Ovintiv(OVV)2024-02-28 17:40Financial Data and Key Metrics Changes - In 2023, the company achieved net earnings of $2.1 billion and cash flow of $3.9 billion, with capital investment totaling $2.7 billion, resulting in free cash flow of approximately $1.2 billion [5][6] - The company returned $733 million, or 63% of free cash flow, directly to shareholders [6] - The total debt was reduced by $426 million, strengthening the balance sheet further [13] Business Line Data and Key Metrics Changes - Oil and condensate volumes reached 240,000 barrels per day, exceeding expectations by 7% [11] - The company expects to generate about $1.6 billion of free cash flow in 2024, which is $450 million more than in 2023, with flat production and lower commodity prices [14] - The 2024 oil and condensate capital efficiency reflects an 18% gain compared to the original pre-acquisition 2023 guidance [14] Market Data and Key Metrics Changes - The company achieved a 42% reduction in greenhouse gas emissions intensity from the 2019 baseline [9] - The Montney play continues to show strong performance, with the best wells averaging over 1,000 barrels per day on an IP30 basis [37] Company Strategy and Development Direction - The company focuses on maximizing returns on invested capital and free cash flow to enhance shareholder returns while reducing leverage [13][48] - The strategy includes a disciplined approach to both organic and inorganic investments, with a significant emphasis on capital efficiency [8][44] - The company plans to maintain a level-loaded capital program in 2024, focusing 100% of investment on oil and condensate [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued operational success and efficiency gains, setting the stage for further growth in 2024 [10][48] - The company is well-protected against potentially weak natural gas prices, having hedged about 50% of 2024 gas volumes [16] - Management indicated that the current market does not require more barrels, leading to a focus on maximizing free cash flow rather than increasing production [61] Other Important Information - The company repurchased approximately 10 million shares during the year and increased its base dividend by 20% [9] - The company has added 1,650 premium drilling locations to its portfolio over the last three years, with a significant portion in the Permian [8][44] Q&A Session Summary Question: What is driving the notable capital efficiency improvement? - Management indicated that the improvement is a result of a multi-year effort focused on innovation and operational efficiency, with half of the gains attributed to production improvement and half to capital efficiency [51][52] Question: How repeatable are the drivers of capital efficiency? - Management emphasized that the improvements are based on a combination of effective drilling techniques and completion designs, which have been refined over time [56][57] Question: What is the outlook for the Montney play in 2024? - Management highlighted a strong inventory position in the Montney, with expectations for high returns on invested capital and significant free cash flow potential [66][67] Question: How does the company view M&A opportunities? - Management stated that they remain disciplined and opportunistic in M&A, focusing on adding premium inventory at competitive costs [96][97] Question: What is the expected production profile for 2024? - The company anticipates a consistent production profile with annual oil and condensate volumes expected to average about 205,000 barrels per day [23][24]