Ovintiv Inc. Q3 FY2025 earnings call

• Brendan McCracken announced entering into an agreement to acquire NuVista Energy, which is immediately accretive, leverage-neutral at closing, comes with spare midstream capacity and downstream gas price exposure, and adds significant oil inventory in the Montney. - Plan to commence divestiture process for Anadarko assets to accelerate debt reduction and allocate more free cash flow to shareholder returns. - Continued to add Permian well inventory at attractive prices. - Third quarter results demonstrated business resiliency and capital efficiency. - NuVista acquisition details: sits in core of Alberta Montney, adjacent to existing operations, largely undeveloped with processing capacity and downstream market access, adds ~930 net 10,000-foot equivalent well locations, boosts Montney oil inventory and type curve, acquired at reasonable cost with strong financial accretion.

Corey Code stated they delivered a strong quarter, generating cash flow per share of $3.47 and free cash flow of $351 million, both beating consensus estimates. Production during the quarter was at the high end of guidance ranges across all products. The beat was largely driven by the Montney due to strong efficiency gains from recently acquired assets. Capital was below midpoint, and per unit cost items were matched or beaten. Absolute terms: cash flow per share $3.47, free cash flow $351 million. Revenue contribution % not explicitly detailed but focused on Montney and overall production performance.

• Full year 2025 guidance updated with increased production targets for all products while maintaining capital guide. Lowered full year capital by $50 million last quarter. For full year 2025, expect 10,000 BOE per day more production or $50 million less capital compared to original plan. Fourth quarter expected total volumes average ~620,000 BOEs per day including ~206,000 bbl/day oil and condensate, capital ~$465 million. Anticipated reduction in 2025 cash tax bill by about $75 million. - NuVista acquisition is leverage-neutral at close, enhances scale in Montney with 2026 expected Montney oil and condensate volumes to ~85,000 bbl/day.

Q: On the growth outlook for the NuVista asset and balancing/optimizing plants vs capital discipline?

A: Brendan McCracken said they'll fold NuVista into capital disciplined way, considering market demand for growth and cash flow per share growth from buybacks.

Q: On the 900-plus locations acquired with NuVista and derisking upside locations?

A: Gregory Givens said they'll take same approach as with Paramount assets, delineating acreage to convert upside to base.

Q: On year-end '26 time line for Anadarko sale and reverse inquiries?

A: Brendan McCracken said lots of interest in Anadarko asset, no technical proof needed, and there have been some reverse inquiries.

Q: On Montney maintenance CapEx and well productivity delta?

A: Gregory Givens said they'll drive down CapEx organically and through infrastructure sharing, and delta is due to oil mix in NuVista acreage.

Q: On processing capacity and midstream optimization for Montney?

A: Brendan McCracken said there are opportunities to optimize midstream, avoid capital expenditure, boost run time, and grow into assets.

Q: On growth potential with expanded scale and Permian ground game?

A: Brendan McCracken said there's growth option unlocked with processing capacity available if exercised.

Q: On Permian ground game and adding locations at attractive price?

A: Brendan McCracken said their comparative advantage as operator of choice in Permian allows getting best royalty stream.

Q: On drivers of $100 million in annual capital and cost synergies with NuVista?

A: Gregory Givens said they'll use AI and algorithms for drilling and completion efficiencies, reduce facility costs, and optimize production.

Q: On funding acquisition through equity and cash combination?

A: Brendan McCracken said they were disciplined with equity use as equity is undervalued and aimed for leverage neutral at close.

Q: On AECO and Canadian gas markets outlook?

A: Brendan McCracken said cautious on AECO but optimistic about future LNG projects.

Q: On Permian inventory additions and funding?

A: Brendan McCracken said they bucketed several deals for Permian inventory additions.

Q: On tax slippage with Anadarko transaction?

A: Corey Code said they don't forecast much tax leakage.

Q: On timing of NuVista acquisition?

A: Brendan McCracken said it was influenced by NuVista's competitive process starting in August and acquisition in October.

Q: On EBITDA run rate for Mid-Con asset?

A: Brendan McCracken said he didn't have the number on hand.

Q: On soft guide for 2026 pro forma and AI automation?

A: Brendan McCracken said 2026 pro forma is inclusive of Anadarko production, and AI automation is in early stages with potential to transform business.