Ovintiv Inc.

Sources of Liquidity

The Company has the flexibility to access cash equivalents and a range of funding alternatives at competitive rates through committed revolving credit facilities as well as debt and equity capital markets. Ovintiv closely monitors the accessibility of cost-effective credit and ensures that sufficient liquidity is in place to fund capital expenditures and dividend payments. In addition, the Company may use cash and cash equivalents, cash from operating activities, or proceeds from asset divestitures to fund its operations and capital allocation framework or to manage its capital structure as discussed below.

The Company’s capital structure consists of total shareholders’ equity plus long-term debt, including any current portion. The Company’s objectives when managing its capital structure are to maintain financial flexibility to preserve Ovintiv’s access to capital markets and its ability to meet financial obligations and finance internally generated growth, as well as potential acquisitions. Ovintiv has a practice of maintaining capital discipline and strategically managing its capital structure by adjusting capital spending, adjusting dividends paid to shareholders, issuing new shares of common stock, purchasing shares of common stock for cancellation or return to treasury, issuing new debt and repaying or repurchasing existing debt.

(1)

Includes three uncommitted demand lines totaling $296 million, net of $204 million in related undrawn letters of credit (2024 - $285 million and $48 million, respectively).

(2)

These measures are defined in the Non-GAAP Measures section of this MD&A.

The Company has full access to two committed revolving U.S. dollar denominated credit facilities totaling $3.5 billion, which include a $2.2 billion revolving credit facility for Ovintiv Inc. and a $1.3 billion revolving credit facility for a Canadian subsidiary (collectively, the “Credit Facilities”). The Credit Facilities, which mature in December 2029, provide financial flexibility and allow the Company to fund its operations or capital investment program. At March 31, 2025, there were no outstanding amounts under the revolving Credit Facilities.

Depending on the Company’s credit rating and market demand, the Company may issue from its two U.S. CP programs, which include a $1.5 billion program for Ovintiv Inc. and a $1.0 billion program for a Canadian subsidiary. As at March 31, 2025, the Company had $85 million of commercial paper outstanding under its U.S. CP program maturing at various dates with a weighted average interest rate of approximately 4.91 percent, which is supported by the Company’s Credit Facilities. All of Ovintiv’s credit ratings are investment grade as at March 31, 2025.

The available Credit Facilities, uncommitted demand lines, and cash and cash equivalents, net of outstanding commercial paper, provide Ovintiv with total liquidity of approximately $3.5 billion as at March 31, 2025. At March 31, 2025, Ovintiv also had approximately $204 million in undrawn letters of credit issued in the normal course of business as collateral security.

Ovintiv has a U.S. shelf registration statement under which the Company may issue from time to time, debt securities, common stock, preferred stock, warrants, units, share purchase contracts and share purchase units in the U.S. The U.S. shelf registration statement expires in March 2026.

The obligations under the Company’s existing debt securities are fully and unconditionally guaranteed on a senior unsecured basis by Ovintiv Canada ULC, an indirect wholly-owned subsidiary of the Company. Additional information on the Company’s Canadian Operations segment and the Bow office lease can be found in the Results of Operations section in this MD&A and in the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the MD&A and audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2024, which are included in Items 7 and 8, respectively, of the 2024 Annual Report on Form 10-K.

Ovintiv is currently in compliance with all financial covenants under the Credit Facilities. Management monitors Debt to Adjusted Capitalization, which is a non-GAAP measure defined in the Non-GAAP Measures section of this MD&A, as a proxy for Ovintiv’s financial covenant under the Credit Facilities, which requires Debt to Adjusted Capitalization to be less than 60 percent. As at March 31, 2025, the Company’s Debt to Adjusted Capitalization was 24 percent. The definitions used in the covenant under the Credit Facilities adjust capitalization for cumulative historical ceiling test impairments recorded in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP. Additional information on financial covenants can be found in Note 15 to the Consolidated Financial Statements included in Item 8 of the 2024 Annual Report on Form 10‑K.

Sources and Uses of Cash

The following table summarizes the sources and uses of the Company’s cash and cash equivalents.

Operating Activities

Net cash from operating activities in the first quarter of 2025 was $873 million and was primarily a reflection of the impacts from production volumes, average realized commodity prices, realized gains/losses on risk management and changes in non‑cash working capital.

Additional detail on changes in non-cash working capital can be found in Note 20 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Ovintiv expects it will continue to meet the payment terms of its suppliers.

Non-GAAP Cash Flow in the first quarter of 2025 was $1,004 million and was primarily impacted by the items affecting cash from operating activities which are discussed below and in the Results of Operations section of this MD&A.

Net cash from operating activities increased $214 million compared to the first quarter of 2024 primarily due to:

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Changes in non-cash working capital ($244 million), higher realized commodity prices ($58 million), lower operating expense, excluding non-cash long-term incentive costs ($40 million) and lower transportation and processing expense ($21 million);

•

Realized foreign exchange losses on U.S. dollar risk management contracts issued from Canada in 2025 ($98 million), lower production volumes ($32 million), lower realized gains on risk management in revenues compared to 2024 ($16 million) and an increase in current income tax expense ($11 million).

Investing Activities

Cash used in investing activities in the first quarter of 2025 was $895 million primarily due to the Montney Acquisition and capital expenditures, partially offset by the sale of the Company’s Uinta assets. Capital expenditures, and acquisition and divestiture activities are summarized in Notes 3 and 8, respectively, to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.

Capital expenditures increased $26 million compared to the first quarter of 2024, primarily due to increased drilling and completions activity in Anadarko, increased completions activity in Permian, and increased capital activity in Montney due to the Montney Acquisition during the quarter, partially offset by decreased capital activity due to the sale of the Uinta assets during the quarter.

Acquisitions in the first quarter of 2025 were $2,310 million, which primarily included the Montney Acquisition. Acquisitions in the first quarter of 2024 were $190 million, which primarily included property purchases with oil and liquids-rich potential in the USA Operations.

Divestitures in the first quarter of 2025 were $1,884 million, which primarily included the sale of the Uinta assets in Utah.

Additional information regarding the Montney Acquisition and the sale of the Uinta assets can be found in Note 8 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Financing Activities

Net cash from and/or used in financing activities has been impacted by Ovintiv’s strategic objective to return value to shareholders by repaying existing debt, purchasing shares of common stock and paying dividends.

Net cash used in financing activities in the first quarter of 2025 was $12 million compared to net cash from financing activities of $102 million in 2024. The change was primarily due to a decrease in the net issuance of revolving debt in 2025 compared to 2024 ($376 million), partially offset by purchases of shares of common stock in 2024 ($250 million).

The Company’s long-term debt, including the current portion of $1,144 million, totaled $5,538 million at March 31, 2025. The Company’s long-term debt at December 31, 2024, including the current portion of $600 million, totaled $5,453 million. The Company has $1,059 million of fixed rate long-term debt due in the next twelve months consisting of $600 million due in May 2025 and $459 million due in January 2026. The Company intends to repay the 2025 maturing balance of $600 million using a combination of available cash on hand and/or proceeds from short-term borrowings.

In support of the Company’s commitment to enhancing shareholder value, Ovintiv utilizes its capital allocation framework to provide competitive returns to shareholders while strengthening its balance sheet. The Company’s share buyback program was temporarily paused in the fourth quarter of 2024 to recover the transaction proceeds differential between the Montney Acquisition and the Uinta divestiture of $377 million. Cumulatively, through the fourth quarter of 2024 and the first quarter of 2025, the Company applied approximately $368 million in cash from the buyback pause to debt reduction. The Company has resumed share buybacks in the second quarter of 2025 in accordance with its capital allocation framework.

For additional information on long-term debt, refer to Note 11 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Further details on the Company’s debt-based metrics can be found in the Non-GAAP measures section of this MD&A.

Dividends

The Company pays quarterly dividends to common shareholders at the discretion of the Board of Directors.

On May 6, 2025, the Board of Directors declared a dividend of $0.30 per share of common stock payable on June 30, 2025, to common shareholders of record as of June 13, 2025.

Normal Course Issuer Bid

On September 26, 2024, the Company announced it had received regulatory approval for the renewal of its NCIB program, which enables the Company to purchase, for cancellation or return to treasury, up to approximately 25.9 million shares of common stock over a 12-month period from October 3, 2024 to October 2, 2025. The Company has resumed activity under the renewed NCIB program in conjunction with its capital allocation framework in the second quarter of 2025.

For additional information on the NCIB, refer to Note 13 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Material Cash Requirements

For information on material cash requirements, refer to the Material Cash Requirements section of the MD&A included in Item 7 of the 2024 Annual Report on Form 10-K.

Commitments and Contingencies

For information on commitments and contingencies, refer to Note 21 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

There have been no significant changes to the Company’s critical accounting policies and use of estimates from the disclosures reported in the Critical Accounting Estimates section of the MD&A included in Item 7 of the 2024 Annual Report on Form 10‑K.