Executive Summary / Key Takeaways

• Ovintiv Inc. is executing a transformative strategy, consolidating its portfolio into a "dual-basin powerhouse" focused on the Permian and Montney, North America's premier oil resources, complemented by the high-cash-flow Anadarko asset.
• The recent acquisition of NuVista Energy Ltd. for approximately $2.7 billion (C$3.8 billion) and the planned divestiture of Anadarko assets are pivotal, extending Montney oil inventory to nearly 20 years and accelerating debt reduction to below $4 billion by year-end 2026.
• Operational excellence, driven by proprietary cube development, advanced completion designs like trimul-frac, and AI-powered optimization, has led to industry-leading capital efficiency, including Permian D&C costs under $600 per foot and Montney well cost savings of $1.5 million per well on acquired acreage.
• Despite commodity price volatility, Ovintiv maintains robust financial health, projecting $1.5 billion in free cash flow for 2025 at $60 WTI and $3.75 NYMEX, with a post-dividend breakeven under $40 WTI and a 16% free cash flow yield, supporting a balanced capital return framework.
• The company's strategic market diversification for natural gas, including new JKM-linked and Chicago-indexed contracts, significantly reduces AECO exposure, enhancing realized prices and providing a hedge against regional price weakness.

A Focused Future: Ovintiv's Evolution into a North American Energy Leader

Ovintiv Inc., formerly Encana Corporation, has undergone a profound transformation since its rebranding in January 2020, evolving into a North American energy producer sharply focused on its highest-quality, most profitable assets. The company's core business revolves around the exploration, development, production, and marketing of oil, natural gas liquids (NGLs), and natural gas across its strategic positions in the Permian and Anadarko basins in the U.S., and the Montney formation in Canada. This strategic pivot, culminating in recent high-impact acquisitions and divestitures, underscores a commitment to a "durable return strategy" designed to maximize profitability and generate significant free cash flow through commodity price cycles.

The broader energy landscape presents a complex interplay of global supply and demand dynamics, geopolitical events, and the accelerating shift towards lower-carbon energy. Oil prices for the remainder of 2025 are influenced by global economic growth, OPEC and non-OPEC production levels, and macroeconomic uncertainties. Natural gas markets, meanwhile, are shaped by structural supply and demand changes, seasonal weather, and the burgeoning demand from sectors like power generation for AI-driven data centers. Ovintiv's strategy is to thrive within this environment by concentrating capital in highly efficient, short-cycle, high-margin projects that offer flexibility and strong returns.

Ovintiv's operational philosophy is rooted in innovation, particularly its pioneering "cube development" approach, introduced nearly a decade ago. This systematic method involves co-developing multiple stacked zones from a single well pad, a technique designed to maximize both returns and resource recovery. This contrasts with traditional "cherry-picking" strategies that often lead to degraded child well performance and sterilized acreage. By developing the entire stack at once and optimizing adjacent cube drilling within 18 to 24 months, Ovintiv ensures consistent, repeatable results and preserves the long-term value of its inventory. This approach has been a critical differentiator, enabling the company to deliver oil type curves in the Permian that have improved by 10% over the last three years, while many peers face productivity degradation.

Technological Edge: Driving Efficiency and Returns

At the heart of Ovintiv's competitive advantage lies its relentless pursuit of technological differentiation and operational excellence. The company's core technologies are not merely tools but integrated systems that enhance every stage of the exploration and production lifecycle.

One of the most impactful innovations is the trimul-frac completion design. This advanced technique allows for the simultaneous fracturing of multiple wells, significantly reducing cycle times and costs. In the first quarter of 2025, Ovintiv's trimul-frac wells in the Permian averaged 4,400 completed feet per day, contributing to an overall completion speed of over 3,900 feet per day year-to-date 2025—a 50% improvement over 2022 averages. This efficiency translates directly into lower drilling and completion (D&C) costs, with the company achieving a "pacesetter" D&C cost of less than $600 per foot in the Permian, among the best in the industry.

Beyond completion, Ovintiv leverages AI technology and extensive private data sets to optimize execution in real-time across its entire portfolio. This includes:

• AI Drill Centers: Utilizing in-house algorithms to refine drilling efficiencies, leading to faster cycle times. In the newly acquired Montney assets, Ovintiv has already taken approximately 10 days out of the drilling cycle time, achieving an average of less than 15 days from spud to rig release. This has resulted in $1 million per well savings on the drilling side, primarily from efficient casing design, eliminating intermediate casing, and optimizing directional profiles.
• AI Completion Centers: Refining pumping schedules and shortening cycle times.
• Production Operations Control Centers: Remotely operating wells and applying digital workflows to optimize cash flow at the individual well level, enhancing uptime and artificial lift optimization. This integration has been particularly successful in the Montney, where acquired wells are now managed with the same digital workflows as legacy operations.

These technological advancements offer tangible, quantifiable benefits:

• Cost Reduction: The Montney acquisition from Paramount Resources Ltd. saw $1.5 million of per well cost savings realized within six months, bringing the cost structure to approximately $525 per foot. Facilities design on new acreage is also saving $200,000 per well through faster build times and 85% less structural steel.
• Productivity Improvement: The integration of NuVista assets is expected to result in a 10% oil and condensate productivity improvement for Ovintiv's Montney program type curve, driven by the oilier mix of the acquired acreage.
• Capital Efficiency: The combination of faster cycle times and consistent well performance leads to industry-leading capital efficiency and highly competitive returns.

For investors, these technological differentiators are critical. They form a robust competitive moat, enabling Ovintiv to sustain superior financial performance through lower operating costs, higher well productivity, and better margins. The continuous R&D and deployment of new technologies, such as AI, ensure that Ovintiv remains at the forefront of operational efficiency, strengthening its market positioning and underpinning its long-term growth strategy in a maturing shale environment.

Strategic Portfolio Transformation and Competitive Positioning

Ovintiv's strategic journey has culminated in a focused, high-return, deep-inventory portfolio, positioning it as a formidable player in the North American energy sector. The company's competitive advantage is built on its multi-basin strategy, operational excellence, and disciplined capital allocation.

In the USA Operations, Ovintiv maintains anchor positions in the Permian and Anadarko basins. The Permian is a cornerstone, boasting nearly 15 years of premium oil inventory. Ovintiv's "ground game strategy" has been highly effective, adding 170 premium drilling locations year-to-date 2025 at an average cost of $1.5 million per well, significantly below recent transaction metrics in the Lower 48, which have seen inventory valued as high as $7 million per well. This low-cost inventory acquisition, coupled with a 10% improvement in Permian oil productivity per foot over the last three years, highlights Ovintiv's operational superiority in a basin where many peers face declining productivity. The company's cube development and reoccupation strategy make it an "operator of choice" for mineral rights holders, ensuring optimal royalty streams.

The Anadarko Basin, while slated for divestiture, has been a strong free cash flow generator due to its exceptionally low base decline rate of approximately 16% per year. This asset, which produced roughly 100,000 BOEs per day in Q3 2025 (including 29,000 barrels of oil and condensate), has minimal stay-flat capital requirements and has seen D&C costs reduced by $100 per foot year-over-year to $550 per foot in 2025. The planned sale of Anadarko assets, expected to commence in Q1 2026, will further streamline the portfolio and accelerate debt reduction.

In Canadian Operations, the Montney formation is rapidly becoming Ovintiv's second core growth engine. Building on the January 2025 acquisition of 109,000 net acres from Paramount Resources Ltd. (POU.TO), Ovintiv announced on November 4, 2025, the acquisition of NuVista Energy Ltd. (NVA.TO) for $2.7 billion (C$3.8 billion). This transaction adds approximately 140,000 net acres and 930 net well locations in the oil-rich Alberta Montney, extending Ovintiv's Montney oil inventory to the higher end of its 15- to 20-year range. The NuVista acquisition is expected to add 100 MBOEd of production in 2026 and comes with valuable spare midstream capacity and downstream gas price exposure, reducing Ovintiv's 2026 AECO exposure from 30% to 25% pro forma. The company anticipates $100 million in durable annualized free cash flow synergies from NuVista, half from lower capital costs ($1 million per well savings) and the remainder from reduced production costs and overhead.

Compared to direct competitors like EOG Resources (EOG), ConocoPhillips (COP), and Devon Energy (DVN), Ovintiv differentiates itself through its unique combination of multi-basin diversification across North America and its proven ability to acquire high-quality inventory at attractive valuations. While EOG is known for its operational efficiency in U.S. shale and COP for its global scale and financial strength, Ovintiv's integrated approach to market optimization and its disciplined "ground game" in the Permian allow it to secure low-cost, high-quality inventory that rivals often miss. Ovintiv's technological leadership in cube development and advanced completions also provides a tangible edge in well productivity and cost efficiency, often surpassing industry averages. The company's strategic gas market diversification, including new JKM-linked and Chicago-indexed contracts, further enhances its competitive standing by mitigating regional price risks, a challenge for many Canadian gas producers.

Financial Performance and Outlook: A Story of Resilience and Returns

Ovintiv's financial performance in 2025 reflects its strategic focus on profitability and capital efficiency, even amidst a volatile commodity price environment. For the three months ended September 30, 2025, Ovintiv reported net earnings of $148 million, or $0.57 per share diluted, which included a non-cash ceiling test impairment of $108 million (after tax) in Canadian Operations. For the nine months ended September 30, 2025, net earnings were $296 million, or $1.13 per share diluted, including a larger $665 million (after tax) impairment in Canadian Operations. These impairments were primarily driven by declines in 12-month average trailing prices, which reduced proved reserves.

Despite lower average realized oil and plant condensate prices and decreased oil production volumes (due to the Uinta divestiture), Ovintiv's upstream product revenues for the nine months ended September 30, 2025, were partially offset by higher plant condensate volumes (from the Montney acquisition) and a 46% increase in average realized natural gas prices. The company's cash flow per share has remained remarkably consistent, even with a more than $10 per barrel drop in WTI oil prices since Q1 2024.

Ovintiv generated cash from operating activities of $812 million in Q3 2025 and $2.70 billion for the first nine months of 2025. Non-GAAP Cash Flow stood at $895 million for Q3 2025 and $2.81 billion for the nine-month period. Capital expenditures for the nine months ended September 30, 2025, were $1.68 billion, a decrease of $69 million from the prior year, reflecting increased efficiencies and the Uinta divestiture.

The company's liquidity remains robust, with approximately $3.30 billion as of September 30, 2025, including $3.50 billion in available credit facilities that mature in December 2029 and are not subject to borrowing base redeterminations or cash flow/EBITDA covenants. Ovintiv's Debt to Adjusted Capitalization was a healthy 22% as of September 30, 2025, well below its 60% covenant. Net debt was reduced by $126 million in Q3 2025 to approximately $5.19 billion, and the company expects to be below $5 billion by year-end 2025. The $600 million senior notes due May 2025 were repaid using cash on hand and short-term borrowings.

Guidance and Assumptions:

• Full Year 2025 Production: Raised to 610-620 MBOE/d, including 208-210 Mbbls/d of oil and condensate and 1,850-1,870 MMcf/d of natural gas.
• Full Year 2025 Capital Investment: Maintained at $2.125-$2.175 billion.
• Q4 2025 Outlook: Total volumes of approximately 620,000 BOEs per day, with capital expenditure around $465 million.
• Free Cash Flow: Expected to be $1.5 billion for 2025, assuming $60 WTI and $3.75 NYMEX, and $1 billion even at $50 WTI and $3.75 NYMEX.
• Cash Tax Bill: Anticipated 50% reduction in 2025 cash tax bill (approx. $75 million) due to internal restructuring and evolving U.S. tax guidelines, with these reductions expected to be durable for several years.
• Operating Expenses: On track to achieve full year upstream transportation and processing guidance of $7.50-$8.00 per BOE and upstream operating expenses of $3.75-$4.00 per BOE.
• Hedging: Approximately 50 Mbbls/d of oil and condensate and 500 MMcf/d of natural gas production hedged for the remainder of 2025.

Risks and Challenges

Despite its strong positioning, Ovintiv faces several risks. The completion and integration of the NuVista Acquisition are subject to customary conditions and the inherent complexities of integrating new assets, which could impact anticipated benefits. Commodity price volatility remains a fundamental risk, as fluctuations in oil, NGL, and natural gas prices directly affect revenues and cash flows. While Ovintiv uses derivative instruments to mitigate this, significant downturns could still impact profitability. Foreign exchange risk from U.S./Canadian dollar fluctuations and interest rate risk on floating-rate debt also pose financial exposures. Furthermore, the company faces the ongoing risk of ceiling test impairments if 12-month average trailing commodity prices decline further, potentially reducing proved reserves values.

Conclusion

Ovintiv Inc. stands at a pivotal juncture, having meticulously reshaped its portfolio into a focused, high-return enterprise anchored in North America's most prolific oil and gas basins. The strategic acquisitions in the Montney, coupled with the planned divestiture of the Anadarko assets, underscore a clear commitment to enhancing inventory depth, accelerating debt reduction, and ultimately, boosting shareholder returns. This transformation is not merely about asset reshuffling but is deeply intertwined with Ovintiv's technological leadership in cube development, advanced completions, and AI-driven operational optimization, which collectively deliver industry-leading capital efficiency and robust well performance.

With a resilient financial profile, a clear path to achieving its $4 billion net debt target by year-end 2026, and a disciplined capital allocation framework that prioritizes shareholder returns, Ovintiv is poised for durable value creation. The company's ability to generate substantial free cash flow even in challenging commodity price environments, combined with its strategic market diversification for natural gas, positions it favorably against its peers. For discerning investors, Ovintiv offers a compelling narrative of strategic clarity, operational excellence, and a commitment to shareholder value, making it a compelling consideration in the North American E&P landscape.