Ovintiv Inc 3Q26 Preview - Improving Outlook Despite Midstream Headwinds

We see another positive update from OVV despite lingering Montney midstream headwinds. We believe this issue, plus higher royalties, will push crude/condensate volumes to the low end of the 205-210mbpd range, suggesting the strong Permian well performance is more than making up the difference. We see this as a positive trend heading into 2027. Additionally, OVV remains on track to ramp the buyback to reach the 60+% of FY26 FCF target, implying a significant ramp in 4Q26 after acquiring $440mm of undeveloped inventory in 3Q26. Last, we see positive commentary on the improving Canada condensate and tax environment following recent government initiatives. We forecast 3Q26 Adj. EBITDAX of $1,265mm vs. Street $1,254mm, with total production of 627.5mboepd and crude/condensate volumes of 205.7mbpd. We moved our FY26/FY27 WTI forecast to $87/$76/bbl and our FY26 HH forecast to $3.50, moving our FY27/FY28 Adj. EBITDAX forecasts to $5,612/$5,456mm. Our PT remains $85. Reiterate Buy.