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

John Abbott : Yes. So what we’re trying to understand is it’s — again, it’s — the quarter’s 2/3 is complete, right? I mean the guidance is 160,000 barrels per day. And so we’re trying to see whether or not we’ve already seen the lows of production for oil and condensate for the quarter. Are you already moving higher at this point in time? I mean you’ve had the slowdown in activity in 4Q that drove outlook guidance for this quarter, but are you already on an upward trajectory at this point in time?

Brendan McCracken: Yes, that’s a reasonable way to think about it, John. You bet.

John Abbott : All right. And then for our second question is — I mean, congratulations on the additions to your inventories. What is your thoughts on potential portfolio cleanup in the current environment?

Brendan McCracken: I think we’ve done a fair bit of that over time. And so when you look at how we’re allocating capital today, every asset and the portfolio is competing for capital, and delivering free cash flow for the corporation. So we’re always going to look at that and think about it is there a way we can enhance the value of the company for our shareholders. But a lot of the cleanup that we’ve been doing has been done here, so.

Operator: Your next question comes from Jeoffrey Lambujon of Tudor, Pickering and Holt.

Jeoffrey Lambujon: My first one is just if you could elaborate more on the capital efficiencies that you spoke about on what were the most impactful factors there in 2022? How those contributed to that 10% improvement year-to-year last year? And then looking forward, how do you view the repeatability there and then also incremental improvements to be captured this year and what’s embedded in the outlook here?

Brendan McCracken: Yes, Jeff, appreciate it. I think on the backward-looking capital efficiencies, it was all about just being faster. So drilling faster and completing faster was the big thing as we really embedded frac into the portfolio and local wet sand and those, I think, were good winners for us last year. And as you transition and take a more forward-looking view that’s the order of the day again this year is to keep finding those efficiencies and technical breakthroughs on our drilling and completions and well site facility in short time in operations, which is where all of our capital goes to. So I think it’s just a continuation year-over-year. And we’ve taken a modest approach to our expectations in terms of how we set that guidance for 2023.

Greg Givens: And maybe just to build real quickly on the efficiencies for ’23. We felt it was really important for the DUCs that we carried over from the fourth quarter that we fill those in to our schedule. So we would have a very level loaded frac schedule this year which doesn’t expose us to spot crew pricing but also just makes the best, most efficient use of the equipment that we have under contract today. So efficiencies are only going to improve in ’23 over what we want.

Brendan McCracken: Some of the moving pieces from a regional perspective within the capital program for the year, just how to think about Flex points across the assets, pieces from a regional perspective within the capital program for the year, just how to think about points across the assets. Maybe starting with the Permian, it looks like inflation is kind of the primary driver of the year-to-year increase there on spending just given will look to be similarities in activity and lateral length plans. But can you talk about how the contracts there set up on pricing and how quickly inflation flattening or subsiding could flow through? And then maybe separately as we think about flexibility across the other parts of the portfolio, how do you view the option to add or drop activity outside of the Permian in response to commodity prices or inflation or just other key factors that you might consider there?