DENVER, July 6, 2022
/CNW/ - Ovintiv Inc. (NYSE: OVV) (TSX: OVV) today announced it has
reached agreements with two counterparties to sell portions of its
assets located in the Uinta and Bakken Basins for total proceeds of
approximately $250 million.
As a result of these agreements and continued strong financial
and operational results, Ovintiv has elected to accelerate the
doubling of its cash returns to shareholders. Starting immediately
for the third quarter, Ovintiv will increase its returns to
shareholders to 50% of the previous quarter's Non-GAAP Free Cash
Flow after base dividends. Previously the company had planned to
increase cash returns to the 50% level starting October 1st. Cash returns in the third
quarter are anticipated to be delivered through share buybacks.
"These transactions continue our track record of portfolio
optimization, and this means we will double our cash returns to
shareholders starting now," said Ovintiv CEO, Brendan McCracken. "This enables our
shareholders to directly benefit from these non-core asset sales
and our continuing strong performance."
The Uinta Basin assets being sold are mature waterflood assets
with Operating Expenses of approximately $35.00 per BOE. The assets include approximately
3,000 gross vertical wells. Post the transaction, Ovintiv will
retain approximately 130,000 largely contiguous net acres in the
horizontal oil-rich shale portion of the play.
The Bakken assets include approximately 88 wells, located mainly
in Richland County, Montana,
approximately 30 miles from Ovintiv's primary Bakken position.
As of April 2022, the combined
volumes from the assets being sold totaled approximately 5.0
thousand barrels of oil equivalent per day (MBOE/d), including 4.9
thousand barrels per day (Mbbls/d) of oil and condensate.
The agreements are subject to ordinary closing conditions,
regulatory approvals and other adjustments and are expected to
close in the third quarter. The effective date of both sales is
April 1st, 2022. Total
proceeds received are subject to customary closing adjustments.
Ovintiv plans to update its 2022 production and Total Cost guidance
to reflect the impact of the asset sales with its second quarter
results. 2022 capital guidance will remain unchanged.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS – This
news release contains forward-looking statements or information
(collectively, "forward-looking statements") within the meaning of
applicable securities legislation, including Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements,
except for statements of historical fact, that relate to the
anticipated future activities, plans, strategies, objectives or
expectations of Ovintiv are forward-looking statements.
Readers are cautioned against unduly relying on forward-looking
statements which, by their nature, involve numerous assumptions and
are subject to both known and unknown risks and uncertainties (many
of which are beyond our control) that may cause such statements not
to occur, or actual results to differ materially and/or adversely
from those expressed or implied. Readers are encouraged to
review the assumptions, risks and uncertainties impacting Ovintiv's
business as described in Item 1A. Risk Factors of Ovintiv's most
recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q; and the other assumptions, risks and uncertainties described
from time to time in Ovintiv's periodic filings with the SEC or
Canadian securities regulators.
Although Ovintiv believes the expectations represented by its
forward-looking statements are reasonable based on the information
available to it as of the date such statements are made,
forward-looking statements are only predictions and statements of
our current beliefs and there can be no assurance that such
expectations will prove to be correct. All forward-looking
statements contained in this news release are made as of the date
of this news release and, except as required by law, Ovintiv
undertakes no obligation to update publicly or revise any
forward-looking statements.
NOTE 1: Non-GAAP
measures
Certain measures in this news release do not have any
standardized meaning as prescribed by U.S. GAAP and, therefore, are
considered non-GAAP measures. These measures may not be comparable
to similar measures presented by other companies and should not be
viewed as a substitute for measures reported under U.S. GAAP. These
measures are commonly used in the oil and gas industry and/or by
Ovintiv to provide shareholders and potential investors with
additional information regarding the Company's liquidity and its
ability to generate funds to finance its operations. For additional
information regarding non-GAAP measures, see the Company's website.
This news release contains references to non-GAAP measures as
follows:
Non-GAAP Cash Flow is a non-GAAP measure defined as cash
from (used in) operating activities excluding net change in other
assets and liabilities, net change in non-cash working capital and
current tax on sale of assets. Non-GAAP Free Cash Flow is a
non-GAAP measure defined as Non-GAAP Cash Flow in excess of capital
expenditures, excluding net acquisitions and divestitures.
Total Costs is a non-GAAP measure which includes the
summation of production, mineral and other taxes, upstream
transportation and processing expense, upstream operating expense
and administrative expense, excluding the impact of long-term
incentive, restructuring and legal costs, and current expected
credit losses. It is calculated as total operating expenses
excluding non-upstream operating costs and non-cash items which
include operating expenses from the Market Optimization and
Corporate and Other segments, depreciation, depletion and
amortization, impairments, accretion of asset retirement
obligation, long-term incentive, restructuring and legal costs, and
current expected credit losses. When presented on a per BOE basis,
Total Costs is divided by production volumes. Management believes
this measure is useful to the Company and its investors as a
measure of operational efficiency across periods.
Further information on Ovintiv Inc. is available on the
Company's website, www.ovintiv.com, or by contacting:
Investor contact:
(888) 525-0304
|
Media contact:
(403) 645-2252
|
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SOURCE Ovintiv Inc.