have high hurdle, focused on execution and free cash flow.

Q: Neal Dingmann asked about continued efficiencies.

A: Brendan McCracken said data strategy, innovation culture, AI machine learning automation, outward focus on learning from peers. Greg Givens added it's combination of high-performance rigs, better frac fleets, optimizing laterals, drilling and completing efficiently.

Q: Neil Mehta asked about natural gas capture and Uinta monetization.

A: Brendan McCracken said basin diversification, egress out of markets, Uinta margin competitive with drilling cost reduction.

Q: Doug Leggate asked about choices for 2025 and scale.

A: Brendan McCracken said will base decisions on value and free cash generation, will do same calculus as 2024. Reiterated innovation and efficiency gains drive value, see investor relevancy as not a barrier.

Q: Kalei Akamine asked about Permian oil and operational improvement extrapolation.

A: Brendan McCracken said production landing in Q4, TILs for 2024 upper end of range.

Q: Arun Jayaram asked about LNG Canada and A&D market.

A: Brendan McCracken said LNG Canada could tighten AECO market transitorily, acquisitions have high hurdle.

Q: Geoff Jay asked about Permian completions Trimulfrac rate.

A: Brendan McCracken said 60% was a good start, details for 2025 plan still being finalized