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Financial Instruments and Risk Management | 12 Months Ended
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Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments and Risk Management |
25. | Financial Instruments and Risk Management
A) FINANCIAL INSTRUMENTS Ovintiv’s financial assets and liabilities are recognized in cash and cash equivalents, accounts receivable and accrued revenues, investment in marketable securities, other assets, accounts payable and accrued liabilities, risk management assets and liabilities, long-term debt, and other liabilities and provisions. B) RISK MANAGEMENT ACTIVITIES Ovintiv uses derivative financial instruments to manage its exposure to fluctuating commodity prices and foreign currency exchange rates. The Company does not apply hedge accounting to any of its derivative financial instruments. As a result, gains and losses from changes in the fair value are recognized in net earnings (loss). COMMODITY PRICE RISK Commodity price risk arises from the effect that fluctuations in future commodity prices may have on revenues from production. To partially mitigate exposure to commodity price risk, the Company has entered into various derivative financial instruments. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors. Oil and NGLs - To partially mitigate oil and NGL commodity price risk, the Company uses WTI- and NGL-based contracts such as options. Ovintiv has also entered into basis swaps to manage against widening price differentials between various production areas, products and price points. Natural Gas - To partially mitigate natural gas commodity price risk, the Company uses NYMEX-based contracts such as fixed price contracts and options. Ovintiv has also entered into forward contracts to manage against widening price differentials between various production areas and benchmark price points. FOREIGN EXCHANGE RISK Foreign exchange risk arises from changes in foreign currency exchange rates that may affect the fair value or future cash flows from the Company’s financial assets or liabilities. To partially mitigate the effect of foreign exchange fluctuations on future commodity revenues and expenses, the Company may enter into foreign currency derivative contracts. As at December 31, 2025, the Company does not have any notional U.S. dollar denominated currency swaps. RISK MANAGEMENT POSITIONS AS AT DECEMBER 31, 2025
|  | Notional Volumes |  | Term |  | Average Price |  | Fair Value |
Oil and NGL Contracts |  |  |  |  |  | US$/bbl |  |  |
WTI Three-Way Options |  |  |  |  |  |  |  |  |
Sold call / bought put / sold put |  | 36.2 Mbbls/d |  | 2026 |  | 71.14 / 60.21 / 50.86 |  |  | 48 |
Basis Contracts (1) |  |  |  | 2026 |  |  |  |  | - |
Oil and NGLs Fair Value Position |  |  |  |  |  |  |  |  | 48 |
Natural Gas Contracts |  |  |  |  |  | US$/Mcf |  |  |
Fixed Price Contracts |  |  |  |  |  |  |  |  |
AECO Fixed Price |  | 100 MMcf/d |  | 2026 |  | 2.33 |  |  | 12 |
NYMEX Three-Way Options |  |  |  |  |  |  |  |  |
Sold call / bought put / sold put |  | 462 MMcf/d |  | 2026 |  | 6.46 / 3.33 / 2.61 |  |  | 27 |
Sold call / bought put / sold put |  | 25 MMcf/d |  | 2027 |  | 6.16 / 3.50 / 2.50 |  |  | - |
Basis Contracts (2) |  |  |  | 2026 |  |  |  |  | - |
|  |  |  | 2027 |  |  |  |  | 3 |
|  |  |  | 2028 - 2030 |  |  |  |  | - |
Physical Forward Contracts (3) |  |  |  | 2026 - 2037 |  |  |  |  | (15 | )
Natural Gas Fair Value Position |  |  |  |  |  |  |  |  | 27 |
Total Fair Value Position |  |  |  |  |  |  |  | $ | 75 |
(1) Ovintiv has entered into oil differential swaps associated with Canadian condensate and WTI. (2) Ovintiv has entered into natural gas basis swaps associated with AECO and NYMEX. (3) Ovintiv has entered into natural gas physical forward contracts associated with JKM (100 MMcf/d) and Chicago (100 M Mcf/d) as described in Note 24. EARNINGS IMPACT OF REALIZED AND UNREALIZED GAINS (LOSSES) ON RISK MANAGEMENT POSITIONS
For the years ended December 31 |  |  |  | 2025 |  |  | 2024 |  |  | 2023 |
Realized Gains (Losses) on Risk Management |  |  |  |  |  |  |  |  |  |  |
Commodity and Other Derivatives: |  |  |  |  |  |  |  |  |  |  |
Revenues (1) |  |  |  | $ | 166 |  |  | $ | 271 |  |  | $ | (43 | )
Foreign Currency Derivatives: |  |  |  |  |  |  |  |  |  |  |
Foreign exchange (2) |  |  |  |  | (98 | ) |  |  | (3 | ) |  |  | (8 | )
Interest Rate Derivatives: |  |  |  |  |  |  |  |  |  |  |
Interest rate (3) |  |  |  |  | - |  |  |  | - |  |  |  | 1 |
|  |  |  | $ | 68 |  |  | $ | 268 |  |  | $ | (50 | )
Unrealized Gains (Losses) on Risk Management |  |  |  |  |  |  |  |  |  |  |
Commodity Derivatives: |  |  |  |  |  |  |  |  |  |  |
Revenues |  |  |  | $ | 6 |  |  | $ | (136 | ) |  | $ | 194 |
Foreign Currency Derivatives: |  |  |  |  |  |  |  |  |  |  |
Foreign exchange |  |  |  |  | 89 |  |  |  | (100 | ) |  |  | 21 |
|  |  |  | $ | 95 |  |  | $ | (236 | ) |  | $ | 215 |
Total Realized and Unrealized Gains (Losses) on Risk Management, net |  |  |  |  |  |  |  |  |
Commodity and Other Derivatives: |  |  |  |  |  |  |  |  |  |  |
Revenues (1) |  |  |  | $ | 172 |  |  | $ | 135 |  |  | $ | 151 |
Foreign Currency Derivatives: |  |  |  |  |  |  |  |  |  |  |
Foreign exchange (2) |  |  |  |  | (9 | ) |  |  | (103 | ) |  |  | 13 |
Interest Rate Derivatives: |  |  |  |  |  |  |  |  |  |  |
Interest rate (3) |  |  |  |  | - |  |  |  | - |  |  |  | 1 |
|  |  |  | $ | 163 |  |  | $ | 32 |  |  | $ | 165 |
(1) There were no realized gains or losses related to other derivative contracts for the year ended December 31, 2025 (2024 - gain of $4 million; 2023 - gain of $1 million). (2) Includes a realized foreign exchange loss of approximately $97 million during 2025, related to notional U.S. dollar denominated currency swaps as discussed in Note 5. (3) The interest rate swap in 2023 was executed and settled in relation to the senior notes issuance described in Note 15. The gain was recognized in interest expense. RECONCILIATION OF UNREALIZED RISK MANAGEMENT POSITIONS FROM JANUARY 1 TO DECEMBER 31
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | Fair Value |  |  | Total Unrealized Gain (Loss) |  |  | Total Unrealized Gain (Loss) |  |  | Total Unrealized Gain (Loss) |
Fair Value of Contracts, Beginning of Year |  | $ | (20 | ) |  |  |  |  |  |  |  |  |
Change in Fair Value of Contracts in Place at Beginning of Year |  |  |  |  |  |  |  |  |  |  |  |
and Contracts Entered into During the Year |  |  | 163 |  |  | $ | 163 |  |  | $ | 32 |  |  | $ | 165 |
Fair Value of Contracts Realized During the Year |  |  | (68 | ) |  |  | (68 | ) |  |  | (268 | ) |  |  | 50 |
Fair Value of Contracts, End of Year |  | $ | 75 |  |  | $ | 95 |  |  | $ | (236 | ) |  | $ | 215 |
Risk management assets and liabilities arise from the use of derivative financial instruments and are measured at fair value. See Note 24 for a discussion of fair value measurements. UNREALIZED RISK MANAGEMENT POSITIONS
As at December 31 |  |  |  | 2025 |  |  | 2024 |
Risk Management Assets |  |  |  |  |  |  |  |
Current |  |  |  | $ | 86 |  |  | $ | 108 |
Long-term |  |  |  |  | 4 |  |  |  | - |
|  |  |  |  | 90 |  |  |  | 108 |
Risk Management Liabilities |  |  |  |  |  |  |  |
Current |  |  |  |  | 2 |  |  |  | 107 |
Long-term |  |  |  |  | 13 |  |  |  | 21 |
|  |  |  |  | 15 |  |  |  | 128 |
Net Risk Management Assets (Liabilities) |  |  |  | $ | 75 |  |  | $ | (20 | )
C) CREDIT RISK Credit risk arises from the potential that the Company may incur a loss if a counterparty to a financial instrument fails to meet its obligation in accordance with agreed terms. While exchange-traded contracts are subject to nominal credit risk due to the financial safeguards established by the exchanges and clearing agencies, over-the-counter traded contracts expose Ovintiv to counterparty credit risk. Counterparties to the Company’s derivative financial instruments consist primarily of major financial institutions and companies within the energy industry. This credit risk exposure is mitigated through the use of credit policies approved by the Board of Directors governing the Company’s credit portfolio including credit practices that limit transactions according to counterparties’ credit quality. Mitigation strategies may include master netting arrangements, requesting collateral, purchasing credit insurance, and/or transacting credit derivatives. The Company executes commodity derivative financial instruments under master agreements that have netting provisions that provide for offsetting payables against receivables. Ovintiv actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. As at December 31, 2025, Ovintiv’s maximum exposure of loss due to credit risk from derivative financial instrument assets on a gross and net fair value basis was $91 million and $90 million, respectively, as disclosed in Note 24. The Company had no significant credit derivatives in place and held no collateral at December 31, 2025. Any cash equivalents include high-grade, short-term securities, placed primarily with financial institutions with investment grade ratings. Any foreign currency agreements entered into are with major financial institutions that have investment grade credit ratings. A substantial portion of the Company’s accounts receivable are with customers and working interest owners in the oil and gas industry and are subject to normal industry credit risks. As at December 31, 2025, approximate ly 94 percent (2024 - 94 percent) of Ovintiv’s accounts receivable and financial derivative credit exposures were with investment grade counterparties.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 825 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/825/tableOfContent + Details
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