Ovintiv Inc. (DE)

Good day, ladies and gentlemen, and thank you for standing by. Welcome to OVENTIV's 2020 First Quarter Results Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Members of the investment community will have the opportunity to ask questions and can join the queue at any time by pressing star 1. For members of the media attending in the listen-only mode today, you may quote statements made by any of the OVINTIV representatives. However, members of the media who wish to quote others who are speaking on this call today, we advise you to contact those individuals directly to obtain their consent. Please be advised that this conference call may not be recorded or rebroadcast without the express consent of OVINTIV. I would now like to turn the conference call over to Steve Campbell, from Investor Relations. Please go ahead, Mr. Campbell.

Thank you, Operator, and welcome everyone to our first quarter conference call. This call is being webcast, and the slides are available on our website at oventiv.com. Please take note today of the advisory regarding forward-looking statements at the end of our slides and in our disclosure documents that we file on CDAR and EDGAR. Following our prepared remarks today from the leadership team, We will all be available to take your specific questions. Please limit your time today to one question and one follow-up. This simply allows us to get to more of your thoughts and questions. I'll now turn the call over to our CEO, Doug Suttles.

Thank you and good morning. We very much appreciate you dialing in today for our first quarter update, and I hope you're healthy and surviving staying at home. Today, we are living in unprecedented times, both in our daily lives and in our industry. Over the last two plus months, we've been managing through a challenging combination of events that is one for the ages. As shareholders, it's important that you know we are in a very good position and I'm very confident we will come out of this even stronger. While we didn't predict this situation, we did plan on volatility. We deliberately built a business that has massive flexibility and that allows us to be very dynamic in how we respond. The immediate actions we are taking positions us very well for 2021, and we will talk more about that on the call today. Our first quarter financial and operating results were very strong. We delivered higher than expected production for less capital, but clearly a lot has changed in our sector since we closed the books on the quarter. We'll focus this morning on how we're effectively using that flexibility we've built into our business to manage through these challenging times. and how we see ourselves positioned for a recovering world. We will not only survive, but we'll be positioned to thrive. And I know we all hope that that day is very soon. I'm joined today by other members of our team who will help with the presentation and be available to answer your questions. We will reference the slides we issued yesterday and take your questions after our prepared remarks. The market is certainly challenging and something none of us could have predicted. I told someone recently that while we prepare for a Black Swan event in our risk management process, we never thought we had to prepare for a whole flock of them. Fortunately, we have the flexibility to rapidly adapt to changing market conditions without incurring fees or penalties. We are adjusting our activities in real time to assure that we get optimal outcomes today, as well as position us for 2021 and beyond. You will find in today's deck that we have outlined potential scenarios for the remainder of 2020 and for 2021. Although we are not issuing formal guidance, it's important that you understand what our business can deliver. The recent reductions to our cash cost and the meaningful gains in capital efficiency have enhanced the cash flow outlook for 2021. Our stay flat capital at a $35 wall price is about $1.5 billion. You'll recall that this is about $700 million less than previous estimates. More on how we get there later in the call. As the COVID-19 demand impact became apparent in oil markets, we immediately announced a series of actions to protect the health and safety of our workforce, maintain balance sheet strength, and preserve liquidity. Over the next several months, we expect that oil prices will be weak and volatile. Although encouraged by OPEC Plus cuts, and the swift actions being taken by producers to cut capital, defer completions and shut in production. The COVID-19 driven demand loss is too great to quickly overcome, but it is encouraging to begin to see the green shoots of returning demand. We are laser focused today on the things we can control and are using the tremendous flexibility we built into our business to make sound decisions consistent with our market views. Our priorities today are crystal clear. There has never been a more important time to focus on efficiency, both cash costs and capital efficiency, to get the most out of every dollar we spend. This is something we are very good at, and we have a long-standing track record when it comes to innovating and creatively finding new ways to enhance margins and reduce capital costs. The entirety of our workforce is solely focused on safely doing this. When this crisis began, we announced we would reduce cash costs by $100 million, and today we are doubling that to $200 million. And we expect the vast majority of this will stick with us in 2021 and beyond. In addition, in the first quarter, we substantially reduced well costs versus 2019, and now we believe they will be more than 20% lower in 2021 versus 2019. The steps we are taking today are maintaining our strong balance sheet and preserving liquidity. We have the flexibility in our business to do this quickly, efficiently, and without penalties. In the second quarter, we immediately cut capital by 60%. We went from 23 rigs to the seven we are running today. We reduced frac spreads from eight to zero, and we did all of this without incurring penalties or termination fees. Our 2020 cash flows and balance sheet are supported by our strong hedge position. Successful risk management is a part of our track record and is designed to manage balance sheet risk. In addition to reducing cost and capital spending, we also entered the debt market and repurchased a portion of our 2021 and 2022 bonds at a discount, lowering our debt and our interest expense. Recall that this is something we did effectively in 2016. We have substantial and firm liquidity today. And note that two credit agencies recently reaffirmed our investment-grade rating, which we know is a key advantage in today's capital-constrained market. With the extreme volatility we've seen in oil prices, we are actively managing our production. Because we operate substantially all of our production, we have almost full control to shut in the right wells based on variable cost, market views by areas, differentials, and the extreme contango in the market today. We have a thoughtful approach to shut-ins and are confident we can quickly return wells to production without reservoir damage or lasting impacts. And most importantly, we are protecting the health and safety of our people. We seamlessly deployed our business continuity plan and removed to remote working with our team effectively managing the business from home. We are now beginning to return to more normal working aligned with national and local guidance. We also implemented safety protocols in the field where we've now completed over 45,000 health screenings. This has been very effective. We've had no known cases of COVID-19 in our field operations. Our goal was not just to maintain critical functions, but to effectively run the business. I have to compliment our team as we haven't missed a beat. These priorities give us tremendous resilience and position us to thrive during the recovery. Although we are certainly prepared to make additional cuts to preserve our liquidity and protect the balance sheet, we also believe we have to do this in the context of a recovery. I'll now turn the call over to Brendan McCracken to discuss our first quarter results.