Hi. Good morning, everyone. Thanks very much for joining us. Today, we are very pleased to have Mr. Brendan McCracken, President and CEO of Ovintiv. Brendan, you had some really great announcements last night. Maybe it makes just the most sense to go right into Q&A? Let's do it. Yeah. Thanks, Jeanine. Great to be here. All right. Well, before we get to the great news, maybe if we can just step back, it probably makes a lot of sense to just start off with your macro view. On the 2Q call, you commented that you don't really see the macro conditions changing your view on capital and growth. You reiterated last night in your press release that you're committed to not growing oil in an oversupply market. Can you just update us on what macro indicators you're looking at to determine activity levels, and where we stand on those, and under what conditions would you rethink oil growth? Yeah. No, happy to. I think we're just really clear on how we're creating value in the company. Today, that pathway is rapidly reducing debt, increasing cash returns to our shareholders, and driving ESG progress in generating superior returns on the capital that we do invest. With that clarity in mind, mid-single digit growth down the road could be a tool for creating value, but that's not where we're at today. Instead, what we're focused on is growing free cash flow without growing production. Yesterday, we shared our five and 10-year projections of free cash flow, and some pretty big numbers in there, especially relative to our equity and our enterprise value today. What's really exciting for me is that those numbers don't include any efficiency gains from here. In other words, there's a lot of upside to them, and we fully expect to get better as we go and unlock even more cash returns to time. If we use that as the backdrop to turning our minds to setting the 2022 budget, because we've been, hopefully, very clear we're not changing the 2021 cap allocation. As we start to think about setting 2022, we still see over 5 million bbl a day of excess capacity in the world. Unfortunately, we still see the world struggling to get on top of the pandemic. In addition, the economy's dealing with inflationary pressures. To us, it's very clear the right value-based decision is to continue in that safe flat mode and deliver on those strategic priorities that we've laid out. Okay. Then, actually, maybe one more before we get into the announcement last night. I wanted to just talk about the CEO changeover. You took the reins last month, and can you just talk a little bit about the transition, perhaps, something on the why now in terms of the transition and any implications there may be on the corporate strategy? For sure. The company means a tremendous amount to me. I've literally spent my entire adult life here. With this transition, myself and my whole team, we're just really excited to share our strategy going forward. We know what we're great at, making oil and gas from shale. We're going to use that unique set of skills to create value for our shareholders. I think that's why our announcement yesterday is so pivotal, because we're combining our unique and proven set of skills at driving innovation and increasing or improving capital efficiency and expanding margins. We're combining that set of skills with a clear and durable capital allocation commitment. We think we've got a very compelling proposition for investors, and we're just pleased to get it out there. The business is performing very well. We're rapidly de-levering. We're on track for $3 billion of debt reduction in a year and a half. That's just adding resilience to the company, but also shifting enterprise value to our equity holders. We've got a top-tier multi-basin portfolio with over a decade of premium inventory. Like I said, we're going to generate a massive amount of free cash flow off the back of that, some $15 billion over the next 10 years at $55 WTI. Like I said, there's upside to that as we continue to innovate and continuously improve capital efficiency and expand margins. What we really like is that we can grow free cash flow without growing production, and that's how the projections are based. That framework we announced yesterday puts us on track to deliver a cash yield to our investors of something north of 7% at conservative pricing. That's while we're reducing debt by another $1.5 billion. Once we hit that debt target, the cash yield would shift even higher, into the high teens if we use today's equity prices. Very confident in the value proposition, but also very clear on how we're going to run the company so that through the cycle, we can continue to increase cash returns to shareholders and achieve and maintain financial strength and invest into our business to generate superior returns going forward. Maybe, we can talk about some of those returns and the forward outlook. If I could just summarize what the release said last night for those of you who may not have read it. Last night, Ovintiv announced that their new capital framework starting in fourth quarter of this year, and until you reach the $3 billion net debt target, that you'll be returning 25% of free cash flow after the base dividend in the form of either buybacks or a variable dividend. The remaining 75% is earmarked for net debt reduction, as well as small, low-cost property bolt-ons. Brendan, maybe we can just start with timing and why now? Why is now the right time for ya'll to come up with a framework? Why ahead of the $3 billion net debt target? Was this in response to maybe some of the conversations you had after 2Q? Is it based on your updated macro view, or just you've decided on the medium and long-term vision for the company or operating plan? I think, Jeanine, it's just really simple. This is my first chance and my team's first chance to sort of put our imprint on where we're going to take the company going forward. The great news is the business is generating a significant amount of free cash, which allows for this balance of achieving the strategic priorities in parallel, both reducing debt rapidly, and increasing cash returns to shareholders. The commitments we've made to the market as far as capital allocation and debt targets are all still intact. They're built in to the new framework. Our 75% reinvestment rate commitment at mid-cycle prices is built right into this framework. Our net debt target of achieving $3 billion on or before year-end 2023 is built right in at a very conservative prices. Even if prices snap back to $50 WTI and $2.50 NYMEX tomorrow, I sure hope they don't, but even if they did, we'd still be on track to achieve that target with this framework. We just think the timing is right to share how we intend to govern the company going forward. Okay, just unpacking the details, the 25% payout between now and the $3 billion net debt, how did you decide on the 25% level? Did you consider looking at a percent of cash flows from operations versus a percent of free cash flow? We've been asking a lot of management teams this, because as we love that in E&P land, everybody seems to be upping the ante on shareholder returns. From our view, percent of CFO, it does require a little bit different level of discipline, versus percent of free cash flow, where you have some leeway on the CapEx. Yeah, I think what we really considered when we built this framework is clarity and durability. Those were the two factors that we thought about from a principles perspective. We wanted to be really clear so investors could look through and understand how we were going to allocate capital going forward. We also wanted to be very durable. We know we exist in a commodity environment where there's volatility. We don't have to look very far back in the past to see that volatility. We wanted a framework that could work through the cycle. Rooting the allocation off of free cash flow means that we don't have to set a return threshold at different price environments. It's the same framework across the full range of price environments. When we thought about where to set these thresholds, the 25% and the greater than 50%, it was really around achieving those strategic priorities. The 25% lets us rapidly reduce debt, which we think is a very critical priority to have today, as well as increase those cash returns to a leading level. The cash yields that we're going to deliver in the next year are going to be industry leading while still doing significant debt reduction. Of course, once that debt reduction is achieved, they go even higher from there. We think it's the right model for our company, and our strategic priorities. Okay. In terms of when you achieve your $3 billion net debt target, you've provided it on mid-cycle pricing. When you look at it on strip pricing, when do you anticipate getting to that $3 billion net debt target level, and how pushed out is that relative to if you hadn't announced the framework? Yeah. This is the great news story. Like I said before, the commitment to achieve the $3 billion on or before year-end 2023 is still intact and built right in. Obviously, with today's prices, we'll hit that much sooner. I think likely late 2022 or early 2023, if you look at our projections. Really the on/off switch with this program has really only moved that around by a few quarters, which is how we got really comfortable that this is the right balance to strike. Okay. Yeah. On our numbers, without the payout, you'd hit that in like 3Q 2022-ish. With the payout, it's kind of like early 2023. Yeah, we agree with your projections, which is good news for our model. Okay. Then in terms of how you return the cash, you've had the benefit of kind of looking at how well or not well received other cash flow return frameworks have been in the market. The feedback that we've gotten as of last night is that people do like that you've included the variable and the share buybacks as kind of like a either/or, whatever fits in the right time, versus kind of sticking straight to variable or straight to the buyback. Can you just tell us how you're thinking about the buyback versus the variable decision in the near term? Are you leaning towards one more than the other? Yeah, I think hopefully this is starting to be a bit of a theme in terms of our thinking. It's a value-based decision. Like I said, with the framework, we're very intentional to create a lot of clarity, but also that durability. We know things will change in unpredictable ways, and we wanted to have the flexibility to make the right value decision at the time. We think it's quite important to have that flexibility built in. Our choices between buybacks and variable dividends are going to be driven on a sort of a series of criteria. The first one that I'll highlight, and perhaps even the most important, would be our view of intrinsic value of the assets across a range of prices, and how does that compare to where the equity trades at the time. We'll also look at heuristics like free cash flow yield, what's essentially the cost of capital that the equity is pricing in. We'll look at relative value. I think that has an impact or has a consideration. We'll look at the macro, because we know historically, when we look back at share buybacks, what we saw is inherently when you do a large moment in time share buyback, you're making a market call on commodity prices going forward. That will be part of the consideration as well. I think today, based on that criteria, buybacks seem highly attractive. We'll make that decision each quarter. One other thing that I find really important in the framework is the ratable aspect of the program. I think in my mind, that's a key feature. Like I said, looking back at prior cash returns to investors, I think one of the biggest challenges is they tended to be single point in time decisions. Our program, by making it ratable quarter- by- quarter, takes some of that macro risk out of the equation, and we like that feature. Okay. Yeah, we're a big fan of the buybacks right now, just for Ovintiv, given the opportunity where it's trading and the disconnect. For whatever it's worth, on our estimates, if you just did the buyback within your framework, you'd be buying back a 1/3 of your market cap by 2025, which I think is pretty attractive. Yeah. We highlighted some of that in the materials last night. Yeah. Did you consider at all special dividends? Well, I think the framework that we're describing really takes you out of that special zone, because really, that's the ratability of this program. I think maybe the important point to make is that the framework allows for increases to the base dividend as we go. We're very committed to a sustainable and growing base dividend as well. That's the approach we took. For the base dividend, some of your peers have commented that at mid-cycle pricing, they would target up to 10% of cash flow for the base. How are you thinking about a sustainable and growing dividend? Well, I think the first place we think about is your first word, which is sustainable. We've set the base dividend to be sustainable through the price cycle, and we saw that through 2020 when we didn't change or reduce our dividend, even though prices cycled quite low for a while there. That's important to us. As the cash flow generation of the company grows, the base dividend will grow with it, and that's been what we've been doing as legacy cost and interest expense and margin expansion occur, that gives us the ability to be increasing that base dividend. Today, at a mid-cycle deck, we're in sort of a 5% payout range, so there's lots of room for that to grow with time. With 2Q, you increased the base dividend by 50%, which was pretty impressive. The stock didn't react as well to it. Day one reactions on earnings are always squirrely, to put it nicely. What was the feedback from your investors on the 50% increase? We were just surprised that the stock hadn't performed better on that announcement. Yeah. I think, as you know, Jeanine, we keep a very regular dialogue with investors. I don't think we fixated on feedback immediately following earnings, but we certainly listen to investors and have that dialogue through the year. We're not making these decisions for short-term responses in the market. We think the clarity that we've brought forward on capital allocation is an important consideration, and we feel really good about bringing that clarity into the investors' minds. Okay. Maybe moving on. We hit what the cash would be going to on buybacks variables. The remaining cash that you have would be allocated to the balance sheet and small bolt-ons. On the balance sheet, can you just remind us on what your debt maturity stack looks like now? When's the next maturity due, and how much is it? Yeah. With the two recent redemptions, the 2021 and 2022 maturities, we now have got about $4.7 billion of long-term debt. The next maturity is $1 billion in 2024. To achieve the $3 billion of net debt, we'd hold about $1.7 billion of cash on the balance sheet ahead of that maturity. Okay. Have you thought about moving from a net debt target to a gross debt target? Well, I think the point we're making here is that we'll make the right value-based, again, my theme of value-based decisions, but we're going to make a value-based decision on early redemption versus redeeming that next maturity in 2024. We'll just make that as we go. Obviously, we'll think about the right way to allocate that capital. That's why we've talked to the $3 billion as a net debt for now, is without that early redemption, it'll just be building that cash position ahead of maturity. Okay. Fair enough. Not all debt is callable, and it can be expensive. Yeah. We get it. Okay. I think the wording on the remaining allocation would be on low-cost property bolt-ons, small low-cost property bolt-ons. You know where I'm going here. What qualifies as small? Yeah. I think people are, and we've seen this before with other companies, that when you build cash on the balance sheet, and when you have kind of a strong A&D market like we do right now, the skepticism in the sector says, "Oh, they might allocate that to buying something instead of paying it out." Can you just talk about what qualifies as a small bolt-on for you? Yeah. We really tied our view here to that it's just good business to be continuously extending our inventory life. We think 10-15 years of premium inventory is the right range for us to be in. Less than that creates a sense of urgency and probably removes some optionality for that renewal with time. On the other hand, much more than that, you're just stacking a lot of value quite far out in time. We think it's prudent to always be opportunistic here. When you've got the operating capability that we have, there's an ability to create real value here. We're looking for bolt-ons where we've got a value advantage, indirectly offsetting acreage to our infrastructure and where we're active today, and where we can take our leading capital efficiency and use that to play to our strengths. We've been quite focused on organic efforts to add inventory life, and they've been really successful to date, and that is very much still ongoing. Within the $1.5 billion capital program this year, we're appraising over 500 locations that could be converted into premium with success. This really sits on top of that organic effort. We're going to be pretty disciplined about this. The focus is going to be on full cycle returns, and we're looking for resource that competes or enhances with our existing opportunities. If you want to think about it one way, the free cash flow projections that we've made are really the floor. Through a combination of inventory enhancement and capital efficiency gains and margin expansion, what I'm excited about is putting upside on top of that floor as we go along. I think on a quantifying basis, it's a little tough to say because, of course, these are not going to be ratable pieces of business here. I see it as in that 5%-10% of cash flow range, so something in the several hundred million dollars per year. The program, the framework that we've laid out allows for that and gives room with that for us to still deliver on the debt and cash return priorities. We'll look for those bolt-ons across the entire portfolio, but we're focused on the core assets. Okay. Of the core assets, is there anywhere where your value proposition and where you see that the market for assets that would lend you towards one basin versus the other? I don't think there's a lean, Jeanine. I think we're open across the board, and it'll just be an opportunistic as we go type of deal. Okay. 10-15 years of premium inventory, what qualifies as premium? Is that a certain return at a certain price check? Yeah. We define that as 35% rate of return at $55 and $2.75 NYMEX. We've had that in our sort of discipline for a while now, and today we're generating returns well in excess of that. That's how we try and count up a high quality or high grading inventory. Okay. Maybe moving to some of your projections that you included in the release last night. I think you said in 2022, you anticipate $400 million of buybacks or variable dividends at $60 and $3. Maybe we can just dig into the assumptions for that. Does that assume maintenance mode and like $1.5 billion of CapEx for 2022? Yeah. From a modeling perspective, we just held production flat through the period. This isn't a guidance by any means, but we wanted to give a sense for what the business can generate for free cash flow over the period. Yeah, we've held capital efficiencies where we are today, which I think means there's a ton of upside in the plan because it would be the first time ever that we don't improve capital efficiencies as we go. We're really confident that we'll do that. Like I said, we've held in maintenance mode through the period. Okay, and that's relative to 4Q production? Yeah, that's right. Okay. That's right. Since you're holding capital efficiency flat, does that mean that there's no inflation in your assumptions? That's right. Okay. You have included your 2022 hedges? Yes. Okay. You're in the firing squad here. Sorry. We're in the lightning round? Yeah. Lightning round. So far, the answers are good. Anything specific on what AECO or NGL pricing you assumed? I think we were talking about this with somebody else earlier today, the gas market has really recovered, and everybody noticed that the front month had hit $5 earlier this week. Ovintiv has tremendous upside to gas and NGLs. Anyways, but in your 2022 estimate, roughly what AECO and NGL realizations did you assume? Yeah. All we've done there, because we provided the estimates across a range of prices. What we did there is we just used historical AECO and NGL pricing differentials to either to NYMEX or to WTI. Just held those through the plan here. There's really nothing special in the AECO or NGL assumptions. They're tied to each of the different WTI and NYMEX assumptions. Okay. Maybe fast-forwarding to when you hit the $3 billion net debt target and then your returns get even juicier, going from 25% to at least 50% of free cash flow. On that at least 50%, do you envision that as kind of flexing up and down according to the environment, or is it something like would be steadily increasing over time? First off, the framework lays out our commitment ahead of getting there, which I think is important because it gives that visibility for investors out in time. Once we hit the debt target, the 50% return is a minimum. We'll have the option to go higher if that, again, is the best value option at the time. We'll also be able to reduce debt further if we choose or invest into the business if we see superior returns there. I think we like the flexibility of that, but it is the floor. Okay. Got it. All right. Let's see, maybe moving to, oh, we've only have four minutes left. Okay, maybe moving to the big cash flow numbers that you put out. At $55, your mid-cycle pricing, you anticipate cumulative free cash flow about $8 billion over the next five years and $15 billion over the next 10. I think I heard you say earlier, and I want to just confirm, it sounded like that was in maintenance mode because you said you wanted to highlight that you can increase cash flow without having to increase production. Did I hear that correctly? That's right, Jeanine. Yeah. We've just held production flat through that period. Again, that's not a guide or a reflection of what the business could do, but just a modeling input. Okay. More of just a scenario. I think you did reference that when you kind of get the all clear on the macro, maybe low single-digit growth would be what you would target. Yeah. I think the important thing, again, to come back to this value-based decision, if growing cash flows through production growth is the right value-based decision, we have the portfolio and the capability to do that in a leading way to generate those superior returns. That's a decision for down the road. Okay. Got it. Let's see. Then maybe, we only have three minutes left here. Where do we want to go? Maybe in terms of catalysts, what do you see as the most impactful catalyst for Ovintiv in kind of the near or medium term? You've got the allocation, the framework out there now. Is it really just more on execution from here on out? Yeah. I think we have a compelling proposition for investors that the business continues to perform very well. We're rapidly de-levering. We're set to generate a massive amount of free cash flow, and there's upside to that free cash flow as we continue to innovate. I think the framework complements what we're truly great at and lets the investors see through into that. That's really the message from yesterday and today. Okay. Then, on the 2Q call, I think you called the Bakken something like a small but mighty asset, and that you weren't interested in selling it. In terms of upsides to either margins or free cash flow or just payouts, are there any other opportunities to prune the portfolio? Well, I think the point we were making there, I think is still the same point today, that we've right-sized the base asset portfolio to the capital program we're running. We can hold production flat in those assets with the capital that they're seeing today, which is under 10% of the $1.5 billion. As we relayed with the Q2 results, we're really excited about the impact that our innovation is having in the Bakken, both on cost and production. We're seeing our new wellbore architecture rapidly reduce drilling costs, and we're seeing our completion designs drive up well productivity. This is just another example of how we're able to continuously improve capital efficiency. Pretty excited about what we're seeing in the asset there, and I don't anticipate that part of the portfolio shifting. Then in our last minute, I wanted to hit on M&A. I think I saw on your new slide presentation it had a check mark on no big expensive corporate M&A. One of the themes that we're seeing in consolidation recently is that things have been motivated maybe more so from a financial accretion standpoint rather than a synergy or operational standpoint. More companies are citing size and scale as being important going forward. Is it just that you're not on the hunt for larger transformational M&A, or how do you think about that? Yeah. I think it really comes back to our commitment to fundamental value creation. Today, we don't need M&A to deliver on our strategic objectives, and we're absolutely committed. We're not going to do expensive, dilutive M&A. Today it's uncompetitive with what we're doing organically and potential bolt-on opportunities that we see out there. Obviously it'd be imprudent to say we're never going to consider M&A, but today it very much doesn't compete with the other strategic opportunities that we have. You've got a lot going on already internally, organically. We are out of time, which is a shame, because I'd love to keep talking. Brendan, this has been a real pleasure. We loved the announcement last night and thank you so much for your time today. Thank you, Jeanine. Appreciate you making time for us. All right.