Company Updates 2023 Guidance for Early
Close
DENVER, June 12,
2023 /CNW/ - Ovintiv Inc. (NYSE: OVV) (TSX: OVV)
("Ovintiv" or the "Company") today closed the previously announced
acquisition of core Midland Basin assets, adding approximately
1,050 net 10,000 foot well locations and approximately 65,000 net
acres of largely undeveloped land adjacent to Ovintiv's existing
Permian operations. The Company has acquired substantially all the
leasehold interest and related assets of Black Swan Oil & Gas,
PetroLegacy Energy and Piedra Resources, which are portfolio
companies of funds managed by EnCap Investments L.P. ("EnCap"), in
a cash and stock transaction valued at $4.275 billion.
The Company also closed the previously announced all cash sale
of its Bakken assets, located in the Williston Basin of North Dakota to Grayson Mill Bakken, LLC, a portfolio company of
funds managed by EnCap for $825
million. The sale represents the entirety of Ovintiv's
Bakken position.
The combined transactions are expected to enhance capital
efficiency by 15% and durably increase cash returns per share by
more than 25%(1).
Updated 2023 Guidance
The Company revised its second quarter and full year 2023
guidance to reflect the early close of the Midland Basin and Bakken
transactions.
|
|
2Q
2023
|
|
Full Year
2023
|
Guidance
Updates
|
|
Previous
|
Updated
|
|
Previous
|
Updated
|
Total Production
(MBOE/d)
|
|
515 –
535
|
520 –
540
|
|
520 –
545
|
521 –
546
|
Oil & Condensate
(Mbbls/d)
|
|
170 –
174
|
175 –
179
|
|
185 –
195
|
186 –
196
|
Capital Investment
($ Millions)
|
|
$590 –
$630
|
$670 –
$710
|
|
$2,600 –
$2,900
|
$2,680 –
$2,980
|
2024 Outlook
In 2024, Ovintiv expects to deliver total
company oil and condensate production of greater than 200 thousand
barrels per day ("Mbbls/d") with total capital investment of
$2.1 billion to $2.5 billion. The Company's production
profile is expected to normalize by mid-year 2024 with second-half
2024 oil and condensate production stabilizing at 200 Mbbls/d.
S&P 400 Inclusion
Separately, it was recently
announced that Ovintiv will be added to the S&P 400 Index
effective prior to market open on June
20, 2023. Ovintiv is not currently included in any of
the S&P 500/400/600 Indices.
Additional Transaction Details
Ovintiv will use cash
and issue approximately 31.8 million shares of Ovintiv common stock
in conjunction with the transaction, down from the original 32.6
million shares estimated at the transaction announcement
date. Customary closing adjustments are expected to result in
an upward adjustment of approximately $85
million associated with the Midland Basin acquisition and a
$110 million reduction in Bakken sale
proceeds. One-time transaction-related costs, including financing
costs, bridge loan costs, fees, insurance costs and restructuring
costs are expected to total approximately $80 to $85
million.
Refer to Note 1 for information regarding Non-GAAP Measures
in the footnotes of this release.
Important information
Ovintiv reports in U.S. dollars
unless otherwise noted. Production, sales and reserves estimates
are reported on an after-royalties basis, unless otherwise noted.
Unless otherwise specified or the context otherwise requires,
references to "Ovintiv," "we," "its," "our" or to "the Company"
includes reference to subsidiaries of and partnership interests
held by Ovintiv Inc. and its subsidiaries.
Please visit Ovintiv's website and the Investor Relations page
at www.ovintiv.com and investor.ovintiv.com, where Ovintiv often
discloses important information about the Company, its business,
and its results of operations.
The shares that were issued by the Company pursuant to the
transaction have been conditionally approved for listing on the
Toronto Stock Exchange ("TSX"). In obtaining TSX listing approval,
the Company has relied on the "Eligible Interlisted Issuer"
exemption from TSX rules under section 602.1 of the TSX Company
Manual.
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:
- Forward Looking: Non-GAAP Free Cash Flow is a non-GAAP
measure. Non-GAAP Free Cash Flow is defined as Non-GAAP
Cash Flow in excess of capital expenditures, excluding net
acquisitions and divestitures. Ovintiv has not provided a
reconciliation for Free Cash Flow or Cash Flow to cash from
operating activities, the most comparable financial measure
calculated in accordance with GAAP. Cash from operating activities
includes certain items which may be significant and difficult to
project with a reasonable degree of accuracy. Therefore, cash from
operating activities and a reconciliation of the Free Cash Flow or
Cash Flow to cash from operating activities are not available
without unreasonable effort.
ADVISORY REGARDING OIL AND GAS INFORMATION – The
conversion of natural gas volumes to barrels of oil equivalent
(BOE) is on the basis of six thousand cubic feet to one barrel. BOE
is based on a generic energy equivalency conversion method
primarily applicable at the burner tip and does not represent
economic value equivalency at the wellhead. Readers are cautioned
that BOE may be misleading, particularly if used in isolation.
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
the Company are forward-looking statements. When used in this news
release, the use of words and phrases including "anticipates,"
"believes," "continue," "could," "estimates," "expects," "focused
on," "forecast," "guidance," "intends," "maintain," "may,"
"opportunities," "outlook," "plans," "potential," "strategy,"
"targets," "will," "would" and other similar terminology are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words or
phrases. Without limiting the generality of the foregoing,
forward-looking statements contained in this news release include:
future commodity prices and basis differentials; the Company's
ability to successfully integrate completed acquisitions (including
the Midland Basin transaction described herein); the ability of the
Company to access credit facilities and capital markets; the
availability of attractive commodity or financial hedges and the
enforceability of risk management programs; the Company's ability
to capture and maintain gains in productivity and efficiency; the
ability for the Company to general cash returns and execute on its
share buyback plan; expectations of plans, strategies and
objectives of the Company, including anticipated production volumes
and capital investment; the Company's ability to manage cost
inflation and expected cost structures, including expected
operating, transportation, processing and labor expenses; the
outlook of the oil and natural gas industry generally, including
impacts from changes to the geopolitical environment; and
projections made in light of, and generally consistent with, the
Company's historical experience and its perception of historical
industry trends; and the other assumptions contained herein.
Although the Company 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,
the Company undertakes no obligation to update publicly or revise
any forward-looking statements. The forward-looking statements
contained or incorporated by reference in this news release, and
all subsequent forward-looking statements attributable to the
Company, whether written or oral, are expressly qualified by these
cautionary statements.
The reader should carefully read the risk factors described in
the "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" sections of the
Company's most recent Annual Report on Form 10-K, Quarterly Report
on Form 10-Q, and in other filings with the SEC or Canadian
securities regulators, for a description of certain risks that
could, among other things, cause actual results to differ from
these forward-looking statements. Other unpredictable or unknown
factors not discussed in this new release could also have material
adverse effects on forward-looking statements.
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.