Ovintiv(OVV)2023-05-10 18:31Financial Data and Key Metrics Changes - The company reported net earnings of $487 million, cash from operating activities of $1.1 billion, and free cash flow of $241 million, exceeding consensus estimates [3] - Cash flow per share was $3.44, and approximately $300 million was returned to shareholders through share buybacks and dividends, representing a cash return yield of nearly 15% [3] Business Line Data and Key Metrics Changes - Production during the quarter was 511,000 BOEs per day, exceeding guidance on oil, gas, and NGL [19] - The company achieved an impressive IP30 rate of 1,165 barrels of oil per day in the Permian, indicating strong well performance [10] - In the Montney, a recent well posted a 30-day IP rate of over 5,300 BOE per day, showcasing robust productivity [26] Market Data and Key Metrics Changes - The company realized 111% of NYMEX after hedges across its portfolio, with Canadian gas prices exceeding 140% of NYMEX on a pre-hedge basis [8][27] - The economics in the Montney remain strong, with expected returns of over 100% across the 2023 program [27] Company Strategy and Development Direction - The company announced two transactions aimed at enhancing capital efficiency and extending inventory depth, including acquiring Midland acreage and selling Bakken assets for $825 million [4][14] - The acquisition is expected to enhance capital efficiency and lower cash costs per BOE, while maintaining a strong investment-grade rated balance sheet [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and execution, highlighting strong operational performance and innovation culture [7][21] - The company anticipates production growth in Q2 2023 to approximately 515,000 to 535,000 BOEs per day, with capital spending of $590 million to $630 million [41] Other Important Information - A 20% increase in the base dividend per share was announced alongside the transactions [20] - The company expects to run a low-level development program in 2024, producing over 200,000 barrels of oil and condensate per day with a capital range of $2.1 billion to $2.5 billion [56] Q&A Session Summary Question: Clarification on cash outflow and acquisition price adjustments - Management estimated the closing adjustment on the Permian acquisition to be under $100 million, noting that the asset is running free cash flow negative during the interim period [39] Question: Thoughts on shareholder return program - Management confirmed the shareholder return framework remains unchanged, emphasizing buybacks as the best value for returning cash to shareholders [53][81] Question: Integration plans for newly acquired assets - Management stated that integration processes are in motion, covering drilling, completion plans, and midstream marketing [97][99]