Ovintiv Surpasses Disposal Target, Announces Sale of Eagle Ford, Updates Forecast



DENVER, March 24, 2021 / CNW / – Ovintiv Inc. (NYSE: OVV) (TSX: OVV) today announced that it has signed an agreement to sell its assets from Eagle Ford to Validus Energy for $ 880 million. With this sale, the Company exceeded its disposal target and, together with other elements, now anticipates a debt at the end of 2021 of less than $ 5 billion using his 2021 planning prize deck from $ 50 WTI oil and $ 2.75 NYMEX gas. In addition, the Company expects to achieve its $ 4.5 billion debt target for the first half of 2022. The forecast has also been updated to reflect the impact of the winter storms in the first quarter and recent divestitures. The accompanying slides can be viewed on the Company’s website at www.ovintiv.com.

Ovintiv Surpasses Disposal Target, Announces Sale of Eagle Ford, Updates Forecast (CNW Group / Ovintiv Inc.)

Strong points:

  • Disposal target exceeded with more than $ 1.1 billion in asset sales

  • The resolution of a tax item from the previous year resulted in a recovery of approximately $ 150 million

  • Total debt should be lower $ 5 billion at the end of 2021, assuming $ 50 per barrel of WTI oil and $ 2.75 per MMBtu of NYMEX natural gas for the rest of the year

  • Impact of winter storms in Texas and Oklahoma reduce the volumes of crude and condensates for the first quarter to 196 – 200 Mbbls / d

  • Now ready to deliver crude and condensate volumes for the whole of 2021 of around 190 Mb / d, including the impact of 10 Mb / d of disposals

“Today’s Eagle Ford announcement continues our experience of creating value from non-core assets,” said Doug Suttles, CEO of Ovintiv. “The revenue will significantly accelerate the achievement of our debt reduction target and allow us to repay short-term debt maturities with cash on hand. Our outlook for 2021 is strong and we expect to generate significant free cash flow for the fourth consecutive year.

Asset sales
Since the start of the year, Ovintiv has announced more than $ 1.1 billion in asset sales, including the Eagle Ford ($ 880 million) and the previously announced Duvernay to sell ($ 263 million including ~ $ 12 million in emergency payments based on future commodity prices). The agreements are subject to ordinary closing conditions, regulatory approvals and other adjustments and are expected to close in the second quarter. Eagle Ford volumes for the year 2021 are expected to average around 21,000 barrels of oil equivalent per day (MBOE / d), including 14 Mbbls / d of crude and condensate.

Tax resolution
The Company recently resolved and received funds for a tax item from a prior year, resulting in the recognition of approximately $ 150 million current tax recovery in the first quarter of 2021. The associated cash proceeds have been used for debt reduction.

Multi-year debt reduction target
The Company expects to meet its total debt target of $ 4.5 billion in the first half of 2022. The absolute debt at the end of 2021 should be lower $ 5 billion, supposing $ 50 per barrel of WTI oil and $ 2.75 by NYMEX Natural Gas MMBtu for the remainder of the year.

Update on production and capital investments
Production was quickly restored to full capacity following winter storms in Texas and Oklahoma and our production in the rest of the company’s multi-basin portfolio was not impacted. As a result, the storms affected only the first quarter. First quarter crude and condensate volumes are now expected to average 196-200 Mb / d. March 2021 production is expected to average over 205 kb / d.

Based on expected close dates for second quarter disposals, the Company expects its crude and condensate production for the full year of 2021 to now average around 190 Mb / d. , of which around 10 Mb / d comes from sold assets. Capital investments planned for 2021 remain unchanged at around $ 1.5 billion. The impact on the total unit cost per boe is expected to be minimal.

About Ovintiv inc.
Ovintiv is one of the largest producers of oil, condensate and natural gas in North America. The Company is committed to preserving its financial strength, maximizing its profitability through disciplined capital investments and operational efficiency gains, and returning capital to shareholders. A talented team, associated with a culture of innovation and efficiency, fuels Ovintiv’s economic performance, increases shareholder value and strengthens its commitment to sustainable development in the communities where its employees live and work.

NOTICE REGARDING FORWARD-LOOKING STATEMENTS – This press release contains certain forward-looking statements or information (collectively, the “FLS”) within the meaning of applicable securities laws, including the United States Private Securities Litigation Reform Act of 1995. FLS includes: expected consideration sales of assets, including conditional payments and the use of the proceeds thereof; the expectation that the closing conditions and regulatory approvals will be met and the timing of the closings; targeted debt reduction and timing, outlook 2021, including expected capital investments, rate of reinvestment, production and free cash flow. FLS involves assumptions, risks and uncertainties which may cause such statements not to occur or for the results to differ materially. These assumptions include expectations and projections made in light of the historical experience of the Company. The risks and uncertainties include: the volatility of commodity prices and the impact on the Company’s share prices and cash flows; the ability to ensure adequate transportation and potential reductions in refining operations, including resulting storage constraints or widening price differentials; business interruption, loss of property and accidents or unexpected technical difficulties; the impact of COVID-19 on the Company’s operations, including maintaining ordinary staff levels, securing operational inputs, performing parts of its business and the cybersecurity risks associated with remote working; counterparty and credit risk; the impact of credit rating changes and access to liquidity, including costs associated with risks in marketing operations; the risks associated with the technology; and other risks and uncertainties as described in the Company’s Annual Report on Form 10-K, Quarterly Report on Form 10-Q and as described from time to time in its other periodic filings as filed on EDGAR and SEDAR . While the Company believes these FLSs to be reasonable, there can be no assurance that they will prove to be correct. The above assumptions, risks and uncertainties are not exhaustive. FSLs are created as of the date hereof and, except as required by law, the Company assumes no obligation to update or revise FLS.

NOTE 1: Non-GAAP measures

Certain measures in this press release do not have standardized meanings as prescribed by US GAAP and, therefore, are considered non-GAAP measures. These measures may not be comparable to similar measures presented by other companies and should not be considered a substitute for measures presented under US GAAP. These metrics are commonly used in the oil and gas industry and / or 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. For more information on non-GAAP measures, see the Company’s website. This press release contains references to non-GAAP measures as follows:

  • Non-GAAP cash flows is a non-GAAP measure defined as cash provided (used in) operating activities, excluding net change in other assets and liabilities, net change in non-cash working capital and tax payable on the sale of assets. Non-GAAP Free Cash Flow is a non-GAAP measure defined as non-GAAP cash flows in excess of capital expenditures, excluding net acquisitions and disposals.

  • Total costs is a non-GAAP measure that includes the sum of taxes on production, minerals and others, upstream transportation and processing costs, upstream operating costs and administrative costs, excluding l ‘impact of long-term incentive costs, restructuring costs and expected current credit losses. It is calculated as the total operating expenses excluding operating costs excluding upstream and non-cash items which include operating expenses of the Market Optimization and Corporate and other segments, depreciation, depletion. and amortization, impairments, increased asset retirement obligation, costs, restructuring costs and current expected credit losses. When presented on a per boe basis, total costs are divided by production volumes. Management believes that this measure is useful to the Company and its investors as a measure of operational efficiency across the periods.

Further information on Ovintiv Inc. is available on the Company’s website, www.ovintiv.com, or by contacting:

Investor contact:

(888) 525-0304

Media contact:

(281) 210-5253

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SOURCE Ovintiv Inc.

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