Financial Performance & Outlook - 2Q25 Free Cash Flow was $392 million[26] - FY25E Free Cash Flow is projected at approximately $1.65 billion, yielding a Free Cash Flow Yield of approximately 16% (assuming $60/bbl WTI and $3.75/MMBtu NYMEX)[12, 34] - Net Debt was $5.313 billion as of June 30, 2025, with an expectation to reduce it below $5 billion by YE25[14] - The company anticipates approximately 25% Cash Flow per Share growth from FY21 to FY24[22] Production & Capital Efficiency - 2Q25 Oil & Condensate Production reached 211 Mbbls/d[27] - The company has a maintenance level of approximately 205 Mbbls/d of oil & condensate and approximately 1,850 MMcf/d of gas[11] - FY25 capital expenditure guidance was lowered by $50 million[17, 51] Inventory & Strategy - The company possesses 10-20 years of premium oil inventory in each asset (Permian, Montney, and Anadarko) and over 20 years of natural gas inventory[13] - The company is implementing a cube development strategy to preserve inventory and improve resource recovery[17, 52, 56] - The company is diversifying Montney natural gas exposures, with less than 20% exposed to unenhanced AECO in '26-'28[43] Shareholder Returns - Cumulative shareholder returns since 3Q21 exceed $3.3 billion, representing over 30% of the current market capitalization[38] - Planned buybacks in 3Q25 are $158 million, based on 2Q25 Free Cash Flow[38]

Industry Overview - The Zacks Oil and Gas - Exploration and Production - Canadian industry is facing challenges due to weaker commodity prices and a stronger Canadian dollar, which are eroding margins and cash flows [1][3] - Dividend growth and share buybacks are becoming unsustainable for many companies under current strip prices, leading to tighter capital spending [1][4] - The long-term impact of electric vehicle (EV) adoption and climate policies is contributing to a cautious outlook for the industry [1][6] LNG Breakthrough - Canada's first shipment of LNG to Asia marks a significant milestone, opening access to premium markets and reducing the natural gas discount [1][5] - The LNG Canada project, valued at $40 billion, is expected to ramp up exports to 14 million tonnes per annum (mtpa) and potentially double output in Phase 2, which will strengthen Canadian natural gas prices [5] Key Companies - **ARC Resources Ltd. (AETUF)**: The largest pure-play Montney operator in Canada, focusing on cost leadership and LNG market opportunities. It aims to triple free funds flow per share by 2028 and has a Zacks Consensus Estimate indicating 11% year-over-year earnings growth for 2025 [22][23] - **Ovintiv Inc. (OVV)**: A leading independent E&P company with a diverse portfolio. It has maintained a disciplined cost reduction approach and benefits from a proactive hedging program, with a trailing four-quarter earnings surprise of approximately 27.8% [27][28] - **Obsidian Energy Ltd. (OBE)**: Focused on oil-weighted assets, aiming to increase production from 34,000 boe/d to 50,000 boe/d by 2026. The company has a Zacks Consensus Estimate indicating 199.5% year-over-year earnings growth for 2025 [31][32] - **InPlay Oil Corp. (IPOOF)**: A junior upstream company with a focus on light oil development, expected to exceed production of 18,750 boe/d in the second half of the year. It prioritizes sustainability and shareholder returns [18][19] Market Performance - The Zacks Oil and Gas - Canadian E&P industry has underperformed compared to the S&P 500 and the broader Zacks Oil – Energy sector, declining 9.4% over the past year [11] - The industry's Zacks Industry Rank is 165, placing it in the bottom 33% of 245 Zacks industries, indicating challenging near-term prospects [7][8] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 4.76, significantly lower than the S&P 500's 17.98 and slightly below the sector's 4.84 [15]

Core Viewpoint - Ovintiv reported quarterly earnings of $1.02 per share, missing the Zacks Consensus Estimate of $1.04 per share, and down from $1.24 per share a year ago, indicating an earnings surprise of -1.92% [1] - The company posted revenues of $2.32 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 18.75% and slightly up from $2.29 billion year-over-year [2] Group 1: Earnings Performance - Ovintiv has surpassed consensus EPS estimates three times over the last four quarters [2] - The earnings report reflects a mixed trend in estimate revisions leading to a Zacks Rank 3 (Hold) for the stock, suggesting it will perform in line with the market in the near future [6] Group 2: Revenue Insights - The current consensus EPS estimate for the upcoming quarter is $1.32 on revenues of $2.08 billion, and for the current fiscal year, it is $5.31 on revenues of $8.63 billion [7] Group 3: Market Context - Ovintiv shares have underperformed the market, losing about 2.5% since the beginning of the year compared to the S&P 500's gain of 8.1% [3] - The Oil and Gas - Exploration and Production - Canadian industry is currently in the bottom 32% of Zacks industries, indicating potential challenges ahead [8]

[PART I](index=6&type=section&id=PART%20I) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Ovintiv's unaudited condensed consolidated financial statements for Q2 2025 include statements of earnings, comprehensive income, balance sheet, changes in shareholders' equity, and cash flows, with detailed notes on accounting policies and specific financial items [Condensed Consolidated Statement of Earnings](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Earnings) Ovintiv reported net earnings of **$148 million** for the six months ended June 30, 2025, a significant decrease from **$678 million** in 2024, primarily due to a **$730 million** impairment charge, with diluted EPS falling to **$0.57** Condensed Consolidated Statement of Earnings Highlights (Six Months Ended June 30) | Metric | 2025 (US$ millions) | 2024 (US$ millions) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenues** | 4,695 | 4,640 | +1.2% | | **Operating Income (Loss)** | 422 | 1,050 | -59.8% | | **Net Earnings (Loss)** | 148 | 678 | -78.2% | | **Diluted EPS** | $0.57 | $2.51 | -77.3% | - A significant non-cash impairment charge of **$730 million** was recorded in the first six months of 2025, which was the primary driver for the substantial decrease in net earnings compared to the prior year[27](index=27&type=chunk) [Condensed Consolidated Balance Sheet](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of June 30, 2025, Ovintiv's total assets increased to **$19.73 billion** from **$19.25 billion** at year-end 2024, with total liabilities growing to **$9.36 billion** from **$8.92 billion**, influenced by the Montney acquisition Condensed Consolidated Balance Sheet Summary | Metric | June 30, 2025 (US$ millions) | Dec 31, 2024 (US$ millions) | | :--- | :--- | :--- | | **Total Current Assets** | 1,244 | 1,369 | | **Property, Plant and Equipment, net** | 14,383 | 14,364 | | **Total Assets** | 19,734 | 19,254 | | **Total Current Liabilities** | 2,874 | 2,681 | | **Long-Term Debt** | 4,393 | 4,853 | | **Total Liabilities** | 9,357 | 8,923 | | **Total Shareholders' Equity** | 10,377 | 10,331 | [Condensed Consolidated Statement of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, cash from operating activities increased to **$1.89 billion**, while investing activities used **$1.45 billion** primarily for acquisitions and capital expenditures, partially offset by divestiture proceeds Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 (US$ millions) | 2024 (US$ millions) | | :--- | :--- | :--- | | **Cash From Operating Activities** | 1,886 | 1,679 | | **Cash From (Used in) Investing Activities** | (1,453) | (1,402) | | **Cash From (Used in) Financing Activities** | (442) | (274) | | **Increase (Decrease) in Cash** | (22) | 5 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail financial statement explanations, including the reclassification of the Market Optimization segment, a **$730 million** non-cash impairment, the **$2.3 billion** Montney acquisition, **$1.9 billion** Uinta divestiture, and share capital updates - The Market Optimization segment was reclassified into the USA and Canadian operating segments, which they support, with prior periods reclassified for comparative purposes[42](index=42&type=chunk) - On January 31, 2025, the company completed the acquisition of Montney formation assets for approximately **$2.308 billion** in cash, accounted for as an asset acquisition[62](index=62&type=chunk) - The company sold its Uinta Basin assets for proceeds of approximately **$1.882 billion** during the first six months of 2025[64](index=64&type=chunk) - For the six months ended June 30, 2025, the company recognized a before-tax non-cash ceiling test impairment in the Canadian Operations of **$730 million**, primarily due to lower 12-month average trailing prices compared to market prices at the time of the Montney Acquisition[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The MD&A provides management's perspective on financial results and condition, detailing strategy, performance, and outlook for 2025, including the Montney acquisition and Uinta divestiture, and covers liquidity and capital resources [Executive Overview](index=35&type=section&id=Executive%20Overview) Ovintiv focuses on generating cash flow and shareholder returns through its multi-basin portfolio, with key H1 2025 developments including the **$2.3 billion** Montney acquisition and **$1.9 billion** Uinta divestiture, reporting **$148 million** in net earnings - The company's strategy is to be a leading North American energy producer, focusing on quality returns, cash flow generation, and durable cash returns to shareholders through its multi-basin portfolio[131](index=131&type=chunk) - On January 31, 2025, the company closed its acquisition of Montney assets for approximately **$2.308 billion**[143](index=143&type=chunk) - On January 22, 2025, the company closed its divestiture of Uinta assets for approximately **$1.9 billion**[143](index=143&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Total revenues for H1 2025 were **$4.7 billion**, slightly up from **$4.6 billion** in 2024, with upstream product revenues impacted by lower oil prices and Uinta divestiture, offset by higher natural gas prices and Montney acquisition volumes Production Volumes (Six Months Ended June 30) | Product | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Oil (Mbbls/d)** | 146.3 | 168.8 | -13.3% | | **NGLs (Mbbls/d)** | 154.3 | 132.6 | +16.4% | | **Natural Gas (MMcf/d)** | 1,807 | 1,693 | +6.7% | | **Total (MBOE/d)** | 601.9 | 583.8 | +3.1% | Average Realized Prices (Six Months Ended June 30, excluding risk management) | Product | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Oil ($/bbl)** | $68.24 | $77.17 | -11.6% | | **NGLs ($/bbl)** | $40.00 (Blended) | $42.10 (Blended) | -5.0% | | **Natural Gas ($/Mcf)** | $2.60 | $1.74 | +49.4% | - Oil revenues for H1 2025 decreased by **$568 million** YoY, driven by a **12%** drop in realized prices and lower production volumes from the Uinta asset sale[179](index=179&type=chunk)[180](index=180&type=chunk) - Natural gas revenues for H1 2025 increased by **$313 million** YoY, driven by a **49%** increase in realized prices and higher production volumes from the Montney acquisition[182](index=182&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, Ovintiv had total liquidity of approximately **$3.2 billion**, with a Debt to Adjusted Capitalization ratio of **23%**, and generated **$1.9 billion** in cash from operations, funding acquisitions and debt repayment Liquidity Position (as of June 30, 2025) | Component | Amount (US$ millions) | | :--- | :--- | | Cash and Cash Equivalents | 20 | | Available Credit Facilities | 3,350 | | Available Uncommitted Demand Lines | 132 | | Issuance of U.S. Commercial Paper | (331) | | **Total Liquidity** | **3,171** | - The company is in compliance with all financial covenants, with a Debt to Adjusted Capitalization of **23%** against a **60%** limit[247](index=247&type=chunk) - In May 2025, the company redeemed its **$600 million**, **5.65%** senior notes due May 2025[263](index=263&type=chunk) - The share buyback program, which was paused in Q4 2024, resumed in Q2 2025, with **4.1 million** shares repurchased for approximately **$147 million**[269](index=269&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Ovintiv is exposed to market risks from commodity prices, foreign currency exchange rates, and interest rates, with sensitivity analyses indicating a **10%** change in oil prices impacts pre-tax net earnings by approximately **$48-51 million** Market Risk Sensitivity Analysis (as of June 30, 2025) | Risk Factor | Change | Impact on Pre-Tax Net Earnings (US$ millions) | | :--- | :--- | :--- | | **Oil Price** | +10% | $(51) | | | -10% | $48 | | **Natural Gas Price** | +10% | $(13) | | | -10% | $9 | | **Foreign Exchange Rate (CAD/USD)** | +10% | $22 | | | -10% | $(27) | - The company had **$481 million** in floating rate debt as of June 30, 2025, resulting in a sensitivity of **$5 million** in before-tax earnings for each **1%** change in interest rates[293](index=293&type=chunk) [Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting during Q2 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[295](index=295&type=chunk) - No changes in internal control over financial reporting occurred during the second quarter of 2025 that have materially affected, or are reasonably likely to affect, these controls[296](index=296&type=chunk) [PART II](index=64&type=section&id=PART%20II) [Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to its 2024 Annual Report on Form 10-K and Note 21 for legal proceedings information, not expecting outstanding claims to materially affect its financial position - For information on legal proceedings, the report refers to Item 3 of the 2024 Annual Report on Form 10-K and Note 21 of the current 10-Q[299](index=299&type=chunk) [Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have been reported since the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[300](index=300&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Under its NCIB program, Ovintiv repurchased approximately **4.1 million** shares for **$146 million** during Q2 2025, with approximately **21.9 million** shares remaining for purchase Share Repurchases (Three Months Ended June 30, 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,234,753 | $32.40 | | May 2025 | 1,788,932 | $36.89 | | June 2025 | 1,041,415 | $38.41 | | **Total** | **4,065,100** | **$35.92** | - The current NCIB program allows for the purchase of up to approximately **25.9 million** shares and is active from October 3, 2024, to October 2, 2025[301](index=301&type=chunk) [Other Part II Items](index=65&type=section&id=Other%20Part%20II%20Items) This section covers remaining Part II items, reporting no defaults upon senior securities, mine safety disclosures as not applicable, and no other information to report, with a list of exhibits provided - Item 3, Defaults Upon Senior Securities: None[306](index=306&type=chunk) - Item 4, Mine Safety Disclosures: Not applicable[307](index=307&type=chunk) - Item 5, Other Information: None[308](index=308&type=chunk)

[Selected Financial Information](index=1&type=section&id=Selected%20Financial%20Information) Ovintiv's Q2 2025 revenues slightly rose to $2,318 million, but net earnings declined to $307 million, with a six-month drop to $148 million due to a $730 million impairment [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Ovintiv's Q2 2025 revenues slightly rose to $2,318 million, but net earnings declined to $307 million, with a six-month drop to $148 million due to a $730 million impairment [Condensed Consolidated Statement of Earnings](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Earnings) Q2 2025 revenues increased to $2,318 million, but net earnings decreased to $307 million, with a six-month net earnings drop to $148 million due to a $730 million impairment Statement of Earnings Summary (US$ millions, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $2,318 | $2,288 | $4,695 | $4,640 | | **Operating Income (Loss)** | $511 | $556 | $422 | $1,050 | | **Net Earnings (Loss)** | $307 | $340 | $148 | $678 | | **Diluted EPS** | $1.18 | $1.27 | $0.57 | $2.51 | - A **$730 million impairment charge** was recorded in the first six months of 2025, significantly impacting net earnings for the period, with no such charge in 2024[2](index=2&type=chunk) [Condensed Consolidated Statement of Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Q2 2025 comprehensive income rose to $500 million due to currency adjustments, while the six-month total decreased to $348 million Comprehensive Income Summary (US$ millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Earnings (Loss)** | $307 | $340 | $148 | $678 | | **Other Comprehensive Income (Loss)** | $193 | $(33) | $200 | $(110) | | **Comprehensive Income (Loss)** | $500 | $307 | $348 | $568 | [Condensed Consolidated Balance Sheet](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) Total assets increased to $19,734 million, and liabilities to $9,357 million, with stable shareholders' equity at $10,377 million as of June 30, 2025 Balance Sheet Summary (US$ millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $1,244 | $1,369 | | **Property, plant and equipment, net** | $14,383 | $14,364 | | **Total Assets** | $19,734 | $19,254 | | **Total Current Liabilities** | $2,874 | $2,681 | | **Long-Term Debt** | $4,393 | $4,853 | | **Total Liabilities** | $9,357 | $8,923 | | **Total Shareholders' Equity** | $10,377 | $10,331 | [Condensed Consolidated Statement of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Operating cash flow increased to $1,886 million, while investing activities used $1,453 million due to acquisitions and divestitures, ending with $20 million cash Cash Flow Summary (US$ millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Cash From Operating Activities** | $1,886 | $1,679 | | **Cash From (Used in) Investing Activities** | $(1,453) | $(1,402) | | **Cash From (Used in) Financing Activities** | $(442) | $(274) | | **Increase (Decrease) in Cash** | $(22) | $5 | | **Cash, End of Period** | $20 | $8 | - Key investing activities for the first six months of 2025 included **$2,313 million for acquisitions** and **$1,896 million in proceeds from divestitures**[5](index=5&type=chunk) - Key financing activities for the first six months of 2025 included **$147 million for share repurchases** and **$155 million for dividend payments**[5](index=5&type=chunk) [Interim Supplemental Information](index=5&type=section&id=Interim%20Supplemental%20Information) This section provides detailed quarterly financial and operating data, including non-GAAP measures, production volumes, and per-unit netback analysis [Supplemental Financial Information](index=6&type=section&id=Supplemental%20Financial%20Information) Q2 2025 Non-GAAP Adjusted Earnings decreased to $265 million, and Non-GAAP Cash Flow to $913 million, with stable debt ratios Quarterly Financial Results (US$ millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net Earnings (Loss)** | $307 | $340 | | **Non-GAAP Adjusted Earnings** | $265 | $331 | | **Non-GAAP Cash Flow** | $913 | $1,025 | Financial Metrics | Metric | YTD 2025 | Year 2024 | | :--- | :--- | :--- | | **Debt to Capitalization** | 34% | 35% | | **Debt to Adjusted Capitalization** | 23% | 23% | | **Debt to EBITDA** | 1.6x | 1.3x | | **Debt to Adjusted EBITDA** | 1.2x | 1.2x | [Supplemental Operating Information](index=7&type=section&id=Supplemental%20Operating%20Information) Total production increased to 615.3 MBOE/d in Q2 2025, driven by natural gas and NGLs, with USA Operations as the largest contributor Production Volumes by Product (Average) | Product | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Oil (Mbbls/d)** | 142.0 | 167.3 | | **NGLs (Mbbls/d)** | 164.7 | 136.6 | | **Natural Gas (MMcf/d)** | 1,851 | 1,740 | | **Total (MBOE/d)** | 615.3 | 593.8 | Production Volumes by Segment (Average, MBOE/d) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **USA Operations** | 314.7 | 341.9 | | **Canadian Operations** | 300.6 | 251.9 | | **Total** | 615.3 | 593.8 | [Supplemental Financial & Operating Information (Results of Operations)](index=8&type=section&id=Supplemental%20Financial%20%26%20Operating%20Information%20(Results%20of%20Operations)) Total operations netback, excluding hedging, decreased to $18.55/BOE in Q2 2025, primarily due to lower realized prices in USA Operations Per-Unit Netback (US$/BOE, excluding hedging) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **USA Operations Netback** | $26.41 | $32.24 | | **Canadian Operations Netback** | $10.30 | $5.68 | | **Total Operations Netback** | $18.55 | $20.99 | - The decrease in total netback was primarily due to a lower average realized price, which fell to **$31.32/BOE in Q2 2025** from $34.08/BOE in Q2 2024[16](index=16&type=chunk) [Supplemental Oil and Gas Operating Statistics](index=10&type=section&id=Supplemental%20Oil%20and%20Gas%20Operating%20Statistics) Q2 2025 realized oil prices before hedging were $64.50/bbl, with Permian and Montney as core plays, and 73 net wells brought on production [Per-Unit Prices and Risk Management Impact](index=10&type=section&id=Per-Unit%20Prices%20and%20Risk%20Management%20Impact) Q2 2025 average realized price per BOE before hedging was $31.32, with hedging adding $0.59/BOE for a total of $31.91/BOE Per-Unit Prices by Product (Q2 2025 vs Q2 2024, excluding hedging) | Product | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Oil Price ($/bbl)** | $64.50 | $78.19 | | **NGLs - Total Price ($/bbl)** | $36.14 | $35.74 | | **Natural Gas Price ($/Mcf)** | $2.24 | $1.30 | | **Total Price ($/BOE)** | $31.32 | $34.08 | - Realized gains on risk management contributed an additional **$0.59/BOE** to the total price in Q2 2025, lifting the realized price to **$31.91/BOE**[19](index=19&type=chunk)[20](index=20&type=chunk) [Results by Play (Production & Capital)](index=13&type=section&id=Results%20by%20Play%20(Production%20%26%20Capital)) Permian (214.5 MBOE/d, $265 million capex) and Montney (300.3 MBOE/d, $171 million capex) are key production and capital drivers Production by Key Play (Q2 2025 Average, MBOE/d) | Play | Production (MBOE/d) | | :--- | :--- | | **Permian (USA)** | 214.5 | | **Anadarko (USA)** | 99.9 | | **Montney (Canada)** | 300.3 | Capital Expenditures by Key Play (Q2 2025, US$ millions) | Play | Capital Expenditures | | :--- | :--- | | **Permian (USA)** | $265 | | **Anadarko (USA)** | $83 | | **Montney (Canada)** | $171 | [Drilling and Completions Activity](index=17&type=section&id=Drilling%20and%20Completions%20Activity) In Q2 2025, 55 net wells were drilled and 73 net wells brought on production, with Permian and Montney being the most active Drilling & Completions Activity (Net Wells) | Activity | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | **Wells Drilled** | 55 | 120 | | **Wells on Production** | 73 | 154 | [Non-GAAP Definitions and Reconciliations](index=18&type=section&id=Non-GAAP%20Definitions%20and%20Reconciliations) This section defines and reconciles key non-GAAP financial measures, including cash flow, adjusted earnings, and debt-related metrics [Key Non-GAAP Measure Definitions and Reconciliations](index=19&type=section&id=Key%20Non-GAAP%20Measure%20Definitions%20and%20Reconciliations) Q2 2025 Non-GAAP Cash Flow was $913 million, leading to $392 million in Free Cash Flow, with Adjusted Earnings at $265 million - Non-GAAP Cash Flow is defined as cash from operating activities excluding net change in other assets and liabilities, and net change in non-cash working capital[34](index=34&type=chunk) - Non-GAAP Adjusted Earnings excludes items like unrealized hedging gains/losses, impairments, and non-operating foreign exchange impacts to improve comparability between periods[35](index=35&type=chunk) Reconciliation to Non-GAAP Free Cash Flow (Q2 2025, US$ millions) | Metric | Amount | | :--- | :--- | | Cash From Operating Activities | $1,013 | | Adjustments | $(100) | | **Non-GAAP Cash Flow** | **$913** | | Less: Capital expenditures | $(521) | | **Non-GAAP Free Cash Flow** | **$392** | [Debt-Related Non-GAAP Measures](index=20&type=section&id=Debt-Related%20Non-GAAP%20Measures) As of Q2 2025, Debt to Adjusted Capitalization was 23%, well below the 60% covenant limit, with Net Debt at $5,313 million - The company's credit facilities require **Debt to Adjusted Capitalization to be less than 60%**, with the YTD 2025 ratio at **23%**[38](index=38&type=chunk)[39](index=39&type=chunk) Key Debt Metrics (YTD 2025) | Metric | Value | | :--- | :--- | | **Net Debt** | $5,313 million | | **Debt to Capitalization** | 34% | | **Debt to Adjusted EBITDA (TTM)** | 1.2x | [Netback Calculation](index=22&type=section&id=Netback%20Calculation) Q2 2025 total operations netback was $18.59/BOE, calculated from a $31.34/BOE price less production-related costs - Netback is a non-GAAP measure calculated on a BOE basis using upstream product revenues (excluding hedging), less costs for production taxes, transportation, processing, and operations[46](index=46&type=chunk) Total Operations Netback Calculation (Q2 2025, US$/BOE) | Item | Amount | | :--- | :--- | | Price | $31.34 | | Production, mineral and other taxes | $(1.30) | | Transportation and processing | $(7.61) | | Operating | $(3.84) | | **Netback** | **$18.59** |

Core Insights - Ovintiv Inc. has lowered its full year capital investment guidance while increasing its production guidance for 2025, reflecting strong operational performance and capital efficiency [3][5][9] Financial Performance - For Q2 2025, Ovintiv reported net earnings of $307 million, or $1.18 per diluted share, with cash from operating activities amounting to $1,013 million and Non-GAAP Free Cash Flow of $392 million after capital expenditures of $521 million [9][22] - The company generated Non-GAAP Cash Flow of $913 million, down from $1,025 million in Q2 2024, while capital expenditures decreased from $622 million in Q2 2024 to $521 million in Q2 2025 [21][22] Production and Capital Guidance - Full year production volumes are now expected to average between 600 to 620 MBOE/d, with capital investment guidance lowered to $2.125 billion to $2.175 billion, a reduction of $50 million at the midpoint [5][9] - Q2 2025 production averaged 615 MBOE/d, exceeding guidance, with specific contributions of 211 Mbbls/d of oil and condensate, 96 Mbbls/d of other NGLs, and 1,851 MMcf/d of natural gas [8][9] Shareholder Returns - The company remains committed to returning at least 50% of post-base dividend Non-GAAP Free Cash Flow to shareholders through buybacks and variable dividends, having returned $223 million in Q2 2025 [7][9] - In Q2 2025, Ovintiv repurchased approximately 4.1 million shares for about $146 million and declared a quarterly dividend of $0.30 per share [7][13] Debt and Liquidity - As of June 30, 2025, Ovintiv had approximately $3.2 billion in total liquidity, with a Debt to EBITDA ratio of 1.6 times and Non-GAAP Debt to Adjusted EBITDA of 1.2 times [11][12] - The company reduced its net debt by $217 million during the quarter, bringing it to approximately $5.31 billion [9][11] Asset Highlights - In the Permian region, production averaged 215 MBOE/d, with a full year capital investment expected to be around $1.20 billion to $1.25 billion [14] - Montney production averaged 300 MBOE/d, with anticipated capital investment of approximately $575 million to $625 million [15] - Anadarko production averaged 100 MBOE/d, with expected capital investment of about $290 million to $310 million [16]

Core Viewpoint - Analysts project Ovintiv (OVV) will report quarterly earnings of $1.03 per share, a decline of 16.9% year over year, with revenues expected to reach $1.95 billion, down 14.7% from the same quarter last year [1] Earnings Projections - Revisions to earnings projections are crucial for predicting investor behavior, with empirical studies showing a strong link between earnings estimate trends and short-term stock performance [2] Analyst Forecasts - Analysts' average forecasts for Ovintiv's key metrics provide valuable insights into the company's performance [3] Revenue Estimates - Estimated revenues from Canadian operations are projected at $611.52 million, reflecting a year-over-year increase of 32.9% [4] - Revenues from USA operations are expected to be $1.19 billion, indicating a decline of 17.9% from the previous year [4] - Revenues from corporate and other sources are estimated at $18.19 million, down 30.1% year over year [4] Production Volumes - Total production volumes are projected to reach 599.60 thousand barrels of oil equivalent per day, up from 593.80 thousand barrels per day a year ago [5] - Oil and plant condensate production volumes are expected to be 207.78 thousand barrels per day, down from 211.90 thousand barrels per day [5] - NGLs (Natural Gas Liquids) production volumes are estimated at 89.81 thousand barrels per day, down from 92.00 thousand barrels per day [6] - Total oil production volumes are projected at 147.84 thousand barrels per day, down from 167.30 thousand barrels per day [7] - NGLs total production is expected to be 149.02 thousand barrels per day, up from 136.60 thousand barrels per day in the same quarter last year [7] - Total production volumes for Canadian operations are forecasted at 286.62 thousand barrels of oil equivalent per day, up from 251.90 thousand barrels per day a year ago [9] - Total production volumes for USA operations are expected to reach 313.29 thousand barrels of oil equivalent per day, down from 341.90 thousand barrels per day [9] Stock Performance - Over the past month, Ovintiv shares have remained unchanged, while the Zacks S&P 500 composite has increased by 5.9% [10] - Based on its Zacks Rank 3 (Hold), Ovintiv is expected to perform in line with the overall market in the upcoming period [10]

Core Viewpoint - Ovintiv Inc. is expected to report second-quarter earnings on July 24, with estimates of $1.04 per share and revenues of $1.9 billion [1][7]. Group 1: Previous Quarter Performance - In the last reported quarter, Ovintiv exceeded earnings expectations with adjusted earnings per share of $1.42, surpassing the Zacks Consensus Estimate of $1.20 [2]. - Total revenues for the last quarter were $2.4 billion, beating the Zacks Consensus Estimate by 3.3%, driven by improved natural gas pricing and higher product and service sales [2]. - Ovintiv has consistently beaten earnings estimates in the past four quarters, achieving an average surprise of 27.8% [2]. Group 2: Estimate Revisions and Projections - The Zacks Consensus Estimate for second-quarter 2025 earnings has increased by 2% in the past week, although it indicates a 16.1% year-over-year decline [3]. - Revenue estimates for the second quarter suggest a decline of approximately 14.7% compared to the previous year [3]. - Ovintiv's natural gas volumes are projected to rise by 4.5% year-over-year to 1818 million cubic feet per day (MMcf/d) in Q2 [4][7]. Group 3: Operational Insights - The company anticipates higher natural gas volumes due to full gas systems in Western Canada, preparing for LNG Canada coming online [4]. - Revenues from Canadian operations are expected to reach $481.7 million, reflecting a 4.7% increase from the prior year [4]. - However, operating expenses are projected to increase significantly to $2.3 billion from $1.7 billion in the previous year [5][7]. Group 4: Earnings Prediction - The model predicts an earnings beat for Ovintiv, supported by a positive Earnings ESP of +7.28% and a Zacks Rank of 3 [6][8].

Core Viewpoint - Ovintiv (OVV) is anticipated to report a year-over-year decline in earnings due to lower revenues, with the consensus outlook indicating a potential impact on its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is expected to be released on July 24, with a consensus EPS estimate of $1.04, reflecting a year-over-year decrease of 16.1%. Revenues are projected to be $1.95 billion, down 14.7% from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has been revised 0.76% higher in the last 30 days, indicating a collective reassessment by analysts [4]. The Most Accurate Estimate for Ovintiv is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +7.28%, suggesting a bullish outlook on the company's earnings prospects [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3. Stocks with this combination have historically produced a positive surprise nearly 70% of the time [10][12]. Historical Performance - Ovintiv has a history of beating consensus EPS estimates, having done so in the last four quarters. In the most recent quarter, it exceeded expectations by delivering earnings of $1.42 per share against an expected $1.20, resulting in a surprise of +18.33% [13][14]. Conclusion - Ovintiv is positioned as a compelling earnings-beat candidate, but investors should consider other factors that may influence stock performance beyond earnings results [15][17].

Core Insights - Ovintiv Inc. is a prominent player in the oil and gas exploration and production sector, with significant operations in North America, particularly in the Permian Basin, Anadarko Basin, and Montney Formation [1][7] - Since rebranding from Encana Corporation in 2020, the company has focused on strategic growth, operational optimization, and financial discipline, enhancing its market position [2] - Ovintiv's shares have increased by 29.2% over the past three months, outperforming the Zacks United States Exploration and Production sub-industry growth of 19.1%, indicating strong investor confidence [3][8] Company Performance - The company possesses a high-quality asset portfolio with a deep inventory in key basins, ensuring sustainable production and competitive returns [7] - The recent $2.3 billion acquisition in Montney is expected to boost condensate production significantly, enhancing cash flow and diversifying the long-term drilling inventory [8][11] - Ovintiv has achieved cost efficiencies, with Permian drilling costs below $600 per foot and Montney well cost savings targeting $1.5 million, which supports profitability even in lower-price environments [9][10] Shareholder Returns - The company follows a 50/50 capital return strategy, allocating half of post-dividend free cash flow to buybacks and the other half to debt reduction, having repurchased $2 billion in shares since 2021 [10] - A stable quarterly dividend of 30 cents per share complements total shareholder returns, reflecting a commitment to returning value to investors [10] Strategic Positioning - Ovintiv's business model is designed to be resilient to macro volatility, ensuring profitability at mid-cycle prices and maintaining a free cash flow of $1 billion at $50 WTI [10] - The Montney acquisition is progressing ahead of schedule, with cost synergies and operational improvements already being realized [11] Challenges - The company remains exposed to commodity price volatility, with revenues tied to oil and gas prices, which are cyclical in nature [12] - Approximately 40% of Canadian gas volumes are exposed to weak AECO pricing, which could impact cash flow despite diversification efforts [13] - Ovintiv's conservative growth approach prioritizes free cash flow over production growth, which may limit upside potential in stronger market conditions [13][14]