Ovintiv (OVV) 8 Nov 242024 Q3 Earnings call transcript

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Ovintiv's 2024 Third Quarter Results Conference Call.

As a reminder, today's call is being recorded. [Operator Instructions] Please be advised that this conference call may not be recorded or rebroadcast without the expressed consent of Ovintiv. I would now like to turn the conference call over to Jason Verhaest from Investor Relations. Please go ahead, Mr. Verhaest.

Please everyone, being third are at webcast, our SEDAR. at welcome, This conference available the and the filed website is of on slides call and ovintiv.com. disclosure beginning Joanna, of to forward-looking and quarter our call. on advisory our Thanks, regarding note our statements documents take the and slides EDGAR

questions. will remarks, the we be available take prepared your Following to

Brendan I'll now over call turn to our McCracken. President, the

million, of you came $XXX and on cash generated operational end combined ranges TMP for or quarter business. or cash Thank driven by us. our LOE. execution Jason. flow of $X.XX million We guidance outperformance and the top share guidance remain on of of flow both strong below everybody. the end free in exceeded range Thanks, production $XXX production and $XXX net We Good the another products and joining yesterday, all very $X.XX announced morning, cash earnings we bottom across delivered beating million about We which the share, to cost financial we're pleased flow than and we was sure despite transfers make what excellence our that operational doing way prices. We're The through beat of second per lower and with as all quarter our oil was higher to per excited performance. estimates. financial consensus the

free our our XX% and of third generate buyback. the flow. returned free incremental second quarter more delivered dividend year, quarter $XXX cash With this we're on lower and an base cash track shareholders to extra production our we've to costs We share via flow our million

to the of during make on Importantly, at at million $XXX quarter, the for we QX $X.XX end total debt reduction billion. repaying debt continued progress

discuss more detail. Corey quarter call turn our to to now I'll the third over results in

condensate high and driven quarter by the well our equivalent XXX,XXX volumes. per the see the per performance The outperformance of continue beating Montney, volumes production day. portfolio barrels to end with guidance. strong production day, We of And of oil Brendan. across base our Permian delivered strong barrels from operational the we total averaging where Thanks, results and third approximately XXX,XXX beat and was about

Our record capital met third We or was million, investment bottom of build $XXX every to as at our on operator. industry-leading item quarter guidance the an range. our approximately track continuing beat on end guidance almost

buybacks the return continue to the repurchased of $X.X Our $XX approximately approximately of in $XXX through balance of third through the share quarter. of shareholder debt total we've of program repayment than yield about payments of our a represents shareholder the billion. dividends to XXXX returned for in quarter the competitive allocation cash XX framework XXXX, million during quarter $XXX base shares We cash base million returns million and more of X%. buyback Since of inception third and distributed returns share with to This million $XXX repurchases flow free million. shareholders our dividend

October. applied X.Xx. million reduced legacy disclosed more our fourth by settlement ratio reduction debt already leverage and trailing we debt disposition quarter, million, debt XX-month $XXX to to to from this previously $XXX was In We reduction. than million direct received our been has $XX and expect in the of

decreasing our leverage our We expense. reducing to make interest progress capital towards structure, and continue optimizing

work the profile years prices. next The mid-cycle target. remain debt, we maturity couple assuming as target committed schedule also of of towards Xx of will about We to debt leverage allow of us mid-cycle paydown optimize bonds our billion $X to or that our total our over

our rating target sooner. four from with business allow a flow and credit volatility. and resiliency Our us of outlook withstand rated reach enables will additional generate bolsters to all efficiency improvement debt us stable agencies. to investment-grade continuous in our We cash the market capital remain This

I'll over now discuss turn the call to highlights. Greg our to operational

Thanks, Corey.

part in strides to in of reducing activities result. business our a we've cycle couple continue efficiency portfolio, of made every speed completions significant important Across our during teams the Our quarter. times is and as increasing the of and drive gains the for This drilling a reasons.

by in of also it earlier returns, cost the revenue business many services are shifts but of it increases or in hours days because in on lower built First, time, the results number our location. which

XX% was These cost to in our the cycle and about Permian mean continue that day than time than well average. well costs this In program completions, quarter, improvements more was average Permian, program than fastest speed, third day faster faster feet our lower less the roughly last our this per X,XXX, and XX% foot. per was our On drive XXXX quarter average ever our completed X,XXX the quarter which was averaged the during feet per than for $XXX we pacesetter drilling year. was

to year. We five recently rigs activities. pace rigs to and align of six We dropped better five completion through the run plan drilling end the from our to down of the

of barrels is see continue well XXX performance curve, wells with our and per since line performance day. and in to the XXXX tracking curve. right our type hold year, to flat the at able we Permian last fourth quarter-over-quarter We approximately type online We volumes essentially quarter were our XXX,XXX brought

from is confident is the year. than As a we of meet the our year. last Permian, our productivity well higher the type achieved reminder, our improved ability fully in results start all remain well XXXX to XXXX curve We in which the incorporating type unchanged curve the

was drilled X% we XXXX day, average. about X,XXX than feet our program which of per average an faster Montney, the In

the in We more also well than in play longest the feet. ever XX,XXX drilled

of wells In fact, the drilled record Ovintiv XX has the in Montney. on longest XX

averages with day the side, completion faster XX% on third Trimulfrac in than per the quarter program year completed our X,XXX over of last feet is On average our and the Permian. average was par

our and run three XX,XXX portfolio, Montney day for than the and pacesetter production rigs cost Our and cost less quarter, and per plan play well to the in wells the has completions. Montney averaged year-end. condensate drilling The oil foot in in through we barrels per $XXX the lowest

Supported our condensate prices Montney by strategy. expect realized to Even current a level because the better outstanding. of of that, more we diversification at our on our and been and generate to remain price IRR XX% assumes XX%. IRR exposure wells our full AECO strip much program that oil pricing, economics have over strip productivity than actual Note result

Moving the to Anadarko.

asset benefit low exceptionally to due the We strong cash in from base to flow part from its the generation continue free decline.

coming early continue less release part oil. the the currently the displayed has acreage. end cuts first the to program, per of of with to these our The than X,XXX X target year wells of to play, on The will of or XXXX We to quarter. cost from which per Anadarko than about XX%, active new and day, we our through speed days about the production year. run improvement oiliest D&C about significant foot has from enhance $XXX faster XX% the during than feet rig have in made eight-well Our XXXX our program year designed one now drilling in completed This over was first we economics pacesetter which program oil team average. contributed of progress more the rig from averaging XX% revenue of spud the

well portfolio, our Uinta, has performance Permian. the play reductions competitive what continued the in with on made In in our margins similar combined cost our receive to strong to progress with we

room with about net land acres undeveloped XXX,XXX have of the in we means pay X,XXX and approximately running base largely scale play. Our collective of feet significant

oil barrels is Our run from condensate per quarter third our of asset. production go-forward and XX,XXX expected consistent the production for rate day with

the the online have we XX quarter, third end wells. of brought of As net

turn plan through in play, for recently in the year. expected end the total year. the resumed rig We to Our of we run lines and the drilling one

the I'll now to Brendan. call turn back

Thanks, Greg. for and program and returns we to Capital generate the of cash free superior XXXX durable shareholders. work our generation as our hallmark remains efficiency

this targeted the year, For increasing while our maintaining third guidance time capital production our spending. we're

from across product a a This all June in our of of outlook from volumes XXX,XXX year. the last up oil barrels higher barrels start year day streams. of day up expectations the and deliver to a includes original our and expect condensate, X,XXX XX,XXX barrels We day at

and Fourth set to is volumes the at quarter of oil XXX,XXX day XXX,XXX a production condensate about average barrels With to BOEs per day. XXX,XXX midpoint.

year come remain of We and around expect fourth $XXX $X.X our the at capital billion. midpoint in guide million investment quarter midpoint, to full committed the at to we

Our XXXX of barrels capital year. XXX,XXX a us 'XX about is with of condensate program and to allowing and investment per sustain beyond, production day approximately oil billion repeatable $X.X in

generating significant energy strong delivering returns We cash pride safe, shareholders. deliver on maintaining to In in maximizing profitability focused and the reliable of great while business, results. outstanding our balance summary, We're our secure to and continue affordable, our flow sheet. take producing superior we free

our concludes open Operator, we're for now remarks. This questions. the to line ready prepared

question First Instructions] Daoud Gabe comes TD [Operator at Cowen. from

the has I increased start budget. the Obviously, quite But and you've static, ranges maybe this least capital that been with highlighted your we at your evolution through pretty front, guidance guidance moving was midpoint hoping, XXXX. volume Brendan, can a your XXXX on you've the of bit year.

gains into maybe bit Can that X.X trends number any little given and you efficiency that about So a talk you've how seen? XXXX?

question. Yes, Yes, thanks for Gabe. the sure, for

as activity up in closed run the reminding gone we year. and we wells I'd free the cash when say EnCap planned the huge we've for worth what the number had this it's assets for slowing of year, progress, in stepped guidance down a returns. had and acquisition, through the production we level to of we ourselves significantly have think them were I the and we shape that is definitely And

run very our to a we're we XXX,XXX have landing gone profile has of and shape that barrels stable credit production a team. integration But at still the overriding rate in that obviously, oil level day. Now on new well the where

into to half and we'll we landing do has our to the now first originally for program year, quarter, official is year-end which pushed come a continue cash. outperformance fourth tune fantastic our guidance outcome so results. guided in and the And that landing of that And with free this 'XX the optimize but

detailed the point pricing next we're still year in services direction, equipment the As out, and planning going you lots for of midst the things in of right and program. on but

skis. get want our over I So to don't out

XXX guide. think X,XXX X.X to that's right day the higher next now, than way our and for barrels so about remember, a is year. And And the original

Got it. it. Got

I to reports helpful. for you been follow-up, on markets guys. and maybe, then a A&D details. your get obviously Obviously, generally. There's more just as formal of media a we comments tuned related some updated number M&A That's Okay. And stay guess can

all So on get your thoughts I of would updated just love that. to

for Gabe, Yes, sure.

extremely we're high a built topic. really for What in mean, I how with you asset, and flow say And So deep our extremely can steward business. and portfolio us. acquisitions us out from focused free an on We've hurdle high-quality focus, from this very a disciplined on consistent have we're a I'd execution see is as we and up cash inventory the each our message our really driving of results about capital. shareholders'

of that. kind that's leave where So I'd

from next Dingmann Securities. at comes The question Neal Truist

question, or it of certain this upside? an Is what what just saw the is even wondering the expected Greg you just around been Brendan, quarter. and operation are things I My you wondering team, production to first areas capital. wondering would can outperformed efficiencies different I'm some just your less drivers another teams maybe be Brendan notably all seem continued forecast excellent of idea would on have doing? maybe give few the I'm have outperforming this? in using quarters, of me I'm of this the quarter. you bigger last last certainly drivers specifically notable continued that

yes, driven lot is Yes. innovation generating Thanks, everything we a in service cash an Neil. are And -- And exercise. really, doing business. very well, of the intentional of the more been free from it's really a the from perspective

drive also way And that it the incremental of through our bit talk business free asked, performance so things financial cash. extends all operational some bottom the line a but the say I'll would to to about I like you

in And showcasing look, work we've that results tours a over and up doing built there teams time. Permian are skill we're sophistication Montney but I like both really, is year -- pointed to, speaking investor And and edge and is would the our themselves. are for the what cutting doing. you We this this the say, did

has really a start I'd strategy. to been things foundation So few data the point of our

set trying in everybody not D&C our production base this one curious year being portfolio. private here, data and on also So a we've operations those, what only also great on that opportunities. up to unique learning built of leading showcased analytical AI is we've America years lot with data we're I do entire our drilling And on and to where about is And engaged of over a our and those a work us combined to lowering cost, North in second, a real and that geoscience of engineering excited find you operations, and culture new we completion Montney across we and speed have of and but innovation are of in understand Permian things that deployed, the to and with. the do things number causality. And have our kind was think real a lean that edge true those but we've the given machine to has how tours team, decline the across best-in-class automation throughout then

infinite maybe break our those around peers to maybe a outward really been focused of an is learning at industry is leave doing one really leading-edge our and of incorporating available thing I'd And that operator's risk you final rate company hard we insular walls. watching capital. within business. down things And and And habit are return bad from only the then we've with things is the often us bit to the another say studying the the backward back into of working being

move I to rapidly the it's those across your across the just spread and around would asset assets. really And ideas collaboration to finally, the say in been question, working portfolio each company. We've hard create all

Neil, lot important story. an it's the So there, of but part

logistics. I I like it's your optimize the detail. a And described -- record talked and versus Greg. line that. to couple and are at that levels. you you today things for it wondering No, where maybe second about question ago, -- maybe are is a down, at when notable I'm curious, just cost are more that coming like the very seeing slide but sort largely appreciate maybe program. through just I'm the completions? you're of on bit. are doing records? then of or a D&C -- same activity wells you Or noticed what And Permian year that you set e-fleets Well Simply to a now I wondering, just look driven returns these was little

of the laterals how returns always mentioning, that's place, jobs whatever question, to Thanks right the drive that productivity are great can When as improve of comes for using, do the things teams optimize better And of three really on things comes a to rigs. part that with it returns they're to -- foot. and it's times, of you're more It's your equipment improvement. fleets. in a of a it Neil. lot ultimately you But your to improve to It's working and there's the in e-fleets, high-performance the it's our was part Brendan down to fleet well efficiency free per cash placed can really higher which frac the it. We you execute point flow. design and combination combination execution down cycle results

the We strong also those finally, look is performance. completing what's execution increasing drilling up we teams lateral of at the wells can. all just quickly on can. showing And possibly and fronts, are And efficiently in whenever working as as which we and and

that back mentioned, landing fourth to zone As to in allowed Brendan quarter. push the that's Permian us back the

do lot five a same frac would we it whole the a ago. our rigs fleet. match specifically, feel frac rigs where now program we'll Permian of crew drilled. and gotten And a we've going year we think than more And and We'll have that forward, fleet if and done one to point about like get

go-forward using we But available efficient us. that And we us so rigs feel that's frac and rigs to quo we five. being five why just technologies as a different like dropped six the and are as that's from to down for the is of can kind running all crew status

question Neil Sachs. Goldman at next comes from The Mehta

how One but natural season your Relatively story just is get not only amount of for out in big molecule, gas. Yes. of easy demand value of the of natural the earnings long-term then basis issues given is questions debates me. gas we context the Waha, to and this that of see one -- the most for

how are Brendan, the curious, guys you just So to your shaping gas? maximize business on natural capture

the industry basin to. absolutely, Neil. strategy couple see that probably reflects we've better gas a is the Yes, than us very low realization number been pointing We're quarters. for even pleased I diversification. And you're doing to And it's though number, of really it's last what on think

So in Permian. and markets Canada gas in we have produce those both market the Western through prices summer the for of of And horrific gas a months. lot the been

is so those up on years several of of we both egress out last the over And set what based places.

to So we been off. markets two those and tried minimize really that our paying to has exposure

so And strategy. kind into to lean of we're really, continuing that

exposure in And the of next gas to with additional we we late egress some starting with that Permian. With capacity assets. secured Permian, a the picked Waha recently up year of -- out acquisition those bunch the just

So in gas a back appendix slides for and that pie outside our us kind outside we'll of that's gas of we're of more of getting ours of where chart normal most kind most of be place Waha. of our into bringing AECO the

Uinta of we whether talked but That monetization And deck, sense, you Okay. just on there? comments process perspective about bit think that have would on the could the should of about any a asset, makes curious the how And trade? Brendan. little asset then in your you that

can they're We're job. us. all And for capital, we today, And -- the portfolio. competitive the consistent assets. really great then across always team message there have value assets pretty what's I sure, getting we that but And the margin about is Neil. our returns portfolio from the to working drive to down -- thinking with and No, four and a drilling our our we Uinta, competitive. focus how with for costs. Yes. consistent delivering create down been here and They're That's think helped has

leave So yes, I think that's it. where I'd

The Leggate from question at Wolfe comes Research. next Doug

higher the choice kind quarter, you've XXXX, in guess. I every a your and look to take your production a get Brendan, capital? made ultimately, which want deliver It I'm the doing not as you given capital. -- I mouth, strength gains, in of front is trying you're pacesetter well new put in to questions, extraordinary at some 'XX not the two take to of one number or that seems you cut lower operations, there's basins. words that by When efficiency two efficiency those Ovintiv, the and gains production a other higher with of or don't of guide, it but look the going have which philosophical options we of seems take rather to you're your coming to again, And for I'm you progress would

dilemma generation. is cash and value a have. driven really great free it's we'll I'd by what Yes, be to And say

the we to of a be kind that going feel the we do So as couple macro. of decisions look at is parameters about we'll those make how the

also more And low-level from that is how barrels So the that perspective set and low-level the looking we're we up the program world we for gains feel efficiency then do like look helpful. a really is because for BTUs.

of at production let look there. out what you found accretive the the chose free to float that choice. did if and be more this cash we we flow harvested kind We So to year,

And of more a if and makes flat, capital we choice the that's back calculus the pull And so in the keep little instance. just next the year. and the volumes kind we'll to would it same out then bearish make turns that sense world do

Okay.

We questions, for the me guidance. I have one. will the had watch second and philosophical two you for forgive to

Your the -- it's been execution-wise, flawless took you much pretty since helm.

You've of deals. share done your

going the at of not And despite energy is in tough exposed of wins billion with to It's differentiate? doing, trillion to $XX your a from we Are whatever. $X backdrop investors, to our ultimately You're buy market. share energy. the everything least going We're discussions company sector. given commodity buy kind the you're to or a price

think And good my way you that? to do not, So if management in is, is assets do to you I how compete for the relevance, do hands question gain investor change good what you wonder, create scale you have But a might value. to strong the of dollars? putting

and conversation what's the And and driver do engaged again, is to shareholder always be is most philosophically, forefront around efficiency gains we space We're independent would there Yes. of part strategic group, would a effective and be a say going be value. of here going I The to E&P way doing say tend that always that. to in strong landscape. certainly think from I at driven for I the do to that. innovation we're the how a that the

is relevancy a but scale, from there. investor think I an look, scale I there perspective, think think we're I

for We don't of barrier we're the how looking see as to most engagement But sit create a continue that always value. today. here we as and shareholder a have we look, lot

-- put you're ask would Would engaged B part on and in comment M&A to any currently whether a you if that particular discussions? about I you maybe care you could

Doug, know, that. able on you ever to we're not comment As

answer that So I one. afraid can't

at of Bank question Kalei Akamine next from America. The comes

oil. It's XXX. I expected above a Permian to holding little bit on of here. XXX guess guide first is question better seems up It soft my your to still than be

think EnCap send it that already going where better you'll aesthetically, mitigated looks like of to So out? you've have from you When understanding decline transaction. do the a the that's

What a Well, to at here yes, fourth and day happen question. quarter seeing here. that landing barrels really pointed I think we XXX,XXX a in around was the landing great

kind part landing the And value. through in and now. it we're more cash that of So of free which let pushed year, midst of of is middle that because up harvest kind us the great this right we production more

staff My that times Permian. improvement. that. Got jumped appreciate follow-up was in the I drilling operational out quarter it. is The the second a the this on

do how to in to drill those 'XX, think cycle more wells times extrapolate [indiscernible]. 'XX were over for many you If you

Yes.

TILs in end range this TIL our if at think upper you I looked that would year, it put the of for us year-over-year.

The at Arun next Jayaram question JPMorgan. comes from

if wondering thoughts position do the mid I Brendan, you the Canada, could in which year? on and as implications gas could of next your market discuss the you well think Montney? was LNG for your start as Implications Canadian

Yes.

this think, a be going Canadian thing to is long-term great look, I for gas.

I then LNG of through have the insight start We could we any think Canada ramp special but and there, XXXX. would best kind up up early would that be have the don't steering year.

So you're that talking about there of X.X operators drilled Bcf into we gas a is day of gas upcoming big at But of the what a market. capacity. incremental when Canadian number look is takeaway see share we leveraged which have landscape the the

we the with probably see So perhaps the fills quickly relatively be what LNG relatively Canada. unlike going new That's that to dynamic quickly. not egress egress Permian see fills we where in

we tighten, So transitory going a but say feature might AECO's it. to would to it have bit of probably a

that a we've that and So anything upside that's for better than been is tone cautious taken us. of kind

excited what offer in the end to course, and pricing. we'll we're some the of Canada probably X behind Phase of the but decade, towards about basin, more support And more egress are is of of then, that even out AECO coming continue really LNG projects the

what the structure Brendan, to looks what of trade the the a what Basin you're obviously, Permian lower basins to seeing could maybe you're seeing leverage But cost other A&D in on I in just potentially be thoughts wondering characterize and if and the the ability one Basin. large you advantage? your market, to Midland in

Yes, Arun, for sure.

A&D feature have that notable biggest has the been from probably when the increase think in we the did market in been paid I our deal. valuations

deep hurdle acquisitions really very up we've built high there. us, portfolio a for with high-quality a a have so already And because inventory

how disciplined you just with behave. expect shareholder how should us we're that's and So stewarding the we're very capital, to

at question from comes Partners. Next Energy Daniel Geoff Jay

of XX% have were you if sort if wondering one I XX%? said Permian -- that completions a good XXXX just to that upside of there's I'm your plan? for Trimulfrac, go-forward rate noticed that's your Or I

putting We're place details year's decent a next still final that's think I on to start. plan. Yes,

year course move bit. clearly, over So the a marched Trimulfrac. of we've it and around more of could the more little in the up and with program But

extra decent So place to for probably your Doug, a donated it's you question to I 'XX. Geoff, guess. start

call this we completed you. the Thank and Mr. At Verhaest. session, question-and-answer turn back the to we'll time, have

Thanks, Joanna, for everyone, and thanks, us joining today.

now Our call complete. is

Thanks, everybody.

please gentlemen, this for today. you ask disconnect your you lines. conference your concludes and Ladies and for thank participating, we that We