Ovintiv Inc. (OVV) First Take Strong FCF Beat in Elevated Liquids Pricing Environment, Focus on Management's Outlook on Ret...

Equity Research 23 July 2026 | 7:51PM EDT

Ovintiv Inc. (OVV): First Take: Strong FCF Beat in Elevated Liquids Pricing Environment, Focus on Management’s Outlook on Return of Capital

OVV reported 2Q26 EBITDA of $1.33 bn vs GS estimate at $1.21 bn and FactSet Neil Mehta | consensus estimates at $1.30 bn. 2Q26 capex was reported at $574 mn vs Goldman Sachs & Co. LLC

GS/consensus estimates at $569/$574 mn. 2Q26 FCF was $682 mn vs GS/consensus Jack Cavanagh | estimates at $540/$598 mn. Oil and condensate production was 206 Mb/d vs GS Goldman Sachs & Co. LLC estimate of 204 Mb/d. Net debt of <$3.0 bn at 2Q26 end vs $6.4 bn at 1Q26 end. Jerry Speicher | 3Q26 Guidance. OVV guided to 1) oil + condensate production of 205-210 Mb/d vs Goldman Sachs & Co. LLC GS at 205 Mb/d, 2) liquids production of 280-290 Mb/d vs GS/consensus at 284/270 Mb/d, 3) total production of 615-640 Mboe/d vs GS/consensus at 626/626 Mboe/d, and 4) capital spending of $550-$600 mn vs GS/consensus at $559/$562 mn.

2026 Guidance. OVV guided to 1) revised oil + condensate production range of 210-212 Mb/d vs 205-212 Mb/d prior vs GS at 212 Mb/d, 2) revised liquids production range of 293-297 Mb/d vs 285-297 Mb/d prior vs GS/consensus at 294/293 Mb/d, 3) revised total production guidance range of 630-645 Mboe/d vs 620-645 Mboe/d prior vs GS/consensus at 638/637 Mboe/d, and 4) maintained capital spending range of $2.25-$2.35 bn vs GS/consensus at $2.29/$2.31 bn.

What are key questions for the 11 AM ET conference call?

1. What have been the key drivers of strong well results and productivity in the Permian Basin? To what degree could continued investment in surfactant solutions drive further sustainable efficiencies?

2. What is the company’s current outlook on return of capital for 2H26 in the context of its flexible framework of returning between 50%-100% of FCF to shareholders annually? How do you think about share repurchases within that framework with shares at current levels?

3. What is OVV’s macro outlook for condensate prices in the Montney Basin, and what is management’s willingness to engage in further risk management?

4. What additional details can you provide on the cadence for TIL activity across the Montney and Permian in 2026? How much capital is expected to be allocated to each basin?

5. Are there opportunities to add additional Permian locations through ground game additions in 2026?

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Goldman Sachs Ovintiv Inc. (OVV)

Exhibit 1: 2Q 2026 Results vs GS vs Consensus $ mn unless noted Actual Actual vs. Actual GS Consensus vs. GS Consensus

Earnings EBITDA $1,330 $1,210 10% $1,295 3% Op. Cash Flow $1,256 $1,109 13% $1,172 7% Cash flow per share $4.46 $3.97 12% $4.21 6% Capex ($ mn) $574 $569 1% $574 0% Net Debt ($ bn) $3.00 $3.45 -13% $3.59 -16% FCF ($ mn) $682 $540 26% $598 14%

EPS (reported) $1.62 $1.76 -8% - NA EPS (adjusted) $1.74 $1.76 -1% $1.94 -11%

Production Natural gas (MMcf/d) 1,959 2,018 -3% 2,009 -2% Oil (Mb/d) 123 120 2% 122 1% NGLs (Mb/d) 165 160 3% Total production (Mboe/d) 615 617 0% 617 0% Oil+Condensate (Mb/d) 206 204 1% - NA

Realized prices Natural gas ($/Mcf) $1.99 $1.86 7% - NA Liquids ($/bbl) $71.34 $67.44 6% - NA

Costs ($/boe) Production cost $12.72 $12.49 2% - NA Production taxes $1.43 $1.39 3% - NA Administrative cost $1.28 $1.28 0% - NA Total cash costs $15.43 $15.16 2% - NA

Source: Company data, FactSet, Goldman Sachs Global Investment Research

OVV Valuation. Our 12-month price target of $64 is based on a target FCF yield of 12.5% on 2027/2028 estimates with $75 per bbl Brent oil price and $3.50 per MMBtu Henry Hub gas price. We apply an M&A rank of 2 for the stock with an 85% weight to a fundamental valuation and a 15% weight…