Ovintiv Inc

GENERAL

Ovintiv is a leading North American oil and natural gas exploration and production company that is focused on developing its multi-basin portfolio of high-quality assets located in the United States and Canada. Ovintiv's operations also include the marketing of oil, NGLs and natural gas. As at December 31, 2023, all of the Company’s reserves and production were located in North America.

Ovintiv’s principal office is located at 370 – 17 th Street, Suite 1700, Denver, Colorado 80202, U.S.A. Ovintiv’s shares of common stock are listed and posted for trading on the NYSE and the TSX under the symbol “OVV”.

Available Information

Ovintiv is subject to the informational requirements of the Exchange Act of 1934, as amended (the “Exchange Act”) and, in accordance with the Exchange Act, it also files reports with and furnishes other information to the SEC. The public may obtain any document Ovintiv files with or furnishes to the SEC from the SEC's Electronic Document Gathering, Analysis, and Retrieval system (“EDGAR”), which can be accessed atwww.sec.gov, or via the System for Electronic Document Analysis and Retrieval (“SEDAR”), which can be accessed atwww.sedar.com, as well as from commercial document retrieval services.

Copies of this Annual Report on Form 10-K and the documents incorporated herein by reference may be obtained on request without charge from Ovintiv’s Corporate Secretary, 370 – 17 th Street, Suite 1700, Denver, Colorado 80202, U.S.A., telephone: (303) 623-2300. Ovintiv also provides access without charge to all of the Company’s SEC filings, including copies of this Annual Report on Form 10-K, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after filing or furnishing, on Ovintiv’s website located atwww.ovintiv.com.

STRATEGY AND APPROACH

Ovintiv aims to be the leading producer of oil and natural gas in North America. The Company strives to be at the forefront of driving innovation to both profitably and sustainably provide safe, reliable and affordable energy that makes modern life possible. Ovintiv is committed to delivering quality returns on the capital it invests in its multi-basin portfolio, generating significant cash flows and providing durable cash returns to its shareholders through the commodity price cycle.

The Company seeks to maximize returns by harnessing innovation to drive efficiency gains across its business, leveraging optionality from its high-quality multi-basin and multi-product portfolio, building flexibility into commercial agreements and actively managing commodity price risk.

The pillars that support the execution of the Company’s strategy include:

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Execution Excellence - The Company is a leader in the responsible multi-zone development of North American shale plays. A commitment to continuously pursue efficiency gains through innovation and technology enable Ovintiv to enhance well productivity, reduce risks, capture capital and operating cost savings, and sustainably enhance margins and returns while minimizing its environmental footprint.

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Disciplined Capital Allocation - Ovintiv’s capital investment strategy focuses on a limited number of high-quality assets to generate cash flows and quality returns. Ovintiv’s investment strategy is flexible, allowing for capital programs to be quickly optimized in response to changes in the macro commodity-price environment, which helps to preserve excess cash flows to return to shareholders and to maintain balance sheet strength.

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Commercial Acumen & Risk Management - The Company leverages its innovative supply chain and market fundamentals expertise to support capital allocation decisions and quickly respond in a dynamic commodity-price environment. The Company actively monitors and seeks to manage market volatility through diversification of price exposures and market access with the aim of enhancing margins and returns.

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Environmental, Social and Corporate Governance Progress - Ovintiv embraces stakeholder and societal expectations as it continues to evolve in response to the changing landscape with respect to climate change, diversity, equity, inclusion and governance matters. Ovintiv believes that strong business practices increase efficiency, economic performance, value creation and sustainability. Since 2005, the Company has published an annual Sustainability Report, which communicates Ovintiv’s performance and tracks progress on key issues important to stakeholders. Additional information can be found on the Company’s sustainability website atsustainability.ovintiv.com.

Ovintiv’s foundational values of integrity, safety, sustainability, trust and respect guide the organization’s behavior and define expectations in the workplace. Ovintiv takes pride not only in what the Company achieves, but also in how its goals are accomplished.

REPORTING SEGMENTS

Ovintiv’s operations are focused on the exploration and development of oil, NGLs and natural gas reserves. The Company is also focused on creating and capturing additional value through its market optimization segment. The Company conducts a substantial portion of its business through subsidiaries. Ovintiv’s operating and reportable segments are: USA Operations; Canadian Operations; and Market Optimization.

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USA Operations includes the exploration for, development of, and production of oil, NGLs, natural gas and other related activities within the United States. Plays in the U.S. include Permian in west Texas, Anadarko in west-central Oklahoma and Uinta in northeastern Utah.

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Canadian Operations includes the exploration for, development of, and production of oil, NGLs, natural gas and other related activities within Canada. Plays in Canada include Montney in northeast British Columbia and northwest Alberta and Horn River in northeast British Columbia.

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Market Optimization activities are managed by the Midstream, Marketing & Fundamentals team, which is primarily responsible for the sale of the Company’s proprietary production to third-party customers while enhancing the associated netback price. Market Optimization activities also 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.

For additional information regarding the reporting segments, see Note 2 to Ovintiv’s audited Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

OIL AND NATURAL GAS PROPERTIES AND ACTIVITIES

The following map reflects the location of Ovintiv’s North American landholdings and assets.

USA Operations

Overview: In 2023, the USA Operations had total capital investment of approximately $2,189 million, drilled approximately 168 net wells primarily in Permian and total production averaged approximately 158.8 Mbbls/d of oil, approximately 85.5 Mbbls/d of NGLs and approximately 517 MMcf/d of natural gas. As of December 31, 2023, the USA Operations had an established land position of approximately 853,000 net acres, including approximately 162,000 net undeveloped acres. The USA Operations accounted for 72 percent of upstream production revenues, excluding the impacts of hedging, and 58 percent of total proved reserves as of December 31, 2023.

During 2023, the Company completed an acquisition of Midland basin assets (“Permian Acquisition”) which included approximately 1,050 net well locations and 65,000 net acres, which are located in close proximity to Ovintiv’s existing Permian operations, in a cash and stock transaction valued at approximately $4.4 billion, before closing adjustments.

During 2023, the Company divested its Bakken assets, which included approximately 46,000 net acres, for proceeds of approximately $734 million, after closing adjustments.

The following tables summarize the USA Operations landholdings, producing wells and daily production as of and for the periods indicated.

(1)

(2)

(1)

Figures exclude wells capable of producing, but not producing.

(2)

(1)

(2)

Other Operations includes volumes associated with Bakken, which was divested during the second quarter of 2023.

Permian

Permian is an oil play located in west Texas primarily in Midland, Martin, Howard, Glasscock, Andrews and Upton counties. The properties within the play are characterized by exposure of up to 10 potential producing horizons spanning approximately 3,000 feet of stratigraphy or stacked pay, an extensive production history and developed infrastructure. As of December 31, 2023, the Company’s acreage comprises approximately 193,000 net acres in the play. The current focus of development is on the Spraberry and Wolfcamp formations in the Midland basin, where Ovintiv holds a large position. During 2023, the Company drilled 113 horizontal net wells. In 2023, production averaged approximately 99.5 Mbbls/d of oil, approximately 37.1 Mbbls/d of NGLs and approximately 185 MMcf/d of natural gas.

The Company has primarily developed the play using its cube development model and multi-frac techniques. Cube development utilizes multi-well pads and frac spreads running in parallel to simultaneously access multiple layers of stacked pay to maximize product recovery. Multi-frac technology is the process of fracing multiple wells at the same time instead of a single well. These advanced development approaches optimize cycle times and increase capital efficiency, while minimizing the surface footprint. During 2023, the Company began fracing three wells (“Trimulfrac”) at the same time instead of the standard two wells (“Simulfrac”), which lowered well costs by reducing frac-treating pressure, diesel usage and the cycle time to complete the wells. In addition, during the second half of 2023, the Company focused on integrating the Permian Acquisition, applying Ovintiv standards for well design, safety, cost management and team culture to the acquired Midland basin assets.

Oil and natural gas facilities include field gathering systems, storage batteries, saltwater disposal systems, separation equipment and pumping units. The majority of Ovintiv’s acreage and associated oil production is dedicated under multiple pipeline gathering agreements, with varying remaining terms of less than 11 years with optional renewal terms. In the event of pipeline capacity constraints, Ovintiv’s oil production is trucked by various third parties. Natural gas is delivered by the Company to the purchaser’s meter and pipeline interconnection point in the field.

Anadarko

Anadarko is a liquids-rich play located in west-central Oklahoma in Blaine, Canadian, Custer, Dewey, Garvin, Grady, Kingfisher, Major, McClain and Stephens counties. The majority of the Anadarko properties are located in the black oil window of the STACK which comprises the Woodford, Meramec and Osage formations spanning up to 800 feet of stratigraphy, while the remaining properties located in the SCOOP comprises the Woodford, Sycamore, Caney and Springer formations spanning up to 1,150 feet of stratigraphy. The play is characterized by silt, shale and carbonate formations which provide multiple potential oil and natural gas targets making the play ideal for cube development and long laterals. As of December 31, 2023, the Company’s acreage comprises approximately 351,000 net acres in the play, with development currently targeting liquids-rich prospects. During 2023, the Company drilled 11 horizontal net wells. In 2023, production averaged approximately 30.6 Mbbls/d of oil, approximately 42.2 Mbbls/d of NGLs and approximately 283 MMcf/d of natural gas.

The Company is developing the play using its cube development model. During 2023, Ovintiv focused on increasing capital efficiency and well economics by drilling longer laterals, reducing cycle times, and reduced base decline by four percent compared to the prior year.

The play has significant existing infrastructure and ample access to major pricing hubs, including Cushing, Oklahoma, the U.S. Gulf Coast, Mont Belvieu, Texas and Conway, Kansas, and a number of Mid-Continent natural gas pipelines. The Company’s oil and natural gas production is gathered at various production facilities, with the majority of oil subsequently transported to sales points by pipeline or sold at and trucked from tank batteries. The majority of Ovintiv’s acreage and associated production is dedicated to long-term gathering and processing agreements with various third parties, which have remaining terms ranging from one to eight years.

Uinta

Uinta is an oil play located in northeastern Utah primarily in Duchesne and Uintah counties. The Uinta basin provides a deep inventory of multiple stacked oil horizons with approximately 2,600 feet of oil saturated reservoir rock. As of December 31, 2023, the Company’s acreage comprises approximately 137,000 net acres in the play. During 2023, the

Company drilled 33 horizontal net wells. Production averaged approximately 19.1 Mbbls/d of oil, approximately 1.5 Mbbls/d of NGLs and approximately 22 MMcf/d of natural gas.

During 2023, the Company drilled 34 gross wells on 10 pads utilizing multi-well pad development which captured capital cost savings.

Oil production from Uinta is waxy, ranging from yellow to black, and is transported from the lease by truck due to the high heat pour point characteristics of the oil. The Company has one oil volume minimum delivery commitment that expires in 2025. Oil production that is not subject to sales commitments is sold monthly in spot markets or transported by rail to other markets such as the Gulf Coast.

Canadian Operations

Overview: In 2023, the Canadian Operations had total capital investment of approximately $549 million, drilled approximately 96 horizontal net wells in Montney and production averaged approximately 47.7 Mbbls/d of oil and NGLs and approximately 1,125 MMcf/d of natural gas. As of December 31, 2023, the Canadian Operations had an established land position of approximately 1.1 million net acres including approximately 673,000 net undeveloped acres. The Canadian Operations accounted for 28 percent of upstream production revenues, excluding the impacts of hedging, and 42 percent of total proved reserves as of December 31, 2023.

The following tables summarize the Canadian Operations landholdings, producing wells and daily production as of and for the periods indicated.

(1)

(2)

Other Operations primarily includes Horn River, as well as assets where the Company may pursue growth opportunities.

(1)

Figures exclude wells capable of producing, but not producing.

(2)

Other Operations primarily includes Horn River.

(1)

Other Operations primarily includes volumes associated with Horn River.

Montney

Montney is primarily a condensate-rich natural gas play located in northeast British Columbia and northwest Alberta. The play includes properties that are located in the Montney formation where Ovintiv is primarily targeting the development of condensate-rich locations, but also includes landholdings with incremental producing formations such as Cadomin and Doig. The Montney formation is characterized by up to six stacked horizons spanning over 1,000 feet of stratigraphy and is being developed exclusively with horizontal well technology. In 2023, total production from the play averaged approximately 47.7 Mbbls/d of oil and NGLs and approximately 1,095 MMcf/d of natural gas. As of December 31, 2023, the Company’s acreage comprises approximately 811,000 net acres and 441,000 net undeveloped acres in the play.

Ovintiv utilizes cube development to precisely place and space each well drilled to maximize value and resource extraction within the productive pay. During 2023, Ovintiv focused on drilling longer laterals and completing wells faster while improving frac placement efficiency and productivity. Drilling, completions and production efficiencies were captured by stacking innovation initiatives such as rotary steerable systems, redesigned drill bits, motor optimization, real time frac optimization and high-rate facilities designs. In 2023, the Company drilled approximately 96 horizontal net wells. Ovintiv also focused on reducing its emissions footprint by implementing well sites with nitrogen air gas instruments and frac fleets operating on natural gas, which resulted in lower fuel costs, less logistical complexity of sourcing diesel, and reduced operational footprint.

Ovintiv has access to natural gas processing capacity of approximately 1,562 MMcf/d, of which approximately 1,340 MMcf/d is under contract with third parties under varying terms and duration and approximately 222 MMcf/d of processing capacity which is owned by the Company. In addition, Ovintiv has access to liquids handling capacity of approximately 125 Mbbls/d of which approximately 93 Mbbls/d is contracted with third parties under varying terms and duration, and approximately 32 Mbbls/d is owned by the Company.

Other Operations:

Horn River

Horn River is located in northeast British Columbia, where development was historically in the Horn River Basin shales (Muskwa, Otter Park and Evie), which are upwards of 500 feet thick. In 2023, the Company’s natural gas production averaged approximately 26 MMcf/d. As of December 31, 2023, the Company had approximately 45 net producing horizontal wells and its acreage comprises approximately 186,000 net acres in the play. Ovintiv owns an interest in natural gas compression capacity in Horn River of approximately 285 MMcf/d at various facilities in the area. Ovintiv has a take or pay commitment under the Cabin plant natural gas processing arrangement with a third-party, which has a remaining term of nine years.

PROVED RESERVES AND OTHER OIL AND NATURAL GAS INFORMATION

The process of estimating oil, NGLs and natural gas reserves is complex and requires significant judgment. The Company’s estimates of proved reserves and associated future net cash flows were evaluated and prepared by the Company’s internal qualified reserves evaluators (“QREs”) and are the responsibility of management. As a result, Ovintiv has developed internal policies that prescribe procedures and standards to be followed for preparing, estimating and recording reserves in compliance with SEC definitions and regulations. Ovintiv’s policies assign responsibilities for compliance in booking reserves and require that reserve estimates be made by its QREs. A QRE is an individual who has a minimum of five years practical experience, with at least three recent years of experience in the evaluation of reserves, and has a degree in petroleum engineering, geology, or other discipline of engineering or physical science.

Ovintiv’s Corporate Reserves Group, which consists of five staff, report to the Vice-President Midstream, Marketing and Corporate Reserves who reports to the Executive Vice-President & Chief Financial Officer. The Corporate Reserves Group is responsible for overseeing the internal preparation, review and approval of the reserves estimates and is separate and independent from the preparation of reserves estimates, which are done by operations’ teams who report to Ovintiv’s Executive Vice-President & Chief Operating Officer. The Corporate Reserves Group maintains Ovintiv’s internal policies that prescribe procedures and standards to be followed for preparing, estimating and recording reserves. This includes the Company’s reserves manual and conducting internal audits of the procedures, records and controls relating to the preparation of reserves estimates. Ovintiv’s QREs receive ongoing education on the fundamentals of SEC definitions and reserves reporting through the review of the Company’s reserves manual and internal training programs administered by the Corporate Reserves Group. The Corporate Reserves Group also oversees the engagement of independent qualified reserves evaluators (“IQREs”) or independent qualified reserves auditors (“IQRAs”), if any, retained by the Company.

As a member of the Corporate Reserves Group, the Company’s Director, Reserves is primarily responsible for overseeing the preparation of proved reserves estimates. The Director, Reserves has a Bachelor of Science with a degree in Petroleum Engineering from Colorado School of Mines and is a member of the Society of Petroleum Evaluation Engineers (Denver Chapter). The Director, Reserves has over 24 years of experience in upstream oil and gas and has held numerous positions in reservoir, development and production engineering.

Annually, each play is reviewed in detail by the QREs, the Corporate Reserves Group, subject matter experts and the Company’s executive officers, as appropriate. The Corporate Reserves Group also conducts a separate review to ensure the effectiveness of the disclosure controls and that the reserves estimates are free from material misstatement. The final reserves estimates are reviewed by Ovintiv’s Reserves Committee of the Board of Directors (the “Reserves Committee”), for approval by the Board of Directors. The Reserves Committee comprises directors that are independent and familiar with estimating oil and natural gas reserves and disclosure requirements. The Reserves Committee provides additional oversight to the Company’s reserves process, meeting with management periodically to review the reserves process, the portfolio of properties, results and related disclosures. The Reserves Committee is also responsible for reviewing the qualifications and appointment of IQREs or IQRAs, if any, retained by the Company, including recommending the selection of such IQREs or IQRAs to the Board of Directors for its approval, and meets with such IQREs or IQRAs to review their reports.

For year-ended December 31, 2023, the Company involved IQRAs to audit the Company’s internal oil and natural gas reserve estimates for certain properties. In 2023, Netherland, Sewell & Associates, Inc. audited 26 percent of the Company’s estimated U.S. proved reserve volumes and McDaniel & Associates Consultants Ltd. audited 53 percent of the Company’s estimated Canadian proved reserve volumes. An audit of reserves is an examination of a company’s oil and natural gas reserves by an independent petroleum consultant that is conducted for the purpose of expressing an opinion as to whether such estimates, in aggregate, are reasonable and have been estimated and presented in conformity with generally accepted petroleum engineering and evaluation methods and procedures.

Proved oil and natural gas reserves are those quantities of oil, natural gas and NGLs which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from known reservoirs under existing economic conditions, operating methods and government regulations. To be considered proved, oil and natural gas reserves must be economically producible before contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. Also, the project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years.

The Company’s reserve estimates are conducted from fundamental petrophysical, geological, engineering, financial and accounting data. Data used in reserves assessments may include information obtained directly from the subsurface through wellbores such as well logs, reservoir core samples, fluid samples, static and dynamic pressure information, production test data, and surveillance and performance information. Reserves are estimated based on production decline analysis, analogy to producing offsets, detailed reservoir modeling, volumetric calculations or a combination of these methods, based on the unique circumstances of each reservoir and the dataset available at the time of the estimate. The tools used to interpret the data may include proprietary and commercially available reservoir modeling and simulation software. Reservoir parameters from analogous reservoirs may be used as appropriate. In the case of producing reserves, the emphasis is on decline analysis where volumetric analysis is considered to limit forecasts to reasonable levels. Undeveloped reserves are estimated by analogy to producing offsets, with consideration of volumetric estimates of in place quantities. All locations to which proved undeveloped reserves have been assigned are subject to a development plan adopted by the Company’s management. In all cases, the Company’s reserve estimates consider technologies that have been demonstrated in the field to yield repeatable and consistent results, having regard to economic considerations, as defined in the SEC regulations.

In general, estimates of economically recoverable reserves and the future net cash flows therefrom are based on a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies, and operating costs, all of which may vary materially from actual results. For those reasons, among others, estimates of the economically recoverable oil and natural gas reserves attributable to any group of properties and estimates of future net revenues associated with reserves may vary and such variations may be material. The actual production, revenues, taxes, and development and operating expenditures with respect to the reserves associated with the Company’s properties may vary from the information presented herein, and such variations could be material.

SEC regulations require that proved reserves be estimated using existing economic conditions (constant pricing). Based on this methodology, the Company’s reserves have been calculated utilizing the 12-month average trailing historical price for each of the years presented prior to the effective date of the report. The 12-month average is calculated as an unweighted average of the first-day-of-the-month price for each month. The reserve estimates provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.

Ovintiv does not file any estimates of total net proved reserves with any U.S. federal authority or agency other than the SEC. Reserve estimates filed with the SEC correspond with the estimates of the Company’s reserves contained in its reports. For the Company’s U.S. assets, reserves estimates are filed with the Department of Energy (“DOE”) and are based upon the same underlying technical and economic assumptions as the estimates of Ovintiv’s reserves that are filed with the SEC; however, the DOE requires reserves reports to include the interests of all owners in wells that Ovintiv operates and to exclude all interests in wells that Ovintiv does not operate.

The reserves and other oil and natural gas information set forth below has an effective date of December 31, 2023 and was prepared as of January 12, 2024. The audit reports prepared by the IQRAs are attached in Exhibits 99.1 and 99.2 of this Annual Report on Form 10-K.

The following table is a summary of the Company’s proved reserves. Estimates of future net cash flows and discounted future net cash flows derived from proved reserves information can be found in Note 27 to Ovintiv’s audited Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

Proved Reserves

The table below summarizes the Company’s total proved reserves by oil, NGLs and natural gas and by geographic area for the year ended December 31, 2023 and other summary operating data.

(1)

(2)

Total net productive wells includes producing wells and wells mechanically capable of production.

Changes to the Company’s proved reserves during 2023 are summarized in the table below:

(1)

(2)

Changes in reserve estimates resulting from application of improved recovery techniques are included in revisions of previous estimates.

In 2023, the Company’s proved reserves decreased by 87.7 MMBOE from 2022. Revisions and improved recovery of 309.6 MMBOE were negative primarily due to changes in the approved development plan of 330.0 MMBOE and revisions other than price of 9.2 MMBOE, partially offset by positive price revisions of 29.6 MMBOE from lower royalties in Canada due to lower 12-month average trailing prices. Extensions and discoveries of 285.3 MMBOE were the result of successful drilling leading to increased technical delineation, as well as new proved undeveloped locations resulting from updated development plans primarily in Montney, Permian and Uinta. Extensions and discoveries include 14.7 MMBOE as a result of drilling wells in 2023 that were not previously classified as proved undeveloped reserves. Approximately 38 percent of the 2023 extensions and discoveries were oil, condensate and NGLs.

Purchases of 243.9 MMBOE were primarily from the Permian Acquisition. Production for 2023 was 206.5 MMBOE. Sales of 100.8 MMBOE were primarily due to the divestiture of the Bakken.

Proved reserves are estimated based on the average first-day-of-month prices during the 12-month period for the respective year. The average prices used to compute proved reserves as of December 31, 2023 were WTI: $78.22 per bbl, Edmonton Condensate: C$104.61 per bbl, Henry Hub: $2.64 per MMBtu, and AECO: C$2.78 per MMBtu. Prices for oil, NGLs and natural gas are inherently volatile.

Proved Undeveloped Reserves

Changes to the Company’s proved undeveloped reserves during 2023 are summarized in the table below:

(1)

As of December 31, 2023, there are no proved undeveloped reserves that are expected to remain undeveloped for five years or more.

Revisions of prior estimates of proved undeveloped reserves were negative 334.3 MMBOE primarily due to development plan changes of 330.0 MMBOE, and revisions other than price of 24.5 MMBOE, partially offset by positive price revisions of 20.2 MMBOE from lower royalties in Canada due to lower 12-month average trailing prices. Extensions and discoveries of 270.5 MMBOE of proved undeveloped reserves were the result of successful drilling leading to increased technical delineation, as well as new proved undeveloped locations resulting from updated development plans primarily in Montney, Permian and Uinta. Development plan changes are driven by portfolio optimization and changing commodity prices as compared to the prior year.

Conversions of proved undeveloped reserves to proved developed status were 179.2 MMBOE, equating to 18 percent of the total prior year-end proved undeveloped reserves. U.S. Operations converted 17 percent of proved undeveloped reserves and Canadian Operations converted 21 percent of proved undeveloped reserves. The Company spent approximately $1,666 million to develop proved undeveloped reserves in 2023, of which approximately 74 percent related to the U.S. properties and 26 percent related to the Canadian properties.

Purchases of proved undeveloped reserves of 137.1 MMBOE relate primarily to the Permian acquisition, while the sale of proved undeveloped reserves of 38.7 MMBOE relate primarily to the divestiture of the Bakken.

Sales Volumes, Prices and Production Costs

The following table summarizes the Company’s production by final product sold, average sales price, and production cost per BOE for each of the last three years by geographic area:

(1)

Excludes the impact of commodity derivatives.

(2)

Excludes ad valorem, severance and property taxes.

(3)

As of December 31, 2023, 2022 and 2021, there was no production from fields that comprise greater than 15 percent of the Company’s total reserves.

(4)

Annual production from fields that comprise greater than 15 percent of the Company’s total proved reserves related to B.C. Montney: 2023 ‑ 7.7 MMbbls of NGLs and 306 Bcf of natural gas; 2022 - 7.2 MMbbls of NGLs and 267 Bcf of natural gas; and 2021 - 9.1 MMbbls of NGLs and 282 Bcf of natural gas.

Drilling and other exploratory and development activities (1, 2)

The following tables summarize the Company’s gross participation and net interest in wells drilled for the periods indicated by geographic area.

(1)

(2)

Drilling and other exploratory and development activities(1, 2)

The following table summarizes the number of wells in the process of drilling or in active completion stages and the number of wells suspended or waiting on completion by geographic area as of December 31, 2023.

(1)

(2)

(3)

Wells suspended or waiting on completion include exploratory and development wells where drilling has occurred.

Oil and natural gas properties, wells, operations, and acreage

The following table summarizes the number of producing wells and wells mechanically capable of production by geographic area as of December 31, 2023.

(1)

(2)

(3)

Includes 4 gross oil wells (4 net oil wells) containing multiple completions.

(4)

Includes 382 gross natural gas wells (303 net natural gas wells) containing multiple completions.

The following table summarizes the Company’s developed, undeveloped and total landholdings by geographic area as of December 31, 2023.

(1)

Fee lands are those lands in which the Company has a fee simple interest in the mineral rights and has either: (a) not leased out all the mineral zones; (b) retained a working interest; or (c) one or more substances or products that have not been leased. The current fee lands acreage summary includes all fee titles owned by the Company that have one or more zones that remain unleased or available for development.

(2)

Crown/Federal/State/Tribal/Allotted lands are those owned by the federal, provincial or state government or First Nations, in which the Company has purchased a working interest lease.

(3)

Freehold lands are owned by individuals (other than a government or the Company), in which the Company holds a working interest lease.

(4)

(5)

Gross acres are the total area of properties in which the Company has a working interest.

(6)

Net acres are the sum of the Company’s fractional working interest in gross acres.

(7)

Undeveloped acreage refers to those acres on which wells have not been drilled or completed to a point that would permit the production of economic quantities of oil or gas regardless of whether such acreage contains proved reserves.

Of the total 1.9 million net acres, approximately 1.8 million net acres is held by production. The table above includes acreage subject to leases that will expire over the next three years: 2024 - approximately 21,000 net acres; 2025 ‑ approximately 21,000 net acres; and 2026 - approximately 11,000 net acres, if the Company does not establish production or take any other action to extend the terms. For acreage that the Company intends to further develop, Ovintiv will perform operational and administrative actions to continue the lease terms that are set to expire. As a result, it is not expected that a significant portion of the Company’s net acreage will expire before such actions occur.

Title to Properties

As is customary in the oil and natural gas industry, a preliminary review of title records, which may include opinions or reports of appropriate professionals or counsel, is made at the time Ovintiv acquires properties. The Company believes that title to all of the various interests set forth in the above table is satisfactory and consistent with the standards generally accepted in the oil and natural gas industry, subject only to immaterial exceptions that do not detract substantially from the value of the interests or materially interfere with their use in Ovintiv’s operations. The interests owned by Ovintiv may be subject to one or more royalty, overriding royalty, or other outstanding interests (including disputes related to such interests) customary in the industry. The interests may additionally be subject to obligations or duties under applicable laws, ordinances, rules, regulations, and orders of arbitral or governmental authorities. In addition, the interests may be subject to burdens such as production payments, net profits interests, liens incident to operating agreements and current taxes, development obligations under oil and natural gas leases, and other encumbrances, easements, and restrictions, none of which detract substantially from the value of the interests or materially interfere with their use in the Company’s operations.

MARKETING ACTIVITIES

Market Optimization activities are managed by Ovintiv’s Midstream, Marketing & Fundamentals team, which is responsible for the sale of the Company’s proprietary production and enhancing the associated netback price. In marketing its production, Ovintiv looks to minimize market related curtailment, maximize realized prices and manage concentration of credit-risk exposure. 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.

Ovintiv’s produced oil, NGLs and natural gas, are primarily marketed to refiners, local distributing companies, energy marketing companies and aggregators. Prices received by Ovintiv are based primarily upon prevailing market index prices in the region in which it is sold. Prices are impacted by regional and global supply and demand and by competing fuels in such markets.

Ovintiv’s oil production is sold under short-term and long-term contracts that range up to two years or under dedication agreements, for which prices received by Ovintiv are based primarily upon the prevailing index prices in the relevant region where the product is sold. The Company also has firm transport contracts to deliver oil to other downstream markets. Ovintiv’s NGLs production is sold under short-term and long-term contracts that range up to eight years, or under dedication arrangements at the relevant market price at the time the product is sold. Ovintiv’s natural gas production is sold under short-term and long-term delivery contracts with terms ranging up to one year in duration, at the relevant monthly or daily market price at the time the product is sold. The Company also has firm transport contracts to deliver natural gas production to other downstream markets, including Dawn and Chicago.

Ovintiv also seeks to mitigate the market risk associated with future cash flows by entering into various financial derivative instruments used to manage price risk relating to produced oil, NGLs and natural gas. Details of contracts related to Ovintiv’s various financial risk management positions are found in Note 24 to Ovintiv’s audited Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

The Company enters into various contractual agreements to sell oil, NGLs and natural gas, some of which require the delivery of fixed and determinable quantities. As of December 31, 2023, the Company was committed to deliver approximately 22.7 MMbbls of oil and approximately 40 MMcf of natural gas in the USA Operations and approximately 7.3 MMbbls of oil and NGLs and approximately 61.9 MMcf of natural gas in the Canadian Operations with varying contract terms. The Company has one oil minimum volume sales contract related to Uinta production in Utah. Given the limited access to transportation and refining facilities resulting from the paraffin content in Uinta oil production, volatility in commodity prices and changes in capital and development plans, deficiency fees incurred can vary and may be incurred on the remaining committed deliveries of 20 Mbbls/d through August 2025.

Certain transportation and processing commitments result in the following financial commitments:

In general, Ovintiv expects to fulfill its delivery commitments with oil, NGLs and natural gas production from proved developed reserves, with longer term delivery commitments to be filled from the Company’s proved undeveloped reserves. Where proved reserves are not sufficient to satisfy the Company’s delivery commitments, Ovintiv can and may use spot market purchases to satisfy the respective commitments. In addition, for the Company’s long-term transportation and processing agreements, Ovintiv also expects to fulfill delivery commitments from the future development of resources not yet characterized as proved reserves. Where delivery commitments are not transferred along with property divestitures, Ovintiv may market and transport certain portions of the acquirer’s production to meet the delivery requirements.

In addition, oil, NGLs and natural gas production from the Company’s reserves are not subject to any priorities or curtailments that may affect quantities delivered to its customers or any priority allocations or price limitations imposed by federal or state regulatory agencies, or any other factors beyond the Company’s control that may affect Ovintiv’s ability to meet contractual obligations other than those discussed in Item 1A. Risk Factors of this Annual Report on Form 10-K.

MAJOR CUSTOMERS

In connection with the marketing and sale of the Company’s oil, NGLs and natural gas production and purchased product for the year ended December 31, 2023, the Company had one customer, which individually accounted for more than 10 percent of the Company’s consolidated revenues (2022 and 2021 - one customer). Ovintiv does not believe that the loss of any single customer would have a material adverse effect on the Company’s financial condition or results of operations. Further information on Ovintiv’s major customers is found in Note 2 to Ovintiv’s audited Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

COMPETITION

The Company’s competitors include national, integrated and independent oil and natural gas companies, as well as oil and natural gas marketers and participants in other industries supplying energy and fuel to industrial, commercial and individual consumers. All aspects of the oil and natural gas industry are highly competitive and Ovintiv actively competes with other companies in the industry, particularly in the following areas:

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Exploration for and development of new sources of oil, NGLs and natural gas reserves;

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Reserves and property acquisitions;

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Transportation and marketing of oil, NGLs, natural gas and diluents;

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Access to services and equipment to carry out exploration, development and operating activities; and

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Attracting and retaining experienced industry personnel.

The oil and natural gas industry also competes with other industries focused on providing alternative forms of energy to consumers. Competitive forces can lead to cost increases or result in an oversupply of oil, NGLs or natural gas.

HUMAN CAPITAL

Ovintiv strives to be one of the most competitive energy companies in North America, bringing together the brightest minds and best technologies to fuel innovation and maximize operational performance and results. Recruiting, developing and retaining Ovintiv’s workforce is vital to the Company’s future success. Ovintiv has a history of hiring top industry talent and recruiting individuals from within and outside of the oil and natural gas industry who will thrive in the Company’s unique culture. The Company’s core values of one, agile, innovative and driven, along with its foundational values of integrity, safety, sustainability, trust and respect guide behavior and define what Ovintiv expects of its employees in the workplace. These values support the Company’s corporate strategy and organizational priorities and reflect the Company’s culture. The Company’s Board chair and the Human Resources and Compensation Committee provide strategic oversight to key social issues including diversity, equity and inclusion, as well as the compensation program and its alignment with the Company’s strategic and business objectives, shareholder interests and governance developments. Ovintiv is committed to fair labor practices in its operations and adherence to all applicable workplace and employment standards.

As of December 31, 2023, the Company employed 1,743 employees. The following table outlines our employees by geographic area.

The Company also engages a number of contractors and service providers.

Employee Development and Retention

Ovintiv’s success is the direct result of a talented workforce and the Company’s approach to idea sharing and collaborative work to achieve company goals. Ovintiv’s culture is defined by continuous innovation, promoting internal collaboration as a way for employees to implement successful strategies and best practices across the Company’s business. Opportunities are provided for Ovintiv’s employees to further develop leadership, technical and business skills through on-the-job work experiences and job rotations, development opportunities, networking and mentoring circles, as well as formal learning programs and instructor led workshops. The Company also offers new graduate and intern opportunities in both technical and professional disciplines to support the recruitment of top talent, hiring an average of 20 new graduates and 27 interns per year over the past three years. In addition, the Company has a robust approach to succession planning for key personnel which assesses the competencies, experience, leadership capabilities, and development opportunities of identified succession candidates.

Ovintiv’s compensation and benefits program is designed to attract and retain the talent necessary to achieve the Company’s business strategy by rewarding individual performance as well as company performance. The Company’s compensation model is tied to financial, operational and environmental metrics which align to Ovintiv’s strategic plan. In addition, the compensation philosophy is anchored by two key objectives: a) delivering competitive base salaries and benefits and b) rewarding short and long-term performance through the grant of an annual cash bonus and long-term incentive awards (“LTI awards”). LTI awards are primarily performance-based and are designed to incentivize delivery of the Company’s strategy and long-term value creation with the payout of these awards correlating to Ovintiv’s stock price performance. Settlement of certain awards can be either in shares of common stock or cash at the discretion of the Human Resources and Compensation Committee. See Note 21 Compensation Plans and Note 22 Pensions and Other Post-Employment Benefits to Ovintiv’s audited Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

As of December 31, 2023, the average tenure of our employees is over nine years and voluntary turnover is approximately six percent.

Diversity, Equity and Inclusion

The Company values diversity and fosters a culture of equity and inclusion, believing that diverse perspectives and experience enhances Ovintiv’s overall effectiveness and performance. The Company’s approach to diversity and inclusion is nested within the Company’s social commitment. The Company takes an integrated approach to this work by inviting perspectives from various internal functions in order to amplify the impact. As part of the Company’s commitment to diversity, equity and inclusion, Ovintiv has an employee resource group called Leveraging Inclusion, Networking and Knowledge, which helps provide opportunities for all employees to engage, collaborate, learn and grow, in addition to fostering an environment where diverse perspectives are celebrated. In addition, formal training and resources have been offered to employees of all levels on inclusive leadership and interrupting bias.

Ovintiv strives to provide equal opportunity in recruitment, career development, promotion, training and rewards for its employees. The Company actively facilitates professional development for women and other underrepresented groups through its succession planning and mentoring programs. In order to broaden the diversity of the Company’s talent pipeline, Ovintiv also participates in programs targeting students in junior and high schools, with the purpose of advancing and strengthening its workforce.

Specific to gender diversity, women at Ovintiv comprised approximately 60 percent of the executive leadership team reporting to the Chief Executive Officer, approximately 32 percent of the senior leadership group and approximately 31 percent of all employees as of December 31, 2023.

Employee Safety & Wellness

Safety is a foundational value at Ovintiv. Providing a safe workplace for employees, contractors, suppliers, and the community is a tenet of managing the Company’s operations. Strong safety performance reflects a well-run business and builds confidence in the communities where Ovintiv operates. Ovintiv promotes workplace safety with regular comprehensive training and orientation programs for employees and contractors. Employees and contractors are expected to comply with Ovintiv’s process safety protocols, regulatory compliance, and are required to report incidents and near-miss events.

Our operations are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act (“OSHA”), and comparable state and provincial laws, rules and regulations and have established a variety of standards related to workplace exposure to hazardous substances, whose purpose is to protect the health and safety of workers. In addition, in the U.S. the OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendments and Reauthorization Act and comparable state and provincial statutes require that information be maintained concerning hazardous materials used or produced in operations and that this information be provided to employees, state, provincial and local government authorities and citizens.

As a result, certain safety metrics are included in the Company’s scorecard and are tied into the Company’s compensation program. Environmental, Health and Safety (“EH&S”) metrics reflected in the scorecard include Injury Severity, Total Recordable Injuries Frequency, Spill Intensity, GHG Intensity, all of which are described in the Proxy Statement relating to the Company’s 2023 annual meeting of shareholders.

REGULATORY MATTERS

As Ovintiv is an operator of oil and natural gas properties and facilities in the United States and Canada, the Company is subject to numerous federal, state, provincial, local, tribal and foreign country laws and regulations. These laws and regulations relate to matters that include: acquisition of seismic data; issuance of permits; well locations, drilling and casing of wells; well design; hydraulic fracturing; well production; use, transportation, storage and disposal of fluids and materials incidental to oil and natural gas operations; surface usage and the restoration of properties upon which wells have been drilled and facilities have been constructed; plugging and abandoning of wells; pollution, protection of the environment and the handling of hazardous materials; transportation of production; periodic report submittals during operations; and calculation and disbursement of royalty payments and production and other taxes. The following are significant areas of government control and regulation affecting Ovintiv’s operations:

Exploration and Development Activities

Certain of our U.S. oil and natural gas leases are granted or approved by the federal government and administered by the Bureau of Indian Affairs, the Office of Natural Resources Revenue (“ONRR”) or the Bureau of Land Management (“BLM”), all of which are federal agencies. BLM leases contain relatively standardized terms and require compliance with detailed regulations. Many onshore leases contain stipulations limiting activities that may be conducted on the lease. Some stipulations are unique to particular geographic areas and may limit the time during which activities on the lease may be conducted, the manner in which certain activities may be conducted or, in some cases, may ban surface activity. Under certain circumstances, the BLM may require that our operations on federal leases be suspended or terminated. Any such suspension or termination could materially and adversely affect Ovintiv’s interests.

In addition, President Biden and certain members of his administration have expressed support for, and have taken steps to implement, additional regulation of oil and gas leasing and permitting on federal lands. For example, President Biden issued an executive order in January 2021 directing the Secretary of the Interior to pause on entering new oil and gas leases on public lands to the extent possible and to launch a rigorous review of all existing leasing and permitting practices related to fossil fuel development on public lands. The Department of the Interior subsequently issued its report on the federal leasing program in November 2021. The report recommended various changes to the program, including, among other things, increasing royalty and rental rates, enhancing bonding requirements and applying a more rigorous land-use planning process prior to leasing. The pause on leasing has been subject to a challenge by 13 states and, following a vacated preliminary injunction in July 2021, was permanently enjoined in those states by a federal district court in Louisiana in August 2022. In July 2023, the Department of the Interior announced a proposed rule that would revise outdated fiscal terms of the onshore federal oil and gas leasing program, including for bonding requirements, royalty rates, and minimum bids. The proposed rule would specifically codify provisions made by Congress in the Inflation Reduction Act (“IRA”) and the Bipartisan Infrastructure Law, as well as recommendations from the Department of the Interior’s Report on the Federal Oil and Gas Leasing Program, issued in November 2021.

Certain other recommendations from the report require Congressional actions. To the extent further rules are promulgated implementing the recommendations of the November 2021 report or there are any other future regulatory changes, any additional restrictions or burdens on our ability to operate on federal lands could adversely impact our business in areas where we operate under federal leases.

In Canada, oil and natural gas mineral rights may be held by individuals, corporations or governments that have jurisdiction over the area in which such mineral rights are located. Generally, parties holding these mineral rights grant licenses or leases to third parties to facilitate the exploration and development of these mineral rights. The terms of these leases and licenses are generally established to require timely development. Notwithstanding the ownership of mineral rights, the government of the jurisdiction in which the mineral rights are located generally retains authority over the drilling and operation of oil and natural gas wells.

Drilling and Production

The Company’s operations also are subject to conservation regulations, including the regulation of the location of wells, size of drilling and spacing units or proration units; the number of wells that may be drilled in a unit; the rate of production allowable from oil and natural gas wells; and the unitization or pooling of oil and natural gas properties. In the U.S., some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases, which make it more difficult to develop oil and natural gas properties. In addition, conservation laws generally limit the venting or flaring of natural gas and impose certain requirements regarding the ratable purchase of production. These regulations limit the amounts of oil and natural gas that can be produced from the Company’s wells and the number of wells or the locations that can be drilled.

Royalties

Operations on U.S. Federal or Indian oil and natural gas leases must comply with numerous regulatory restrictions, including various non-discrimination statutes, and certain of such operations must be conducted pursuant to certain on-site security regulations and other permits issued by various tribal and federal agencies, including the BLM and the ONRR. The basis for royalty payments due under federal oil and natural gas leases are through regulation issued under the applicable statutory authority. State regulatory authorities establish similar standards for royalty payments due under state oil and natural gas leases. The basis for royalty payments established by ONRR and the state regulatory authorities is generally applicable to all federal and state oil and natural gas leases.

The royalty calculation in Canada is a significant factor in the profitability of Canadian oil and natural gas production. Oil and natural gas crown royalties are determined by provincial and territorial government regulation and are generally calculated as a percentage of the value of the gross production, net of allowed deductions. The royalty rate is dependent in part on prescribed reference prices, well productivity, geographical locations, recovery methods, as well as type and quality of the hydrocarbon produced. For pre-payout oil and natural gas projects, the regulations prescribe lower royalty rates for oil and natural gas projects until allowable incentive programs have been depleted and capital costs have been recovered. The calculation for wells post payout is based on a percentage of production net of allowed deductions and varies with commodity price. The Province of British Columbia introduced a new oil and gas royalty framework which will take effect September 1, 2024. The new framework is based on revenue-minus-cost royalty system with price-sensitive royalty rates designed to reflect the value of the resource and achieve a return of 50 percent of profits after production cost are accounted for. New wells will pay a flat royalty rate of five percent until the capital spent on drilling and completions is recovered, then they will move to a price-sensitive royalty rate (between five percent and 40 percent). The specific range of price sensitivity varies by commodity type.

Royalties payable on production from lands other than federal, state or provincial government lands are determined through negotiations between the parties.

Sales and Transportation

Although oil and natural gas prices are currently unregulated in the U.S., Congress historically has been active in oil and natural gas regulation. As a result, the Company cannot predict whether new regulations might be proposed.

The availability, terms and transportation significantly affect sales of oil and natural gas. The interstate transportation and sale for resale of oil and natural gas is subject to U.S. federal regulation, including regulation of terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (“FERC”). Federal and state regulations govern the price and terms of access to oil and natural gas pipeline transportation. FERC’s regulations for oil and natural gas transmission in some circumstances may also affect the intrastate transportation of oil as the transportation of oil in common carrier pipelines is also subject to rate regulation by the FERC under the Intrastate Commerce Act. To the extent that effective interstate and intrastate rates are equally applicable to all comparable shippers, the Company believes that the regulation of oil transportation rates will not affect our operations in any way that is of material difference from those of our competitors.

Project Approvals

Approvals and licenses from relevant state, provincial or federal government or regulatory bodies are required to carryout or make modifications to the Company’s oil and natural gas activities. The project approval process can involve environmental assessment, stakeholder and indigenous consultation and inputs regarding project concerns and public hearings and may included various conditions and commitments which may arise throughout the process.

In 2019, the Canadian government implemented a new environmental assessment framework in Canada under Bill C‑69, the Federal Impact Assessment Act, which may impact the way large energy projects are approved. Though the Company does not typically own, operate, permit or construct projects which fall under the scope of the Impact Assessment Act, some of the Company’s business may rely on these projects owned, operated, permitted and constructed by others. Subsequently, in October of 2023, the Supreme Court of Canada ruled that many parts of the Impact Assessment Act and subsequent regulations were unconstitutional and overreaching. The Supreme Court decided that a province, not the federal parliament, decides when such developments are in the public interest. The federal parliament does not have a veto over provincially regulated activities, including developments within a province related to conventional oil and gas, oilsands (mining and in-situ), hard rock mining, coal and other similar non-renewable resource developments. The Canadian government is currently working on amendments to the Impact Assessment Act to account for the Supreme Court of Canada decision.

A historic Supreme Court of British Columbia decision in mid-2021 which declared, among other things, that the province of British Columbia has unjustifiably infringed on the rights of the Blueberry River First Nation (“BRFN”) by permitting the cumulative impacts of industrial development (activities which include forestry, mining, oil and natural gas, agriculture, land clearing, hydroelectric infrastructure, roads and other industrial developments) to diminish the BRFN’s ability to meaningfully exercise its treaty rights within an area comprising approximately 9,400,000 acres in northeast British Columbia. This has impacted regulatory processes and timelines for natural resource development in northeast British Columbia, however the province of British Columbia subsequently reached agreements with BRFN and five other Treaty 8 First Nations in early 2023 which have improved permitting outcomes in the region. These agreements were negotiated to advance a collaborative approach to land and resource planning and the province has indicated that agreements with the remaining two Treaty 8 First Nations are moving towards a resolution. The agreements will transform how the province and First Nations steward land, water and resources together, and address cumulative effects in BRFN’s Claim Area through restoration measures to heal the land, establish new areas protected from industrial development, and constrain development activities while a new long-term cumulative effects management regime is implemented. More importantly, the new development constraints are land disturbance focused and are not intended to cap or constrain production. The new requirements do not apply to existing production, to private lands, or to lands outside of the claim area identified in the court case. However, authorizations on private lands will be subject to an enhanced Indigenous consultation process. Ovintiv’s landholdings in Montney that are located in northeast British Columbia are within the ‘Blueberry Claim Area’ subject to the agreement, however, the majority of the Company’s current land holdings and operations are on private land. While it is not anticipated the new agreements will materially impact the Company’s development plans in Montney, final details of the agreements have yet to be released. Should the agreements impose new, onerous approval requirements, the Company may be unable to conduct exploration and development activities on a portion of its landholdings in Montney that are located within northeast British Columbia.

Investment Canada Act

The Investment Canada Act requires Government of Canada approval, in certain cases, of the acquisition of control of a Canadian business by an entity that is not controlled by Canadians. In certain circumstances, the acquisition of oil and natural gas properties may be considered to be a transaction requiring such approval.

Environmental and Occupational Health and Safety Regulations

The Company is subject to many federal, state, provincial, local and tribal environmental and occupational health and safety laws and regulations. These environmental and occupational health and safety laws and regulations include, but are not limited to, legal requirements relating to:

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the discharge of pollutants into federal, provincial and state waters;

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assessing the environmental impact of seismic acquisition, drilling or construction activities;

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the generation, storage, transportation and disposal of waste materials, including hazardous substances;

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the emission of certain gases into the atmosphere, including any laws or regulations in connection with a response to climate change;

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the protection of private and public surface and ground water supplies;

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the sourcing and disposal of water;

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the protection of endangered species and habitat;

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the monitoring, abandonment, reclamation and remediation of well and other sites, including former operating sites;

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the development of emergency response and spill contingency plans; and

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the establishment of workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures.

Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil, and criminal penalties; the imposition of investigatory, remedial, and corrective action obligations or the incurrence of capital expenditures; the occurrence of delays in the permitting, development or expansion of projects; and the issuance of injunctions restricting or prohibiting some or all of the Company’s activities in a particular area. Further, certain environmental and occupational health and safety laws and regulations contain citizen suit provisions which allow private parties, including environmental organizations, to directly sue alleged violators or government agencies to enforce applicable requirements. To address climate change, the United States, Canada, and other signatories to the Paris Agreement and the Glasgow Climate Pact have agreed to voluntary and non-binding commitments to limit GHG emissions and fossil fuel subsidies. In June 2021, Canada passed the Net-Zero Emissions Accountability Act, which formally establishes the country’s 2050 net-zero emissions target. In the United States, no comprehensive climate change legislation has been implemented at the federal level. However, the U.S. Environmental Protection Agency (the “EPA”) has determined that GHG emissions present a danger to public health and the environment and has promulgated regulations to address methane and volatile organic compound emissions from oil and natural gas sources. Although environmental requirements have a substantial impact upon the energy industry as a whole, Ovintiv does not believe that these requirements affect the Company differently, to any material degree, as compared to other companies in the oil and natural gas industry. For further information regarding regulations relating to environmental protection, see Item 1A. Risk Factors of this Annual Report on Form 10-K.

Monitoring and reporting programs for environmental, health and safety performance in day-to-day operations, as well as inspections and assessments, are designed to provide assurance that environmental and regulatory standards are met. The Company has established operating procedures and training programs designed to limit the environmental impact of the Company’s field facilities and identify, communicate and comply with changes in existing laws and regulations. Contingency plans are in place for a timely response to an environmental event and remediation/reclamation programs are in place and utilized to restore the environment. In addition, the Environmental, Health and Safety Committee of the Board of Directors reviews and recommends environmental policy to the Board of Directors for approval and oversees compliance with government laws and regulations. The Board of Directors is advised of significant contraventions thereof, and receives updates on trends, issues or events which could have a significant impact on the Company.

The Company believes that the cost of maintaining compliance with these existing laws and regulations will not have a material adverse effect on its business, financial condition or results of operations. In addition, Ovintiv maintains insurance coverage for insurable risks against certain environmental and occupational health and safety risks that is consistent with insurance coverage held by other similarly situated industry participants, but the Company is not fully insured against all such risks. However, it is possible that developments, such as new or more stringently applied existing laws and regulations as well as claims for damages to property or persons resulting from the Company’s operations, could result in substantial costs and liabilities to the Company. As a result, Ovintiv is unable to predict with any reasonable degree of certainty future exposures concerning such matters.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The Company’s Executive Officers are set out in the table below:

(1)

As of February 16, 2024.

Mr. McCracken was appointed President & Chief Executive Officer in August 2021. Mr. McCracken joined one of the Company’s predecessor companies in 1997 and assumed a variety of leadership roles, including his previous positions as President in December 2020, Executive Vice-President, Corporate Development & External Affairs in September 2019 and Vice-President & General Manager of Canadian Operations in 2017.

Mr. Code was appointed Executive Vice-President & Chief Financial Officer of the Company in May 2019. Mr. Code joined one of the Company’s predecessor companies in 1999 and assumed a variety of leadership roles, including his previous position as Vice-President, Investor Relations and Strategy in 2018, Vice-President, Investor Relations in 2017, and Treasurer and Vice President, Portfolio Management in 2013.

Ms. Eilers was appointed Executive Vice-President, General Counsel & Corporate Secretary in March 2022. Ms. Eilers joined the Company in 2019, serving as Vice-President, Legal Operations. Prior to joining the Company, Ms. Eilers served as the Assistant General Counsel at Newfield Exploration from 2018 to 2019, and served in various legal roles, including Managing Counsel – Domestic Operations, at Noble Energy, Inc. from 2007 to 2018.

Mr. Givens was appointed Executive Vice-President & Chief Operating Officer of the Company in September 2019. Mr. Givens joined the Company in 2018 serving as Vice-President and General Manager of Texas Operations. Prior to joining the Company, Mr. Givens was Vice-President Eagle Ford of EP Energy (a public oil and natural gas company) from 2012 to 2017 and worked in various technical and leadership roles from 1996 onwards for El Paso Exploration & Production Company and Sonat Exploration Company which were predecessor companies to EP Energy.

Ms. Moore was appointed Executive Vice-President, Corporate Services of the Company in June 2020. Ms. Moore joined the Company in 2015 serving as Vice-President, Human Resources. Prior to joining the Company, Ms. Moore was Executive Vice-President, Human Resources of Savanna Energy Services Corporation (a privately held oil and natural gas services company) from 2010 to 2015 and was Vice President, Human Resources of Enerflex Ltd. (a public oil and natural gas services company) from 2003 to 2010.

Ms. Zemljak was appointed Executive Vice-President, Midstream, Marketing & Fundamentals of the Company in November 2009. Ms. Zemljak joined one of the Company’s predecessor companies in 2000 and assumed a variety of leadership roles, including her previous position as Vice-President of USA Marketing in 2002. Prior to joining the Company, Ms. Zemljak worked in various roles for Montana Power (formerly a public power company).