OVV: Update with Corey Code

Research evidence excerpt

OVV: Update with Corey Code

d return 50%–75% of free cash

flow to shareholders in 2026 across dividends and buybacks, a modest step back from its prior

signal of at least 75%. The company indicated that this shift reflects a deliberate move away

from the rigidly formulaic, quarterly-calculated framework put in place in 2021. Having

reached its $4 billion net debt target (with net debt at $3.3 billion as of April 30), the company

believes it has earned the right to deploy its shareholder returns with more latitude/flexibility

and a longer-term mindset. Moving forward, Ovintiv will continue to repurchase its common

shares on a counter-cyclical basis, aiming for net debt/mid-cycle cash flow of around 1.0x or

less. The company has no plans to pursue a zero net debt path in part because its cost of capital

would be entirely driven by its cost of equity.

Adding to our bullish outlook for Ovintiv is its potential inclusion in the S&P/TSX index

following S&P Dow Jones Indices' April 2026 proposed methodology change to expand

eligibility to TSX-listed foreign issuers. The company’s external (third-party) evaluation of this

possibility is constructive, pointing towards 4-5 million shares of direct demand, a half-

weighting (vs. a domestic issuer) and a timeline as early as this September. RBC Capital

Markets’ Index Team estimates that Ovintiv could receive direct indexing demand of

approximately 3 million shares. The timing of an inclusion would likely align with the index’s

standard rebalance calendar, with September possible but December the more likely window.

From our conversations with Canadian investors, benchmark risk has been a persistent barrier

to owning Ovintiv. TSX inclusion would remove that overhang, opening the stock up to a

broader domestic bid.