Ovintiv Inc.OVV

Ovintiv Inc. Leases Disclosure

10-KFiled Feb 26, 20253 min read

14.

Leases

 

Operating leases include drilling rigs, compressors, office and buildings, certain land easements and various equipment utilized in the development and production of oil, NGLs and natural gas. The Company has an office building that is accounted for as a finance lease. Subleases relate to office and building leases.

 

The tables below summarize Ovintiv’s operating and finance lease costs and include ROU assets and lease liabilities, amounts recognized in net earnings (loss) during the year and other lease information.

 

As at December 31 (US$ millions, unless otherwise specified)

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet (1):

 

 

 

 

 

 

 

 

Operating Lease ROU Assets, in Other Assets

 

 

 

$

788

 

 

$

894

 

Finance Lease ROU Assets, in Other Property Plant and Equipment

 

 

 

 

12

 

 

 

17

 

 

 

 

 

 

 

 

 

 

Operating Lease Liabilities:

 

 

 

 

 

 

 

 

Current

 

 

 

 

82

 

 

 

87

 

Long-term

 

 

 

 

737

 

 

 

832

 

 

 

 

 

 

 

 

 

 

Finance Lease Liabilities:

 

 

 

 

 

 

 

 

Current, in accounts payable and accrued liabilities

 

 

 

 

8

 

 

 

7

 

Long-term, in other liabilities and provisions

 

 

 

 

12

 

 

 

20

 

 

 

 

 

 

 

 

 

 

Weighted Average Discount Rate

 

 

 

 

 

 

 

 

Operating leases

 

 

 

5.42%

 

 

5.45%

 

Finance leases

 

 

 

6.11%

 

 

6.11%

 

Weighted Average Remaining Lease Term

 

 

 

 

 

 

 

 

Operating leases

 

 

 

12.1 years

 

 

12.8 years

 

Finance leases

 

 

 

2.5 years

 

 

3.5 years

 
(1)
Total ROU assets and liabilities are recorded at the gross contractual amount. A portion of the future lease payments will be recovered from other working interest owners based on their proportionate share when incurred.

 

For the years ended December 31

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

Lease Costs (1):

 

 

 

 

 

 

 

 

Operating Lease Costs, Excluding Short-Term Leases

 

 

 

$

271

 

 

$

180

 

 

 

 

 

 

 

 

 

 

Finance Lease Costs:

 

 

 

 

 

 

 

 

Amortization of ROU assets

 

 

 

 

5

 

 

 

5

 

Interest on lease liabilities

 

 

 

 

1

 

 

 

2

 

Total Finance Lease Costs

 

 

 

 

6

 

 

 

7

 

 

 

 

 

 

 

 

 

 

Short-Term Lease Costs

 

 

 

 

259

 

 

 

232

 

Variable Lease Costs

 

 

 

 

117

 

 

 

41

 

 

 

 

 

 

 

 

 

 

Sublease Income:

 

 

 

 

 

 

 

 

Operating lease income

 

 

 

 

53

 

 

 

50

 

Variable lease income

 

 

 

 

21

 

 

 

21

 

 

 

 

 

 

 

 

 

 

Other Information (2):

 

 

 

 

 

 

 

 

Cash Paid for Amounts Included in the Measurement of Lease Liabilities:

 

 

 

 

 

 

 

 

Operating cash outflows from operating leases

 

 

 

 

198

 

 

 

182

 

Investing cash outflows from operating leases

 

 

 

 

326

 

 

 

225

 

Operating cash outflows from finance leases

 

 

 

 

1

 

 

 

2

 

Financing cash outflows from finance leases

 

 

 

 

7

 

 

 

6

 

 

 

 

 

 

 

 

 

 

Supplemental Non-Cash Information:

 

 

 

 

 

 

 

 

New ROU operating lease assets and liabilities

 

 

 

 

46

 

 

 

113

 
(1)
Lease costs include amounts capitalized into property, plant and equipment in the Consolidated Balance Sheet and lease expense recognized in the Consolidated Statement of Earnings.
(2)
Rights to extend or terminate a lease are included in the lease term when there is reasonable certainty the right will be exercised. Lease contracts include rights to extend leases after the initial term, ranging from month-to-month to less than 10 years.

 

Operating lease expense is reflected in the Consolidated Statement of Earnings as follows:

 

For the years ended December 31

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

Operating Lease Expense

 

 

 

 

 

 

 

 

Transportation and processing

 

 

 

$

2

 

 

$

4

 

Operating

 

 

 

 

101

 

 

 

82

 

Administrative

 

 

 

 

101

 

 

 

101

 

Total Operating Lease Expense

 

 

 

$

204

 

 

$

187

 

 

The following table outlines the Company’s future lease payments and lease liabilities related to the Company’s operating and finance leases as at December 31, 2024:

 

 

 

2025

 

 

2026

 

 

2027

 

 

2028

 

 

2029

 

 

Thereafter

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Leases (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected Future Lease Payments

 

$

124

 

 

$

98

 

 

$

87

 

 

$

85

 

 

$

81

 

 

$

652

 

 

$

1,127

 

Less: Discounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

308

 

Present Value of Future Operating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Lease Payments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sublease Income (undiscounted)

 

$

(40

)

 

$

(41

)

 

$

(41

)

 

$

(39

)

 

$

(36

)

 

$

(311

)

 

$

(508

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected Future Lease Payments

 

$

9

 

 

$

9

 

 

$

4

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

22

 

Less: Discounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

Present Value of Future Finance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Lease Payments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sublease Income (undiscounted) (2)

 

$

(8

)

 

$

(8

)

 

$

(3

)

 

$

-

 

 

$

-

 

 

$

-

 

 

$

(19

)
(1)
Lease payments are presented based on the gross contractual amount. A portion of the future lease payments will be recovered from other working interest owners based on their proportionate share when incurred.
(2)
Classified as operating lease.

There are no material commitments for leases with terms greater than one year that have not yet commenced at December 31, 2024.

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Historical Timeline

Fiscal YearFiled
2024Feb 26, 2025Showing above
2023Feb 27, 2024
2022Feb 27, 2023
2021Feb 25, 2022
2020Feb 18, 2021
2019Feb 21, 2020

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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