Ovintiv NYSE: OVV executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight the completion of a multi-year portfolio overhaul, outline a new shareholder return framework, and provide 2026 production and capital plans that reflect the pending exit from Anadarko and the recently closed NuVista acquisition.
Portfolio transformation nears completion, focus narrows to two core basins
President and CEO Brendan McCracken said Ovintiv has “remade” its portfolio and balance sheet over several years, with the company now centered on the Permian and the Montney. In 2026 to date, Ovintiv closed the NuVista acquisition and reached an agreement to sell its Anadarko assets, which McCracken described as completing the company’s portfolio transformation.
McCracken argued the strategy has been to build deep, durable inventory in top-tier resources while maintaining discipline in capital allocation. He said the company has increased Permian and Montney drilling inventory by more than 3,200 locations since 2023 at an average cost of $1.4 million per net 10,000-foot location, without shareholder dilution or balance sheet stress.
Anadarko sale proceeds targeted to debt reduction, longer-dated maturity profile
McCracken said Ovintiv expects the Anadarko sale to close early in the second quarter. After closing, he expects net debt to be roughly $3.6 billion, which he said would bring leverage closer to peers and “open the door” to allocate more free cash flow to shareholder returns.
He also detailed the intended use of proceeds: the company plans to repay the term loan used to fund the cash portion of the NuVista acquisition, repay its 2028 notes, and then apply remaining proceeds to the credit facility and commercial paper balance. After those repayments, the company expects its remaining long-term debt to have no maturities before 2030.
Management cited expected interest savings tied to the debt actions, including $40 million of annualized savings from repaying the 2028 notes and an additional $25 million of annual savings from paying off 2026 notes earlier in 2026. McCracken said the company remains committed to its investment-grade credit rating and expects the Anadarko sale and deleveraging to be credit positive.
Shareholder returns framework revised; $3 billion buyback authorized
Management introduced a revised shareholder return framework for 2026. McCracken said Ovintiv plans to return at least 75% of 2026 free cash flow to shareholders, compared with the prior 50% level. Longer term, the company set an expected return range of 50% to 100% to allow flexibility across commodity price cycles and to avoid “pro-cyclical buybacks.”
McCracken said the company believes its shares are “significantly undervalued” and that buybacks screen as an attractive return on investment. The company plans to begin repurchases immediately and said its 2026 buyback target will be based on full-year free cash flow, including plans to “make up” for a pause it had initially planned for the first quarter. The board authorized a $3 billion share repurchase program.
During Q&A, McCracken explained the wider 50%–100% range as a way to lean toward the low end during higher commodity price periods—banking windfalls into the capital structure—and toward the higher end when prices are below mid-cycle and equity appears more attractive. Asked about the company’s debt level after achieving its prior $4 billion net debt target, McCracken said the goal had been a trigger for increased returns, not a stepping stone to a new debt target, and indicated the company intends to keep debt “around this level” while emphasizing cash returns.
2025 results and 2026 outlook: maintenance program, updated production ranges
CFO Corey described 2025 as another year of “execution excellence.” Ovintiv reported full-year cash flow of $3.8 billion and free cash flow of more than $1.6 billion. The company returned over $600 million directly to shareholders during the year.
Corey said the company improved capital efficiency versus its initial 2025 plan, lowering capital spending by $50 million and producing an additional 10,000 BOE per day of total volumes versus original guidance that assumed 605,000 BOE per day on $2.2 billion of capital. Ovintiv ended 2025 with less than $5.2 billion of net debt, down more than $240 million.
For the fourth quarter, Corey said oil and condensate volumes averaged about 209,000 barrels per day at the high end of guidance, capital investment was $465 million (midpoint of guidance), and the company “matched or beat” per-unit cost guidance across all items. He added that fourth-quarter cash flow per share was $3.81, about 10% above consensus, and fourth-quarter free cash flow was $508 million.
For 2026, management described an oil-directed “maintenance” or “stay flat” program with level-loaded activity in both core areas. Corey said the 2026 program (including one quarter of Anadarko operations) is expected to deliver:
- Oil and condensate production of 209,000 barrels per day
- Natural gas production of more than 2 Bcf per day
- Total production of 620,000–645,000 BOE per day
- Capital investment of about $2.3 billion
Corey also reconciled the 2026 outlook to earlier commentary: compared with the preliminary 2026 production outlook of 715,000 BOE per day provided in November, the Anadarko sale reduces volumes by about 70,000 BOE per day, and the timing of the NuVista close reduces volumes by about 10,000 BOE per day.
For the first quarter, Corey expects production to average about 670,000 BOE per day, including roughly 223,000 barrels per day of oil and condensate, which he called the high point for the year. He said that includes about 3,000–4,000 BOE per day of cold weather impacts across U.S. assets in January. First-quarter capital is expected to be about $625 million, reflecting roughly $50 million of Anadarko capital and inherited NuVista Montney drilling activity.
Corey said Ovintiv expects margin improvement in 2026 from lower lease operating expense (LOE), production and mineral taxes, and interest expense, partially offset by higher transportation and processing (T&P) costs due to increased Montney weighting, added Montney processing capacity, and additional market access that management said should enhance netbacks.
Operational highlights: Permian surfactants, AI tools, and Montney integration
Greg, speaking to operations, emphasized performance in the Permian, including third-party recognition from JPMorgan, which he said awarded Ovintiv the 2025 “Order of Merit for Midland Basin Performance.” Greg said Ovintiv posted the highest three-month cumulative oil per foot again in 2025 and was the only operator to improve performance in each of the last three years.
A key driver discussed throughout the call was Ovintiv’s surfactant program in Permian completions. Greg said the company has pumped surfactants in about 300 Permian wells since 2019 and observed a 9% improvement in oil productivity versus analog wells. He said surfactants are liquid additives included in frac fluid to change surface tension and improve oil recovery, and management believes they account for roughly half of the type-curve improvement seen in the Permian since 2022. He added the company pumped surfactants in about 75% of Midland Basin completions last year and anticipates similar usage in 2026. McCracken said the surfactant cost is “in the hundreds of thousands of dollars a well,” noting the company has worked to substitute lower-cost chemistries and optimize concentrations.
Greg also cited efficiency efforts such as real-time frac optimization using proprietary algorithms, a continuous pumping trial that improved completed feet per day by 20%, and in-house AI tools aimed at reducing drilling cycle times. For 2026, he said expected Permian drilling and completion costs are projected at less than $600 per foot, about $25 per foot lower than 2025. The company brought 136 net wells online in the Permian in 2025 and expects to bring on about 130 net wells in 2026 with five rigs and one to two frac crews, holding oil and condensate production around 120,000 barrels per day. Greg also noted the company has about 150 MMcf per day of firm transport out of the Permian, with about 55% of 2026 Permian gas expected to be priced at the Gulf Coast rather than Waha.
In the Montney, Greg said the company is integrating NuVista and reiterated a plan to deliver $1 million per well of cost savings on the acquired assets by applying Ovintiv’s drilling, completion, and production approach. He pointed to progress integrating previously acquired Paramount assets, including achieving $1.5 million per well cost savings, removing 14 days from drilling cycle time, and testing higher-density development.
Greg said a higher-density pad test (the “15 of 16” pad) added a third bench and increased density to 14 wells per section, with initial productivity exceeding expectations, unlocking roughly 130 upside locations across Montney acreage. For 2026, he said the Montney program plans for six rigs and one to two frac spreads to bring on about 135 net turn-in-lines, with activity split roughly one-third each across NuVista acreage, legacy Paramount lands, and legacy Pipestone/Cutbank Ridge areas. Montney production was described as in line with a run rate of about 85,000 barrels per day of oil and condensate, with full-year guidance of 83,000–87,000 barrels per day and 1.75–1.85 Bcf per day of gas.
Greg said planned second-quarter plant turnarounds are expected to push Montney volumes toward the low end of guidance, describing the maintenance as typical on a two-to-three-year cycle but unusually clustered this year, with five turnarounds occurring in the same quarter. He said these are generally routine and not intended to add capacity.
On costs, Greg said Montney D&C costs are expected to average less than $500 per foot in 2026, about $25 per foot lower than 2025, driven by faster cycle times and increased use of domestic sand. He said about half of 2026 Montney wells are expected to be completed with locally sourced Canadian sand, while Permian completions are effectively 100% local wet sand.
Management also addressed future testing and optionality. Greg said Ovintiv has Barnett rights on about half of its Permian acreage—around 100,000 acres—and plans to test the Barnett with a first well in 2026, while remaining cautious given deeper-zone costs and the ability to be a “fast follower.”
Looking ahead, McCracken reiterated that the portfolio transition is “complete” and said the company intends to keep its program stable and level-loaded. On growth versus buybacks, he said Ovintiv would consider growth if there were a clear market call for incremental volumes and if incremental rigs outperformed buybacks in driving cash flow per share. For now, he said both “gates” point to maintenance mode and prioritizing repurchases.
About Ovintiv NYSE: OVV
Ovintiv Inc is a North American energy company focused on the exploration, development and production of oil, natural gas and natural gas liquids. Formerly known as Encana Corporation, the company rebranded as Ovintiv in January 2020 and established its headquarters in Denver, Colorado. Ovintiv's upstream portfolio spans multiple unconventional resource plays, reflecting a strategy centered on high-return projects and disciplined capital allocation.
The company's core business activities include the acquisition and development of acreage in major shale basins across the United States and Canada.
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