DENVER, April 2, 2020 /PRNewswire/ - Ovintiv Inc.
(NYSE, TSX: OVV) restructured its crude oil derivatives positions
to provide additional downside protection for the balance of 2020.
In addition, the Company now plans to further reduce its second
quarter investments by an additional $200
million, bringing total capital reductions in the second
quarter to $500 million. Updated
hedge and sensitivity tables are included within this release.
"We have built our Company with tremendous flexibility and
optionality for volatile and uncertain times like we are currently
experiencing," said Ovintiv CEO Doug
Suttles. "We are using and expect to continue to use this
flexibility as market conditions evolve. We have created more
certainty in our cash flow by restructuring oil hedges and further
reducing second quarter capital spending. We will have additional
details when we report our first quarter earnings and operating
results."
Strong Hedging Position Protects Cash Flow:
- Ovintiv is now substantially hedged on benchmark oil risk for
the near term. For the second quarter of 2020, 206 Mbbls/d is
hedged at an average price of $42.09
per barrel. Of these positions 191 Mbbls/d is in a fixed price swap
at $41.47 per barrel and 15 Mbbls/d
is covered by costless collars between $50.00 and $68.71
per barrel. The term "benchmark" above refers to NYMEX WTI and
NYMEX Henry Hub.
- With these updated positions, downside oil price risk is
further reduced. A balance of year $20.00 NYMEX WTI price would generate oil hedge
revenues of more than $1.1 billion.
This amount excludes oil hedge settlements in the first quarter of
2020. Settlements for natural gas and various other oil
differential and natural gas basis positions in 2020 are expected
to further add to oil hedge revenues.
For additional information, please refer to the Company's April
investor presentation at www.ovintiv.com.
Hedge Volumes as of April 1,
2020 for the balance of the year:
Natural Gas
Hedges
|
2020
|
|
Oil &
Condensate Hedges
|
2020
|
Total
Hedges
|
1,196
MMcf/d
|
|
Total
Hedges
|
183
Mbbls/d
|
Hedges
($/Mcf)
|
|
Hedges
($/bbl)
|
NYMEX
Swaps Swap Price
|
811 MMcf/d
$2.65
|
|
WTI
Swaps Swap Price
|
141
Mbbls/d $45.30
|
NYMEX 3-Way
Options
Short Call Long Put
Short Put
|
330
MMcf/d $2.72 $2.60 $2.25
|
|
WTI 3-Way
Options
Short Call Long Put
Short Put
|
27
Mbbls/d $61.68 $53.44 $43.44
|
NYMEX Costless
Collars Short Call
Long Put
|
55
MMcf/d
$2.88
$2.50
|
|
WTI Costless
Collars Short Call
Long Put
|
15
Mbbls/d
$68.71
$50.00
|
Basis Hedges
($/Mcf)
|
|
Basis Hedges
($/bbl)
|
AECO Basis
Swaps
Swap Price
|
305
MMcfd
($0.88)
|
|
WTI / Midland
Swaps
Swap Price
|
7
Mbbls/d
($1.20)
|
WAHA Basis
Swaps
Swap Price
|
105
MMcf/d
($0.91)
|
|
|
|
"Updated" Price Sensitivities for WTI Oil Hedge
Gains/Losses by Quarter for 2020 ($ MM):
Period
|
$10
|
$20
|
$30
|
$40
|
$50
|
2Q
2020
|
602
|
414
|
227
|
39
|
(148)
|
3Q
2020
|
565
|
404
|
243
|
82
|
(79)
|
4Q
2020
|
440
|
360
|
280
|
200
|
71
|
Q2-Q4
Total
|
1,607
|
1,178
|
750
|
321
|
(156)
|
Price Sensitivities for NYMEX Natural Gas Hedge Gains/Losses
by Quarter for 2020 ($ MM)
Period
|
$1.00
|
$1.25
|
$1.50
|
$1.75
|
$2.00
|
$2.25
|
2Q
2020
|
143
|
123
|
103
|
83
|
63
|
44
|
3Q
2020
|
145
|
125
|
104
|
84
|
64
|
44
|
4Q
2020
|
141
|
121
|
102
|
82
|
63
|
43
|
Q2-Q4
Total
|
429
|
369
|
309
|
249
|
190
|
131
|
Note:
|
Sensitivities do not
include gains or losses related to differential hedges.
|
Note:
|
Company has
additional hedges on Butane and Propane not
included.
|
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS – This
document contains certain forward-looking statements or information
(collectively, "FLS") within the meaning of applicable securities
legislation, including the United States Private Securities
Litigation Reform Act of 1995. FLS include: planned capital
reductions, operational flexibility and anticipated hedges and
hedging sensitivities based on oil and gas prices. FLS involve
assumptions, risks and uncertainties that may cause such statements
not to occur or results to differ materially. These assumptions
include: future commodity prices and differentials; assumptions
regarding strip prices; data contained in key modeling statistics;
availability of attractive hedges and enforceability of risk
management program; and expectations and projections made in light
of the Company's historical experience. Risks and uncertainties
include: withdrawal of, changes in or updates to corporate
guidance, including as a result of changes in capital program,
changes in commodity prices, and associated impact to production;
ability to generate sufficient cash flow to meet obligations;
commodity price volatility and impact to the Company's stock price
and cash flows; ability to secure adequate transportation and
potential curtailments; business interruption, property and
casualty losses or unexpected technical difficulties; the impact of
COVID-19 to the Company's operations, including maintaining
ordinary staffing levels, securing operational inputs, and
executing on portions of its business; counterparty and credit
risk; impact of changes in credit rating and access to liquidity;
risks in marketing operations; risks associated with
decommissioning activities, including timing and costs thereof;
risks associated with lawsuits and regulatory actions, including
disputes with partners; and other risks and uncertainties as
described in the Company's Annual Report on Form 10-K and as
described from time to time in its other periodic filings as filed
on SEDAR and EDGAR. Although the Company believes such FLS are
reasonable, there can be no assurance they will prove to be
correct. The above assumptions, risks and uncertainties are not
exhaustive. FLS are made as of the date hereof and, except as
required by law, the Company undertakes no obligation to update or
revise any FLS.
Further information on Ovintiv Inc. is available on the
Company's website, www.ovintiv.com, or by
contacting:
Investor
contact:
(888)
525-0304
|
Media
contact:
(281)
210-5253
|
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SOURCE Ovintiv Inc.