Ovintiv Inc.

Management Report

Management’s Responsibility for Consolidated Financial Statements

The accompanying Consolidated Financial Statements of the Company are the responsibility of Management. The Consolidated Financial Statements have been prepared by Management in United States dollars in accordance with generally accepted accounting principles in the United States and include certain estimates that reflect Management’s best judgments.

Ovintiv’s Board of Directors has approved the information contained in the Consolidated Financial Statements. The Board of Directors fulfills its responsibility regarding the financial statements mainly through its Audit Committee, which has a written mandate that complies with the requirements of United States and Canadian securities legislation and the Audit Committee guidelines of the New York Stock Exchange. The Audit Committee meets at least on a quarterly basis.

Management’s Assessment of Internal Control over Financial Reporting

Management is also responsible for establishing and maintaining adequate internal control over the Company’s financial reporting. The internal control system was designed to provide reasonable assurance to the Company’s Management regarding the preparation and presentation of the Consolidated Financial Statements.

Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed the design and effectiveness of the Company’s internal control over financial reporting as at December 31, 2025. In making its assessment, Management has used the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of the Company’s internal control over financial reporting. Based on our evaluation, Management has concluded that the Company’s internal control over financial reporting was effective as at that date.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, was appointed by the Audit Committee of the Board of Directors, which was subsequently ratified by a vote of shareholders at the Company’s last annual meeting, to audit and provide independent opinions on both the Consolidated Financial Statements and the Company’s internal control over financial reporting as at December 31, 2025, as stated in their Auditor’s Report. PricewaterhouseCoopers LLP has provided such opinions.

Auditor’s Report

To the Board of Directors and Shareholders of Ovintiv Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Ovintiv Inc. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of earnings, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “Consolidated Financial Statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Consolidated Financial Statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these Consolidated Financial Statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s Consolidated Financial Statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the Consolidated Financial Statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the Consolidated Financial Statements included performing procedures to assess the risks of material misstatement of the Consolidated Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the Consolidated Financial Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Consolidated Financial Statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the Consolidated Financial Statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the Consolidated Financial Statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The impact of estimates of proved oil, natural gas liquids (“NGL”) and natural gas reserves on net oil and natural gas proved properties

As described in Notes 1 and 10 to the Consolidated Financial Statements, the Company had a net oil and natural gas proved properties balance of $13,676 million as of December 31, 2025 and depreciation, depletion, and amortization (“DD&A”) expense of $2,179 million for the year then ended. The Company also recognized a before-tax non-cash ceiling test impairment of $920 million for the year ended December 31, 2025. The Company uses the full cost method of accounting for its acquisition, exploration, and development activities. Capitalized costs accumulated within each cost center are depleted using the unit-of-production method based on proved oil, NGL and natural gas reserves. Proved oil, NGL and natural gas reserve estimates are key inputs to the Company’s depletion and ceiling test impairment calculations. A ceiling test impairment is recognized in net earnings when the carrying amount of a country cost center exceeds the country cost center ceiling. Management estimates its proved oil, NGL and natural gas reserves according to the definition of proved reserves provided by the SEC. Proved oil, NGL and natural gas reserves are those quantities of oil, NGL and natural gas, which can be estimated with reasonable certainty to be economically producible in future periods from known reservoirs under existing economic conditions, operating methods and government regulations. The assumptions used by management to determine estimates of the proved oil, NGL and natural gas reserves and the ceiling test impairment calculation include the average beginning-of-the-month prices during the 12-month period for the year, future production estimates and future production and development costs. The estimation of reserves is a subjective process. In determining the estimates of the proved oil, NGL and natural gas reserves, management utilizes the services of specialists, specifically internal reservoir engineers.

The principal considerations for our determination that performing procedures relating to the impact of estimates of proved oil, NGL and natural gas reserves on net oil and natural gas proved properties is a critical audit matter are (i) the judgment used by management, including the use of specialists, when developing the estimates of the proved oil, NGL and natural gas reserves and performing the ceiling test impairment calculation (ii) a high degree of auditor judgment, effort and subjectivity in performing procedures to evaluate the significant assumptions used in developing those estimates including the average beginning-of-the-month prices during the 12-month period for the year, future production estimates and future production and development costs, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the Consolidated Financial Statements. These procedures included testing the effectiveness of controls relating to management’s estimates of proved oil, NGL and natural gas reserves, the calculation of the full cost ceiling test and the calculation of DD&A expense. These procedures also included, among others, evaluating management’s ceiling test impairment calculations and testing the unit-of-production depletion rate used to calculate depletion expense, testing the completeness, accuracy and relevance of underlying data and evaluating the reasonableness of the significant assumptions used by management in developing these estimates, including assumptions related to the average beginning-of-the-month prices during the 12-month period for the year, future production estimates and future production and development costs. The work of management’s specialists was used in performing procedures to evaluate the reasonableness of the estimates of proved oil, NGL and natural gas reserves. As a basis for using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was assessed. The procedures performed also included evaluating the methods and assumptions used by the specialists, testing the completeness and accuracy of the data used by the specialists and evaluating the specialists’ findings. Professionals with specialized skill and knowledge were used to assist in this evaluation as applicable. Evaluating the significant assumptions also involved evaluating whether the assumptions used were reasonable considering the current and past performance of the Company, external market and industry data and whether they were consistent with evidence obtained in other areas of the audit, as applicable.

Fair value of the United States reporting unit for the purposes of goodwill impairment testing

As described in Notes 1 and 12 to the Consolidated Financial Statements, the Company’s United States reporting unit has goodwill of $1,938 million as of December 31, 2025. Goodwill represents the excess of purchase price over fair value of net assets acquired and is assessed for impairment at least annually as of December 31. To assess impairment, the carrying amount of each reporting unit is determined and compared to the fair value of each respective reporting unit. Any excess of the carrying value of the reporting unit, including goodwill, over its fair value is recognized as an impairment and charged to net earnings. Management used an income valuation approach to determine the fair value of the United States reporting unit. The most significant assumptions used by management to determine a reporting unit’s fair value include estimations of oil and natural gas reserves, including both proved reserves and risk-adjusted unproved reserves, estimates of market prices considering forward commodity price curves as of the measurement date, market discount rates and estimates of operating and capital costs. In determining the estimates of proved reserves and risk-adjusted unproved reserves, management utilizes the services of specialists, specifically internal reservoir engineers. The fair value of the United States reporting unit was determined to be greater than the carrying value. Accordingly, no goodwill impairment was recognized.

The principal considerations for our determination that performing procedures relating to the fair value of the United States reporting unit for the purposes of goodwill impairment testing is a critical audit matter are (i) the judgment used by management, including the use of specialists, when developing the fair value of the United States reporting unit, (ii) a high degree of auditor judgment, effort and subjectivity in performing procedures to evaluate the significant assumptions such as estimations of oil and natural gas reserves, including both proved reserves and risk-adjusted unproved reserves, estimates of market prices considering forward commodity price curves as of the measurement date, market discount rates and estimates of operating and capital costs adjusted for inflation, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the Consolidated Financial Statements. These procedures included testing the effectiveness of controls relating to management’s determination of the fair value of the United States reporting unit. These procedures also included, among others, testing management’s process for determining the fair value of the United States reporting unit which included (i) evaluating the appropriateness of the income valuation approach used by management in making the estimate, (ii) testing the completeness and accuracy of underlying data used in management’s determination of the fair value and (iii) evaluating the reasonableness of significant assumptions used by management related to estimations of oil and natural gas reserves, including both proved reserves and risk-adjusted unproved reserves, estimates of market prices considering forward commodity price curves as of the measurement date, market discount rates and estimates of operating and capital costs adjusted for inflation. Evaluated the reasonableness of estimates of market prices considering forward commodity price curves as of the measurement date, and estimates of operating and capital costs adjusted for inflation by considering the current and past performance of the United States reporting unit, external market and industry data and whether they were consistent with evidence obtained in other areas of the audit, as applicable. The work of management’s specialists was used in performing procedures to evaluate the reasonableness of the estimations of oil and natural gas reserves, including both proved reserves and risk-adjusted unproved reserves. As a basis for using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was assessed. The procedures performed also included evaluating the methods and assumptions used by the specialists, testing the completeness and accuracy of the data used by the specialists, and evaluating the specialists’ findings. Professionals with specialized skill and knowledge assisted in this evaluation, as applicable. Also, Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the income valuation approach and the reasonableness of the market discount rates.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants

Calgary, Canada

February 23, 2026

We have served as the Company’s or its predecessors’ auditor since 1958.

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Shareholders’ Equity

A)

NATURE OF OPERATIONS

Ovintiv Inc. and its subsidiaries (collectively, “Ovintiv”) are in the business of the exploration for, the development of, and the production and marketing of oil, NGLs and natural gas.

B)

BASIS OF PRESENTATION

The Consolidated Financial Statements include the accounts of Ovintiv and are presented in conformity with U.S. GAAP and the rules and regulations of the SEC.

In these Consolidated Financial Statements, unless otherwise indicated, all dollar amounts are expressed in U.S. dollars. Ovintiv’s financial results herein are consolidated and reported in U.S. dollars. All references to US$ or to $ are to United States dollars and references to C$ are to Canadian dollars.

C)

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of Ovintiv and entities in which it holds a controlling interest. All intercompany balances and transactions are eliminated on consolidation. Undivided interests in oil and natural gas exploration and production joint ventures and partnerships are consolidated on a proportionate basis. Investments in non-controlled entities over which Ovintiv has the ability to exercise significant influence are accounted for using the equity method.

D)

FOREIGN CURRENCY TRANSLATION

Monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rates of exchange in effect at the period end date. Any gains or losses are recorded in the Consolidated Statement of Earnings. Foreign currency revenues and expenses are translated at the rates of exchange in effect at the time of the transaction.

Assets and liabilities of foreign operations are translated at period end exchange rates, while the related revenues and expenses are translated using average rates during the period. Translation gains and losses relating to foreign operations are included in accumulated other comprehensive income (“AOCI”). Recognition of Ovintiv’s accumulated translation gains and losses into net earnings occurs upon complete or substantially complete liquidation of the Company’s investment in the foreign operation.

E)

USE OF ESTIMATES

Preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires Management to make informed estimates and assumptions and use judgments that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the period. Such estimates primarily relate to unsettled transactions and events as of the date of the Consolidated Financial Statements. Accordingly, actual results may differ from estimated amounts as future events occur.

Significant items subject to estimates and assumptions are:

•

Estimates of proved reserves used for depletion and ceiling test impairment calculations

•

Estimated fair value of long-term assets used for impairment calculations

•

Fair value of reporting units used for the assessment of goodwill

•

Estimates of future taxable earnings used to assess the realizable value of deferred tax assets

•

Estimates of incremental borrowing rates and lease terms used in the measurement of right-of-use (“ROU”) assets and lease liabilities

•

Fair value of asset retirement costs and related obligations

•

Fair value of derivative instruments

•

Fair value attributed to assets acquired and liabilities assumed in business combinations

•

Tax interpretations, regulations and legislation in the various jurisdictions in which the Company and its subsidiaries operate

•

Accruals for long-term performance-based compensation arrangements, including whether or not the performance criteria will be met and measurement of the ultimate payout amount

•

Recognized values of pension assets and obligations, as well as the pension costs charged to net earnings, depend on certain actuarial and economic assumptions

•

Accruals for legal claims, environmental risks and exposures

F)

REVENUES FROM CONTRACTS WITH CUSTOMERS

Revenues from contracts with customers associated with Ovintiv’s oil, NGLs and natural gas, sales of purchased product and third-party gathering and processing are recognized when control of the good or service is transferred to the customer, and title or risk of loss transfers to the customer. Transaction prices are determined at inception of the contract and allocated to the performance obligations identified. Variable consideration is estimated and included in the transaction price, unless the variable consideration is constrained.

For product sales, the performance obligations are satisfied at a point in time when the product is delivered to the customer and control is transferred. Payment from the customer is due when the product is delivered to the custody point. Revenues for product sales are presented on an after-royalties basis. For arrangements to gather and process natural gas for third parties, performance obligations are satisfied over time as the service is provided to the customer. Payment from the customer is due when the customer receives the benefit of the service and the product is delivered to the custody point or plant tailgate. Revenues associated with services provided where Ovintiv acts as agent are recorded on a net basis.

G)

PRODUCTION, MINERAL AND OTHER TAXES

Costs paid by Ovintiv for taxes based on production or revenues from oil, NGLs and natural gas are recognized when the product is produced. Costs paid by Ovintiv for taxes on the valuation of upstream assets and reserves are recognized when incurred.

H)

TRANSPORTATION AND PROCESSING

Costs paid by Ovintiv for the transportation and processing of oil, NGLs and natural gas are recognized when the product is delivered and the services made available or provided.

I)

OPERATING

Operating costs paid by Ovintiv, net of amounts capitalized, are recognized for oil and natural gas properties in which the Company has a working interest.

J)

EMPLOYEE BENEFIT PLANS

The Company sponsors defined contribution and defined benefit plans, providing pension and other post-employment benefits to its employees in the U.S. and Canada. As of January 1, 2003, the defined benefit pension plan was closed to new entrants.

Pension expense for the defined contribution pension plan is recorded as the benefits are earned by the employees covered by the plans. Ovintiv accrues for its obligations under its employee defined benefit plans, net of plan assets. The cost of defined benefit pensions and other post-employment benefits is actuarially determined using the projected benefit method based on length of service and reflects Management’s best estimate of salary escalation, mortality rates, retirement ages of employees and expected future health care costs. The expected return on plan assets is based on historical and projected rates of return for assets in the investment plan portfolio. The actual return is based on the fair value of plan assets. The projected benefit obligation is discounted using the market interest rate on high-quality corporate debt instruments as at the measurement date.

Defined benefit pension plan expenses include the cost of pension benefits earned during the current year, the interest cost on pension obligations, the expected return on pension plan assets, the amortization of adjustments arising from pension plan amendments, the amortization of net prior service costs, and the amortization of the excess of the net actuarial gains or losses over 10 percent of the greater of the benefit obligation and the fair value of plan assets. Amortization is on a straight-line basis over a period covering the expected average remaining service lives of employees covered by the plans. All components of the net defined periodic benefit cost, excluding the service cost component, are included in other (gains) losses, net.

K)

INCOME TAXES

Ovintiv follows the liability method of accounting for income taxes. Under this method, deferred income taxes are recorded for the effect of any temporary difference between the accounting and income tax basis of an asset or liability, using the enacted income tax rates and laws expected to apply when the assets are realized and liabilities are settled. Current income taxes are measured at the amount expected to be recoverable from or payable to the taxing authorities based on the income tax rates and laws enacted at the end of the reporting period. The effect of a change in the enacted tax rates or laws is recognized in net earnings in the period of enactment. Income taxes are recognized in net earnings except to the extent that they relate to items recognized directly in shareholders’ equity, in which case the income taxes are recognized directly in shareholders’ equity.

Deferred income tax assets are assessed routinely for realizability. If it is more likely than not that deferred tax assets will not be realized, a valuation allowance is recorded to reduce the deferred tax assets. Ovintiv considers available positive and negative evidence when assessing the realizability of deferred tax assets including historic and expected future taxable earnings, available tax planning strategies and carry forward periods.

Ovintiv recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. A recognized tax position is initially and subsequently measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement with a taxing authority. Liabilities for unrecognized tax benefits that are not expected to be settled within the next 12 months are included in other liabilities and provisions. Interest related to unrecognized tax benefits is recognized in interest expense.

L)

EARNINGS PER SHARE AMOUNTS

Basic net earnings per share of common stock is computed by dividing the net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted net earnings per share of common stock is calculated giving effect to the potential dilution that would occur if stock options were exercised or other contracts to issue shares of common stock were exercised, fully vested, or converted to shares of common stock. The treasury stock method is used to determine the dilutive effect of stock options and other dilutive instruments. The treasury stock method assumes that proceeds received from the exercise of in-the-money stock options and other dilutive instruments are used to repurchase shares of common stock at the average market price.

M)

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand and short-term investments, such as money market deposits or similar type instruments, with a maturity of three months or less when purchased. Outstanding disbursements issued in excess of applicable bank account balances are excluded from cash and cash equivalents and are recorded in accounts payable and accrued liabilities.

N)

PROPERTY, PLANT AND EQUIPMENT

UPSTREAM

Ovintiv uses the full cost method of accounting for its acquisition, exploration and development activities. Accordingly, all costs directly associated with the acquisition of, the exploration for, and the development of oil, NGLs and natural gas reserves, including costs of undeveloped leaseholds, dry holes and related equipment, are capitalized on a country-by-country cost center basis. Capitalized costs exclude costs relating to production, general overhead or similar activities.

Capitalized costs accumulated within each cost center are depleted using the unit-of-production method based on proved reserves. Depletion is calculated using the capitalized costs, including estimated retirement costs, plus the undiscounted future expenditures, based on current costs, to be incurred in developing proved reserves.

Costs associated with unproved properties are excluded from the depletion calculation until it is determined that proved reserves are attributable or impairment has occurred. Unproved properties are assessed separately for impairment on a quarterly basis. Costs that have been impaired are included in the costs subject to depletion within the full cost pool.

Under the full cost method of accounting, the carrying amount of Ovintiv’s oil and natural gas properties within each of the USA and Canadian country cost centers is subject to a ceiling test at the end of each quarter. A ceiling test impairment is recognized in net earnings when the carrying amount of the country cost center exceeds the respective country cost center’s ceiling. The carrying amount of a country cost center includes capitalized costs of proved oil and natural gas properties, net of accumulated depletion and the related deferred income taxes.

The country cost center ceiling is the sum of the estimated after-tax future net cash flows from proved reserves, using the 12‑month average trailing prices and unescalated future development and production costs, discounted at 10 percent, plus unproved property costs. The 12-month average trailing price is calculated as the average of the price on the first day of each month within the trailing 12-month period. Any excess of the carrying amount over the calculated ceiling amount is recognized as an impairment in net earnings.

Proceeds from the divestiture of properties are normally deducted from the full cost pool without recognition of a gain or loss unless the deduction significantly alters the relationship between capitalized costs and proved reserves in the cost center, in which case a gain or loss is recognized in net earnings. Generally, a gain or loss on a divestiture would be recognized when 25 percent or more of the Company’s proved reserves quantities are sold in a particular country cost center. For divestitures that result in the recognition of a gain or loss on the sale and constitute a business, goodwill is allocated to the divestiture.

CORPORATE

Costs associated with office furniture, fixtures, leasehold improvements, information technology and aircraft are carried at cost and depreciated on a straight-line basis over the estimated service lives of the assets, which range from three to 25 years. Land is carried at cost.

O)

CAPITALIZATION OF COSTS

Expenditures related to renewals or betterments that improve the productive capacity or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Interest on borrowings associated with development projects is capitalized during the development phase.

P)

BUSINESS COMBINATIONS

Business combinations are accounted for using the acquisition method. The acquired identifiable net assets are measured at fair value at the date of acquisition. Deferred taxes are recognized for any differences between the fair value of net assets acquired and the related tax bases. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill. Any deficiency of the purchase price below the fair value of the net assets acquired is recorded as a gain in net earnings. Associated transaction costs are expensed when incurred.

Q)

GOODWILL

Goodwill represents the excess of purchase price over fair value of net assets acquired and is assessed for impairment at least annually at December 31. Goodwill and all other assets and liabilities are allocated to reporting units, which are Ovintiv’s country cost centers. To assess impairment, the carrying amount of each reporting unit is determined and compared to the fair value of each respective reporting unit. Any excess of the carrying value of the reporting unit, including goodwill, over its fair value is recognized as an impairment and charged to net earnings. The impairment charge measured is limited to the total amount of goodwill allocated to that reporting unit. Subsequent measurement of goodwill is at cost less any accumulated impairments.

R)

IMPAIRMENT OF LONG-TERM ASSETS

The carrying value of long-term assets, excluding goodwill and upstream assets included in property, plant and equipment, is assessed for impairment when indicators suggest that the carrying value of an asset or asset group may not be recoverable. Individual assets are grouped for impairment purposes at the lowest level for which there are identifiable cashflows that are largely independent of the cashflows of other groups of assets. If the carrying amount exceeds the sum of the undiscounted cash flows expected to result from the continued use and eventual disposition of the asset or asset group, an impairment is recognized for the excess of the carrying amount over its estimated fair value.

S)

ASSET RETIREMENT OBLIGATION

Asset retirement obligations are those legal obligations where the Company will be required to retire tangible long-lived assets such as producing well sites, processing plants, and restoring land at the end of oil and gas production operations. The asset retirement obligation is initially measured at its fair value and recorded as a liability with an offsetting retirement cost that is capitalized as part of the related long-lived asset in the Consolidated Balance Sheet. The estimated fair value is measured by reference to the expected future cash flows required to satisfy the obligation, discounted at the Company’s credit-adjusted risk-free rate. Changes in the estimated obligation resulting from revisions to estimated timing or amount of future cash flows are recognized as a change in the asset retirement obligation and the related asset retirement cost.

Amortization of asset retirement costs are included in depreciation, depletion and amortization in the Consolidated Statement of Earnings. Increases in the asset retirement obligations resulting from the passage of time are recorded as accretion of asset retirement obligation in the Consolidated Statement of Earnings. Actual expenditures incurred are charged against the accumulated asset retirement obligation.

T)

STOCK-BASED COMPENSATION

Stock-based compensation arrangements are accounted for at fair value. Fair values are determined using observable share prices and/or pricing models such as the Black-Scholes-Merton option-pricing model. For equity-settled stock-based compensation plans, fair values are determined at the grant date and are recognized over the vesting period as compensation costs with a corresponding credit to shareholders’ equity. For cash-settled stock-based compensation plans, fair values are determined at each reporting date and periodic changes are recognized as compensation costs, with a corresponding change to liabilities. Compensation costs are recognized over the vesting period using the accelerated attribution method for awards with a graded vesting feature. Forfeitures are estimated based on the Company’s historical turnover rates.

U)

LEASES

Leases for the right to use an asset are classified as either an operating or finance lease. Upon commencement of the lease, a ROU asset and corresponding lease liability are recognized in the Consolidated Balance Sheet for all operating and finance leases. Ovintiv has elected the short-term lease exemption, which does not require a ROU asset or lease liability to be recognized in the Consolidated Balance Sheet when the lease term is 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Upon commencement of the lease, ROU assets are recognized based on the initial measurement of the lease liability and adjusted for any lease payments made before the commencement date of the lease, less any lease incentives and including any initial direct costs incurred. Lease liabilities are initially measured at the present value of future minimum lease payments over the lease term. The discount rate used to determine the present value is the rate implicit in the lease unless that rate cannot be determined, in which case Ovintiv’s incremental borrowing rate is used.

Rights to extend or terminate a lease are included in the lease term when there is reasonable certainty the right will be exercised. Factors used to assess reasonable certainty of rights to extend or terminate a lease include current and forecasted drilling plans, anticipated changes in development strategies, historical practice in extending similar contracts and current market conditions.

Operating lease ROU assets and liabilities are subsequently measured at the present value of the lease payments not yet paid and discounted at the initial discount rate at commencement of the lease, less any impairments to the ROU asset. Operating lease expense and revenue from subleases are recognized in the Consolidated Statement of Earnings on a straight-line basis over the lease term. Finance lease ROU assets are amortized on a straight-line basis over the estimated useful life of the asset if the lessee is reasonably certain to exercise a purchase option or ownership of the leased asset transfers at the end of the lease term, otherwise the leased assets are amortized over the lease term. Amortization of finance lease ROU assets is included in depreciation, depletion and amortization in the Consolidated Statement of Earnings.

Variable lease payments include changes in index rates, mobilization and demobilization costs related to oil and gas equipment and certain costs associated with office and building leases. Variable lease payments are recognized when incurred. Lease and non-lease components are accounted for as a single lease component for compression, coolers and office subleases.

V)

FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques include the market, income and cost approach. The market approach uses information generated by market transactions involving identical or comparable assets or liabilities; the income approach converts estimated future cash flows to a present value; the cost approach is based on the amount that currently would be required to replace an asset.

Inputs used in determining fair value are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observable. The three input levels of the fair value hierarchy are as follows:

•

Level 1 - Inputs represent quoted prices in active markets for identical assets or liabilities, such as exchange-traded commodity derivatives.

•

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets or other market corroborated inputs.

•

Level 3 - Inputs that are not observable from objective sources, such as forward prices supported by little or no market activity or internally developed estimates of future cash flows used in a present value model.

In determining fair value, the Company utilizes the most observable inputs available. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair value measurement is characterized based on the lowest level of input that is significant to the fair value measurement.

The carrying amount of cash and cash equivalents, accounts receivable and accrued revenues, and accounts payable and accrued liabilities reported in the Consolidated Balance Sheet approximates fair value. The fair value of investment in marketable securities is disclosed in Note 7. The fair value of long-term debt is disclosed in Note 15. Fair value information related to pension plan assets is included in Note 23. Recurring fair value measurements are performed for risk management assets and liabilities and other derivative contracts as discussed in Note 24.

Certain non-financial assets and liabilities are initially measured at fair value, such as asset retirement obligations and assets and liabilities acquired in business combinations or certain non-monetary exchange transactions.

W)

RISK MANAGEMENT ASSETS AND LIABILITIES

Risk management assets and liabilities are derivative financial instruments used by Ovintiv to manage economic exposure to market risks relating to commodity prices, foreign currency exchange rates and interest rates. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors.

Derivative instruments that do not qualify for the normal purchases and sales exemption are measured at fair value with changes in fair value recognized in net earnings. The fair values recorded in the Consolidated Balance Sheet reflect netting the asset and liability positions where counterparty master netting arrangements contain provisions for net settlement.

Realized gains or losses from financial derivatives related to oil, NGLs and natural gas commodity prices are presented in revenues as the contracts are settled. Realized gains or losses from foreign currency exchange swaps are presented in foreign exchange (gain) loss as the contracts are settled. Realized gains or losses recognized from other derivative contracts are presented in revenues as the obligations are settled.

Unrealized gains and losses are recognized based on the changes in fair value of the contracts and are presented in revenues and foreign exchange (gain) loss.

X)

COMMITMENTS AND CONTINGENCIES

Liabilities for loss contingencies arising from claims, assessments, litigation, environmental and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change.

Y)

RECENT ACCOUNTING PRONOUNCEMENTS

Changes in Accounting Policies and Practices

On January 1, 2025, Ovintiv adopted ASU 2023-09 “Improvements to Income Tax Disclosures”. The standard requires disaggregated information about the Company’s effective tax rate reconciliation as well as information on income taxes paid. The amendment requires the tabular rate reconciliation to be presented using both percentages and amounts, with additional separate disclosure for any reconciling items within certain categories equal to or greater than five percent of net earnings or loss before income tax and the applicable statutory federal income tax rate. The amendment also requires the disaggregation of income taxes paid by federal, state, and foreign jurisdictions, as well as additional disaggregated information on income taxes paid to an individual jurisdiction equal to or greater than five percent of total income taxes paid. The amendment has been applied prospectively and did not have a material impact on the Company’s annual Consolidated Financial Statements.

New Standards Issued Not Yet Adopted

As of January 1, 2027, Ovintiv will be required to adopt ASU 2024-03 “Disaggregation of Income Statement Expenses” for annual disclosures with interim disclosures required beginning in the first quarter of 2028. The new standard requires that an entity disclose tabular information about certain expenses including, but not limited to, purchases of inventory, employee compensation, and depreciation, depletion, and amortization expense that are presented within expense line captions reported in the statement of earnings. A qualitative description of the remaining other amounts within those expense line captions will be required. The Company will also be required to determine and disclose its definition of selling expenses and the total amount of selling expenses. The amendments are to be applied prospectively, with the option for retrospective application, and are not expected to have a material impact on the Company’s Consolidated Financial Statements.

Ovintiv’s exploration and production activities are subdivided intotwo geographic segments, including the USA Operations and Canadian Operations. These segments’ 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. The Company considers sales of purchased commodities as ancillary to its oil and gas development, exploration and producing activities and manages them to support such activities. In addition, the Company has a single, company-wide management team that allocates capital resources to maximize profitability and measures financial performance as a single enterprise.

Corporate and Other mainly includes unrealized gains or losses recorded on derivative financial instruments. Once the instruments are settled, the realized gains and losses are recorded in the reporting segment to which the derivative instruments relate. Corporate and Other also includes amounts related to sublease rentals and administrative costs not allocated to the operating segments.

The tables below summarize the results of operations and total assets by segment that are provided to the Chief Operating Decision Makers (“CODMs”) which have been identified as the Company’s President & Chief Executive Officer, Executive Vice President & Chief Operating Officer, and the Executive Vice President & Chief Financial Officer. The CODMs evaluate the performance of each of the reportable segments based on Operating Income (Loss) which is also used to assess performance and allocate capital for these segments by comparing actual to historical results and forecasted financial information.

The Company evaluates the effects of debt financing, interest expense and/or interest income, foreign exchange gains (losses) and other gains (losses) at a consolidated level.

Segment Information

(1)

Product and service revenues are split by product in Note 3.

Corporate & Other Revenues by Geographic Region

Major Customers

In connection with the marketing and sale of Ovintiv’s own and purchased oil, NGLs and natural gas for the year ended December 31, 2025, the Company hadone customer which individually accounted for more than 10 percent of Ovintiv’s product revenues. Sales to this customer, which has an investment grade credit rating, totaled approximately $1,016 million which comprised $980 million in the United States and $36 million in Canada(2024 ‑two customers with sales of approximately $3,310 million; 2023 -one customer with sales of approximately $1,976 million).

Capital Expenditures by Segment

Goodwill, Property, Plant and Equipment and Total Assets by Segment

Goodwill, Property, Plant and Equipment and Total Assets by Geographic Region

The following table summarizes Ovintiv’s revenues from contracts with customers.

Revenues

The Company’s revenues from contracts with customers consists of product sales including oil, NGLs and natural gas, sales of purchased product, as well as the provision of gathering and processing, and other services to third parties. Ovintiv hadno contract asset or liability balances during the periods presented. As at December 31, 2025, receivables and accrued revenues from contracts with customers were $845 million (2024 - $921 million).

Ovintiv’s product sales are sold under short-term contracts with terms that are less than one year at either fixed or market index prices or under long-term contracts exceeding one year at market index prices at the time of delivery.

The Company’s gathering and processing services are provided on an interruptible basis with transaction prices that are for fixed prices and/or variable consideration. Variable consideration received is related to recovery of plant operating costs or escalation of the fixed price based on a consumer price index. As the service contracts are interruptible, with service provided on an “as available” basis, there areno unsatisfied performance obligations remaining at December 31, 2025.

As at December 31, 2025, all remaining performance obligations are priced at market index prices or are variable volume delivery contracts. As such, the variable consideration is allocated entirely to the wholly unsatisfied performance obligation or promise to deliver units of production, and revenue is recognized at the amount for which the Company has the right to invoice the product delivered. As the period between when the product sales are transferred and Ovintiv receives payments is generally 30 to 60 days, there is no financing element associated with customer contracts. In addition, Ovintiv does not disclose unsatisfied performance obligations for customer contracts with terms less than 12 months or for variable consideration related to unsatisfied performance obligations.

For the year ended December 31, 2025, interest expense on debt includes $5 million of financing fees associated with two term facilities which were terminated in January 2025, following the closing of the Uinta divestiture and the Montney Acquisition as described in Note 8.

For the year ended December 31, 2024, interest expense on debt includes $12 million related to bridge loan financing fees incurred in contemplation of the Montney Acquisition.

In 2024, the Company entered into $2.4 billion notional U.S. dollar denominated currency swaps at an average exchange rate of C$1.3825 to US$1 to manage the foreign exchange risk associated with the Montney Acquisition, which was denominated in Canadian dollars (see Note 8). In conjunction with the closing of the transaction, the Company settled the currency swaps and recognized a realized foreign exchange loss of approximately $97 million during 2025.

The provision for income taxes is as follows:

During the year ended December 31, 2025, the current income tax expense was primarily due to the Canadian earnings subject to current tax.

During the year ended December 31, 2024, the current income tax expense was primarily due to the Canadian earnings subject to current tax and the impact of the corporate alternative minimum tax (“CAMT”) in the U.S.

During the year ended December 31, 2023, the current income tax expense was primarily due to the full utilization of Ovintiv’s operating losses in Canada and recognition of prior year deferred income, resulting in current tax in 2023.

During the year ended December 31, 2025, the deferred tax recovery was primarily due to the impact of the commercial restructure in Canada described below and ceiling test impairments in Canada, partially offset by taxes on U.S. earnings.

During the year ended December 31, 2024, the deferred tax expense was primarily due to taxes on U.S. earnings, partially offset by deferred tax recovery in Canada due to ceiling test impairments.

During the year ended December 31, 2023, the deferred tax expense was primarily due to taxes on U.S. earnings, offset by the recognition of U.S. research and development credits of $136 million. In addition, the deferred tax recovery in Canada was primarily from the recognition of prior year deferred income as discussed above.

The following disclosures reflect the Company’s prospective adoption of ASU 2023-09 (see Note 1).

The components of net earnings (loss) before income tax for 2025 consist of:

The following table is the rate reconciliation between income tax expense (recovery) compared to statutory expectations.

(1)

Texas represents the majority (greater than 50 percent) of the tax effect.

(2)

Alberta represents the majority (greater than 50 percent) of the tax effect.

(3)

The commercial restructure in Canada resulted in a capital loss utilization with a corresponding reduction of the valuation allowance and the recognition of a net deferred tax asset. In conjunction with the restructure, the Company recognized provincial income tax and a valuation allowance reversal of $520 million ($330 million federal and $190 million provincial).

(4)

The worldwide valuation allowance reversal of $498 million primarily resulted from the commercial restructure in Canada.

During the year ended December 31, 2025, Ovintiv restructured its existing arrangement with a subsidiary of Mitsubishi Corporation for ownership and development of the Cutbank Ridge lands within the Montney area of British Columbia. This commercial restructure is designed to enhance alignment between the two companies and streamline administrative processes. The tax impact of the restructure is reflected in the table above.

The effective tax rate of (61.3) percent for the year ended December 31, 2025, is lower than the U.S. federal statutory tax rate of 21 percent primarily due to the recognition of a net deferred tax asset resulting from the commercial restructure discussed above.

The income taxes paid (recovered) by the Company are as follows:

(1)

Primarily includes taxes paid to (recovered from) Texas.

(2)

Primarily includes taxes paid to (recovered from) Alberta.

The following table reconciles income taxes calculated at the applicable statutory rate with the actual income taxes, prior to the prospective adoption of ASU 2023-09.

During the year ended December 31, 2024, a valuation allowance of $45 million was reversed primarily related to utilization of Canadian net capital losses. During the year ended December 31, 2023, a valuation allowance of $18 million was reversed primarily related to operating losses and utilization of Canadian net capital losses.

The effective tax rate of 16.7 percent for the year ended December 31, 2024, is lower than the U.S. federal statutory tax rate of 21 percent primarily due to the recognition of U.S. research and development credits.

The effective tax rate of 16.9 percent for the year ended December 31, 2023, is lower than the U.S. federal statutory tax rate of 21 percent primarily due to the recognition of U.S. research and development credits as described above.

The net deferred income tax asset (liability) consists of:

As at December 31, 2025, Ovintiv has a valuation allowance against certain U.S. state losses in the amount of $29 million (2024 - $29 million), foreign tax credits of $22 million (2024 -nil) and Canadian net capital losses in the amount of $714 million (2024 - $1,175 million) as it is more likely than not that these benefits will not be realized based on expected future taxable earnings as determined in accordance with the Company’s accounting policies.

The net deferred income tax asset (liability) for the following jurisdictions is reflected in the Consolidated Balance Sheet as follows:

Loss carryforwards and credits available are as follows:

As at December 31, 2025, the Company has recorded a deferred income tax liability ofnil (2024 - $11 million) on the undistributed earnings from its foreign investments. As at December 31, 2025, the Company had a taxable temporary difference of approximately $261 million (2024 ‑ $137 million) in respect of unremitted earnings that continue to be permanently reinvested for which a deferred income tax liability of $13 million (2024 - $7 million)has not been recognizedand becomes subject to taxation upon the remittance of dividends. The deferred tax liability considers U.S. federal, state and foreign withholding tax implications.

The following table presents changes in the balance of Ovintiv’s unrecognized tax benefits excluding interest:

The unrecognized tax benefit is reflected in the Consolidated Balance Sheet as follows:

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not the tax position will be sustained upon audit by the taxing authorities. During the year ended December 31, 2025, the Company recorded unrecognized tax benefits of $54 million (2024 - $59 million).

If recognized, all of Ovintiv’s unrecognized tax benefits as at December 31, 2025, would affect Ovintiv’s effective income tax rate. The nature of the unrecognized tax benefits is highly uncertain.

Ovintiv may recognize interest accrued in respect of unrecognized tax benefits in interest expense. During 2025, Ovintiv recognized an expense of $1 million (2024 - $1 million; 2023 -nil) in interest expense. As at December 31, 2025, Ovintiv had a liability of $1 million (2024 - $1 million) for interest accrued in respect of unrecognized tax benefits.

Included below is a summary of the tax years, by jurisdiction, that remain statutorily open for examination by the taxing authorities.

Ovintiv and its subsidiaries file income tax returns in the U.S. and Canada. Issues in dispute for audited years and audits for subsequent years are ongoing and in various stages of completion.

ACCOUNTS RECEIVABLE AND ACCRUED REVENUES

Ovintiv’s trade receivables and accrued revenues primarily consist of production sales of oil, NGLs and natural gas, product optimization from marketing and recoveries from joint working interest partners. The Company’s receivables are short dated with payments generally due within 30 to 60 days, with no financing element.

Trade receivables and accrued revenues are subject to credit risk which is the risk of loss from the potential of a counterparty failing to meet its obligation in accordance with agreed terms. Ovintiv’s credit exposure related to product sales and derivative financial instruments are mitigated through the use of credit policies approved by the Board of Directors which govern credit practices that limit transactions according to counterparties’ credit quality, and regular monitoring and review of counterparties’ credit worthiness. The Company may also request collateral support, including standby letters of credit, from customers that purchase production. Receivables due from joint working interest partners include numerous counterparties ranging from large public companies to small private companies within the oil and gas industry. In the event of non-payment, Ovintiv may be able to mitigate losses through requiring prepayment of future costs and netting outstanding receivables against associated revenue payables to the interest owner. The Company monitors ongoing credit exposure through active review of counterparty balances against contract terms and due dates, timely dispute resolution, payment confirmation, consideration of the customers’ financial condition and general industry market conditions.

Ovintiv’s estimated credit loss allowance is estimated using historical loss information, current industry conditions and payment practices, as well as reasonable and supportable forecasts of future economic conditions. Credit risk is assessed based on days outstanding and utilizes both internal credit assessments and publicly available credit information. As at December 31, 2025, the current period expected credit loss allowance was $6 million (2024 ‑ $5 million). See Note 25 for more information on credit risk exposures.

INVESTMENT IN MARKETABLE SECURITIES

During 2025, Ovintiv purchased 18.5 million common shares of NuVista Energy Ltd. which were valued at $245 million as at December 31, 2025. The estimated fair value of the common shares is categorized within Level 1 of the fair value hierarchy. During the year ended December 31, 2025, the Company recognized an unrealized gain of $28 million related to these common shares in other (gains) losses, net in the Consolidated Statement of Earnings.

ACQUISITIONS

On January 31, 2025, the Company completed the acquisition of approximately 109,000 net acres in the core of the Montney formation from Paramount Resources Ltd. for total cash consideration, including transaction costs, of approximately $2.274 billion (C$3.280), after closing adjustments (the “Montney Acquisition”). The Company funded the Montney Acquisition with cash on hand, including proceeds from the Uinta divestiture as discussed below, and proceeds from short-term borrowings. The Montney Acquisition was accounted for as an asset acquisition as substantially all of the fair value of the assets acquired were concentrated in a single asset group, largely comprising proved oil and natural gas properties. The Company recognized the assets acquired in the Montney Acquisition at the purchase cost, including transaction costs, on a relative fair value basis. The Company recorded $2,292 million in proved properties, $128 million in unproved properties, $146 million related to asset retirement obligations, and $396 million in operating lease assets and lease liabilities related to long-term midstream agreement for a natural gas processing facility.

In 2025, acquisitions in the USA Operations were $260 million, which primarily included property purchases in Permian with oil and liquids-rich potential.

In 2024, acquisitions in the USA Operations were $200 million, which primarily included property purchases in Permian with oil and liquids-rich potential.

In 2023, acquisitions in the USA Operations were $271 million, which primarily included property purchases in Permian and Uinta with oil and liquids-rich potential.

DIVESTITURES

In 2025, divestitures in the USA Operations were $1,923 million, which primarily included the sale of Uinta located in Utah for proceeds of approximately $1,906 million, after closing and other adjustments.

In 2024, divestitures in the USA Operations primarily included the sale of certain properties that did not complement Ovintiv’s existing portfolio of assets.

In 2023, divestitures in the USA Operations primarily included the sale of Bakken located in North Dakota for proceeds of approximately $734 million, after closing and other adjustments.

Amounts received from the Company’s divestiture transactions have been deducted from the respective U.S. and Canadian full cost pools.

During 2024, Ovintiv also received settlement proceeds of approximately $156 million related to the previous dispositions of certain legacy assets. Accordingly, the total net proceeds of $156 million was recognized as a gain within other (gains) losses, net in the Company’s Consolidated Statement of Earnings and is included in proceeds from divestitures in the Company’s Consolidated Statement of Cash Flows for the year ended December 31, 2024.

Acquisition of Midland Basin Assets (“Permian Acquisition”)

On June 12, 2023, Ovintiv completed a business combination to purchase all of the outstanding equity interests in seven Delaware limited liability companies (“Permian LLCs”) pursuant to the purchase agreement with Black Swan Oil & Gas, LLC, PetroLegacy II Holdings, LLC, Piedra Energy III Holdings, LLC and Piedra Energy IV Holdings, LLC, which were portfolio companies of funds managed by EnCap Investments L.P (“EnCap”). The Company paid aggregate cash consideration of approximately $3.2 billion and issued approximately 31.8 million shares of Ovintiv common stock, representing a value of approximately $1.2 billion. The cash portion of the consideration was funded through a combination of net proceeds from the Company’s May 2023 senior notes offering (see Note 15), net proceeds from the sale of Bakken during the second quarter of 2023 (see Note 8), cash on hand and proceeds from short-term borrowings. During the period from June 12, 2023, to December 31, 2023, transaction costs of approximately $76 million were included in administrative expense.

The acquisition was strategically located in close proximity to Ovintiv’s current Permian operations and added approximately 1,050 net well locations to Ovintiv’s Permian inventory and approximately 65,000 net acres. The results of operations from the acquired Permian assets have been included in Ovintiv’s consolidated financial statements since June 12, 2023.

Purchase Price Allocation

The Permian LLCs have been accounted for under the acquisition method and as a single transaction because the purchase agreement was entered into at the same time with EnCap and in contemplation of one another to achieve an overall economic effect. The purchase price allocations represent the consideration paid and the fair values of the assets acquired, and liabilities assumed as of the acquisition date. The purchase price allocation was finalized during the first quarter of 2024.

(1)

The fair value was based on the issuance of 31.8 million shares of common stock using the NYSE price of $36.78 on June 12, 2023.

(2)

Cash consideration paid includes final cash settlements of $12 million which were completed during the first quarter of 2024.

(3)

Since the completion of the business combination on June 12, 2023, additional information related to pre-acquisition assets and liabilities was obtained resulting in measurement period adjustments. Changes in the fair value estimates comprised an increase in accounts receivable and accrued revenues of $22 million, an increase in proved properties of $134 million, a decrease in unproved properties of $227 million, a decrease in other property, plant and equipment of $16 million, a decrease in accounts payable and accrued liabilities of $73 million and a decrease in other liabilities and provisions of $2 million.

The Company used the income approach valuation technique for the fair value of assets acquired and liabilities assumed. The carrying amounts of cash, accounts receivable and accounts payable approximate their fair values due to their nature and/or short-term maturity of the instruments. The fair value of tubular inventory in other property, plant and equipment was based on the fair value approach, which utilized subsequent sales of inventory, asset listings and cost records with consideration for the relative age, condition, utilization and economic support of the inventory. The fair values of the proved properties, unproved properties and asset retirement obligation were categorized within Level 3 and were determined using relevant market assumptions, including discount rates, future commodity prices and costs, timing of development activities, projections of oil and gas reserves, and estimates to abandon and reclaim producing wells. Level 3 inputs require significant judgment and estimates to be made.

For income tax purposes, the Permian Acquisition was treated as an asset purchase, and as a result, the tax basis in the assets and liabilities reflect their allocated fair value.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information combines the historical financial results of Ovintiv with the Permian LLCs and has been prepared as though the acquisition and the associated debt issuance described in Note 15 had occurred on January 1, 2023. The pro forma information is not intended to reflect the actual results of operations that would have occurred if the Permian Acquisition had been completed at the date indicated. In addition, the pro forma information is not intended to be a projection of Ovintiv’s results of operations for any future period.

Additionally, pro forma earnings were adjusted to exclude acquisition-related costs incurred of approximately $76 million for the year ended December 31, 2023. The pro forma financial information does not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been incurred to integrate the assets. The pro forma financial data does not include the results of operations for any other acquisitions made during the period presented, as they were primarily acreage acquisitions, and their results were not deemed material. Ovintiv’s consolidated results for the years ended December 31, 2025, and 2024, include the results from the Permian LLCs.

USA and Canadian Operations’ property, plant and equipment include internal costs directly related to exploration, development and construction activities of $151 million, which have been capitalized during the year ended December 31, 2025 (2024 - $181 million).

In 2025, the Company recognized before-tax non-cash ceiling test impairments of $871 million (2024 - $450 million; 2023 -nil) and $49 million (2024 -nil; 2023 -nil) in the Canadian Operations and USA Operations, respectively. The non-cash ceiling test impairments primarily resulted from the 12-month average trailing prices used in the ceiling test at March 31, 2025, which were lower than the market prices used for the Montney Acquisition on January 31, 2025, and declines in the 12-month average trailing prices during the year, which reduced proved reserves in both the Canadian and USA Operations.

The 12-month average trailing prices used in the ceiling test calculations reflect benchmark prices adjusted for basis differentials to determine local reference prices, transportation costs and tariffs, heat content and quality. The benchmark prices are disclosed in Note 29.

(1)

Includes funds paid by the Company and held in escrow related to the Montney Acquisition at December 31, 2024.

The Company hadno additions or dispositions relating to goodwill during 2025 or 2024. The change in the Canada goodwill balance reflects movement due to foreign currency translation.

Goodwill was assessed for impairment as at December 31, 2025, and December 31, 2024. The fair values of the United States and Canada reporting units were determined to be greater than the respective carrying values of the reporting units. Accordingly, no goodwill impairments were recognized.

Payables and accruals are non-interest bearing. Interest payable represents amounts accrued related to Ovintiv’s unsecured notes as disclosed in Note 15.

Operating leases include drilling rigs, compressors, office and buildings, certain land easements and various equipment utilized in the development and production of oil, NGLs and natural gas. Subleases relate to office and building leases.

The tables below summarize Ovintiv’s operating and finance lease costs and include ROU assets and lease liabilities, amounts recognized in net earnings (loss) during the year and other lease information.

(1)

Total ROU assets and liabilities are recorded at the gross contractual amount. A portion of the future lease payments will be recovered from other working interest owners based on their proportionate share when incurred.

(2)

In 2025, the Company reclassified an office building lease from a finance to an operating lease following a contract modification.

(1)

Lease costs include amounts capitalized into property, plant and equipment in the Consolidated Balance Sheet and lease expense recognized in the Consolidated Statement of Earnings.

(2)

Rights to extend or terminate a lease are included in the lease term when there is reasonable certainty the right will be exercised. Lease contracts include rights to extend leases after the initial term, ranging from month-to-month to less than 10 years.

Operating lease expense is reflected in the Consolidated Statement of Earnings as follows:

The following table outlines the Company’s future lease payments and lease liabilities related to the Company’s operating leases as at December 31, 2025:

(1)

Lease payments are presented based on the gross contractual amount. A portion of the future lease payments will be recovered from other working interest owners based on their proportionate share when incurred.

There are no material commitments for leases with terms greater than one year that have not yet commenced at December 31, 2025.

A)

REVOLVING CREDIT AND TERM LOAN BORROWINGS

At December 31, 2025, Ovintiv had in place committed revolving U.S. dollar denominated bank credit facilities totaling $3.5 billion, which included $2.2 billion on a revolving bank credit facility for Ovintiv Inc. and $1.3 billion on a revolving bank credit facility for a Canadian subsidiary. The facilities are extendible from time to time, but not more than once per year, for a period not longer than five years plus 90 days from the date of the extension request, at the option of the lenders and upon notice from Ovintiv. The facilities mature in December 2029, and are fully revolving up to maturity.

At December 31, 2025, the Company had $351 million of commercial paper (“CP”) outstanding under its U.S. CP program maturing at various dates with a weighted average interest rate of approximately 4.37 percent, which is supported by the Company’s credit facilities. The Ovintiv Inc. facility is unsecured and bears interest at either the lenders’ U.S. base rate or SOFR, plus applicable margins. The Canadian subsidiary facility is unsecured and bears interest at the lenders’ rates for Canadian prime, U.S. base rate, SOFR or CORRA, plus applicable margins. As at December 31, 2025, there were no outstanding amounts under the revolving credit facilities.

Ovintiv is subject to a financial covenant in its credit facility agreements and its Term Credit Agreement, as defined below, whereby financing debt to adjusted capitalization cannot exceed 60 percent. Financing debt primarily includes total long-term debt and finance lease obligations. Adjusted capitalization is calculated as the sum of total financing debt, shareholders’ equity and a $7.7 billion equity adjustment for cumulative historical ceiling test impairments recorded in conjunction with the Company’s January 1, 2012 adoption of U.S. GAAP. As at December 31, 2025, the Company is in compliance with all financial covenants.

On November 4, 2025, the Company announced it had entered into a definitive agreement to acquire all of the issued and outstanding common shares of NuVista Energy Ltd. (“NuVista”) in a cash and stock transaction (“NuVista Acquisition”). On November 25, 2025, the Company entered into a $1.2 billion Two-Year Term Credit Agreement (“Term Credit Agreement”) to fund the cash component of the NuVista Acquisition. The Term Credit Agreement is unsecured and bears interest at Term CORRA or Canadian prime rate plus applicable margins. As at December 31, 2025, the Company hadno outstanding borrowings under the Term Credit Agreement. The Company closed the NuVista Acquisition on February 3, 2026 (see Note 28).

Standby fees paid in 2025 relating to revolving credit and term loan agreements were approximately $8 million (2024 ‑ $8 million; 2023 - $8 million) and were included in interest expense in the Consolidated Statement of Earnings.

B)

UNSECURED NOTES

Shelf Prospectus

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 United States. The U.S. shelf registration statement expires in March 2026. The ability to issue securities under the U.S. shelf registration statement is dependent upon market conditions and securities law requirements.

U.S. Unsecured Notes

Unsecured notes include medium-term notes and senior notes that are issued from time to time under trust indentures and have equal priority with respect to the payment of both principal and interest.

On May 31, 2023, Ovintiv completed a public offering of senior unsecured notes of $600 million with a coupon rate of 5.65 percent due May 15, 2025, $700 million with a coupon rate of 5.65 percent due May 15, 2028, $600 million with a coupon rate of 6.25 percent due July 15, 2033, and $400 million with a coupon rate of 7.10 percent due July 15, 2053. The proceeds of the offering, totaling $2,278 million, were used to fund a portion of the Company’s Permian Acquisition. See Note 9 for further information on the business combination.

C)

INCREASE IN VALUE OF DEBT ACQUIRED

Certain of the notes and debentures of the Company were acquired in business combinations and were accounted for at their fair value at the dates of acquisition. The difference between the fair value and the principal amount of the debt is being amortized over the remaining life of the outstanding debt acquired, which has a weighted average remaining life of approximately three years.

D)

UNAMORTIZED DEBT DISCOUNTS AND ISSUANCE COSTS

Long-term debt premiums and discounts are capitalized within long-term debt and are being amortized using the effective interest method. No debt discounts or issuance costs were incurred related to long term-debt during 2025 or 2024. Issuance costs are amortized over the term of the related debt.

E)

CURRENT PORTION OF LONG-TERM DEBT

As at December 31, 2025, the current portion of long-term debt was $810 million (2024 - $600 million).

F)

PROJECTED DEBT PAYMENTS

As at December 31, 2025, total long-term debt had a carrying value of $5,202 million and a fair value of $5,510 million (2024 - carrying value of $5,453 million and a fair value of $5,649 million). The estimated fair value of long-term borrowings is categorized within Level 2 of the fair value hierarchy and has been determined based on market information of long-term debt with similar terms and maturity, or by discounting future payments of interest and principal at interest rates expected to be available to the Company at period end.

AUTHORIZED

Ovintiv is authorized to issue 750 million shares of common stock, par value $0.01 per share, and 25 million shares of preferred stock, par value $0.01 per share. No shares of preferred stock are outstanding.

ISSUED AND OUTSTANDING

On June 12, 2023, in accordance with the terms of the Permian Acquisition agreement, Ovintiv issued approximately 31.8 million shares of common stock as a component of the consideration paid to EnCap as discussed in Note 9. In conjunction with the share issuance, the Company recognized share capital of $318 thousand and paid in surplus of $1,169 million.

NORMAL COURSE ISSUER BID AND OTHER SHARE BUYBACKS

On September 29, 2025, 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 22.3 million shares of common stock over a 12-month period from October 3, 2025, to October 2, 2026.

During the year ended December 31, 2025, under its 2024 NCIB program which extended from October 3, 2024, to October 2, 2025, the Company purchased approximately 7.8 million shares for total consideration of approximately $307 million. Of the amount paid, $78 thousand was charged to share capital and $307 million was charged to paid in surplus.

During the year ended December 31, 2024, under its 2023 NCIB program which extended from October 3, 2023, to October 2, 2024, the Company purchased approximately 12.7 million shares for total consideration of approximately $597 million. Of the amount paid, $127 thousand was charged to share capital and $597 million was charged to paid in surplus.

During the year ended December 31, 2023, under its 2022 NCIB program which extended from October 3, 2022, to October 2, 2023, the Company purchased approximately 7.7 million shares for total consideration of approximately $328 million. Of the amount paid, $77 thousand was charged to share capital and $328 million was charged to paid in surplus.

In addition to the NCIB purchases, during the year ended December 31, 2023, the Company purchased approximately 2.2 million shares of common stock for total consideration of approximately $98 million. Of the amount paid, $22 thousand was charged to share capital and $98 million was charged to paid in surplus.

All NCIB purchases were made in accordance with their respective programs at prevailing market prices plus brokerage fees, with consideration allocated to share capital up to the par value of the shares, with any excess allocated to paid in surplus.

DIVIDENDS

During the year ended December 31, 2025, the Company declared and paid dividends of $1.20 per share of common stock, totaling $308 million (2024 - $1.20 per share of common stock, totaling $316 million; 2023 - $1.15 per share of common stock, totaling $307 million).

The Company’s quarterly dividend payment in 2025 and 2024 was $0.30 per share of common stock. Ovintiv’s quarterly dividend payment in 2023 was $0.25 per share of common stock in the first quarter and $0.30 per share of common stock for each of the second, third and fourth quarters.

On February 23, 2026, the Board of Directors declared a dividend of $0.30 per share of common stock payable on March 31, 2026, to shareholders of record as of March 13, 2026.

EARNINGS PER SHARE OF COMMON STOCK

The following table presents the calculation of net earnings (loss) per share of common stock:

STOCK-BASED COMPENSATION PLANS

Ovintiv’s Performance Share Unit (“PSU”) and Restricted Share Unit (“RSU”) stock-based compensation plans allow the Company to settle the awards either in cash or in the Company’s common stock. Accordingly, Ovintiv issued 0.7 million shares of common stock during the year ended December 31, 2025 (2024 -1.4 million shares of common stock) as certain PSU and RSU grants vested during the year. Certain PSUs and RSUs are classified as equity-settled if the Company has sufficient common stock held in reserve for issuance. These awards are included in the calculation of fully diluted net earnings (loss) per share of common stock, using the treasury stock method, if dilutive.

Ovintiv’s stock options with associated Tandem Stock Appreciation Rights (“TSARs”) give the employee the right to purchase shares of common stock of the Company or receive cash. Historically, most holders of options have elected to exercise their TSARs in exchange for a cash payment. As a result, outstanding options are not considered potentially dilutive securities.

Following shareholder approval in the second quarter of 2025, the Company added 5.7 million shares of common stock to its reserves for issuance under its stock-based compensation plans. Subsequent to the shareholder approval, an aggregate of 11.7 million shares of common stock is authorized and held in reserve for issuance. As at

December 31, 2025,7.8 million shares of common stock remain available for issuance under the Company’s stock-based compensation plans. Shares issued as a result of awards granted from stock-based compensation plans are generally funded out of the common stock authorized for issuance as approved by the Company’s shareholders. As at December 31, 2025, there were no changes to Ovintiv’s compensation plans and the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans.

See Note 22 for further information on Ovintiv’s outstanding and exercisable TSARs, PSUs and RSUs.

Veresen Midstream Limited Partnership

Veresen Midstream Limited Partnership (“VMLP”) provides gathering, compression and processing services under various agreements related to the Company’s development of liquids and natural gas production in the Montney play. As at December 31, 2025, VMLP provides approximately 1,152 MMcf/d of natural gas gathering and compression and 913 MMcf/d of natural gas processing under long-term service agreements with remaining terms ranging fromsixto 20 years and have various renewal terms providing up to a potential maximum of 10 years.

Ovintiv has determined that VMLP is a variable interest entity and that Ovintiv holds variable interests in VMLP. Ovintiv is not the primary beneficiary as the Company does not have the power to direct the activities that most significantly impact VMLP’s economic performance. These key activities relate to the construction, operation, maintenance and marketing of the assets owned by VMLP. The variable interests arise from certain terms under the various long-term service agreements and include: i) a take or pay for volumes in certain agreements; ii) an operating fee of which a portion can be converted into a fixed fee once VMLP assumes operatorship of certain assets; and iii) a potential payout of minimum costs in certain agreements. The potential payout of minimum costs will be assessed in theeighth year of the assets’ service period and is based on whether there is an overall shortfall of total system cash flows from natural gas gathered and compressed under certain agreements. The potential payout amount can be reduced in the event VMLP markets unutilized capacity to third-party users. Ovintiv is not required to provide any financial support or guarantees to VMLP.

As a result of Ovintiv’s involvement with VMLP, the maximum total exposure to loss related to the commitments under the agreements is estimated to be $760 million as at December 31, 2025. The estimate comprises the take or pay volume commitments and the potential payout of minimum costs. The take or pay volume commitments associated with certain gathering and processing assets are included in Note 27 under Transportation and Processing. The potential payout requirement is highly uncertain as the amount is contingent on future production estimates, pace of development and downstream transportation constraints. As at December 31, 2025, accounts payable and accrued liabilities included $29 million (2024 - $20 million) related to the take or pay commitment and payout of minimum costs.

In 2024, Ovintiv undertook a plan to reduce its workforce by approximately 10 percent as part of a corporate reorganization. During 2025, the Company incurred restructuring chargesof $12 million, before tax, related to severance costs (2024 - $27 million). Of the $39 million in restructuring charges incurred to date, $1 million remains accrued as at December 31, 2025 (2024 - $19 million). The remaining amount accrued is expected to be paid in 2026.

Restructuring charges are included in administrative expense presented in the Corporate and Other segment in the Consolidated Statement of Earnings.

(1)

Included in accounts payable and accrued liabilities in the Consolidated Balance Sheet.

Ovintiv has a number of compensation arrangements under which the Company awards various types of long-term incentive grants to eligible employees and Directors. They may include Stock Appreciation Rights (“SARs”), TSARs, PSUs, Deferred Share Units (“DSUs”) and RSUs.

Ovintiv accounts for certain PSUs and RSUs as equity-settled stock-based payment transactions provided there is sufficient common stock held in reserve for issuance. SARs, TSARs and DSUs are accounted for as cash-settled stock-based payment transactions. The Company accrues compensation costs over the vesting period based on the fair value of the rights determined using the Black-Scholes-Merton or other appropriate fair value models.

As at December 31, 2025, there were no changes to Ovintiv’s compensation plans and the Company has sufficient common stock held in reserve for issuance in accordance with its equity-settled stock-based compensation plans.

The Company has recognized the following share-based compensation costs:

As at December 31, 2025, the liability for cash-settled share-based payment transactions totaled $6 million (2024 ‑ $10 million), which is recognized in accounts payable and accrued liabilities in the Consolidated Balance Sheet.

The following sections outline certain information related to Ovintiv’s compensation plans as at December 31, 2025.

A)

STOCK APPRECIATION RIGHTS

U.S. dollar denominated SARs were historically granted to eligible U.S.-based employees, which entitle the employee to receive a cash payment equal to the excess of the market price of Ovintiv’s shares of common stock at the time of exercise over the original grant price of the right. SARs granted vest and are exercisable at 30 percent of the number granted afterone year, an additional 30 percent of the number granted aftertwo years, are fully exercisable after three years and expire seven years after the date granted. SARs are classified as a liability and remeasured at the end of each reporting period.

The following table summarizes information related to the U.S. dollar denominated SARs:

(1)

The intrinsic value of option awards exercised and cash-settled during 2025 was $1 million (2024 -nil; 2023 - $1 million).

(2)

The intrinsic value of option awards outstanding at December 31, 2025, was nil (2024 - $2 million).

(3)

The intrinsic value of option awards vested and exercisable at December 31, 2025, was nil (2024 - $2 million).

The following weighted average assumptions were used to determine the fair value of SARs outstanding:

(1)

Volatility was estimated using historical rates.

As at December 31, 2025, and 2024, there wereno unvested SARs outstanding andno associated unrecognized compensation costs.

B)

TANDEM STOCK APPRECIATION RIGHTS

All options to purchase shares of common stock historically issued to eligible Canadian-based employees under Ovintiv’s Stock Option Plan have associated TSARs attached. In lieu of exercising the option, the associated TSARs give the option holder the right to purchase shares of common stock of the Company or receive a cash payment equal to the excess of the market price of Ovintiv’s shares of common stock at the time of exercise over the original grant price. TSARs granted vest and are exercisable at 30 percent of the number granted afterone year, an additional 30 percent of the number granted aftertwo years, are fully exercisable after three years and expire seven years after the date granted. TSARs are classified as a liability and remeasured at the end of each reporting period.

The following table summarizes information related to the TSARs:

(1)

The intrinsic value of option awards exercised and cash-settled during 2025 was $1 million (2024 -nil; 2023 -nil).

(2)

The intrinsic value of option awards outstanding at December 31, 2025, wasnil (2024 - $1 million).

(3)

The intrinsic value of option awards vested and exercisable at December 31, 2025, wasnil (2024 - $1 million).

The following weighted average assumptions were used to determine the fair value of TSARs outstanding:

(1)

Volatility was estimated using historical rates.

As at December 31, 2025, and 2024, there wereno unvested TSARs outstanding andno associated unrecognized compensation costs.

C)

PERFORMANCE SHARE UNITS

PSUs are granted to eligible employees, which entitle the employee to receive, upon vesting, one share of Ovintiv common stock for each PSU held or a cash equivalent, at the discretion of the Company. PSUs vest three years from the date granted, provided the employee remains actively employed with Ovintiv on the vesting date. Based on the performance assessment, up to a maximum oftwo times the original PSU grant may be eligible to vest in respect of the year being measured.

The ultimate value of the PSUs will depend upon Ovintiv’s performance relative to predetermined strategic milestones as well as the performance of a specified peer group over a three-year period.

The following tables summarize information related to the PSUs:

(1)

During the year ended December 31, 2025, performance shares that vested and were cash-settled resulted in payments of $17 million (2024 ‑ $36 million; 2023 - $22 million).

As at December 31, 2025, there were approximately $22 million of unrecognized compensation costs (2024 ‑ $22 million) related to unvested PSUs. The costs are expected to be recognized over a weighted average period of 1.7 years.

D)

DEFERRED SHARE UNITS

The Company has in place a program whereby Directors and certain key employees are issued DSUs, which vest immediately, are equivalent in value to a share of Ovintiv common stock and are settled in cash. DSUs are classified as a liability and remeasured at the end of each reporting period based on the change in fair value of the Company’s common stock.

Under the DSU Plan, employees have the option to convert either 25 or 50 percent of their annual bonus award into DSUs. The number of DSUs converted is based on the value of the award divided by the closing value of Ovintiv’s share price at the end of the performance period of the bonus award.

For both Directors and employees, DSUs can only be redeemed following departure from Ovintiv in accordance with the terms of the respective DSU Plan and must be redeemed prior to December 15 th of the year following the departure from Ovintiv.

The following table summarizes information related to the DSUs:

(1)

During the year ended December 31, 2025, deferred shares that vested and were cash-settled resulted in payments of $2 million (2024 ‑nil; 2023 ‑ $2 million).

(2)

The intrinsic value of deferred shares outstanding at December 31, 2025, was $6 million (2024 - $7 million).

E)

RESTRICTED SHARE UNITS

RSUs are granted to eligible employees and Directors. An RSU is a conditional grant to receive a share of Ovintiv common stock or a cash equivalent at the Company’s discretion upon vesting of the RSUs and in accordance with the terms and conditions of the RSU Plans and grant agreements.

RSUs issued to employees vest over their three-year service period. RSUs issued to Directors fully vest on the grant date and have no required term of service. RSUs issued to Directors before May 2022 are settled three years from the date granted or following the Director’s departure from Ovintiv, whichever is earlier. Beginning with the RSUs issued in May 2022, all RSU awards issued to Directors are equity-settled immediately upon issuance.

The following tables summarize information related to the RSUs:

(1)

During the year ended December 31, 2025, restricted shares that vested and were cash-settled resulted in payments of $5 million (2024 ‑ $7 million; 2023 - $18 million).

As at December 31, 2025, there were approximately $39 million of unrecognized compensation costs (2024 ‑ $40 million) related to unvested RSUs. The costs are expected to be recognized over a weighted average period of 1.3 years.

Ovintiv sponsors defined benefit and defined contribution plans, providing pension and other post-employment benefits (“OPEB”) to its employees in the U.S. and Canada. As of January 1, 2003, the defined benefit pension plan was closed to new entrants. The average remaining service period of active employees participating in the defined benefit pension plan isfour years and the average remaining life expectancy of inactive employees is 12 years. The average remaining service period of the active employees participating in the OPEB plan is 10 years.

The Company is required to file an actuarial valuation of its pension plans with the provincial regulator at least every three years, or more frequently if directed by the regulator. The most recent filing was dated December 31, 2024, and the next required filing is expected to be as at December 31, 2027.

The following tables set forth changes in the benefit obligations and fair value of plan assets for the Company’s defined benefit pension and other post-employment benefit plans for the years ended December 31, 2025, and 2024, as well as the funded status of the plans and amounts recognized in the Consolidated Financial Statements as at December 31, 2025, and 2024.

The accumulated defined benefit obligation for all defined benefit plans was $165 million as at December 31, 2025 (2024 - $169 million).

The following table sets forth the defined benefit plans where the accumulated benefit obligation and projected benefit obligation are in excess of the fair value of the plan assets:

(1)

The Company does not aggregate benefit plans.

Following are the weighted average assumptions used by the Company in determining the defined benefit pension and other post-employment benefit obligations:

The following sets forth the total benefit plans expense recognized by the Company:

Of the total benefit plans expense, $20 million (2024 - $23 million; 2023 - $22 million) was included in operating expense and $5 million (2024 - $5 million; 2023 - $5 million) was included in administrative expense. Excluding service costs, net defined periodic benefit gainsof $4 million (2024 - $4 million; 2023 - $4 million) were recorded in other (gains) losses, net.

The net defined periodic benefit cost is as follows:

(1)

The components of total net defined periodic benefit cost, excluding the service cost component, are included in other (gains) losses, net.

Actuarial gains related to changes in the projected benefit obligations for the Company’s defined benefit pension plan were due were due to an increase in the discount rate used to measure the obligation.

The amounts recognized in other comprehensive income are as follows:

Following are the weighted average assumptions used by the Company in determining the net periodic pension and other post-retirement benefit costs:

The Company’s assumed health care cost trend rates are as follows:

The Company doesnot expect to contribute to its defined benefit pension plans in 2026. The Company’s OPEB plans are funded on an as required basis.

The following provides an estimate of benefit payments for the next 10 years. These estimates reflect benefit increases due to continuing employee service.

The Company’s registered and other defined benefit pension plan assets are presented by investment asset category and input level within the fair value hierarchy as follows:

Fixed Income investments consist of Canadian bonds issued by investment grade companies. Equity investments consist of international securities and securities held in the U.S. The fair values of these securities are based on dealer quotes, quoted market prices and net asset values.

Registered pension plan assets were invested by the Company in the following as at December 31, 2025:67 percent Bonds (2024 -66 percent),33 percent U.S. and Foreign Equity (2024 -31 percent) and nil Cash Equivalents (2024 ‑three percent). The expected long-term rate of return is 4.9 percent. The expected rate of return on pension plan assets is based on histor ical and projected rates of return for each asset class in the plan investment portfolio. The actual return on plan assets was $4 million (2024 ‑ $9 million). The asset allocation structure is subject to diversification requirements and constraints, which reduce risk by limiting exposure to individual equity investment, credit rating categories and foreign currency exposure.

The fair values of cash and cash equivalents, accounts receivable and accrued revenues, and accounts payable and accrued liabilities approximate their carrying amounts due to the short-term maturity of those instruments. The fair values of investment in marketable securities, and restricted cash and other marketable securities included in other assets approximate their carrying amounts due to the nature of the instruments held. Fair value information related to pension plan assets is included in Note 23.

Recurring fair value measurements are performed for risk management assets and liabilities and other derivative contracts, as discussed further in Note 25. These items are carried at fair value in the Consolidated Balance Sheet and are classified within the three levels of the fair value hierarchy in the following tables.

Fair value changes and settlements for amounts related to risk management assets and liabilities are recognized in revenues and foreign exchange gains and losses according to their purpose.

(1)

Netting to offset derivative assets and liabilities where the legal right and intention to offset exists, or where counterparty master netting arrangements contain provisions for net settlement.

The Company’s Level 1 and Level 2 risk management assets and liabilities include contracts with terms to 2030, consisting of commodity fixed price contracts, three-way options, basis swaps and physical forward contracts receiving a percentage of the Japan Korea Marker (“JKM”) index price. The Company uses discounted cash flow and option-pricing models for fair valuing commodity derivatives. The fair value models use inputs such as contracted notional volumes, market future prices, maturities, credit adjusted risk free rates, and market-based implied volatility factors. The fair values of these contracts are estimated using inputs which are either directly or indirectly observable from active markets, such as exchange and other published prices, broker quotes and observable trading activity throughout the term of the instruments.

The three-way options are a combination of a sold call, a bought put and a sold put. These contracts allow the Company to participate in the upside of commodity prices to the ceiling of the call option and provide the Company with partial downside price protection through the put options.

During 2024, the Company transferred all remaining WTI three-way options from Level 3 into Level 2 as a result of the availability of more observable inputs, such as volatility and comparable contract terms, from independent active markets.

Level 3 Fair Value Measurements

During 2025, Ovintiv entered into a ten-year physical forward contract, with terms to 2037, todeliver 100 MMcf/d of natural gas volumes with a delivery point in Alberta and will receive the Chicago city-gates (“Chicago”) index price, less deducts. Delivery of natural gas volumes is expected to commence November 1, 2027. This contract is a derivative and is required to be measured at fair value each reporting period with changes in the fair value recorded in net earnings. The fair value of this contract is based on the discounted cash flow model using observable and unobservable input such as forward prices less deducts. The data used to develop the unobservable inputs are obtained from third parties whenever possible and reviewed by the Company for reasonableness.

A summary of changes in Level 3 fair value measurements for risk management positions is presented below:

Quantitative information about unobservable inputs used in Level 3 fair value measurements for risk management positions is presented below as at December 31, 2025:

(1)

Forward prices refers to the differential between Chicago and AECO forward prices.

A 10 percent increase or decrease in forward price differentials between Chicago and AECO for the physical forward contract would cause an approximate corresponding $24 million (2024 -nil) increase or decrease to net risk management assets and liabilities.

A)

FINANCIAL INSTRUMENTS

Ovintiv’s financial assets and liabilities are recognized in cash and cash equivalents, accounts receivable and accrued revenues, investment in marketable securities, other assets, accounts payable and accrued liabilities, risk management assets and liabilities, long-term debt, and other liabilities and provisions.

B)

RISK MANAGEMENT ACTIVITIES

Ovintiv uses derivative financial instruments to manage its exposure to fluctuating commodity prices and foreign currency exchange rates. The Company does not apply hedge accounting to any of its derivative financial instruments. As a result, gains and losses from changes in the fair value are recognized in net earnings (loss).

COMMODITY PRICE RISK

Commodity price risk arises from the effect that fluctuations in future commodity prices may have on revenues from production. To partially mitigate exposure to commodity price risk, the Company has entered into various derivative financial instruments. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors.

Oil and NGLs - To partially mitigate oil and NGL commodity price risk, the Company uses WTI- and NGL-based contracts such as options. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas, products and price points.

Natural Gas - To partially mitigate natural gas commodity price risk, the Company uses NYMEX-based contracts such as fixed price contracts and options. Ovintiv has also entered into forward contracts to manage against widening price differentials between various production areas and benchmark price points.

FOREIGN EXCHANGE RISK

Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at December 31, 2025, the Company does not have any notional U.S. dollar denominated currency swaps.

RISK MANAGEMENT POSITIONS AS AT DECEMBER 31, 2025

(1)

Ovintiv has entered into oil differential swaps associated with Canadian condensate and WTI.

(2)

Ovintiv has entered into natural gas basis swaps associated with AECO and NYMEX.

(3)

Ovintiv has entered into natural gas physical forward contracts associated with JKM (100 MMcf/d) and Chicago (100 MMcf/d) as described in Note 24.

EARNINGS IMPACT OF REALIZED AND UNREALIZED GAINS (LOSSES) ON RISK MANAGEMENT POSITIONS

(1)

There wereno realized gains or losses related to other derivative contracts for the year ended December 31, 2025 (2024 - gain of $4 million; 2023 - gain of $1 million).

(2)

Includes a realized foreign exchange loss of approximately $97 million during 2025, related to notional U.S. dollar denominated currency swaps as discussed in Note 5.

(3)

The interest rate swap in 2023 was executed and settled in relation to the senior notes issuance described in Note 15. The gain was recognized in interest expense.

RECONCILIATION OF UNREALIZED RISK MANAGEMENT POSITIONS FROM JANUARY 1 TO DECEMBER 31

Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 24 for a discussion of fair value measurements.

UNREALIZED RISK MANAGEMENT POSITIONS

C)

CREDIT RISK

Credit risk arises from the potential that the Company may incur a loss if a counterparty to a financial instrument fails to meet its obligation in accordance with agreed terms. While exchange-traded contracts are subject to nominal credit risk due to the financial safeguards established by the exchanges and clearing agencies, over-the-counter traded contracts expose Ovintiv to counterparty credit risk. Counterparties to the Company’s derivative financial instruments consist primarily of major financial institutions and companies within the energy industry. This credit risk exposure is mitigated through the use of credit policies approved by the Board of Directors governing the Company’s credit portfolio including credit practices that limit transactions according to counterparties’ credit quality. Mitigation strategies may include master netting arrangements, requesting collateral, purchasing credit insurance, and/or transacting credit derivatives. The Company executes commodity derivative financial instruments under master agreements that have netting provisions that provide for offsetting payables against receivables. Ovintiv actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. As at December 31, 2025, Ovintiv’s maximum exposure of loss due to credit risk from derivative financial instrument assets on a gross and net fair value basis was $91 million and $90 million, respectively, as disclosed in Note 24. The Company hadno significant credit derivatives in place and heldno collateral at December 31, 2025.

Any cash equivalents include high-grade, short-term securities, placed primarily with financial institutions with investment grade ratings. Any foreign currency agreements entered into are with major financial institutions that have investment grade credit ratings.

A substantial portion of the Company’s accounts receivable are with customers and working interest owners in the oil and gas industry and are subject to normal industry credit risks. As at December 31, 2025, approximately 94 percent (2024 -94 percent) of Ovintiv’s accounts receivable and financial derivative credit exposures were with investment grade counterparties.

Supplemental disclosures to the Consolidated Statement of Cash Flows are presented below:

A)

NET CHANGE IN NON-CASH WORKING CAPITAL

B)

NON-CASH ACTIVITIES

C)

SUPPLEMENTARY CASH FLOW INFORMATION

COMMITMENTS

The following table outlines the Company’s commitments as at December 31, 2025:

Operating leases with terms greater than one year are not included in the commitments table above. The table above includes short-term leases with contract terms less than 12 months, such as well services and equipment, and field office leases, as well as non-lease operating cost components associated with building leases. See Note 14 for additional disclosures on leases.

Included within transportation and processing in the table above are certain commitments associated with midstream service agreements with VMLP as described in Note 20. Divestiture transactions can reduce certain commitments disclosed above.

CONTINGENCIES

Ovintiv is involved in various legal claims and actions arising in the normal course of the Company’s operations. Although the outcome of these claims cannot be predicted with certainty, the Company does not expect these matters to have a material adverse effect on Ovintiv’s financial position, cash flows or results of operations. Management’s assessment of these matters may change in the future as these matters are subject to a number of uncertainties. For any material matters that the Company believes an unfavorable outcome is reasonably possible, the Company discloses the nature and a range of potential exposures, if reasonably estimable. If an unfavorable outcome were to occur, there exists the possibility of a material impact on the Company’s consolidated net earnings or loss for the period in which the effect becomes reasonably estimable. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. Such accruals are based on the Company’s information known about the matters, estimates of the outcomes of such matters and experience in handling similar matters.

Acquisition of NuVista Energy Ltd.

On February 3, 2026, the Company closed its previously announced acquisition of all the issued and outstanding common shares of NuVista in a cash and stock transaction valued at approximately $2.8 billion (C$3.8 billion), including Ovintiv’s previous purchase of 18.5 million common shares of NuVista. The Company issued approximately 30.1 million shares of Ovintiv common stock and paid cash consideration of approximately $1.2 billion (C$1.6 billion), which was funded with proceeds from the Term Credit Agreement. Additionally, Ovintiv assumed NuVista’s debt, totaling approximately $282 million (C$385 million), which was subsequently repaid using proceeds from short-term borrowings and cash on hand. The acquisition is strategically located adjacent to Ovintiv’s current operations in the oil-rich Alberta Montney. The post-acquisition results of operations of NuVista will be included in the Company’s interim consolidated results for the period ended March 31, 2026.

Divestiture of Anadarko

On February 17, 2026, the Company announced it had entered into a definitive agreement to sell its Anadarko assets, located in Oklahoma, for cash proceeds of $3.0 billion before closing adjustments. The transaction is expected to close early in the second quarter of 2026 and is subject to customary closing conditions, regulatory approvals and closing adjustments. The transaction has an effective date of January 1, 2026.

The unaudited supplementary information on oil and natural gas exploration and production activities for 2025, 2024 and 2023 has been presented in accordance with the FASB’s ASC Topic 932, “Extractive Activities - Oil and Gas” and the SEC’s final rule, “Modernization of Oil and Gas Reporting”. Disclosures by geographic area include the United States and Canada.

Proved Oil and Natural Gas Reserves

The following reserves disclosures reflect estimates of proved reserves, proved developed reserves, and proved undeveloped reserves, net of third-party royalty interests of oil, NGLs and natural gas owned at each year end and changes in proved reserves during each of the last three years.

The Company’s estimates of proved reserves are made using available geological and reservoir data as well as production performance data. These estimates are reviewed annually by internal reservoir engineers and revised, either upward or downward, as warranted by additional data. The results of infill drilling are treated as positive revisions due to increases to expected recovery. Other revisions are due to changes in, among other things, development plans, reservoir performance, commodity prices, economic conditions, and government restrictions. Estimates of proved reserves are inherently imprecise and are continually subject to revision based on production history, results of additional exploration and development, price changes and other factors.

The following reference prices were utilized in the determination of reserves and future net revenue:

(1)

All prices were held constant in all future years when estimating net revenues and reserves.

PROVED RESERVES(1)

(12-MONTH AVERAGE TRAILING PRICES)

(1)

(2)

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

Definitions:

a.

“Proved” oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations.

b.

“Developed” oil and gas reserves are reserves of any category that are expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well.

c.

“Undeveloped” oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

Total Proved reserves increased 268.0 MMBOE including production of 224.3 MMBOE in 2025 due to the following:

•

Revisions and improved recovery of oil, NGLs and natural gas were positive primarily due to positive price revisions of 193.8 MMBOE and 93.2 MMBOE from revisions other than price, partially offset by changes in the approved development plan of 88.8 MMBOE.

•

Extensions and discoveries of oil, NGLs and natural gas increased proved reserves by 138.9 MMBOE due to successful drilling leading to increased technical delineation, as well as new proved undeveloped locations resulting from updated development plans in Montney and Permian.

•

Purchases of 311.8 MMBOE were primarily from the Montney Acquisition and properties with oil and liquids-rich potential in Permian.

•

Sales of reserves in place decreased proved reserves by 156.6 MMBOE primarily due to the Uinta divestiture.

Total Proved reserves decreased 128.8 MMBOE including production of 214.1 MMBOE in 2024 due to the following:

•

Revisions and improved recovery of oil and NGLs were positive primarily due to positive revisions other than price of 97.5 MMBOE, and changes in the approved development plan of 17.9 MMBOE, partially offset by lower 12-month average trailing prices of 27.1 MMBOE. Revisions and improved recovery of natural gas were negative primarily due to lower 12-month average trailing prices of 1,914 Bcf (319.1 MMBOE), and changes in the approved development plan of 239 Bcf (39.8 MMBOE), partially offset by positive revisions other than price of 316 Bcf (52.7 MMBOE).

•

Extensions and discoveries of oil, NGLs and natural gas increased proved reserves by 300.1 MMBOE due to successful drilling leading to increased technical delineation, as well as new proved undeveloped locations resulting from updated development plans in Permian, Montney and Uinta.

Total Proved reserves decreased 87.7 MMBOE including production of 206.5 MMBOE in 2023 due to the following:

•

Revisions and improved recovery of oil, NGLs and natural gas 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 oil, NGLs and natural gas increased proved reserves by 285.3 MMBOE due to successful drilling leading to increased technical delineation, as well as new proved undeveloped locations resulting from updated development plans in Montney, Permian and Uinta.

•

Purchases of 243.9 MMBOE were primarily from the Permian Acquisition.

•

Sale of reserves in place decreased proved developed reserves by 100.8 MMBOE primarily due to the divestiture of the Bakken.

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES

In calculating the standardized measure of discounted future net cash flows, constant price and cost assumptions were applied to Ovintiv’s annual future production from proved reserves to determine cash inflows. Estimates of future net cash flows from proved reserves are computed based on the average beginning-of-the-month prices during the 12-month period for the year. Future production and development costs include estimates for abandonment and dismantlement costs associated with asset retirement obligations and assume the continuation of existing economic, operating and regulatory conditions. Future income taxes are calculated by applying statutory income tax rates to future pre-tax cash flows after provision for the tax cost of the oil and natural gas properties based upon existing laws and regulations. The effect of tax credits is also considered in determining the income tax expense. The discount was computed by application of a 10 percent discount factor to the future net cash flows.

Ovintiv cautions that the discounted future net cash flows relating to proved oil and gas reserves are an indication of neither the fair market value of Ovintiv’s oil and natural gas properties, nor the future net cash flows expected to be generated from such properties. The discounted future net cash flows do not include the fair market value of exploratory properties and probable or possible oil and gas reserves, nor is consideration given to the effect of anticipated future changes in oil and natural gas prices, development, asset retirement and production costs, and possible changes to tax and royalty regulations. The prescribed discount rate of 10 percent may not appropriately reflect future interest rates.

CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES

The following table sets forth revenue and direct cost information relating to the Company’s oil and natural gas exploration and production activities.

(1)

Excludes gains (losses) on risk management and sales of volumes purchased from third parties.

(2)

Excludes costs related to the purchase and sale of third-party volumes.

CAPITALIZED COSTS

Capitalized costs include the cost of properties, equipment and facilities for oil and natural gas producing activities. Capitalized costs for proved properties include costs for oil and natural gas leaseholds where proved reserves have been identified, development wells and related equipment and facilities, including development wells in progress. Capitalized costs for unproved properties include costs for acquiring oil and natural gas leaseholds where no proved reserves have been identified.

COSTS INCURRED

Costs incurred includes both capitalized costs and costs charged to expense when incurred. Costs incurred also includes internal costs directly related to acquisition, exploration, and development activities, new asset retirement costs established in the current year as well as increases or decreases to the asset retirement obligations resulting from changes to cost estimates during the year.

COSTS NOT SUBJECT TO DEPLETION OR AMORTIZATION

Upstream costs in respect of significant unproved properties are excluded from the country cost center’s depletable base as follows:

The following is a summary of the costs related to Ovintiv’s unproved properties as at December 31, 2025:

Acquisition costs primarily include costs incurred to acquire or lease properties. Exploration costs primarily include costs related to geological and geophysical studies and unevaluated costs associated with drilling and equipping exploratory wells. Ultimate recoverability of these costs and the timing of inclusion within the applicable country cost center’s depletable base is dependent upon either the finding of proved oil, NGL and natural gas reserves, expiration of leases or recognition of impairments.

The $434 million of oil and natural gas properties not subject to depletion or amortization primarily includes leasehold and mineral costs related to Permian and Montney. These acquisition costs are associated with acquired acreage for which proved reserves have yet to be assigned from future development. The Company continually assesses the development timeline of the acquired acreage. The timing and amount of the transfer of property acquisition costs into the depletable base are based on several factors and may be subject to changes over time from drilling plans, drilling results, availability of capital, project economics and other assessments of the property. The inclusion of these acquisition costs in the depletable base is expected to occur within three years. The remaining costs excluded from depletion are related to properties which are not individually significant.