UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
Registrant’s telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
Number of registrant’s shares of common stock outstanding as of July 19, 2024 |
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1
OVINTIV INC.
FORM 10-Q
TABLE OF CONTENTS
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Condensed Consolidated Statement of Changes in Shareholders’ Equity |
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11 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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2
DEFINITIONS
Unless the context otherwise requires or otherwise expressly stated, all references in this Quarterly Report on Form 10-Q to “Ovintiv,” the “Company,” “us,” “we,” “our,” and “ours” refer to Ovintiv Inc. and its consolidated subsidiaries. In addition, the following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10‑Q:
“AECO” means Alberta Energy Company and is the Canadian benchmark price for natural gas.
“ASU” means Accounting Standards Update.
“bbl” or “bbls” means barrel or barrels.
“BOE” means barrels of oil equivalent.
“Btu” means British thermal units, a measure of heating value.
“CORRA” means Canadian Overnight Repo Rate Average.
“DD&A” means depreciation, depletion and amortization expenses.
“FASB” means Financial Accounting Standards Board.
“GHG” means greenhouse gas.
“Mbbls/d” means thousand barrels per day.
“MBOE/d” means thousand barrels of oil equivalent per day.
“Mcf” means thousand cubic feet.
“MD&A” means Management’s Discussion and Analysis of Financial Condition and Results of Operations.
“MMBOE” means million barrels of oil equivalent.
“MMBtu” means million Btu.
“MMcf/d” means million cubic feet per day.
“NCIB” means normal course issuer bid.
“NGL” or “NGLs” means natural gas liquids.
“NYMEX” means New York Mercantile Exchange.
“NYSE” means New York Stock Exchange.
“OPEC” means Organization of the Petroleum Exporting Countries.
“SEC” means United States Securities and Exchange Commission.
“S&P 400” means Standard and Poor’s MidCap 400 index.
“TSX” means Toronto Stock Exchange.
“U.S.”, “United States” or “USA” means United States of America.
“U.S. GAAP” means U.S. Generally Accepted Accounting Principles.
“WTI” means West Texas Intermediate.
CONVERSIONS
In this Quarterly Report on Form 10-Q, a conversion of natural gas volumes to BOE is on the basis of six Mcf to one bbl. 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. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value, particularly if used in isolation.
CONVENTIONS
Unless otherwise specified, all dollar amounts are expressed in U.S. dollars, all references to “dollars”, “$” or “US$” are to U.S. dollars and all references to “C$” are to Canadian dollars. All amounts are provided on a before tax basis, unless otherwise stated. In addition, all information provided herein is presented on an after royalties basis.
3
The terms “include”, “includes”, “including” and “included” are to be construed as if they were immediately followed by the words “without limitation”, except where explicitly stated otherwise.
The term “liquids” is used to represent oil, NGLs and condensate. The term “liquids rich” is used to represent natural gas streams with associated liquids volumes. The term “play” is used to describe an area in which hydrocarbon accumulations or prospects of a given type occur. Ovintiv’s focus of development is on hydrocarbon accumulations known to exist over a large areal expanse and/or thick vertical section and are developed using hydraulic fracturing. This type of development typically has a lower geological and/or commercial development risk and lower average decline rate, when compared to conventional development.
References to information contained on the Company’s website at www.ovintiv.com are not incorporated by reference into, and does not constitute a part of, this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS AND RISK
This Quarterly Report on Form 10-Q, and the other documents incorporated herein by reference (if any), contain certain 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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 Quarterly Report on Form 10‑Q, and the other documents incorporated herein by reference (if any), 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 is 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 Quarterly Report on Form 10‑Q include: expectations of plans, strategies and objectives of the Company, including anticipated reserves development; the Company’s ability to consummate any future acquisition and divestiture transactions; the Company’s ability to successfully integrate any acquired assets (including the Permian Acquisition as defined in Note 9 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q) into its business; drilling plans and programs, including the amount and availability of capital to complete these plans and programs; the composition of the Company’s assets and the anticipated capital returns associated with its assets; anticipated oil, NGL and natural gas prices; the anticipated success of, and benefits from, technology and innovation, including the cube development model, Trimulfrac and Simulfrac techniques and other new or advanced drilling techniques or well completion designs; anticipated drilling and completions activity, including the number of drilling rigs and frac crews utilized; anticipated proceeds and future benefits from various joint venture, partnership and other agreements; anticipated oil, NGLs and natural gas production and commodity mix; the Company’s ability to access credit facilities, debt and equity capital markets and other sources of liquidity; the ability of the Company to timely achieve its stated environmental, social and governance goals, targets and initiatives; the impact of changes in federal, state, provincial, local and tribal laws, rules and regulations; anticipated compliance with current or proposed environmental legislation; the Company’s ability to manage debt and financial ratios and comply with financial covenants; the implementation and outcomes of risk management programs, including exposure to commodity prices, interest rate and foreign exchange fluctuations and the volume of oil, NGLs and natural gas production hedged; the declaration and payment of future dividends and the anticipated repurchase of the Company’s outstanding common shares; the Company’s ability to manage cost inflation and expected cost structures, including expected operating, transportation, processing and labor expenses; and the outlook of the oil and natural gas industry generally, including impacts from changes to the geopolitical environment.
The forward-looking statements included in this Quarterly Report on Form 10-Q involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We have based these forward-looking statements on current expectations and assumptions about future events, taking into account all information currently known by us. While we consider these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond our control. The risks and uncertainties that may affect the operations, performance and results of our business and forward-looking statements include, but are not limited to, those set forth in Item 1A. Risk Factors of the Company’s most recent Annual Report on Form 10‑K for the fiscal year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”); and other risks and uncertainties impacting
4
the Company’s business as described from time to time in the Company’s other periodic filings with the SEC or Canadian securities regulators.
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 Quarterly Report on Form 10‑Q are made as of the date of this document (or in the case of a document incorporated herein by reference, the date of such document) 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 Quarterly Report on Form 10‑Q, 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 Item 1A. Risk Factors of the 2023 Annual Report on Form 10‑K for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.
5
PART I
Item 1. Financial Statements
Condensed Consolidated Statement of Earnings (unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(US$ millions, except per share amounts) |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues |
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(Note 3) |
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Product and service revenues |
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(Note 4) |
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$ |
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Gains (losses) on risk management, net |
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(Note 19) |
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Sublease revenues |
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(Note 11) |
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Total Revenues |
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Operating Expenses |
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(Note 3) |
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Production, mineral and other taxes |
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Transportation and processing |
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Operating |
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Purchased product |
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Depreciation, depletion and amortization |
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Accretion of asset retirement obligation |
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Administrative |
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Total Operating Expenses |
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Operating Income (Loss) |
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Other (Income) Expenses |
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Interest |
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(Note 5) |
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Foreign exchange (gain) loss, net |
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(Note 6) |
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Other (gains) losses, net |
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Total Other (Income) Expenses |
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Net Earnings (Loss) Before Income Tax |
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Income tax expense (recovery) |
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(Note 7) |
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Net Earnings (Loss) |
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$ |
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$ |
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$ |
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$ |
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Net Earnings (Loss) per Share of Common Stock |
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(Note 14) |
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Basic |
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$ |
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$ |
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$ |
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Diluted |
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Weighted Average Shares of Common Stock Outstanding (millions) |
(Note 14) |
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Basic |
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Diluted |
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Condensed Consolidated Statement of Comprehensive Income (unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(US$ millions) |
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2024 |
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2023 |
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2024 |
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2023 |
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Net Earnings (Loss) |
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$ |
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$ |
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$ |
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$ |
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Other Comprehensive Income (Loss), Net of Tax |
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Foreign currency translation adjustment |
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(Note 15) |
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Pension and other post-employment benefit plans |
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(Note 15) |
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Other Comprehensive Income (Loss) |
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Comprehensive Income (Loss) |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
6
Condensed Consolidated Balance Sheet (unaudited)
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As at |
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As at |
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June 30, |
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December 31, |
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(US$ millions) |
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2024 |
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2023 |
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Assets |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable and accrued revenues (net of allowances |
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of $ |
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(Note 4) |
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Risk management |
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(Notes 18, 19) |
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Income tax receivable |
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Property, Plant and Equipment, at cost: |
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(Note 10) |
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Oil and natural gas properties, based on full cost accounting |
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Proved properties |
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Unproved properties |
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Other |
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Property, plant and equipment |
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Less: Accumulated depreciation, depletion and amortization |
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Property, plant and equipment, net |
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(Note 3) |
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Other Assets |
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Risk Management |
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(Notes 18, 19) |
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Deferred Income Taxes |
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Goodwill |
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(Note 3) |
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(Note 3) |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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Current portion of operating lease liabilities |
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Income tax payable |
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Risk management |
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(Notes 18, 19) |
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Current portion of long-term debt |
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(Note 12) |
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Long-Term Debt |
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(Note 12) |
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Operating Lease Liabilities |
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Other Liabilities and Provisions |
(Note 13) |
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Risk Management |
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(Notes 18, 19) |
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Asset Retirement Obligation |
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Deferred Income Taxes |
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(Note 21) |
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Shareholders’ Equity |
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Share capital - authorized |
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2024 issued and outstanding: |
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(Note 14) |
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Paid in surplus |
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(Note 14) |
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Retained earnings |
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Accumulated other comprehensive income |
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(Note 15) |
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Total Shareholders’ Equity |
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$ |
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$ |
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See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
7
Three Months Ended June 30, 2024 (US$ millions) |
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Share |
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Paid in |
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Retained |
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Accumulated |
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Total |
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Balance, March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net Earnings (Loss) |
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Dividends on Shares of Common Stock ($ |
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(Note 14) |
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( |
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( |
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Shares of Common Stock Purchased |
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(Note 14) |
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Equity-Settled Compensation Costs |
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Other Comprehensive Income (Loss) |
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(Note 15) |
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Balance, June 30, 2024 |
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|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Three Months Ended June 30, 2023 (US$ millions) |
|
|
|
Share |
|
|
Paid in |
|
Retained |
|
Accumulated |
|
Total |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, March 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends on Shares of Common Stock ($ |
|
(Note 14) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Shares of Common Stock Purchased |
|
(Note 14) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||||
Shares of Common Stock Issued |
(Notes 9,14,20) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity-Settled Compensation Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other Comprehensive Income (Loss) |
|
(Note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, June 30, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
8
Condensed Consolidated Statement of Changes in Shareholders’ Equity (unaudited)
Six Months Ended June 30, 2024 (US$ millions) |
|
|
|
Share |
|
|
Paid in |
|
Retained |
|
Accumulated |
|
Total |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends on Shares of Common Stock ($ |
|
(Note 14) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Shares of Common Stock Purchased |
|
(Note 14) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||||
Equity-Settled Compensation Costs |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||||
Other Comprehensive Income (Loss) |
|
(Note 15) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||||
Balance, June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Six Months Ended June 30, 2023 (US$ millions) |
|
|
|
Share |
|
|
Paid in |
|
Retained |
|
Accumulated |
|
Total |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2022 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends on Shares of Common Stock ($ |
|
(Note 14) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Shares of Common Stock Purchased |
|
(Note 14) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||||
Shares of Common Stock Issued |
(Notes 9,14,20) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity-Settled Compensation Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other Comprehensive Income (Loss) |
|
(Note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, June 30, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
9
Condensed Consolidated Statement of Cash Flows (unaudited)
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(US$ millions) |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings (loss) |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accretion of asset retirement obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred income taxes |
|
(Note 7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized (gain) loss on risk management |
|
(Note 19) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Unrealized foreign exchange (gain) loss |
|
(Note 6) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Foreign exchange (gain) loss on settlements |
|
(Note 6) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net change in other assets and liabilities |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net change in non-cash working capital |
|
(Note 20) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Cash From (Used in) Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures |
|
(Note 3) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acquisitions |
|
(Note 8) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Corporate acquisition, net of cash acquired |
|
(Note 9) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Proceeds from divestitures |
|
(Note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net change in investments and other |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Cash From (Used in) Investing Activities |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net issuance (repayment) of revolving debt |
|
(Note 12) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Issuance of long-term debt |
|
(Note 12) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchase of shares of common stock |
|
(Note 14) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Dividends on shares of common stock |
|
(Note 14) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Finance lease payments and other |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Cash From (Used in) Financing Activities |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign Exchange Gain (Loss) on Cash, Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
and Restricted Cash Held in Foreign Currency |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash, Cash Equivalents and Restricted Cash, Beginning of Period |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash, Cash Equivalents and Restricted Cash, End of Period |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash, End of Period |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash Equivalents, End of Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted Cash, End of Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash, Cash Equivalents and Restricted Cash, End of Period |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Supplementary Cash Flow Information |
|
(Note 20) |
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements
10
1. |
Basis of Presentation and Principles of Consolidation |
Ovintiv is in the business of the exploration for, the development of, and the production and marketing of oil, NGLs and natural gas.
The interim Condensed Consolidated Financial Statements include the accounts of Ovintiv and entities in which it holds a controlling interest. All intercompany balances and transactions are eliminated on consolidation. Undivided interests in oil and natural gas exploration and production joint ventures and partnerships are consolidated on a proportionate basis. Investments in non-controlled entities over which the Company has the ability to exercise significant influence are accounted for using the equity method.
The interim Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP and the rules and regulations of the SEC. Pursuant to these rules and regulations, certain information and disclosures normally required under U.S. GAAP have been condensed or have been disclosed on an annual basis only. Accordingly, the interim Condensed Consolidated Financial Statements should be read in conjunction with the annual audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2023, which are included in Item 8 of Ovintiv’s 2023 Annual Report on Form 10‑K.
The interim Condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the annual audited Consolidated Financial Statements for the year ended December 31, 2023.
These unaudited interim Condensed Consolidated Financial Statements reflect, in the opinion of Management, all normal and recurring adjustments necessary to present fairly the financial position and results of the Company as at and for the periods presented. Interim condensed consolidated financial results are not necessarily indicative of consolidated financial results expected for the fiscal year.
2. |
Recent Accounting Pronouncements |
Changes in Accounting Policies and Practices
On
New Standards Issued Not Yet Adopted
As of January 1, 2025, Ovintiv will be required to adopt ASU 2023-09 “Improvements to Income Tax Disclosures”. The standard requires disaggregated information about the Company’s effective tax rate reconciliation as well as information on income taxes paid. The amendment requires the tabular rate reconciliation to be presented using both percentages and amounts, with additional separate disclosure for any reconciling items within certain categories equal to or greater than five percent of net earnings or loss before income tax and the applicable statutory federal income tax rate. The amendment also requires the disaggregation of income taxes paid by federal, state, and foreign jurisdictions, as well as additional disaggregated information on income taxes paid to an individual jurisdiction equal to or greater than five percent of total income taxes paid. Amendments will be applied prospectively at the date of adoption and are not expected to have a material impact on the Company’s Consolidated Financial Statements.
11
3. |
Segmented Information |
Ovintiv’s reportable segments are determined based on the following operations and geographic locations:
Corporate and Other mainly includes unrealized gains or losses recorded on derivative financial instruments. Once the instruments are settled, the realized gains and losses are recorded in the reporting segment to which the derivative instruments relate. Corporate and Other also includes amounts related to sublease rentals.
12
Results of Operations (For the three months ended June 30)
Segment and Geographic Information
|
|
USA Operations |
|
|
Canadian Operations |
|
|
Market Optimization |
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and service revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Gains (losses) on risk management, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sublease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Income (Loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and service revenues |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Gains (losses) on risk management, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sublease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accretion of asset retirement obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Income (Loss) |
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange (gain) loss, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Other (gains) losses, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Total Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Earnings (Loss) Before Income Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income tax expense (recovery) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
13
Results of Operations (For the six months ended June 30)
Segment and Geographic Information
|
|
USA Operations |
|
|
Canadian Operations |
|
|
Market Optimization |
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and service revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Gains (losses) on risk management, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Sublease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Income (Loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and service revenues |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Gains (losses) on risk management, net |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Sublease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Revenues |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Production, mineral and other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accretion of asset retirement obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Income (Loss) |
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange (gain) loss, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Other (gains) losses, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Total Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Earnings (Loss) Before Income Tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income tax expense (recovery) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
14
Intersegment Information
|
|
|
|
|
|
|
|
Market Optimization |
|
|
|
|
|
|
|
|||||||||
|
|
Marketing Sales |
|
|
Upstream Eliminations |
|
|
Total |
|
|||||||||||||||
For the three months ended June 30, |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
Operating Income (Loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
Market Optimization |
|
|
|
|
|
|
|
|||||||||
|
|
Marketing Sales |
|
|
Upstream Eliminations |
|
|
Total |
|
|||||||||||||||
For the six months ended June 30, |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transportation and processing |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
Operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased product |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||
Operating Income (Loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
Capital Expenditures by Segment
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate & Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Goodwill, Property, Plant and Equipment and Total Assets by Segment
|
|
Goodwill |
|
|
Property, Plant and Equipment |
|
|
Total Assets |
|
|||||||||||||||
|
|
As at |
|
|
As at |
|
|
As at |
|
|||||||||||||||
|
|
June 30, |
|
|
December 31, |
|
|
June 30, |
|
|
December 31, |
|
|
June 30, |
|
|
December 31, |
|
||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
USA Operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Market Optimization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate & Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
15
4. |
Revenues from Contracts with Customers |
The following table summarizes Ovintiv’s revenues from contracts with customers.
Revenues (For the three months ended June 30)
|
|
USA Operations |
|
|
Canadian Operations |
|
|
Market Optimization |
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product revenues (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gathering and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and Service Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product revenues (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gathering and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and Service Revenues |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Revenues (For the six months ended June 30)
|
|
USA Operations |
|
|
Canadian Operations |
|
|
Market Optimization |
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product revenues (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gathering and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and Service Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Corporate & Other |
|
|
Consolidated |
|
|||||||||||||||
|
|
|
|
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues from Customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product revenues (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Oil |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gathering and processing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product and Service Revenues |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
16
The Company’s revenues from contracts with customers consists of product sales including oil, NGLs and natural gas, as well as the provision of gathering and processing services to third parties. Ovintiv had
Ovintiv’s product sales are sold under short-term contracts with terms that are less than one year at either fixed or market index prices or under long-term contracts exceeding one year at market index prices.
The Company’s gathering and processing services are provided on an interruptible basis with transaction prices that are for fixed prices and/or variable consideration. Variable consideration received is related to recovery of plant operating costs or escalation of the fixed price based on a consumer price index. As the service contracts are interruptible, with service provided on an “as available” basis, there are
As at June 30, 2024, all remaining performance obligations are priced at market index prices or are variable volume delivery contracts. As such, the variable consideration is allocated entirely to the wholly unsatisfied performance obligation or promise to deliver units of production, and revenue is recognized at the amount for which the Company has the right to invoice the product delivered.
5. |
Interest |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Expense on: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Finance leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
6. |
Foreign Exchange (Gain) Loss, Net |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized Foreign Exchange (Gain) Loss on: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Translation of U.S. dollar risk management contracts issued from Canada |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Translation of intercompany notes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Foreign Exchange (Gain) Loss on Settlements of: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. dollar financing debt issued from Canada |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
U.S. dollar risk management contracts issued from Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Intercompany notes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Other Monetary Revaluations |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
17
7. |
Income Taxes |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current Tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Current Tax Expense (Recovery) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred Tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total Deferred Tax Expense (Recovery) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income Tax Expense (Recovery) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Effective Tax Rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
Ovintiv’s interim income tax expense is determined using the estimated annual effective income tax rate applied to year-to-date net earnings before income tax plus the effect of legislative changes and amounts in respect of prior periods. The estimated annual effective income tax rate is impacted by expected annual earnings, changes in valuation allowances, income tax related to foreign operations, state taxes, the effect of legislative changes, non-taxable items and tax differences on transactions, which can produce interim effective tax rate fluctuations.
18
8. |
Acquisitions and Divestitures |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Divestitures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Canadian Operations |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Total Divestitures |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net Acquisitions & (Divestitures) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
Acquisitions
For the three and six months ended June 30, 2024, acquisitions in the USA Operations were $
For the three and six months ended June 30, 2023, acquisitions in the USA Operations were $
Divestitures
For the three and six months ended June 30, 2024, divestitures in the USA Operations were $
For the three and six months ended June 30, 2023, divestitures in the USA Operations were $
Amounts received from the Company’s divestiture transactions have been deducted from the respective U.S. and Canadian full cost pools.
9. |
Business Combination |
Acquisition of Midland Basin Assets (“Permian Acquisition”)
On June 12, 2023, Ovintiv completed a business combination to purchase all of the outstanding equity interests in seven Delaware limited liability companies (“Permian LLCs”) pursuant to the purchase agreement with Black Swan Oil & Gas, LLC, PetroLegacy II Holdings, LLC, Piedra Energy III Holdings, LLC and Piedra Energy IV Holdings, LLC, which were portfolio companies of funds managed by EnCap Investments L.P. (“EnCap”). The Company paid aggregate cash consideration of approximately $
The acquisition was strategically located in close proximity to Ovintiv’s current Permian operations and added approximately
19
Purchase Price Allocation
The Permian LLCs were accounted for under the acquisition method and as a single transaction because the purchase agreement was entered into at the same time with EnCap and in contemplation of one another to achieve an overall economic effect. The purchase price allocations represent the consideration paid and the fair values of the assets acquired, and liabilities assumed as of the acquisition date. The purchase price allocation was finalized during the first quarter of 2024.
Purchase Price Allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration: |
|
|
|
|
|
|
|
|
|
Fair value of shares of Ovintiv common stock issued (1) |
|
|
|
|
|
|
$ |
|
|
Consideration paid in cash (2) |
|
|
|
|
|
|
|
|
|
Total Consideration |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Assets Acquired: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
$ |
|
|
Accounts receivable and accrued revenues (3) |
|
|
|
|
|
|
|
|
|
Proved properties (3) |
|
|
|
|
|
|
|
|
|
Unproved properties (3) |
|
|
|
|
|
|
|
|
|
Other property, plant and equipment (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities Assumed: |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities (3) |
|
|
|
|
|
|
|
( |
) |
Asset retirement obligation |
|
|
|
|
|
|
|
( |
) |
Other liabilities and provisions (3) |
|
|
|
|
|
|
|
( |
) |
Total Purchase Price |
|
|
|
|
|
|
$ |
|
The Company used the income approach valuation technique for the fair value of assets acquired and liabilities assumed. The carrying amounts of cash, accounts receivable and accounts payable approximate their fair values due to their nature and/or short-term maturity of the instruments. The fair value of tubular inventory in other property, plant and equipment was based on the fair value approach, which utilized subsequent sales of inventory, asset listings and cost records with consideration for the relative age, condition, utilization and economic support of the inventory. The fair values of the proved properties, unproved properties and asset retirement obligation were categorized within Level 3 and were determined using relevant market assumptions, including discount rates, future commodity prices and costs, timing of development activities, projections of oil and gas reserves, and estimates to abandon and reclaim producing wells. Level 3 inputs require significant judgment and estimates to be made.
For income tax purposes, the Permian Acquisition was treated as an asset purchase, and as a result, the tax basis in the assets and liabilities reflect their allocated fair value.
20
10. |
Property, Plant and Equipment, Net |
|
|
As at June 30, 2024 |
|
|
As at December 31, 2023 |
|
||||||||||||||||||
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||
|
|
Cost |
|
|
DD&A |
|
|
Net |
|
|
Cost |
|
|
DD&A |
|
|
Net |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
USA Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Proved properties |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Unproved properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Canadian Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Proved properties |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Unproved properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Market Optimization |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Corporate & Other |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration, development and construction activities of $
11. |
Leases |
The following table outlines Ovintiv’s estimated future sublease income as at June 30, 2024. All subleases are classified as operating leases.
(undiscounted) |
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Sublease Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
For the three and six months ended June 30, 2024, operating lease income was $
21
12. |
Long-Term Debt |
|
|
|
|
As at |
|
|
As at |
|
||
|
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
|
|
||
U.S. Dollar Denominated Debt |
|
|
|
|
|
|
|
|
||
Revolving credit and term loan borrowings |
|
|
|
$ |
|
|
$ |
|
||
U.S. Unsecured Notes: |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Total Principal |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Increase in Value of Debt Acquired |
|
|
|
|
|
|
|
|
||
Unamortized Debt Discounts and Issuance Costs |
|
|
|
|
( |
) |
|
|
( |
) |
Total Long-Term Debt |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Current Portion |
|
|
|
$ |
|
|
$ |
|
||
Long-Term Portion |
|
|
|
|
|
|
|
|
||
|
|
|
|
$ |
|
|
$ |
|
On May 31, 2023, Ovintiv completed a public offering of senior unsecured notes of $
As at June 30, 2024, the Company had outstanding commercial paper of $
As at June 30, 2024, total long-term debt had a carrying value of $
13. |
Other Liabilities and Provisions |
|
|
As at |
|
|
As at |
|
||
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Finance Lease Obligations |
|
$ |
|
|
$ |
|
||
Unrecognized Tax Benefits |
|
|
|
|
|
|
||
Pensions and Other Post-Employment Benefits |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
22
14. |
Share Capital |
Authorized
Ovintiv is authorized to issue
Issued and Outstanding
|
|
As at |
|
|
As at |
|
||||||||||
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Number |
|
|
|
|
|
Number |
|
|
|
|
||||
|
|
(millions) |
|
|
Amount |
|
|
(millions) |
|
|
Amount |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares of Common Stock Outstanding, Beginning of Year |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Shares of Common Stock Purchased |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Shares of Common Stock Issued |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares of Common Stock Outstanding, End of Period |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
On June 12, 2023, in accordance with the terms of the Permian Acquisition agreement, Ovintiv issued approximately
Ovintiv’s Performance Share Units (“PSU”) and Restricted Share Units (“RSU”) stock-based compensation plans allow the Company to settle the awards either in cash or in the Company’s common stock. Accordingly, Ovintiv issued
Normal Course Issuer Bid and Other Share Buybacks
During the three and six months ended June 30, 2024, the Company purchased approximately
During the three and six months ended June 30, 2023, the Company purchased approximately
For the twelve months ended December 31, 2023, the Company purchased approximately
All NCIB purchases were made in accordance with their respective programs at prevailing market prices plus brokerage fees, with consideration allocated to share capital up to the par value of the shares, with any excess allocated to paid in surplus.
23
Dividends
During the three months ended June 30, 2024, the Company declared and paid dividends of $
During the six months ended June 30, 2024, the Company declared and paid dividends of $
On
Earnings Per Share of Common Stock
The following table presents the calculation of net earnings (loss) per share of common stock:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(US$ millions, except per share amounts) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Earnings (Loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Number of Shares of Common Stock: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares of common stock outstanding - Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted Average Shares of Common Stock Outstanding - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Earnings (Loss) per Share of Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based Compensation Plans
Shares issued as a result of awards granted from stock-based compensation plans are funded out of the common stock authorized for issuance as approved by the Company’s shareholders. As at June 30, 2024, there were no changes to Ovintiv’s compensation plans and the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans.
15. |
Accumulated Other Comprehensive Income |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign Currency Translation Adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Change in Foreign Currency Translation Adjustment |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Balance, End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension and Other Post-Employment Benefit Plans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, Beginning of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amounts Reclassified from Other Comprehensive Income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reclassification of net actuarial (gains) and losses to net earnings |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, End of Period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total Accumulated Other Comprehensive Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
24
16. |
Variable Interest Entities |
Veresen Midstream Limited Partnership
Veresen Midstream Limited Partnership (“VMLP”) provides gathering, compression and processing services under various agreements related to the Company’s development of liquids and natural gas production in the Montney play. As at June 30, 2024, VMLP provides approximately
Ovintiv has determined that VMLP is a variable interest entity and that Ovintiv holds variable interests in VMLP. Ovintiv is not the primary beneficiary as the Company does not have the power to direct the activities that most significantly impact VMLP’s economic performance. These key activities relate to the construction, operation, maintenance and marketing of the assets owned by VMLP. The variable interests arise from certain terms under the various long-term service agreements and include: i) a take or pay for volumes in certain agreements; ii) an operating fee of which a portion can be converted into a fixed fee once VMLP assumes operatorship of certain assets; and iii) a potential payout of minimum costs in certain agreements. The potential payout of minimum costs will be assessed in the of the assets’ service period and is based on whether there is an overall shortfall of total system cash flows from natural gas gathered and compressed under certain agreements. The potential payout amount can be reduced in the event VMLP markets unutilized capacity to third-party users. Ovintiv is not required to provide any financial support or guarantees to VMLP.
As a result of Ovintiv’s involvement with VMLP, the maximum total exposure to loss related to the commitments under the agreements is estimated to be $
25
17. |
Compensation Plans |
As at June 30, 2024, there were no changes to Ovintiv’s compensation plans and the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans.
The Company has recognized the following share-based compensation costs:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Compensation Costs of Transactions Classified as Cash-Settled |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Total Compensation Costs of Transactions Classified as Equity-Settled |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Total Share-Based Compensation Costs Capitalized |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total Share-Based Compensation Expense (Recovery) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recognized in the Condensed Consolidated Statement of Earnings in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Administrative |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
As at June 30, 2024, the liability for cash-settled share-based payment transactions totaled $
The following weighted average assumptions were used to determine the fair value of SAR and TSAR units outstanding:
|
|
As at June 30, 2024 |
|
|
As at June 30, 2023 |
|
||||
|
|
US$ SAR |
|
C$ TSAR |
|
|
US$ SAR |
|
C$ TSAR |
|
|
|
Share Units |
|
Share Units |
|
|
Share Units |
|
Share Units |
|
|
|
|
|
|
|
|
|
|
|
|
Risk Free Interest Rate |
|
|
|
|
|
|
||||
Dividend Yield |
|
|
|
|
|
|
||||
Expected Volatility Rate (1) |
|
|
|
|
|
|
||||
Expected Term |
|
|
|
|
|
|
||||
Market Share Price |
|
US$ |
|
C$ |
|
|
US$ |
|
C$ |
|
Weighted Average Grant Date Fair Value |
|
US$ |
|
C$ |
|
|
US$ |
|
C$ |
|
The following units were granted primarily in conjunction with the Company’s annual grant of long-term incentive awards. The PSUs and RSUs were granted at the volume-weighted average trading price of shares of Ovintiv common stock for the five days prior to the grant date.
Six Months Ended June 30, 2024 (thousands of units) |
|
|
|
|
|
|
|
|
|
RSUs |
|
|
|
|
PSUs |
|
|
|
|
DSUs |
|
|
|
26
18. |
Fair Value Measurements |
The fair values of cash and cash equivalents, accounts receivable and accrued revenues, and accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of those instruments. The fair values of restricted cash and marketable securities included in other assets approximate their carrying amounts due to the nature of the instruments held.
Recurring fair value measurements are performed for risk management assets and liabilities and other derivative contracts, as discussed further in Note 19. These items are carried at fair value in the Condensed Consolidated Balance Sheet and are classified within the three levels of the fair value hierarchy in the following tables.
Fair value changes and settlements for amounts related to risk management assets and liabilities are recognized in revenues and foreign exchange gains and losses according to their purpose.
As at June 30, 2024 |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
|
Total Fair |
|
|
Netting (1) |
|
|
Carrying |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk Management Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
Foreign Currency Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
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|
|||||||
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk Management Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As at December 31, 2023 |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
|
Total Fair |
|
|
Netting (1) |
|
|
Carrying |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Risk Management Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
Foreign Currency Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
||||||
Risk Management Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other Derivative Contracts (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current in accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
27
The Company’s Level 1 and Level 2 risk management assets and liabilities consist of commodity fixed price contracts, NYMEX three-way options, NYMEX costless collars, foreign currency swaps and basis swaps with terms to 2025. The fair values of these contracts are estimated using inputs which are either directly or indirectly observable from active markets, such as exchange and other published prices, broker quotes and observable trading activity throughout the term of the instruments.
Level 3 Fair Value Measurements
As at June 30, 2024, the Company’s Level 3 risk management assets and liabilities consist of WTI costless collars and WTI three-way options with terms to 2025. The WTI three-way options are a combination of a sold call, a bought put and a sold put. The WTI costless collars are a combination of a sold call and a bought put. These contracts allow the Company to participate in the upside of commodity prices to the ceiling of the call option and provide the Company with complete (collars) or partial (three-way) downside price protection through the put options. The fair values of these contracts are determined using an option pricing model using observable and unobservable inputs such as implied volatility. The unobservable inputs are obtained from third parties whenever possible and reviewed by the Company for reasonableness.
A summary of changes in Level 3 fair value measurements for risk management positions is presented below:
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Balance, Beginning of Year |
|
$ |
|
|
$ |
|
||
|
|
( |
) |
|
|
|
||
Purchases, Sales, Issuances and Settlements: |
|
|
|
|
|
|
||
Purchases, sales and issuances |
|
|
|
|
|
|
||
Settlements |
|
|
|
|
|
|
||
Transfers Out of Level 3 |
|
|
|
|
|
|
||
Balance, End of Period |
|
$ |
( |
) |
|
$ |
|
|
Change in Unrealized Gains (Losses) During the |
|
|
|
|
|
|
||
Period Included in Net Earnings (Loss) |
|
$ |
( |
) |
|
$ |
|
Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at June 30, 2024:
|
|
Valuation Technique |
|
Unobservable Input |
|
Range |
|
Weighted Average (1) |
|
|
|
|
|
|
|
|
|
|
|
Risk Management - WTI Options |
|
Option Model |
|
Implied Volatility |
|
|
|
A 10 percent increase or decrease in implied volatility for the WTI options would cause an approximate corresponding $
28
19. |
Financial Instruments and Risk Management |
A) Financial Instruments
Ovintiv’s financial assets and liabilities are recognized in cash and cash equivalents, accounts receivable and accrued revenues, other assets, accounts payable and accrued liabilities, risk management assets and liabilities, long-term debt, and other liabilities and provisions.
B) Risk Management Activities
Ovintiv uses derivative financial instruments to manage its exposure to fluctuating commodity prices and foreign currency exchange rates. The Company does not apply hedge accounting to any of its derivative financial instruments. As a result, gains and losses from changes in the fair value are recognized in net earnings (loss).
Commodity Price Risk
Commodity price risk arises from the effect that fluctuations in future commodity prices may have on revenues from production. To partially mitigate exposure to commodity price risk, the Company has entered into various derivative financial instruments. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors.
Oil and NGLs - To partially mitigate oil and NGL commodity price risk, the Company uses WTI- and NGL-based contracts such as fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas, products and price points.
Natural Gas - To partially mitigate natural gas commodity price risk, the Company uses NYMEX-based contracts such as fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas and benchmark price points.
Foreign Exchange Risk
Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at June 30, 2024, the Company has entered into $
29
Risk Management Positions as at June 30, 2024
|
|
Notional Volumes |
|
Term |
|
Average Price |
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and NGL Contracts |
|
|
|
|
|
US$/bbl |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Price Contracts |
|
|
|
|
|
|
|
|
|
|
Ethane Fixed Price |
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
WTI Three-Way Options |
|
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|
|
|
|
|
Sold call / bought put / sold put |
|
|
|
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|
( |
) |
|||
Sold call / bought put / sold put |
|
|
|
|
|
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
WTI Costless Collars |
|
|
|
|
|
|
|
|
|
|
Sold call / bought put |
|
|
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|
||||
|
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|
|
|
|
|
|
Basis Contracts (1) |
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|
||
Oil and NGLs Fair Value Position |
|
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( |
) |
|
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|
Natural Gas Contracts |
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|
|
US$/Mcf |
|
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|
|
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|
|
Fixed Price Contracts |
|
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|
|
NYMEX Fixed Price |
|
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||||
|
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|
|
NYMEX Three-Way Options |
|
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|
|
|
|
|
|
|
Sold call / bought put / sold put |
|
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|
|
||||
Sold call / bought put / sold put |
|
|
|
|
|
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
NYMEX Costless Collars |
|
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|
|
|
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|
|
Sold call / bought put |
|
|
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|
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|
||||
|
|
|
|
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|
|
|
|
|
|
Basis Contracts (2) |
|
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||
|
|
|
|
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|
||
|
|
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|
|
|
|
Natural Gas Fair Value Position |
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
Foreign Currency Contracts |
|
|
|
|
|
|
|
|
|
|
Fair Value Position (3) |
|
|
|
|
|
|
|
|
||
Total Fair Value Position |
|
|
|
|
|
|
|
$ |
|
30
Earnings Impact of Realized and Unrealized Gains (Losses) on Risk Management Positions
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity and Other Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Foreign Currency Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest Rate Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity and Other Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (3) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Foreign Currency Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Realized and Unrealized , net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity and Other Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (1) (3) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Interest Rate Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest Rate (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Reconciliation of Unrealized Risk Management Positions from January 1 to June 30
|
|
|
|
2024 |
|
|
2023 |
|
||||||
|
|
|
|
Fair Value |
|
|
Total |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
Fair Value of Contracts, Beginning of Year |
|
|
|
$ |
|
|
|
|
|
|
|
|||
Change in Fair Value of Contracts in Place at Beginning of Year |
|
|
|
|
|
|
|
|
|
|
|
|||
and Contracts Entered into During the Period |
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
Settlement of Other Derivative Contracts |
|
|
|
|
|
|
|
|
|
|
|
|||
Fair Value of Contracts Realized During the Period |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Fair Value of Contracts, End of Period |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 18 for a discussion of fair value measurements.
31
Unrealized Risk Management Positions
|
|
As at |
|
|
As at |
|
||
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Risk Management Assets |
|
|
|
|
|
|
||
Current |
|
$ |
|
|
$ |
|
||
Long-term |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Risk Management Liabilities |
|
|
|
|
|
|
||
Current |
|
|
|
|
|
|
||
Long-term |
|
|
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|
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|
||
|
|
|
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|
||
|
|
|
|
|
|
|
||
Other Derivative Contract Liabilities |
|
|
|
|
|
|
||
Current in accounts payable and accrued liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net Risk Management Assets (Liabilities) and Other Derivative Contracts |
|
$ |
|
|
$ |
|
C) Credit Risk
Credit risk arises from the potential that the Company may incur a loss if a counterparty to a financial instrument fails to meet its obligation in accordance with agreed terms. While exchange-traded contracts are subject to nominal credit risk due to the financial safeguards established by the exchanges and clearing agencies, over-the-counter traded contracts expose Ovintiv to counterparty credit risk. Counterparties to the Company’s derivative financial instruments consist primarily of major financial institutions and companies within the energy industry. This credit risk exposure is mitigated through the use of credit policies approved by the Board of Directors governing the Company’s credit portfolio including credit practices that limit transactions according to counterparties’ credit quality. Mitigation strategies may include master netting arrangements, requesting collateral, purchasing credit insurance and/or transacting credit derivatives. The Company executes commodity derivative financial instruments under master agreements that have netting provisions that provide for offsetting payables against receivables. Ovintiv actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. As at June 30, 2024, Ovintiv’s maximum exposure of loss due to credit risk from derivative financial instrument assets on a gross and net fair value basis was $
Any cash equivalents include high-grade, short-term securities, placed primarily with financial institutions with investment grade ratings. Any foreign currency agreements entered into are with major financial institutions that have investment grade credit ratings.
A substantial portion of the Company’s accounts receivable are with customers and working interest owners in the oil and gas industry and are subject to normal industry credit risks. As at June 30, 2024, approximately
During 2015 and 2017, the Company entered into agreements resulting from divestitures, which required Ovintiv to fulfill certain payment obligations on the take or pay volume commitments assumed by the purchasers. The circumstances that would require Ovintiv to perform under the agreements included events where a purchaser failed to make payment to the guaranteed party and/or a purchaser was subject to an insolvency event. The agreements had a fair value of $
32
20. |
Supplementary Information |
Supplemental disclosures to the Condensed Consolidated Statement of Cash Flows are presented below:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable and accrued revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Current portion of operating lease liabilities |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Income tax receivable and payable |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-Cash Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ROU operating lease assets and liabilities |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-Cash Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property, plant and equipment accruals |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Capitalized long-term incentives |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Property additions/dispositions, including swaps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-Cash Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common shares issued in conjunction with the Permian |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition (See Note 9) |
|
$ |
- |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
( |
) |
21. |
Commitments and Contingencies |
Commitments
The following table outlines the Company’s commitments as at June 30, 2024:
|
|
Expected Future Payments |
|
|||||||||||||||||||||||||
(undiscounted) |
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Transportation and Processing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Drilling and Field Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Building Leases & Other Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Operating leases with terms greater than one year are not included in the commitments table above. The table above includes short-term leases with contract terms less than 12 months, such as drilling rigs and field office leases, as well as non-lease operating cost components associated with building leases.
Included within transportation and processing in the table above are certain commitments associated with midstream service agreements with VMLP as described in Note 16. Divestiture transactions can reduce certain commitments disclosed above.
33
Contingencies
Ovintiv is involved in various legal claims and actions arising in the normal course of the Company’s operations. Although the outcome of these claims cannot be predicted with certainty, the Company does not expect these matters to have a material adverse effect on Ovintiv’s financial position, cash flows or results of operations. Management’s assessment of these matters may change in the future as these matters are subject to a number of uncertainties. For any material matters that the Company believes an unfavorable outcome is reasonably possible, the Company discloses the nature and a range of potential exposures, if reasonably estimable. If an unfavorable outcome were to occur, there exists the possibility of a material impact on the Company’s consolidated net earnings or loss for the period in which the effect becomes reasonably estimable. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. Such accruals are based on the Company’s information known about the matters, estimates of the outcomes of such matters and experience in handling similar matters.
During the second quarter of 2024, Ovintiv resolved a dispute related to the previous disposition of certain legacy assets. The Company expects to receive net proceeds of approximately $
34
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The MD&A is intended to provide a narrative description of the Company’s business from management’s perspective, which includes an overview of Ovintiv’s condensed consolidated results for the three and six months ended June 30, 2024, and period-over-period comparison. This MD&A should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and accompanying notes for the period ended June 30, 2024 (“Consolidated Financial Statements”), which are included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and accompanying notes and MD&A for the year ended December 31, 2023, which are included in Items 8 and 7, respectively, of the 2023 Annual Report on Form 10‑K.
Common industry terms and abbreviations are used throughout this MD&A and are defined in the Definitions, Conversions and Conventions sections of this Quarterly Report on Form 10-Q. This MD&A includes the following sections:
Executive Overview |
Strategy
Ovintiv aims to be a leading North American energy producer and is focused on developing its high-quality multi-basin portfolio of oil and natural gas producing plays. Ovintiv is committed to delivering quality returns from its capital investment, generating significant cash flows and providing durable cash returns to its shareholders through the commodity price cycle. The Company aims to achieve its strategic priorities through execution excellence, disciplined capital allocation, and commercial acumen and risk management. In addition, the Company is dedicated to driving progress in areas of environmental, social, and governance, aligning with its commitment to corporate responsibility.
In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its capital allocation framework to provide competitive returns to shareholders while strengthening its balance sheet.
Ovintiv continually monitors and evaluates changing market conditions to maximize cash flows, mitigate risks and renew its premium well inventory. The Company’s assets, located in some of the most prolific plays in North America, form a multi-basin, multi-product portfolio which enables flexible and efficient investment of capital that supports the Company’s strategy.
Ovintiv seeks to deliver results in a socially and environmentally responsible manner. Best practices are deployed across its assets, allowing the Company to capitalize on operational efficiencies and decrease emissions intensity. The Company’s sustainability reporting, which outlines its key metrics, targets and relative progress achieved, can be found in the Company Outlook section of this MD&A and on the Company’s sustainability website.
Underpinning Ovintiv’s strategy are core values of one, agile, innovative and driven, which guide the organization to be collaborative, responsive, flexible and determined. The Company is committed to excellence with a passion to drive corporate financial performance and shareholder value.
For additional information on Ovintiv’s strategy, its reporting segments and the plays in which the Company operates, refer to Items 1 and 2 of the 2023 Annual Report on Form 10-K.
In evaluating its operations and assessing its leverage, Ovintiv reviews performance-based measures such as Non‑GAAP Cash Flow and debt-based metrics such as Debt to Adjusted Capitalization, Debt to EBITDA and Debt to Adjusted EBITDA, which are non-GAAP measures and do not have any standardized meaning under U.S. GAAP. These measures may not be similar to measures presented by other issuers and should not be viewed as a substitute for measures reported under U.S. GAAP. Additional information regarding these measures, including reconciliations to the closest GAAP measure, can be found in the Non-GAAP Measures section of this MD&A.
35
Highlights
During the first six months of 2024, the Company focused on executing its 2024 capital investment plan aimed at maximizing profitability through operational and capital efficiencies, and delivering cash from operating activities. Higher upstream product revenues in the first six months of 2024 compared to 2023, primarily resulted from higher production volumes and liquids prices, partially offset by lower average realized natural gas prices, excluding the impact of risk management activities. Production volumes increased eight percent compared to the first six months of 2023 primarily due to the addition of the Permian assets acquired in the second quarter of 2023. Decreases in average realized natural gas prices of 43 percent were primarily due to lower benchmark prices. Ovintiv continues to focus on optimizing realized prices from the diversification of the Company’s downstream markets.
Financial Results
Three months ended June 30, 2024
Six months ended June 30, 2024
Capital Investment
During the six months ended June 30, 2024
Production
During the six months ended June 30, 2024
36
Operating Expenses
During the six months ended June 30, 2024
The Company’s upstream operations refers to the summation of the USA and Canadian operating segments. Additional information on the items above and other expenses can be found in the Results of Operations section of this MD&A.
2024 Outlook
Industry Outlook
Oil Markets
The oil and gas industry is cyclical and commodity prices are inherently volatile. Oil prices reflect global supply and demand dynamics as well as the geopolitical and macroeconomic environment.
Oil prices for the remainder of 2024 are expected to be impacted by the interplay between the pace of global economic growth and demand for oil, continued OPEC+ production restraint and continued supply uncertainties resulting from geopolitical events. Recessionary concerns continue to have an impact on global demand outlooks as central banks evaluate and recalibrate their strategies in response to the prevailing economic environment. Supply and the accumulation of global oil inventories are expected to be impacted by changes in OPEC+ production levels, consumer demand behavior and geopolitical volatility.
Natural Gas Markets
Natural gas prices are primarily impacted by structural changes in supply and demand as well as deviations from seasonally normal weather.
Natural gas prices for the remainder of 2024 are expected to be impacted by the interplay between natural gas production and associated natural gas from oil production, changes in demand from the power generation sector, changes in export levels of U.S. liquefied natural gas, impacts from seasonal weather, as well as supply chain constraints or other disruptions resulting from geopolitical events.
Company Outlook
The Company will continue to exercise discretion and discipline, and intends to optimize capital allocation through the remainder of 2024 as the commodity price environment evolves. Ovintiv pursues innovative ways to maximize cash flows and to reduce upstream operating and administrative expenses.
Markets for oil and natural gas are exposed to different price risks and are inherently volatile. To mitigate price volatility and provide more certainty around cash flows, the Company enters into derivative financial instruments. As at June 30, 2024, the Company has hedged approximately 50.0 Mbbls/d of expected oil production and 800 MMcf/d of expected natural gas production for the remainder of the year. In addition, Ovintiv proactively utilizes transportation contracts to diversify the Company’s sales markets, thereby reducing significant exposure to any given market and regional pricing.
37
Additional information on Ovintiv’s hedging program can be found in Note 19 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Capital Investment
The Company continues to execute its 2024 capital investment program, focusing on maximizing returns from high-margin oil and condensate, and generating cash flows in excess of capital expenditures.
During the second quarter of 2024, the Company invested $622 million, which was in line with the second quarter guidance range of $610 million to $650 million. In July 2024, the Company narrowed its full year 2024 capital investment guidance range to $2,250 million to $2,350 million.
Ovintiv continually strives to improve well performance and lower costs through innovative techniques. Ovintiv’s large-scale cube development model utilizes multi-well pads and advanced completion designs to maximize returns and resource recovery from its reservoirs. The Company continues to enhance its multi-frac technology by shifting, where possible, from simultaneously fracing two wells (“Simulfrac”) to fracing three wells (“Trimulfrac”) at the same time. Ovintiv’s disciplined capital program and continuous innovation create flexibility to allocate capital in changing commodity markets to maximize cash flows while preserving the long-term value of the Company’s multi-basin portfolio.
Production
During the second quarter of 2024, total average production volumes were 593.8 MBOE/d, which significantly exceeded the second quarter guidance range of 560.0 MBOE/d to 575.0 MBOE/d, primarily due to the impact of lower than expected royalty rates in the Canadian Operations resulting from lower natural gas benchmark prices, as well as infrastructure royalty credits and allowances in Montney. Average oil and plant condensate production volumes were 211.9 Mbbls/d and average natural gas production volumes were 1,740 MMcf/d, which exceeded second quarter guidance ranges of 205.0 Mbbls/d to 209.0 Mbbls/d and 1,600 MMcf/d to 1,650 MMcf/d, respectively. Average other NGL production volumes were 92.0 Mbbls/d, which were in line with the second quarter guidance range of 89.0 Mbbls/d to 92.0 Mbbls/d.
In July, the Company further updated its full year 2024 total production guidance range to 570.0 MBOE/d to 580.0 MBOE/d, including oil and plant condensate production volumes of approximately 207.0 Mbbls/d to 209.0 Mbbls/d, other NGLs production volumes of approximately 89.0 Mbbls/d to 91.0 Mbbls/d and natural gas production volumes of approximately 1,660 MMcf/d to 1,690 MMcf/d.
Operating Expenses
Ovintiv promotes a collaborative culture that values knowledge exchange, open communication, continuous improvement and learning. This culture stimulates innovation and fosters the creation of best practices resulting in efficiency improvements and enhanced operational performance for the Company.
The Company is on track to achieve its full year upstream transportation and processing cost guidance range of approximately $7.50 per BOE to $8.00 per BOE, based on commodity price assumptions of $75.00 per barrel for WTI oil and $2.50 per MMBtu for NYMEX natural gas. Upstream transportation and processing costs of $7.15 per BOE during the three months ended June 30, 2024, was significantly lower than guidance, primarily due to lower than expected natural gas commodity prices.
The Company is also on track to meet the full year guidance for operating expenses of approximately $4.25 per BOE to $4.75 per BOE, and total production, mineral and other taxes of approximately four to five percent of upstream product revenues. The Company’s upstream operations refers to the summation of the USA and Canadian operating segments.
Additional information on Ovintiv’s third quarter and updated full year 2024 Corporate Guidance can be accessed on the Company’s website at www.ovintiv.com.
38
Environmental, Social and Governance
Ovintiv recognizes climate change as a global concern and the importance of reducing its environmental footprint as part of the solution. The Company voluntarily participates in emission reduction programs and has adopted a range of strategies to help reduce emissions from its operations. These strategies include incorporating new and proven technologies, optimizing processes in its operations and working closely with third-party providers to develop best practices. The Company continues to look for innovative techniques and efficiencies in support of its commitment to emission reductions.
In May 2024, Ovintiv published its 2023 Sustainability Report. The report highlights the Company’s 2023 environmental, social and governance results, and its progress in emissions intensity reductions with the goal to meet its Scope 1&2 GHG emissions target by 2030. As at the end of 2023, the Company had achieved a greater than 40 percent reduction in the Scope 1&2 GHG emissions intensity from 2019 levels and is on track to meet its emissions intensity reduction target of 50 percent by 2030 measured against the 2019 baseline. The GHG emissions reduction target is tied to the annual compensation program for all employees.
During the second quarter of 2023, the Company acquired assets in Permian which increased both oil production volumes and net premium well inventory. Ovintiv is undergoing an integration period to align the emissions profile of the acquired inventory with the World Bank Zero Routine Flaring initiative. Ovintiv remains committed to its emissions reduction targets.
Ovintiv is committed to diversity, equity and inclusion (“DEI”). The Company’s social commitment framework, which is rooted in the Company’s foundational values of integrity, safety, sustainability, trust and respect, reflects Ovintiv’s positive contributions to the communities where it operates and highlights the Company’s approach to enabling an inclusive culture that embraces diversity of thought, background and experience.
Ovintiv remains committed to protecting the health and safety of its workforce. Safety is a foundational value at Ovintiv and plays a critical role in the Company’s belief that a safe workplace is a strong indicator of a well-managed business. This safety-oriented mindset enables the Company to quickly respond to emergencies and minimize any impacts to employees and business continuity. Safety performance goals are incorporated into the Company’s annual compensation program. Additional information on DEI and employee safety can be found in the Human Capital section of Items 1 and 2 of the 2023 Annual Report on Form 10-K.
Additional information on Ovintiv’s sustainable business practices are included in its most recent Sustainability Report on the Company’s sustainability website at https://sustainability.ovintiv.com.
39
Results of Operations |
Selected Financial Information
|
Three months ended June 30, |
|
|
|
Six months ended June 30, |
|
||||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product and Service Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Upstream product revenues |
|
$ |
1,842 |
|
|
$ |
1,646 |
|
|
|
|
$ |
3,771 |
|
|
$ |
3,521 |
|
Market optimization |
|
|
350 |
|
|
|
703 |
|
|
|
|
|
806 |
|
|
|
1,419 |
|
Service revenues (1) |
|
|
1 |
|
|
|
3 |
|
|
|
|
|
3 |
|
|
|
4 |
|
Total Product and Service Revenues |
|
|
2,193 |
|
|
|
2,352 |
|
|
|
|
|
4,580 |
|
|
|
4,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gains (Losses) on Risk Management, Net |
|
|
77 |
|
|
|
147 |
|
|
|
|
|
23 |
|
|
|
89 |
|
Sublease Revenues |
|
|
18 |
|
|
|
18 |
|
|
|
|
|
37 |
|
|
|
35 |
|
Total Revenues |
|
|
2,288 |
|
|
|
2,517 |
|
|
|
|
|
4,640 |
|
|
|
5,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Operating Expenses (2) |
|
|
1,732 |
|
|
|
1,986 |
|
|
|
|
|
3,590 |
|
|
|
3,859 |
|
Operating Income (Loss) |
|
|
556 |
|
|
|
531 |
|
|
|
|
|
1,050 |
|
|
|
1,209 |
|
Total Other (Income) Expenses |
|
|
90 |
|
|
|
94 |
|
|
|
|
|
156 |
|
|
|
159 |
|
Net Earnings (Loss) Before Income Tax |
|
|
466 |
|
|
|
437 |
|
|
|
|
|
894 |
|
|
|
1,050 |
|
Income Tax Expense (Recovery) |
|
|
126 |
|
|
|
101 |
|
|
|
|
|
216 |
|
|
|
227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Earnings (Loss) |
|
$ |
340 |
|
|
$ |
336 |
|
|
|
|
$ |
678 |
|
|
$ |
823 |
|
Revenues
Ovintiv’s revenues are substantially derived from sales of oil, NGLs and natural gas production. Increases or decreases in Ovintiv’s revenue, profitability and future production are highly dependent on the commodity prices the Company receives. Prices are market driven and fluctuate due to factors beyond the Company’s control, such as supply and demand, seasonality and geopolitical and economic factors. The Company’s realized prices generally reflect WTI, NYMEX, Edmonton Condensate and AECO benchmark prices, as well as other downstream benchmarks, including Houston and Dawn. The Company proactively mitigates price risk and optimizes margins by entering into firm transportation contracts to diversify market access to different sales points. Realized prices, excluding the impact of risk management activities, may differ from the benchmarks for many reasons, including quality, location, or production being sold at different market hubs.
Benchmark prices relevant to the Company are shown in the table below.
Benchmark Prices
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
(average for the period) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil & NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
WTI ($/bbl) |
|
$ |
80.57 |
|
|
$ |
73.78 |
|
|
|
|
$ |
78.77 |
|
|
$ |
74.95 |
|
Houston ($/bbl) |
|
|
82.21 |
|
|
|
74.94 |
|
|
|
|
|
80.53 |
|
|
|
76.26 |
|
Edmonton Condensate (C$/bbl) |
|
|
105.72 |
|
|
|
97.39 |
|
|
|
|
|
102.32 |
|
|
|
102.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Natural Gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NYMEX ($/MMBtu) |
|
$ |
1.89 |
|
|
$ |
2.10 |
|
|
|
|
$ |
2.07 |
|
|
$ |
2.76 |
|
AECO (C$/Mcf) |
|
|
1.44 |
|
|
|
2.35 |
|
|
|
|
|
1.74 |
|
|
|
3.34 |
|
Dawn (C$/MMBtu) |
|
|
2.29 |
|
|
|
2.77 |
|
|
|
|
|
2.84 |
|
|
|
3.22 |
|
40
Production Volumes and Realized Prices
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||||||||||||||||||||
|
Production Volumes (1) |
|
|
|
Realized Prices (2) |
|
|
Production Volumes (1) |
|
|
|
Realized Prices (2) |
|
||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
2024 |
|
|
2023 |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Oil (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
166.8 |
|
|
|
142.4 |
|
|
|
$ |
78.20 |
|
|
$ |
72.83 |
|
|
|
168.5 |
|
|
|
134.8 |
|
|
|
$ |
77.18 |
|
|
$ |
73.41 |
|
Canadian Operations |
|
0.5 |
|
|
|
- |
|
|
|
|
74.86 |
|
|
|
- |
|
|
|
0.3 |
|
|
|
0.1 |
|
|
|
|
74.07 |
|
|
|
71.44 |
|
Total |
|
167.3 |
|
|
|
142.4 |
|
|
|
|
78.19 |
|
|
|
72.83 |
|
|
|
168.8 |
|
|
|
134.9 |
|
|
|
|
77.17 |
|
|
|
73.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
NGLs - Plant Condensate (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
10.9 |
|
|
|
10.5 |
|
|
|
|
59.43 |
|
|
|
55.09 |
|
|
|
10.7 |
|
|
|
10.6 |
|
|
|
|
58.71 |
|
|
|
58.46 |
|
Canadian Operations |
|
33.7 |
|
|
|
33.0 |
|
|
|
|
75.61 |
|
|
|
70.99 |
|
|
|
31.8 |
|
|
|
30.6 |
|
|
|
|
73.77 |
|
|
|
73.84 |
|
Total |
|
44.6 |
|
|
|
43.5 |
|
|
|
|
71.66 |
|
|
|
67.14 |
|
|
|
42.5 |
|
|
|
41.2 |
|
|
|
|
69.96 |
|
|
|
69.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
NGLs - Other (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
75.7 |
|
|
|
78.1 |
|
|
|
|
16.84 |
|
|
|
13.43 |
|
|
|
75.1 |
|
|
|
76.0 |
|
|
|
|
18.09 |
|
|
|
15.99 |
|
Canadian Operations |
|
16.3 |
|
|
|
18.7 |
|
|
|
|
25.36 |
|
|
|
18.62 |
|
|
|
15.0 |
|
|
|
15.6 |
|
|
|
|
27.54 |
|
|
|
25.20 |
|
Total |
|
92.0 |
|
|
|
96.8 |
|
|
|
|
18.35 |
|
|
|
14.43 |
|
|
|
90.1 |
|
|
|
91.6 |
|
|
|
|
19.67 |
|
|
|
17.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Oil & NGLs (Mbbls/d, $/bbl) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
253.4 |
|
|
|
231.0 |
|
|
|
|
59.09 |
|
|
|
51.94 |
|
|
|
254.3 |
|
|
|
221.4 |
|
|
|
|
58.94 |
|
|
|
52.99 |
|
Canadian Operations |
|
50.5 |
|
|
|
51.7 |
|
|
|
|
59.35 |
|
|
|
52.06 |
|
|
|
47.1 |
|
|
|
46.3 |
|
|
|
|
59.03 |
|
|
|
57.43 |
|
Total |
|
303.9 |
|
|
|
282.7 |
|
|
|
|
59.13 |
|
|
|
51.96 |
|
|
|
301.4 |
|
|
|
267.7 |
|
|
|
|
58.95 |
|
|
|
53.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Natural Gas (MMcf/d, $/Mcf) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
531 |
|
|
|
530 |
|
|
|
|
1.16 |
|
|
|
1.79 |
|
|
|
528 |
|
|
|
518 |
|
|
|
|
1.59 |
|
|
|
2.57 |
|
Canadian Operations |
|
1,209 |
|
|
|
1,213 |
|
|
|
|
1.36 |
|
|
|
2.02 |
|
|
|
1,165 |
|
|
|
1,131 |
|
|
|
|
1.81 |
|
|
|
3.30 |
|
Total |
|
1,740 |
|
|
|
1,743 |
|
|
|
|
1.30 |
|
|
|
1.95 |
|
|
|
1,693 |
|
|
|
1,649 |
|
|
|
|
1.74 |
|
|
|
3.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Production (MBOE/d, $/BOE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
USA Operations |
|
341.9 |
|
|
|
319.2 |
|
|
|
|
45.61 |
|
|
|
40.56 |
|
|
|
342.5 |
|
|
|
307.7 |
|
|
|
|
46.23 |
|
|
|
42.45 |
|
Canadian Operations |
|
251.9 |
|
|
|
253.8 |
|
|
|
|
18.40 |
|
|
|
20.26 |
|
|
|
241.3 |
|
|
|
234.7 |
|
|
|
|
20.27 |
|
|
|
27.21 |
|
Total |
|
593.8 |
|
|
|
573.0 |
|
|
|
|
34.08 |
|
|
|
31.56 |
|
|
|
583.8 |
|
|
|
542.4 |
|
|
|
|
35.49 |
|
|
|
35.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Production Mix (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Oil & Plant Condensate |
|
36 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
36 |
|
|
|
32 |
|
|
|
|
|
|
|
|
||||
NGLs - Other |
|
15 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
16 |
|
|
|
17 |
|
|
|
|
|
|
|
|
||||
Total Oil & NGLs |
|
51 |
|
|
|
49 |
|
|
|
|
|
|
|
|
|
|
52 |
|
|
|
49 |
|
|
|
|
|
|
|
|
||||
Natural Gas |
|
49 |
|
|
|
51 |
|
|
|
|
|
|
|
|
|
|
48 |
|
|
|
51 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Production Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Period Over Period (%) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Oil & NGLs |
|
7 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
13 |
|
|
|
4 |
|
|
|
|
|
|
|
|
||||
Natural Gas |
|
- |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
13 |
|
|
|
|
|
|
|
|
||||
Total Production |
|
4 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
8 |
|
|
|
8 |
|
|
|
|
|
|
|
|
41
Upstream Product Revenues
|
Three months ended June 30, |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
($ millions) |
Oil |
|
|
NGLs - Plant Condensate |
|
|
NGLs - Other |
|
|
Natural Gas |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2023 Upstream Product Revenues |
$ |
944 |
|
|
$ |
265 |
|
|
$ |
129 |
|
|
$ |
308 |
|
|
$ |
1,646 |
|
Increase (decrease) due to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sales prices |
|
87 |
|
|
|
20 |
|
|
|
32 |
|
|
|
(103 |
) |
|
|
36 |
|
Production volumes |
|
162 |
|
|
|
6 |
|
|
|
(7 |
) |
|
|
(1 |
) |
|
|
160 |
|
2024 Upstream Product Revenues |
$ |
1,193 |
|
|
$ |
291 |
|
|
$ |
154 |
|
|
$ |
204 |
|
|
$ |
1,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Six months ended June 30, |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
($ millions) |
Oil |
|
|
NGLs - Plant Condensate |
|
|
NGLs - Other |
|
|
Natural Gas |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2023 Upstream Product Revenues |
$ |
1,792 |
|
|
$ |
520 |
|
|
$ |
293 |
|
|
$ |
916 |
|
|
$ |
3,521 |
|
Increase (decrease) due to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sales prices |
|
119 |
|
|
|
1 |
|
|
|
33 |
|
|
|
(411 |
) |
|
|
(258 |
) |
Production volumes |
|
460 |
|
|
|
21 |
|
|
|
(3 |
) |
|
|
30 |
|
|
|
508 |
|
2024 Upstream Product Revenues |
$ |
2,371 |
|
|
$ |
542 |
|
|
$ |
323 |
|
|
$ |
535 |
|
|
$ |
3,771 |
|
Oil Revenues
Three months ended June 30, 2024 versus June 30, 2023
Oil revenues were higher by $249 million compared to the second quarter of 2023 primarily due to:
Six months ended June 30, 2024 versus June 30, 2023
Oil revenues were higher by $579 million compared to the first six months of 2023 primarily due to:
NGL Revenues
Three months ended June 30, 2024 versus June 30, 2023
NGL revenues were higher by $51 million compared to the second quarter of 2023 primarily due to:
42
Six months ended June 30, 2024 versus June 30, 2023
NGL revenues were higher by $52 million compared to the first six months of 2023 primarily due to:
Natural Gas Revenues
Three months ended June 30, 2024 versus June 30, 2023
Natural gas revenues were lower by $104 million compared to the second quarter of 2023 primarily due to:
Six months ended June 30, 2024 versus June 30, 2023
Natural gas revenues were lower by $381 million compared to the first six months of 2023 primarily due to:
43
Gains (Losses) on Risk Management, Net
As a means of managing commodity price volatility, Ovintiv enters into commodity derivative financial instruments on a portion of its expected oil, NGLs and natural gas production volumes. Additional information on the Company’s commodity price positions as at June 30, 2024, can be found in Note 19 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
The following tables provide the effects of the Company’s risk management activities on revenues.
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized Gains (Losses) on Risk Management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity Price (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil |
|
$ |
(25 |
) |
|
$ |
- |
|
|
|
|
$ |
(33 |
) |
|
$ |
- |
|
NGLs - Other |
|
|
1 |
|
|
|
- |
|
|
|
|
|
2 |
|
|
|
- |
|
Natural Gas |
|
|
89 |
|
|
|
5 |
|
|
|
|
|
142 |
|
|
|
(71 |
) |
Other (2) |
|
|
4 |
|
|
|
- |
|
|
|
|
|
4 |
|
|
|
- |
|
Total |
|
|
69 |
|
|
|
5 |
|
|
|
|
|
115 |
|
|
|
(71 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized Gains (Losses) on Risk Management |
|
|
8 |
|
|
|
142 |
|
|
|
|
|
(92 |
) |
|
|
160 |
|
Total Gains (Losses) on Risk Management, Net |
|
$ |
77 |
|
|
$ |
147 |
|
|
|
|
$ |
23 |
|
|
$ |
89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
(Per-unit) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized Gains (Losses) on Risk Management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity Price (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil ($/bbl) |
|
$ |
(1.61 |
) |
|
$ |
- |
|
|
|
|
$ |
(1.06 |
) |
|
$ |
- |
|
NGLs - Other ($/bbl) |
|
$ |
0.12 |
|
|
$ |
- |
|
|
|
|
$ |
0.12 |
|
|
$ |
- |
|
Natural Gas ($/Mcf) |
|
$ |
0.56 |
|
|
$ |
0.03 |
|
|
|
|
$ |
0.46 |
|
|
$ |
(0.24 |
) |
Total ($/BOE) |
|
$ |
1.21 |
|
|
$ |
0.10 |
|
|
|
|
$ |
1.05 |
|
|
$ |
(0.72 |
) |
Ovintiv recognizes fair value changes from its risk management activities each reporting period. The changes in fair value result from new positions and settlements that occur during each period, as well as the relationship between contract prices and the associated forward curves. Realized gains or losses on risk management activities related to commodity price mitigation are included in the USA Operations, Canadian Operations and Market Optimization revenues as the contracts are cash settled. Unrealized gains or losses on fair value changes of unsettled contracts are included in the Corporate and Other segment. Additional information on fair value changes can be found in Note 18 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Market Optimization Revenues
Market Optimization product revenues relate to activities that provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification. Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with the Company’s previous divestitures.
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market Optimization |
|
$ |
350 |
|
|
$ |
703 |
|
|
|
|
$ |
806 |
|
|
$ |
1,419 |
|
Three months ended June 30, 2024 versus June 30, 2023
Market Optimization product revenues decreased $353 million compared to the second quarter of 2023 primarily due to:
partially offset by:
44
Six months ended June 30, 2024 versus June 30, 2023
Market Optimization product revenues decreased $613 million compared to the first six months of 2023 primarily due to:
partially offset by:
Sublease Revenues
Sublease revenues primarily include amounts related to the sublease of office space in The Bow office building recorded in the Corporate and Other segment. Additional information on office sublease income can be found in Note 11 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Operating Expenses
Production, Mineral and Other Taxes
Production, mineral and other taxes include production and property taxes. Production taxes are generally assessed as a percentage of oil, NGLs and natural gas production revenues. Property taxes are generally assessed based on the value of the underlying assets.
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
85 |
|
|
$ |
73 |
|
|
|
|
$ |
165 |
|
|
$ |
153 |
|
Canadian Operations |
|
|
4 |
|
|
|
3 |
|
|
|
|
|
7 |
|
|
|
7 |
|
Total |
|
$ |
89 |
|
|
$ |
76 |
|
|
|
|
$ |
172 |
|
|
$ |
160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
2.74 |
|
|
$ |
2.49 |
|
|
|
|
$ |
2.65 |
|
|
$ |
2.74 |
|
Canadian Operations |
|
$ |
0.17 |
|
|
$ |
0.14 |
|
|
|
|
$ |
0.17 |
|
|
$ |
0.17 |
|
Production, Mineral and Other Taxes |
|
$ |
1.65 |
|
|
$ |
1.43 |
|
|
|
|
$ |
1.62 |
|
|
$ |
1.63 |
|
Three months ended June 30, 2024 versus June 30, 2023
Production, mineral and other taxes increased $13 million compared to the second quarter of 2023 primarily due to:
partially offset by:
Six months ended June 30, 2024 versus June 30, 2023
Production, mineral and other taxes increased $12 million compared to the first six months of 2023 primarily due to:
partially offset by:
45
Transportation and Processing
Transportation and processing expense includes transportation costs incurred to move product from production points to sales points including gathering, compression, pipeline tariffs, trucking and storage costs. Ovintiv also incurs costs related to processing provided by third parties or through ownership interests in processing facilities.
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
126 |
|
|
$ |
148 |
|
|
|
|
$ |
253 |
|
|
$ |
295 |
|
Canadian Operations |
|
|
260 |
|
|
|
268 |
|
|
|
|
|
511 |
|
|
|
535 |
|
Upstream Transportation and Processing |
|
|
386 |
|
|
|
416 |
|
|
|
|
|
764 |
|
|
|
830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market Optimization |
|
|
27 |
|
|
|
36 |
|
|
|
|
|
68 |
|
|
|
77 |
|
Total |
|
$ |
413 |
|
|
$ |
452 |
|
|
|
|
$ |
832 |
|
|
$ |
907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
4.05 |
|
|
$ |
5.10 |
|
|
|
|
$ |
4.06 |
|
|
$ |
5.29 |
|
Canadian Operations |
|
$ |
11.37 |
|
|
$ |
11.57 |
|
|
|
|
$ |
11.65 |
|
|
$ |
12.59 |
|
Upstream Transportation and Processing |
|
$ |
7.15 |
|
|
$ |
7.97 |
|
|
|
|
$ |
7.20 |
|
|
$ |
8.45 |
|
Three months ended June 30, 2024 versus June 30, 2023
Transportation and processing expense decreased $39 million compared to the second quarter of 2023 primarily due to:
partially offset by:
Six months ended June 30, 2024 versus June 30, 2023
Transportation and processing expense decreased $75 million compared to the first six months of 2023 primarily due to:
partially offset by:
46
Operating
Operating expense includes costs paid by the Company, net of amounts capitalized, on oil and natural gas properties in which Ovintiv has a working interest. These costs primarily include labor, service contract fees, chemicals, fuel, water hauling, electricity and workovers.
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
205 |
|
|
$ |
167 |
|
|
|
|
$ |
416 |
|
|
$ |
337 |
|
Canadian Operations |
|
|
26 |
|
|
|
2 |
|
|
|
|
|
51 |
|
|
|
31 |
|
Upstream Operating Expense |
|
|
231 |
|
|
|
169 |
|
|
|
|
|
467 |
|
|
|
368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market Optimization |
|
|
6 |
|
|
|
6 |
|
|
|
|
|
13 |
|
|
|
13 |
|
Total |
|
$ |
237 |
|
|
$ |
175 |
|
|
|
|
$ |
480 |
|
|
$ |
381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
6.58 |
|
|
$ |
5.73 |
|
|
|
|
$ |
6.67 |
|
|
$ |
6.05 |
|
Canadian Operations |
|
$ |
1.18 |
|
|
$ |
0.10 |
|
|
|
|
$ |
1.19 |
|
|
$ |
0.73 |
|
Upstream Operating Expense |
|
$ |
4.29 |
|
|
$ |
3.23 |
|
|
|
|
$ |
4.40 |
|
|
$ |
3.75 |
|
Three months ended June 30, 2024 versus June 30, 2023
Operating expense increased $62 million compared to the second quarter of 2023 primarily due to:
partially offset by:
Six months ended June 30, 2024 versus June 30, 2023
Operating expense increased $99 million compared to the first six months of 2023 primarily due to:
partially offset by:
Purchased Product
Purchased product expense includes purchases of oil, NGLs and natural gas from third parties that are used to provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification. Ovintiv also purchases and sells third-party volumes under marketing arrangements associated with the Company’s previous divestitures.
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
|||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market Optimization |
|
$ |
333 |
|
|
$ |
692 |
|
|
|
|
$ |
773 |
|
|
$ |
1,393 |
|
47
Three months ended June 30, 2024 versus June 30, 2023
Purchased product expense decreased $359 million compared to the second quarter of 2023 primarily due to:
partially offset by:
Six months ended June 30, 2024 versus June 30, 2023
Purchased product expense decreased $620 million compared to the first six months of 2023 primarily due to:
partially offset by:
Depreciation, Depletion & Amortization
Proved properties within each country cost center are depleted using the unit-of-production method based on proved reserves as discussed in Note 1 to the Consolidated Financial Statements included in Item 8 of the 2023 Annual Report on Form 10-K. Depletion rates are impacted by impairments, acquisitions, divestitures and foreign exchange rates, as well as fluctuations in 12-month average trailing prices which affect proved reserves volumes. Corporate assets are carried at cost and depreciated on a straight-line basis over the estimated service lives of the assets.
Additional information can be found under Upstream Assets and Reserve Estimates in the Critical Accounting Estimates section of the MD&A included in Item 7 of the 2023 Annual Report on Form 10-K.
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
498 |
|
|
$ |
336 |
|
|
|
|
$ |
987 |
|
|
$ |
630 |
|
Canadian Operations |
|
|
76 |
|
|
|
78 |
|
|
|
|
|
148 |
|
|
|
143 |
|
Upstream DD&A |
|
|
574 |
|
|
|
414 |
|
|
|
|
|
1,135 |
|
|
|
773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate & Other |
|
|
6 |
|
|
|
5 |
|
|
|
|
|
11 |
|
|
|
10 |
|
Total |
|
$ |
580 |
|
|
$ |
419 |
|
|
|
|
$ |
1,146 |
|
|
$ |
783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
USA Operations |
|
$ |
15.99 |
|
|
$ |
11.56 |
|
|
|
|
$ |
15.84 |
|
|
$ |
11.31 |
|
Canadian Operations |
|
$ |
3.34 |
|
|
$ |
3.36 |
|
|
|
|
$ |
3.38 |
|
|
$ |
3.37 |
|
Upstream DD&A |
|
$ |
10.62 |
|
|
$ |
7.93 |
|
|
|
|
$ |
10.69 |
|
|
$ |
7.87 |
|
Three months ended June 30, 2024 versus June 30, 2023
DD&A increased $161 million compared to the second quarter of 2023 primarily due to:
The depletion rate in the USA Operations increased $4.43 per BOE compared to the second quarter of 2023 primarily due to a higher depletable base associated with the Permian assets acquired in the second quarter of 2023.
48
Six months ended June 30, 2024 versus June 30, 2023
DD&A increased $363 million compared to the first six months of 2023 primarily due to:
The depletion rate in the USA Operations increased $4.53 per BOE compared to the first six months of 2023 primarily due to a higher depletable base associated with the Permian assets acquired in the second quarter of 2023.
Administrative
Administrative expense represents costs associated with corporate functions provided by Ovintiv staff. These expenses primarily include salaries and benefits, operating lease, office, information technology, legal and long-term incentive costs.
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Administrative, excluding Long-Term Incentive, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
and Transaction and Legal Costs (1) |
|
$ |
69 |
|
|
$ |
66 |
|
|
|
|
$ |
144 |
|
|
$ |
137 |
|
Long-term incentive costs |
|
|
8 |
|
|
|
16 |
|
|
|
|
|
23 |
|
|
|
(3 |
) |
Transaction and legal costs |
|
|
(1 |
) |
|
|
86 |
|
|
|
|
|
11 |
|
|
|
92 |
|
Total Administrative |
|
$ |
76 |
|
|
$ |
168 |
|
|
|
|
$ |
178 |
|
|
$ |
226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($/BOE) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Administrative, excluding Long-Term Incentive, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
and Transaction and Legal Costs (1) |
|
$ |
1.28 |
|
|
$ |
1.28 |
|
|
|
|
$ |
1.34 |
|
|
$ |
1.39 |
|
Long-term incentive costs |
|
|
0.14 |
|
|
|
0.30 |
|
|
|
|
|
0.22 |
|
|
|
(0.03 |
) |
Transaction and legal costs |
|
|
(0.01 |
) |
|
|
1.65 |
|
|
|
|
|
0.11 |
|
|
|
0.94 |
|
Total Administrative |
|
$ |
1.41 |
|
|
$ |
3.23 |
|
|
|
|
$ |
1.67 |
|
|
$ |
2.30 |
|
Three months ended June 30, 2024 versus June 30, 2023
Administrative expense decreased $92 million compared to the second quarter of 2023 primarily due to:
Six months ended June 30, 2024 versus June 30, 2023
Administrative expense decreased $48 million compared to the first six months of 2023 primarily due to:
partially offset by:
Additional information on the Company’s long-term incentive costs can be found in Note 17 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
49
Other (Income) Expenses
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest |
|
$ |
105 |
|
|
$ |
80 |
|
|
|
|
$ |
203 |
|
|
$ |
151 |
|
Foreign Exchange (Gain) Loss, Net |
|
|
(10 |
) |
|
|
25 |
|
|
|
|
|
(38 |
) |
|
|
22 |
|
Other (Gains) Losses, Net |
|
|
(5 |
) |
|
|
(11 |
) |
|
|
|
|
(9 |
) |
|
|
(14 |
) |
Total Other (Income) Expenses |
|
$ |
90 |
|
|
$ |
94 |
|
|
|
|
$ |
156 |
|
|
$ |
159 |
|
Interest
Interest expense primarily includes interest on Ovintiv’s short-term and long-term debt. Additional information on changes in interest can be found in Note 5 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Three months ended June 30, 2024 versus June 30, 2023
Interest expense increased $25 million compared to the second quarter of 2023 primarily due to:
Six months ended June 30, 2024 versus June 30, 2023
Interest expense increased $52 million compared to the first six months of 2023 primarily due to:
partially offset by:
Foreign Exchange (Gain) Loss, Net
Foreign exchange gains and losses primarily result from the impact of fluctuations in the Canadian to U.S. dollar exchange rate. Additional information on changes in foreign exchange gains or losses can be found in Note 6 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Additional information on foreign exchange rates and the effects of foreign exchange rate changes can be found in Part I, Item 3 of this Quarterly Report on Form 10-Q.
Three months ended June 30, 2024 versus June 30, 2023
Net foreign exchange gain of $10 million compared to a loss of $25 million during the second quarter of 2023 primarily due to:
partially offset by:
50
Six months ended June 30, 2024 versus June 30, 2023
Net foreign exchange gain of $38 million compared to a loss of $22 million during the first six months of 2023 primarily due to:
partially offset by:
Other (Gains) Losses, Net
Other (gains) losses, net, primarily includes other non-recurring revenues or expenses and may also include items such as interest income, interest received from tax authorities, reclamation charges relating to decommissioned assets, and adjustments related to other assets.
Income Tax
During the three and six months ended June 30, 2024, current income tax expense in the U.S. of $10 million and $24 million, respectively, is higher than the comparative periods in 2023 primarily due to the impact of the corporate alternative minimum tax. In Canada, the current income tax expense for the three and six months ended June 30, 2024 of $13 million and $31 million, respectively, is lower than the comparative periods in 2023 due to lower expected full year taxable earnings.
The determination of income and other tax liabilities of the Company and its subsidiaries requires interpretation of complex domestic and foreign tax laws and regulations, that are subject to change. The Company’s interpretation of tax laws may differ from the interpretation of the tax authorities. As a result, there are tax matters under review for which the timing of resolution is uncertain. The Company believes that the provision for income taxes is adequate.
On June 20, 2024, Canada enacted its Global Minimum Tax Act (“GMTA”), which implements the Organization for Economic Cooperation and Development Pillar II framework, providing a global minimum tax of 15 percent. The Company continues to evaluate the GMTA but does not anticipate any material impact in 2024.
Additional information on income taxes can be found in Note 7 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
51
Liquidity and Capital Resources |
Sources of Liquidity
The Company has the flexibility to access cash equivalents and a range of funding alternatives at competitive rates through committed revolving credit facilities as well as debt and equity capital markets. Ovintiv closely monitors the accessibility of cost-effective credit and ensures that sufficient liquidity is in place to fund capital expenditures and dividend payments. In addition, the Company may use cash and cash equivalents, cash from operating activities, or proceeds from asset divestitures to fund its operations and capital allocation framework or to manage its capital structure as discussed below.
The Company’s capital structure consists of total shareholders’ equity plus long-term debt, including any current portion. The Company’s objectives when managing its capital structure are to maintain financial flexibility to preserve Ovintiv’s access to capital markets and its ability to meet financial obligations and finance internally generated growth, as well as potential acquisitions. Ovintiv has a practice of maintaining capital discipline and strategically managing its capital structure by adjusting capital spending, adjusting dividends paid to shareholders, issuing new shares of common stock, purchasing shares of common stock for cancellation or return to treasury, issuing new debt and repaying or repurchasing existing debt.
|
|
As at June 30, |
|
|||||
($ millions, except as indicated) |
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Cash and Cash Equivalents |
|
$ |
8 |
|
|
$ |
52 |
|
Available Credit Facilities |
|
|
3,250 |
|
|
|
3,150 |
|
Available Uncommitted Demand Lines (1) |
|
|
211 |
|
|
|
278 |
|
Issuance of U.S. Commercial Paper |
|
|
(384 |
) |
|
|
(330 |
) |
Total Liquidity |
|
$ |
3,085 |
|
|
$ |
3,150 |
|
|
|
|
|
|
|
|
||
Long-Term Debt, including current portion |
|
$ |
6,087 |
|
|
$ |
6,134 |
|
Total Shareholders’ Equity |
|
$ |
10,328 |
|
|
$ |
9,316 |
|
|
|
|
|
|
|
|
||
Debt to Capitalization (%) (2) |
|
|
37 |
|
|
|
40 |
|
Debt to Adjusted Capitalization (%) (2) |
|
|
25 |
|
|
|
26 |
|
The Company has full access to two committed revolving U.S. dollar denominated credit facilities totaling $3.5 billion, which include a $2.2 billion revolving credit facility for Ovintiv Inc. and a $1.3 billion revolving credit facility for a Canadian subsidiary (collectively, the “Credit Facilities”). The Credit Facilities, which mature in July 2026, provide financial flexibility and allow the Company to fund its operations or capital investment program. At June 30, 2024, $250 million was outstanding under the revolving Credit Facilities.
Depending on the Company’s credit rating and market demand, the Company may issue from its two U.S. CP programs, which include a $1.5 billion program for Ovintiv Inc. and a $1.0 billion program for a Canadian subsidiary. As at June 30, 2024, the Company had $384 million of commercial paper outstanding under its U.S. CP program maturing at various dates with a weighted average interest rate of approximately 6.13 percent, which is supported by the Company’s Credit Facilities. All of Ovintiv’s credit ratings are investment grade as at June 30, 2024.
The available Credit Facilities, uncommitted demand lines, and cash and cash equivalents, net of outstanding commercial paper, provide Ovintiv with total liquidity of approximately $3.1 billion as at June 30, 2024. At June 30, 2024, Ovintiv also had approximately $72 million in undrawn letters of credit issued in the normal course of business primarily as collateral security related to sales arrangements.
Ovintiv has a U.S. shelf registration statement under which the Company may issue from time to time, debt securities, common stock, preferred stock, warrants, units, share purchase contracts and share purchase units in the U.S. The U.S. shelf registration statement expires in March 2026.
The obligations under the Company’s existing debt securities are fully and unconditionally guaranteed on a senior unsecured basis by Ovintiv Canada ULC, an indirect wholly-owned subsidiary of the Company. Additional information on the Company’s Canadian Operations segment and the Bow office lease can be found in the Results of Operations section in this MD&A and
52
the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the MD&A and audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2023, which are included in Items 7 and 8, respectively, of the 2023 Annual Report on Form 10-K.
Ovintiv is currently in compliance with all financial covenants under the Credit Facilities. Management monitors Debt to Adjusted Capitalization, which is a non-GAAP measure defined in the Non-GAAP Measures section of this MD&A, as a proxy for Ovintiv’s financial covenant under the Credit Facilities, which requires Debt to Adjusted Capitalization to be less than 60 percent. As at June 30, 2024, the Company’s Debt to Adjusted Capitalization was 25 percent. The definitions used in the covenant under the Credit Facilities adjust capitalization for cumulative historical ceiling test impairments recorded in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP. Additional information on financial covenants can be found in Note 15 to the Consolidated Financial Statements included in Item 8 of the 2023 Annual Report on Form 10‑K.
Sources and Uses of Cash
In the first six months of 2024, Ovintiv primarily generated cash through operating activities. The following table summarizes the sources and uses of the Company’s cash and cash equivalents.
|
|
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
Activity Type |
|
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sources of Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash from operating activities |
Operating |
|
|
$ |
1,020 |
|
|
$ |
831 |
|
|
|
|
$ |
1,679 |
|
|
$ |
1,899 |
|
Proceeds from divestitures |
Investing |
|
|
|
2 |
|
|
|
717 |
|
|
|
|
|
4 |
|
|
|
729 |
|
Corporate acquisition |
Investing |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
12 |
|
|
|
- |
|
Net issuance of revolving debt |
Financing |
|
|
|
- |
|
|
|
100 |
|
|
|
|
|
350 |
|
|
|
287 |
|
Issuance of long-term debt |
Financing |
|
|
|
- |
|
|
|
2,278 |
|
|
|
|
|
- |
|
|
|
2,278 |
|
Other |
Investing |
|
|
|
- |
|
|
|
155 |
|
|
|
|
|
- |
|
|
|
89 |
|
|
|
|
|
|
1,022 |
|
|
|
4,081 |
|
|
|
|
|
2,045 |
|
|
|
5,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Uses of Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures |
Investing |
|
|
|
622 |
|
|
|
640 |
|
|
|
|
|
1,213 |
|
|
|
1,250 |
|
Acquisitions |
Investing |
|
|
|
5 |
|
|
|
15 |
|
|
|
|
|
195 |
|
|
|
214 |
|
Net repayment of revolving debt |
Financing |
|
|
|
111 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
- |
|
Corporate acquisition, net of cash acquired |
Investing |
|
|
|
- |
|
|
|
3,225 |
|
|
|
|
|
- |
|
|
|
3,225 |
|
Purchase of shares of common stock |
Financing |
|
|
|
184 |
|
|
|
89 |
|
|
|
|
|
434 |
|
|
|
328 |
|
Dividends on shares of common stock |
Financing |
|
|
|
80 |
|
|
|
82 |
|
|
|
|
|
160 |
|
|
|
143 |
|
Other |
Investing/Financing |
|
|
|
17 |
|
|
|
1 |
|
|
|
|
|
40 |
|
|
|
72 |
|
|
|
|
|
|
1,019 |
|
|
|
4,052 |
|
|
|
|
|
2,042 |
|
|
|
5,232 |
|
Foreign Exchange Gain (Loss) on Cash, Cash Equivalents |
|
|
|
- |
|
|
|
(3 |
) |
|
|
|
|
2 |
|
|
|
(3 |
) |
|
Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash |
|
|
$ |
3 |
|
|
$ |
26 |
|
|
|
|
$ |
5 |
|
|
$ |
47 |
|
Operating Activities
Net cash from operating activities in the second quarter and first six months of 2024 was $1,020 million and $1,679 million, respectively, and was primarily a reflection of the impacts from production volumes, average realized commodity prices, realized gains/losses on risk management and changes in non‑cash working capital.
Additional detail on changes in non-cash working capital can be found in Note 20 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Ovintiv expects it will continue to meet the payment terms of its suppliers.
Non-GAAP Cash Flow in the second quarter and first six months of 2024 was $1,025 million and $2,060 million, respectively, and was primarily impacted by the items affecting cash from operating activities which are discussed below and in the Results of Operations section of this MD&A.
53
Three months ended June 30, 2024 versus June 30, 2023
Net cash from operating activities increased $189 million compared to the second quarter of 2023 primarily due to:
partially offset by:
Six months ended June 30, 2024 versus June 30, 2023
Net cash from operating activities decreased $220 million compared to the first six months of 2023 primarily due to:
partially offset by:
Investing Activities
Cash used in investing activities in the first six months of 2024 was $1,402 million primarily due to capital expenditures and acquisitions in the USA Operations. Capital expenditures, and acquisition and divestiture activities are summarized in Notes 3 and 8, respectively, to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Capital expenditures decreased $37 million compared to the first six months of 2023, primarily due to decreased activity in Anadarko and Montney, and the sale of the Bakken assets in the second quarter of 2023, partially offset by increased activity in Permian and Uinta.
Acquisitions in the first six months of 2024 were $195 million, which primarily included property purchases with oil and liquids-rich potential in the USA Operations (2023 - $214 million).
Corporate acquisitions in the first six months of 2024 reflect the final cash settlements of $12 million completed in the first quarter of 2024 related to the Permian assets acquired in the second quarter of 2023. Additional information regarding the Permian Acquisition can be found in Note 9 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Financing Activities
Net cash from and/or used in financing activities has been impacted by Ovintiv’s strategic objective to return value to shareholders by repaying or repurchasing existing debt, purchasing shares of common stock and paying dividends.
Net cash used in financing activities in the first six months of 2024 was $274 million compared to net cash from financing activities in 2023 of $2,022 million. The change was primarily due to the net issuance of long-term debt in 2023 of $2,278 million and increased purchases of shares of common stock in 2024 compared to 2023 ($106 million), partially offset by an increase in the net issuance of revolving debt ($63 million).
From time to time, Ovintiv may seek to retire or purchase the Company’s outstanding debt through cash purchases and/or exchanges for other debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.
54
The Company’s long-term debt, including the current portion of $1,234 million, totaled $6,087 million at June 30, 2024. The Company’s long-term debt at December 31, 2023, including the current portion of $284 million, totaled $5,737 million. As at June 30, 2024, the Company has $600 million of fixed rate long-term debt due within the next year.
In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its capital allocation framework to provide competitive returns to shareholders while strengthening its balance sheet. Ovintiv expects to continue to deliver shareholder returns through share buybacks.
For additional information on long-term debt, refer to Note 12 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Further details on the Company’s debt-based metrics can be found in the Non-GAAP measures section of this MD&A.
Dividends
The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
|||||||||||
($ millions, except as indicated) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividend Payments |
|
$ |
80 |
|
|
$ |
82 |
|
|
|
|
$ |
160 |
|
|
$ |
143 |
|
Dividend Payments ($/share) |
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
|
|
$ |
0.60 |
|
|
$ |
0.55 |
|
On July 30, 2024, the Board of Directors declared a dividend of $0.30 per share of common stock payable on September 27, 2024, to common shareholders of record as of September 13, 2024.
Dividends increased $17 million compared to the first six months of 2023 as a result of Ovintiv increasing its annualized dividend to $1.20 per share of common stock in the second quarter of 2023. The dividend increase reflects the Company’s commitment to returning capital to shareholders.
Normal Course Issuer Bid
In the second quarter and first six months of 2024, under the NCIB program, the Company purchased, for cancellation, approximately 3.6 million and 9.0 million shares of common stock, respectively, for total consideration of approximately $184 million and $434 million, respectively. The Company expects to continue to execute the NCIB program in conjunction with its capital allocation framework. For additional information on the NCIB, refer to Note 14 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Material Cash Requirements
For information on material cash requirements, refer to the Material Cash Requirements section of the MD&A included in Item 7 of the 2023 Annual Report on Form 10-K.
Commitments and Contingencies
For information on commitments and contingencies, refer to Note 21 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
There have been no significant changes to the Company’s critical accounting policies and use of estimates from the disclosures reported in the “Critical Accounting Estimates” section of the MD&A included in Item 7 of the 2023 Annual Report on Form 10-K.
55
Non-GAAP Measures |
Certain measures in this document 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 issuers 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 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. Non-GAAP measures include: Non-GAAP Cash Flow, Debt to Adjusted Capitalization, Debt to EBITDA and Debt to Adjusted EBITDA. Management’s use of these measures is discussed further below.
Cash from Operating Activities and Non-GAAP Cash Flow
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, and net change in non-cash working capital.
Management believes this measure is useful to the Company and its investors as a measure of operating and financial performance across periods and against other companies in the industry, and is an indication of the Company’s ability to generate cash to finance capital investment programs, to service debt and to meet other financial obligations. This measure is used, along with other measures, in the calculation of certain performance targets for the Company’s management and employees.
|
|
Three months ended June 30, |
|
|
|
|
Six months ended June 30, |
|
||||||||||
($ millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash From (Used in) Operating Activities |
|
$ |
1,020 |
|
|
$ |
831 |
|
|
|
|
$ |
1,679 |
|
|
$ |
1,899 |
|
(Add back) deduct: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net change in other assets and liabilities |
|
|
(42 |
) |
|
|
(12 |
) |
|
|
|
|
(54 |
) |
|
|
(17 |
) |
Net change in non-cash working capital |
|
|
37 |
|
|
|
144 |
|
|
|
|
|
(327 |
) |
|
|
366 |
|
Non-GAAP Cash Flow |
|
$ |
1,025 |
|
|
$ |
699 |
|
|
|
|
$ |
2,060 |
|
|
$ |
1,550 |
|
Debt to Capitalization and Debt to Adjusted Capitalization
Debt to Adjusted Capitalization is a non-GAAP measure which adjusts capitalization for historical ceiling test impairments that were recorded as at December 31, 2011. Management monitors Debt to Adjusted Capitalization as a proxy for the Company’s financial covenant under the Credit Facilities which require Debt to Adjusted Capitalization to be less than 60 percent. Adjusted Capitalization includes debt, total shareholders’ equity and an equity adjustment for cumulative historical ceiling test impairments recorded as at December 31, 2011 in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP.
($ millions, except as indicated) |
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
6,087 |
|
|
$ |
5,737 |
|
Total Shareholders’ Equity |
|
|
10,328 |
|
|
|
10,370 |
|
Capitalization |
|
$ |
16,415 |
|
|
$ |
16,107 |
|
Debt to Capitalization |
|
37% |
|
|
36% |
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
6,087 |
|
|
$ |
5,737 |
|
Total Shareholders’ Equity |
|
|
10,328 |
|
|
|
10,370 |
|
Equity Adjustment for Impairments at December 31, 2011 |
|
|
7,746 |
|
|
|
7,746 |
|
Adjusted Capitalization |
|
$ |
24,161 |
|
|
$ |
23,853 |
|
Debt to Adjusted Capitalization |
|
25% |
|
|
24% |
|
56
Debt to EBITDA and Debt to Adjusted EBITDA
Debt to EBITDA and Debt to Adjusted EBITDA are non-GAAP measures. EBITDA is defined as trailing 12-month net earnings (loss) before income taxes, depreciation, depletion and amortization, and interest. Adjusted EBITDA is EBITDA adjusted for impairments, accretion of asset retirement obligation, unrealized gains/losses on risk management, foreign exchange gains/losses, gains/losses on divestitures and other gains/losses.
Management believes these measures are useful to the Company and its investors as a measure of financial leverage and the Company’s ability to service its debt and other financial obligations. These measures are used, along with other measures, in the calculation of certain financial performance targets for the Company’s management and employees.
($ millions, except as indicated) |
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
6,087 |
|
|
$ |
5,737 |
|
|
|
|
|
|
|
|
||
Net Earnings (Loss) |
|
|
1,940 |
|
|
|
2,085 |
|
Add back (deduct): |
|
|
|
|
|
|
||
Depreciation, depletion and amortization |
|
|
2,188 |
|
|
|
1,825 |
|
Interest |
|
|
407 |
|
|
|
355 |
|
Income tax expense (recovery) |
|
|
414 |
|
|
|
425 |
|
EBITDA |
|
$ |
4,949 |
|
|
$ |
4,690 |
|
Debt to EBITDA (times) |
|
|
1.2 |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Debt (Long-Term Debt, including Current Portion) |
|
$ |
6,087 |
|
|
$ |
5,737 |
|
|
|
|
|
|
|
|
||
Net Earnings (Loss) |
|
|
1,940 |
|
|
|
2,085 |
|
Add back (deduct): |
|
|
|
|
|
|
||
Depreciation, depletion and amortization |
|
|
2,188 |
|
|
|
1,825 |
|
Accretion of asset retirement obligation |
|
|
19 |
|
|
|
19 |
|
Interest |
|
|
407 |
|
|
|
355 |
|
Unrealized (gains) losses on risk management |
|
|
58 |
|
|
|
(194 |
) |
Foreign exchange (gain) loss, net |
|
|
(41 |
) |
|
|
19 |
|
Other (gains) losses, net |
|
|
(15 |
) |
|
|
(20 |
) |
Income tax expense (recovery) |
|
|
414 |
|
|
|
425 |
|
Adjusted EBITDA |
|
$ |
4,970 |
|
|
$ |
4,514 |
|
Debt to Adjusted EBITDA (times) |
|
|
1.2 |
|
|
|
1.3 |
|
57
Item 3: Quantitative and Qualitative Disclosures About Market Risk
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about Ovintiv’s potential exposure to market risks. The term “market risk” refers to the Company’s risk of loss arising from adverse changes in oil, NGL and natural gas prices, foreign currency exchange rates and interest rates. The following disclosures are not meant to be precise indicators of expected future losses but rather indicators of reasonably possible losses. The forward-looking information provides indicators of how the Company views and manages ongoing market risk exposures.
COMMODITY PRICE RISK
Commodity price risk arises from the effect fluctuations in future commodity prices, including oil, NGLs and natural gas, may have on future revenues, expenses and cash flows. Realized pricing is primarily driven by the prevailing worldwide price for oil and spot market prices applicable to the Company’s natural gas production. Pricing for oil, NGLs and natural gas production is volatile and unpredictable as discussed in Part 1, Item 2 of this Quarterly Report on Form 10‑Q in the Executive Overview section in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Item 1A. “Risk Factors” of the 2023 Annual Report on Form 10‑K. To partially mitigate exposure to commodity price risk, the Company may enter into various derivative financial instruments including futures, forwards, swaps, options and costless collars. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors and may vary from time to time. Both exchange traded and over-the-counter traded derivative instruments may be subject to margin-deposit requirements, and the Company may be required from time to time to deposit cash or provide letters of credit with exchange brokers or counterparties to satisfy these margin requirements. For additional information relating to the Company’s derivative and financial instruments, see Note 19 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10‑Q.
The table below summarizes the sensitivity of the fair value of the Company’s risk management positions to fluctuations in commodity prices, with all other variables held constant. The Company has used a 10 percent variability to assess the potential impact of commodity price changes. Fluctuations in commodity prices could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows:
|
|
June 30, 2024 |
|
|||||
(US$ millions) |
|
10% Price |
|
|
10% Price |
|
||
|
|
|
|
|
|
|
||
Oil price |
|
$ |
(64 |
) |
|
$ |
46 |
|
NGL price |
|
|
(1 |
) |
|
|
1 |
|
Natural gas price |
|
|
(44 |
) |
|
|
43 |
|
FOREIGN EXCHANGE RISK
Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. As Ovintiv operates primarily in the United States and Canada, fluctuations in the exchange rate between the U.S. and Canadian dollars can have a significant effect on the Company’s reported results.
The table below summarizes selected foreign exchange impacts on Ovintiv’s financial results when compared to the same periods in 2023.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
$ millions |
|
|
$/BOE |
|
|
$ millions |
|
|
$/BOE |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Increase (Decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital Investment |
|
$ |
(2 |
) |
|
|
|
|
$ |
(2 |
) |
|
|
|
||
Transportation and Processing Expense (1) |
|
|
(5 |
) |
|
$ |
(0.10 |
) |
|
|
(4 |
) |
|
$ |
(0.04 |
) |
Operating Expense (1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Administrative Expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Depreciation, Depletion and Amortization (1) |
|
|
(1 |
) |
|
|
(0.03 |
) |
|
|
(1 |
) |
|
|
(0.01 |
) |
58
Foreign exchange gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated and settled, and primarily include:
To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at June 30, 2024, Ovintiv has entered into $236 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3697 to US$1, which mature monthly through the remainder of 2024.
As at June 30, 2024, Ovintiv did not have any U.S. dollar denominated financing debt issued from Canada that was subject to foreign exchange exposure.
The table below summarizes the sensitivity to foreign exchange rate fluctuations, with all other variables held constant. The Company has used a 10 percent variability to assess the potential impact from Canadian to U.S. foreign currency exchange rate changes. Fluctuations in foreign currency exchange rates could have resulted in unrealized gains (losses) impacting pre-tax net earnings as follows:
|
|
June 30, 2024 |
|
|||||
(US$ millions) |
|
10% Rate |
|
|
10% Rate |
|
||
|
|
|
|
|
|
|
||
Foreign currency exchange |
|
$ |
122 |
|
|
$ |
(149 |
) |
INTEREST RATE RISK
Interest rate risk arises from changes in market interest rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. The Company may partially mitigate its exposure to interest rate changes by holding a mix of both fixed and floating rate debt and may also enter into interest rate derivatives to partially mitigate effects of fluctuations in market interest rates.
As at June 30, 2024, Ovintiv had floating rate revolving credit and term loan borrowings of $634 million. Accordingly, on a before-tax basis, the sensitivity for each one percent change in interest rates on floating rate revolving credit and term loan borrowings was $6 million.
59
Item 4: Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
Ovintiv’s Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2024.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Company’s internal controls over financial reporting during the second quarter of 2024 that have materially affected, or are reasonably likely to affect, the Company’s internal controls over financial reporting.
60
PART II
Item 1. Legal Proceedings
Please refer to Item 3 of the 2023 Annual Report on Form 10‑K and Note 21 to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10‑Q.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in Item 1A., "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchase of Equity Securities
On September 26, 2023, the Company announced it had received regulatory approval to purchase, for cancellation or return to treasury, up to approximately 26.7 million shares of common stock pursuant to a NCIB over a 12-month period from October 3, 2023 to October 2, 2024. The number of shares of common stock authorized for purchase represented approximately 10 percent of Ovintiv’s issued and outstanding shares of common stock as of such time.
During the three months ended June 30, 2024, the Company purchased approximately 3.6 million shares of common stock for approximately $182 million, excluding excise tax, at a weighted average price of $49.96. The following table presents the common shares purchased during the three months ended June 30, 2024.
Period |
Total Number of |
|
|
Average |
|
|
Total Number of Shares |
|
|
Maximum Number of Shares |
|
|||||
April 1 to April 30, 2024 |
|
|
837,417 |
|
|
$ |
53.22 |
|
|
|
837,417 |
|
|
|
19,317,730 |
|
May 1 to May 31, 2024 |
|
|
1,249,583 |
|
|
|
49.96 |
|
|
|
1,249,583 |
|
|
|
18,068,147 |
|
June 1 to June 30, 2024 |
|
|
1,555,636 |
|
|
|
48.21 |
|
|
|
1,555,636 |
|
|
|
16,512,511 |
|
Total |
|
|
3,642,636 |
|
|
$ |
49.96 |
|
|
|
3,642,636 |
|
|
|
16,512,511 |
|
In the first quarter of 2022, Ovintiv obtained an exemption order (the “NCIB Exemption”) from the Alberta Securities Commission and the Ontario Securities Commission, which permits Ovintiv to make repurchases (the “Proposed Bids”), under its current and any future normal course issuer bids, through the facilities of the NYSE and other U.S.-based trading systems (collectively, “U.S. Markets”), in excess of the maximum allowable purchases under applicable Canadian securities laws. The NCIB Exemption applies to any Proposed Bid commenced within 36 months of the date of the exemption order and is subject to several other conditions, including that Ovintiv remain a U.S. and SEC foreign issuer under applicable Canadian securities laws. The purchases of common stock under a Proposed Bid must also be made in compliance with other applicable Canadian securities laws and applicable U.S. rules. Additionally, the NCIB Exemption imposes restrictions on the number of shares of common stock that may be acquired under the exemption, including that: (a) Ovintiv may not acquire common stock in reliance upon the exemption under subsection 4.8(3) of Canadian National Instrument 62-104 – Take-Over Bids and Issuer Bids (“NI 62-104”) from the requirements applicable to issuer bids (the “Other Published Markets Exemption”) if the aggregate number of shares of common stock purchased by Ovintiv, and any person or company acting jointly or in concert with Ovintiv, in reliance on the NCIB Exemption and the Other Published Markets Exemption within any period of 12 months exceeds 5 percent of the outstanding common stock on the first day of such 12-month period; and (b) the aggregate number of shares of common stock purchased pursuant to (i) a Proposed Bid in reliance on the NCIB Exemption; (ii) exempt issuer bid purchases made in the normal course through the facilities of the TSX; and (iii) the Other Published Markets Exemption does not exceed, over the 12-month period of its current NCIB, 10 percent of Ovintiv’s public float. As a result, the NCIB Exemption effectively allows Ovintiv to purchase up to 10 percent of its public float on U.S. Markets under its NCIB. Without the NCIB Exemption this amount would be limited to 5 percent of Ovintiv’s outstanding common stock within a 12-month period under applicable Canadian securities law.
61
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit No |
|
Description |
10.1 |
|
|
31.1 |
|
|
31.2 |
|
|
32.1* |
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. |
32.2* |
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. |
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document. |
104 |
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, has been formatted in Inline XBRL. |
* The certifications on Exhibits 32.1 and 32.2 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certifications will not be deemed incorporated by reference to any filings under the Securities Act or the Exchange Act.
62
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Ovintiv Inc. |
|||
|
|||
By: |
/s/ Corey D. Code |
||
|
|||
|
Name: |
|
Corey D. Code |
|
Title: |
|
Executive Vice-President & Chief Financial Officer |
Dated: July 30, 2024
63
Exhibit 10.1
Execution Version
FIRST AMENDING AGREEMENT
THIS FIRST AMENDING AGREEMENT (this “Amending Agreement”) is dated as of June 26, 2024 among Ovintiv Canada ULC, as borrower, (the “Borrower”), Ovintiv Inc., as guarantor, (the “Guarantor” and together with the Borrower, the “Obligors”), Royal Bank of Canada, as agent (the “Agent”) and the lenders party hereto (collectively, the “Lenders”).
WHEREAS:
NOW THEREFORE THIS AMENDING AGREEMENT WITNESSES that, in consideration of the mutual covenants and agreements contained in this Amending Agreement and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
ARTICLE 2
AMENDMENTS
- 2 -
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
ARTICLE 4
CONDITIONS PRECEDENT
- 3 -
ARTICLE 5
GENERAL
[signatures on the following pages]
IN WITNESS WHEREOF the parties hereto have executed this Amending Agreement.
Notice Address: 500 Centre Street S.E. |
|
OVINTIV CANADA ULC, as Borrower |
|
By: |
/s/ L. Troy Cudmore |
||
|
Name: L. Troy Cudmore |
||
|
Title: Assistant Treasurer |
||
By: |
/s/ Evan A. J. Anderson |
||
|
Name: Evan A. J. Anderson |
||
|
Title: Assistant Treasurer |
||
Notice Address: 370 17th Street, Suite 1700 |
|
OVINTIV INC., as Guarantor |
|
By: |
/s/ Michael J. Liedtke |
||
|
Name: Michael J. Liedtke |
||
|
Title: Treasurer |
||
By: |
/s/ Aaron Carlson |
||
|
Name: Aaron Carlson |
||
|
Title: Vice-President & Deputy General Counsel |
[Signature Page to First Amending Agreement - 2024 Credit Agreement – (OVV)]
|
|
ROYAL BANK OF CANADA, as Agent |
|
By: |
/s/ Casey Clark |
||
|
Name: Casey Clark |
||
|
Title: Associate Director |
||
|
|
By: |
|
|
|
|
Name: Title: |
|
|
|
|
[Signature Page to First Amending Agreement - 2024 Credit Agreement – (OVV)]
|
ROYAL BANK OF CANADA
By: /s/ Bryn Davies ________________________________ Name: Bryn Davies Title: Authorized Signatory
By: ________________________________ Name: Title:
|
|
|
[Signature Page to First Amending Agreement - 2024 Credit Agreement – (OVV)]
|
JPMORGAN CHASE BANK, N.A.,
By: /s/ Jeffery Coleman ________________________________ Name: Jeffery Coleman Title: Executive Director
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Adam Fellows ________________________________ Name: Adam Fellows Title: Executive Director
By: /s/ Eric Hamilton ________________________________ Name: Eric Hamilton Title: Director
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
THE TORONTO-DOMINION BANK
By: /s/ Cathy McGee ________________________________ Name: Cathy McGee Title: Director
By: /s/ Anil Nayak ________________________________ Name: Anil Nayak Title: Managing Director
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
CITIBANK, N.A., CANADIAN BRANCH
By: /s/ Daljeet Lamba ________________________________ Name: Daljeet Lamba Title: Authorized Signatory
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
BANK OF MONTREAL
By: /s/ Morgan Driscoll ________________________________ Name: Morgan Driscoll Title: Director
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
THE BANK OF NOVA SCOTIA
By: /s/ Michael Linder ________________________________ Name: Michael Linder Title: Director
By: /s/ Claire Bergh ________________________________ Name: Claire Bergh Title: Associate
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
NATIONAL BANK OF CANADA
By: /s/ James Dexter ________________________________ Name: James Dexter Title: Authorized Signatory
By: /s/ Tara Yates ________________________________ Name: Tara Yates Title: Authorized Signatory
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
FÉDÉRATION DES CAISSES DESJARDINS
By: /s/ Oliver Sumugod ________________________________ Name: Oliver Sumugod Title: Managing Director
By: /s/ Matt van Remmen ________________________________ Name: Matt van Remmen Title: Managing Director
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
SUMITOMO MITSUI BANKING CORPORATION, CANADA BRANCH
By: /s/ Alfred Lee ________________________________ Name: Alfred Lee Title: Managing Director
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
BANC OF AMERICA CREDIT PRODUCTS, INC.
By: /s/ Alexander Watts ________________________________ Name: Alexander Watts Title: Assistant Vice President
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
WELLS FARGO BANK, N.A.
By: /s/ Borden Tennant ________________________________ Name: Borden Tennant Title: Executive Director
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
BANK OF AMERICA, N.A., CANADA BRANCH
By: /s/ Adrian Plummer ________________________________ Name: Adrian Plummer Title: Director
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
MUFG BANK, LTD., CANADA BRANCH
By: /s/ Samin Atique ________________________________ Name: Samin Atique Title: Authorized Signatory
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
BARCLAYS BANK PLC
By: /s/ Joseph Tauro ________________________________ Name: Joseph Tauro Title: Assistant Vice President
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
MIZUHO BANK, LTD., CANADA BRANCH
By: /s/ James K.G. Campbell ________________________________ Name: James K.G. Campbell Title: Director
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
PNC BANK CANADA BRANCH
By: /s/ Cameron Ruff ________________________________ Name: Cameron Ruff Title: SVP PNC Bank Canada Branch
By: ________________________________ Name: Title:
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
TRUIST BANK
By: /s/ James Giordano ________________________________ Name: James Giordano Title: Managing Director
|
[Signature Page to First Amending Agreement– 2024 Credit Agreement – (OVV)]
|
MORGAN STANLEY BANK, N.A.
By: /s/ Taylor Tripucka ________________________________ Name: Taylor Tripucka Title: Vice President
By: /s/ Taylor Tripucka ________________________________ Name: Taylor Tripucka Title: Vice President
|
[Signature Page to Amending Agreement No.1 – ARCA - 2024 Credit Agreement – (OVV)]
|
BANK OF CHINA (CANADA)
By: /s/ David Liang ________________________________ Name: David Liang Title: Head of Coroprate Banking Department
By: ________________________________ Name: Title:
|
[Signature Page to Amending Agreement No.1 – ARCA - 2024 Credit Agreement – (OVV)]
(See attached)
Execution Version
US$1,300,000,000 (OR EQUIVALENT)
EXTENDIBLE REVOLVING - TERM CREDIT FACILITY
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
OVINTIV CANADA ULC
(as Borrower)
AND
OVINTIV INC.
(as Guarantor)
AND
THE FINANCIAL AND OTHER INSTITUTIONS NAMED HEREIN
FROM TIME TO TIME IN THEIR
CAPACITIES AS LENDERS
(as Lenders)
AND
ROYAL BANK OF CANADA
(as Agent)
Dated as of April 1, 2022
RBC CAPITAL MARKETS
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH
CANADIAN IMPERIAL BANK OF COMMERCE
TD SECURITIES
CITIBANK, N.A., CANADIAN BRANCH
(as Joint-Lead Arrangers and Joint Bookrunners)
AND
BMO CAPITAL MARKETS
THE BANK OF NOVA SCOTIA
(as Joint-Lead Arrangers)
AND
BANK OF MONTREAL
THE BANK OF NOVA SCOTIA
(as Documentation Agents)
Norton Rose Fulbright Canada LLP
Blake, Cassels & Graydon LLP
2
TABLE OF CONTENTS
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Page |
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Article 1 DEFINITIONS |
1 |
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1.1 |
Definitions |
1 |
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1.2 |
Headings and Table of Contents |
310 |
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1.3 |
References |
310 |
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1.4 |
Rules of Interpretation |
310 |
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1.5 |
Generally Accepted Accounting Principles |
310 |
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1.6 |
Changes in GAAP or Accounting Policies |
31 |
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1.7 |
Schedules |
32 |
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1.8 |
Certain Matters Related to Ratings Explained |
332 |
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1.9 |
Amendment and Restatement |
343 |
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1.10 |
Divisions |
34 |
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1.11 |
Interest Rates; Benchmark Notification |
354 |
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Article 2 REPRESENTATIONS AND WARRANTIES |
35 |
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2.1 |
Representations and Warranties |
35 |
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2.2 |
Deemed Representation and Warranty Upon Drawdown |
38 |
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2.3 |
Deemed Representation and Warranty Upon Conversion or Rollover |
38 |
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2.4 |
Nature of Representations and Warranties |
38 |
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Article 3 THE CREDIT FACILITY |
398 |
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3.1 |
Obligations of the Lenders |
398 |
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3.2 |
Purpose/Certain Acquisitions |
398 |
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3.3 |
Drawdowns |
40 |
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3.4 |
Term Benchmark Loans |
410 |
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3.5 |
Bankers’ Acceptances |
41 |
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3.6 |
Agent’s Duties re Bankers’ Acceptances |
43 |
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3.75 |
Letters of Credit |
430 |
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3.86 |
Conversion Option |
475 |
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3.97 |
Rollover Option |
485 |
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3.108 |
Notice and Additional Repayment Requirements |
496 |
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3.119 |
Pro-Rata Treatment of Borrowings |
5046 |
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3.120 |
Extension of Maturity Date |
5047 |
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3.131 |
Increase in Credit Facility |
541 |
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Article 4 REPAYMENT AND CANCELLATION |
551 |
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4.1 |
Repayment of Borrowings |
551 |
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4.2 |
Exchange Rate Fluctuations |
552 |
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4.3 |
Cancellation of Syndicated Commitments |
562 |
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4.4 |
Evidence of Indebtedness |
563 |
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Article 5 PAYMENT OF INTEREST AND FEES |
563 |
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5.1 |
Payment of Interest on Prime Loans |
563 |
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5.2 |
Payment of Interest on USBRDaily Compounded CORRA Loans |
573 |
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5.3 |
Payment of Interest on Term BenchmarkCORRA Loans |
573 |
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5.4 |
Stamping Fees for Bankers’ AcceptancesPayment of Interest on USBR Loans |
574 |
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5.5 |
Payment of Interest on SOFR Loans |
54 |
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5.56 |
Issuance Fees for Letters of Credit |
584 |
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5.67 |
Adjustments |
585 |
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5.78 |
Interest on Overdue Amounts |
585 |
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5.89 |
Standby Fees |
595 |
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5.910 |
Agency Fees |
596 |
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5.101 |
Maximum Rate Permitted by Law |
596 |
i
5.112 |
Interest Act |
596 |
5.123 |
Nominal Rates; No Deemed Reinvestment |
560 |
5.134 |
Interest on Prepayments and Repayments |
6057 |
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Article 6 PAYMENTS |
6057 |
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6.1 |
Time and Place of Payment |
6057 |
6.2 |
Currency of Payment |
6057 |
6.3 |
Payments Free and Clear |
6057 |
6.4 |
Account Debit Authorization |
6158 |
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Article 7 CONDITIONS PRECEDENT |
6259 |
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7.1 |
Conditions Precedent to Effectiveness |
6259 |
7.2 |
Conditions Precedent to all Drawdowns |
630 |
7.3 |
Conditions Precedent to Conversion or Rollover |
630 |
7.4 |
Waiver |
641 |
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Article 8 COVENANTS OF THE OBLIGORS |
641 |
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8.1 |
Affirmative Covenants of the Obligors |
641 |
8.2 |
Negative Covenants of the Obligors |
685 |
8.3 |
Actions in Respect of Subsidiaries |
730 |
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Article 9 EVENTS OF DEFAULT |
730 |
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9.1 |
Events of Default |
730 |
9.2 |
Occurrence of an Event of Default |
752 |
9.3 |
Lenders’ Right to Suspend the Borrowings |
763 |
9.4 |
Remedies Cumulative |
763 |
9.5 |
Set-Off |
763 |
9.6 |
Cash Coverage Account |
774 |
9.7 |
Application and Sharing of Payments Following Acceleration |
774 |
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Article 10 CHANGE OF CIRCUMSTANCES |
785 |
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10.1 |
Market Disruption |
785 |
10.2 |
Increased Costs or Reduced Income or Return Due to Change in Law |
8176 |
10.3 |
Illegality |
783 |
10.4 |
Designation of Different Lending Office |
8479 |
10.5 |
Benchmark Replacement Setting |
8479 |
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Article 11 PAYMENT OF EXPENSES AND INDEMNITIES |
850 |
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11.1 |
Payment of Expenses |
850 |
11.2 |
General Indemnity |
851 |
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Article 12 THE AGENT AND THE LENDERS |
872 |
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12.1 |
Authorization of Agent |
872 |
12.2 |
Responsibility of Agent |
872 |
12.3 |
Acknowledgement of Lenders |
872 |
12.4 |
Rights and Obligations of Each Lender |
883 |
12.5 |
Determinations by Lenders |
883 |
12.6 |
Notices between the Lenders, the Agent and the Borrower |
884 |
12.7 |
Agent’s Duty to Deliver Documents Obtained from Borrower |
894 |
12.8 |
Arrangements for Borrowings |
894 |
12.9 |
Arrangements for Repayment of Borrowings |
894 |
12.10 |
Repayment by Lenders to Agent |
9085 |
12.11 |
Adjustments Among Lenders |
9085 |
12.12 |
Lenders’ Consents to Waivers, Amendments, etc. |
9186 |
12.13 |
Reimbursement of Agent’s Expenses |
9388 |
ii
12.14 |
Reliance by Agent on Notices, etc. |
9388 |
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12.15 |
Relations with Borrower |
9388 |
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12.16 |
Successor Agent |
9388 |
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12.17 |
Change of Schedule “I” Reference Bank |
94 |
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12.187 |
Indemnity of Agent |
894 |
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12.198 |
Cash Collateral and Withholding from a Defaulting Lender |
895 |
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12.2019 |
Funding if there is a Defaulting Lender |
960 |
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12.210 |
Erroneous Payments by the Agent |
972 |
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12.221 |
Amendment to this Article 12 |
983 |
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Article 13 GUARANTEE |
983 |
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13.1 |
Guarantee |
983 |
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13.2 |
No Subrogation |
994 |
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13.3 |
Amendments, etc. With Respect to the Obligations; Waiver of Rights |
994 |
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13.4 |
Guarantee Absolute and Unconditional |
10095 |
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13.5 |
Reinstatement |
10195 |
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13.6 |
Not Affected by Bankruptcy |
10196 |
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Article 14 NOTICES |
10196 |
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14.1 |
Method of Giving Notice |
10196 |
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14.2 |
Change of Address |
10196 |
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14.3 |
Deemed Receipt |
10196 |
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Article 15 GOVERNING LAW AND JUDGMENT CURRENCY |
10297 |
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15.1 |
Governing Law |
10297 |
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15.2 |
Jurisdiction |
10297 |
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15.3 |
Judgment Currency |
10297 |
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Article 16 MISCELLANEOUS |
10398 |
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16.1 |
Exchange and Confidentiality of Information |
10398 |
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16.2 |
Severability |
10499 |
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16.3 |
Amendments and Waivers |
10599 |
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16.4 |
Survival of Representations |
1050 |
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16.5 |
Whole Agreement |
1050 |
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16.6 |
Term of Agreement |
1050 |
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16.7 |
Time of Essence |
1050 |
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16.8 |
Substitution of Lender |
1050 |
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16.9 |
Successors and Assigns |
1061 |
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16.10 |
AML Legislation and “Know Your Client” Requirements |
1082 |
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16.11 |
Platform |
1083 |
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16.12 |
Waiver of Jury Trial |
1093 |
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16.13 |
Electronic Communications |
1094 |
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16.14 |
Counterparts |
1094 |
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16.15 |
Acknowledgement and Consent to Bail-In of Affected Financial Institutions |
1104 |
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16.16 |
No Advisory or Fiduciary Responsibility |
1105 |
iii
SCHEDULES
Schedule “A”- |
Notice of Drawdown, Repayment or Cancellation of Commitment |
Schedule “B” - |
Notice of Drawdown by way of Bankers’ AcceptancesConversion |
Schedule “C” - |
Notice of ConversionRollover |
Schedule “D” - |
Notice of Rollover |
Schedule “ED” - |
Request for Extension |
Schedule “FE” - |
Compliance Certificate |
Schedule “G” |
Intentionally Deleted. |
Schedule “H” - |
Power of Attorney – Bankers’ Acceptances |
Schedule “IF” - |
Lender Transfer Agreement |
Schedule “JG” - |
Commitments |
iv
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April 1, 2022
AMONG:
OVINTIV CANADA ULC, a corporation continued under the laws of the Province of British Columbia, having an office in Calgary, Alberta, Canada (the “Borrower”)
AND
OVINTIV INC., a corporation incorporated under the laws of the State of Delaware, having its executive office in Denver, Colorado, United States of America (the “Guarantor”)
AND
each of the financial and other institutions named on Schedule “JG” from time to time, in their capacities as Lenders
AND
ROYAL BANK OF CANADA, a Canadian chartered bank having its head office in Toronto, Ontario, Canada, in its capacity from time to time as administrative agent of the Lenders hereunder (in such capacity, the “Agent”)
WHEREAS the Borrower, the Guarantor, certain of the Lenders and the Agent are parties to the Existing Credit Agreement;
AND WHEREAS the Borrower has requested and the Lenders have agreed to amend and restate the Existing Credit Agreement upon the terms and conditions, and in the form, of this Agreement;
NOW THEREFORE, in consideration of the premises, the mutual covenants and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
In this Agreement:
“Acceleration Notice” has the meaning ascribed thereto in Section 9.2;
“Accounts” means the accounts and records established by the Agent to record the Borrower’s liability to each of the Lenders in respect of the Borrowings and other Loan Indebtedness owing by the Borrower to each of the Lenders hereunder in accordance with Section 4.4;
“Additional Compensation” has the meaning ascribed to that term in Section 10.2;
“Adjusted Daily Compounded CORRA” means, for the purposes of any calculation, the rate per annum equal to (i) Daily Compounded CORRA for such calculation plus (ii) the Daily Compounded CORRA Adjustment; provided that, if Adjusted Daily Compounded CORRA as so determined for any day shall be less than the Floor, then Adjusted Daily Compounded CORRA shall be deemed to be the Floor for such day;
1
“Adjusted Daily Simple SOFR” means, for any day, an interest rate per annum equal to (ai) Daily Simple SOFR for such day plus (ii) the Daily Simple SOFR, plus (b) 0.10% per annum Adjustment; provided that, if the Adjusted Daily Simple SOFR as so determined wouldabove for any day shall be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreementsuch day;
“Adjusted Term CORRA” means, for the purposes of any calculation, the rate per annum equal to (i) Term CORRA for such calculation plus (ii) the Term CORRA Adjustment; provided that, if the Interest Period with respect to the applicable Term CORRA Loan is a Non-Standard Interest Period, then Adjusted Term CORRA shall be the CORRA Interpolated Rate; and provided further that, if Adjusted Term CORRA as so determined for any day shall be less than the Floor, then Adjusted Term CORRA shall be deemed to be the Floor for such day;
“Adjusted Term SOFR Rate” means, for any Interest Period, an interestthe purposes of any calculation, the rate per annum equal to (ai) Term SOFR for such calculation plus (ii) the Term SOFR Rate for suchAdjustment; provided that, if the Interest Period with respect to the applicable SOFR Loan is a Non-Standard Interest Period, plus (b) 0.10% per annum for all Interest Periods; provided that if then Adjusted Term SOFR Rateshall be the SOFR Interpolated Rate; and provided further that, if Adjusted Term SOFR as so determined wouldabove for any day shall be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreementsuch day;
“Administrative Questionnaire” means an administrative questionnaire in the form supplied by the Agent;
“Affected Financial Institution” means (ai) any EEA Financial Institution or (bii) any UK Financial Institution;
“Affiliate” means any Person which, directly or indirectly, controls, is controlled by or is under common control with another Person; and, for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” or “under common control with”) means the power to direct or cause the direction of the management and policies of any Person, whether through the ownership of shares or other economic interests, the holding of voting rights or contractual rights or otherwise;
“Agent” means Royal when acting in its capacity as agent hereunder, and includes any successor agent appointed pursuant to Section 12.16;
“Agent’s Account for Payments” means:
Royal Bank of Canada
Swift Address: ROYCCAT2
Favour: /00002-266-760-8
RBC Agency Services Group
Toronto, Ontario
Ref: Ovintiv Canada ULC
2
JPMorgan Chase Bank, New York, New York
ABA 021000021, Swift code: CHASUS33
Swift Address: ROYCCAT2
Beneficiary: Favour: /00002-408-919-9
RBC Agency Services Group
Toronto, Ontario
Ref: Ovintiv Canada ULC
or such other places or accounts in Canada as may be stipulated by the Agent from time to time and notified in writing to the Borrower and the Lenders;
“Agent’s Branch of Account” means:
Royal Bank of Canada
RBC Agency Services Group
RBC Centre
155 Wellington Street West
8th Floor
Toronto, Ontario
M5V 3K7
Email: rbcmagnt@rbccm.com
Fax: (416) 842-4023
or such other office or branch of the Agent in Canada as the Agent may from time to time advise the Borrower and the Lenders in writing;
“Agreement” or “Credit Agreement” means this agreement, including Schedule “A” to Schedule “JG” inclusive, and any further amendments or supplements to it;
“AML Legislation” has the meaning given to it in Section 16.10;
“Anti-Corruption Laws” means all laws, rules, and regulations of Sanctions Authorities that apply to the Borrower and its Subsidiaries from time to time concerning or relating to bribery of government officials or public corruption;
“Applicable Law” means, with respect to any Person, property, transaction or event, and whether or not having the force of law, all applicable provisions of laws, statutes, regulations, rules, guidelines, by-laws, treaties, orders, policies, judgments, decrees and official directives of Governmental/Judicial Bodies or Persons acting under the authority of any Governmental/Judicial Body;
“Applicable Pricing Margin” means, with respect to any applicable Borrowing or the standby fees payable under Section 5.89, a rate per annum set forth opposite the applicable Debt Rating:
Level |
Debt Rating |
Bankers’ Acceptances / Term Benchmark Loans / |
Prime Loans / USBR Loans |
Standby Fee |
1 |
A/A2/A or higher |
80 |
0 |
16 |
3
2 |
A-/A3/A- |
100 |
0 |
20 |
3 |
BBB+/Baa1/BBB+ |
120 |
20 |
24 |
4 |
BBB/Baa2/BBB |
145 |
45 |
29 |
5 |
BBB-/Baa3/BBB- |
170 |
70 |
34 |
6 |
Lower than Level 5, or unrated by each of S&P, Moody’s and Fitch |
225 |
125 |
45 |
provided that, in each case, as applicable:
“Available Tenor” means, as of any date of determination and with respect to theany then-current Benchmark, as applicable, (i) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate oror (ii) otherwise, any payment period for interest calculated with reference
4
to such Benchmark (or any component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 10.5(d);
“BA Equivalent Loan” means, in relation to a Drawdown of, Conversion into or Rollover of, Bankers’ Acceptances, a Borrowing advanced by a Non-Acceptance Lender pursuant to Section 3.5(f) as part of such Drawdown, Conversion or Rollover;
“BA Suspension Notice” has the meaning given to it in Section 10.1(b)(ii);
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution;
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their Affiliates (other than through liquidation, administration or other insolvency proceedings);
“Bankers’ Acceptance” means either a depository bill, as defined by the Depository Bills and Notes Act (Canada), or a blank non-interest bearing bill of exchange, as defined by the Bills of Exchange Act (Canada), in either case drawn by the Borrower and accepted by a Lender as a bankers’ acceptance, as evidenced by the Lender’s endorsement thereof at the request of the Borrower pursuant to Section 3.3, 3.8 or 3.9;
“basis point” or “bp” means one one-hundredth of a percent;
“Benchmark” means, initially, with(i) in respect toof any Term BenchmarkSOFR Loan, the Term SOFR Reference Rate, (ii) in respect of any Term CORRA Loan, the Term CORRA Reference Rate and (iii) in respect of any Daily Compounded CORRA Loan, CORRA; provided in each case that if a Benchmark Transition Event, and the related Benchmark Replacement Date have has occurred with respect to the Term SOFR Rate or theany then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 10.5(da);
“Benchmark Fallback Loans” means (i) in respect of any SOFR Loans, USBR Loans, (ii) in respect of any Term CORRA Loans, Daily Compounded CORRA Loans and (iii) in respect of any Daily Compounded CORRA Loans, Prime Loans;
“Benchmark Loan” means any Loan that bears interest with reference to any Benchmark (or any Benchmark Replacement thereof);
“Benchmark Replacement” means, with respect to any Benchmark Transition Event for any then-current Benchmark:
5
Ifprovided that, if the Benchmark Replacement as so determined pursuant to clause (1) or (2) above for any day would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documentssuch day;
“Benchmark Replacement Adjustment” means, with respect to any replacement of theany then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (ai) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (bii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with
6
the applicable Unadjusted Benchmark Replacement for US Dollar or Canadian Dollar dollar-denominated syndicated credit facilities (as applicable) at such time;
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement and/or any Term Benchmark Loan, any technical, administrative or operational changes (including changes to the definition of “US Base Rate,” the definition of “Business Day,” the definition of “US Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Agent decides in its reasonable discretion in consultation with the Borrower may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides in its reasonable discretion that adoption of any portion of such market practice is not administratively feasible or if the Agent determines in its reasonable discretion that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Agent, in consultation with the Borrower, decides is reasonably necessary in connection with the administration of this Agreement);
“Benchmark Replacement Date” means, with respect to any Benchmark, the a date and time determined by the Agent, which date shall be no later than the earliestr to occur of the following events with respect to suchany then-current Benchmark:
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (i) or (ii) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).;
“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to suchany then-current Benchmark:
7
For the avoidance of doubt, if such Benchmark is a term rate, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof);
“Benchmark Unavailability Period” means, within respect toof any Benchmark, the period (if any) (xi) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred in respect of such Benchmark if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any other Loan Document in accordance with Section 10.5 and (yii) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any other Loan Document in accordance with Section 10.5;
“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation;
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230;
“Borrower” means Ovintiv Canada ULC, an unlimited liability corporation continued under the laws of British Columbia and any successor thereto permitted pursuant to Section 8.2(c);
“Borrower’s Accounts” means, for all payments in Canadian Dollars, account no. 100-994-3, and, for all payments in US Dollars, account no. 400-284-6, in each case maintained by the Borrower with the Agent at the Agent’s Main Branch in Calgary, Alberta, or such other account or accounts maintained by the Borrower with the Agent as the Borrower may from time to time designate and advise the Agent in writing;
“Borrowing” means (i) an advance by way of Prime Loans, (ii) an advance by way of USBR Loans, (iii) an advance by way of Term BenchmarkCORRA Loans, (iv) an acceptance of drafts or Depository Bills to become Bankers’ Acceptances having the same issuance and maturity dates
8
(or BA Equivalent Loans made in lieu thereof)advance by way of SOFR Loans or (v) an issuance of any Letter(s) of Credit, in each case made pursuant to a Notice of Drawdown, Notice of Conversion or Notice of Rollover, or as a result of applying Section 3.4(a), or 3.5(g) or 3.7(d);
“Borrowing Conversion Date” means the date on which the Borrower has elected, pursuant to Section 3.86, or is deemed pursuant to Section 3.4(a) or 3.5(g) to have elected, to convert a Borrowing (or a portion thereof) to another type of Borrowing;
“Borrowing Rollover Date” means the date on which the Borrower has elected, pursuant to Section 3.97, (i) to Rollover a Term Benchmark Loan (or a portion thereof) for a further Interest Period, or (ii) to Rollover a Bankers’ Acceptance (or a BA Equivalent Loan made in lieu thereof) (or a portion thereof) to a new Bankers’ Acceptance (or a BA Equivalent Loan in lieu thereof), or (iii) to Rollover a Letter of Credit (or a portion thereof) to a new or extended Letter of Credit;
“Bow Office Lease” means, collectively and individually, the Headlease, the Sublease and the Encana Indemnity and all amendments, supplements, renewals, extensions, replacements and restatements of any of the foregoing and any other agreements entered into pursuant to any of the foregoing relating to The Bow office tower or any properties ancillary thereto. For purposes of this definition, “Headlease” means, collectively, the lease made as of February 7, 2007 between EDP (as landlord) and Encana Leasehold Limited Partnership (“ELLP”) (as tenant), as assigned by EDP to Centre Street Trust pursuant to an assignment and assumption agreement dated February 8, 2007 between EDP and Centre Street Trust, as amended pursuant to letter agreements dated December 10, 2007, February 11, 2008, February 14, 2008 and February 25, 2009 among Centre Street Trust, ELLP and EDP, and as amended by a lease amending agreement made as of April 22, 2009 among, inter alia, Centre Street Trust and ELLP, as same may be further assigned or amended, restated, superseded, supplemented, extended, replaced or modified from time to time; “Sublease” means the Sublease with respect to a portion of the premises located in The Bow entered into between ELLP as sublandlord and the Borrower as subtenant dated November 29, 2009 and effective on or about November 30, 2009, as such sublease may be amended, restated, superseded, supplemented, extended, replaced or modified from time to time; and “Encana Indemnity” means the indemnity entered into by the Borrower and Encana Developments Partnership (“EDP”) dated February 7, 2007, as assigned by EDP to Centre Street Trust pursuant to an assignment and assumption agreement dated February 8, 2007 between EDP and Centre Street Trust, as same may be amended, restated, superseded, supplemented, extended, replaced or modified from time to time;
“Branch of Account” means, with respect to each Lender, the branch or office of such Lender at the address set forth in such Lender’s Administrative Questionnaire provided to the Agent or such other branch or office in Canada as such Lender may from time to time advise the Borrower and the Agent in writing; provided that, for purposes of delivering any notice required to be delivered by the Agent to a Lender pursuant to Section 12.8 and for purposes of effecting any payments to a Lender in connection with this Agreement, a Lender may specify to the Borrower and the Agent in writing any other branch or office of such Lender in Canada, and such branch or office shall thereafter be the Branch of Account of such Lender for such purpose;
“Business Day” means a day, excluding Saturday and Sunday, on which Canadian chartered banks are open for business in Calgary, Alberta, Canada and Toronto, Ontario, Canada and, in respect of any payments in US Dollars, a day on which banking institutions are also open for business in New York, New York, USA; provided, that, if such matter relates to anywhen used in connection with a SOFR Loan, or any other calculation or determination of the Adjusted Term SOFR Rate or a Borrowing or payment in respect of Term Benchmark Loansinvolving SOFR, the term “Business Day” means any day that is also a US Government Securities Business Day;
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“Canadian Dollars”, “Cdn. Dollar” and the symbol “Cdn. $” each mean lawful currency of Canada;
“Capital Adequacy Guidelines” means the capital adequacy guidelines from time to time issued by the Office of the Superintendent of Financial Institutions Canada or any other governmental agency or regulatory authority in Canada regulating or having jurisdiction with respect to any Lender;
“Cash Coverage Account” means an account maintained by the Agent (i) which bears interest for the Borrower’s account at the rates prevailing at the time of deposit for deposits of similar amounts and for similar terms, (ii) which contains amounts received by the Agent from the Borrower pursuant to Sections 3.108(c), 3.10(d), 4.2 or 9.6 and (iii) from which the Borrower shall have no withdrawal rights or other entitlement to such amounts (except for any accrued interest thereon unless such interest is required to yield the face amount of any Bankers’ Acceptances) to the extent and for so long as such amounts may be required to satisfy any unmatured or contingent obligations or liabilities of the Borrower to the Agent and the Lenders pursuant to the above sections or are actually used to satisfy any such obligations and liabilities pursuant to the above sections; and, for the purposes hereof and to the foregoing extent, each such account shall be considered to be the Agent’s or Lender’s account and not the Borrower’s account;
“CDOR Discontinuation Date” has the meaning given to it in Section 10.1(b);
“CDOR One Month Rate” means, on any day, the annual rate of interest determined by the Agent as being the arithmetic average of the “BA 1 mth” rate per annum applicable to Canadian Dollar bankers’ acceptances displayed and identified as such on the “Refinitiv Screen Canadian Dollar Offered Rate (CDOR) Page” (or any display substituted therefor) as at approximately 10:00 a.m. (Toronto time) on such day, or if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Agent in good faith after approximately 10:00 a.m. (Toronto time) to reflect any error in a posted rate or in the posted average annual rate); provided, however, if such a rate does not appear on the Refinitiv Screen Canadian Dollar Offered Rate (CDOR) Page as contemplated, then CDOR One Month Rate, on any day, shall be the 30 day discount rate quoted to the Agent by the Schedule “I” Reference Bank (determined as of approximately 10:00 a.m. (Toronto time) on such day) which would be applicable in respect of an issue of one month Bankers’ Acceptances accepted by the Schedule “I” Reference Bank and in an aggregate amount of Cdn. $10,000,000, and issued on such day, or if such day is not a Business Day, then on the immediately preceding Business Day; provided further that if and for so long as the long term debt of the Schedule “I” Reference Bank is assigned a rating of A2 or lower by Moody’s, the Borrower shall be entitled to designate another Lender for the purposes of determination of CDOR One Month Rate pursuant to the preceding proviso and CDOR One Month Rate shall be the average of (i) the rate determined in the absence of this proviso and (ii) the aforesaid rate, determined with the designated Lender substituted for the Schedule “I” Reference Bank; and provided, further, that if the CDOR One Month Rate would be less than zero on any day, then the CDOR One Month Rate will be deemed to be zero on such day;
“CDOR Rate” means, on any day, the annual rate of interest determined by the Agent as being the arithmetic average of the annual yield rates applicable to Canadian Dollar bankers’ acceptances having identical issue and comparable maturity dates as the Bankers’ Acceptances proposed to be issued by the Borrower displayed and identified as such on the display referred to as the “Refinitiv Screen Canadian Dollar Offered Rate (CDOR) Page” (or any display substituted therefor) as at approximately 10:00 a.m. (Toronto time) on such day, or if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Agent in good faith after approximately 10:00 a.m. (Toronto time) to reflect any error in a posted rate of interest or in the posted average annual rate of interest); provided, however, if such a rate does not appear on such Refinitiv Screen Canadian Dollar Offered Rate (CDOR) Page, then the CDOR Rate, on any day, shall be the discount rate quoted to the Agent by the Schedule “I” Reference Bank (determined as of approximately 10:00 a.m. (Toronto time) on such day) which would be applicable in respect of an issue of bankers’ acceptances accepted by the Schedule “I” Reference Bank in a comparable
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amount and with comparable maturity dates to the Bankers’ Acceptances proposed to be issued by the Borrower on such day, or if such day is not a Business Day, then on the immediately preceding Business Day; provided that if the CDOR Rate would be less than zero on any day, then the CDOR Rate will be deemed to be zero on such day;
“Centralized Banking Arrangements” means any centralized banking arrangements entered into by the Borrower and/or any of its Subsidiaries with any financial institution in the ordinary course of business for the purpose of obtaining cash management services (which arrangements may include, without limitation, the pooling and set-off of account balances between accounts belonging to different entities, the provision of guarantees or indemnities or the assumption of joint and several liabilities by one or more entities in regard to obligations of one or more other entities, or other similar arrangements);
“Change in Control” means the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the US Securities and Exchange Commission thereunder in effect on the date hereof), of Voting Shares representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Voting Shares of the Guarantor;
“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator);
“Code” means the United States Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time;
“Commitment” means, in relation to a Lender, such Lender’s Syndicated Commitment or Fronting Bank Commitment, as the context may require;
“Common Equity Securities” means the securities of a Person which are entitled to share without limitation in a distribution of the assets of such Person upon any liquidation, dissolution or winding-up of such Person;
“Compliance Certificate” means a compliance certificate substantially in the form attached hereto as Schedule “FE” executed by any Senior Financial Officer;
“Conforming Changes” means, with respect to either the use or administration of any Benchmark or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definitions of “Prime Rate”, “US Base Rate,” “Business Day,” “US Government Securities Business Day”, “Interest Period”, “Interest Date” or any similar or analogous definition in respect of the foregoing, the timing and frequency of determining rates and making payments of interest, the timing of Notices of Drawdown, Notices of Conversion, Notices of Rollover or notices of prepayment, the applicability and length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that the Agent decides, acting reasonably, may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Agent decides, acting reasonably, is necessary in connection with the administration of this Agreement and the other Loan Documents);
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“Consolidated” refers to the consolidation of accounts in accordance with GAAP;
“Consolidated Assets” means the aggregate amount of assets of the Guarantor as set forth in the Guarantor’s most recent Consolidated financial statements prepared in accordance with GAAP;
“Consolidated Capitalization” means, at the end of a Fiscal Quarter, and as determined on a Consolidated basis in accordance with GAAP, the aggregate of:
“Consolidated Debt” means, at the end of a Fiscal Quarter and as determined on a Consolidated basis in accordance with GAAP, all Financing Debt of the Guarantor at such time but excluding any Financing Debt referred to in the proviso to the definition of Consolidated Debt to Consolidated Capitalization Ratio;
“Consolidated Debt to Consolidated Capitalization Ratio” means, at the end of a Fiscal Quarter, the ratio of Consolidated Debt at such date to Consolidated Capitalization at such date; provided that, for the purposes of calculating such ratio, Consolidated Debt shall exclude:
“Consolidated Net Tangible Assets” means the total amount of assets of the Guarantor on a Consolidated basis (less applicable reserves and other properly deductible items) after deducting therefrom:
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and adding back the non-cash ceiling test impairments and other changes in aggregate of $11,251,000,000 as at December 31, 2011 as a consequence of Encana’s adoption of US GAAP, in each case, as shown on the most recent annual audited or quarterly unaudited Consolidated balance sheet of the Guarantor computed in accordance with GAAP;
“Consolidated Net Worth” means, at the end of a Fiscal Quarter and as determined in accordance with GAAP on a Consolidated basis for the Guarantor, the consolidated shareholders’ equity as shown on the Consolidated balance sheet of the Guarantor (including, for certainty, to the extent included as shareholders’ equity on such balance sheet, preferred securities and minority interests, but excluding all amounts included in shareholders’ equity attributable to Non-Recourse Assets and without giving effect to the non-cash ceiling test impairments and other changes in aggregate of US$ 7,746,000,000 as at December 31, 2011 as a consequence of Encana’s adoption of US GAAP);
“Consolidated Tangible Assets” means, at the end of a Fiscal Quarter and as determined in accordance with GAAP on a Consolidated basis for the Guarantor, the total assets of the Guarantor shown on the Consolidated balance sheet of the Guarantor ((i) excluding goodwill, trademarks, copyrights and other similar intangible assets; (ii) excluding Non-Recourse Assets; and (iii) without giving effect to the non-cash ceiling test impairments and other changes in aggregate of US$10,585,000,000 as at December 31, 2011 as a consequence of Encana’s adoption of US GAAP); provided that Consolidated Tangible Assets shall not include any deposits referred to in either (A) or (B) of the proviso to the definition of Consolidated Debt to Consolidated Capitalization Ratio;
“Conversion” means a conversion or deemed conversion of one type of Borrowing or a portion thereof into another type of Borrowing in accordance with the provisions of this Agreement;
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor;
“CORRA” means the Canadian Overnight Repo Rate Average administered and published by the CORRA Administrator;
“CORRA Administrator” means the Bank of Canada, or any successor administrator of the Canadian Overnight Repo Rate Average;
“CORRA Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which commercial banks are authorized or required by law to be closed for business in Toronto, Ontario, Canada;
“CORRA Loans” means, collectively, Term CORRA Loans and Daily Compounded CORRA Loans;
“Credit Facility” means the credit facility established pursuant to Section 3.1;
“Daily Simple SOFRCompounded CORRA” means, for any day (a “SOFR Rate Day”), a rate per annum equal SOFR for the day that is five (5) US Government Securities Business Days prior to (i) if such SOFR Rate Day is a US Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a US Government Securities Business Day, the US Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective
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date of such change in SOFR without notice to the Borrower;in any applicable period, CORRA with interest accruing on a compounded daily basis, with the methodology and conventions for this rate (which will include compounding in arrears with a five (5) Business Day lookback period, or as selected by the Agent in consultation with the Borrower a two (2) Business Day lookback period, in each case, without observational shift) being established by the Agent in accordance with the methodology and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded CORRA for business loans; provided that if the Agent decides that any such methodology or convention is not administratively feasible for the Agent, then the Agent may establish another methodology or convention in its discretion, acting reasonably; and provided that if the CORRA Administrator has not provided or published CORRA and a Benchmark Transition Event with respect to CORRA has not occurred, then, in respect of any day for which CORRA is required, references to CORRA will be deemed to be references to the last provided or published CORRA;
“Daily Compounded CORRA Adjustment” means 0.29547% (29.547 basis points) per annum for an Interest Period of one-month’s duration, and 0.32138% (32.138 basis points) per annum for an Interest Period of three-months’ duration;
“Daily Compounded CORRA Loan” means a Loan that bears interest at a rate based on Adjusted Daily Compounded CORRA;
“Daily Simple SOFR” means, for any day, a rate per annum equal to SOFR for such day, with the conventions for this rate (which will include a lookback) being established by the Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Agent decides, acting reasonably, that any such convention is not administratively feasible for the Agent, then the Agent may establish another convention in its discretion, acting reasonably;
“Daily Simple SOFR Adjustment” means, with respect to Daily Simple SOFR, 0.10% (10 basis points) per annum;
“Debt Ratings” means the ratings that have been most recently announced by S&P, Moody’s and Fitch (or, as applicable under Section 1.8, a Substitute Rating Entity) for any class of senior unsecured non-convertible publicly-held long term debt of the Guarantor;
“Default” means any event or circumstance which, with the giving of notice, lapse of time (or both) or the fulfillment of any other event or condition (including, for certainty and as applicable, the making of a Borrowing) would become an Event of Default;
“Defaulting Lender” means any Lender, as reasonably determined by the Agent:
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“Depository Bill” has the meaning ascribed thereto in the Depository Bills and Notes Act (Canada);
“Direct Credit Substitutes” has the meaning contemplated within the Capital Adequacy Guidelines;
“Director” means a director of the Guarantor for the time being and “Directors” or “Board of Directors” means the board of directors of the Guarantor or, if duly constituted and whenever duly empowered, the executive committee of the board of directors of the Guarantor for the time being, and reference to action by the Directors means action by the Directors of the Guarantor as a board or action by the said executive committee as such committee;
“Discount Proceeds” means the net cash proceeds to the Borrower from the sale of Bankers’ Acceptances at the applicable Discount Rate, before deduction or payment of stamping fees to be paid to the Lenders pursuant to Section 5.4;
“Discount Rate” means:
(i) with respect to an issue of Bankers’ Acceptances accepted by a Lender that is a Schedule “I” Bank:
(A) in the case of a standard term of one (1) month, two (2) months or three (3) months, the annual rate of interest determined by the Agent as being the arithmetic average of the yield rates per annum (calculated on a year of 365 days) applicable to Canadian Dollar bankers’ acceptances having identical issue and comparable maturity dates as the Bankers’ Acceptances proposed to be issued by the Borrower, displayed and identified as such on the “Refinitiv Screen Canadian Dollar Offered Rate (CDOR) Page” (or any display substituted therefor) as at approximately 10:00 a.m. (Toronto time) on such day, or if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Agent in good faith after approximately 10:00 a.m. (Toronto time) to reflect any error in a posted rate of interest or in the posted average annual rate of interest); provided, however, if such rates do not appear on such Refinitiv Screen Canadian Dollar Offered Rate (CDOR) Page as contemplated, then the Discount Rate for purposes of this paragraph (i), on any day, shall be the discount rate quoted to the Agent by the Schedule “I” Reference Bank (determined as of approximately 10:00 a.m. (Toronto time) on such day) which would be applicable in respect of an issue of Canadian Dollar bankers’ acceptances accepted by the Schedule “I” Reference Bank having comparable face values and identical issue and comparable maturity dates as the Bankers’ Acceptances proposed to be issued by the Borrower, and
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issued on such day, or if such day is not a Business Day, then on the immediately preceding Business Day; provided further that if and for so long as the long term debt of the Schedule “I” Reference Bank is assigned a rating of A2 or lower by Moody’s, the Borrower shall be entitled to designate another Lender for the purposes of the determination of Discount Rate pursuant to the preceding proviso and the Discount Rate for purposes of this paragraph (i) shall be the average of (A) the rate determined in the absence of the proviso and (B) the aforesaid rate, determined with the designated Lender substituted for the Schedule “I” Reference Bank; and
(B) in the case of any other term:
(1) if such term is less than one (1) month, such rate of interest as may be determined by the Agent (acting reasonably); and
(2) if such term is greater than one (1) month, such rate of interest as may be determined by the Agent (acting reasonably) in accordance with its customary practices by interpolating between the rates of interest determined in accordance with subparagraph (A) above for the immediately shorter and immediately longer standard terms; and
(ii) with respect to an issue of Bankers’ Acceptances accepted by a Lender that is a Schedule II Bank or a Schedule III Bank, the lesser of:
(A) the arithmetic average of the yield rates per annum (calculated on a year of 365 days) quoted to the Agent by the Schedule II/III Reference Banks (determined as of approximately 10:00 a.m. (Toronto time) on the date of determination), which rates would be applicable in respect of the purchase by the Schedule II/III Reference Banks of Canadian Dollar bankers’ acceptances accepted by the Schedule II/III Reference Banks having comparable face values and identical issue dates and comparable maturity dates as the Bankers’ Acceptances proposed to be issued by the Borrower, and issued on such day, or if such day is not a Business Day, then on the immediately preceding Business Day; and
(B) the sum of the Discount Rate, determined in accordance with paragraph (i) above, and 10 bps per annum;
provided that if the Discount Rate as determined above is less than zero on any day, then the Discount Rate shall be deemed to be zero on such day;
“Drawdown” means an advance or deemed advance of funds or other extension of credit in accordance with the provisions of this Agreement, and for certainty includes the issuance of a Letter of Credit but does not include a Conversion or a Rollover;
“Drawdown Date” means a Business Day, at the expiration of the notice period specified pursuant to Section 3.3, on which the Borrower obtains a Drawdown;
“EEA Financial Institution” means (ai) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (bii) any entity established in an EEA Member Country which is a Lender Parent of an institution described in clause (ai) of this definition, or (ciii) any institution established in an EEA Member Country which is a subsidiary of an institution described in clause (ai) or (bii) of this definition and is subject to consolidated supervision with its Lender Parent;
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“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein and Norway;
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution;
“Effective Date” means the date on which all conditions in Section 7.1 are satisfied or waived by the Lenders;
“Encana” means Encana Corporation, as predecessor to the Borrower;
“Environmental Action” means any action, suit, demand, demand letter, claim, notice of non‑compliance or violation, notice of liability, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Material or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (a) by any Governmental/Judicial Body for enforcement, cleanup, removal, response, remedial or other similar actions or damages and (b) by any Governmental/Judicial Body or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief;
“Environmental Law” means any applicable federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance having the force or effect of law relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials;
“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law;
“Equivalent Amount” in one currency (the “First Currency”) of an amount in another currency (the “Other Currency”) means, as of the date of determination, the amount of the First Currency which would be required to purchase such amount of the Other Currency at the average exchange rate quoted by the Bank of Canada at approximately the close of business on the Business Day that such determination is required to be made (or, if such determination is required to be made before close of business on such Business Day, then at approximately close of business on the immediately preceding Business Day); provided that, in either case, if no such rate is quoted, it shall mean the spot rate of exchange for wholesale transactions quoted by the Agent at approximately noon (Toronto time) on such date of determination in accordance with its normal practice or, if such date of determination is not a Business Day, on the Business Day immediately preceding such date of determination;
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder;
“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the controlled group of the Guarantor, or under common control with the Guarantor, within the meaning of Section 414(b), (c), (m) and (o) of the Code;
“ERISA Event” means (ai) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30‑day notice requirement with respect to such event has been waived by the PBGC; (bii) the application for a minimum funding waiver under Section 412(c) of the Code with respect to a Plan; (ciii) the provision by the administrator of any Plan of a notice of intent to terminate such Plan in a distress termination pursuant to Section 4041(a)(2) of ERISA (including any such notice of a distress termination with respect to a plan
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amendment referred to in Section 4041(e) of ERISA); (div) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (ev) the withdrawal by the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (fvi) the conditions for the imposition of a Lien under Section 303(k) of ERISA shall have been met with respect to any Plan; or (gvii) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that is reasonably expected to result in the termination of, or the appointment of a trustee to administer, a Plan;
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time;
“Event of Default” means any of the occurrences referred to in Section 9.1 if, at the time of, or during the continuance of any such occurrence, a Borrowing is outstanding;
“Excluded Taxes” means:
“Existing Credit Agreement” means the restated credit agreement dated as of January 27, 2020 among Ovintiv Canada ULC as “Borrower”, Ovintiv Inc. as “Guarantor”, the Existing Lenders and the Agent, as amended prior to the Effective Date;
“Existing Lenders” means those financial and other institutions which are parties as “Lenders” to the Existing Credit Agreement;
“Extension Date” has the meaning ascribed to that term in Section 3.120(a);
“Facilities” means any drilling equipment, production equipment and platforms or mining equipment; pipelines, pumping stations and other pipeline facilities; terminals, warehouses and storage facilities; bulk plants; production, separation, dehydration, extraction, treating and processing facilities; gasification or natural gas liquefying facilities, flares, stacks and burning towers; floatation mills, crushers and ore handling facilities; tank cars, tankers, barges, ships,
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trucks, automobiles, airplanes and other marine, automotive, aeronautical and other similar moveable facilities or equipment; computer systems and associated programs or office equipment; roads, airports, docks (including drydocks); reservoirs and waste disposal facilities; sewers; generating plants (including power plants) and electric lines; telephone and telegraph lines, radio and other communications facilities; townsites, housing facilities, recreation halls, stores and other related facilities; and similar facilities and equipment of or associated with any of the foregoing;
“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention entered into in connection with the implementation of such Sections of the Code;
“Fed Funds Rate” means, for any day, the rate per annum calculated by the NYFRB, based on such day’s federal funds transactions by depositary institutions, as determined in such manner as the NYFRB shall set forth on its public website from time to time and as published on the next succeeding Business Day by the NYFRB as the federal funds effective rate, provided that if the Fed Funds Rate would be less than zero on any day, then the Fed Funds Rate shall be deemed to be zero on such day;
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America;
“Finance Co.” means Encana Holdings Finance Corp., an unlimited liability company incorporated under the laws of Nova Scotia, and any successor thereto;
“Finance Lease” means, at any time, any finance lease or other arrangement providing for the right of the lessee thereunder to use property, real or personal, moveable or immovable (whether or not such lease or other arrangement is intended as security), and in respect of which the present value of the minimum rental commitment or other amounts payable by the lessee thereunder would, in accordance with GAAP, be accounted for as a finance lease on a balance sheet of the lessee thereunder; provided that any real property leases (including the Bow Office Lease) and any other leases (whether entered into before or after December 31, 2021) that are or would be characterized as operating leases under GAAP as at December 31, 2021 shall be deemed to be operating leases and shall be excluded from this definition;
“Financial Instrument Obligations” means obligations arising under:
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“Financing Debt” means, with respect to any Person and at any time, all indebtedness for borrowed money of such Person at such time and specifically includes (without duplication):
provided that Financing Debt of a Person shall not include (A) any Non-Recourse Debt of such Person, (B) indebtedness under any real property leases (including the Bow Office Lease) and any other leases (whether entered into before or after December 31, 2021) that are or would be characterized as operating leases under GAAP as at December 31, 2021 and (C) where such Person is a Wholly-Owned Subsidiary, any of the foregoing which is owed to the Guarantor, the Borrower or another Wholly-Owned Subsidiary or owed by the Guarantor or the Borrower to a Wholly-Owned Subsidiary;
“Fiscal Quarter” means the first three (3) months of a Fiscal Year, and each successive period of three (3) months in such Fiscal Year;
“Fiscal Year” means the fiscal year as adopted by the Guarantor from time to time and which is currently the one year period commencing on January 1 of each year and ending on December 31 of such year;
“Fitch” means Fitch Ratings Inc., its Affiliates and their respective successors;
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“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Adjusted Term SOFR Rate. For the avoidance of doubt the initial Floor for each of Adjusted Term SOFR Rate shall be 0.00% per annum;
“Fronting Bank Commitment” means, in relation to a Fronting Bank, the amount set forth opposite such Fronting Bank’s name in the second column on Schedule “JG” from time to time, as such Fronting Bank Commitment may hereafter be increased, cancelled, reduced or terminated from time to time pursuant to this Agreement;
“Fronting Banks” means, from time to time, any Lenders selected by the Borrower and the Agent which have agreed to act as a fronting bank to issue Letters of Credit up to their respective Fronting Bank Commitments; provided that with respect to any particular Letter of Credit issued hereunder, “Fronting Bank” shall mean the Lender which issued that Letter of Credit;
“GAAP” means, with respect to any Person at any time, generally accepted accounting principles in the United States of America which are in effect from time to time, unless such Person’s most recent audited annual or unaudited interim financial statements are not prepared in accordance with generally accepted accounting principles in the United States, in which case GAAP shall mean generally accepted accounting principles in Canada in effect from time to time;
“Governmental/Judicial Body” means:
“Guarantor” means Ovintiv Inc., a corporation incorporated under the laws of the State of Delaware and any successor thereto, in its capacity as covenantor and guarantor under this Agreement;
“Guarantor Subsidiary” means, at any time, a Subsidiary which is then guaranteeing the Obligations pursuant to a guarantee in a form acceptable to the Agent (acting reasonably);
“Hazardous Material” means any waste, material or substance that is defined as hazardous in or pursuant to any Environmental Law or which is subject to regulation or control pursuant thereto;
“Indebtedness” means indebtedness created, issued or assumed for borrowed funds, or for the unpaid purchase price of property of the Guarantor or a Restricted Subsidiary, and includes such indebtedness guaranteed by the Guarantor or a Restricted Subsidiary;
“Interest Date” means, :
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(ii) in respect of CORRA Loans and SOFR Loans, the date falling on the last day of each Interest Period; provided that if the Borrower selects an Interest Period for a period longer than three (3) months, the Interest Date shall be each date falling every three (3) months after the beginning of such Interest Period and the date falling on the last day of such Interest Period;
“Interest Period” means, :
provided that (iA) the Interest Period shall commence on the date of a Drawdown or Rollover of or a Conversion to a Term Benchmarksuch Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the nextimmediately preceding Interest Period expiresends; (iiB) if any Interest Period with respect to such Loan would otherwise expireend on a day that is not a Business Day, such Interest Period shall expireend on the next succeeding Business Day;, provided, further that, if any Interest Period with respect to a Term Benchmark Loan would otherwise expireend on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expireend on the nextimmediately preceding Business Day; (iiiC) any Interest Period with respect to a Term Benchmarksuch Loan that begins on the last Business Day of a calendar month (or on a day for which there is notno numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period; (ivD) no Interest Period shall extend beyond the Maturity Date; and (vE) no tenor that has been removed from this definition pursuant to Section 10.5(d) shall be available for specification in such Notice of Drawdown, Notice of Rollover or Notice of Conversion or interest election;
“Investment Grade” means a Debt Rating from at least two Rating Agencies of not lower than BBB- from S&P, Baa3 from Moody’s and BBB- from Fitch (or, if applicable, an equivalent Debt Rating from a Substitute Rating Entity);
“LC Draft” means any draft, bill of exchange, receipt, acceptance, demand or other request for payment presented to a bank as provided in a Letter of Credit;
“Lead Arrangers” means RBC Capital Markets, JPMorgan Chase Bank, N.A., Toronto Branch, Canadian Imperial Bank of Commerce, TD Securities, Citibank, N.A., Canadian Branch, BMO Capital Markets and The Bank of Nova Scotia;
“Lender Distress Event” means, in respect of a given Lender, such Lender or its Lender Parent is subject to a forced liquidation, merger, sale or other change of control supported in whole or in part by guarantees or other support (including, without limitation, the nationalization or assumption of ownership or operating control by the Government of the United States, Canada or any other Governmental/Judicial Body) or is otherwise adjudicated as, or determined by any Governmental/Judicial Body having regulatory authority over such Lender or Lender Parent or their respective assets to be, insolvent or bankrupt or deficient in meeting any capital adequacy or liquidity standard of any such Governmental/Judicial Body; provided that a Lender shall not become a Defaulting Lender solely as the result of the acquisition or maintenance of an ownership interest in such Lender or its Lender Parent (including the exercise of control over such Lender or its Lender
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Parent through such ownership interest) by a Governmental/Judicial Body or an instrumentality thereof;
“Lender Insolvency Event” means, in respect of a given Lender, such Lender or its Lender Parent:
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“Lender Parent” means any Person that directly or indirectly controls a Lender and, for the purposes of this definition, “control” shall have the same meaning as set forth in the definition of “Affiliate” contained herein;
“Lender’s Proportion” means, at any time and from time to time with respect to each Lender:
“Lenders” means each of the financial and other institutions named on Schedule “JG” hereto as a Lender which has executed this Agreement or, as a Permitted Assignee, an agreement substantially in the form of Schedule “IF”, and includes Royal in its capacity as a Lender, but excludes any such financial or other institution, the Commitment of which has been reduced to zero, and also excludes the Agent in its capacity as the Agent; and “Lender” means any one of such Lenders, as applicable;
“Letter of Credit” means a performance, standby or documentary letter of credit issued by the Fronting Bank at the request of the Borrower pursuant to Section 3.75;
“Lien” means any lien, security interest, mortgage, hypothecation or other charge or encumbrance of any kind;
“Loan Documents” means this Agreement (including Schedule “H” and Schedule “JG”), the letter agreements referred to in Sections 3.75(g) and 5.910 and, when executed and delivered, Schedules "“A”, “B”, “C”, “D”, “E”, and “F” and “I”;
“Loan Indebtedness” means the aggregate, at any time, of:
but, for certainty, shall not include contingent obligations under the Loan Documents not then due or owing, including such obligations under indemnities contained therein;
“Loans” means Prime Loans, USBR Loans, CORRA Loans and Term BenchmarkSOFR Loans;
“Majority Lenders” means any Lender or group of Lenders having Lender’s Proportions, in aggregate, of 50.1% or more;
“Margin Stock” has the meaning specified in Regulation U of the Board of Governors of the Federal Reserve Board, as in effect from time to time;
“Material Adverse Effect” means any act, event or condition that has a material adverse effect on (i) the consolidated financial condition and operations of the Guarantor and its Subsidiaries, taken as a whole, (ii) the ability of the Guarantor to pay any amounts owing from time to time under this Agreement or (iii) the validity or enforceability of this Agreement, provided that in no event shall fluctuations in commodity prices for oil and/or natural gas be regarded as an act, event or condition that in and of itself has a Material Adverse Effect;
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“Material Subsidiary” means from time to time (i) the Borrower, (ii) any other Subsidiary of the Guarantor which, on a Consolidated basis for such Subsidiary and its Subsidiaries, has assets which have a value, as reflected on the Consolidated balance sheet of the Guarantor most recently delivered to the Lenders hereunder, in excess of 10% of the value of the Consolidated Assets of the Guarantor as reflected therein (without giving effect to the non-cash ceiling test impairments and other changes as at December 31, 2011 as a consequence of Encana’s adoption of US GAAP) and (iii) any other Subsidiary so designated by the Borrower;
“Maturity Date” means, with respect to a Commitment, July 15, 2026, as such date may, from time to time, be extended pursuant to Section 3.120 in respect of such Commitment;
“Moody’s” means Moody’s Ratings, a division of Moody’s Investors Service, Inc., its Affiliates and their respectiveand any successors thereto;
“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Guarantor or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions;
“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Guarantor or any ERISA Affiliate and at least one Person other than the Guarantor and the ERISA Affiliates or (b) was so maintained and in respect of which the Guarantor or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated;
“Non-Acceptance Discount Rate” means, for any day, the simple average of the Discount Rate in paragraph (i) of the definition of Discount Rate and the Discount Rate in paragraph (ii) of such definition;
“Non-Acceptance Lender” means a Lender which does not accept bankers’ acceptances in the ordinary course of its business;
“Non-Defaulting Lender” means a Lender that is not a Defaulting Lender;
“Non-Guarantor Subsidiary” means, at any time, a Subsidiary which is not then a Guarantor Subsidiary;
“Non-Recourse Assets” means the Guarantor’s proportion (determined on a Consolidated basis in accordance with GAAP) of assets owned directly or indirectly by the Guarantor or any Subsidiary which meet all of the following conditions: (i) the assets represent a specific Project, whether alone or in association with others, (ii) debt for borrowed money is owed to one or more Non-Recourse Creditor(s), was incurred for the purpose of financing the costs of such Project and the recourse of such creditors in relation to such debt is limited to the assets of such Project (including equity interests and investments in any Non-Recourse Subsidiary), and (iii) neither the Guarantor nor any Subsidiary is liable or has issued a guarantee in respect of any such debt, other than any such debt or any such guarantee in respect of which the recourse thereunder is limited to the assets of such Project (including equity interests and investments in any Non-Recourse Subsidiary); provided that upon all such debt to all such creditors in respect of any such assets being repaid, such assets shall then cease to be Non-Recourse Assets;
“Non-Recourse Creditor” means an arm’s length creditor whose recourse is limited to Non-Recourse Assets, to the exclusion of any and all other recourse, whether directly or indirectly, by way of guarantees or otherwise, against the Guarantor or any Subsidiary in respect of any such debt or liability referred to in the definition of Non-Recourse Assets except for non-recourse
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guarantees and/or non-recourse pledges which are limited in recourse to equity interests and investments in any Non-Recourse Subsidiary;
“Non-Recourse Debt” means debt incurred for the purpose of financing the costs of a specific Project and due or otherwise owing to a Non-Recourse Creditor;
“Non-Recourse Subsidiary” means a Subsidiary whose material assets are Non-Recourse Assets;
“Non-Standard Interest Period” means, (a) with respect to a SOFR Loan, an Interest Period which is for a term other than one, three or six months not exceeding six months and (b) with respect to a Term CORRA Loan, an Interest Period which is for a term other than one or three months not exceeding three months;
“Notice of Conversion” means a notice substantially in the form of Schedule “CB” to this Agreement, duly completed with all information necessary to effect a Conversion, given or to be given by the Borrower to the Agent pursuant to this Agreement;
“Notice of Drawdown” means a notice substantially in the form of Schedule “A” or, in the case of a Drawdown by way of Bankers’ Acceptances (or BA Equivalent Loans in lieu thereof), Schedule “B” to this Agreement, duly completed with all information necessary to effect a Drawdown, given or to be given by the Borrower to the Agent pursuant to this Agreement;
“Notice of Extension” means a written notice by the Agent, on behalf of some or all of the Lenders for a period of not more than five (5) years from the Extension Date, to the Borrower pursuant to Section 3.120 extending the then current Maturity Date in respect of the Commitments of such Lenders;
“Notice of Rollover” means a notice substantially in the form of Schedule “DC” to this Agreement, duly completed with all information necessary to effect a Rollover, given or to be given by the Borrower to the Agent pursuant to this Agreement;
“NYFRB” means Federal Reserve Bank of New York;
“NYFRB Rate” means, for any day, the greater of (a) the Fed Funds Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day; provided, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to zero for the purposes of calculating such rate;
“Obligations” means, collectively and at any time and from time to time, all of the obligations, indebtedness and liabilities (present or future, absolute or contingent, matured or not) of the Borrower to the Agent and the Lenders under, pursuant or relating to this Agreement and the other Loan Documents and including all Outstandings and all interest, commissions, legal and other costs, charges and expenses payable by the Borrower under this Agreement and such other Loan Documents, whether the same are from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again;
“Obligors” means, collectively, the Borrower and the Guarantor and “Obligor” means either of them;
“OFAC” means the Office of Foreign Assets Control of the United States Treasury Department;
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“Outstanding Principal” means, at any time, the Equivalent Amount in US Dollars of the Outstandings at such time disregarding any due and unpaid interest;
“Outstandings” at any time means the aggregate at such time of:
(iii) the amounts payable at maturity of all outstanding Bankers’ Acceptances and BA Equivalent Loans; and
provided that (A) for the purpose of calculating the Outstandings owing to any Lender at any time, such Lender shall be deemed to have issued its Lender’s Proportion of all outstanding Letters of Credit for which it has a reimbursement or indemnification obligation in the circumstances contemplated in Section 3.75(d) and (B) where the context requires, the Outstandings shall mean only those Outstandings owing to a particular Lender;
“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in US Dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate);
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001);
“PBGC” means the Pension Benefit Guaranty Corporation (or any successor);
“Periodic Term CORRA Determination Day” has the meaning set out in the definition of “Term CORRA”;
“Permitted Assignee” has the meaning ascribed thereto in Section 16.9(a);
“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof;
“Plan” means a Single Employer Plan or a Multiple Employer Plan, in each case that is subject to ERISA;
“Prime Loans” means the loans made available by the Lenders to the Borrower pursuant to Section 3.3, 3.86 or 3.97 with respect to which the Borrower has agreed to pay interest thereon in accordance with Section 5.1 or which are made available to the Borrower by the Lenders as a result of applying Section 3.5(g) or 3.7(d);
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“Prime Rate” means, with respect to outstanding Prime Loans, on any day, a rate per annum equal to the greater of:
provided that, (x) if all such rates are equal, then the “Prime Rate” shall be the rate specified in (i) above and (y) if the Prime Rate as so determined abovefor any day would be less than zero on any day, thenthe Floor, the Prime Rate shallwill be deemed to be zero onthe Floor for such day;
“Project” means the acquisition, construction and development of previously undeveloped or newly acquired assets forming an economic unit capable of generating sufficient cash flow, on the basis of reasonable initial assumptions, to cover the operating costs and debt service required to finance the undertaking relating to such assets over a period of time which is less than the projected economic life of the assets, and includes any commercial operation for which such assets were so acquired, constructed or developed and which is subsequently carried on with such assets by such economic unit and, for certainty, includes each such Project which exists at the Effective Date or which is acquired, created or comes into existence after the Effective Date;
“Public Material Subsidiary” means any Material Subsidiary whose Common Equity Securities have been listed on any stock exchange at all times since such Material Subsidiary first became a Material Subsidiary;
“Publicly Traded Securities” means (a) securities of a corporation which are listed on any stock exchange and are entitled to share without limitation in a distribution of the assets of such corporation upon any liquidation, dissolution or winding-up of such corporation and includes any securities convertible or exchangeable into such securities; and (b) with respect to a partnership, limited liability company or other entity, means securities of such partnership, limited liability company or other entity which are listed on any stock exchange and represent income interests or capital interests in such partnership, limited liability company or other entity and includes any securities convertible or exchangeable into such securities;
“Purchase Money Mortgage” means any mortgage, hypothecation, charge or other encumbrance on property or assets created, issued or assumed to secure a Purchase Money Obligation in respect of such property or assets and also means any agreement or other instrument entered into for the acquisition of or right to acquire any property or assets or any interest therein in which agreement or instrument there is reserved or which obligates the Guarantor or a Restricted Subsidiary to pay a royalty, rent or percentage of profits or proceeds won from such property or assets and which charges or secures such property or assets or interest therein or the lands containing the same with the payment thereof and includes any extension, renewal, refunding or refinancing thereof so long as the principal amount outstanding immediately prior to the date of such extension, renewal, refunding or refinancing is not increased; provided, however, that such mortgage, hypothecation, charge, encumbrance, agreement or other instrument is created, issued or assumed prior to, concurrently with or within 180 days following the acquisition of such property or assets, except in the case of property or assets on which improvements are constructed, installed or added, in which case the same shall be created or issued within a period of 180 days after Substantial Completion of such improvements;
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“Purchase Money Obligation” means any Indebtedness assumed as, or issued and incurred to provide funds to pay, all or part of (i) the purchase price (which shall be deemed to include any costs of construction or installation) of any property or assets acquired after the date of this Agreement or (ii) the cost of improvements made after the date of this Agreement to any property or assets;
“Reference Time” with respect to any setting of the then-current Benchmark means (i) if such Benchmark is the Term SOFR Rate or Daily Simple SOFR, 5:00 a.m. (Chicago time) on the day that is two Business Days preceding the date of such setting or (ii) if such Benchmark is none of the Term SOFR Rate or Daily Simple SOFR, the time determined by the Agent in its reasonable discretion;
“Release” means a releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing, spraying, abandonment, depositing, seeping, placing or dumping;
“Relevant Governmental Body” means:
(ii) in respect of any CORRA Loan (or any Benchmark Replacement thereof), the Bank of Canada, or a committee officially endorsed or convened by the Bank of Canada, or any successor thereto;
“Request for Extension” means a written request by the Borrower to the Agent on behalf of some or all of the Lenders pursuant to Section 3.120 requesting such Lenders to issue a Notice of Extension in respect of the Commitments of such Lenders, in the form attached as Schedule “ED”;
“Relevant Subsidiary” means, on any date, any corporation or other Person of which Voting Shares or other interests carrying more than 50% of the voting rights attached to all outstanding Voting Shares or other interests are owned, directly or indirectly, by or for the Guarantor and/or by or for any corporation in like relation to the Guarantor and includes any corporation in like relation to a Relevant Subsidiary; provided, however, such term shall not include any corporations or other Persons (or their respective Relevant Subsidiaries) which have Publicly Traded Securities where the aggregate amount of assets of all such corporations or other Persons does not exceed 20% of the Consolidated Assets of the Guarantor at the time and from time to time;
“Resolution Authority” means, with respect to any EEA Financial Institution, an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority;
“Restricted Property” means any oil, gas or mineral property of a primary nature located in Canada or the United States and any facilities located in Canada or the United States directly related to the mining, processing or manufacture of hydrocarbons or minerals, or any of the constituents thereof or the derivatives therefrom and includes Voting Shares or other interests of a corporation or other Person which owns such property or facilities, but does not include (i) any property or facilities used in connection with or necessarily incidental to the purchase, sale, storage, transportation or distribution of Restricted Property, (ii) any property which, in the opinion of the Board of Directors of the Guarantor, is not materially important to the total business conducted by the Guarantor and its Subsidiaries as an entirety, or (iii) any portion of a particular property which, in the opinion of the Board of Directors of the Guarantor, is not materially important to the use or operation of such property;
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“Restricted Subsidiary” means, on any date, any Relevant Subsidiary which owns at the time Restricted Property; provided, however, such term shall not include a Relevant Subsidiary of the Guarantor if the amount of the Guarantor’s share of Shareholders’ Equity of such Subsidiary constitutes, at the time of determination, less than 2% of the Consolidated Net Tangible Assets of the Guarantor;
“Rollover” means:
(ii) with respect to any Bankers’ Acceptance (or BA Equivalent Loan made in lieu thereof), the issuance of new Bankers’ Acceptances (or making of new BA Equivalent Loans) in respect of all or any portion of such Bankers’ Acceptance (or BA Equivalent Loans made in lieu thereof) on the maturity date thereof; and
(ii) (iii) with respect to any Letter of Credit, the extension or replacement of an existing Letter of Credit in respect of all or any portion of such Letter of Credit effective on the expiry date thereof including, for certainty, any extension referred to in the proviso in Section 3.97(cb); provided that the beneficiary thereof (including any successor or permitted assigns thereof) remains the same, the maximum amount available to be drawn thereunder is not increased, the currency in which the same is denominated remains the same and the terms upon which the same may be drawn remain the same;
all in accordance with the provisions of this Agreement;
“Royal” means Royal Bank of Canada, a Canadian chartered bank;
“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions;
“Sanctioned Person” means, at any time, any Person listed in any Sanctions-specific list of designated Persons maintained by OFAC, the United States Department of State, or by the United Nations Security Council, in all cases, to the extent not inconsistent with Applicable Law in Canada;
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by a Sanctions Authority that are applicable to the Borrower or its Subsidiaries; provided that, with respect to economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the United Nations Security Council, to the extent such sanctions or trade embargoes are not inconsistent with Applicable Law in Canada;
“Sanctions Authority” means any of: (a) the federal government of Canada; (b) the federal government of the United States of America; (c) the United Nations Security Council (to the extent not inconsistent with Applicable Law in Canada); or (d) the respective governmental institutions, departments and agencies of any of the foregoing, including OFAC and the United States Department of State; and “Sanctions Authorities” means all of the foregoing Sanctions Authorities, collectively;
“Schedule I Bank” means a bank under Schedule “I” of the Bank Act (Canada);
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“Schedule I Reference Bank” means Royal, or such other Lender as may from time to time be appointed as the Schedule “I” Reference Bank pursuant to Section 12.17;
“Schedule II Bank” means a bank under Schedule II of the Bank Act (Canada);
“Schedule II/III Reference Banks” means, other than Bank of America, N.A., Canada Branch, (i) any two or more Lenders which are Schedule II Banks or Schedule III Banks, as selected from time to time by the Agent and approved by the Borrower, each acting reasonably, and shall include any other Lender that is a Schedule II Bank or Schedule III Bank selected from time to time by the Agent and approved by the Borrower, each acting reasonably, in substitution for or replacement of any then existing Schedule II/III Reference Banks, or (ii) if there is only one Schedule II Bank or Schedule III Bank that is a Lender, that Lender alone;
“Schedule III Bank” means an authorized foreign bank under Schedule III of the Bank Act (Canada);
“Senior Financial Officer” means the Chief Financial Officer, Chief Accounting Officer, Vice-President Finance, Comptroller, Assistant Comptroller, Treasurer or Assistant Treasurer or any other officer of the Guarantor and/or the Borrower, as applicable, having a similar title or position;
“Shareholders’ Equity” means the aggregate amount of shareholders’ equity (including but not limited to share capital, contributed surplus and retained earnings) of a Person as shown on the most recent annual audited or unaudited interim Consolidated balance sheet of such Person and computed in accordance with GAAP;
“Similar Business” means any business, the majority of whose revenues are derived from (i) business or activities conducted by the Guarantor and its Subsidiaries on the Effective Date, (ii) any business that is a natural outgrowth or reasonable extension, development or expansion of any such business or any business similar, reasonably related, incidental, complementary or ancillary to any of the foregoing or (iii) any business that in the Borrower’s good faith business judgment constitutes a reasonable diversification of businesses conducted by the Guarantor and the Subsidiaries;
“Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Guarantor or any ERISA Affiliate and no Person other than the Guarantor and the ERISA Affiliates or (b) was so maintained and in respect of which the Guarantor or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated;
“SOFR” means a rate per annum equal to the secured overnight financing rate as administered by the SOFR Administrator;
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate);
“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time;
“SOFR Loan” means a Loan that bears interest at a rate based on Adjusted Term SOFR, other than pursuant to clause (iii) of the definition of “US Base Rate”.
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“S&P” means S&P Global Ratings, a division of S&P Global Inc., its Affiliates and their respective successors;
“Subsidiary” of any Person means: (a) any corporation of which Voting Shares issued by such corporation and carrying more than 50% of the voting rights attached to all outstanding Voting Shares issued by such corporation are owned, directly or indirectly, by or for such Person and/or by or for any corporation in like relation to such Person and includes any corporation in like relation to a Subsidiary; and (b) any partnership, limited liability company or other business entity of which at least a majority of the outstanding income interest or capital interests are at the time directly, indirectly or beneficially owned or controlled by such Person or one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries;
“Substantial Completion” means, with respect to an improvement, the point at which the improvement is ready for use or is being used for the purpose for which it was intended;
“Substitute Rating Entity” has the meaning assigned thereto in Section 1.8(b)(i);
“Syndicated Borrowings” means Borrowings made available by the Syndicated Lenders pursuant to the Syndicated Commitments;
“Syndicated Commitment” means, in relation to a Syndicated Lender, the amount set forth opposite such Syndicated Lender’s name in the first column on Schedule “JG” from time to time, as such Syndicated Commitment may hereafter be increased, cancelled, reduced or terminated from time to time pursuant to this Agreement;
“Syndicated Lenders” means, from time to time, those Lenders then providing Syndicated Commitments;
“Tax” means all present and future taxes, levies, duties, imposts, stamp and documentary taxes, deductions, charges or withholdings imposed by any Governmental/Judicial Body, and all liabilities with respect thereto, including all income taxes, capital taxes, excise taxes, financial institution duties, debit taxes and similar levies, and any interest, additions to tax and penalties imposed with respect to any of the foregoing;
“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Adjusted Term SOFR Rate;
“Term CORRA” means, for any calculation with respect to a Term CORRA Loan or a Prime Loan, the Term CORRA Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term CORRA Determination Day”) that is two (2) CORRA Business Days prior to the first day of such Interest Period, as such rate is published by the Term CORRA Administrator; provided, however, that if as of 1:00 p.m. (Toronto time) on any Periodic Term CORRA Determination Day the Term CORRA Reference Rate for the applicable tenor has not been published by the Term CORRA Administrator and a Benchmark Replacement Date with respect to the Term CORRA Reference Rate has not occurred, then Term CORRA will be the Term CORRA Reference Rate for such tenor as published by the Term CORRA Administrator on the first preceding CORRA Business Day for which such Term CORRA Reference Rate for such tenor was published by the Term CORRA Administrator so long as such first preceding CORRA Business Day is not more than three (3) CORRA Business Days prior to such Periodic Term CORRA Determination Day. If such first preceding CORRA Business Day is more than three (3) CORRA Business Days prior to such Periodic Term CORRA Determination Day, Section 10.1 will apply;
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“Term CORRA Adjustment” means 0.29547% (29.547 basis points) per annum for an Interest Period of one-month’s duration or 0.32138% (32.138 basis points) per annum for an Interest Period of three-months’ duration;
“Term CORRA Administrator” means CanDeal Benchmark Administration Services Inc., TSX Inc., or any successor administrator of the Term CORRA Reference Rate;
“Term CORRA Loan” means a Loan that bears interest at a rate based on Adjusted Term CORRA, other than pursuant to clause (ii) of the definition of “Prime Rate”;
“Term CORRA Reference Rate” means the forward-looking term rate based on CORRA;
“Term Benchmark Interest DateSOFR” means:
(i) the last day of each Interest Period; and
(ii) if the Borrower selects an Interest Period for a period longer than three (3) months, the dates falling every three (3) months after the beginning of such Interest Period and on the last day of such Interest Period;
“Term Benchmark Loans” means the loans made available by the Lenders to the Borrower pursuant to Sections 3.3, 3.8 or 3.9, which the Borrower has elected to denominate in US Dollars and has agreed to pay interest thereon in accordance with Section 5.3;
“Term SOFR Rate” means, with respect to any Borrowing in respect of any Term Benchmark Loans denominated in US Dollars for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two US Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator;
(ii) for any calculation with respect to a USBR Loan, the Term SOFR Reference Rate (rounded upward to the nearest fifth decimal place, if necessary) for a tenor of one (1) month on the day (such day the “US Base Rate Term SOFR Determination Day”) that is two (2) US
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Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, (i) that if as of 5:00 p.m. (New York City time) on any US Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding US Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding US Government Securities Business Day is not more than three (3) US Government Securities Business Days prior to such US Base Rate Term SOFR Determination Day (ii) and if such first preceding US Government Securities Business Day is more than three (3) US Government Securities Business Days prior to such US Base Rate Term SOFR Determination Day, Section 10.1 will apply;
“Term SOFR Adjustment” means, with respect to Term SOFR, 0.10% (10 basis points) per annum;
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Agent in its discretion, acting reasonably);
“Term SOFR Determination Day” has the meaning assigned to it under the definition of “Term SOFR”;
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR;
“Total Syndicated Commitment” means, at any time, an amount equal to the aggregate of all of the Syndicated Commitments at such time;
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain Affiliates of such credit institutions or investment firms;
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution;
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment; provided that, if the Unadjusted Benchmark Replacement as so determined would be less than zero, the Unadjusted Benchmark Replacement will be deemed to be zero for the purposes of this Agreement;
“US Base Rate” means, with respect to outstanding USBR Loans, onfor any day, a rate per annum equal to the greatest of:
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provided that for the purpose of this definition, the Adjusted Term SOFR Rate for any US Government Securities Business Day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology); provided further that, (x) if all such rates of interest are equal, then the “US Base Rate” shall be the rate specified in (i) above and (y) if the US Base Rate as so determined above wouldfor any day shall be less than zero on any day, then the US Basethe Floor, such Rrate shall be deemed to be zero onthe Floor for such day;
“USBR Loans” means the loans made available by the Lenders to the Borrower pursuant to Section 3.3, 3.86 or 3.97 with respect to which the Borrower has agreed to pay interest thereon in accordance with Section 5.2 or which are made available to the Borrower by the Lenders as a result of applying Section 3.4(a), 3.75(d) or 10.1;
“US Dollars” and the symbol “US $” each mean lawful currency of the United States of America;
“US GAAP” means generally accepted accounting principles in the United States of America in effect from time to time;
“US Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities;
“Value” means:
“Voting Shares” means shares of any class of any corporation carrying voting rights under all circumstances, provided that, for the purposes of this definition, shares which only carry the right to vote conditionally on the happening of an event shall not be considered Voting Shares, nor shall any shares be deemed to cease to be Voting Shares solely by reason of a right to vote accruing to shares of another class or classes by reason of the happening of such an event, or solely because the right to vote may not be exercisable under the charter of the corporation;
“Wholly-Owned Subsidiary” means (i) any corporation of which 100% of the outstanding shares having by the terms thereof ordinary voting power to vote with respect to the election of the board of directors of such corporation (irrespective of whether at the time shares of any other class or classes of such corporation might have voting power by reason of the happening of any contingency, unless the contingency has occurred and then only for so long as it continues) is at the time directly, indirectly or beneficially owned or controlled by the Guarantor or one or more of its Wholly-Owned Subsidiaries or by the Guarantor and one or more of its Wholly-Owned
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Subsidiaries, or (ii) any partnership or other entity of which 100% of the outstanding income interests and capital interests is at the time directly, indirectly or beneficially owned or controlled by the Guarantor or one or more of its Wholly-Owned Subsidiaries or by the Guarantor and one or more of its Wholly-Owned Subsidiaries;
“Withdrawal Liability” has the meaning specified in Part I of Subtitle E of Title IV of ERISA; and
“Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable UK Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that Person or any other Person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
The headings, the table of contents, and the Article and Section titles are inserted for convenience only and are to be ignored in construing this Agreement.
All references to Sections, Articles and Schedules are to Sections, Articles and Schedules to this Agreement. The words “hereto”, “herein”, “hereof”, “hereunder”, “this Agreement” and similar expressions mean and refer to this Agreement as hereafter supplemented or amended.
The singular includes the plural and vice versa; “month” means calendar month; and “in writing” or “written” includes printing, typewriting, or any electronic means of communication capable of being visibly reproduced at the point of reception, including facsimile, telex or telegraph.
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and the above change would require disclosure under GAAP in the consolidated financial statements of the Guarantor and would cause an amount required to be determined for the purposes of any financial test in Section 8.1(j) or 8.2(e) or any financial term or threshold used in Section 2.1(c), 8.2(a), 8.2(f), 9.1 or elsewhere in this Agreement (each a “Financial Covenant/Term”) to be materially different than the amount that would be determined without giving effect to such change, the Guarantor shall notify the Agent of such change (an “Accounting Change”). Such notice (an “Accounting Change Notice”) shall describe the nature of the Accounting Change, its effect on the current and immediately prior year’s financial statements in accordance with GAAP and state whether the Guarantor desires to revise the method of calculating one or more of the Financial Covenants/Terms (including the revision of any of the defined terms used in the determination of such Financial Covenant/Term) in order that amounts determined after giving effect to such Accounting Change and the revised method of calculating such Financial Covenant/Term will approximate the amount that would be determined without giving effect to such Accounting Change and without giving effect to the revised method of calculating such Financial Covenant/Term. The Accounting Change Notice shall be delivered to the Agent within sixty (60) days after the end of the Fiscal Quarter in which the Accounting Change is implemented or, if such Accounting Change is implemented in the fourth Fiscal Quarter or in respect of an entire Fiscal Year, within 120 days after the end of such period.
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Schedule “A” to Schedule “JG” are attached to and constitute part of the terms and conditions of this Agreement.
For the purposes hereof:
it being agreed that:
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The Borrower, the Guarantor, the Agent and the Lenders acknowledge and agree that as of the Effective Date:
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For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its equity interests at such time.
The interest rate on a Loan denominated in US Dollarsany currency available hereunder may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event in respect of any Benchmark, Section 10.5 provides a mechanism for determining an alternative rate of interest. The Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to (a) the continuation of, the administration of, submission of, calculation of, performance of or any other matter related to any interest rate used in this Agreement, (including the Prime Rate, US Base Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR, SOFR, Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, CORRA, Term CORRA Reference Rate, Adjusted Term CORRA, Adjusted Daily Compounded CORRA, Term CORRA or Daily Compounded CORRA) or any component definition thereof or rates referred to in the definition thereof, or with respect to any alternative or successor rate thereto, or replacement rate thereof (including any Benchmark Replacement), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate, including the Prime Rate, US Base Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR, SOFR, Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, CORRA, Term CORRA Reference Rate, Adjusted Term CORRA, Adjusted Daily Compounded CORRA, Term CORRA or Daily Compounded CORRA or any other Benchmark (or any component thereof) prior to its discontinuance or unavailability or (b) the effect, implementation or composition of any Conforming Changes. The Agent and its aAffiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate (or component thereof) used in this Agreement or any alternative, successor or alternativereplacement rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Agent may select information sources or services in its reasonable discretion, acting reasonably, to ascertain any interest rate used in this Agreement, any component thereof, or rates referencedreferred to in the definition thereof or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other Person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
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Each of the Guarantor (without any limitation) and the Borrower (whose representations and warranties will be limited to only Sections 2.1(a), (b), (c) and (d) below) represents and warrants to each of the Lenders and the Agent that:
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Each Notice of Drawdown given by the Borrower to the Agent shall be deemed to be a representation and warranty by the Guarantor (with respect to all of the representations and warranties in Section 2.1) and the Borrower (with respect to only those representations and warranties in Sections 2.1(a), (b), (c) and (d)) to each of the Lenders and the Agent that the representations and warranties contained in Section 2.1 (other than Sections 2.1(f)(i) and 2.1(i)(ii) which are intended to apply only as of the Effective Date) are, as of the date of such notice, and will be, as of the applicable Drawdown Date, true and correct in all material respects as of each such date.
Except as expressly stated otherwise therein (in which case Section 9.3 shall apply), each Notice of Conversion and Notice of Rollover given by the Borrower to the Agent shall be deemed to be a representation and warranty by the Guarantor to each of the Lenders and the Agent that the representation and warranty contained in Section 2.1(l) is, as of the date of such notice, and will be, as of the applicable Borrowing Conversion Date or Borrowing Rollover Date, true and correct in all material respects as of such date.
The representations and warranties set out in this Agreement, or deemed to be made pursuant hereto, shall survive the execution and delivery of this Agreement and the making of each Drawdown, Conversion and Rollover hereunder, notwithstanding any investigations or examinations which may be made by the Agent, the Lenders or their legal counsel. Such representations and warranties shall survive until this Agreement has been terminated and all Loan Indebtedness then owing by the Borrower hereunder have been repaid in full.
Relying on each of the representations and warranties set out in Article 2 and subject to the terms and conditions of this Agreement, each Lender agrees to make Borrowings available to the Borrower in respect of such Lender’s Commitments at the Agent’s Account for Payments up to an aggregate principal amount at any time outstanding not in excess of the amount of its respective Commitments.
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and in the event that any such Lender has such a conflict of interest (an “Affected Lender”), then upon the Agent so notifying the Borrower, the Affected Lender shall have no obligation to provide Borrowings to finance such Take-over, notwithstanding any other provision of this Agreement to the contrary; provided however that each other relevant Lender which has, or is deemed to have, no such conflict of interest (a “Non-Affected Lender”) shall have an obligation, up to the amount of its Commitment, to provide Borrowings to finance such Take-over, and Borrowings to finance such Take-over shall be provided by each Non-Affected Lender in accordance with the ratio, determined prior to the provision of any Borrowings to finance such Take-over, that the Commitment of such Non-Affected Lender bears to the aggregate of the Commitments of all the Non-Affected Lenders.
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Subject to the provisions of this Agreement, prior to the Maturity Date the Borrower may, upon delivery of a Notice of Drawdown to the Agent in accordance with the provisions of this Agreement, borrow from, repay to, and reborrow from the Lenders by way of Borrowings up to an amount at any time outstanding not in excess of the amount of the Total Syndicated Commitment from time to time in effect, by way of:
Any Notice of Drawdown to be given by the Borrower pursuant to this Section 3.3 shall be delivered to the Agent at the Agent’s Branch of Account at or prior to 12:00 noon (Toronto time) on the last day on which such notice can be given. Such Notice of Drawdown shall be substantially in the form of Schedule “A”, in the case of Prime Loans, USBR Loans, Term BenchmarkCORRA Loans, SOFR Loans and Letters of Credit, and shall be substantially in the form of Schedule “B”, in the case of Bankers’ Acceptances and BA Equivalent Loans. Subject to the provisions of this Agreement, the Lenders shall make Borrowings available to the Borrower in accordance with Section 12.8.
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3.5 Bankers’ Acceptances
(a) Acceptance and Purchase of Bankers’ Acceptances: Subject to the terms and conditions of this Agreement, each Lender agrees to either (i) accept Bankers’ Acceptances issued by the Borrower and requested pursuant to Section 3.3, 3.8 or 3.9 and purchase such Bankers’ Acceptances in accordance with Section 12.8; or, (ii) if such Lender is a Non-Acceptance Lender, make BA Equivalent Loans in accordance with Sections 3.5(f) and 12.8.
(b) Payment: The Borrower agrees to pay the applicable Lender the face amount of each Bankers’ Acceptance accepted by such Lender on its maturity date and hereby waives presentment for payment of such Bankers’ Acceptance by such Lender and agrees not to claim from such Lender any days of grace for the payment at maturity of such Bankers’ Acceptance, notwithstanding that (if such should be the case) any such Banker’s Acceptance has been unlawfully issued or used or put into circulation fraudulently or without authority, and the Borrower shall indemnify such Lender against any loss, cost, damage, expense or claim regardless of by whomsoever made, that such Lender may suffer or incur by reason of any fraudulent, unauthorized or unlawful issue or use of any such bankers’ acceptance form, except any fraudulent, unauthorized or unlawful issue or use of any such bankers’ acceptance form which is caused by the negligence or wilful act or omission of such Lender or any of its officers, employees, agents or representatives or which occurs as a result of such Lender or any of its officers, employees, agents or representatives failing to use the same standard of care in the custody of such bankers’ acceptance form as it uses in the custody of its own property of a similar nature.
(c) Other Terms: Each Bankers’ Acceptance shall:
(i) subject to availability, have a term selected by the Borrower of not less than one (1) month and not more than three (3) months, or such other period as is agreed to by all Lenders under the Credit Facility from time to time;
(ii) have a maturity date which shall be on a Business Day and not later than the earliest then applicable Maturity Date; and
(iii) be in a form satisfactory to the applicable Lender.
(d) Power of Attorney Respecting Bankers’ Acceptances: As a condition precedent to each Lender’s obligation to accept Bankers’ Acceptances hereunder, the Borrower agrees to the power of attorney annexed hereto as Schedule “H”, enabling such Lender to execute and deliver Bankers’ Acceptances for and on behalf of the Borrower.
(e) Applicability of DBNA: It is the intention of the parties that all Bankers’ Acceptances accepted by the Lenders (other than a Lender which elects to accept Bankers’ Acceptances in the form of bills of exchange instead of Depository Bills) under this Agreement shall be issued in the form of a Depository Bill, be deposited with and be made payable to a “clearing house” (as defined in the Depository Bills and Notes Act (Canada)). The Agent and the Lenders shall effect the following practices and procedures and, subject to the approval of the Majority Lenders, establish and notify the Borrower and the Lenders of any additional procedures, consistent with the terms of this Agreement and the requirements of the Depository Bills and Notes Act (Canada), as are reasonably necessary to accomplish such intention:
(i) each Bankers’ Acceptance accepted and purchased by a Lender hereunder shall have marked prominently and legibly on its face and within its text, at or before the time
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of issue, the words “This is a depository bill subject to the Depository Bills and Notes Act”;
(ii) any reference to authentication of such Bankers’ Acceptance will be removed; and
(iii) such Bankers’ Acceptance shall not be marked with any words prohibiting negotiation, transfer or assignment of it or of an interest in it.
(f) BA Equivalent Loans: Notwithstanding the foregoing provisions of this Section 3.5, a Non-Acceptance Lender shall, in lieu of accepting and purchasing Bankers’ Acceptances, make a BA Equivalent Loan. The amount of each BA Equivalent Loan shall be equal to the Discount Proceeds which would be realized from a hypothetical sale of those Bankers’ Acceptances which such Lender would otherwise be required to accept and purchase as part of a Drawdown, Conversion or Rollover of Bankers’ Acceptances. To determine the amount of such Discount Proceeds, the hypothetical sale shall be deemed to take place at the Non-Acceptance Discount Rate for such Borrowing. Any BA Equivalent Loan shall be made on the relevant Drawdown Date, Borrowing Conversion Date or Borrowing Rollover Date, as the case may be, and shall remain outstanding for the term of the relevant Drawdown of, Conversion into or Rollover of, Bankers’ Acceptances. Concurrently with the making of a BA Equivalent Loan, a Non-Acceptance Lender shall be entitled to deduct therefrom an amount equal to the stamping fees which such Lender would otherwise be entitled to receive pursuant to Section 5.4 as part of such Borrowing if such Borrowing was a Bankers’ Acceptance, based on the amount payable (including interest) on the maturity date of such BA Equivalent Loan. Upon the maturity date for such Bankers’ Acceptances, the Borrower shall pay to each Non-Acceptance Lender in respect of that Non-Acceptance Lender’s BA Equivalent Loan an amount equal to the face amount of the Bankers’ Acceptances which that Non-Acceptance Lender would have accepted and purchased at the Non-Acceptance Discount Rate for such Borrowing had that Non-Acceptance Lender been a Schedule “I” Bank, Schedule II Bank or Schedule III Bank. All references in this Agreement to “Borrowings” and “Bankers’ Acceptances” shall, unless otherwise expressly provided herein or unless the context otherwise requires, be deemed to include BA Equivalent Loans made by a Non-Acceptance Lender as part of a Drawdown of, Conversion into or Rollover of Bankers’ Acceptances.
(g) Deemed Conversion of Bankers’ Acceptances: If the Borrower fails to pay the applicable Lender the face amount of each Bankers’ Acceptance accepted by such Lender on its maturity date as required by Section 3.5(b), or, in the case of a Non-Acceptance Lender which has made a BA Equivalent Loan, to pay that Non-Acceptance Lender the amount of its BA Equivalent Loan plus interest on the maturity date of that loan as required by Section 3.5(f), then the Agent shall effect a Conversion of that Borrowing into a Prime Loan of the entire amount of such Borrowing, including all interest due in the case of BA Equivalent Loans, as if the Borrower had given a Notice of Conversion to the Agent to that effect in accordance with Section 3.8.
3.6 Agent’s Duties re Bankers’ Acceptances
(a) Advice to the Lenders: The Agent, promptly following receipt from the Borrower of a Notice of Drawdown by way of Bankers’ Acceptances, a Notice of Conversion where a Borrowing of another type is to be converted into a Borrowing by way of Bankers’ Acceptances (or BA Equivalent Loans in lieu thereof) or a Notice of Rollover in respect of a Borrowing by way of Bankers’ Acceptances (or BA Equivalent Loans made in lieu thereof), shall compute the funding details of such Drawdown, Conversion or Rollover (in compliance with Section 3.11(a)) and shall advise each applicable Lender forthwith of the amount of each issue of Bankers’ Acceptances to be accepted and purchased (or the amount of the BA Equivalent Loans to be made in lieu thereof) by such Lender. Prior to 12:00 noon (Toronto time) on the Drawdown Date, Borrowing Conversion Date or Borrowing Rollover Date, as
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applicable, the Agent shall provide advice by facsimile to the Borrower and each applicable Lender of the face amount of each issue of Bankers’ Acceptances, the Discount Rate, the Discount Proceeds of sale deliverable in respect thereof and the term thereof, which term in respect of each Borrowing shall be identical for all applicable Lenders.
(b) Completion of Bankers’ Acceptance: Upon receipt of the advice pursuant to Section 3.6(a), each applicable Lender, other than a Non-Acceptance Lender, is thereupon authorized to execute bankers’ acceptances as the duly authorized attorney of the Borrower, in accordance with the particulars so advised by the Agent.
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The Fronting Bank shall not have any responsibility or liability for or any duty to inquire into the form, sufficiency (other than to the extent provided in the preceding paragraph), authorization, execution, signature, endorsement, correctness (other than to the extent provided in the preceding paragraph), genuineness or legal effect of any LC Draft, certificate or other document presented to it pursuant to a Letter of Credit and the Borrower unconditionally assumes all risks with respect to the same. The Borrower agrees that it assumes all risks of the acts or omissions of the beneficiary of any Letter of Credit with respect to the use by such beneficiary of the relevant Letter of Credit.
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provided that at any one time there shall be no more than five (5) Fronting Banks which are eligible to issue Letters of Credit under this Section 3.75.
(i) Bankers’ Acceptances may be converted only on their maturity dates;
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(b) The Discount Proceeds of the replacement Bankers’ Acceptances or BA Equivalent Loans (as the case may be) shall be retained by the Agent to be applied by it to:
(i) the stamping fees payable pursuant to Section 5.4 in respect of the replacement Bankers’ Acceptances or BA Equivalent Loans (as the case may be); and
(ii) the principal amount of the maturing Bankers’ Acceptance or BA Equivalent Loan (as the case may be);
and the Borrower shall pay to the Agent, on the maturity date of the maturing Banker’s Acceptance or BA Equivalent Loan (as the case may be), an amount equal to the difference between:
(iii) the aggregate of the principal amount at maturity of the maturing Bankers’ Acceptance or BA Equivalent Loan (as the case may be), and the stamping fees payable pursuant to Section 5.4 in respect of the replacement Bankers’ Acceptances or BA Equivalent Loans (as the case may be); and
(iv) the Discount Proceeds of the replacement Banker’s Acceptances or BA Equivalent Loans (as the case may be).
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(c) Deposits for Bankers’ Acceptances: In the event the Borrower wishes to prepay Bankers’ Acceptances comprising a Borrowing on a date other than their maturity dates, the Borrower shall so notify the Agent, and, if the Borrower and the Agent have agreed upon the amount to be deposited into a Cash Coverage Account in order to yield on such maturity date the face amount of such Bankers’ Acceptances, and if such amount has been so deposited with the Agent as prepayment of such Bankers’ Acceptances, such Bankers’ Acceptances shall not thereafter be deemed to be outstanding as Bankers’ Acceptances hereunder. All such amounts in the Cash Coverage Account shall be applied to satisfy the obligations of the Borrower for the relevant Bankers’ Acceptances on their maturity dates and the Agent is hereby irrevocably directed by the Borrower to so apply any such amount in the Cash Coverage Account.
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(each Requested Lender being in agreement with delivering a Notice of Extension being an “Extending Lender” for the purposes of this Section 3.120), deliver to the Borrower (with a copy to each Extending Lender) a Notice of Extension on behalf of all Extending Lenders, executed by the Agent and, in the circumstance where not all Requested Lenders are Extending Lenders, advise the Borrower of:
The failure of the Agent within the aforementioned five day period to deliver a Notice of Extension, as provided in Section 3.120(c)(i) above, shall be deemed to be notification by the Agent to the Borrower that the Requested Lenders have denied the Request for Extension, and, in such circumstances, the Maturity Date shall not be extended for any of the Requested Lenders.
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The Borrower shall provide the Agent with written notice of its desire to proceed under this Section 3.120(e)(i) (which notice the Agent shall promptly provide to each Extending Lender), and the Extending Lenders shall be entitled to purchase such of the Assigned Interests as they may request (pro rata, in proportion to the Commitments of those Extending Lenders wishing to purchase Assigned Interests, or otherwise as such Extending Lenders may agree) by written notice to the Agent and the Borrower within 10 days after receipt of such notice, before any Assigned Interests may be assigned to third party financial or other institutions. Such assignments, in any event, shall be effective upon:
Upon such assignment and transfer becoming effective, the Non-Extending Lender shall have no further right, interest, benefit or obligation hereunder to the extent of the Assigned Interests assigned by that Lender, and each assignee thereof shall succeed to the position of such Lender to the extent of the portion of the Assigned Interests acquired by such assignee as if the assignee was an original Lender hereunder in regard thereto in the place and stead of such Non-Extending Lender; and
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provided that, notwithstanding Section 3.120(e) or any other provision herein, at any time prior to such Maturity Date, the Borrower may require any Non-Extending Lender to assign all or (subject to Section 16.9(a)) a portion of its rights and obligations under the Credit Facility in the same manner and subject to the same procedures as are contemplated in Section 3.120(e)(i) above and, upon such assignment becoming effective, each assignee shall be deemed to be an Extending Lender and the Maturity Date applicable to the Assigned Interests shall be extended to the Maturity Date applicable to the Commitments of the Extending Lenders; and provided, further, that where the proposed Assigned Interests are less than the aggregate Commitments of all of the Non-Extending Lenders, the Borrower shall ensure that the Commitments of all (but not less than all) of the Non-Extending Lenders are assigned or cancelled either (A) by requiring some or all of the Non-Extending Lenders to (and such Non-Extending Lender shall thereupon become obligated to) assign to the proposed assignee or assignees the same proportion of their respective Commitments as their respective Commitments bear to the aggregate Commitments of all Non-Extending Lenders or (B) if no Default or Event of Default then exists, by repaying to some or all of the Non-Extending Lenders all Loan Indebtedness owing hereunder to the Non-Extending Lenders in the same manner as is contemplated in Section 3.120(e)(ii) above.
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The Borrower may, at any time and from time to time, add additional financial institutions hereunder as Lenders and/or, with the consent of the applicable Lender (which may be given or withheld in its sole discretion), increase the Commitment of such Lender and, in each case, thereby increase the maximum principal amount of the Credit Facility, provided that, at the time of any such addition or increase:
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If, on the last day of any Fiscal Quarter or any Interest Period , or on the maturity date of an outstanding Banker’s Acceptance (each (a “Currency Test Date”), the amount of Outstanding Principal owed to any Lender is in excess of the Syndicated Commitment of such Lender and the amount of any funds on deposit or letter of credit or other assurance satisfactory to the Agent held for or by such Lender pursuant to this Section 4.2 (the amount of the excess being the “Currency Excess”), the Borrower shall, within 10 Business Days of the Currency Test Date, repay or otherwise reduce a portion of Borrowings owed to such Lender to the extent of the amount of such Currency Excess or provide satisfactory assurance of repayment thereof by depositing funds in an amount equal to the Currency Excess into a Cash Coverage Account with the Agent on behalf of the relevant Lender, to be dedicated to payment of Borrowings owed to the relevant Lender or provide satisfactory assurance of repayment thereof by way of letter of credit or otherwise as may be acceptable to such Lender, all to the satisfaction of the Agent. The Agent is hereby directed to apply any such sums on deposit to reduce the Currency Excess by applying such funds to satisfy obligations or liabilities of the Borrower under the Credit Facility to the relevant Lenders under the Loan Documents in respect of Bankers’ Acceptances (or BA Equivalent Loans made in lieu thereof) on their maturity or Term Benchmark Loans at the expiration of Interest Periods, as applicable, or (subject to compliance with Sections 3.108(b) and 3.10(c), as applicable), at such earlier time as the Borrower elects. Upon the Currency Excess being eliminated by repayments or by virtue of
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subsequent changes in the exchange rate for determining the Equivalent Amount in US Dollars of Borrowings on a Currency Test Date, such funds on deposit, together with interest thereon, or letter of credit or other assurance shall be returned to the Borrower.
The Borrower may at any time, at its option and in its sole discretion, upon not less than two (2) Business Days’ prior notice to the Agent substantially in the form of Schedule “A”, cancel and reduce without penalty all or any portion of (a) the aggregate Syndicated Commitments of those Lenders which are not Non-Extending Lenders (as defined in Section 3.120), (b) the aggregate Syndicated Commitments of those Lenders which are Non-Extending Lenders (as defined in Section 3.120), or (c) any combination thereof, in minimum amounts of US$10,000,000 and in multiples of US$1,000,000 thereof, by:
provided that (i) on or prior to the last day of such notice period, the Borrower has repaid or reduced the principal amount of Syndicated Borrowings owing to each relevant Lender in accordance with Section 3.108(a) in an amount equal to the amount by which the Equivalent Amount of such Syndicated Borrowings in US Dollars would otherwise be in excess of such Lender’s Syndicated Commitment immediately after the reduction of the Total Syndicated Commitment provided for in such notice and (ii) the cancellation of all of the Syndicated Commitment of a Lender shall be deemed to be a cancellation of all other Commitments of such Lender. Any such notice of cancellation is irrevocable and the amount of the Total Syndicated Commitment so cancelled may not be reinstated.
The Agent shall open and maintain on the books at the Agent’s Branch of Account accounts evidencing the Borrower’s liability to the Agent and each Lender in respect of the Borrowings and other Loan Indebtedness outstanding by the Borrower hereunder. The Agent shall enter therein the amount and currency of such Borrowings, each payment of principal and interest on the Borrowings and other Loan Indebtedness, and shall record the Bankers’ Acceptances accepted by each Lender, the Letters of Credit issued by each Fronting Bank and all other amounts becoming due to the Agent and each Lender hereunder (and for such purposes the Agent shall be entitled to rely upon information provided by the Fronting Bank in respect of any Letter of Credit issued by such Lender). The Accounts constitute, in the absence of manifest error, prima facie evidence of the Loan Indebtedness of the Borrower to the Agent and each Lender pursuant to this Agreement, the date and amount of each Borrowing made available to the Borrower, the date and amount of each payment by the Borrower on account of the Loan Indebtedness owing hereunder.
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The Borrower shall pay the Agent, on behalf of each Lender, interest on Prime Loans owed to such Lender in Canadian Dollars at the Agent’s Account for Payments at a variable rate per annum equal to the Prime Rate plus any Applicable Pricing Margin from time to time. Each change in the fluctuating interest rate for the Prime Loans will take place without notice to the Borrower, simultaneously with the corresponding change in the Prime Rate. A change in the Applicable Pricing Margin will simultaneously cause a corresponding change in the rate of interest payable for a Prime Loan. Such interest is payable quarterly in arrears on each Interest Date, in respect of the previous Fiscal Quarter, and shall be calculated on a daily basis, based on the actual number of days elapsed and a year of 365 days, rounded in accordance with the Agent’s usual practices. If, at any time while Prime Loans are outstanding, the Prime Rate is being determined by reference to the CDOR One Month RateAdjusted Term CORRA, the Agent shall promptly advise the Borrower of such fact.
The Borrower shall pay to the Agent on behalf of each Lender interest on each Daily Compounded CORRA Loan owed to such Lender in Canadian Dollars at the Agent’s Account for Payments at the rate, expressed on the basis of a 365 day year, equal to the sum of Adjusted Daily Compounded CORRA plus the Applicable Pricing Margin. A change in Daily Compounded CORRA or the Applicable Pricing Margin will simultaneously cause a corresponding change in the rate of interest payable for a Daily Compounded CORRA Loan. Each determination by the Agent of the rate of interest applicable to a Interest Period shall, in the absence of manifest error, be final, conclusive and binding upon the Borrower and each Lender. Such interest shall accrue and compound daily, shall be payable in arrears on each Interest Date of each Interest Period applicable to each Daily Compounded CORRA Loan, for the period commencing on and including, as applicable, the first day of the applicable Interest Period or the preceding Interest Date in such Interest Period, up to but not including such Interest Date, and calculated on a daily basis, based on the actual number of days elapsed divided by 365, rounded in accordance with the Agent’s usual practices.
The Borrower shall pay to the Agent on behalf of each Lender interest on each Term CORRA Loan owed to such Lender in Canadian Dollars at the Agent’s Account for Payments at the rate, expressed on the basis of a 365 day year, equal to the sum of Adjusted Term CORRA plus the Applicable Pricing Margin. A change in Term CORRA or the Applicable Pricing Margin will simultaneously cause a corresponding change in the rate of interest payable for a Term CORRA Loan. Each determination by the Agent of the rate of interest applicable to a Interest Period shall, in the absence of manifest error, be final, conclusive and binding upon the Borrower and each Lender. Such interest shall be payable in arrears on each Interest Date of each Interest Period applicable to each Term CORRA Loan, for the period commencing on and including, as applicable, the first day of the applicable Interest Period or the preceding Interest Date in such Interest Period, up to but not including such Interest Date, and calculated on a daily basis, based on the actual number of days elapsed divided by 365, rounded in accordance with the Agent’s usual practices.
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The Borrower shall pay to the Agent, on behalf of each Lender, interest on USBR Loans owed to such Lender in US Dollars at the Agent’s Account for Payments at a variable rate per annum equal to the US Base Rate plus any Applicable Pricing Margin from time to time. Each change in the fluctuating interest rate for the USBR Loans will take place without notice to the Borrower, simultaneously with the corresponding change in the US Base Rate. A change in the Applicable Pricing Margin will simultaneously cause a corresponding change in the rate of interest payable for a USBR Loan. Such interest is payable quarterly in arrears on each Interest Date, in respect of the previous Fiscal Quarter, and shall be calculated on a daily basis, based on the actual number of days elapsed and a year of 365 days, rounded in accordance with Agent’s usual practices. If, at any time while USBR Loans are outstanding, the US Base Rate is being determined by reference to the Fed Funds Rate or the one month Adjusted Term BenchmarkSOFR, the Agent shall promptly advise the Borrower of such fact.
The Borrower shall pay to the Agent on behalf of each Lender interest on each Term BenchmarkSOFR Loan owed to such Lender in US Dollars at the Agent’s Account for Payments at the rate, expressed on the basis of a 360 day year, equal to the sum of:
(a) Adjusted Term SOFR plus the Applicable Pricing Margin. the Term Benchmark applicable to such Term Benchmark Loan for the applicable Interest Period; and
(b) the Applicable Pricing Margin from time to time.
A change in the Applicable Pricing Margin will simultaneously cause a corresponding change in the rate of interest payable for a Term BenchmarkSOFR Loan. Each determination by the Agent of the rate of interest applicable to a Interest Period shall, in the absence of manifest error, be final, conclusive and binding upon the Borrower and each Lender. Such interest shall be payable in arrears on each Term Benchmark Interest Date of each Interest Period applicable to each Term BenchmarkSOFR Loan, for the period commencing on and including, as applicable, the first day of the applicable Interest Period or the preceding Term Benchmark Interest Date in such Interest Period, up to but not including such Term Benchmark Interest Date, and calculated on a daily basis, based on the actual number of days elapsed divided by 360, rounded in accordance with the Agent’s usual practices.
5.4 Stamping Fees for Bankers’ Acceptances
The Borrower shall pay to each Lender stamping fees in Canadian Dollars forthwith upon the acceptance by such Lender of each Bankers’ Acceptance issued by the Borrower hereunder (including, for certainty, any Bankers’ Acceptances issued and accepted pursuant to Section 3.8 or 3.9) at a rate per 365 day period equal to the Applicable Pricing Margin in effect during the term of such Bankers’ Acceptance, calculated on the face amount of such Bankers’ Acceptance and on the basis of the number of days in the term of such Bankers’ Acceptance divided by 365. Fees payable to the Lenders pursuant to this Section 5.4 shall be paid in the manner specified in Section 12.8(b)(ii). All fees payable pursuant to this Section 5.4 on any date in respect of any issuance of Bankers’ Acceptances shall be calculated by the Agent and payable by the Borrower.
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All fees payable under Section 5.46 or 5.5 shall be calculated by the Agent and payable by the Borrower initially on the assumption that the Debt Ratings at the time of issuance of the applicable Bankers’ Acceptances or Letters of Credit will be maintained during the term thereof. In the event such fees are calculated and paid on such assumption and such Debt Rating is changed or ceases to be available such as to change the Applicable Pricing Margin (any such change or cessation of a Debt Rating being a “Rating Change”) during the term of any such outstanding Bankers’ Acceptances or Letters of Credit, the Agent shall recalculate the amount of such fees on the basis of the Applicable Pricing Margin applicable to the period before such Rating Change, and the Applicable Pricing Margin applicable to the period on and after such Rating Change, and advise the Borrower and the Lenders of the amount of the underpayment or overpayment (if any). In the case of an underpayment, the Borrower shall pay to the Agent on behalf of the Lenders, on the maturity date of such outstanding Bankers’ Acceptances (in the case of Bankers’ Acceptances) or on the next date on which any interest or fee payment is made hereunder (in the case of Letters of Credit), the amount of such underpayment, and, in the case of an overpayment, the amount thereof shall be credited against amounts in respect of interest or other amounts accruing hereunder. Changes in the interest rate payable in respect of Loans as a result of a Rating Change shall be effective on the date of such Rating Change.
The Borrower expressly agrees to pay to the Agent on behalf of each Lender, at the Agent’s Branch of Account, on demand, interest on all overdue amounts outstanding under this Agreement at a variable rate per annum, which shall be adjusted automatically without notice to the Borrower whenever there is a change in the Prime Rate or US Base Rate, as the case may be, which is equal to:
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and which additional interest the Borrower acknowledges to be commensurate with the increased credit risk to the Lenders in the circumstances. Such interest on overdue amounts shall be compounded monthly and shall be payable both before and after default, maturity and judgment.
The Borrower covenants and agrees to pay to the Agent, on behalf of each Lender at the Agent’s Branch of Account, a standby fee in US Dollars payable in arrears on the first Business Day of each Fiscal Quarter, in respect of the previous Fiscal Quarter, in an amount equal to the Applicable Pricing Margin on each day in the calculation period, calculated on the amount by which the Syndicated Commitment of such Lender on such day is in excess of the Outstanding Principal then owing to such Lender on such day. Such standby fees shall be computed from and including the Effective Date and shall be calculated on a daily basis and based on a year of 365 days.
The Borrower covenants and agrees to pay to the Agent certain fees as set forth in a letter agreement between the Agent and the Borrower relating to the Agent’s role as agent hereunder.
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The principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement; all interest payments to be made hereunder shall be paid without allowance or deduction for deemed reinvestment or otherwise, before and after maturity, default and judgment. The rates of interest specified in this Agreement are intended to be nominal rates and not effective rates. Interest calculated hereunder shall be calculated using the nominal rate method and not the effective rate method of calculation.
At the same time as any repayment or prepayment of principal is made under this Agreement or any Borrowings have been repaid in accordance with a cancellation of the Commitment pursuant to Section 4.3, the Borrower shall also pay all accrued and unpaid interest on the principal being repaid or prepaid.
Subject to the next sentence, the Borrower shall make all payments pursuant to this Agreement to the Agent on behalf of the Lenders at the Agent’s Branch of Account in immediately available funds for good value on the day specified for payment. The Borrower shall make all payments owing to a Fronting Bank for its own account at such Lender’s Branch of Account in immediately available funds for good value on the day specified for payment. Whenever a payment is due to be made on a day which is not a Business Day, the day for payment is the following Business Day and such extension of time shall in such case be included in the computation of the payment of interest or any other amounts payable hereunder. Receipt by the Agent from the Borrower of funds for value on any day pursuant to this Agreement, as principal, interest, fees or otherwise, shall be deemed to be receipt of such funds on such day by the Agent or relevant Lenders, as the case may be.
Borrowings and payments in respect thereof are payable in the currency in which they are denominated.
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The Borrower authorizes and directs the Agent, in its discretion, to automatically debit, by mechanical, electronic or manual means, the Borrower’s Accounts for all amounts payable under this Agreement, including, but not limited to, the repayment of principal and the payment of interest, fees and all charges for the keeping of such bank accounts; provided that the Agent shall not be obligated to effect any such debit and shall not be liable or responsible for its failure to do so. The Agent shall send the Borrower an invoice for any fees payable under this Agreement at least three (3) Business Days prior to any such debit and shall provide a confirmation of any upcoming debit for repayment of Borrowings on the same day that the Agent receives notice of such repayment from the Borrower. In the event the Agent debits the Borrower’s Accounts by an amount in excess of the principal, interest, fees or charges properly due on a day, then forthwith upon the error being discovered, the Agent shall reimburse the Borrower such excess amount with interest thereon from the date of the excess debit until reimbursement at rates prevailing at the time of the excess debit for deposits of like amount and currency with the Agent.
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The effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent:
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Each Lender hereby authorizes the Agent to confirm to the Borrower on the Effective Date that the conditions precedent set forth in this Section 7.1 have been satisfied on or prior to the Effective Date, provided such Lender has not advised the Agent in writing prior to such Effective Date that such Lender is not satisfied that the Borrower has complied with such conditions precedent.
The Lenders’ obligations to make available any Drawdown pursuant to Section 3.3 are subject to and conditional upon the condition precedent that the Effective Date shall have occurred and the satisfaction of each of the following conditions precedent:
The Lenders’ obligations to make any Conversion pursuant to Section 3.86 or to Rollover a Borrowing pursuant to Section 3.97 are subject to and conditional upon the satisfaction of each of the following terms and conditions (except as expressly provided otherwise in Section 3.75(d)):
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The terms and conditions of Sections 7.1, 7.2 and 7.3 are inserted for the sole benefit of the Lenders and, subject to Sections 12.12 and 16.3, the Lenders may waive them in whole or in part, with or without terms or conditions in respect of any Borrowing, without prejudicing the Lenders’ rights to assert them in whole or in part in respect of any other Borrowing.
Subject to Section 8.3, each of the Guarantor (without any limitation) and the Borrower (whose affirmative covenants will be limited to only Sections 8.1(a), 8.1(c) and 8.1(e) below) covenants with the Agent and each Lender that:
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provided that any Obligor may satisfy the delivery requirements set forth in this Section 8.1(h) by sending to the Agent by electronic mail the documents that are to be delivered to the Agent pursuant to this Section 8.1(h), and, in the case of documents delivered pursuant to paragraph (iii) above, the Borrower promptly executes and delivers to the Agent an originally signed copy of such Compliance Certificate; and further, provided that the Guarantor shall be deemed to have furnished the information required by Sections 8.1(h)(i), 8.1(h)(ii) and 8.1(h)(iv) if it shall have timely made the same available on “SEDAR” or “EDGAR” and notified the Agent that such information has been posted on “SEDAR” or “EDGAR” and such information is freely accessible without charge; and further, provided, that if any Lender is unable to access “SEDAR” or “EDGAR”, as applicable, the Guarantor agrees to provide such Lender with paper or electronic copies of the information required to be furnished pursuant to this Section 8.1(h) promptly following notice (and thereafter so long as such notice remains in effect) from the Agent that such Lender has requested same; and further, provided that the Agent and the Lenders hereby agree to keep confidential any data or information delivered to the Agent or the Lenders under this Section 8.1(h) which is not already in the public domain;
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the Borrower shall promptly provide the Agent with a copy of such notice and shall, or shall cause its Subsidiary to, furnish to the Agent from time to time all reasonable information requested by the Agent relating to the same;
Subject to Section 8.3, each of the Guarantor (without any limitation) and the Borrower (whose negative covenants will be limited to only Section 8.2(c) below) covenants with the Agent and each Lender that:
The Guarantor shall not create, or permit any of its Restricted Subsidiaries to create, any mortgage, hypothecation, charge or other encumbrance on any of its or their property or assets, present or future, to secure Indebtedness, unless at or prior thereto, the Loans, up to the maximum aggregate amount of the Commitments then in effect, are equally and ratably secured or, at the option of the Guarantor, security in the form of other property having at such time a Value equal to 150% of the aggregate Commitments at such time is extended to the Agent, the Lenders and the Fronting Banks; provided, however, that the preceding shall not apply to or operate to prevent the following:
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and provided further that (IA) in any event, the Guarantor and any Restricted Subsidiary shall be entitled to give security that would otherwise be prohibited hereby so long as the aggregate Indebtedness outstanding and secured under this clause (IA) and the aggregate Indebtedness outstanding and secured under Section 8.2(a)(xiv) does not at the time of giving such security exceed an amount equal to 10% of Consolidated Net Tangible Assets
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of the Guarantor at such time and (IIB) in no event shall the Guarantor or any Restricted Subsidiary be entitled to give security that would otherwise be permitted by Section 8.2(a)(xiv) if such security secures Indebtedness which exceeds an amount equal to 10% of the Consolidated Net Tangible Assets of the Guarantor at such time.
Transactions such as the sale (including any forward sale) or other transfer of (AI) oil, gas, minerals or other resources of a primary nature, whether in place or when produced, for a period of time until, or in an amount such that, the purchaser will realize therefrom a specified amount of money or a specified rate of return (however determined), or a specified amount of such oil, gas, minerals, or other resources of a primary nature, or (BII) any other interest in property of the character commonly referred to as a “production payment”, will not constitute secured indebtedness and will not result in the Guarantor being required to secure the Borrowings.
In the event security has been provided to the Agent, the Lenders and the Fronting Banks in accordance with this Section 8.2(a) and the maximum principal amount of the Commitments is thereafter permanently reduced at any time or from time to time, the Guarantor may request once in each calendar year, and the Agent, the Lenders and the Fronting Banks shall grant at the Guarantor’s expense, discharges of security as will ensure that the remaining security secures, to the satisfaction of the Agent, the Lenders and the Fronting Banks acting reasonably, the maximum principal amount of Loans which are, or which may become, outstanding after giving effect to such permanent reduction in the total amount of the Commitments;
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to exceed 17.5% of Consolidated Tangible Assets as of the last day of each Fiscal Quarter, as reported to the Lenders in accordance with Section 8.1(h); provided that, for the purpose of calculating the aggregate Financing Debt referred to in (i) above or the aggregate Indebtedness referred to in (ii) above, there shall be excluded (yA) the Financing Debt of any Public Material Subsidiary or (zB) any such Indebtedness secured by security interests over Restricted Property of any Public Material Subsidiary for so long as, in regard to any case referred to in (yA) or (zB) above, Common Equity Securities of the relevant Public Material Subsidiary are listed on any stock exchange and for 120 days (or such longer period as the Majority Lenders may allow in their sole discretion) after the date that Common Equity Securities of such Public Material Subsidiary cease to be so listed; and
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in either case, for so long as such wholly-owned Subsidiaries remain, directly or indirectly, wholly-owned by such Material Subsidiary, without being required by this Section 8.2(f) to execute and deliver a guarantee or other instrument to the Agent in accordance with the foregoing; and provided further however, that a Subsidiary which is not a Material Subsidiary need not execute and deliver such a guarantee or other instrument if and for so long as such Subsidiary, together with each other such Subsidiary which has given, granted, or become subject to a Third Party Guarantee and which has not executed and delivered a guarantee or other instrument to the Agent on behalf of the Lenders hereunder, has assets which have a value, as reflected in the Consolidated balance sheet of the Guarantor most recently delivered to the Lenders hereunder, of 10% or less of the value of the assets of the Guarantor and its Subsidiaries reflected therein (without giving effect to the non-cash ceiling test impairments and other changes as at December 31, 2011 as a consequence of Encana’s adoption of US GAAP). Any Material Subsidiary that provides a guarantee to the Agent on behalf of the Lenders in accordance with this Section shall also provide such other documents and certificates as the Agent may reasonably request, and to the extent such Material Subsidiary qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, shall provide to any Lender that so requests a Beneficial Ownership Certification. If any Subsidiary that provides a guarantee to the Agent on behalf of the Lenders in accordance with this Section is released from its Third Party Guarantee(s) (other than as a result of any payment being made under such Third Party Guarantee(s)), then, upon the request of the Borrower or such Subsidiary for the release of such guarantee and provided that no Default or Event of Default has occurred and is continuing or would result from such release, such guarantee shall also be released (and the Agent shall promptly execute such documents and instruments as the Borrower or such Subsidiary may reasonably request to evidence such release).
Notwithstanding anything to the contrary provided in Section 8.1 or Section 8.2 whereby an Obligor has covenanted to cause any Subsidiary to do or not to do any act or thing and (a) such Subsidiary is not a Wholly-Owned Subsidiary, (b) the Guarantor does not control the day to day operations of such Subsidiary (by operation of contract or otherwise) and (c) the portion of the Consolidated Tangible Assets of the Guarantor attributable to all of the Subsidiaries that meet the requirements of clauses (a) and (b) does not exceed 10% of the value of the Consolidated Tangible Assets of the Guarantor, as measured as of the end of the immediately preceding fiscal year, the applicable Obligor(s) shall have complied with its or their covenants in that regard if it shall have used all reasonable efforts to cause such Subsidiary to comply with the requirements of Sections 8.1 and 8.2 or to remedy any breaches thereof; and with respect to any breach of Section 8.1 or Section 8.2 caused by any Subsidiary acting or failing to act in the manner required by such Section, such Obligor’s obligation to use its reasonable efforts to prevent or remedy such breach shall only be applicable from and after the date that such Obligor becomes aware of such breach or the date such Obligor becomes aware such breach may occur, as the case may be; provided that this Section 8.3 shall not apply to (i) the covenants contained in Section 8.2(e) or 8.2(f), or (ii) any covenant if the breach thereof could reasonably be expected to have a Material Adverse Effect.
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Any one or more of the following occurrences is an Event of Default, but only if at the time of or during the continuance of any such occurrence a Borrowing is outstanding:
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Upon the occurrence and during the continuance of an Event of Default, the Agent may, at its option, and shall if so required by the Majority Lenders, by written notice to the Borrower (an “Acceleration Notice”), declare all or any part of the Outstandings and all other Loan Indebtedness (whether matured or unmatured) of the Borrower to the Lenders under this Agreement (including the amount of all Bankers’ Acceptances and BA Equivalent Loans, as determined by the Agent acting reasonably) to be due and payable, whereupon the Total Syndicated Commitment and all Fronting Bank Commitments and any right of the Borrower to any further Borrowing shall terminate and all Loan Indebtedness (whether matured or unmatured) of the Borrower to the Lenders pursuant to this Agreement (including the amount of all Bankers’ Acceptances and BA Equivalent Loans, as determined by the Agent acting reasonably) shall be immediately due and payable without further demand or other notice of any kind, all of which are expressly waived by the Borrower; provided that upon the occurrence of an Event of Default specified in Section 9.1(b) or 9.1(c), the Total Syndicated Commitment and all Fronting Bank Commitments and any right of the Borrower to any further Borrowing shall automatically terminate and all Loan Indebtedness (whether matured or unmatured) of the Borrower to the Lenders pursuant to this Agreement (including the amount of all Bankers’ Acceptances and BA Equivalent Loans, as determined by the Agent acting reasonably) shall be immediately due and payable without further demand or other notice of any kind, all of which are expressly waived by the Borrower. The Borrower shall pay to the Lenders immediately the amount due and payable pursuant to this Section 9.2, failing which the Lenders or any of them may pursue their remedies under this Agreement.
Where (xa) an occurrence occurs that would otherwise be an Event of Default but is not an Event of Default by reason of the repayment of Borrowings or because there are no outstanding Borrowings (including, for certainty, because of any cash cover provided pursuant to Section 3.108(c) or 3.10(d)), or (yb) a Default or Event of Default exists, or (zc) the financial statements delivered by the Borrower disclose a likely breach of the financial tests in Section 8.1(j) or 8.2(e) which cannot be verified because the relevant Compliance Certificate has not been delivered and in respect of which the Borrower has not satisfied the Majority Lenders that such breach has been rectified, then, in each such case and notwithstanding anything else contained herein, the obligations of the Lenders to make Borrowings available to the Borrower hereunder which would increase the total Outstandings shall be suspended and shall remain suspended, and all Interest Periods and terms of Bankers’ Acceptances, BA Equivalent Loans and Letters of Credit which commence during such period through Rollovers and Conversions shall not exceed 1 month, until, as applicable, such occurrence, Default or Event of Default has been remedied or waived and any conditions to the effectiveness (or the continued effectiveness) of such waiver are satisfied or are being complied with, as applicable.
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The Borrower expressly agrees that the rights and remedies of the Lenders under this Agreement and each of the Loan Documents delivered by the Borrower hereunder are cumulative, and in addition to, and not in substitution for, any rights or remedies provided by law; any single or partial exercise by the Lenders of any right or remedy for a default or breach of any term, covenant, condition or agreement in this Agreement or any Loan Document delivered by the Borrower hereunder does not waive, alter, affect, or prejudice any other right or remedy to which the Lenders may be lawfully entitled for the same default or breach.
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Upon the occurrence of an Event of Default and in addition to any other rights or remedies of the Lenders hereunder, the Borrower, at the request of the Agent, shall deposit into a Cash Coverage Account with the Agent such amounts as may be required to satisfy obligations or liabilities of the Borrower to the Lenders under the Loan Documents in respect of Bankers’ Acceptances which have not matured or Letters of Credit which have not been drawn; provided that any such amounts not so deposited by the Borrower shall, at the option of the Lenders, be paid by the Lenders into such Cash Coverage Account and shall be deemed to constitute, without duplication of any relating Outstandings, a Prime Loan (in respect of amounts denominated in Cdn. Dollars) or a USBR Loan (in respect of amounts denominated in US Dollars).
Except as otherwise agreed to by all of the Lenders in their sole discretion, any sum received by the Agent at any time after delivery of an Acceleration Notice or after the occurrence of an Event of Default specified in Section 9.1(b) or 9.1(c) which the Agent is obliged to apply in or towards satisfaction of sums due from the Borrower hereunder shall be applied by the Agent rateably among the Lenders and the Agent in accordance with amounts owed to the Lenders and the Agent in respect of each category of amounts set forth below, each such application to be made in the following order with the balance remaining after application in respect of each category to be applied to the next succeeding category:
(a) Respecting Term Benchmark Loans:If, with respect to any Term Benchmark Loans, (x) the Majority Lenders notify the Agent that the Adjusted Term SOFR Rate for any Interest Period for such Term Benchmark Loans will not adequately reflect the cost to such Majority Lenders of making, funding or maintaining their respective Term Benchmark Loans for such Interest Period, or (y) the Agent is unable to determine the Term SOFR Reference
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Rate under the definition thereof, the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each Term Benchmark Loan will automatically, on the final day of the then existing Interest Period therefor, convert into a USBR Loan as if a Notice of Conversion had been given to the Agent by the Borrower pursuant to the provisions hereof, and (ii) the obligation of the Lenders to make, or to convert Loans into, Term Benchmark Loans shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.
Subject to Section 10.5, if:
then, in each case, the Agent will promptly so notify the Borrower and each Lender. Upon notice thereof by the Agent to the Borrower, any obligation of the Lenders to make such Benchmark Loans, and any right of the Borrower to Rollover such Benchmark Loans, or to convert any other Loans into such Benchmark Loans, shall be suspended (to the extent of the affected Benchmark Loans or affected Interest Periods) until the Agent (with respect to clause (b), at the instruction of Lenders holding at least such proportion of the Total Syndicated Commitment) revokes such notice.
Upon receipt of such notice:
(i) an interest rate or discount rate is not ascertainable pursuant to the provisions of the definition of “CDOR Rate” and the inability to ascertain such rate is unlikely to be temporary;
(ii) the regulatory supervisor for the administrator of the CDOR Rate screen rate, the Bank of Canada, an insolvency official with jurisdiction over the administrator for the CDOR Rate, a resolution authority with jurisdiction over the administrator for the CDOR Rate, or a court or an entity with similar insolvency or resolution authority over the administrator for the CDOR Rate, has made a public statement, or published information, stating that the administrator of the CDOR Rate, has ceased or will cease to provide the CDOR Rate, permanently or indefinitely on a specific date; provided that, at that time, there is no successor administrator that will continue to provide the CDOR Rate; or
(iii) the administrator of the CDOR Rate screen rate or a Governmental/Judicial Body having jurisdiction over the Agent or the administrator of the CDOR Rate screen rate has made a public statement identifying a specific date after which the CDOR Rate, or the CDOR Rate screen rate shall no longer be made available, or used for determining the interest rate of loans or the discount rates for bankers’ acceptances; provided that, at that time, there is no successor administrator that will continue to provide the CDOR Rate,
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(the date of determination or such specific date in the foregoing paragraphs (i) through (iii), the “CDOR Discontinuation Date”),
then the Agent and the Borrower shall negotiate in good faith to select a replacement index rate for the CDOR Rate and make such spread adjustments thereto and other related amendments to this Agreement that shall give due consideration to the prevailing market practice for: (A) determining a rate of interest applicable to newly originated Canadian Dollar loans made in Canada at such time and for determining the discount rate for Canadian Dollar bankers’ acceptances issued and accepted in Canada at such time, and (B) transitioning existing loans and bankers’ acceptances from CDOR Rate-based rates to loans bearing interest and bankers’ acceptances with discount rates calculated with reference to the new reference index rate; provided that, to the extent reasonably practicable, the all-in rate paid by the Borrower under this Agreement based on such replacement index rate will be substantially equivalent to the all-in rate applicable to Bankers’ Acceptances and a BA Equivalent Loans made hereunder prior to the replacement of the CDOR Rate (excluding, for certainty, any differences resulting from fluctuations in the Debt Rating).
Upon an agreement being reached between the Agent and the Borrower pursuant to the immediately preceding paragraph, the Agent and the Borrower shall enter into an amendment to this Agreement that gives effect to the replacement index rate, adjustments to the Applicable Pricing Margin and such other related amendments as may be appropriate in the discretion of the Agent for the implementation and administration of Canadian Dollar loans bearing interest or bankers’ acceptances with discount rates calculated with reference to the replacement index rate. Notwithstanding anything to the contrary in this Agreement (including Section 12.12) or any other Loan Document, such amendment shall become effective at 5:00 p.m. (Calgary time) on the fifth Business Day after a copy of the amendment is provided to the Lenders and without any further action or consent of any other party to this Agreement, unless the Agent receives, on or before such date and time, a written notice from the Majority Lenders stating that such Lenders object to such amendment; provided that, if such replacement index rate agreed upon to replace the CDOR Rate shall be less than zero, it shall be deemed to be zero for the purposes of this Agreement.
Until an amendment reflecting the transition to a new reference index rate becomes effective as contemplated by this Section, the discount rate applicable to each Drawdown, Conversion or Rollover of a Bankers’ Acceptance or a BA Equivalent Loan shall continue to be calculated with reference to the CDOR Rate; provided that if the Agent determines (which determination shall be conclusive, absent manifest error) that a CDOR Discontinuation Date has occurred, then following the CDOR Discontinuation Date, until such time as an amending agreement adopting such a new reference index rate becomes effective as contemplated by this Section:
(iv) any requested Drawdown by way of, Conversion into, or Rollover of, a Bankers’ Acceptance or a BA Equivalent Loan shall be deemed to be a request for a Prime Loan in the same principal amount; and
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in each case, upon any such Conversion, the Borrower shall also pay accrued interest on the amount so converted, together with any additional amounts required pursuant to Section 3.8(b). Subject to Section 10.5, if the Agent determines (which determination shall be conclusive and binding absent manifest error) that any Benchmark cannot be determined pursuant to the definition thereof on any given day, the interest rate on USBR Loans or Prime Loans, as applicable, shall be determined by the Agent without reference to clause (iii) of the definition of “US Base Rate” or clause (ii) of the definition of “Prime Rate” until the Agent revokes such determination.
For certainty, upon the occurrence of a CDOR Discontinuation Date, the Prime Rate shall be determined without regard to subparagraph (ii) of the definition thereof.
(c) Respecting Bankers’ Acceptances: Notwithstanding anything to the contrary herein contained, if:
(i) the Agent (acting reasonably), makes a determination, which determination shall be conclusive and binding upon the Borrower, and notifies the Borrower, that there no longer exists an active market for bankers’ acceptances accepted by the Lenders; or
(ii) the Agent is advised by Lenders holding at least 35% of the Total Syndicated Commitment by written notice (each, a “BA Suspension Notice”) that such Lenders (acting reasonably) have determined that the Discount Rate will not or does not accurately reflect the discount rate which would be applicable to a sale of Bankers Acceptances accepted by such Lenders in the market for the applicable term;
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then:
(iii) the right of the Borrower to request Bankers’ Acceptances or BA Equivalent Loans from any Lender shall be suspended until the Agent (acting reasonably) determines that the circumstances causing such suspension no longer exist, and so notifies the Borrower and the Lenders;
(iv) any outstanding Notice of Drawdown requesting a Drawdown by way of Bankers’ Acceptances or BA Equivalent Loans shall be deemed to be a Notice of Drawdown requesting a Borrowing by way of Prime Loans in the amount specified in the original Notice of Drawdown;
(v) any outstanding Notice of Conversion requesting a Conversion of a Borrowing into a Borrowing by way of Bankers’ Acceptances or BA Equivalent Loans shall be deemed to be a Notice of Conversion requesting a Conversion of such Borrowing into a Borrowing by way of Prime Loans; and
(vi) any outstanding Notice of Rollover requesting a Rollover of Bankers’ Acceptance or BA Equivalent Loans shall be deemed to be a Notice of Conversion requesting a Conversion of such Borrowing into a Borrowing by way of Prime Loans.
The Agent shall promptly notify the Borrower and the Lenders under such Credit Facility of any suspension of the Borrower’s right to request the Bankers’ Acceptances or BA Equivalent Loans and of any termination of any such suspension or if the circumstances giving rise to such suspension no longer exist. A BA Suspension Notice shall be effective upon receipt of the same by the Agent if received prior to 12:00 noon (Calgary time) on a Business Day and, if not, then on the next following Business Day, except in connection with a Notice of Drawdown, Notice of Conversion or Notice of Rollover previously received by the Agent, in which case the applicable BA Suspension Notice shall only be effective with respect to such previously received Notice of Drawdown, Notice of Conversion or Notice of Rollover if received by the Agent prior to 12:00 noon (Calgary time) two Business Days prior to the proposed Drawdown Date or date of Rollover or Conversion (as applicable) applicable to such previously received Notice of Drawdown, Notice of Conversion or Notice of Rollover (as applicable).
If any Lender (acting reasonably) makes a determination that the adoption, introduction, implementation or coming into effect of any Applicable Law, or any change therein, or any change in any existing Applicable Law or in the interpretation, administration or application of any Applicable Law by any Governmental/Judicial Body or any other entity charged with the interpretation or administration thereof, or the compliance by a Lender with any request or direction (whether or not having the force of law) of any such Governmental/Judicial Body or entity, hereafter:
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and the result of any of the foregoing shall be to increase the cost to, or reduce the amount of principal, interest, fees or other amounts received or receivable by, such Lender hereunder or such Lender’s effective return hereunder (without regard to Taxes based on capital or the overall net income or profits of such Lender or, in the case of a Lender which is a Schedule III Bank and without limiting the application of the foregoing part of this exception to such Lender, of any branch thereof, or the impact thereof) in respect of making, maintaining or funding a Borrowing hereunder or maintaining, as applicable, its Commitment or Fronting Bank Commitment hereunder, or cause such Lender to make any payment or forego any interest, fees or other amounts hereunder, then the Agent shall give notice thereof to the Borrower as soon as possible after such determination, and such Lender shall have no further obligation to make Borrowings of the type affected or maintain, as applicable, its Commitment or Fronting Bank Commitment in respect of such type of Borrowings unless prior arrangements satisfactory to such Lender are made to compensate it as hereinafter provided. Such Lender shall, acting reasonably, determine that amount of money which shall compensate such Lender for such increase in cost, reduction in principal, interest, fees or other amount received or receivable by such Lender, or such reduction in effective return hereunder, or any payment made or interest, fees or other amounts forgone (herein referred to as “Additional Compensation”). Notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all regulations, requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States, Canadian or other regulatory authorities, in each case pursuant to Basel III ((i) and (ii) being, the “New Rules”), shall in each case be deemed to be a change in Applicable Law for the purposes of this Section 10.2, regardless of the date enacted, adopted or issued, in each case (i) to the extent that such New Rules are applicable to a Lender claiming Additional Compensation, (ii) to the extent that such New Rules are materially different from Applicable Laws which are in full force and effect on the Effective Date and (iii) to the extent that such New Rules are not limited to specific financial institutions only but instead have general application to substantially all banks or their Affiliates which are subject to the New Rules in question. Upon a Lender having determined that it is entitled to Additional Compensation in accordance with the provisions of this Section 10.2, such Lender shall promptly so notify the Borrower and the Agent and shall provide the Borrower and the Agent with a photocopy of the Applicable Law, rule, guideline, regulation, treaty or official directive (or, if it is impracticable to provide a photocopy, a written summary of the same) and a certificate of a duly authorized officer of such Lender setting forth the amount of the Additional Compensation and the basis of calculation therefor, which shall be prima facie evidence of the amount of such Additional Compensation, in the absence of manifest error. The Borrower shall pay to such Lender, within ten (10) Business Days of the giving of such notice by such Lender, such Lender’s Additional Compensation, as additional interest. Each of the Lenders shall be entitled to be paid such Additional Compensation from time to time to the extent that the provisions of this Section 10.2 are then applicable, notwithstanding that any Lender has previously been paid any Additional Compensation. Each Lender agrees that it will not claim Additional Compensation from the Borrower under this Section 10.2 (i) if it is not generally claiming similar compensation from its other customers in similar circumstances; or (ii) in respect of any period greater than three (3) months prior to the delivery of notice in respect thereof by such Lender, unless the adoption, change or other event or circumstance giving rise to the claim for Additional Compensation is retroactive or is retroactive in
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effect. When Additional Compensation is payable to a Lender, the Borrower shall have the right, upon at least three Business Days prior written notice to the Agent (unless provided otherwise below), to either:
(iv) in the case of Bankers’ Acceptances accepted by such Lender, such amount as such Lender may, in its discretion, require be deposited with such Lender in order to yield to that Lender on the maturity date of such Bankers’ Acceptances the face amount thereof; and
Subject to Section 12.11, any such Conversion or prepayment need not be pro rata as among the Lenders under the Credit Facility or this Agreement or otherwise in compliance with Section 3.119.
If a Lender (acting reasonably) makes a determination, which shall be conclusive and binding upon the Borrower, that the adoption, introduction or coming into effect of any Applicable Law, or any change therein, or any change in any existing Applicable Law or in the interpretation, administration or application of any Applicable Law by any Governmental/Judicial Body or any other entity charged with the interpretation or administration thereof, or the compliance by a Lender with any request or direction (whether or not having the force of law) of any such Governmental/Judicial Body or entity, hereafter makes it unlawful or impossible for such Lender to make, fund or maintain a Borrowing hereunder or to comply with, or give effect to, its obligations under this Agreement, such Lender may, by written notice thereof to the Borrower and to the Agent, declare its obligations under this Agreement in respect of such types of Borrowing to be terminated, whereupon the same shall forthwith terminate, and the Borrower shall, within the time required by such law (or at the end of such longer period as such Lender at its discretion has agreed), either:
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(iv) in the case of Bankers’ Acceptances accepted by such Lender, such amount as such Lender may, in its discretion, require be deposited with such Lender in order to yield to that Lender on the maturity date of such Bankers’ Acceptances the face amount thereof; and
Subject to Section 12.11, any such Conversion or prepayment need not be pro rata as among the Lenders under the Credit Facility or this Agreement or otherwise in compliance with Section 3.119. If any such change shall only affect a portion of such Lender’s obligations under this Agreement which is, in the opinion of such Lender, the Agent and the Borrower, severable from the remainder of this Agreement so that the remainder of this Agreement may be continued in full force and effect without otherwise affecting any of the obligations of the Agent, the other Lenders or the Borrower hereunder, such Lender shall only declare its obligations under that portion so terminated.
If any Lender requests Additional Compensation under Section 10.2, or the Borrower is required to pay any additional amount to the Agent on behalf of any Lender pursuant to Section 6.3(a), or if any Lender gives a notice pursuant to Section 10.3, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking the Borrowings hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 10.2 or 6.3(a), as the case may be, in the future, or eliminate the need for the notice pursuant to Section 10.3, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous in any material respect to such Lender. The Borrower hereby agrees to pay all reasonable and documented out-of-pocket costs and expenses incurred by any Lender in connection with any such designation or assignment.
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The Borrower shall:
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In addition to any liability of the Borrower to any Lender or the Agent under any other provision hereof, the Borrower shall indemnify each Lender and the Agent and their respective Affiliates, directors, officers, agents and employees (collectively, in this Section 11.2, the “Indemnified Parties”), and hold each Indemnified Party harmless from and against any losses, claims, costs, damages or liabilities (including reasonable out-of-pocket expenses and reasonable legal fees on a solicitor and his own client basis) incurred by the same which arise as a result of or in connection with the Loan Documents including, without limitation, as a result of or in connection with:
(f) the prepayment of any outstanding Bankers’ Acceptance before the maturity date of such Bankers’ Acceptance;
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provided that this Section 11.2 shall not apply to any losses, claims, costs, damages or liabilities of any Indemnified Party claiming indemnity hereunder to the extent that the same are determined by a court of competent jurisdiction by final and non-appealable judgment to have arisen by reason of the bad faith, gross negligence or wilful misconduct of such Indemnified Party. Payment of an amount for which the Borrower is liable under this indemnification shall be made within 30 days from the date an Indemnified Party makes written demand for payment thereof. The provisions of this Section 11.2 shall survive the termination of the Agreement and the repayment of the obligations of the Borrower hereunder. The Borrower agrees not to assert any claim against any of the Agent, the Lead Arrangers or any Lender or any of their respective Affiliates or their officers, directors, employees, agents or advisors (each, a “Lender-Related Person”), on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to any of the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Borrowings. No Lender-Related Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
Each Lender irrevocably appoints and authorizes the Agent to exercise such powers, perform such duties, take such actions, make such decisions and determinations and give such consents under the Loan Documents as are required to be exercised, performed, taken, made, given or otherwise carried out by the Agent hereunder or under any other agreement between the Lenders, together with all powers reasonably incidental thereto. As to any matters not expressly required by this Agreement or by any other agreement between the Lenders to be carried out by the Agent, the Agent is not required to exercise any discretion or take or to refrain from taking any action except upon the written instructions of the Majority Lenders. Notwithstanding anything to the contrary in this Agreement, the Agent shall not be required to exercise any discretion or to take or to refrain from taking any action in any manner which is contrary to the Loan Documents, to any other agreement between the Lenders or to Applicable Law.
The Agent makes no representation or warranty, and accepts no responsibility, with respect to the due execution, legality, validity, sufficiency, enforceability or priority of any of the Loan Documents nor with respect to the due execution, legality, validity, sufficiency, enforceability, accuracy or authenticity of any documents, papers, materials or other information furnished by the Borrower (or any other Person, including the Agent) in connection with the Loan Documents, whether provided before or after the date of this Agreement. The Agent shall incur no liability to the Lenders under or in respect of the Loan Documents with respect to anything which it may do or refrain from doing in the reasonable exercise of its judgment or which may seem to it to be necessary or desirable in the circumstances, except for its gross negligence or wilful misconduct (as determined by a final non-appealable judgment of a court of competent jurisdiction). The Agent assumes no responsibility for the payment of any of the Borrowings or other Loan Indebtedness owing hereunder by the Borrower.
Each Lender acknowledges to the Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal of and investigation into the financial condition, creditworthiness, environmental soundness, affairs, status and nature of the Borrower and
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accordingly, each Lender confirms to the Agent that it has not relied, and will not hereafter rely, on the Agent:
The rights and obligations of each Lender under this Agreement are several and no Lender shall be obligated to make Borrowings available to the Borrower in excess of the amount of such Lender’s Syndicated Commitment. The failure of a Lender to perform its obligations under this Agreement shall neither:
Nothing contained herein or in any other Loan Document nor any action taken pursuant hereto or thereto shall be deemed to constitute the Lenders a partnership, joint venture or any other similar entity.
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All notices by the Lenders to the Agent shall be through the Agent’s Branch of Account and all notices by the Agent to a Lender shall be through such Lender’s Branch of Account. All notices or communications between the Borrower and the Lenders which are required or contemplated pursuant to the Loan Documents shall be given or made through the Agent at the Agent’s Branch of Account.
The Agent shall promptly deliver to each Lender, at its Branch of Account, such notices, documents, papers, materials and other information as are furnished by the Borrower to the Agent and which are not (i) notices or information relating solely to the role of the Agent or any Fronting Bank hereunder, or (ii) required to be furnished by the Borrower directly to the Lenders pursuant to this Agreement.
(i) the same proportion of such Borrowing by way of Loans as the amount of such Lender’s Syndicated Commitment at such time bears to the Total Syndicated Commitment at such time, by forwarding to the Agent at the Agent’s Account for Payments the amount of Loans required to be made available by such Lender; and.
(ii) the same proportion of such Borrowing by way of Bankers’ Acceptances (by accepting and purchasing such Bankers’ Acceptances, or, if such Lender is a Non-Acceptance Lender, making BA Equivalent Loans in lieu thereof) as the amount of such Lender’s Syndicated Commitment at such time bears to the Total Syndicated Commitment at such time, by forwarding to the Agent at the Agent’s Account for Payments the amount of the Discount Proceeds in respect of such Bankers’ Acceptances or BA Equivalent Loans required to be accepted and purchased or made by such Lender (less the amount of applicable fees payable by the Borrower to such Lender pursuant to Section 3.5(f) or 5.4).
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in each case, unless such amendment, waiver or consent is agreed to in writing by all of the Lenders.
in each case, unless such amendment, waiver or consent is agreed to in writing by each Lender directly affected thereby.
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Each Lender agrees that it will indemnify the Agent for its Lender’s Proportion of any and all costs, expenses and disbursements (including, without limitation, those costs and expenses referred to in Section 11.1) which may be incurred or made by the Agent in good faith in connection with the Loan Documents, and agrees that it will, on written demand detailing such costs, expenses and disbursements, reimburse the Agent for any such costs, expenses or disbursements for which the Agent is not promptly reimbursed at any time by the Borrower. The Agent may refrain from exercising any right, power or discretion or taking any action to protect or enforce the rights of any Lender under the Loan Documents until it has been so reimbursed.
The Agent shall be entitled:
and the Agent shall assume no responsibility and shall incur no liability to the Borrower or any Lender by reason of relying on any such document or acting on any such advice.
Except for the transactions provided for in this Agreement, each Lender may deal with the Borrower in all transactions and generally do any banking business with, or provide any financial services to, the Borrower without having any liability to account to the other Lenders therefor. With respect to Royal’s (or any successor Agent’s) Commitment and Lender’s Proportion, Royal (or any successor Agent) shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent.
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The Agent shall resign if at any time:
in which circumstances such other Lender shall be appointed as Agent hereunder; or
The Agent may resign at any time by giving 30 days’ prior written notice thereof to each of the Lenders and the Borrower, and the Agent may be removed at any time for cause by the Lenders, other than the Agent in its capacity as a Lender (the “Remaining Lenders”), provided that Remaining Lenders holding Commitments of eighty percent (80%) or more of the aggregate Commitments of all the Remaining Lenders consent to such removal. Upon any such resignation or removal, other than in the circumstances described in paragraph (a) above, the Remaining Lenders shall have the right to appoint a successor agent with the written approval of the Borrower (such approval not in any event to be unreasonably withheld). Any successor agent appointed under this Section 12.16 shall be a financial institution which has offices in Calgary, Alberta and Toronto, Ontario. If no successor agent shall have been appointed by the Remaining Lenders and shall have accepted such appointment within 30 days after the retiring Agent’s giving of notice of resignation, or the Remaining Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders and with the written approval of the Borrower (such approval not to be unreasonably withheld), appoint a successor agent. Should the Remaining Lenders and the retiring Agent fail to appoint a successor agent as aforesaid within 30 days of the aforesaid resignation or removal, the Borrower may appoint a financial institution as successor agent provided the long term debt of such financial institution (if not a Lender) or its parent entity (if not a Lender) is assigned a rating of A2 or better by Moody’s. Upon the acceptance of any appointment as Agent by a successor agent, such successor agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent as Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement as Agent. After any retiring Agent’s resignation or removal hereunder as the Agent, the provisions of this Agreement shall continue in effect for its benefit and for the benefit of the Lenders in respect of any actions taken or omitted to be taken by the retiring Agent while it was acting as the Agent.
12.17 Change of Schedule “I” Reference Bank
The Agent shall, with the prior written consent of the Borrower (such consent not to be unreasonably withheld) appoint another Lender (with the latter’s consent) to act as the Schedule “I” Reference Bank in replacement of the Schedule I Reference Bank if:
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(a) Assignment of Rights: the Schedule I Reference Bank assigns, subject to the provisions of Section 16.9, all its rights hereunder or otherwise ceases to be a Lender; or
(b) Giving of Notice of Intention: the Schedule I Reference Bank gives notice of its intention to cease being the Schedule I Reference Bank.
Each Lender hereby agrees to indemnify the Agent (to the extent not reimbursed by the Borrower), rateably as to its Lender’s Proportion, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent, in any way relating to or arising out of the Loan Documents or any action taken or omitted by Agent under or in respect of the Loan Documents; provided that the Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s gross negligence or wilful misconduct (as determined by a final non-appealable judgment of a court of competent jurisdiction). Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its Lender’s Proportion of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preservation of any rights of the Agent or the Lenders under, or the enforcement of, or legal advice in respect of rights or responsibilities under, the Loan Documents, but only to the extent that the Agent is not reimbursed for such expenses by the Borrower.
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provided that any such funds in excess of such Defaulting Lender’s defaulted obligations shall be paid to the Defaulting Lender.
provided that the Agent shall only be required to give effect to (i) and (ii) above if the Agent has actual knowledge that a Lender is a Defaulting Lender. If the Agent acquires actual knowledge that a Lender is a Defaulting Lender, then the Agent shall promptly notify the Borrower and the other Lenders that such Lender is a Defaulting Lender (and such Lender shall be deemed to have consented to such disclosure); provided that, for certainty, the Agent shall have no duty to inquire as to whether any Lender is a Defaulting Lender.
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Save and except for the provisions of Sections 12.5, 12.6, 12.11(d), 12.12(a), 12.12(b), 12.12(c), 12.15, 12.16, 12.178, 12.19, 12.20 and this Section 12.221, the provisions of this Article 12 may be amended or added to from time to time without the agreement of the Borrower, provided such amendment or addition does not adversely affect any rights of the Borrower hereunder or increase, in aggregate, the liabilities, costs, expenses or reporting requirements of the Borrower hereunder. A copy of the instrument evidencing such amendment or addition shall be forwarded by the Agent to the Borrower as soon as practicable following the execution thereof.
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Notwithstanding any payment or payments made by the Guarantor pursuant to this Article 13 or any set-off or application of funds of the Guarantor by the Agent or any Lender, the Guarantor shall not be entitled to be subrogated to any of the rights of the Agent or any Lender against the Borrower or any other guarantor or any collateral security or guarantee or right of offset held by the Agent or any Lender for the payment of the Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from any other guarantor in respect of payments made by such the Guarantor pursuant to this Article 13, until all amounts owing to the Agent and the Lenders by the Guarantor on account of the Obligations are paid in full and the Commitments are terminated. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Guarantor in trust for the Agent and the Lenders and shall, forthwith upon receipt by the Guarantor, be turned over to the Agent in the exact form received by the Guarantor (duly endorsed by the Guarantor to the Agent, if required), to be applied against the Obligations, whether matured or unmatured, in accordance with this Agreement.
The Guarantor shall remain obligated under this Article 13 notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment of any of the Obligations made by the Agent, on behalf of the Lenders, may be rescinded by the Agent and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Agent or any Lender, and this Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Agent (or the Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Agent or any Lender for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. When making any demand of the Guarantor under this Article 13 against the Guarantor, the Agent may, but shall be under no obligation to, make a similar demand on any other guarantor, and any failure by the Agent to make any such demand or to collect any payments from any such other guarantor or any release of any other guarantor shall not relieve the Guarantor of its obligations or liabilities under this Article 13, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of the Agent, on behalf of the Lenders, against the Guarantor under this Article 13. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.
The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Agent or any Lender upon this Article 13 or acceptance of this Agreement, the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Agreement; and all dealings between the Obligors, on the one hand, and the Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Article 13. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Article 13 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to and shall not be released, discharged, limited or otherwise affected by (a) the validity, regularity or enforceability of this Agreement or any other Loan Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Agent or any Lender, (b) any defense, set-off or counterclaim (other than
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a defense of payment of performance) which may at any time be available to or be asserted against the Agent or any Lender, (c) any law or regulation of any jurisdiction or any other event affecting any term of a guaranteed obligation or (d) any other circumstance whatsoever (with or without notice to or knowledge of the Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Guarantor for the Obligations, or of the Guarantor under this Article 13, in bankruptcy or in any other instance. When the Agent is pursuing its rights and remedies under this Article 13 against the Guarantor, the Agent and any Lender may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Borrower or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Agent or any Lender to pursue such other rights or remedies or to collect any payments from the Borrower or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability under this Article 13, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Agent against the Guarantor under this Article 13. This Article 13 shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to be benefit of the Agent and the Lenders, until (xi) all the outstanding Obligations and the obligations of the Guarantor under this Article 13 shall have been satisfied by payment in full (excluding from such Obligations and the obligations of the Guarantor under this Article 13 any contingent indemnity or similar obligations that expressly survive repayment or termination of the Loan Documents) and the Commitments shall be terminated or (yii) the release of the Guarantor pursuant to Section 12.12(a), in each case notwithstanding that from time to time during the term of this Agreement the Obligations may be reduced to zero.
This Article 13 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.
Notwithstanding any modification, discharge or extension of the Obligations or any amendment, modification, stay or cure of the Agent’s or Lenders’ rights which may occur in any bankruptcy or reorganization case or proceeding against the Borrower, whether permanent or temporary, and whether or not assented to by the Lender, the Guarantor hereby agrees that the Guarantor shall be obligated under this Article 13 to pay and perform the Obligations and discharge its other obligations in accordance with the terms of the Obligations and the terms of this Article 13. The Guarantor understands and acknowledges that, by virtue of this Article 13, it has specifically assumed any and all risks of a bankruptcy or reorganization case or proceeding with respect to the Borrower. Without in any way limiting the generality of the foregoing, any subsequent modification of the Obligations in any reorganization case concerning the Borrower shall not affect the obligation of the Guarantor to pay and perform the Obligations in accordance with the original terms thereof.
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Any notice or other document required or permitted to be given by a party pursuant to this Agreement (in this Article referred to as a “Notice”), if no particular manner is specified in which it is to be given, shall be in writing and shall be delivered by hand or transmitted by facsimile addressed in accordance with the particulars set forth (i) in the case of the Borrower, opposite the signature of the Borrower herein, (ii) in the case of the Guarantor, opposite the signature of the Guarantor herein, (iii) in the case of the Agent, as set forth in Schedule “JG” or (iv) in the case of any Lender, as set out in its Administrative Questionnaire provided to the Agent.
A party shall have the right to change any of the particulars of its address or its Branch of Account or place for Notices under Section 12.6 by giving a Notice in accordance with this Article.
Any Notice given in accordance with the foregoing provisions shall be conclusively deemed received:
Without prejudice to or limitation of any other rights or remedies available under the laws of any jurisdiction where property or assets of the Borrower may be, the parties agree that this Agreement is conclusively deemed to be made under and for all purposes to be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein.
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If, for the purpose of obtaining judgment in any court or for any other related purpose hereunder, it is necessary for a Lender to convert an amount due hereunder in the currency in which it is due (the “Original Currency”) into another currency (the “Second Currency”), the rate of exchange to be applied in respect of such conversion shall be that at which, in accordance with normal banking procedures, such Lender could purchase, in the New York foreign exchange market, the Original Currency with the Second Currency on the date which is one (1) Business Day preceding that on which judgment is given. The Borrower agrees that its obligation in respect of any Original Currency due from it to such Lender hereunder shall, notwithstanding any judgment or payment in the Second Currency, be discharged only to the extent that on the Business Day following receipt of any sum so paid or adjudged to be due hereunder in the Second Currency such Lender may, in accordance with normal banking procedures, purchase, in the New York foreign exchange market, the Original Currency with the amount of the Second Currency so paid or so adjudged to be due; and if the amount of the Original Currency so purchased is less than the amount originally due in the Original Currency, the Borrower agrees that the deficiency shall be a separate obligation of the Borrower independent from its other obligations under this Agreement, and which shall give such Lender a cause of action which shall continue in full force and effect notwithstanding any such judgment, or order to the contrary, and the Borrower agrees, notwithstanding any such payment or judgment, to indemnify such Lender against any such loss or deficiency. If the amount of the Original Currency so purchased is greater than the amount originally due to the Agent or any Lender, the Agent or such Lender, as the case may be, agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under Applicable Law).
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Any provision of this Agreement which is or becomes prohibited or unenforceable in any jurisdiction does not invalidate, affect or impair the remaining provisions; any prohibition or unenforceability in any jurisdiction does not invalidate or render unenforceable the provision concerned in any other jurisdiction.
No amendment, modification or waiver of any provision of this Agreement or consent to any departure by the Borrower from any provision of this Agreement is effective against the Agent or the Lenders except in accordance with Section 12.12 and then the amendment, modification, waiver or consent is effective only in the specific instance and for the specific purpose for which it is given. Any waiver by the Lenders of the strict observance, performance or compliance with any term, covenant, condition or agreement of this Agreement, and any indulgence granted by the Lenders, is not a waiver of any subsequent default.
All representations and warranties made pursuant to this Agreement survive the execution and delivery of this Agreement.
This Agreement, together with the other Loan Documents delivered by the Borrower hereunder, constitutes the whole and entire agreement between the parties pertaining to the subject matter hereof and, except as provided herein, cancels and supersedes any prior agreements, undertakings, declarations and representations, written or verbal, pertaining to the subject matter hereof.
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The term of this Agreement shall continue until the later of the date on which the Lenders have no further Commitments hereunder and the date on which the Borrower has paid to the Agent and the Lenders all Loan Indebtedness owing to them under the Loan Documents.
Time shall be of the essence of this Agreement.
In the event:
(any such Lender being a “Subject Lender”), the Borrower may, in its sole discretion (i) request the Agent to use reasonable efforts to obtain a replacement financial institution satisfactory to the Borrower and the Agent to acquire and assume all or part of the Subject Lender’s Borrowings and Commitment (a “Replacement Lender”); (ii) request the Subject Lender to use reasonable efforts to obtain a Replacement Lender satisfactory to the Borrower and the Agent to acquire and assume all or part of the Subject Lender’s Loan Indebtedness and Commitments; (iii) request one or more of the other Lenders to acquire and assume all or part of the Subject Lender’s Loan Indebtedness and Commitments (there being no obligation on the other Lenders to do so); (iv) designate a Replacement Lender acceptable to the Agent, acting reasonably, to acquire and assume all or part of the Subject Lender’s Loan Indebtedness and Commitments; (v) elect to terminate all of the non-assigned Commitments of the Subject Lender on 15 days’ notice to the Agent and such Lender, without terminating any or all of the Commitments of any other Lenders; and (vi) any combination of the foregoing. Any such replacement, acquisition and assumption, designation or termination shall only be effective upon the Subject Lender receiving, as applicable, payment of, or the purchase price for, all loans, interest and fees accrued hereunder to the date of such event, or such lesser amount as may be agreed by the Subject Lender, and adequate provision, satisfactory to the Subject Lender (acting reasonably), being made for (w) payment at maturity of the face amount of Bankers’ Acceptances outstanding hereunder which were accepted by the Subject Lender; (xA) indemnification, cash collateralization or release of the Subject Lender from its obligations in respect of any outstanding Letters of Credit including its obligations under Section 3.75(d); (yB) any costs, losses, premiums or expenses incurred by the Subject Lender by reason of a liquidation or re-deployment of deposits or other funds in respect of Term BenchmarkCORRA Loans or SOFR Loans outstanding hereunder; and (zC) in any case, payment of all other amounts accrued to the date of such event which are owed to the Subject Lender hereunder. Any such acquisition and assumption by a Replacement Lender shall be made pursuant to and in accordance with the provisions of the last 3 sentences of Section 16.9(a), mutatis mutandis. Any such replacement or repayment of a Non-Consenting Lender shall only be permitted if, after doing so, the proposed consent, waiver or amendment will be approved in accordance with the Loan Documents.
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To the extent permitted by Applicable Law, each of the Borrower, the Guarantor, the Agent and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to the Loan Documents or the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement thereof.
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This Agreement may be executed in any number of counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by telecopier or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “execute,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement or any other Loan Document shall be deemed to include electronic signatures, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, as provided in Parts 2 and 3 of the Personal Information Protection and Electronic Documents Act (Canada), the Electronic Commerce Act, 2000 (Ontario), the Electronic Transactions Act (British Columbia), the Electronic Transactions Act (Alberta), or any other similar laws based on the Uniform Electronic Commerce Act of the Uniform Law Conference of Canada. The Agent may, in its discretion, require that any such documents and signatures executed electronically or delivered by facsimile or other electronic transmission be confirmed by a manually-signed original thereof; provided that the failure to request or deliver the same shall not limit the effectiveness of any document or signature executed electronically or delivered by facsimile or other electronic transmission.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
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In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Obligor acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a) (i) no fiduciary, advisory or agency relationship between each Obligor and its Subsidiaries and any Lead Arranger, the Agent or any Lender is intended to be or has been created in respect of the transactions contemplated hereby or by the other Loan Documents, irrespective of whether any Lead Arranger, the Agent, or any Lender has advised or is advising any Obligor or any Subsidiary on other matters, (ii) the arranging and other services regarding this Agreement provided by the Lead Arrangers, the Agent and the Lenders are arm’s-length commercial transactions between each Obligor and its Affiliates, on the one hand, and the Lead Arrangers, the Agent and the Lenders, on the other hand, (iii) each Obligor has consulted its own legal, accounting, regulatory and tax advisors to the extent that it has deemed appropriate and (iv) each Obligor is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; and (b) (i) the Lead Arrangers, the Agent and the Lenders each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Obligor or any of its Affiliates, or any other Person; (ii) none of the Lead Arrangers, the Agent and the Lenders has any obligation to any Obligor or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Lead Arrangers, the Agent and the Lenders and their respective branches and Affiliates may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from those of each Obligor and its Affiliates, and none of the Lead Arrangers, the Agent and the Lenders has any obligation to disclose any of such interests to any Obligor or its Affiliates. To the fullest extent permitted by Applicable Law, each Obligor hereby waives and releases any claims that it may have against any of the Lead Arrangers, the Agent and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above.
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Notice Address: 500 Centre Street S.E. |
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OVINTIV CANADA ULC, AS BORROWER |
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OVINTIV INC., AS GUARANTOR |
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[Signature Page to Amended and Restated Credit Agreement – Ovintiv Canada ULC]
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ROYAL BANK OF CANADA, as Agent |
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ROYAL BANK OF CANADA |
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JPMORGAN CHASE BANK, N.A., |
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CANADIAN IMPERIAL BANK OF COMMERCE |
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THE TORONTO-DOMINION BANK |
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CITIBANK, N.A., CANADIAN BRANCH |
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BANK OF MONTREAL |
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THE BANK OF NOVA SCOTIA |
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NATIONAL BANK OF CANADA |
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FÉDÉRATION DES CAISSES DESJARDINS |
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SUMITOMO MITSUI BANKING CORPORATION, CANADA BRANCH |
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BANC OF AMERICA CREDIT SUISSE AG, TORONTO BRANCHPRODUCTS, INC. |
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WELLS FARGO BANK, N.A. |
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BANK OF AMERICA, N.A., CANADA BRANCH |
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MUFG BANK, LTD., CANADA BRANCH |
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BARCLAYS BANK PLC |
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MIZUHO BANK, LTD., CANADA BRANCH |
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PNC BANK CANADA BRANCH |
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TRUIST BANK |
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MORGAN STANLEY BANK, N.A. |
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BANK OF CHINA (CANADA) |
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[Signature Page to Amended and Restated Credit Agreement – Ovintiv Canada ULC]
Schedule "A" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC., as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
Date:
Dear Sirs/Mesdames:
We refer to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent (the “Credit Agreement”). Terms and expressions defined in the Credit Agreement which are used and not otherwise defined herein shall have the same meanings ascribed to them in the Credit Agreement.
We hereby give notice of our request for a [Borrowing, repayment and/or cancellation of Commitment] pursuant to Section [3.3, 3.75. 3.108 or 4.3] of the Credit Agreement as follows:
Yours very truly,
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OVINTIV CANADA ULC |
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A-1
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cc. [If applicable] [Name of Fronting Bank]
A-2
Schedule "B" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
NOTICE OF DRAWDOWN
BY WAY OF BANKERS' ACCEPTANCES
Date:
Dear Sirs/Mesdames:
Re: Issuance of Bankers’ Acceptances for
[amount] on [date]
We refer to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent (the “Credit Agreement”). Terms and expressions defined in the Credit Agreement which are used and not otherwise defined herein shall have the same meanings ascribed to them in the Credit Agreement.
We hereby request that the Lenders issue Bankers’ Acceptance(s) (or, as applicable, make BA Equivalent Loans) pursuant to Section [3.3, 3.8 or 3.9] of the Credit Agreement on the date and in the aggregate face amount and with the specified maturity date set out below.
General Information:
Aggregate amount due at maturity in regard to Borrowing: |
Cdn.$ |
Date of issuance: |
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Payment instructions: |
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Upon maturity of these Bankers’ Acceptance(s) (or, as applicable, BA Equivalent Loans) on [specified maturity date], you are authorized to make payment directly to the Lenders of an amount equal to the face or principal amounts of such Bankers’ Acceptances (or, as applicable, BA Equivalent Loans) respectively accepted or made by them and charge the Borrower’s Accounts with the principal amount of the aggregate of such face or principal amounts.
Yours truly,
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OVINTIV CANADA ULC |
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A-1
Schedule "C" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
Date:
Dear Sirs/Mesdames:
Re: Notice of Conversion Pursuant to
Section 3.86 of the Credit Agreement
We refer to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent (the “Credit Agreement”), and in particular to Section 3.86 of the Credit Agreement. Terms and expressions defined in the Credit Agreement which are used and not otherwise defined herein shall have the same meanings ascribed to them in the Credit Agreement.
We have outstanding [Cdn. or US] $________________ of Borrowings by way of [Prime Loans, USBR Loans, Bankers’ Acceptances (or, as applicable, BA EquivalentDaily Compounded CORRA Loans) or, Term BenchmarkCORRA Loans or SOFR Loans] [if applicable] [having a maturity date of / an Interest Period ending on the _____ day of _______________ , ________. ] Please convert [Cdn. or US] $ outstanding by way of [Prime Loans, USBR Loans, Bankers’ Acceptances (or, as applicable, BA EquivalentDaily Compounded CORRA Loans) or, Term BenchmarkCORRA Loans or SOFR Loans] into a Borrowing by way of __________________ [Prime Loans, USBR Loans, Bankers’ Acceptances (or, as applicable, BA EquivalentDaily Compounded CORRA Loans) or, Term BenchmarkCORRA Loans or SOFR Loans] on the day of , .
[If applicable] General Information:
Aggregate amount due at maturity in regard to Borrowing: |
[Cdn. or US] $ |
Date of issuance: |
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[If applicable] Upon maturity of these Bankers’ Acceptance(s) (or, as applicable, BA Equivalent Loans) on [specified maturity date], you are authorized to make payment directly to the Lenders of an amount equal to the face or principal amounts of such Bankers’ Acceptances (or, as applicable, BA Equivalent Loans) respectively accepted or made by them and charge the Borrower’s Accounts with the principal amount of the aggregate of such face or principal amounts.
[If applicable] The Interest Period for the Borrowing by way of Term Benchmark Loans[Daily Compounded CORRA Loans, Term CORRA Loans or SOFR Loans] to which such Conversion is being effected is __________ [days/months].
Pursuant to Section 2.3 of the Credit Agreement, this Notice of Conversion given by the Borrower to the Agent shall be deemed to be a representation and warranty by the Borrower to each of the Lenders and the Agent that the representation and warranty contained in Section 2.1(l) of the Credit Agreement is, as of the date of this notice, and will be, as of the applicable Borrowing Conversion Date, true and correct in all material respects as of such date, except as stated otherwise herein.
B-1
[Set forth exceptions, if applicable.]
Yours truly,
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OVINTIV CANADA ULC |
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B-2
Schedule "D" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
Date:
Dear Sirs/Mesdames:
Re: Notice of Rollover Pursuant to
Section 3.97 of the Credit Agreement
We refer to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent (the “Credit Agreement”), and in particular to Section 3.97 of the Credit Agreement. Terms and expressions defined in the Credit Agreement which are used and not otherwise defined herein shall have the same meanings ascribed to them in the Credit Agreement.
We have outstanding [Cdn. or US] $_______________ of Borrowings by way of [Bankers’ Acceptances (or, as applicable, BA EquivalentDaily Compounded CORRA Loans) or, Term BenchmarkCORRA Loans, SOFR Loans or Letter of Credit described in Schedule “A” hereto] [as applicable] [having a maturity date of / an Interest Period / expiration date ending on the _____ day of _______________ , ________. ] Please Rollover [Cdn. or US] $ outstanding by way of [Bankers’ Acceptances (or, as applicable, BA EquivalentDaily Compounded CORRA Loans) or, Term BenchmarkCORRA Loans, SOFR Loans or such Letter of Credit] into a further Borrowing by way of [Bankers’ Acceptances (or, as applicable, BA EquivalentDaily Compounded CORRA Loans) or, Term BenchmarkCORRA Loans, SOFR Loans or an extended or replacement Letter of Credit in accordance with Schedule “A” hereto] on the day of , .
[If applicable] General Information:
Aggregate amount due at maturity in regard to Borrowing: |
[Cdn. or US] $ |
Date of issuance: |
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Specified maturity date: |
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Payment instructions: |
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[If applicable] Upon maturity of these Bankers’ Acceptance(s) (or, as applicable, BA Equivalent Loans) on [specified maturity date], you are authorized to make payment directly to the Lenders of an amount equal to the face or principal amounts of such Bankers’ Acceptances (or, as applicable, BA Equivalent Loans) respectively accepted or made by them and charge the Borrower’s Accounts with the principal amount of the aggregate of such face or principal amounts.
[If applicable] The Interest Period for the Borrowing by way of Term Benchmark Loans[Daily Compounded CORRA Loans, Term CORRA Loans or SOFR Loans] to which such Rollover is being effected is __________ [days/months].
Pursuant to Section 2.3 of the Credit Agreement, this Notice of Rollover given by the Borrower to the Agent shall be deemed to be a representation and warranty by the Borrower to each of the Lenders and the Agent that the representation and warranty contained in Section 2.1(l) of the Credit Agreement is, as of the date
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of this notice, and will be, as of the applicable Borrowing Rollover Date, true and correct in all material respects as of such date, except as stated otherwise herein.
[Set forth exceptions, if applicable.]
Yours truly,
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OVINTIV CANADA ULC |
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Per: |
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Name: |
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Title: |
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Per: |
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Name: |
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Title: |
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Schedule "E" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
Date:
Dear Sirs/Mesdames:
Re: Request for Extension Pursuant to Sections 3.120 (Commitment) or 3.75(f) (Fronting Bank Commitment) of the Credit Agreement
We refer to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent (the “Credit Agreement”), and in particular to Sections 3.75(f) and 3.120 of the Credit Agreement. Terms and expressions defined in the Credit Agreement which are used and not otherwise defined herein shall have the same meanings ascribed to them in the Credit Agreement.
We hereby request that:
We hereby confirm that no Default or Event of Default has occurred and is continuing [other than as described below].
We also confirm that, as of the end of the immediately preceding Fiscal [Quarter] [Year] ending ___________:
Yours truly,
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OVINTIV CANADA ULC |
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Per: |
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Name: |
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Title: |
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Per: |
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Name: |
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Title: |
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Schedule "F" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
I, _______________________________, of the City of _______________, in the [Province] [State] of _______________, for and on behalf of Ovintiv Inc., and without incurring any personal liability, hereby certify as follows:
A. |
Consolidated Debt |
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All Financing Debt of the Guarantor |
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US$_______________________________ |
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Less: all Financing Debt of the Guarantor referred to in the proviso to the definition of Consolidated Debt to Consolidated Capitalization Ratio |
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US$_______________________________ |
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Consolidated Debt |
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US$_______________________________ |
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B. |
Consolidated Net Worth |
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Consolidated shareholders’ equity of the Guarantor as shown on the Consolidated balance sheet of the Guarantor (including preferred securities and minority interests to the extent included thereon) |
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US$_______________________________ |
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Less: to the extent not already excluded from the preceding amount, all amounts included in shareholders’ equity attributable to Non-Recourse Assets |
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US$_______________________________ |
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Plus: the non-cash ceiling test impairments and other changes as at December 31, 2011 as a consequence of Encana’s adoption of US GAAP |
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US$ 7,746,000,000 |
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Consolidated Net Worth |
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US$_______________________________ |
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C. |
Consolidated Tangible Assets |
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Total assets of the Guarantor shown on the Consolidated balance sheet of the Guarantor |
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US$_______________________________ |
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Less: to the extent not already excluded from the preceding amounts, goodwill, trademarks, copyrights and other similar intangible assets |
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US$_______________________________ |
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Less: to the extent not already excluded from the preceding amounts, Non-Recourse Assets |
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US$_______________________________ |
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Less: deposits referred to in either (i) or (ii) of the proviso to the definition of Consolidated Debt to Consolidated Capitalization Ratio |
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US$_______________________________ |
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Plus: the non-cash ceiling test impairments and other changes as at December 31, 2011 as a consequence of Encana’s adoption of US GAAP |
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US$ 10,585,000,000 |
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Consolidated Tangible Assets |
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US$_______________________________ |
E-2
(which is not to exceed 17.5% of Consolidated Tangible Assets) is equal to _______________% of the Consolidated Tangible Assets after taking into account the exclusions permitted by Section 8.2(e). Reasonable particulars of the calculation of the items referred to in paragraphs 8(a), (b), (c) and (d) above, and the exclusions therefrom permitted by Section 8.2(e), are described in the attached schedule;
EXECUTED at the City of _______________, in the [Province] [State] of _______________, this ___ day of _________, ________.
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OVINTIV CANADA INC. |
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Per: |
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Name: |
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Title: |
E-3
[Intentionally Deleted.]
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Schedule "H" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
POWER OF ATTORNEY - BANKERS' ACCEPTANCES
19. This Power of Attorney is provided pursuant to the Amended and Restated Credit Agreement dated as of April 1, 2022 among Ovintiv Canada ULC as borrower (the “Borrower”), Ovintiv Inc. as guarantor, the financial and other institutions named therein from time to time as Lenders and Royal Bank of Canada as Agent (as amended, modified, supplemented or restated from time to time, the “Credit Agreement”). Terms and expressions defined in the Credit Agreement which are used in this Power of Attorney and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.
20. The Borrower hereby appoints each Lender which is not a Non-Acceptance Lender (individually, the “Lender”), acting by any authorized signatory of the Lender, the attorney of the Borrower:
(a) to sign, for and on behalf and in the name of the Borrower as drawer, and to endorse on its behalf, Bankers’ Acceptances drawn on the Lender and, if applicable, payable to the order of a “clearing house” as defined in the Depository Bills and Notes Act (Canada); and
(b) to fill in the amount payable at maturity, date and maturity date of such Bankers’ Acceptances;
provided that such acts in each case are to be undertaken by the Lender strictly in accordance with instructions given to the Lender by the Agent as hereinafter provided in paragraph 3 of this Power of Attorney. The Borrower understands signatures of any authorized signatory of the Lender may be mechanically reproduced in facsimile on Bankers’ Acceptances in accordance herewith and such facsimile signatures shall be binding and effective as if they had been manually executed by such authorized signatory of the Lender.
21. Instructions from the Borrower to the Lender relating to the amounts payable at maturity, date and maturity dates of Bankers’ Acceptances to be purchased by the Lender shall be communicated by the Borrower in writing to the Lender by delivery to the Agent on behalf of the Lender of a Notice of Drawdown by way of Bankers’ Acceptance in the form of Schedule “B” to the Credit Agreement, a Notice of Conversion where a Borrowing is to be converted into a Borrowing by way of Bankers’ Acceptances or a Notice of Rollover in respect of a Borrowing by way of Bankers’ Acceptances (each being a “Notice”) in accordance with provisions of the Credit Agreement. The communications in writing by the Borrower to the Agent on behalf of the Lender of the instructions set out in the Notice shall constitute (a) the authorization and instruction of the Borrower to the Lender to sign for and on behalf and in the name of the Borrower as drawer the requested Bankers’ Acceptances and to complete and/or endorse Bankers’ Acceptances in accordance with such information as set out therein, and (b) the request of the Borrower to the Lender to accept such Bankers’ Acceptances and purchase the same in accordance with the Credit Agreement. The Borrower acknowledges that the Lender shall not be obligated to accept or purchase any such Bankers’ Acceptances except in accordance with the provisions of the Credit Agreement.
22. The Lender shall be and it is hereby authorized to act on behalf of the Borrower upon and in compliance with instructions from the Agent communicated to the Lender as provided herein if the Lender reasonably believes such instructions to be genuine. The Lender’s actions in compliance with such instructions from the Agent shall be conclusively deemed to have been in accordance with the instructions of the Borrower.
23. The Borrower hereby agrees to indemnify the Lender and its directors, officers, employees, Affiliates and agents and to hold it and them harmless from and against any loss, liability, expense or claim of any kind or nature whatsoever incurred by any of them as a result of any action or inaction in
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any way relating to or arising out of this Power of Attorney or the acts contemplated hereby; provided that this indemnity shall not apply to any such loss, liability, expense or claim which results from the gross negligence or wilful misconduct of the Lender or any of its directors, officers, employees, Affiliates and agents.
24. No revocation of this Power of Attorney shall reduce, limit or otherwise affect the obligations of the Borrower in respect of any Bankers’ Acceptances executed, completed, endorsed, discounted and/or delivered in accordance herewith prior to the time at which such revocation becomes effective.
25. The Power of Attorney is in addition to and not in substitution of any agreement to which the Lender and the Borrower are parties, including the Credit Agreement.
26. The Power of Attorney shall be governed in all respects by the laws of Alberta and the laws of Canada applicable therein and the Borrower and the Lender each hereby irrevocably attorns to the non-exclusive jurisdiction of the courts and such jurisdiction in respect of all matters arising out of this Power of Attorney.
27. In the event of a conflict between the provisions of this Power of Attorney and the Credit Agreement, the Credit Agreement shall prevail.
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Schedule "I" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
To: Ovintiv Canada ULC
To: Royal Bank of Canada, as Agent
Dear Sirs:
We refer to Section 16.9 of the Amended and Restated Credit Agreement dated as of April 1, 2022 among Ovintiv Canada ULC as borrower (the “Borrower”), Ovintiv Inc. as guarantor, the financial and other institutions named therein from time to time as Lenders (the “Lenders”) and Royal Bank of Canada as agent (the “Agent”) (as amended, modified, supplemented or restated from time to time, the “Credit Agreement”). Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement.
This Agreement is delivered to you pursuant to Section 16.9 of the Credit Agreement and constitutes notice of confirmation to each of you of the assignment from _______________________ (the “Assignor”) to (the “Assignee”) of _______% of the Outstandings owing to the Assignor and the Assignor’s Commitment outstanding under the Credit Agreement on the date hereof. After giving effect to the foregoing assignment, the Borrowings and Commitments of the Assignor and Assignee for the purposes of the Credit Agreement are as set forth opposite such Person’s name on the signature pages hereof.
The Assignee hereby acknowledges and confirms that it has received a copy of the Credit Agreement and the exhibits related thereto, together with copies of the documents which were required to be delivered under the Credit Agreement as a condition to the making of Borrowings thereunder. The Assignee further confirms and agrees that in becoming a Lender and in making its Commitment and its Lender’s Proportion of Borrowings, such actions have and will be made without recourse to, or representation or warranty by the Agent.
Except as otherwise provided in the Credit Agreement, effective as of the date of acceptance hereof by the Agent and the Borrower:
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The Assignee hereby advises each of you of the following administrative details with respect to the assigned Outstandings and Commitments and further requests the Agent to acknowledge receipt of this document:
This Agreement shall be governed by laws in force in the Province of Alberta and may be executed by the Assignor and Assignee in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
DATED at Calgary, Alberta this day of , .
After giving effect to this Assignment:
Loans: [describe amount, type and currency] Bankers’ Acceptances: Letters of Credit: Commitment: US$[] Fronting Bank Commitment: US$[] |
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[ASSIGNOR] |
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Per: |
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Name: |
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Title: |
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Per: |
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Name: |
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Title: |
After giving effect to this Assignment: Loans: [describe amount, type and currency] Bankers’ Acceptances: Letters of Credit: Commitment: US$[] |
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[ASSIGNEE] |
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Per: |
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Name: |
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Title: |
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F-2
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Per: |
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Fronting Bank Commitment: US$[] |
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Name: |
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Title: |
Accepted and Acknowledged this day of , ROYAL BANK OF CANADA as Agent |
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By: |
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Name: |
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Title: |
By: |
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Name: |
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Title: |
Accepted and Acknowledged this day of , OVINTIV CANADA ULC |
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By: |
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Name: |
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Title: |
By: |
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Name: |
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Title: |
[If applicable] [Add consent and release from the Fronting Bank(s) under Section 3.75(d)(ii)(D) of the Credit Agreement]
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Schedule "J" to the Amended and Restated Credit Agreement dated as of April 1, 2022 among OVINTIV CANADA ULC as Borrower, OVINTIV INC. as Guarantor, the financial and other institutions named therein from time to time as Lenders and ROYAL BANK OF CANADA as Agent
AGENT:
Name |
Notice Address |
Royal Bank of Canada, |
Royal Bank of Canada Agency Services Group RBC Centre 155 Wellington Street West 8th Floor Toronto, Ontario M5V 3K7 Attention: Manager, Agency Facsimile: (416) 842-4023 |
LENDERS:
Name |
Syndicated Commitment |
Fronting Bank |
Royal Bank of Canada |
US$87,500,000 |
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JPMorgan Chase Bank, N.A., Toronto Branch |
US$87,500,000 |
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Canadian Imperial Bank of Commerce |
US$87,500,000 |
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The Toronto-Dominion Bank |
US$87,500,000 |
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Citibank N.A., Canadian Branch |
US$87,500,000 |
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Bank of Montreal |
US$76,000,000 |
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The Bank of Nova Scotia |
US$76,000,000 |
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National Bank of Canada |
US$76,000,000 |
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Fédération des Caisses Desjardins du Québec |
US$75,000,000 |
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Sumitomo Mitsui Banking Corporation, Canada Branch |
US$62,000,000 |
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Name |
Syndicated Commitment |
Fronting Bank |
Banc of America Credit Suisse AG, Toronto BranchProducts, Inc. |
US$55,000,000 |
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Wells Fargo Bank, N.A. |
US$55,000,000 |
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Bank of America, N.A., Canada Branch |
US$55,000,000 |
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MUFG Bank, Ltd., Canada Branch |
US$55,000,000 |
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Barclays Bank PLC |
US$55,000,000 |
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Mizuho Bank, Ltd., Canada Branch |
US$55,000,000 |
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PNC Bank Canada Branch |
US$55,000,000 |
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Truist Bank |
US$55,000,000 |
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Morgan Stanley Bank, N.A. |
US$37,500,000 |
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Bank of China (Canada) |
US$20,000,000 |
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TOTAL COMMITMENT |
US$1,300,000,000 |
US$0 |
G-2
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brendan M. McCracken, certify that:
Dated: July 30, 2024
/s/ Brendan M. McCracken
Brendan M. McCracken
President & Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Corey D. Code, certify that:
Dated: July 30, 2024
/s/ Corey D. Code
Corey D. Code
Executive Vice-President & Chief Financial Officer
(Principal Financial Officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ovintiv Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brendan M. McCracken, President & Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
By: /s/ Brendan M. McCracken
Brendan M. McCracken
President & Chief Executive Officer
Dated: July 30, 2024
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ovintiv Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Corey D. Code, Executive Vice-President & Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
By: /s/ Corey D. Code
Corey D. Code
Executive Vice-President & Chief Financial Officer
Dated: July 30, 2024
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Condensed Consolidated Statement of Comprehensive Income (unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
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Statement of Comprehensive Income [Abstract] | ||||
Net Earnings (Loss) | $ 340 | $ 336 | $ 678 | $ 823 |
Other Comprehensive Income (Loss), Net of Tax | ||||
Foreign currency translation adjustment | (31) | 53 | (107) | 55 |
Pension and other post-employment benefit plans | (2) | (1) | (3) | (3) |
Other Comprehensive Income (Loss) | (33) | 52 | (110) | 52 |
Comprehensive Income (Loss) | $ 307 | $ 388 | $ 568 | $ 875 |
Condensed Consolidated Balance Sheet (Parenthetical) (unaudited) - USD ($) $ in Millions |
Jun. 30, 2024 |
Dec. 31, 2023 |
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Statement of Financial Position [Abstract] | ||
Allowances for accounts receivable and accrued revenues | $ 5 | $ 5 |
Share Capital, Authorized | 775,000,000 | 775,000,000 |
Common Stock, Shares, Issued | 264,100,000 | 271,700,000 |
Common Stock, Shares, Outstanding | 264,100,000 | 271,700,000 |
Condensed Consolidated Statement of Changes in Shareholders' Equity (Parenthetical) (unaudited) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
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Statement of Stockholders' Equity [Abstract] | ||||
Dividends on Shares of Common Stock, per share | $ 0.3 | $ 0.3 | $ 0.6 | $ 0.55 |
Basis of Presentation and Principles of Consolidation |
6 Months Ended | ||||
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Jun. 30, 2024 | |||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Basis of Presentation and Principles of Consolidation |
Ovintiv is in the business of the exploration for, the development of, and the production and marketing of oil, NGLs and natural gas. The interim Condensed Consolidated Financial Statements include the accounts of Ovintiv and entities in which it holds a controlling interest. All intercompany balances and transactions are eliminated on consolidation. Undivided interests in oil and natural gas exploration and production joint ventures and partnerships are consolidated on a proportionate basis. Investments in non-controlled entities over which the Company has the ability to exercise significant influence are accounted for using the equity method. The interim Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP and the rules and regulations of the SEC. Pursuant to these rules and regulations, certain information and disclosures normally required under U.S. GAAP have been condensed or have been disclosed on an annual basis only. Accordingly, the interim Condensed Consolidated Financial Statements should be read in conjunction with the annual audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2023, which are included in Item 8 of Ovintiv’s 2023 Annual Report on Form 10‑K. The interim Condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the annual audited Consolidated Financial Statements for the year ended December 31, 2023. These unaudited interim Condensed Consolidated Financial Statements reflect, in the opinion of Management, all normal and recurring adjustments necessary to present fairly the financial position and results of the Company as at and for the periods presented. Interim condensed consolidated financial results are not necessarily indicative of consolidated financial results expected for the fiscal year. |
Recent Accounting Pronouncements |
6 Months Ended | ||||
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Jun. 30, 2024 | |||||
Accounting Standards Update and Change in Accounting Principle [Abstract] | |||||
Recent Accounting Pronouncements |
Changes in Accounting Policies and Practices On January 1, 2024, Ovintiv adopted ASU 2023-07 “Improvements to Reportable Segment Disclosures”, issued by FASB. The amendments enhance annual disclosure requirements about significant segment expenses that are regularly provided to the chief operating decision maker and included within reported measures of segment profit or loss. The amendments do not change how an entity identifies its operating segments. In addition, all annual disclosures are to be presented in interim periods beginning in the first quarter of 2025. The amendments will be applied retrospectively to all prior periods presented in the annual disclosures and are not expected to have a material impact on the Company’s Consolidated Financial Statements. New Standards Issued Not Yet Adopted As of January 1, 2025, Ovintiv will be required to adopt ASU 2023-09 “Improvements to Income Tax Disclosures”. The standard requires disaggregated information about the Company’s effective tax rate reconciliation as well as information on income taxes paid. The amendment requires the tabular rate reconciliation to be presented using both percentages and amounts, with additional separate disclosure for any reconciling items within certain categories equal to or greater than five percent of net earnings or loss before income tax and the applicable statutory federal income tax rate. The amendment also requires the disaggregation of income taxes paid by federal, state, and foreign jurisdictions, as well as additional disaggregated information on income taxes paid to an individual jurisdiction equal to or greater than five percent of total income taxes paid. Amendments will be applied prospectively at the date of adoption and are not expected to have a material impact on the Company’s Consolidated Financial Statements. |
Segmented Information |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segmented Information |
Ovintiv’s reportable segments are determined based on the following operations and geographic locations: • USA Operations includes the exploration for, development of, and production of oil, NGLs and natural gas and other related activities within the U.S. cost center. • Canadian Operations includes the exploration for, development of, and production of oil, NGLs and natural gas and other related activities within the Canadian cost center. • Market Optimization is primarily responsible for the sale of the Company’s proprietary production. These results are reported in the USA and Canadian Operations. Market optimization activities include third-party purchases and sales of product to provide operational flexibility and cost mitigation for transportation commitments, product type, delivery points and customer diversification. These activities are reflected in the Market Optimization segment. Market Optimization sells substantially all of the Company’s upstream production to third-party customers. Transactions between segments are based on market values and are eliminated on consolidation. Corporate and Other mainly includes unrealized gains or losses recorded on derivative financial instruments. Once the instruments are settled, the realized gains and losses are recorded in the reporting segment to which the derivative instruments relate. Corporate and Other also includes amounts related to sublease rentals. Results of Operations (For the three months ended June 30) Segment and Geographic Information
Results of Operations (For the six months ended June 30) Segment and Geographic Information
Intersegment Information
Capital Expenditures by Segment
Goodwill, Property, Plant and Equipment and Total Assets by Segment
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Revenues from Contracts with Customers |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues from Contracts with Customers |
The following table summarizes Ovintiv’s revenues from contracts with customers. Revenues (For the three months ended June 30)
(1) Includes revenues from production and revenues of product purchased from third parties, but excludes intercompany marketing fees transacted between the Company’s operating segments. Revenues (For the six months ended June 30)
(1) Includes revenues from production and revenues of product purchased from third parties, but excludes intercompany marketing fees transacted between the Company’s operating segments.
The Company’s revenues from contracts with customers consists of product sales including oil, NGLs and natural gas, as well as the provision of gathering and processing services to third parties. Ovintiv had no contract asset or liability balances during the periods presented. As at June 30, 2024, receivables and accrued revenues from contracts with customers were $917 million ($1,070 million as at December 31, 2023). Ovintiv’s product sales are sold under short-term contracts with terms that are less than one year at either fixed or market index prices or under long-term contracts exceeding one year at market index prices. The Company’s gathering and processing services are provided on an interruptible basis with transaction prices that are for fixed prices and/or variable consideration. Variable consideration received is related to recovery of plant operating costs or escalation of the fixed price based on a consumer price index. As the service contracts are interruptible, with service provided on an “as available” basis, there are no unsatisfied performance obligations remaining at June 30, 2024. As at June 30, 2024, all remaining performance obligations are priced at market index prices or are variable volume delivery contracts. As such, the variable consideration is allocated entirely to the wholly unsatisfied performance obligation or promise to deliver units of production, and revenue is recognized at the amount for which the Company has the right to invoice the product delivered. As the period between when the product sales are transferred and Ovintiv receives payments is generally 30 to 60 days, there is no financing element associated with customer contracts. In addition, Ovintiv does not disclose unsatisfied performance obligations for customer contracts with terms less than 12 months or for variable consideration related to unsatisfied performance obligations. |
Interest |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expense, Operating and Nonoperating [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest |
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Foreign Exchange (Gain) Loss, Net |
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Foreign Currency [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Exchange (Gain) Loss, Net |
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
Ovintiv’s interim income tax expense is determined using the estimated annual effective income tax rate applied to year-to-date net earnings before income tax plus the effect of legislative changes and amounts in respect of prior periods. The estimated annual effective income tax rate is impacted by expected annual earnings, changes in valuation allowances, income tax related to foreign operations, state taxes, the effect of legislative changes, non-taxable items and tax differences on transactions, which can produce interim effective tax rate fluctuations. |
Acquisitions and Divestitures |
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Acquisitions And Divestitures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Divestitures |
Acquisitions For the three and six months ended June 30, 2024, acquisitions in the USA Operations were $5 million and $195 million, respectively, which primarily included property purchases in Permian with oil and liquids-rich potential. For the three and six months ended June 30, 2023, acquisitions in the USA Operations were $15 million and $208 million, respectively, which primarily included property purchases in Permian and Uinta with oil and liquids-rich potential. Divestitures For the three and six months ended June 30, 2024, divestitures in the USA Operations were $2 million and $4 million respectively, which primarily included the sale of certain properties that did not complement Ovintiv’s existing portfolio of assets. For the three and six months ended June 30, 2023, divestitures in the USA Operations were $718 million and $730 million, respectively, which primarily included the sale of Bakken located in North Dakota for proceeds of approximately $706 million, after closing and other adjustments. Amounts received from the Company’s divestiture transactions have been deducted from the respective U.S. and Canadian full cost pools. |
Business Combination |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination |
Acquisition of Midland Basin Assets (“Permian Acquisition”)
On June 12, 2023, Ovintiv completed a business combination to purchase all of the outstanding equity interests in seven Delaware limited liability companies (“Permian LLCs”) pursuant to the purchase agreement with Black Swan Oil & Gas, LLC, PetroLegacy II Holdings, LLC, Piedra Energy III Holdings, LLC and Piedra Energy IV Holdings, LLC, which were portfolio companies of funds managed by EnCap Investments L.P. (“EnCap”). The Company paid aggregate cash consideration of approximately $3.2 billion and issued approximately 31.8 million shares of Ovintiv common stock, representing a value of approximately $1.2 billion. The cash portion of the consideration was funded through a combination of net proceeds from the Company’s May 2023 senior notes offering, net proceeds from the sale of Bakken during the second quarter of 2023, cash on hand and proceeds from short-term borrowings. During the period from June 12, 2023 to December 31, 2023, transaction costs of approximately $76 million were included in administrative expense.
The acquisition was strategically located in close proximity to Ovintiv’s current Permian operations and added approximately 1,050 net well locations to Ovintiv’s Permian inventory and approximately 65,000 net acres. The results of operations from the acquired Permian assets have been included in Ovintiv’s consolidated financial statements since June 12, 2023.
Purchase Price Allocation
The Permian LLCs were accounted for under the acquisition method and as a single transaction because the purchase agreement was entered into at the same time with EnCap and in contemplation of one another to achieve an overall economic effect. The purchase price allocations represent the consideration paid and the fair values of the assets acquired, and liabilities assumed as of the acquisition date. The purchase price allocation was finalized during the first quarter of 2024.
(1) The fair value was based on the issuance of 31.8 million shares of common stock using the NYSE price of $36.78 on June 12, 2023. (2) Cash consideration paid reflects final cash settlements of $12 million which were completed during the first quarter of 2024. (3) Since the completion of the business combination on June 12, 2023, additional information related to pre-acquisition assets and liabilities was obtained resulting in measurement period adjustments. Changes in the fair value estimates comprised an increase in accounts receivable and accrued revenues of $22 million, an increase in proved properties of $134 million, a decrease in unproved properties of $227 million, a decrease in other property, plant and equipment of $16 million, a decrease in accounts payable and accrued liabilities of $73 million and a decrease in other liabilities and provisions of $2 million. The Company used the income approach valuation technique for the fair value of assets acquired and liabilities assumed. The carrying amounts of cash, accounts receivable and accounts payable approximate their fair values due to their nature and/or short-term maturity of the instruments. The fair value of tubular inventory in other property, plant and equipment was based on the fair value approach, which utilized subsequent sales of inventory, asset listings and cost records with consideration for the relative age, condition, utilization and economic support of the inventory. The fair values of the proved properties, unproved properties and asset retirement obligation were categorized within Level 3 and were determined using relevant market assumptions, including discount rates, future commodity prices and costs, timing of development activities, projections of oil and gas reserves, and estimates to abandon and reclaim producing wells. Level 3 inputs require significant judgment and estimates to be made.
For income tax purposes, the Permian Acquisition was treated as an asset purchase, and as a result, the tax basis in the assets and liabilities reflect their allocated fair value. |
Property, Plant and Equipment, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net |
USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration, development and construction activities of $99 million, which have been capitalized during the six months ended June 30, 2024 (2023 - $76 million). |
Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
The following table outlines Ovintiv’s estimated future sublease income as at June 30, 2024. All subleases are classified as operating leases.
For the three and six months ended June 30, 2024, operating lease income was $12 million and $26 million, respectively (2023 - $12 million and $24 million, respectively), and variable lease income was $6 million and $11 million, respectively (2023 - $6 million and $11 million, respectively). |
Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt |
On May 31, 2023, Ovintiv completed a public offering of senior unsecured notes of $600 million with a coupon rate of 5.65 percent due May 15, 2025, $700 million with a coupon rate of 5.65 percent due May 15, 2028, $600 million with a coupon rate of 6.25 percent due July 15, 2033, and $400 million with a coupon rate of 7.10 percent due July 15, 2053. The net proceeds of the offering, totaling $2,278 million, were used to fund a portion of the Company’s Permian Acquisition. See Note 9 for further information on the business combination.
As at June 30, 2024, the Company had outstanding commercial paper of $384 million maturing at various dates with a weighted average interest rate of approximately 6.13 percent. As at June 30, 2024, the Company also had $250 million drawn on its revolving credit facilities. The credit facilities are unsecured and bear interest at the lenders’ U.S. base rate, Canadian prime, Bankers’ Acceptances, SOFR or CORRA, plus applicable margins.
As at June 30, 2024, total long-term debt had a carrying value of $6,087 million and a fair value of $6,293 million (as at December 31, 2023 - carrying value of $5,737 million and a fair value of $5,989 million). The estimated fair value of long-term borrowings is categorized within Level 2 of the fair value hierarchy and has been determined based on market information of long-term debt with similar terms and maturity, or by discounting future payments of interest and principal at interest rates expected to be available to the Company at period end. |
Other Liabilities and Provisions |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities and Provisions |
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Share Capital |
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Share Capital |
Authorized Ovintiv is authorized to issue 750 million shares of common stock, par value $0.01 per share, and 25 million shares of preferred stock, par value $0.01 per share. No shares of preferred stock are outstanding.
Issued and Outstanding
On June 12, 2023, in accordance with the terms of the Permian Acquisition agreement, Ovintiv issued approximately 31.8 million shares of common stock as a component of the consideration paid to EnCap as discussed in Note 9. In conjunction with the share issuance, the Company recognized share capital of $318 thousand and paid in surplus of $1,169 million.
Ovintiv’s Performance Share Units (“PSU”) and Restricted Share Units (“RSU”) stock-based compensation plans allow the Company to settle the awards either in cash or in the Company’s common stock. Accordingly, Ovintiv issued 1.4 million shares of common stock during the six months ended June 30, 2024 (4.1 million shares of common stock during the twelve months ended December 31, 2023), as certain PSU and RSU grants vested during the period.
Normal Course Issuer Bid and Other Share Buybacks During the three and six months ended June 30, 2024, the Company purchased approximately 3.6 million shares and 9.0 million shares, respectively, for total consideration of approximately $184 million and $434 million, respectively. Of the amounts paid during the same three and six month periods, $36 thousand and $90 thousand, respectively, were charged to share capital and $184 million and $434 million, respectively, were charged to paid in surplus. During the three and six months ended June 30, 2023, the Company purchased approximately 2.5 million shares and 7.7 million shares, respectively, for total consideration of approximately $89 million and $328 million, respectively. Of the amounts paid during the same three and six month periods, $25 thousand and $77 thousand, respectively, were charged to share capital and $89 million and $328 million, respectively, were charged to paid in surplus. For the twelve months ended December 31, 2023, the Company purchased approximately 9.9 million shares for total consideration of approximately $426 million, of which $99 thousand was charged to share capital and $426 million was charged to paid in surplus. All NCIB purchases were made in accordance with their respective programs at prevailing market prices plus brokerage fees, with consideration allocated to share capital up to the par value of the shares, with any excess allocated to paid in surplus. Dividends During the three months ended June 30, 2024, the Company declared and paid dividends of $0.30 per share of common stock totaling $80 million (2023 - $0.30 per share of common stock totaling $82 million). During the six months ended June 30, 2024, the Company declared and paid dividends of $0.60 per share of common stock totaling $160 million (2023 - $0.55 per share of common stock totaling $143 million). On July 30, 2024, the Board of Directors declared a dividend of $0.30 per share of common stock payable on September 27, 2024, to shareholders of record as of September 13, 2024. Earnings Per Share of Common Stock The following table presents the calculation of net earnings (loss) per share of common stock:
Stock-Based Compensation Plans Shares issued as a result of awards granted from stock-based compensation plans are funded out of the common stock authorized for issuance as approved by the Company’s shareholders. As at June 30, 2024, there were no changes to Ovintiv’s compensation plans and the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans. |
Accumulated Other Comprehensive Income |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income |
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Variable Interest Entities |
6 Months Ended | ||||
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Jun. 30, 2024 | |||||
Variable Interest Entity, Not Primary Beneficiary, Disclosures [Abstract] | |||||
Variable Interest Entities |
Veresen Midstream Limited Partnership Veresen Midstream Limited Partnership (“VMLP”) provides gathering, compression and processing services under various agreements related to the Company’s development of liquids and natural gas production in the Montney play. As at June 30, 2024, VMLP provides approximately 1,153 MMcf/d of natural gas gathering and compression and 913 MMcf/d of natural gas processing under long-term service agreements with remaining terms ranging from to 21 years and have various renewal terms providing up to a potential maximum of 10 years. Ovintiv has determined that VMLP is a variable interest entity and that Ovintiv holds variable interests in VMLP. Ovintiv is not the primary beneficiary as the Company does not have the power to direct the activities that most significantly impact VMLP’s economic performance. These key activities relate to the construction, operation, maintenance and marketing of the assets owned by VMLP. The variable interests arise from certain terms under the various long-term service agreements and include: i) a take or pay for volumes in certain agreements; ii) an operating fee of which a portion can be converted into a fixed fee once VMLP assumes operatorship of certain assets; and iii) a potential payout of minimum costs in certain agreements. The potential payout of minimum costs will be assessed in the of the assets’ service period and is based on whether there is an overall shortfall of total system cash flows from natural gas gathered and compressed under certain agreements. The potential payout amount can be reduced in the event VMLP markets unutilized capacity to third-party users. Ovintiv is not required to provide any financial support or guarantees to VMLP.
As a result of Ovintiv’s involvement with VMLP, the maximum total exposure to loss related to the commitments under the agreements is estimated to be $1,111 million as at June 30, 2024. The estimate comprises the take or pay volume commitments and the potential payout of minimum costs. The take or pay volume commitments associated with certain gathering and processing assets are included in Note 21 under Transportation and Processing. The potential payout requirement is highly uncertain as the amount is contingent on future production estimates, pace of development and downstream transportation constraints. As at June 30, 2024, accounts payable and accrued liabilities included $0.6 million related to the take or pay commitment. |
Compensation Plans |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation Plans |
As at June 30, 2024, there were no changes to Ovintiv’s compensation plans and the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans. The Company has recognized the following share-based compensation costs:
As at June 30, 2024, the liability for cash-settled share-based payment transactions totaled $14 million ($14 million as at December 31, 2023), which is recognized in accounts payable and accrued liabilities. The following weighted average assumptions were used to determine the fair value of SAR and TSAR units outstanding:
(1) Volatility was estimated using historical rates. The following units were granted primarily in conjunction with the Company’s annual grant of long-term incentive awards. The PSUs and RSUs were granted at the volume-weighted average trading price of shares of Ovintiv common stock for the five days prior to the grant date.
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Fair Value Measurements |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
The fair values of cash and cash equivalents, accounts receivable and accrued revenues, and accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of those instruments. The fair values of restricted cash and marketable securities included in other assets approximate their carrying amounts due to the nature of the instruments held. Recurring fair value measurements are performed for risk management assets and liabilities and other derivative contracts, as discussed further in Note 19. These items are carried at fair value in the Condensed Consolidated Balance Sheet and are classified within the three levels of the fair value hierarchy in the following tables. Fair value changes and settlements for amounts related to risk management assets and liabilities are recognized in revenues and foreign exchange gains and losses according to their purpose.
(1) Netting to offset derivative assets and liabilities where the legal right and intention to offset exists, or where counterparty master netting arrangements contain provisions for net settlement. (2) Includes credit derivatives associated with certain prior years’ divestitures. The Company’s Level 1 and Level 2 risk management assets and liabilities consist of commodity fixed price contracts, NYMEX three-way options, NYMEX costless collars, foreign currency swaps and basis swaps with terms to 2025. The fair values of these contracts are estimated using inputs which are either directly or indirectly observable from active markets, such as exchange and other published prices, broker quotes and observable trading activity throughout the term of the instruments. Level 3 Fair Value Measurements As at June 30, 2024, the Company’s Level 3 risk management assets and liabilities consist of WTI costless collars and WTI three-way options with terms to 2025. The WTI three-way options are a combination of a sold call, a bought put and a sold put. The WTI costless collars are a combination of a sold call and a bought put. These contracts allow the Company to participate in the upside of commodity prices to the ceiling of the call option and provide the Company with complete (collars) or partial (three-way) downside price protection through the put options. The fair values of these contracts are determined using an option pricing model using observable and unobservable inputs such as implied volatility. The unobservable inputs are obtained from third parties whenever possible and reviewed by the Company for reasonableness. A summary of changes in Level 3 fair value measurements for risk management positions is presented below:
Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at June 30, 2024:
(1) Unobservable inputs were weighted by the relative fair value of the instruments.
A 10 percent increase or decrease in implied volatility for the WTI options would cause an approximate corresponding $4 million ($1 million as at December 31, 2023) increase or decrease to net risk management assets and liabilities. |
Financial Instruments and Risk Management |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments and Risk Management |
A) Financial Instruments Ovintiv’s financial assets and liabilities are recognized in cash and cash equivalents, accounts receivable and accrued revenues, other assets, accounts payable and accrued liabilities, risk management assets and liabilities, long-term debt, and other liabilities and provisions. B) Risk Management Activities Ovintiv uses derivative financial instruments to manage its exposure to fluctuating commodity prices and foreign currency exchange rates. The Company does not apply hedge accounting to any of its derivative financial instruments. As a result, gains and losses from changes in the fair value are recognized in net earnings (loss). Commodity Price Risk Commodity price risk arises from the effect that fluctuations in future commodity prices may have on revenues from production. To partially mitigate exposure to commodity price risk, the Company has entered into various derivative financial instruments. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors. Oil and NGLs - To partially mitigate oil and NGL commodity price risk, the Company uses WTI- and NGL-based contracts such as fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas, products and price points. Natural Gas - To partially mitigate natural gas commodity price risk, the Company uses NYMEX-based contracts such as fixed price contracts, options and costless collars. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas and benchmark price points. Foreign Exchange Risk
Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at June 30, 2024, the Company has entered into $236 million notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3697 to US$1, which mature monthly through the remainder of 2024. Risk Management Positions as at June 30, 2024
(1) Ovintiv has entered into oil differential swaps associated with Canadian condensate and WTI. (2) Ovintiv has entered into natural gas basis swaps associated with AECO, Waha and NYMEX. (3) Ovintiv has entered into U.S. dollar denominated fixed-for-floating average currency swaps to protect against fluctuations between the Canadian and U.S. dollars. Earnings Impact of Realized and Unrealized Gains (Losses) on Risk Management Positions
(1) Includes a realized gain of $4 million for the three and six months ended June 30, 2024, respectively (2023 - nil, respectively), related to other derivative contracts. (2) The interest rate swap was executed and settled during the three months ended June 30, 2023, in relation to the senior notes issuance described in Note 12. The gain was recognized in interest expense. (3) There were no unrealized gains or losses related to other derivative contracts for the three or six months ended June 30, 2024 or 2023. Reconciliation of Unrealized Risk Management Positions from January 1 to June 30
Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 18 for a discussion of fair value measurements. Unrealized Risk Management Positions
C) Credit Risk Credit risk arises from the potential that the Company may incur a loss if a counterparty to a financial instrument fails to meet its obligation in accordance with agreed terms. While exchange-traded contracts are subject to nominal credit risk due to the financial safeguards established by the exchanges and clearing agencies, over-the-counter traded contracts expose Ovintiv to counterparty credit risk. Counterparties to the Company’s derivative financial instruments consist primarily of major financial institutions and companies within the energy industry. This credit risk exposure is mitigated through the use of credit policies approved by the Board of Directors governing the Company’s credit portfolio including credit practices that limit transactions according to counterparties’ credit quality. Mitigation strategies may include master netting arrangements, requesting collateral, purchasing credit insurance and/or transacting credit derivatives. The Company executes commodity derivative financial instruments under master agreements that have netting provisions that provide for offsetting payables against receivables. Ovintiv actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. As at June 30, 2024, Ovintiv’s maximum exposure of loss due to credit risk from derivative financial instrument assets on a gross and net fair value basis was $143 million and $127 million, respectively, as disclosed in Note 18. The Company had no significant credit derivatives in place and held no collateral at June 30, 2024. Any cash equivalents include high-grade, short-term securities, placed primarily with financial institutions with investment grade ratings. Any foreign currency agreements entered into are with major financial institutions that have investment grade credit ratings. A substantial portion of the Company’s accounts receivable are with customers and working interest owners in the oil and gas industry and are subject to normal industry credit risks. As at June 30, 2024, approximately 93 percent (91 percent as at December 31, 2023) of Ovintiv’s accounts receivable and financial derivative credit exposures were with investment grade counterparties. During 2015 and 2017, the Company entered into agreements resulting from divestitures, which required Ovintiv to fulfill certain payment obligations on the take or pay volume commitments assumed by the purchasers. The circumstances that would require Ovintiv to perform under the agreements included events where a purchaser failed to make payment to the guaranteed party and/or a purchaser was subject to an insolvency event. The agreements had a fair value of $4 million as at December 31, 2023 and expired in June 2024. |
Supplementary Information |
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Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Information |
Supplemental disclosures to the Condensed Consolidated Statement of Cash Flows are presented below:
A) Net Change in Non-Cash Working Capital
B) Non-Cash Activities
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
Commitments The following table outlines the Company’s commitments as at June 30, 2024:
Operating leases with terms greater than one year are not included in the commitments table above. The table above includes short-term leases with contract terms less than 12 months, such as drilling rigs and field office leases, as well as non-lease operating cost components associated with building leases.
Included within transportation and processing in the table above are certain commitments associated with midstream service agreements with VMLP as described in Note 16. Divestiture transactions can reduce certain commitments disclosed above. Contingencies
Ovintiv is involved in various legal claims and actions arising in the normal course of the Company’s operations. Although the outcome of these claims cannot be predicted with certainty, the Company does not expect these matters to have a material adverse effect on Ovintiv’s financial position, cash flows or results of operations. Management’s assessment of these matters may change in the future as these matters are subject to a number of uncertainties. For any material matters that the Company believes an unfavorable outcome is reasonably possible, the Company discloses the nature and a range of potential exposures, if reasonably estimable. If an unfavorable outcome were to occur, there exists the possibility of a material impact on the Company’s consolidated net earnings or loss for the period in which the effect becomes reasonably estimable. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. Such accruals are based on the Company’s information known about the matters, estimates of the outcomes of such matters and experience in handling similar matters.
During the second quarter of 2024, Ovintiv resolved a dispute related to the previous disposition of certain legacy assets. The Company expects to receive net proceeds of approximately $150 million later in the year, at which time the Company will recognize a contingent gain within Other (gains) losses, net in its Consolidated Statement of Earnings. Ovintiv recognizes contingent gains in its Consolidated Financial Statements when the gain is realized or considered realizable. |
Basis of Presentation and Principles of Consolidation (Policies) |
6 Months Ended |
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Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | Ovintiv is in the business of the exploration for, the development of, and the production and marketing of oil, NGLs and natural gas. The interim Condensed Consolidated Financial Statements include the accounts of Ovintiv and entities in which it holds a controlling interest. All intercompany balances and transactions are eliminated on consolidation. Undivided interests in oil and natural gas exploration and production joint ventures and partnerships are consolidated on a proportionate basis. Investments in non-controlled entities over which the Company has the ability to exercise significant influence are accounted for using the equity method. The interim Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP and the rules and regulations of the SEC. Pursuant to these rules and regulations, certain information and disclosures normally required under U.S. GAAP have been condensed or have been disclosed on an annual basis only. Accordingly, the interim Condensed Consolidated Financial Statements should be read in conjunction with the annual audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2023, which are included in Item 8 of Ovintiv’s 2023 Annual Report on Form 10‑K. The interim Condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the annual audited Consolidated Financial Statements for the year ended December 31, 2023. These unaudited interim Condensed Consolidated Financial Statements reflect, in the opinion of Management, all normal and recurring adjustments necessary to present fairly the financial position and results of the Company as at and for the periods presented. Interim condensed consolidated financial results are not necessarily indicative of consolidated financial results expected for the fiscal year. |
Changes in Accounting Policies and Practices and New Standards Issued Not Yet Adopted | Changes in Accounting Policies and Practices On January 1, 2024, Ovintiv adopted ASU 2023-07 “Improvements to Reportable Segment Disclosures”, issued by FASB. The amendments enhance annual disclosure requirements about significant segment expenses that are regularly provided to the chief operating decision maker and included within reported measures of segment profit or loss. The amendments do not change how an entity identifies its operating segments. In addition, all annual disclosures are to be presented in interim periods beginning in the first quarter of 2025. The amendments will be applied retrospectively to all prior periods presented in the annual disclosures and are not expected to have a material impact on the Company’s Consolidated Financial Statements. New Standards Issued Not Yet Adopted As of January 1, 2025, Ovintiv will be required to adopt ASU 2023-09 “Improvements to Income Tax Disclosures”. The standard requires disaggregated information about the Company’s effective tax rate reconciliation as well as information on income taxes paid. The amendment requires the tabular rate reconciliation to be presented using both percentages and amounts, with additional separate disclosure for any reconciling items within certain categories equal to or greater than five percent of net earnings or loss before income tax and the applicable statutory federal income tax rate. The amendment also requires the disaggregation of income taxes paid by federal, state, and foreign jurisdictions, as well as additional disaggregated information on income taxes paid to an individual jurisdiction equal to or greater than five percent of total income taxes paid. Amendments will be applied prospectively at the date of adoption and are not expected to have a material impact on the Company’s Consolidated Financial Statements. |
Segmented Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Geographic Information | Results of Operations (For the three months ended June 30) Segment and Geographic Information
Results of Operations (For the six months ended June 30) Segment and Geographic Information
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Schedule of Marketing Intersegment Eliminations | Intersegment Information
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Capital Expenditures by Segment | Capital Expenditures by Segment
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Goodwill, Property, Plant and Equipment and Total Assets by Segment | Goodwill, Property, Plant and Equipment and Total Assets by Segment
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Revenues from Contracts with Customers (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Revenues (For the three months ended June 30)
(1) Includes revenues from production and revenues of product purchased from third parties, but excludes intercompany marketing fees transacted between the Company’s operating segments. Revenues (For the six months ended June 30)
(1)
Includes revenues from production and revenues of product purchased from third parties, but excludes intercompany marketing fees transacted between the Company’s operating segments. |
Interest (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expense, Operating and Nonoperating [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Expense |
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Foreign Exchange (Gain) Loss, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Exchange (Gain) Loss, Net |
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Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision For Income Taxes |
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Acquisitions and Divestitures (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions And Divestitures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Acquisitions & (Divestitures) |
Acquisitions |
Business Combination (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation |
(1) The fair value was based on the issuance of 31.8 million shares of common stock using the NYSE price of $36.78 on June 12, 2023. (2) Cash consideration paid reflects final cash settlements of $12 million which were completed during the first quarter of 2024. (3)
Since the completion of the business combination on June 12, 2023, additional information related to pre-acquisition assets and liabilities was obtained resulting in measurement period adjustments. Changes in the fair value estimates comprised an increase in accounts receivable and accrued revenues of $22 million, an increase in proved properties of $134 million, a decrease in unproved properties of $227 million, a decrease in other property, plant and equipment of $16 million, a decrease in accounts payable and accrued liabilities of $73 million and a decrease in other liabilities and provisions of $2 million. |
Property, Plant and Equipment, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Property, Plant And Equipment |
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Future Sublease Income | The following table outlines Ovintiv’s estimated future sublease income as at June 30, 2024. All subleases are classified as operating leases.
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Long-Term Debt (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Long-Term Debt |
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Other Liabilities and Provisions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Liabilities and Provisions |
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Share Capital (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Stock Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Issued and Outstanding |
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Earnings Per Common Share | The following table presents the calculation of net earnings (loss) per share of common stock:
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Accumulated Other Comprehensive Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income |
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Compensation Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts Recognized For Share-Based Payment Transactions | The Company has recognized the following share-based compensation costs:
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Schedule of Weighted Average Assumptions Used to Fair Value Share Units | The following weighted average assumptions were used to determine the fair value of SAR and TSAR units outstanding:
(1)
Volatility was estimated using historical rates. |
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Schedule of Share-based Compensation Activity | The following units were granted primarily in conjunction with the Company’s annual grant of long-term incentive awards. The PSUs and RSUs were granted at the volume-weighted average trading price of shares of Ovintiv common stock for the five days prior to the grant date.
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Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Fair Value, Assets And Liabilities Measured On Recurring Basis | Fair value changes and settlements for amounts related to risk management assets and liabilities are recognized in revenues and foreign exchange gains and losses according to their purpose.
(1) Netting to offset derivative assets and liabilities where the legal right and intention to offset exists, or where counterparty master netting arrangements contain provisions for net settlement. (2)
Includes credit derivatives associated with certain prior years’ divestitures. |
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Summary Of Changes In Level 3 Fair Value Measurements | A summary of changes in Level 3 fair value measurements for risk management positions is presented below:
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Quantitative Information About Unobservable Inputs Used In Level 3 | Quantitative information about unobservable inputs used in Level 3 fair value measurements is presented below as at June 30, 2024:
(1)
Unobservable inputs were weighted by the relative fair value of the instruments. |
Financial Instruments and Risk Management (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management Positions |
(1) Ovintiv has entered into oil differential swaps associated with Canadian condensate and WTI. (2) Ovintiv has entered into natural gas basis swaps associated with AECO, Waha and NYMEX. (3)
Ovintiv has entered into U.S. dollar denominated fixed-for-floating average currency swaps to protect against fluctuations between the Canadian and U.S. dollars. |
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Earnings Impact of Realized and Unrealized Gains (Losses) on Risk Management Positions |
(1) Includes a realized gain of $4 million for the three and six months ended June 30, 2024, respectively (2023 - nil, respectively), related to other derivative contracts. (2) The interest rate swap was executed and settled during the three months ended June 30, 2023, in relation to the senior notes issuance described in Note 12. The gain was recognized in interest expense. (3)
There were no unrealized gains or losses related to other derivative contracts for the three or six months ended June 30, 2024 or 2023. |
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Reconciliation of Unrealized Risk Management Positions |
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Unrealized Risk Management Positions |
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Supplementary Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Change in Non-Cash Working Capital | A) Net Change in Non-Cash Working Capital
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Non-Cash Activities | B) Non-Cash Activities
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments | The following table outlines the Company’s commitments as at June 30, 2024:
|
Recent Accounting Pronouncements (Narrative) (Details) - ASU 2023-07 [Member] |
Jun. 30, 2024 |
---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 01, 2024 |
Segmented Information (Capital Expenditures by Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Segment Reporting, Asset Reconciling Item [Line Items] | ||||
Capital Expenditures | $ 622 | $ 640 | $ 1,213 | $ 1,250 |
Operating Segments [Member] | USA Operations [Member] | ||||
Segment Reporting, Asset Reconciling Item [Line Items] | ||||
Capital Expenditures | 504 | 502 | 961 | 969 |
Operating Segments [Member] | Canadian Operations [Member] | ||||
Segment Reporting, Asset Reconciling Item [Line Items] | ||||
Capital Expenditures | 117 | 137 | 250 | 279 |
Corporate & Other [Member] | ||||
Segment Reporting, Asset Reconciling Item [Line Items] | ||||
Capital Expenditures | $ 1 | $ 1 | $ 2 | $ 2 |
Revenues from Contracts with Customers (Narrative) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
Revenue from Contract with Customer [Abstract] | ||
Contract with customer, asset net | $ 0 | $ 0 |
Contract with customer, liability | 0 | 0 |
Receivables & accrued revenues from contracts with customers | 917 | $ 1,070 |
Revenue, remaining performance obligation | $ 0 | |
Description of payment terms | As the period between when the product sales are transferred and Ovintiv receives payments is generally 30 to 60 days, there is no financing element associated with customer contracts. |
Interest (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Interest Expense, Operating and Nonoperating [Abstract] | ||||
Interest Expense on Debt | $ 100 | $ 77 | $ 197 | $ 137 |
Interest on Finance Leases | 1 | 1 | 1 | 1 |
Interest - Other | 4 | 2 | 5 | 13 |
Interest | $ 105 | $ 80 | $ 203 | $ 151 |
Income Taxes (Provision For Income Taxes) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Income Tax Disclosure [Line Items] | ||||
Total Current Tax Expense (Recovery) | $ 23 | $ 54 | $ 55 | $ 116 |
Total Deferred Tax Expense (Recovery) | 103 | 47 | 161 | 111 |
Income Tax Expense (Recovery) | $ 126 | $ 101 | $ 216 | $ 227 |
Effective Tax Rate | 27.00% | 23.10% | 24.20% | 21.60% |
United States [Member] | ||||
Income Tax Disclosure [Line Items] | ||||
Total Current Tax Expense (Recovery) | $ 10 | $ 8 | $ 24 | $ 8 |
Total Deferred Tax Expense (Recovery) | 77 | 65 | 135 | 137 |
Canada [Member] | ||||
Income Tax Disclosure [Line Items] | ||||
Total Current Tax Expense (Recovery) | 13 | 46 | 31 | 108 |
Total Deferred Tax Expense (Recovery) | $ 26 | $ (18) | $ 26 | $ (26) |
Acquisitions and Divestitures (Schedule of Net Acquisitions & (Divestitures)) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Acquisitions and Divestitures [Line Items] | ||||
Acquisitions | $ 5 | $ 15 | $ 195 | $ 214 |
Divestitures | (2) | (717) | (4) | (729) |
Net Acquisitions and Divestitures | 3 | (702) | 191 | (515) |
Operating Segments [Member] | USA Operations [Member] | ||||
Acquisitions and Divestitures [Line Items] | ||||
Acquisitions | 5 | 15 | 195 | 208 |
Divestitures | (2) | (718) | (4) | (730) |
Operating Segments [Member] | Canadian Operations [Member] | ||||
Acquisitions and Divestitures [Line Items] | ||||
Acquisitions | $ 0 | 0 | $ 0 | 6 |
Divestitures | $ 1 | $ 1 |
Acquisitions and Divestitures (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Acquisitions and Divestitures [Line Items] | ||||
Acquisitions | $ 5 | $ 15 | $ 195 | $ 214 |
Divestitures | 2 | 717 | 4 | 729 |
USA Operations [Member] | Operating Segments [Member] | ||||
Acquisitions and Divestitures [Line Items] | ||||
Acquisitions | 5 | 15 | 195 | 208 |
Divestitures | $ 2 | $ 718 | $ 4 | 730 |
USA Operations [Member] | Operating Segments [Member] | Uinta and Bakken Assets [Member] | ||||
Acquisitions and Divestitures [Line Items] | ||||
Divestitures | $ 706 |
Business Combination (Narrative) (Details) - Permian Acquisition [Member] shares in Millions, $ in Millions |
Jun. 12, 2023
USD ($)
a
WellLocation
shares
|
Dec. 31, 2023
USD ($)
|
---|---|---|
Business Acquisition [Line Items] | ||
Cash paid for acquisition | $ 3,229 | |
Number of shares issued | shares | 31.8 | |
Value issued | $ 1,169 | |
Transaction costs | $ 76 | |
Number of well locations acquired | WellLocation | 1,050 | |
Number of acres acquired | a | 65,000 | |
Share Capital [Member] | ||
Business Acquisition [Line Items] | ||
Number of shares issued | shares | 31.8 |
Business Combination (Schedule of Purchase Price Allocation) (Details) - Permian Acquisition [Member] $ in Millions |
Jun. 12, 2023
USD ($)
|
---|---|
Consideration: | |
Fair value of shares of Ovintiv common stock issued | $ 1,169 |
Cash | 3,229 |
Total Consideration | 4,398 |
Assets Acquired: | |
Cash and cash equivalents | 16 |
Accounts receivable and accrued revenues | 202 |
Liabilities Assumed: | |
Accounts payable and accrued liabilities | (446) |
Asset retirement obligation | (28) |
Other liabilities and provisions | (4) |
Total Purchase Price | 4,398 |
Proved Properties [Member] | |
Assets Acquired: | |
Property, plant and equipment, net | 3,727 |
Unproved Properties [Member] | |
Assets Acquired: | |
Property, plant and equipment, net | 914 |
Other Capitalized Property Plant and Equipment [Member] | |
Assets Acquired: | |
Property, plant and equipment, net | $ 17 |
Property, Plant and Equipment, Net (Narrative) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Property, Plant and Equipment [Abstract] | ||
Internal Costs Capitalized | $ 99 | $ 76 |
Leases (Schedule of Estimated Future Sublease Income) (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2024
USD ($)
| |
Leases [Abstract] | |
2024 | $ 25 |
2025 | 51 |
2026 | 51 |
2027 | 46 |
2028 | 41 |
Thereafter | 364 |
Total | $ 578 |
Leases (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Leases [Abstract] | ||||
Operating lease income | $ 12 | $ 12 | $ 26 | $ 24 |
Variable lease income | $ 6 | $ 6 | $ 11 | $ 11 |
Other Liabilities and Provisions (Schedule of Other Liabilities and Provisions) (Details) - USD ($) $ in Millions |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Other Liabilities And Provisions [Line Items] | ||
Finance Lease Obligations | $ 16 | $ 20 |
Pensions and Other Post-Employment Benefits | 77 | 74 |
Other | 12 | 22 |
Other Liabilities and Provisions | 141 | 132 |
Other Liabilities and Provisions [Member] | ||
Other Liabilities And Provisions [Line Items] | ||
Unrecognized Tax Benefits | $ 36 | $ 16 |
Share Capital (Schedule of Common Stock Issued and Outstanding) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
|
Class of Stock [Line Items] | |||||
Shares of Common Stock Outstanding, Beginning of Year | 271,700,000 | 245,700,000 | 245,700,000 | ||
Shares of Common Stock Purchased | (9,000,000) | (9,900,000) | |||
Shares of Common Stock Issued | 1,400,000 | 35,900,000 | |||
Shares of Common Stock Outstanding, End of Period | 264,100,000 | 264,100,000 | 271,700,000 | ||
Shares of Common Stock Outstanding, Beginning of Year | $ 3 | $ 3 | $ 3 | ||
Shares of Common Stock Purchased | $ (184) | $ (89) | (434) | (328) | |
Shares of Common Stock Issued | 1,169 | 1,169 | |||
Shares of Common Stock Outstanding, End of Period | 3 | 3 | 3 | ||
Share Capital [Member] | |||||
Class of Stock [Line Items] | |||||
Shares of Common Stock Purchased | $ 0 | 0 | 0 | 0 | 0 |
Shares of Common Stock Issued | $ 0 | $ 0 | $ 0 | $ 0 |
Share Capital (Earnings Per Common Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Class of Stock Disclosures [Abstract] | ||||
Net Earnings (Loss) | $ 340 | $ 336 | $ 678 | $ 823 |
Weighted average shares of common stock outstanding - Basic | 266.2 | 249.4 | 267.9 | 246.9 |
Effect of dilutive securities | 1.9 | 1.4 | 2.7 | 3.9 |
Weighted Average Shares of Common Stock Outstanding - Diluted | 268.1 | 250.8 | 270.6 | 250.8 |
Net Earnings (Loss) per Share of Common Stock Basic | $ 1.28 | $ 1.35 | $ 2.53 | $ 3.33 |
Net Earnings (Loss) per Share of Common Stock Diluted | $ 1.27 | $ 1.34 | $ 2.51 | $ 3.28 |
Accumulated Other Comprehensive Income (Schedule of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
|
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||
Balance, Beginning of Period, Foreign Currency Translation Adjustment | $ 924 | $ 939 | $ 1,000 | $ 937 | |
Change in Foreign Currency Translation Adjustment | (31) | 53 | (107) | 55 | |
Balance, End of Period, Foreign Currency Translation Adjustment | 893 | 992 | 893 | 992 | |
Pension and Other Post-Employment Benefit Plans | |||||
Balance, Beginning of Period | 49 | 52 | 50 | 54 | |
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax [Abstract] | |||||
Reclassification of net actuarial (gains) and losses to net earnings | (2) | (2) | (3) | (4) | |
Income taxes | 0 | 1 | 0 | 1 | |
Balance, End of Period | 47 | 51 | 47 | 51 | |
Total Accumulated Other Comprehensive Income | $ 940 | $ 1,043 | $ 940 | $ 1,043 | $ 1,050 |
Compensation Plans (Amounts Recognized For Share-Based Payment Transactions) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total Compensation Costs of Transactions Classified as Cash-Settled | $ (3) | $ 4 | $ 2 | $ (24) |
Total Compensation Costs of Transactions Classified as Equity-Settled | 24 | 24 | 48 | 45 |
Less: Total Share-Based Compensation Costs Capitalized | (8) | (5) | (14) | (13) |
Total Share-Based Compensation Expense (Recovery) | 13 | 23 | 36 | 8 |
Operating Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total Share-Based Compensation Expense (Recovery) | 5 | 7 | 13 | 11 |
Administrative Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total Share-Based Compensation Expense (Recovery) | $ 8 | $ 16 | $ 23 | $ (3) |
Compensation Plans (Narrative) (Details) - USD ($) $ in Millions |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Liability for cash-settled share-based payment transactions | $ 14 | $ 14 |
Compensation Plans (Schedule of Share-based Compensation, Activity) (Details) shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2024
shares
| |
PSUs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 582 |
RSUs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 1,494 |
DSUs [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 5 |
Fair Value Measurements (Summary Of Changes In Level 3 Fair Value Measurements) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Balance, Beginning Balance | $ 16 | $ 12 |
Total Gains (Losses) | $ (42) | $ 48 |
Fair Value, Net Derivative Asset (Liability), Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Purchases, sales and issuances | $ 0 | $ 0 |
Settlements | 9 | 0 |
Transfers Out of Level 3 | 0 | 0 |
Balance, Ending Balance | (17) | 60 |
Change in Unrealized Gains (Losses) During the Period Included in Net Earnings (Loss) | $ (33) | $ 48 |
Fair Value Measurements (Quantitative Information About Unobservable Inputs Used In Level 3) (Details) - WTI Options [Member] - Option Model [Member] |
6 Months Ended |
---|---|
Jun. 30, 2024 | |
Minimum [Member] | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Fair Value Inputs Commodity Price Volatility | 20.00% |
Maximum [Member] | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Fair Value Inputs Commodity Price Volatility | 36.00% |
Weighted Average [Member] | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |
Fair Value Inputs Commodity Price Volatility | 23.00% |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
Ten Percent Change in Implied Volatility [Member] | ||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Increase (Decrease) in Risk Management Assets and Liabilities | $ 4 | $ 1 |
Financial Instruments and Risk Management (Earnings Impact of Realized and Unrealized Gains (Losses) On Risk Management Positions) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized Gain (Loss) on Derivatives | $ 68 | $ 3 | $ 114 | $ (77) |
Unrealized Gain (Loss) on Derivatives | 6 | 151 | (102) | 175 |
Realized and Unrealized Gain (Loss) on Risk Management | $ 74 | $ 154 | $ 12 | $ 98 |
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity |
Revenue [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized Gain (Loss) on Derivatives | $ 69 | $ 5 | $ 115 | $ (71) |
Unrealized Gain (Loss) on Derivatives | 8 | 142 | (92) | 160 |
Realized and Unrealized Gain (Loss) on Risk Management | $ 77 | $ 147 | $ 23 | $ 89 |
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity |
Foreign Currency Gain (Loss) [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized Gain (Loss) on Derivatives | $ (1) | $ (3) | $ (1) | $ (7) |
Unrealized Gain (Loss) on Derivatives | (2) | 9 | (10) | 15 |
Realized and Unrealized Gain (Loss) on Risk Management | $ (3) | $ 6 | $ (11) | $ 8 |
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity | Gain (Loss) from Price Risk Management Activity |
Interest Rate [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized Gain (Loss) on Derivatives | $ 0 | $ 1 | $ 0 | $ 1 |
Realized and Unrealized Gain (Loss) on Risk Management | $ 0 | $ 1 | $ 0 | $ 1 |
Financial Instruments and Risk Management (Reconciliation of Unrealized Risk Management Positions) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Derivative [Line Items] | ||||
Fair Value of Contracts, Beginning of Year | $ 212 | |||
Settlement of Other Derivative Contracts | 4 | |||
Fair Value of Contracts Realized During the Period | $ (68) | $ (3) | (114) | $ 77 |
Fair Value of Contracts, End of Period | 114 | 114 | ||
Unrealized Gain (Loss) on Derivatives | $ 6 | $ 151 | (102) | 175 |
Commodity Contract [Member] | ||||
Derivative [Line Items] | ||||
Increase (Decrease) in Derivative Assets and Liabilities | $ 12 | $ 98 |
Financial Instruments and Risk Management (Unrealized Risk Management Positions) (Details) - USD ($) $ in Millions |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Risk Management, Current asset | $ 117 | $ 214 |
Risk Management, Long-term asset | 10 | 4 |
Risk Management, Total asset | 127 | 218 |
Risk Management, Current liability | 7 | 0 |
Risk Management, Long-term liability | 6 | 2 |
Risk Management, Total liability | 13 | 2 |
Guarantor Obligations, Current Carrying Value | 0 | 4 |
Risk Management and Other Derivative Guarantee, at Fair Value, Net | 114 | 212 |
Accounts Payable and Accrued Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Guarantor Obligations, Current Carrying Value | $ 0 | $ 4 |
Supplementary Information (Net Change in Non-Cash Working Capital) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Supplemental Cash Flow Elements [Abstract] | ||||
Accounts receivable and accrued revenues | $ 63 | $ 205 | $ 235 | $ 519 |
Accounts payable and accrued liabilities | (9) | (103) | (301) | (290) |
Current portion of operating lease liabilities | 6 | (3) | (3) | 9 |
Income tax receivable and payable | (23) | 45 | (258) | 128 |
Net change in non-cash working capital | $ 37 | $ 144 | $ (327) | $ 366 |
Supplementary Information (Non-Cash Activity) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Jun. 30, 2024 |
Jun. 30, 2023 |
|
Non-Cash Operating Activities | ||||
ROU operating lease assets and liabilities | $ (25) | $ (40) | $ (33) | $ (69) |
Non-Cash Investing Activities | ||||
Property, plant and equipment accruals | (17) | 93 | (2) | 92 |
Capitalized long-term incentives | 0 | 0 | (7) | (2) |
Property additions/dispositions, including swaps | $ 14 | 4 | $ 31 | 22 |
Non-Cash Financing Activities | ||||
Common shares issued in conjunction with the Permian Acquisition (See Note 8) | $ (1,169) | $ (1,169) |
Commitments and Contingencies (Details) $ in Millions |
Jun. 30, 2024
USD ($)
|
---|---|
Commitments [Line Items] | |
2024 | $ 513 |
2025 | 783 |
2026 | 609 |
2027 | 505 |
2028 | 451 |
Thereafter | 2,164 |
Total | 5,025 |
Transportation and Processing Commitments [Member] | |
Commitments [Line Items] | |
2024 | 336 |
2025 | 669 |
2026 | 594 |
2027 | 498 |
2028 | 445 |
Thereafter | 2,145 |
Total | 4,687 |
Drilling and Field Services Commitments [Member] | |
Commitments [Line Items] | |
2024 | 172 |
2025 | 105 |
2026 | 7 |
2027 | 0 |
2028 | 0 |
Thereafter | 0 |
Total | 284 |
Building Leases & Other Commitments [Member] | |
Commitments [Line Items] | |
2024 | 5 |
2025 | 9 |
2026 | 8 |
2027 | 7 |
2028 | 6 |
Thereafter | 19 |
Total | $ 54 |
Commitments and Contingencies (Narrative) (Details) $ in Millions |
3 Months Ended |
---|---|
Jun. 30, 2024
USD ($)
| |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation settlement, amounts awarded | $ 150 |
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