v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

7.

Income Taxes

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Tax

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

6

 

 

$

1

 

 

$

7

 

 

$

12

 

Canada

 

 

16

 

 

 

25

 

 

 

28

 

 

 

57

 

Total Current Tax Expense (Recovery)

 

 

22

 

 

 

26

 

 

 

35

 

 

 

69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Tax

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

(39

)

 

 

63

 

 

 

(284

)

 

 

159

 

Canada

 

 

100

 

 

 

3

 

 

 

135

 

 

 

(170

)

Total Deferred Tax Expense (Recovery)

 

 

61

 

 

 

66

 

 

 

(149

)

 

 

(11

)

Income Tax Expense (Recovery)

 

$

83

 

 

$

92

 

 

$

(114

)

 

$

58

 

Effective Tax Rate

 

 

15.4

%

 

 

23.1

%

 

 

39.6

%

 

 

28.2

%

 

Ovintiv’s interim income tax expense is determined using the estimated annual effective income tax rate applied to year-to-date net earnings before income tax plus the effect of legislative changes and amounts in respect of prior periods. The estimated annual effective income tax rate is impacted by expected annual earnings, changes in valuation allowances, income tax related to foreign operations, state taxes, the effect of legislative changes, non-taxable items and tax differences on transactions, which can produce interim effective tax rate fluctuations.

 

During the six months ended June 30, 2026, the Canadian current income tax expense includes a recovery related to recently enacted Canadian legislation that accelerates capital cost recovery for years beginning in 2025.

 

During the six months ended June 30, 2026, the deferred tax recovery was primarily due to the estimated annual effective tax rate applied to jurisdictional earnings.

 

The effective tax rate of 15.4 percent for the three months ended June 30, 2026, is lower than the U.S. federal statutory rate of 21 percent primarily due to tax differences on the sale of the Anadarko assets applied to quarterly jurisdictional income.

 

The effective tax rate of 39.6 percent for the six months ended June 30, 2026, is higher than the U.S. federal statutory rate of 21 percent primarily due to tax differences on the sale of the Anadarko assets.

 

The effective tax rate of 23.1 percent for the three months ended June 30, 2025, was higher than the U.S. federal statutory rate of 21 percent primarily due to state tax.

 

The effective tax rate of 28.2 percent for the six months ended June 30, 2025, was higher than the U.S. federal statutory rate of 21 percent primarily due to resolution of prior period tax items.