Ovintiv Declares Enhance in Shareholder Returns By means of New Capital Allocation Framework
DENVER, September 9, 2021 – Ovintiv Inc. (NYSE: OVV) (TSX: OVV) at present introduced a brand new capital allocation framework, which helps the corporate’s aim of unlocking shareholder worth by delivering on its priorities strategic monetary energy, growing money returns to shareholders, producing superior returns on funding and fostering ESG progress.
“We’re dedicated to unlocking shareholder worth by delivering on our strategic priorities,” mentioned Ovintiv President and CEO Brendan McCracken. “We’re on the forefront of innovation to provide oil and fuel from shale each profitably and sustainably. We’ll generate superior returns and free money movement by repeatedly bettering capital effectivity and growing margins whereas decreasing emissions. We’ll ship this worth to our shareholders by way of disciplined capital allocation. Over the following 10 years, our enterprise is anticipated to generate roughly $ 15 billion in free money movement(1) at $ 55 a barrel WTI oil costs steady and would generate about $ 21 billion at $ 65 a barrel. Our capital allocation framework defines our dedication to monetary energy, producing superior returns on the capital we make investments, returning liquidity to our shareholders and fostering ESG progress. ‘
As beforehand introduced, Mr. McCracken can be presenting on the Barclays CEO Vitality-Energy convention on Friday, September 10, 2021, beginning at 10:20 a.m.ET. The stay webcast and replay can 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 primary highlights of the capital allocation framework embody:
Enhance money returns for shareholders
Beginning within the fourth quarter of 2021 and till Ovintiv reaches its internet debt of $ 3 billion(2) Goal, the corporate plans to return 25% of the prior quarter’s free money movement after fundamental dividends to its shareholders by way of share buybacks and / or variable dividends. The remaining 75% can be primarily spent on decreasing internet debt, with a modest quantity earmarked for small, low-cost actual property extensions.
In 2022, utilizing uncooked materials worth assumptions of $ 60 per barrel for WTI oil and $ 3.00 per million cubic toes for NYMEX pure fuel, the Firm initiatives it can generate roughly $ 550 million. direct return to shareholders by way of its base dividend of $ 150 million and an extra $ 400 million in shares. redemptions or variable dividends. This money return would symbolize a money return of over seven %.
As soon as the corporate hits its internet debt goal of $ 3 billion, it plans to extend quarterly returns to shareholders to at the least 50% of the prior quarter’s free money movement after fundamental dividends.
Preserve a reinvestment price beneath 75%
Ovintiv reaffirmed its long-term dedication to reinvest lower than 75% of non-GAAP money movement at mid-cycle costs. In 2021, the Firm’s deliberate capital funding of $ 1.5 billion represents a money movement reinvestment price 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 September 30, 2021, to widespread shareholders of file on September 15, 2021. This was the second time that the dividend had been elevated since 2019..
Free money movement is a non-GAAP measure that Ovintiv defines as non-GAAP money movement in extra of capital expenditures, excluding internet acquisitions and disposals. Non-GAAP money movement 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. Because of the forward-looking nature of the projected free money movement used on this doc, administration can’t reliably predict a few of the crucial elements of essentially the most immediately comparable forward-looking GAAP measures, reminiscent of adjustments within the firm’s belongings and liabilities. operation. Subsequently, Ovintiv is unable to current a quantitative reconciliation of those forward-looking non-GAAP monetary measures to their most immediately comparable forward-looking GAAP monetary measures. Quantities excluded from this non-GAAP measure in future intervals 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.
Continued concentrate on decreasing internet debt
Ovintiv stays dedicated to decreasing its internet debt. By the tip of 2021, the Firm expects its internet debt to be lower than $ 4.5 billion, which represents a discount of roughly $ 3 billion in internet debt since second quarter 2020.
The corporate beforehand set a internet debt goal of $ 3 billion, which it expects to realize by the tip of 2023, assuming a worth of $ 50 per barrel of WTI oil and NYMEX pure fuel worth of $ 2.75.
Extremely repeatable capital program
With over a decade of premium drilling stock in every of its three main belongings – the Permian, Anadarko and Montney – Ovintiv is properly positioned to proceed to offer forefront 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 incorporates sure forward-looking statements or data (collectively, “FLS”) inside the which means of relevant securities legal guidelines, together with america Non-public Securities Litigation Reform Act of 1995. FLS consists of: price 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; skill to satisfy targets together with capital effectivity, money movement era, debt discount, subject 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 internet indebtedness of the corporate; the Firm’s plans to return free money movement to its shareholders by way 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 these 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 info contained in the primary modeling statistics; the supply of engaging hedges and the applicability of the danger administration program; presumed tax, royalty and regulatory regimes; and expectations and projections made in gentle of the historic expertise of the Society. Dangers and uncertainties embody: suspension or adjustments in steering, and the related affect on manufacturing; skill to generate adequate money movement to satisfy obligations and cut back debt; commodity worth volatility and the affect on the Firm’s share worth and money movement; the power to make sure sufficient transportation and potential reductions in refining operations, together with ensuing storage constraints or widening worth differentials; the discretion to declare and pay dividends, if any; the power to repurchase the excellent widespread shares of the Firm, together with acquiring the mandatory inventory market approvals for this function; the existence of different makes use of for the Firm’s money assets which can exceed the cost of dividends or the repurchase of peculiar shares in circulation; enterprise interruption, lack of property and sudden harm or technical difficulties; the affect of COVID-19 on the Firm’s operations, together with sustaining common employees ranges, securing operational inputs, performing elements of its enterprise and cybersecurity dangers related to distant working; counterparty and credit score threat; the affect of credit standing adjustments 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; skill to amass or discover further reserves; imprecision of reserve estimates and recoverable amount estimates; and different dangers and uncertainties as described within the Firm’s Annual Report on Kind 10-Okay, Quarterly Report on Kind 10-Q and as described sometimes in its different periodic filings as filed on EDGAR and SEDAR. Whereas the Firm believes these FLSs to be affordable, there might be no assurance that they may show to be appropriate. The above assumptions, dangers and uncertainties usually are not exhaustive. The FLS are created as of the date hereof and, besides as required by legislation, the Firm assumes no obligation to replace or revise the FLS.
About Ovintiv inc.
Ovintiv is among the largest producers of oil, condensate and pure fuel in North America. Additional data on Ovintiv Inc. is offered on the Firm’s web site, www.ovintiv.com, or by contacting:
Ovintiv inc. printed this content material on September 10, 2021 and is solely accountable for the data it incorporates. Distributed by Public, unedited and unmodified, on September 10, 2021 10:11:14 AM UTC.