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Income Taxes (Tables)

12 Months Ended

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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