Ovintiv in US$2.4bn acquisition in oil-rich Montney
Denver-based producer Ovintiv said November 14 it had entered into an agreement to acquire about 109,000 net acres in the oil-rich core area of the Alberta Montney from Paramount Resources for US$2.4bn (C$3.25bn).
On closing, the all-cash transaction will add about 70,000 barrels of oil equivalent (boe)/day of production to Ovintiv’s portfolio, including 25,000 barrels/day of oil and condensate. The assets are located “strategically close” to Ovintiv’s existing Montney assets.
At the same time, Ovintiv said it would sell substantially all of its Unita Basin assets in Utah to FourPoint Resources for total cash proceeds of about US$2.0bn.
“The combined transactions advance our durable returns strategy,” Ovintiv CEO Brendan McCracken said. “We are high grading our portfolio, significantly increasing free cash flow, and enhancing our resiliency, enabling us to build on our track record of strong shareholder returns.”
Ovintiv expects the combined transactions to increase free cash flow in 2025 by about US$300mn and yield annual cost synergies of about US$125mn.
Paramount, meanwhile, said the transaction with Ovintiv includes 170 net sections in the Karr, Wapiti and Zama areas of the Alberta Montney and certain Horn River Basin properties in northeastern BC. Q3 2024 sales volumes for the assets were about 67,600 boe/day (50% liquids).
The Horn River assets include Ovintiv’s 50% operated interest in an existing joint venture with Paramount at the Two Island Lake field and a 50% operated interest at the Kiwigana field. About 40mn ft3/day of gas production from the two fields has been shut-in since March 2024.
“We believe this transaction provides an opportunity to realise compelling value for the assets while retaining a significant inventory of growth opportunities across our land base”, Paramount CEO Jim Riddell said. “On completion of the transaction, we will be well positioned to continue the development of our high-growth Duvernay assets, advance a number of our exciting early-stage assets and capitalise on new opportunities.”
All the transactions are expected to close in Q1 2025, with an effective date of October 1, 2024.