US-based petroleum company Ovintiv has signed a definitive agreement to acquire certain Montney assets in Alberta, Canada, from Paramount Resources in an all-cash transaction valued at $2.38bn.
Concurrently, the company has agreed to divest nearly all its Uinta Basin assets in Utah, US to FourPoint Resources for approximately $2bn in cash.
Upon finalisation, the Montney acquisition will bring Ovintiv 70,000 barrels of oil equivalent per day (BOE/d) in production, including 25,000 barrels per day (25Mbbls/d) of oil and condensate.
The assets span 109,000 net acres in Alberta, of which 80% remains undeveloped, and include 900 net well locations with 10,000-foot equivalent laterals. These holdings are strategically positioned near Ovintiv’s existing operations, benefiting from nearby midstream infrastructure with available capacity.
The acquisition has been unanimously approved by Ovintiv’s board of directors and is expected to close by Q1 2025, subject to customary conditions.
The sale of the Uinta Basin assets includes 126,000 largely undeveloped net acres in Utah. In Q3 2024, Uinta produced approximately 29Mbbls/d of oil and condensate. This transaction is also expected to close by the end Q1 2025, with an effective date of 1 October 2024.
Ovintiv projects the combined impact of the two transactions to boost its 2025 non-GAAP free cash flow by approximately $300m. Additionally, the Montney acquisition will expand Ovintiv’s premium oil and condensate inventory, adding around 600 premium return drilling locations acquired at less than $1m each, as well as 300 additional upside locations.
Post-acquisition, Ovintiv’s core land position in the Montney will grow to 369,000 net acres, with pro forma oil and condensate production from the play reaching approximately 55Mbbls/d.
The transaction includes the transfer of Ovintiv’s Horn River asset in British Columbia to Paramount Resources as well. Additionally, it involves the transfer of Paramount Resources’ Zama asset in Alberta to Ovintiv.
Ovintiv president and CEO Brendan McCracken said: “The combined transactions advance our durable returns strategy.
“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.”
Following these transactions, Ovintiv’s portfolio will focus on anchor positions in the Montney and Permian basins, supported by the Anadarko asset’s multi-product cash flow. The restructuring aligns with Ovintiv’s long-term strategy to strengthen its position in key North American basins.
Financial advisers for the Montney transaction include J.P. Morgan Securities and Morgan Stanley & Co., while Jefferies and BofA Securities advised on the Uinta sale. Legal counsel for Ovintiv includes Blake, Cassels & Graydon for the Montney acquisition, Kirkland & Ellis for the Uinta transaction, and Gibson, Dunn & Crutcher for financing matters.
Last year, Ovintiv signed a deal worth $4.27bn to acquire certain northern Midland Basin assets in the US from EnCap.
