Fitch Ratings upgraded Ovintiv Inc. (NYSE:OVV) and Ovintiv Canada, ULC on Monday, moving the companies' Long-Term Issuer Default Ratings and senior unsecured ratings up to BBB from BBB-. Short-Term Issuer Default Ratings and commercial paper ratings were raised to F2 from F3. Fitch assigned Stable Rating Outlooks to both companies' IDRs.
The rating action was driven by what Fitch described as accelerated execution of Ovintiv's debt reduction plan after the company completed the sale of its Anadarko basin asset. On a pro forma basis as calculated by Fitch, gross debt fell materially from about $6.4 billion immediately after the close of the NuVista acquisition to roughly $3.7 billion in the second quarter of 2026.
Fitch's pro forma calculations incorporate a series of year-to-date repayments. Those include the $1.2 billion acquisition-linked term loan, $459 million in 2026 notes, $700 million in 2028 notes that were called in April, and reductions in commercial paper balances.
The NuVista acquisition, at a purchase price of $2.7 billion, materially reshaped Ovintiv's production footprint. Fitch notes the deal added approximately 100 thousand barrels of oil equivalent per day of liquids and condensate-rich Montney production, about 140,000 net acres and a significant drilling inventory. Pro forma for the NuVista acquisition and the 2025 Paramount Montney deal, Fitch places Ovintiv's Montney production at around 400 thousand barrels of oil equivalent per day.
Fitch expressed expectations that condensate demand and pricing will remain strong in Western Canada, citing growing regional heavy oil production as a supporting factor for condensate markets.
On key balance-sheet metrics, Fitch calculated that at year-end 2025 Ovintiv's leverage was 1.1 times, interest coverage was 11.3 times and free cash flow was just under $1.2 billion. After accounting for the year-to-date debt reductions Fitch now expects leverage to remain near 1.0 times.
Alongside the balance-sheet improvements, Ovintiv adjusted its distribution framework. The company widened the range to 50% to 100% of adjusted free cash flow for base dividends and share buybacks.
Ovintiv's production base is now concentrated in two basins: the Montney and the Permian. On a pro forma basis that reflects the NuVista acquisition and the Anadarko sale, the Montney represents about 60% of total production and the Permian about 40%.
Fitch also highlighted that Ovintiv has no bond maturities due until 2030, an element that reduces near-term refinancing risk for the company.
Contextual note - The rating upgrade reflects Fitch's assessment based on the company's executed debt reductions and portfolio changes as set out above.