DENVER, September 9, 2021 / PRNewswire / – Ovintiv Inc. (NYSE: OVV) (TSX: OVV) right this moment introduced a brand new capital allocation framework, which helps the corporate’s purpose of unlocking shareholder worth by reaching its strategic priorities of monetary power, growing money returns to shareholders, producing superior returns on funding and driving ESG progress.
“We’re dedicated to creating shareholder worth by reaching our strategic priorities,” mentioned Ovintiv President and CEO, Brendan McCracken. “We’re on the forefront of innovation to supply oil and gasoline from shale each profitably and sustainably. We are going to generate superior returns and free money stream by constantly bettering capital effectivity and growing margins whereas decreasing emissions. We are going to ship this worth to our shareholders by means of a disciplined allocation of capital. Over the following 10 years, our enterprise is anticipated to generate roughly $ 15 billion accessible money(1) To $ 55 per barrel of secure WTI oil value and would generate round $ 21 billion To $ 65 per barrel. Our Capital Allocation Framework defines our dedication to monetary power, producing superior returns on the capital we make investments, returning cash to our shareholders and fostering ESG progress. ”
As beforehand introduced, Mr. McCracken will make a presentation on the Barclays CEO Vitality-Energy convention on Friday, September 10, 2021, from 10:20 a.m. ET. The stay webcast and replay will likely be accessible on Ovintiv’s web site. An up to date company presentation has been posted on the Firm’s web site at: https://www.ovintiv.com/buyers/presentations-events/
The principle highlights of the capital allocation framework embody:
Improve money returns for shareholders
From the fourth quarter of 2021 and till Ovintiv reaches its $ 3 billion web debt(2) Goal, the corporate plans to return 25% of the prior quarter’s free money stream after fundamental dividends to its shareholders by means of share buybacks and / or variable dividends. The remaining 75% will likely be primarily spent on decreasing web debt, with a modest quantity earmarked for small, low-cost actual property extensions.
In 2022, utilizing uncooked materials value assumptions of $ 60 per barrel for WTI oil and $ 3.00 per MMcf for NYMEX pure gasoline, the Firm expects to ship roughly $ 550 million direct returns to shareholders because of its $ 150 million fundamental dividend and a complement $ 400 million within the type of share buybacks or variable dividends. This money return would symbolize a money return of over seven p.c.
As soon as the Firm meets its web debt goal of $ 3 billionit plans to extend quarterly returns to shareholders to no less than 50% of the prior quarter’s free money stream after fundamental dividends.
Preserve a reinvestment charge under 75%
Ovintiv reaffirmed its long-term dedication to reinvest lower than 75% of non-GAAP money stream at mid-cycle costs. In 2021, the deliberate capital funding of the Société de $ 1.5 billion represents a money stream reinvestment charge of lower than 50%.
Sustainable fundamental dividend
Offering shareholders with a sustainable core dividend that will increase over time is a key goal for the Firm. In July 2021, Ovintiv elevated its quarterly dividend by roughly 50% to $ 0.14 per share, payable on September 30, 2021, to peculiar shareholders of document on September 15, 2021. This was the second dividend enhance since 2019.
Continued give attention to decreasing web debt
Ovintiv stays dedicated to decreasing its web debt. By the tip of 2021, the Firm expects web debt to be lower than $ 4.5 billion, marking roughly $ 3 billion discount in web debt because the second quarter of 2020.
The Firm had beforehand set a web debt goal of $ 3 billion, which it expects to realize by the tip of 2023, assuming $ 50 per barrel of WTI oil and $ 2.75 per MMcf of NYMEX pure gasoline value.
Extremely repeatable capital program
With over a decade of premium drilling stock in every of its three major belongings – the Permian, Anadarko and Montney – Ovintiv is nicely positioned to proceed to realize industry-leading capital financial savings for a few years to come back.
The Firm considers the capital effectivity of its 2021 program to be extremely reproducible and is dedicated to not enhance manufacturing in an oversupplied market.
NOTICE REGARDING FORWARD-LOOKING STATEMENTS – This press launch accommodates sure forward-looking statements or data (collectively, “FLS”) throughout the which means of relevant securities legal guidelines, together with america Personal Securities Litigation Reform Act of 1995. FLS contains: value financial savings anticipated, capital effectivity and sustainability; operational flexibility and benefits of the Firm’s multi-basin portfolio; the anticipated success and advantages of know-how and innovation; anticipated ranges of exercise and funding; potential to fulfill targets together with capital effectivity, money stream era, debt discount, situation scale and efficiency, elevated money yields for shareholders, producing superior returns on and timing of capital investments; the schedule of projections and expectations to realize the aims contained within the orientations of the corporate and the target of web indebtedness of the corporate; the Firm’s plans to return free money stream to its shareholders by means of dividends and / or share buybacks; statements concerning potential returns to shareholders; and the dimensions of the Firm’s drilling stock. FLS entails assumptions, dangers and uncertainties which can trigger such statements to not happen or for the outcomes to vary materially. These assumptions embody: future commodity costs and differentials; assumptions contained on this doc; the information contained in the primary modeling statistics; the provision of engaging hedges and the applicability of the chance administration program; presumed tax, royalty and regulatory regimes; and expectations and projections made in mild of the historic expertise of the Firm. Dangers and uncertainties embody: suspension or modifications in steering, and the related influence on manufacturing; the flexibility to generate ample money stream to fulfill obligations and cut back debt; commodity value volatility and the influence on the Firm’s share value and money stream; the flexibility to make sure ample transportation and potential reductions in refining operations, together with ensuing storage constraints or widening value differentials; the discretion to declare and pay dividends, if any; the flexibility to repurchase the excellent frequent shares of the Firm, together with acquiring the mandatory inventory market approvals for this objective; the existence of other makes use of for the Firm’s money sources which can exceed the fee of dividends or the repurchase of peculiar shares in circulation; enterprise interruption, lack of property and surprising injury or technical difficulties; the influence of COVID-19 on the Firm’s operations, together with sustaining common workers ranges, securing operational inputs, performing elements of its enterprise and cybersecurity dangers related to distant working; counterparty and credit score threat; the influence of credit standing modifications and entry to liquidity, together with their prices; dangers in advertising and marketing operations; the dangers related to the know-how; dangers related to lawsuits and regulatory actions, together with litigation with companions; potential to accumulate or discover extra reserves; imprecision of reserve estimates and recoverable amount estimates; and different dangers and uncertainties as described within the Firm’s Annual Report on Type 10-Okay, Quarterly Report on Type 10-Q and as described on occasion in its different periodic filings as filed on EDGAR and SEDAR. Whereas the Firm believes these FLSs to be cheap, there could be no assurance that they’ll show to be appropriate. The above assumptions, dangers and uncertainties are usually not exhaustive. FSLs are created as of the date hereof and, besides as required by regulation, the Firm assumes no obligation to replace or revise FLS.
About Ovintiv inc.
Ovintiv is without doubt one of the largest producers of oil, condensate and pure gasoline in North America. Additional data on Ovintiv Inc. is on the market on the Firm’s web site, www.ovintiv.com, or by contacting:
Free money stream is a non-GAAP measure that Ovintiv defines as non-GAAP money stream in extra of capital expenditures, excluding web acquisitions and disposals. Non-GAAP money stream is a non-GAAP measure outlined as money offered by (utilized in) working actions, excluding the online change in different belongings and liabilities, the online change within the fund non-cash working capital and tax payable on the sale of belongings. As a result of forward-looking nature of the projected free money stream used on this doc, administration can not reliably predict among the vital parts of essentially the most instantly comparable forward-looking GAAP measures, resembling modifications within the firm’s belongings and liabilities. operation. Due to this fact, Ovintiv is unable to current a quantitative reconciliation of those forward-looking non-GAAP monetary measures to their most instantly comparable forward-looking GAAP monetary measures. Quantities excluded from this non-GAAP measure in future durations could possibly be materials.
Web debt is a non-GAAP measure that Ovintiv defines as long-term debt, together with present portion, much less money and money equivalents.
SOURCE Ovintiv Inc.