Ovintiv Inc. (NYSE:OVV) Q4 2022 Earnings Call Transcript

Gabe Daoud: Brendan, maybe could we just hit on CapEx a bit. Just curious, another program is heading towards being more level loaded, but — is there anything else in the back half of the year that’s driving the step down in CapEx? I understand the DUC blowdown will occur in the first half. But as I think about the second half, is there service cost deflation may be being baked in? Or is there intentional DUCs being built again in the second half of the year? Just trying to reconcile that.

Brendan McCracken: Yes, Gabe. I appreciate it. Nothing in there around the deflation or the DUC build. So it is just literally the consuming those carryover DUCs in the first half of the year. And then I think you can see on one of the slides, I’m not sure which number it is here just off the top of my head, but we show the monthly turn in line and essentially works out to about 50 to 60 wells a quarter, and it’s going to be pretty smooth month-to-month as well. So that is a huge step change for us year-over-year to get more low leveled and that is going to wind up greatly benefiting 2024, and we thought it was just really important to get that shift made this year. So that’s why you’re seeing that done.

Gabe Daoud: That’s helpful. Then maybe as a follow-up for Greg. Could you maybe just give us a little more color around what’s going on in the Uinta? Just curious, I guess, what are some of the expectations or goals with the program this year? And as you maybe even think about adding more capital to that moving forward?

Greg Givens: Thanks for the question, Gabe. And really, as we’ve said for a few quarters now, we’ve been pleased with the results we’re getting in the Uinta. We’re seeing some strong individual well results there. But we’ve also been working on the takeaway capacity to make sure that we have the ability to get those barrels to market and get paid a fair price for them. And so this is just a continuation of that effort continuing to delineate that asset and move forward there. But it will continue to be a balanced approach as we continue to evaluate that and use our cube development strategy there and use all of the things that we’ve learned from all of the other plays that we participated in get an optimal result out of the unit to going forward. So encouraged but a measured approach.

Brendan McCracken: Yes. I think, Gabe, if I just added to that, we’ve now got over 100 horizontal wells of our own into the play as well as some third-party wells around us. And the acreage position we have is right in the center of the basin. So it’s right in the best part of the resource, and we’re getting more confidence in the productivity and cost structure of the play. And then as Greg kind of mentioned in the prepared remarks, it’s actually a pretty critical point. the Uinta is our highest margin play alongside the Permian in 2022, which is a huge step change for the play from a margin perspective, and that all adds up to better returns there. And — the only other thing I’d say is part of the reason that margin has enhanced as we sold that high-cost waterflood last year, which took quite a bit of the operating cost out of the asset.

Operator: Your next question comes from Lloyd Byrne at Jefferies.

Lloyd Byrne : Brendan, or maybe, Greg, can you guys just talk a little bit more about what’s happened with the type curves in the Permian? I mean the third and fourth quarter to date look better than the first and second. So what changed there? And how does ’23 look? And then I have a quick follow-up to Gabe’s question, I think.