Our Board is responsible for ensuring an effective risk management process is in place to identify, monitor and manage significant risks to our business and reputation.

Our risk management strategy includes identifying risks, and developing and implementing risk management practices that include mitigation activities, systems, controls and business continuity plans for specific risks, which are aligned with, and complementary to, our internal corporate risk management policy.

Our enterprise risk management process and our sustainability priority assessment help identify and monitor any significant risks. The identification, analysis and mitigation strategy of climate-related risk is incorporated into our risk practices and is a component of an internal Risk Network that comprises senior leadership responsible for understanding and reporting each of Ovintiv’s entity-level risks.

We use an internal risk matrix to form the foundation for assessing, measuring and reporting risks. It creates a consistent methodology to assess residual risks, which may exist after controls and mitigations have been put in place, measured in terms of probability and impact to achieving Ovintiv’s objectives.


Each level of our organization has defined roles and responsibilities outlined by our internal corporate risk management policy. 

Potential Climate-Related Impacts to Our Business


We evaluate both physical risks and transition risks of climate change relating to regulatory, legal, reputational, technology, and market considerations, prioritize them for potential mitigation and incorporate them into risk factors or other disclosures as warranted.

Policy and Legal Risk

Policies governing climate-related issues are continuing to evolve in both the U.S. and Canada. As disclosed on page 41 of the Company’s 2023 Annual Report on Form 10-K, this includes actions that seek to address concerns over climate change, such as the enactment of climate-related regulations, policies and initiatives that seek to promote adaptation to climate change or lessen activities that contribute to the adverse effects of climate change.

Internationally, this has resulted in existing and pending international agreements to reduce GHG emissions globally, while in the U.S. and Canada, this has resulted in both national, regional and local legislation and regulatory programs.

Ovintiv actively participates in public policy development with federal, provincial, state and local levels in the U.S. and Canada to support effective policies governing responsible energy development in North America. We account for an escalation of our Canadian carbon tax costs in our planning and budgeting processes. We also run scenarios to determine how a U.S. implementation would impact our cost structures.

Market Risk

Shifts in supply and demand for certain commodities, including oil and natural gas (and associated products) due to concerns over climate change could affect markets. As identified on page 42 of the Company’s 2023 Annual Report on Form 10-K, lower demand for oil and natural gas or increased demand for lower-emission products and services could result in lower prices and lower revenues.

We use scenario planning to better predict the risks associated with future commodity prices. We utilize a range of prices that represent varying levels of supply and demand for our products. As a leading operator with more than a decade of high-quality drilling locations and a deep commitment to capital discipline, we are positioned to deliver competitive returns to our shareholders through our focus on execution, disciplined capital allocation, responsible operations, and leading capital efficiency.

Reputational Risk

Our 2023 Annual Report on Form 10-K (page 42) disclosed that public attention to issues concerning climate change, and the role of human activity in it, continues to increase, with the oil and natural gas industry receiving heightened scrutiny regarding GHG emissions. These changing perceptions could lower demand for our oil and natural gas production, resulting in lower prices and lower revenues as consumers avoid carbon-intensive industries and could also pressure banks and investment managers to shift investments and reduce lending.

We monitor policy developments and engage with industry working groups and governments to provide input and advocate for policies supportive of emissions reductions initiatives. We participate in regular outreach programs with our investors and lenders and work to address their questions.

Technology Risk

The development and deployment of alternative energy sources and emerging technologies in renewable energy, battery storage and energy efficiency could lower demand for oil and natural gas and as stated in our 2023 Annual Report on Form 10-K (page 42), could potentially result in decreased revenues within the oil and natural gas industry and accelerate alternative energy technology.

We are continuously pursuing opportunities to collaborate on new emissions reduction technology and have established an Emissions Performance Group within the Chief Engineering Organization. This group works across disciplines within the Company to identify and evaluate operational emissions reduction opportunities, among other environmental improvements. We are also committed to understanding potential business opportunities that complement our vision and capitalize on our expertise.

Physical and Climate Risk

Adverse weather conditions such as severe heat or cold, flooding, tornados and other natural disasters could affect our operations. As identified on page 42 of our 2023 Annual Report on Form 10-K, if any such effects were to occur, they could adversely affect or delay demand for the oil or natural gas produced or cause us to incur significant costs in preparing for or responding to the effects of climatic events themselves.

The identification, analysis and mitigation strategy of climate-related risk is incorporated into our risk practices. We also have operational practices in place, including an emergency management incident response process that helps to manage risk associated with severe weather events. We continue to identify and pilot new technology, equipment and processes to manage through events. An example of this includes the development of an environmental hazard monitoring dashboard to track a variety of weather and geological events with potential to impact our operations.


We believe our corporate strategy and our focus on being a low-cost producer enables us to meet the challenges posed by current and future climate-related risks.

We aim to be the leading North American oil and natural gas exploration and production Company by generating free cash flow and delivering superior returns both to our shareholders and on the capital we invest in our multi-basin, multi-product portfolio. By focusing on execution excellence, disciplined capital allocation, commercial acumen and risk management, our business can thrive across a variety of scenarios and deliver results in a socially and environmentally responsible manner.


Our development portfolio is highly focused on short-cycle opportunities, enabling us to maintain operational flexibility at both the asset and portfolio level. This allows for rapid conversion of capital into cash flow and a high degree of agility in managing risk and responding to opportunities.

Capital Discipline

In an evolving commodities market, we have continued our track record of demonstrating capital discipline while driving efficiency and lowering costs in every part of our business. We will continue to be a leading North American operator by strategically managing our supply chain and utilizing technology and innovation to responsibly develop our assets.

Proven Experience

We have experience operating under carbon tax jurisdictions in Canada. Our corporate culture and structure promote knowledge sharing, and we expect to apply carbon tax learnings to our U.S. assets in the event of carbon tax regulation.


Our culture of innovation encourages us to utilize technology and operational efficiencies, particularly to drive free cash flow and emissions reductions. Ovintiv closely follows technological advancements and will continue to deploy equipment proven to be effective in reducing emissions.


Ovintiv’s risk-informed business strategy incorporates key environment, social and governance issues that have the potential to affect our performance. We conduct our strategic planning and scenario analysis on an ongoing basis, considering the impacts of commodities pricing, carbon taxes, regulations and the potential long-term impacts of climate change.

This process incorporates insights from various contributors within the Company, as well as external advisors and private commodity market analysis firms. We follow four interconnected and iterative workflows for our strategic planning.

Macro Review

We conduct a macro analysis of both the business and industry environment focused on key trends, risks and opportunities with potential to impact our corporate strategy.

Strategic Assessment

We incorporate the macro assessment findings in developing a strategic assessment and analysis to test the fitness of the current strategy and discuss potential pathways to deliver value to shareholders over the short and long term. This assessment is presented to, and discussed with, the executive leadership team on at least an annual basis.


Benchmarking is also incorporated in our strategic planning. We benchmark our strategic and competitive positioning against companies both within and outside of the exploration and production industry. This provides real-time intelligence and enhances our understanding of peer strategies, industry trends and business best practices.

Portfolio Evaluation

We conduct an internal assessment to evaluate the current state of our portfolio while considering potential opportunities to advance or enhance value through technological innovation and efficiencies, reduction of uncertainty and the optimization of resources. During this phase, a suite of individual asset development profiles is constructed or revised to test various scenarios and approaches to optimize long-term value creation.

Climate-Focused Scenario Analysis

We consider climate-related risks throughout our corporate strategic planning and scenario analysis process. In conducting our scenario analysis, we utilized internal modeling supported in part by the International Energy Agency’s (IEA) World Energy Outlook (WEO) to better understand the future patterns of a changing global energy system.

We used three of the scenarios included in the IEA’s 2023 Outlook, each of which contains assumptions regarding future population, economic growth and hydrocarbon supply and demand.

Stated Policies Scenario (STEPS): Reflects current policy settings that are in place and have been announced by governments around the world

Announced Pledges Scenario (APS): Assumes that all climate commitments made by governments around the world will be met in full and on time

Net Zero Emissions by 2050 Scenario (NZE): Portrays a pathway for the energy sector to help limit global temperature rise to 1.5°C above preindustrial levels in 2100 with at least 50% probability and limited overshoot

By using scenarios, we can evaluate a range of potential risks related to commodity pricing and emissions reduction structures. Specific to our portfolio, we test our current assets against potential future outcomes to determine where challenges and opportunities may exist. We also assess portfolio resiliency by comparing our assets’ performance under different IEA price forecasts adjusted to the West Texas Intermediate (WTI) benchmark against publicly available breakeven price assumptions per play. For this analysis, we also incorporate an escalating carbon tax in line with the IEA APS.

For the purposes of this analysis, we have included an Ovintiv Base Case Scenario to demonstrate the current competitiveness of our portfolio compared to IEA forecasted prices. The Ovintiv Base Case Scenario assumes holding crude and condensate scale at maintenance capital levels and is non-GAAP free cash flow positive after base dividend.

It is important to note that our analysis assumes a consistent breakeven price. Ovintiv has a strong track record of knowledge sharing, adopting innovative practices and driving efficiencies through our business. We expect this performance to continue, further decreasing our breakeven prices and increasing our portfolio resiliency.

In alignment with the SASB reporting recommendations, we tested our year-end 2023 reserves against the conditions outlined in the IEA STEPS and APS. The value of Ovintiv’s SEC 1P reserves comparing STEPS and the associated pricing and carbon tax to the SEC 12-month average trailing price forecast is ~19% higher on a NPV10 basis. Using the APS and its associated commodity pricing and carbon tax compared to the SEC price forecast resulted in the value of Ovintiv’s SEC 1P reserves decreasing ~10% on a NPV10 basis, driven by lower commodity pricing in the APS. However, the net present value of our future cash flows remains positive even under the APS scenario, and we believe that our multi-basin, diversified product portfolio is well positioned to be resilient in a low-carbon scenario.

Third-party basin average operating break-even

Our analysis confirms the resiliency of our portfolio under a range of possible future climate policy scenarios. Under both STEPS and APS scenarios, we expect new well development to continue to yield an economic return as breakeven prices remain lower than forecast prices. Even with the implementation of an escalating carbon tax, our low-cost, short-cycle portfolio remains competitive under these scenarios.

In the case of a hypothetical NZE 2050 scenario, it is important to take cost and asset competitiveness into consideration, particularly where tightening demand can lead to industry rationalization. The IEA has noted that the pathway to net zero emissions by 2050 is very narrow and depends on fair and effective global cooperation.

Significant Free Cash Flow Potential Across Both STEPS and APS IEA Scenarios