Executive Summary

Ovintiv delivered a solid Q2: net earnings $340M ($1.27 diluted EPS), total revenues $2.29B, and $403M Non-GAAP Free Cash Flow, with production above the top end of guidance across oil, NGLs, and gas .
Management raised 2024 production guidance for the second time while narrowing capex, now 570–580 MBOE/d (oil & condensate 207–209 Mbbl/d; gas 1,660–1,690 MMcf/d) with capex $2.25–$2.35B (midpoint unchanged) .
Operating execution (lower combined LOE+T&P, strong Permian/Montney productivity) underpinned the beat on production and cash flow per share; management stated CFPS/FCFPS beat consensus, though we could not retrieve S&P Global estimates to independently confirm due to API limits .
Stock catalysts: raised FY production guidance without raising capex, reiterated ~$1.9B 2024 FCF outlook at $80/$2.25, and clear deleveraging path (lower interest expense, expected $150M legal recovery, REX roll-off), plus ongoing buybacks (Q3 plan ~$162M) .

What Went Well and What Went Wrong

What Went Well
- Operational outperformance: total production 594 MBOE/d (above guidance), with oil & condensate 212 Mbbl/d and gas 1,740 MMcf/d; combined LOE+T&P at low end of guidance .
- Capital efficiency and productivity: Permian wells tracking above 2024 type curve; pacesetter D&C costs (~$600/ft on 11.5k’ lateral), faster drilling/completions; Montney IRR >60% at $75/$2.50 .
- Raised FY production guidance with capex midpoint unchanged; management expects ~$1.9B 2024 FCF and lowered quarterly interest expense guidance by $10M as leverage trends to ~1x over time .
What Went Wrong
- Gas price pressure persisted (unhedged realized gas $1.30/Mcf), though hedges lifted realized gas to $1.86/Mcf; total average realized price per BOE fell to $35.29 vs $37.84 in Q1 .
- Upstream operating cost/BOE rose YoY (Q2: $4.29 vs $3.23), partly offset by lower T&P ($7.15 vs $7.97) and low-end combined cost delivery .
- Montney Q2 gas outperformance was largely one-time (royalty/maintenance flush), with condensate volumes slated to normalize in H2; per-unit LOE expected to drift seasonally with volumes, though teams mitigated via power hedging and automation .

Financial Results

P&L summary (GAAP)

Metric	Q2 2023	Q1 2024	Q2 2024
Total Revenues ($MM)	$2,517	$2,352 (derived from YTD $4,640 − Q2 $2,288)	$2,288
Operating Income ($MM)	$531	$494 (derived from YTD $1,050 − Q2 $556)	$556
Net Earnings ($MM)	$336	$338	$340
Diluted EPS ($)	$1.34	$1.24	$1.27
Net Income Margin %	13.4% (336/2,517)	14.4% (338/2,352)	14.9% (340/2,288)

Production and realized prices

KPI	Q2 2023	Q1 2024	Q2 2024
Total Production (MBOE/d)	573.0	573.8	593.8
Oil & Condensate (Mbbl/d)	185.9	210.9	211.9
NGLs – Other (Mbbl/d)	96.8	88.4	92.0
Natural Gas (MMcf/d)	1,743	1,648	1,740
Realized Oil & Cond. incl. hedges ($/bbl)	$71.50	$74.20	$75.55
Realized Gas incl. hedges ($/Mcf)	$1.98	$2.56	$1.86
Avg Realized Price incl. hedges ($/BOE)	$31.66	$37.84	$35.29

Cost and cash flow metrics

Metric	Q2 2023	Q1 2024	Q2 2024
Upstream Operating ($/BOE)	$3.23	$4.52	$4.29
Transportation & Processing ($/BOE)	$7.97	$7.25	$7.15
Production, Mineral & Other Taxes ($/BOE)	$1.43	$1.60	$1.65
Cash from Operating Activities ($MM)	$831	$659	$1,020
Capital Expenditures ($MM)	$640	$591	$622
Non-GAAP Free Cash Flow ($MM)	$59	$444	$403

Segment production (MBOE/d)

Segment	Q2 2023	Q1 2024	Q2 2024
USA Operations	319.2	343.0	341.9
Canadian Operations	253.8	230.8	251.9
Total	573.0	573.8	593.8

Notes: Non-GAAP definitions and reconciliations are provided by the company; see releases and EX-99.2 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Production (MBOE/d)	FY 2024	560–575	570–580	Raised
Oil & Condensate (Mbbl/d)	FY 2024	204–208	207–209	Raised
NGLs (C2–C4) (Mbbl/d)	FY 2024	88–92	89–91	Narrowed
Natural Gas (MMcf/d)	FY 2024	1,600–1,650	1,660–1,690	Raised
Capital Investment ($MM)	FY 2024	$2,200–$2,400	$2,250–$2,350	Narrowed (midpoint unchanged)
Total Production (MBOE/d)	Q3 2024	—	565–580	New
Oil & Condensate (Mbbl/d)	Q3 2024	—	204–208	New
Capital Investment ($MM)	Q3 2024	—	$530–$570	New
Base Dividend/Share	Q3 2024 (payable 9/27)	$0.30 (ongoing)	$0.30 declared	Maintained
Share Repurchases	Q3 2024	—	~ $162M expected	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’23, Q1’24)	Current Period (Q2’24)	Trend
Capital efficiency & Trimulfrac	18–19% YoY oil & condensate capital efficiency gains; Trimulfrac on >50% program; no productivity trade-off	Pacesetter D&C costs (~$600/ft), drilling/completions speeds up; Trimulfrac ~>50% of program; productivity at/above 2024 type curve	Improving
Inventory depth	+1,650 premium locations since 2021; bolt-ons added 65 locations in Q1	Maintain 7–10 years sustaining 205 Mbbl/d oil & condensate at ~$2.3B capex; focused on “better, not bigger”	Stable/clarified
Balance sheet & cash returns	Emphasis on deleveraging to ~1x; $1.9B FCF outlook at $80/$2.25; 50%+ FCF to shareholders	Lowered quarterly interest expense guidance by $10M; allocate ~$162M buybacks and ~$162M to debt in Q3; leverage 1.2x TTM	Improving
Montney strategy & pricing	Condensate premium to WTI; gas price diversification outside AECO; IRR >60% at $75/$2.50	Q2 outperformance partly one-time (royalty/flush); maintain condensate focus; cautious on AECO despite LNG Canada, continue diversification	Stable/prudent
Hedging philosophy	~25% volumes; protect against prolonged low prices; scale back as leverage falls	Continue similar approach; evaluate ratcheting down as debt declines	Stable
M&A posture	Opportunistic bolt-ons; disciplined, execution focus	“Better not bigger”; disciplined on Permian speculation; inventory test progress ongoing	Stable

Management Commentary

“Our second quarter results demonstrate our focus on strong, consistent operational execution… We expect to generate approximately $1.9 billion of Non-GAAP Free Cash Flow in 2024—an increase of more than 60% year-over-year.” — CEO Brendan McCracken .
“We lowered our go-forward quarterly interest expense guidance by $10 million to reflect our lower debt levels… In the third quarter… repurchasing shares worth $162 million and allocating $162 million to the balance sheet.” — CFO Corey Code .
“Our pacesetting Permian well… had a D&C cost of about $600 per foot… In the Montney… a pacesetter D&C well cost of less than $500 per foot… we expect our Montney to generate a program level IRR of more than 60% [at $75/$2.50].” — COO Greg Givens .
“We are raising our annual production guidance once again… and we remain on track to generate approximately $1.9 billion of free cash flow even as realized prices are settling lower than last quarter.” — CEO Brendan McCracken .
“We are entirely motivated about better as opposed to bigger.” — CEO Brendan McCracken .

Q&A Highlights

Permian well performance and Trimulfrac adoption: >50% of completions using Trimulfrac; no degradation in well productivity vs zipper/simul; broad adoption of wet sand, sand piles, supply chain/logistics efficiencies .
Efficiency vs capex trade-off: incremental cycle-time gains will be reflected in future plans; for now guidance bakes in known efficiencies .
M&A discipline: focused on execution and leverage; portfolio deepening has reduced need for large deals; “better, not bigger” .
Balance sheet: 2025 $600M maturity manageable within current framework; deleveraging remains priority alongside buybacks .
Montney: condensate premium intact; AECO relief from LNG Canada seen as helpful but not a structural re-rate; gas pricing diversified .
LOE and power risk: LOE per-unit influenced by volumes; Permian power price risk mitigated via forward hedges (~80% summer power firmed) and automation .

Estimates Context

We attempted to retrieve S&P Global (Capital IQ) consensus for Q2 2024 and Q1 2024 (EPS, revenue, EBITDA) but were unable due to a temporary API rate limit. As such, quantitative estimate comparisons are not provided.
Management stated Q2 cash flow per share and free cash flow per share were above consensus; use with caution as we could not independently pull S&P data here .

Key Takeaways for Investors

Raised 2024 production guidance without increasing capex midpoint; stronger volume outlook should support FCF durability (~$1.9B at $80/$2.25) and deleveraging cadence .
Execution edge persists: Permian and Montney productivity/cycle-time improvements are translating into low well costs and higher capital efficiency; monitor continued conversion of “pacesetters” to averages .
H2 shape: Montney condensate expected to normalize to ~30 Mbbl/d with Q2 outperformance mainly one-time; Q3 guide implies stable oil & condensate profile (~~206 kb/d midpoint) and capex moderation (~~$550M midpoint) .
Capital returns path intact: at least 50% of post-base-dividend FCF to shareholders; Q3 buybacks planned at ~$162M; base dividend maintained at $0.30 .
Balance sheet progress: interest expense guidance lowered; leverage 1.2x TTM with additional cash inflows (REX roll-off, ~$150M legal recovery) earmarked for debt reduction .
Watch list: realized gas prices vs hedge coverage; LOE per unit as volumes seasonally shift; Permian rig cadence into 2025 (possible move from 6 to 5 rigs) .

Additional Disclosures and Data Points

Dividend declared: $0.30 per share, payable Sept 27, 2024 (record date Sept 13, 2024) .
Liquidity and leverage: ~$3.1B total liquidity at June 30; Debt/EBITDA and Debt/Adj. EBITDA both 1.2x; total debt including current portion $6.09B .
Q3 2024 operational guide: 565–580 MBOE/d; oil & condensate 204–208 Mbbl/d; capex $530–$570M .

Sources: Company 8-K and attached exhibits (EX-99.1 press release, EX-99.2 supplemental/financials), and Q2 2024 earnings call transcript –.

Ovintiv Inc. (OVV)·Q2 2024 Earnings Summary