Ovintiv Reports Fourth Quarter and Year-End 2023 Financial and Operating Results
Strong 2023 Operational Execution; Enhanced Capital Efficiency Expected in 2024
Highlights:
Full Year 2023
- Generated net earnings of
$2.1 billion , cash from operating activities of$4.2 billion , Non-GAAP Cash Flow of$3.9 billion and Non-GAAP Free Cash Flow of$1.2 billion after capital expenditures of$2.7 billion - Exceeded high end of full year production guidance on every product with average total volumes of 566 thousand barrels of oil equivalent per day ("MBOE/d"), including 202 thousand barrels per day ("Mbbls/d") of oil and condensate, 90 Mbbls/d of other NGLs (C2 to C4) and 1,642 million cubic feet per day ("MMcf/d") of natural gas
- Returned
$733 million to shareholders through the combination of base dividend payments and share buybacks - Acquired and seamlessly integrated high-quality Permian assets comprising approximately 65,000 net acres of largely undeveloped land directly adjacent to the Company's existing Permian operations
- Closed the sale of the Company's Bakken assets, representing
exit from the playOvintiv 's - Announced the Company's inclusion on the S&P 400 index effective
June 20, 2023
Fourth Quarter 2023
- Generated fourth quarter net earnings of
$856 million , cash from operating activities of$1.4 billion , Non-GAAP Cash Flow of$1.2 billion and Non-GAAP Free Cash Flow of$577 million after capital expenditures of$660 million - Delivered average quarterly production volumes of 605 MBOE/d, including 240 Mbbls/d of oil and condensate, 91 Mbbls/d of other NGLs and 1,645 MMcf/d of natural gas; all exceeding the high end of Company guidance
- Reduced total debt by
$426 million
2024 Outlook
- Announced 2024 capital program of approximately
$2.2 to$2.4 billion , which is expected to deliver total production volumes of 545 to 575 MBOE/d, including oil and condensate volumes of 202 to 208 Mbbls/d
"2023 marked a year of exceptionally strong execution for our Company," said President and CEO,
Full Year and Fourth Quarter 2023 Financial and Operating Results
- The Company recorded full year net earnings of
$2,085 million , or$7.90 per diluted share of common stock. Included in net earnings were income tax expense of$425 million and net gains on risk management of$151 million , before tax. - Fourth quarter net earnings totaled
$856 million , or$3.11 per diluted share of common stock. Included in net earnings were income tax expense of$211 million and net gains on risk management of$344 million , before tax. - Full year capital investment of
$2,744 million was below the full year 2023 guidance range of approximately$2,745 million to$2,785 million . - Fourth quarter capital investment of
$660 million was at the low end of the guidance range of approximately$660 million to$700 million . - Full year upstream operating expense was
$4.03 per barrel of oil equivalent ("BOE"). Upstream transportation and processing costs were$7.76 per BOE. Production, mineral and other taxes were$1.66 per BOE, or 4.4% of upstream revenue. These costs were below the bottom end of guidance on a combined basis. - Fourth quarter upstream operating expense was
$4.09 per BOE. Upstream transportation and processing costs were$6.89 per BOE. Production, mineral and other taxes were$1.67 per BOE, or 4.2% of upstream revenue. These costs were below the bottom end of guidance on a combined basis. - Excluding the impact of hedges, full year average realized prices were
$75.19 per barrel for oil and condensate (97% of WTI),$18.09 per barrel for other NGLs (C2-C4) and$2.74 per thousand cubic feet ("Mcf") for natural gas (100% of NYMEX) resulting in a total average realized price of$37.67 per BOE. - Including the impact of hedges, full year average realized prices for oil and condensate was
$74.88 (96% of WTI), other NGLs was unchanged, and the average realized price for natural gas was$2.71 per Mcf (99% of NYMEX) resulting in a total average realized price of$37.46 per BOE. - Excluding the impact of hedges, fourth quarter average realized prices were
$75.66 per barrel for oil and condensate (97% of WTI),$18.85 per barrel for other NGLs (C2-C4) and$2.50 per Mcf for natural gas (87% of NYMEX) resulting in a total average realized price of$39.66 per BOE. - Including the impact of hedges, fourth quarter average realized prices for oil and condensate was
$75.46 (96% of WTI), other NGLs was unchanged, and the average realized price for natural gas was$2.65 per Mcf (92% of NYMEX) resulting in a total average realized price of$39.99 per BOE.
2024 Guidance
The Company issued the following first quarter and full year 2024 guidance:
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2024 Guidance |
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1Q 2024 |
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Full Year 2024 |
Total Production (MBOE/d) |
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560 – 575 |
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545 – 575 |
Oil & Condensate (Mbbls/d) |
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208 – 212 |
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202 – 208 |
NGLs (C2 - C4) (Mbbls/d) |
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86 – 89 |
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85 – 90 |
Natural Gas (MMcf/d) |
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1,575 – 1,625 |
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1,550 – 1,650 |
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$580 – |
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Inventory Renewal
Since 2021,
Returns to Shareholders
In the fourth quarter of 2023, the Company returned approximately
Full year shareholder returns totaled approximately
Share buybacks in the first quarter of 2024 are expected to total approximately
Continued Balance Sheet Focus
Non-GAAP Debt to EBITDA was 1.2 times and Non-GAAP Debt to Adjusted EBITDA was 1.3 times as of
The Company remains committed to maintaining a strong balance sheet and is currently rated investment grade by four credit rating agencies.
Dividend Declared
On
Asset Highlights
Permian
Permian production averaged 220 MBOE/d (84% liquids) in the fourth quarter. The Company had 60 net wells turned in line (TIL).
Montney
Uinta
Uinta production averaged 34 MBOE/d (86% liquids) in the fourth quarter. The Company had eight net wells TIL.
Year-End 2023 Reserves
For additional information, please refer to the Fourth Quarter and Year-end 2023 Results Presentation available on
Conference Call Information
A conference call and webcast to discuss the Company's fourth quarter and year-end 2023 results will be held at
To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3Segm9H to receive an instant automated call back. You can also dial direct to be entered to the call by an Operator. Please dial 888-664-6383 (toll-free in
The live audio webcast of the conference call, including slides and financial statements, will be available on
Refer to Note 1 Non-GAAP measures and the tables in this release for reconciliation to comparable GAAP financial measures.
(for the period ended |
4Q 2023 |
4Q 2022 |
2023 |
2022 |
Capital Expenditures (1) ($ millions) |
660 |
358 |
2,744 |
1,831 |
Oil (Mbbls/d) |
194.1 |
132.0 |
158.9 |
131.6 |
NGLs – Plant Condensate (Mbbls/d) |
46.1 |
42.7 |
42.9 |
44.0 |
Oil & Plant Condensate (Mbbls/d) |
240.2 |
174.7 |
201.8 |
175.6 |
NGLs – Other (Mbbls/d) |
90.9 |
88.7 |
90.2 |
85.5 |
Total Liquids (Mbbls/d) |
331.1 |
263.4 |
292.0 |
261.1 |
Natural gas (MMcf/d) |
1,645 |
1,561 |
1,642 |
1,494 |
Total production (MBOE/d) |
605.2 |
523.6 |
565.6 |
510.0 |
(1) Including capitalized directly attributable internal costs. |
Financial Summary
(for the period ended ($ millions) |
4Q 2023 |
4Q 2022 |
2023 |
2022 |
Cash From (Used In) Operating Activities Deduct (Add Back): Net change in other assets and liabilities Net change in non-cash working capital |
1,362
156 |
875
(15) (5) |
4,167 (62) 330 |
3,866 (57) (187) |
Non-GAAP Cash Flow (1) |
1,237 |
895 |
3,899 |
4,110 |
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Non-GAAP Cash Flow (1) |
1,237 |
895 |
3,899 |
4,110 |
Less: Capital Expenditures (2) |
660 |
358 |
2,744 |
1,831 |
Non-GAAP Free Cash Flow (1) |
577 |
537 |
1,155 |
2,279 |
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Net Earnings (Loss) Before Income Tax Before-tax (Addition) Deduction: Unrealized gain (loss) on risk management Non-operating foreign exchange gain (loss) |
1,067 326 (9) |
1,110 530 10 |
2,510 194 (2) |
3,560 741 (14) |
Adjusted Earnings (Loss) Before Income Tax Income tax expense (recovery) |
750 103 |
570 342 |
2,318 508 |
2,833 1,064 |
Non-GAAP Adjusted Earnings (1) |
647 |
228 |
1,810 |
1,769 |
(1) Non-GAAP Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Adjusted Earnings are non-GAAP measures as defined in Note 1. |
(2) Including capitalized directly attributable internal costs. |
Realized Pricing Summary (Including the impact of realized gains (losses) on risk management)
(for the period ended |
4Q 2023 |
4Q 2022 |
2023 |
2022 |
Liquids ($/bbl) |
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WTI |
78.32 |
82.65 |
77.62 |
94.23 |
Realized Liquids Prices |
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Oil |
76.64 |
75.85 |
76.06 |
81.88 |
NGLs – Plant Condensate |
70.46 |
72.01 |
70.51 |
80.74 |
Oil & Plant Condensate |
75.46 |
74.91 |
74.88 |
81.59 |
NGLs – Other |
18.85 |
22.95 |
18.09 |
31.45 |
Total NGLs |
36.20 |
38.88 |
34.98 |
48.20 |
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Natural Gas |
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NYMEX ($/MMBtu) |
2.88 |
6.26 |
2.74 |
6.64 |
Realized Natural Gas Price ($/Mcf) |
2.65 |
2.49 |
2.71 |
2.42 |
Cost Summary
(for the period ended ($/BOE, except as indicated) |
2023 |
2022 |
Production, mineral and other taxes |
1.66 |
2.23 |
Upstream transportation and processing |
7.76 |
8.75 |
Upstream operating |
4.03 |
4.15 |
Administrative, excluding long-term incentive, transaction and |
1.35 |
1.39 |
Debt to EBITDA (1)
($ millions, except as indicated) |
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Long-Term Debt, including Current Portion |
5,737 |
3,570 |
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Net Earnings (Loss) |
2,085 |
3,637 |
Add back (Deduct): |
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Depreciation, depletion and amortization |
1,825 |
1,113 |
Interest |
355 |
311 |
Income tax expense (recovery) |
425 |
(77) |
EBITDA |
4,690 |
4,984 |
Debt to EBITDA (times) |
1.2 |
0.7 |
Debt to Adjusted EBITDA (1)
($ millions, except as indicated) |
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Long-Term Debt, including Current Portion |
5,737 |
3,570 |
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Net Earnings (Loss) |
2,085 |
3,637 |
Add back (Deduct): |
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Depreciation, depletion and amortization |
1,825 |
1,113 |
Accretion of asset retirement obligation |
19 |
18 |
Interest |
355 |
311 |
Unrealized (gains) losses on risk management |
(194) |
(741) |
Foreign exchange (gain) loss, net |
19 |
15 |
Other (gains) losses, net |
(20) |
(33) |
Income tax expense (recovery) |
425 |
(77) |
Adjusted EBITDA |
4,514 |
4,243 |
Debt to Adjusted EBITDA (times) |
1.3 |
0.8 |
(1) Debt to EBITDA and Debt to Adjusted EBITDA are non-GAAP measures as defined in Note 1. |
Hedge Details as of
Oil and Condensate Hedges ($/bbl) |
1Q 2024 |
2Q 2024 |
3Q 2024 |
4Q 2024 |
1Q 2025 |
WTI Swaps |
25 Mbbls/d
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25 Mbbls/d
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0 - |
0 - |
0 - |
WTI Collars Call Strike Put Strike |
75 Mbbls/d
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75 Mbbls/d
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10 Mbbls/d
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0 - - |
0 - - |
WTI 3-Way Options
Long Put
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0 - - - |
0 - - - |
40 Mbbls/d
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32 Mbbls/d
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0 - - - |
Natural Gas Hedges ($/Mcf) |
1Q 2024 |
2Q 2024 |
3Q 2024 |
4Q 2024 |
1Q 2025 |
NYMEX Swaps |
200 MMcf/d
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200 MMcf/d
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200 MMcf/d
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200 MMcf/d
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0 - |
NYMEX Collars Call Strike Put Strike |
400 MMcf/d
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400 MMcf/d
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400 MMcf/d
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400 MMcf/d
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0 - - |
NYMEX 3-Way Options
Put Strike Sold Put Strike |
100 MMcf/d
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200 MMcf/d
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200 MMcf/d
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200 MMcf/d
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300 MMcf/d
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Waha % of NYMEX Swaps |
50 MMcf/d 71% |
50 MMcf/d 71% |
50 MMcf/d 71% |
50 MMcf/d 71% |
0 - |
AECO Nominal Basis Swaps |
190 MMcf/d
( |
190 MMcf/d
( |
190 MMcf/d
( |
190 MMcf/d
( |
190 MMcf/d
( |
AECO % of NYMEX Swaps |
100 MMcf/d 72% |
100 MMcf/d 72% |
100 MMcf/d 72% |
100 MMcf/d 72% |
100 MMcf/d 72% |
Price Sensitivities for WTI Oil (1) ($MM) (Before-Tax)
WTI Oil Hedge Gains (Losses) |
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1Q 2024 |
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( |
( |
( |
( |
( |
2Q 2024 |
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( |
( |
( |
( |
( |
3Q 2024 |
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- |
- |
( |
( |
( |
( |
4Q 2024 |
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- |
- |
( |
( |
( |
( |
1Q 2025 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(1) Hedge positions and hedge sensitivity estimates as of 12/31/2023. Does not include impact of basis positions. |
Price Sensitivities for
NYMEX Natural Gas Hedge Gains (Losses) |
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1Q 2024 |
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( |
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( |
2Q 2024 |
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( |
( |
( |
( |
3Q 2024 |
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( |
( |
( |
( |
( |
4Q 2024 |
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( |
( |
( |
( |
1Q 2025 |
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- |
- |
- |
( |
( |
( |
(1) Hedge positions and hedge sensitivity estimates as of 12/31/2023. Does not include impact of basis positions. |
Important information
Please visit
NI 51-101 Exemption
The Canadian securities regulatory authorities have issued a decision document (the "Decision") granting
NOTE 1: Non-GAAP Measures
Certain measures in this news release do not have any standardized meaning as prescribed by
- 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.
-
Non-GAAP Free Cash Flow is a non-GAAP measure defined as Non-GAAP Cash Flow in excess of capital expenditures, excluding net acquisitions and divestitures. Forecasted Non-GAAP Free Cash Flow represents forecasted Non-GAAP Cash Flow based on
$75 WTI and$2.50 NYMEX and utilizing the midpoint of production guidance. Due to its forward-looking nature, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as changes in operating assets and liabilities. Accordingly,Ovintiv is unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measure to its most directly comparable forward-looking GAAP financial measure. Amounts excluded from this non-GAAP measure in future periods could be significant. - Non-GAAP Adjusted Earnings is a non-GAAP measure defined as net earnings (loss) excluding non-cash items that the Company's management believes reduces the comparability of the Company's financial performance between periods. These items may include, but are not limited to, unrealized gains/losses on risk management, impairments, non-operating foreign exchange gains/losses, and gains/losses on divestitures. Income taxes includes adjustments to normalize the effect of income taxes calculated using the estimated annual effective income tax rate. In addition, any valuation allowances are excluded in the calculation of income taxes.
- Adjusted EBITDA, Debt to EBITDA and Debt to Adjusted EBITDA (Leverage Target/Ratio) 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. Debt to EBITDA is calculated as long-term debt, including the current portion, divided by EBITDA. Debt to Adjusted EBITDA is calculated as long-term debt, including the current portion, divided by Adjusted EBITDA. Adjusted EBITDA, Debt to EBITDA and Debt to Adjusted EBITDA are a non-GAAP measures monitored by management as indicators of the Company's overall financial strength.
ADVISORY REGARDING OIL AND GAS INFORMATION – The conversion of natural gas volumes to barrels of oil equivalent (BOE) is on the basis of six thousand cubic feet to one barrel. 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. Readers are cautioned that BOE may be misleading, particularly if used in isolation.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS – This news release contains 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, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, except for statements of historical fact, that relate to the anticipated future activities, plans, strategies, objectives or expectations of the Company, including the first quarter and fiscal year 2024 guidance, the expectation of delivering sustainable durable returns to shareholders in future years, plans regarding share buybacks and debt reduction, and timing and expectations regarding capital efficiencies and well completion and performance, are forward-looking statements. When used in this news release, the use of words and phrases including "anticipates," "believes," "continue," "could," "estimates," "expects," "focused on," "forecast," "guidance," "intends," "maintain," "may," "opportunities," "outlook," "plans," "potential," "strategy," "targets," "will," "would" and other similar terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words or phrases. Readers are cautioned against unduly relying on forward-looking statements which, are based on current expectations and by their nature, involve numerous assumptions that are subject to both known and unknown risks and uncertainties (many of which are beyond our control) that may cause such statements not to occur, or actual results to differ materially and/or adversely from those expressed or implied. These assumptions include, without limitation: future commodity prices and basis differentials; the Company's ability to successfully integrate the
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 news release are made as of the date of this news release and, except as required by law, the Company undertakes no obligation to update publicly; revise or keep current any forward-looking statements. The forward-looking statements contained or incorporated by reference in this news release, 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 the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in other filings with the
Further information on
Investor contact: (888) 525-0304 |
Media contact: (403) 645-2252 |
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