Ovintiv Inc. (DE)

Good day, ladies and gentlemen, and thank you for standing by. Welcome to OVINTIV's 2022 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 a 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 today's call, 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 Mr. Jason Verheest from Investor Relations. Please go ahead, Mr. Verheest.

Thank you, Operator, and welcome to our first quarter 22 conference call. This call is being webcast and the slides are available on our website at oventive.com. Please take note of the advisory regarding forward-looking statements at the end of our slides and in our disclosure documents filed on CDAR and EDGAR. Following prepared remarks will be available to take your specific questions. Please limit your time to one question and one follow-up. And I'll turn the call over to our CEO, Brendan McCracken. Good morning.

Thank you for joining us. Quite a lot has happened since we reported our year-end results. Commodity prices have increased significantly due to unfortunate geopolitical events and continued supply chain disruptions across the globe. We're disheartened by these events and hope that they resolve as quickly as possible. Our team is dedicated to responsibly producing our barrels and BTUs to provide the world the energy it needs. I'd like to kick off by covering some of today's key highlights. Our strategy is continuing to lead to strong returns on both the capital we are investing and the cash we are returning to our shareholders. We're delivering those returns while continuing to strengthen the balance sheet, drive ESG progress, and generate leading capital efficiency. We are once again raising our base dividend This 25% increase marks the third raise in the last 12 months and reflects the structural cost reductions and efficiency gains we've made in our business to drive our breakeven price lower and unlock a higher sustainable dividend. We are also confirming the doubling of our shareholder returns starting October 1st. We are making tremendous progress on reducing debt and want to solidify the timing of our cash return inflection. This plan sets us up to deliver $1 billion of cash return to our shareholders this year. With that said, debt reduction still continues to be a key priority, and we have line of sight to achieving $3 billion of net debt in the third quarter. We're also making progress on our absolute debt and issued notice to redeem the entire principal amount of our outstanding 2024 notes, roughly $1 billion in total. In addition to financial and operational excellence, we're proud to continue to demonstrate leading ESG performance. Yesterday, we published our 2022 Sustainability Report, which highlights strong year-over-year progress across a wide range of key performance metrics and marks our 18th consecutive year of transparent ESG reporting. Finally, we're maintaining an intense focus on capital efficiency. Our 2022 outlook is robust, and the team has continued to drive innovation to offset inflationary pressures seen across industry in the broader market today. Our 2022 plan is set to deliver about $5 billion of cash flow at a price deck of $100 WTI and $6 NYMEX gas. We're committed to capital discipline, and we're reinvesting less than 35% of this cash flow, allowing us to utilize the remaining 65% plus for dividends, buybacks, and debt reduction. And while we've increased our capital guidance to align with our current expectations for cost inflation and to keep our high spec equipment and preferred crews running for the remainder of the year, our 22 plan still ranks among the top of our peer group in capital efficiency. Greg will speak more to this later in the call. Given our significant 2022 cash flow profile, we want to provide clear and transparent timing for our upcoming shareholder return increase. We will double our returns to 50% of after base dividend free cash flow starting on October 1st. Over time, this return profile has upside potential as we continue to deleverage and take costs out of the business. Today, our actual second quarter annualized cash return yield is approximately 6%. We're doing this while we continue to rapidly reduce net debt. This metric almost doubles to 10% as we move to our 50% shareholder return distribution and jumps to 18% if you remove the impact of hedges. I'm excited to highlight that this 18% cash return yield is attainable in the near term as our hedges roll off and this return outpaces both the industry and broader market offerings. A strong driver of our go-forward cash return offering is a refreshed hedge profile. Today, our first half 2023 hedge book is complete and equates to about 20% to 25% of production, while also providing upside participation north of $110 WTI and $7 in IMAX gas. This revised approach is set to deliver significant cash flow expansion in 2023 and allow us to return significantly more cash to shareholders on a go-forward basis. Despite a few headwinds in the quarter, we delivered solid results, generated significant free cash flow, and directed a substantial amount of cash to shareholder returns. We generated more than $1 billion of cash flow, along with free cash flow of $592 million. We returned approximately $123 million to our shareholders, or 38% of our fourth quarter 21 free cash flow, through the combination of share buybacks and our base dividend. Through the corridor, we largely offset growing inflationary pressure on capital. This is something we've been intensely focused on mitigating for the better part of last year. On the production front, we produced 500,000 BOEs per day, above the midpoint of guidance. We came in above our guidance range for natural gas, and we were within the range on total liquids. We also saw very strong realized pricing across each of our products. Our oil and condensate production was slightly below our guidance for the quarter. We lost roughly 3,500 barrels per day from a combination of higher Canadian royalty rates, which are directly correlated to higher commodity prices, operational delays, and weather disruptions. With that said, our 22 plan remains strong, and we expect our production profile in the second half of the year to match our original plan. Our substantial free cash flow generation, declining leverage profile, and near-term inflection to higher shareholder returns continue to differentiate us as an investment opportunity. I will now turn the call over to Greg to talk about our operational highlights.