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The call emphasized strong operational execution, significant balance-sheet improvement, and notable cost and productivity gains (Permian and Montney outperformance, successful NuVista integration, surfactant-driven uplift, <$3.3B net debt, $634M FCF, cash flow per share beat). The principal negatives were a sizable non-cash $1.2B impairment (driven by lower trailing SEC prices) that produced a GAAP loss, higher Canadian royalty-driven volume impacts in the near term, and modest inflationary pressure from diesel. Overall, the positives—durable cash generation, deleveraging, completed integration synergies, cost leadership, and sizeable inventory—outweigh the transitory and non-cash negatives.
The company reiterated unchanged full‑year capital guidance and a largely ratable activity cadence while updating its capital‑allocation plan to return 50%–100% of free cash flow (having planned ≥75% for 2026 but now expecting 50%–75% if oil stays elevated, with a return to ≥75% if prices retreat), and said absolute buybacks will still exceed March expectations. Key metrics: Q1 cash flow per share was $4.62 (≈6% above consensus) and free cash flow was $634 million; Q1 capex was $605 million (low end of guidance) and Q2 capex is expected ≈$575 million; net debt was <$3.3 billion (<0.8x leverage) with $4.0 billion liquidity and >$80 million of annualized interest savings expected from early debt paydowns; a $1.2 billion after‑tax non‑cash ceiling‑test impairment was recorded in Q1 but management does not expect further impairments at current strip. Production and operating guidance: full‑year oil & condensate guidance maintained at 205–212 kbpd, Q2 company production expected ~623 kBOE/d including ~203 kbpd of oil & condensate (Q1 oil & condensate averaged ~225 kbpd, Permian ~126 kbpd); Montney specifics include Q1 gas realization at 175% of AECO, a 100 MMcf/d JKM‑linked contract that could be worth roughly $60 million at current strips for the remainder of the year, and a note that higher Canadian sliding‑scale royalties and planned plant turnarounds push Q2 Montney toward the low end of guidance (but higher condensate prices — e.g., $90/bbl — would imply ~+5 kbpd and ~+40% revenues). On costs and productivity the company cited D&C burn rates below $600/ft in the Permian and <$500/ft in the Montney, surfactant treatments at ~$100k/well with ~9% oil uplift versus untreated wells and >10% Permian oil productivity per foot improvement since 2023, NuVista integration synergies including ~$1 million per well savings and $100 million annualized cost synergies, and confidence that higher near‑term prices will accrete to free cash flow while capital plans remain unchanged.
Net debt reduced to less than $3.3 billion with leverage under 0.8x; remaining long-term debt has no maturities before 2030; liquidity of $4.0 billion; expected >$80 million of annualized interest savings from repaid debt.
Cash flow per share of $4.62 beat consensus by ~6%; free cash flow totaled $634 million for the quarter; capital spend of $605 million came in at the low end of guidance.
Delivered volumes at the high end of guidance ranges; Q1 oil and condensate production approximately 225,000 bbl/d; Q2 company production expected ~623,000 BOE/d including ~203,000 bbl/d oil and condensate; full-year oil & condensate guidance maintained at 205,000–212,000 bbl/d.
Since 2023 increased Permian and Montney drilling inventory by more than 3,200 locations, leaving ~12–15 years of premium Permian inventory and multi-year duration in the Montney.
Completed integration of NuVista producing assets; achieved ~ $1.0 million per-well cost savings on the first NuVista pad and on track to realize ~$100 million in annualized cost synergies; reduced wellsite facility costs by ~50% relative to NuVista design.
Permian wells exceeding the 2026 type curve with average Permian oil & condensate volumes of ~126,000 bbl/d in the quarter; company ranks as one of the highest oil-productivity and lowest-cost operators in the Midland Basin and the Montney.
Surfactant program (pumped in >300 Permian wells since 2019) shows ~9% oil productivity uplift vs similar non-treated wells and accounts for roughly half of the type-curve improvement since 2022; overall Permian oil productivity per foot up >10% since 2023. Surfactant cost ~ $100k per well.
Reported D&C efficiency with costs comfortably below ~$600/ft in the Permian and ~$500/ft in the Montney; completion and drilling cycle times improving leading to lower well costs over time.
Montney gas price realization at 175% of AECO; initiated a 100 MMcf/d JKM-linked contract (in-money when AECO <20% of JKM) that, at current strips, would be worth roughly $60 million for the remainder of the year.
Returned $3.7 billion to shareholders since 2021 ($2.4B buybacks, $1.3B dividends); committed to returning 50%–100% of free cash flow (planned at least 75% at start of 2026, now expected 50%–75% depending on oil prices) and still anticipates absolute dollar returns this year to exceed the original plan.
Good day, ladies and gentlemen, and thank you for standing by. Welcome to Ovintiv's 26 First Quarter Results Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Members of the investment community will have the opportunity to ask questions and can join the queue at any time by pressing *1. For members of the media attending in a listen-only mode today, you may quote statements made by any of Ovintiv representatives. However, members of the media who wish to quote others who are speaking on this call today, we advise you to contact those individuals directly to obtain their consent.
Please be advised that this conference call may not be recorded. Or rebroadcast without the expressed consent of Ovintiv. I would now like to turn the conference call over to Jason Verhaest from Investor Relations. Please go ahead, Mr. Verhaest.
Thanks, Joanna, and welcome, everyone, to our first quarter 26 conference call. This call is being webcast and the slides are available on our website at ovintiv.com. Please take note of the advisory regarding forward looking statements at the beginning of our slides in our disclosure documents filed on EDGAR and SEDAR+. Following prepared remarks, we will be available to take your questions. I will now turn the call over to our President and CEO, Brendan Michael McCracken.
Thanks, Jason. Good morning, everybody, and thank you for joining us. We believe the strategic steps for an E&P company to generate differenti...