Ovintiv(US:OVV)2023-02-28 19:43Financial Data and Key Metrics Changes - The company achieved net earnings of $1.3 billion and adjusted EBITDA of $918 million for Q4 2022, with free cash flow of $537 million and cash flow per share of $3.55, slightly above consensus estimates [103][104] - Total annual production reached 510,000 BOEs per day, with Q4 production at 524,000 BOEs per day, despite extreme winter weather [102][103] - The company returned approximately $250 million to shareholders through share buybacks and dividends, increasing to $300 million in Q1 2023 [104][106] - Long-term debt was reduced by $1.2 billion, resulting in a leverage ratio of 0.8x at year-end [107] Business Line Data and Key Metrics Changes - The Uinta Basin matched the Permian for the highest operating margin in the portfolio in 2022, with plans to share rigs between Uinta and Bakken to bring on 40 to 50 net wells [13][21] - The Anadarko asset, primarily natural gas and associated NGLs, provides stable production with strong price realizations, although activity has been reduced due to weaker gas and NGL price outlook [22][42] Market Data and Key Metrics Changes - The company has 25% of its 2023 oil and gas volumes covered by WTI and NYMEX benchmark contracts, allowing participation in price upside [8] - The Uinta Basin oil receives an average price of about 85% of WTI, generating impressive margins [21] Company Strategy and Development Direction - The company focuses on capital efficiency and maximizing shareholder returns while maintaining flat production volumes year-over-year [7][15] - A multi-basin multiproduct portfolio allows for operational and commodity diversification, providing a competitive advantage [6] - The 2023 capital plan is designed to generate significant free cash flow and maintain balance sheet strength [7][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate volatility and emphasized the importance of a disciplined development program [44][45] - The company anticipates a low point in production for Q1 2023, driven by known weather events and a methodical approach to bringing wells online [16][10] - The outlook for natural gas and NGL prices is weak, prompting a shift in capital allocation towards oil and condensate-rich areas [16][22] Other Important Information - The company reduced emissions intensity by more than 30% and is on track to meet a 50% reduction target [5] - The company added approximately 450 new premium return locations, primarily in the Permian, through organic appraisal and transactions [112][114] Q&A Session Summary Question: Stability of Shareholder Return Plan - Management confirmed the consistency of the capital allocation plan since Q3 2021, with a focus on increasing the base dividend over time [46] Question: Inflation Impact Across Different Plays - Inflation was observed throughout 2022, but the rate of change has subsided, with less inflation seen in Canada compared to the U.S. [28] Question: Oil Reserves Revisions - U.S. oil reserves were flat year-over-year after accounting for the sale of high-cost mature waterflood, with a net increase of 30 million barrels in approved reserves [30] Question: Hedging Effectiveness - The new hedging approach aims to provide downside protection, ensuring free cash flow positivity even at low commodity prices [31] Question: Capital Efficiency Factors - Capital efficiencies improved due to faster drilling and completion times, with a focus on maintaining these efficiencies moving forward [83][84]