• Free Cash Flow (2024): $1.7 billion, up 50% year-over-year.
• Free Cash Flow (2025 Guidance): Expected to be $2.1 billion.
• Net Debt (End of 2024): $5.4 billion, a decrease of more than $320 million.
• Cash Flow (2024): $4 billion total cash flow.
• Capital Investment (Q4 2024): Approximately $552 million.
• Cash Flow Per Share (Q4 2024): $3.86, beating consensus estimates by about 7%.
• Free Cash Flow (Q4 2024): More than $450 million.
• Oil and Condensate Production (Q4 2024): Averaged approximately 210,000 barrels per day.
• Total Production (2025 Guidance): 595,000 to 615,000 BOE per day.
• Capital Investment (2025 Guidance): About $2.2 billion.
• Debt Reduction Target (2025): Total debt expected to be well below $5 billion by year-end.
• Permian D&C Cost (2025): Expected to average $600 to $650 per foot.
• Montney D&C Cost (2025): Expected to average $525 per foot.
• Anadarko D&C Cost (2025): Expected to average $550 per foot.

• Warning! GuruFocus has detected 3 Warning Sign with OVV.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ovintiv Inc (NYSE:OVV) reported strong 2024 results with a significant increase in free cash flow, generating approximately $1.7 billion, up 50% year-over-year.
• The company has a robust inventory with close to 15 years of premium inventory in the Permian, 20 years in the Montney, and over a decade in the Anadarko, ensuring long-term sustainability.
• Efficiency gains have led to improved capital and cash costs, with oil type curves on a barrel per foot basis as good or better year-over-year.
• Ovintiv Inc (NYSE:OVV) successfully completed strategic acquisitions and divestitures, enhancing capital efficiency and free cash generation, allowing for faster debt reduction.
• The company plans to generate about $2.1 billion of free cash flow in 2025, with a competitive free cash flow yield of approximately 18% and a cash return yield of 10%.

Negative Points

• Ovintiv Inc (NYSE:OVV) faced challenges with natural gas and NGLs production, coming in slightly below the low end of guidance due to a value-based decision to reject ethane and temporary winter weather impacts.
• Higher Canadian royalties are expected to modestly affect volumes due to higher gas prices.
• The company is exposed to potential impacts from tariffs on Canadian imports into the US, although they anticipate a modest impact on cash flow.
• Ovintiv Inc (NYSE:OVV) has a higher GP&T expense in the Montney compared to peers, attributed to third-party ownership of midstream assets.
• The company is still working on integrating newly acquired assets into their operations, which may present short-term challenges.

Q & A Highlights

Q: Brendan, could you discuss the potential for acquisitions in the Montney versus the Permian, given rising acreage values? A: Brendan McCracken, President, CEO: It's challenging to surpass what we've achieved so far. We've assembled a strong portfolio, and we're confident in its ability to generate free cash flow. There's a significant arbitrage between the Montney and Permian, with Montney acquisitions offering better value for shareholders.

Q: How does the Anadarko Basin fit into Ovintiv's long-term strategy? A: Brendan McCracken, President, CEO: The Anadarko plays a crucial role due to its low decline rate, which enhances free cash generation. It requires minimal capital to maintain production, and its type curves and well costs have improved, making it financially competitive with our other assets.

Q: What is Ovintiv's net debt target by the end of 2025, and how do you plan to achieve it? A: Brendan McCracken, President, CEO: We aim to reduce net debt to well below $5 billion by the end of this year, potentially reaching $4.6 to $4.7 billion. This trajectory positions us to achieve our $4 billion target in 2026. We plan to resume share buybacks in the second quarter.

Q: How does Ovintiv's inventory depth impact its strategic outlook and future A&D opportunities? A: Brendan McCracken, President, CEO: Our extensive inventory provides confidence in our ability to generate durable free cash flow. This depth, combined with efficiency gains, enhances profitability and shareholder returns. It also raises the bar for future acquisitions, given our strong portfolio.

Q: What impact could potential tariffs on Canadian imports have on Ovintiv's business? A: Brendan McCracken, President, CEO: We anticipate a modest impact, even under extreme tariff scenarios. We've assessed potential effects on our supply chain, gas exports, and condensate sales. Overall, we expect a neutral impact on 2025 cash flows, considering potential foreign exchange benefits.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.