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Ovintiv briefs analysts on Anadarko results after a year

Rigs drill wells as part of an Ovintiv cube development in the Anadarko Basin. [PROVIDED]
Rigs drill wells as part of an Ovintiv cube development in the Anadarko Basin. [PROVIDED]

One of Oklahoma’s largest Anadarko Basin operators told analysts it has no complaints about the basin’s 2019 results.

Representatives of Ovintiv, which until recently operated as Encana and entered Oklahoma by acquiring Newfield Energy about a year ago, outlined those results in a call it had with those analysts last week.

“We are extremely pleased with the Anadarko Basin’s performance after our first year,” CEO Doug Suttles said during the recent call. “Well performance has been consistent, and our base production has been strong.

“The basin saw 18% crude and condensate growth over 2018, with fourth quarter production of 164,000 barrels of oil equivalent per day.”

Companywide, Ovintiv beat its guidance for total liquids production in 2019, producing an average 317,000 barrels per day, with 228,000 barrels of that oil.

And it accomplished all that despite cutting the number of rigs it was running in the Anadarko Basin from 11 when the deal closed a year ago to just five the final quarter of 2019.

The presentation indicated Ovintiv saw many financial benefits through its $7.7 billion acquisition of Newfield Energy.

Officials said the company achieved a $200 million savings in general and administrative expenses for the combined operations in 2019, $75 million more than initial estimates.

The company also reduced average drilling and completion costs for an Anadarko Basin well in 2019 from $7.9 million to $6 million and noted it has further cut that average cost to about $5.2 million on recently drilled wells.

Part of that, Ovintiv President Mike McAllister said, was that the company, through its purchasing power, had been able to cut the cost of sand it uses for hydraulic fracturing jobs in half.

Greg Givens, the company’s chief operating officer, also credited improved drilling and completion rates that cut cycle times.

And Matt Vezza, the company’s Anadarko Basin manager, said further reductions were realized by standardizing designs for production facilities at sites, reducing engineering, equipment and installation costs.

That also has helped bring wells to market more quickly, he observed.

“Cycle times matter — we are far from done,” Vezza said. “We will continue to find ways to increase efficiency.”

The team attributed many of its cost-saving accomplishments to lessons Ovintiv has learned in the Anadarko and other basins.

Suttles and other Ovintiv executives told analysts acquiring Newfield and its Anadarko Basin assets made sense.

David Hill, the company’s executive vice president for land and exploration, told analysts the Anadarko met Ovintiv’s “four pillars” that make for a successful venture, as it presented the company with best rock in a position of scale, good market access, and chances to significantly reduce costs by applying operational excellence through cube development and disciplined capital spending.

McAllister agreed.

“We have a great deal of experience in unconventional plays. We had high confidence we could make the basin economically competitive by lowering costs. … This was our promise at the time of the transaction,” he said.

The company has about 2 million acres across five basins that also include the Montney, Bakken Shale, Eagle Ford Shale and Permian Basin.

Suttles also discussed how Ovintiv recently moved its domiciled headquarters from Canada to the U.S. to give it access to deeper investment pools.

He said the company has generated growth in both earnings and free cash flow for two consecutive years and believes it will add a third to that for 2019.

“Ovintiv is now the second-largest unconventional North American exploration and production company, in terms of both total and liquids production,” Suttles said.

Related Photos


<figure><img src="//" alt="Photo - Suttles " title=" Suttles "><figcaption> Suttles </figcaption></figure><figure><img src="//" alt="Photo - Rigs drill wells as part of an Ovintiv cube development in the Anadarko Basin. [PROVIDED] " title=" Rigs drill wells as part of an Ovintiv cube development in the Anadarko Basin. [PROVIDED] "><figcaption> Rigs drill wells as part of an Ovintiv cube development in the Anadarko Basin. [PROVIDED] </figcaption></figure>
Jack Money

Jack Money has worked for The Oklahoman for more than 20 years. During that time, he has worked for the paper’s city, state, metro and business news desks, including serving for a while as an assistant city editor. Money has won state and regional... Read more ›