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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Provision For Income Taxes | The provision for income taxes is as follows:
For the years ended December 31 |  | 2025 |  |  | 2024 |  |  | 2023 |
Current Tax |  |  |  |  |  |  |  |  |
United States |  | $ | (6 | ) |  | $ | 8 |  |  | $ | 12 |
Canada |  |  | 48 |  |  |  | 74 |  |  |  | 269 |
Total Current Tax Expense (Recovery) |  |  | 42 |  |  |  | 82 |  |  |  | 281 |
Deferred Tax |  |  |  |  |  |  |  |  |
United States |  |  | 202 |  |  |  | 228 |  |  |  | 248 |
Canada |  |  | (716 | ) |  |  | (84 | ) |  |  | (104 | )
Total Deferred Tax Expense (Recovery) |  |  | (514 | ) |  |  | 144 |  |  |  | 144 |
Income Tax Expense (Recovery) |  | $ | (472 | ) |  | $ | 226 |  |  | $ | 425 |
Summary of Components of Net Earnings (Loss) before Income Tax | The components of net earnings (loss) before income tax for 2025 consist of:
For the year ended December 31 |  |  |  |  |  | 2025 |
Net Earnings (Loss) Before Income Tax: |  |  |  |  |  |  |
United States |  |  |  |  |  | $ | 1,215 |
Canada |  |  |  |  |  |  | (445 | )
|  |  |  |  |  | $ | 770 |
Income Taxes Reconciliation | The following table is the rate reconciliation between income tax expense (recovery) compared to statutory expectations.
For the year ended December 31 |  |  |  | 2025 |
|  |  |  |  |  | Amount |  |  | Percent |
Net Earnings (Loss) Before Income Tax |  |  |  |  |  | $ | 770 |  |  |  |
Expected Income Tax Expense (Recovery) and United States Federal Statutory Tax Rate |  |  |  |  | 162 |  |  |  | 21.0 | %
State and Local Income Tax, net of Federal Income Tax Effect (1) |  |  |  |  |  |  | (27 | ) |  |  | (3.5 | %)
Foreign Tax Effect from Canada: |  |  |  |  |  |  |  |  |  |
Statutory tax rate difference between Canada and United States |  |  |  |  |  |  | 28 |  |  |  | 3.6 | %
Provincial income tax (2) (3) |  |  |  |  |  |  | (47 | ) |  |  | (6.1 | %)
Non-taxable and non-deductible items: |  |  |  |  |  |  |  |  |  |
Commercial restructure (3) (4) |  |  |  |  |  |  | (559 | ) |  |  | (72.6 | %)
Other |  |  |  |  |  |  | 3 |  |  |  | 0.4 | %
Effect of Cross-Border Tax Law: |  |  |  |  |  |  |  |  |  |
Global intangible low-taxed income |  |  |  |  |  |  | 9 |  |  |  | 1.2 | %
Subpart F |  |  |  |  |  |  | (15 | ) |  |  | (1.9 | %)
Unremitted earnings |  |  |  |  |  |  | (11 | ) |  |  | (1.4 | %)
Base erosion and anti-abuse tax |  |  |  |  |  |  | (16 | ) |  |  | (2.1 | %)
Foreign tax credits |  |  |  |  |  |  | (22 | ) |  |  | (2.9 | %)
Tax Credits: |  |  |  |  |  |  |  |  |  |
Research & development credits |  |  |  |  |  |  | (59 | ) |  |  | (7.7 | %)
Changes in Valuation Allowance (4) |  |  |  |  |  |  | 22 |  |  |  | 2.9 | %
Changes in Unrecognized Tax Benefits |  |  |  |  |  |  | 54 |  |  |  | 7.0 | %
Other |  |  |  |  |  |  | 6 |  |  |  | 0.8 | %
Income Tax Expense (Recovery) and Effective Tax Rate |  |  |  |  |  | $ | (472 | ) |  |  | (61.3 | %)
(1) Texas represents the majority (greater than 50 percent) of the tax effect. (2) Alberta represents the majority (greater than 50 percent) of the tax effect. (3) The commercial restructure in Canada resulted in a capital loss utilization with a corresponding reduction of the valuation allowance and the recognition of a net deferred tax asset. In conjunction with the restructure, the Company recognized provincial income tax and a valuation allowance reversal of $520 million ($330 million federal and $190 million provincial). (4) The worldwide valuation allowance reversal of $498 million primarily resulted from the commercial restructure in Canada. The following table reconciles income taxes calculated at the applicable statutory rate with the actual income taxes, prior to the prospective adoption of ASU 2023-09.
For the years ended December 31 |  | 2024 |  |  | 2023 |
Net Earnings (Loss) Before Income Tax |  | $ | 1,351 |  |  | $ | 2,510 |
United States Federal Statutory Tax Rate |  |  | 21.0 | % |  |  | 21.0 | %
Expected Income Tax Expense (Recovery) |  |  | 284 |  |  |  | 527 |
Effect on Taxes Resulting From: |  |  |  |  |  |
State income tax |  |  | 15 |  |  |  | 23 |
Income tax related to foreign operations |  |  | (14 | ) |  |  | 20 |
Research & development credits |  |  | (67 | ) |  |  | (128 | )
Non-taxable items |  |  | (5 | ) |  |  | 10 |
Amounts in respect of prior periods |  |  | 5 |  |  |  | (19 | )
U.S. international tax |  |  | 40 |  |  |  | 8 |
Change in valuation allowance |  |  | (45 | ) |  |  | (18 | )
Other |  |  | 13 |  |  |  | 2 |
|  | $ | 226 |  |  | $ | 425 |
Effective Tax Rate |  |  | 16.7 | % |  |  | 16.9 | %
Summary of Income Taxes Paid (Recovered) | The income taxes paid (recovered) by the Company are as follows:
For the year ended December 31 |  |  |  |  |  | 2025 |
Income Taxes Paid (Recovered), net: |  |  |  |  |  |  |
United States - Federal |  |  |  |  |  | $ | 17 |
United States - State (1) |  |  |  |  |  |  | (3 | )
Foreign - Canada Federal |  |  |  |  |  |  | 36 |
Foreign - Canada Provincial (2) |  |  |  |  |  |  | 12 |
|  |  |  |  |  | $ | 62 |
(1) Primarily includes taxes paid to (recovered from) Texas. (2) Primarily includes taxes paid to (recovered from) Alberta.
Components of Net Deferred Income Tax Asset (Liability) | The net deferred income tax asset (liability) consists of:
As at December 31 |  |  |  | 2025 |  |  | 2024 |
Deferred Income Tax Assets |  |  |  |  |  |  |  |
Property, plant and equipment |  |  |  | $ | 732 |  |  | $ | 27 |
Risk management |  |  |  |  | - |  |  |  | 6 |
Interest and other deferred deductions |  |  |  |  | 2 |  |  |  | 40 |
Net operating and net capital losses carried forward |  |  |  |  | 888 |  |  |  | 1,665 |
General business credits |  |  |  |  | 271 |  |  |  | 200 |
Foreign tax credits |  |  |  |  | 22 |  |  |  | - |
CAMT credits |  |  |  |  | 2 |  |  |  | 40 |
Compensation plans |  |  |  |  | 46 |  |  |  | 45 |
Other |  |  |  |  | 5 |  |  |  | - |
Less: valuation allowance |  |  |  |  | (765 | ) |  |  | (1,204 | )
Deferred Income Tax Liabilities |  |  |  |  |  |  |  |
Property, plant and equipment |  |  |  |  | (844 | ) |  |  | (971 | )
Risk management |  |  |  |  | (17 | ) |  |  | (17 | )
Other |  |  |  |  | - |  |  |  | (23 | )
Net Deferred Income Tax Asset (Liability) |  |  |  | $ | 342 |  |  | $ | (192 | )
Net Deferred Income Tax Asset (Liability) by Jurisdiction | The net deferred income tax asset (liability) for the following jurisdictions is reflected in the Consolidated Balance Sheet as follows:
As at December 31 |  |  |  | 2025 |  |  | 2024 |
Deferred Income Tax Assets |  |  |  |  |  |  |  |
United States |  |  |  | $ | - |  |  | $ | - |
Canada |  |  |  |  | 744 |  |  |  | 10 |
|  |  |  |  | 744 |  |  |  | 10 |
Deferred Income Tax Liabilities |  |  |  |  |  |  |  |
United States |  |  |  | $ | (402 | ) |  | $ | (202 | )
Canada |  |  |  |  | - |  |  |  | - |
|  |  |  |  | (402 | ) |  |  | (202 | )
Net Deferred Income Tax Asset (Liability) |  |  |  | $ | 342 |  |  | $ | (192 | )
Schedule of Loss Carryforwards and Tax Credits Available | Loss carryforwards and credits available are as follows:
As at December 31 |  |  |  | 2025 |  | Expiration Date |
United States |  |  |  |  |  |  |  |
Net operating losses (federal) |  |  |  | $ | 629 |  |  | Indefinite |
General business credits |  |  |  |  | 271 |  |  | 2032 - 2045 |
Foreign tax credits |  |  |  |  | 22 |  |  | 2035 |
CAMT credits |  |  |  |  | 2 |  |  | Indefinite |
Canada |  |  |  |  |  |  |  |
Net capital losses |  |  |  | $ | 3,005 |  |  | Indefinite |
Changes in Balance of Unrecognized Tax Benefits Excluding Interest | The following table presents changes in the balance of Ovintiv’s unrecognized tax benefits excluding interest:
For the years ended December 31 |  |  |  | 2025 |  |  | 2024 |
Balance, Beginning of Year |  |  |  | $ | (246 | ) |  | $ | (187 | )
Additions for tax positions taken in the current year |  |  |  |  | (23 | ) |  |  | (39 | )
Additions for tax positions of prior years |  |  |  |  | (32 | ) |  |  | (24 | )
Reductions for tax positions of prior years |  |  |  |  | 1 |  |  |  | 4 |
Balance, End of Year |  |  |  | $ | (300 | ) |  | $ | (246 | )
Unrecognized Tax Benefit Reflected In Balance Sheet | The unrecognized tax benefit is reflected in the Consolidated Balance Sheet as follows:
As at December 31 |  |  |  | 2025 |  |  | 2024 |
Income Tax Payable |  |  |  | $ | (15 | ) |  | $ | (2 | )
Other Liabilities and Provisions |  |  |  |  | (15 | ) |  |  | (12 | )
Deferred Income Tax Liability |  |  |  |  | (270 | ) |  |  | (232 | )
Balance, End of Year |  |  |  | $ | (300 | ) |  | $ | (246 | )
Tax Years Subject to Examination, by Jurisdiction | Included below is a summary of the tax years, by jurisdiction, that remain statutorily open for examination by the taxing authorities.
Jurisdiction |  |  |  |  |  | Taxation Year |
United States - Federal |  |  |  |  |  | 2021 - 2025 |
United States - State |  |  |  |  |  | 2019 - 2025 |
Canada - Federal |  |  |  |  |  | 2017 - 2025 |
Canada - Provincial |  |  |  |  |  | 2017 - 2025 |

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