Ovintiv Inc. has announced it has entered into a definitive purchase agreement to acquire certain Montney assets from Paramount Resources Ltd. in an all-cash transaction valued at approximately US$2.377 billion. Upon closing, the acquisition will add approximately 70 thousand boe/d of production (approximately 25 thousand bpd of oil and condensate), 900 net 10 000 ft equivalent well locations, and approximately 109 000 net acres (approximately 80% undeveloped), in the core of the oil-rich Alberta Montney. The assets are strategically located near the Company’s current operations and have access to midstream infrastructure with available capacity. The transaction has been unanimously approved by Ovintiv’s Board of Directors.
“We are acquiring top decile rate of return assets in the heart of the Montney oil window,” said Ovintiv President and CEO, Brendan McCracken. “This acquisition is the targeted result of our in-depth technical and commercial analysis of the basin to identify the highest value undeveloped oil resource. The acquired assets have demonstrated leading well performance and are a natural fit with our operating advantage and our existing acreage. The assets come with ample midstream capacity, unlocking optionality for mid-single digit growth in our Montney oil and condensate volumes. The Montney is the second largest undeveloped oil resource in North America, and with this acquisition, we have solidified our position as the premier operator in the play.”
Ovintiv has also entered into a definitive agreement to sell substantially all its Uinta Basin assets located in Utah, to FourPoint Resources, LLC, for total cash proceeds of approximately US$2.0 billion.
The Company expects the combined transactions to increase 2025 Non-GAAP Free Cash Flow by approximately US$300 million, driving 2025 Non-GAAP Free Cash Flow per share approximately 20% higher than previously expected.
“The combined transactions advance our durable returns strategy,” continued McCracken. “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.”
The Montney acquisition is expected to be funded through a combination of cash proceeds received from the pending sale of the Uinta assets, cash on hand, as well as borrowings under the Company’s credit facility and/or temporary financing. Ovintiv has received fully committed bridge financing from JPMorgan Chase Bank, N.A. and Morgan Stanley Senior Funding, Inc.
The Company has temporarily paused its share buyback program until the cash borrowed under the temporary financing, totalling approximately US$377 million, has been recovered. This represents the net difference between the purchase price for the Montney assets and the expected divestiture proceeds from the Uinta assets. In the fourth quarter, approximately US$181 million has been redirected to debt reduction from the buyback pause. Ovintiv estimates that share buybacks will resume in 2Q25. The Company’s bolt-on acquisition activity has effectively been paused until the share buyback program has resumed. The base dividend is expected to remain unchanged.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/18112024/ovintiv-acquires-montney-assets-from-paramount/