Ovintiv Inc. Commitments Disclosure
27. |
Commitments and Contingencies |
COMMITMENTS
The following table outlines the Company’s commitments as at December 31, 2025:
|
|
Expected Future Payments |
|
|||||||||||||||||||||||||
(undiscounted) |
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Transportation and Processing |
|
$ |
773 |
|
|
$ |
724 |
|
|
$ |
625 |
|
|
$ |
562 |
|
|
$ |
521 |
|
|
$ |
3,051 |
|
|
$ |
6,256 |
|
Drilling and Field Services |
|
|
164 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
165 |
|
Building Leases & Other Commitments |
|
|
8 |
|
|
|
7 |
|
|
|
6 |
|
|
|
4 |
|
|
|
3 |
|
|
|
8 |
|
|
|
36 |
|
Total |
|
$ |
945 |
|
|
$ |
732 |
|
|
$ |
631 |
|
|
$ |
566 |
|
|
$ |
524 |
|
|
$ |
3,059 |
|
|
$ |
6,457 |
|
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.
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.