Upon closing, the acquisition will add approximately 70,000 barrels of oil equivalent per day (boepd) of production, consisting of approximately 25,000 barrels per day (bpd), Ovintiv said in a news release.
The acquisition also adds 900 net 10,000-foot equivalent well locations and approximately 109,000 net acres, of which approximately 80 percent are undeveloped, in the core of the oil-rich Alberta Montney.
Ovintiv said that the assets are strategically located near its current operations and have access to midstream infrastructure with available capacity. The Montney transaction will expand the company’s premium oil and condensate inventory in the play to approximately 15 years with the addition of approximately 600 premium return locations and approximately 300 upside locations, it remarked.
Further, Ovintiv also entered into a definitive agreement to sell substantially all of its Uinta Basin assets located in Utah, to FourPoint Resources, LLC, for total cash proceeds of approximately $2.0 billion.
The divestiture includes approximately 126 thousand net acres of largely undeveloped land. Ovintiv’s third-quarter Uinta oil and condensate production was approximately 29,000 bpd.
The effective date of the acquisition of the Montney assets and the Uinta disposition is October 1, 2024. The transactions, which are expected to close by the end of the first quarter of 2025, are subject to the satisfaction of customary closing conditions and closing adjustments.
“We are acquiring top decile rate of return assets in the heart of the Montney oil window,” Ovintiv President and CEO, Brendan McCracken said. “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”.
McCracken added, “The sale of our Uinta position is aligned with our track record of unlocking significant value from our assets while focusing our portfolio and extending inventory runway in our core areas. We are grateful for the hard work and dedication of our Uinta team”.
Ovintiv plans to fund the Montney acquisition 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.
Following the closing of the transactions, Ovintiv said it plans to run an average of three rigs across its combined Montney acreage, five rigs on its Permian acreage and one to two rigs on its Anadarko acreage. Approximately 85 to 90 percent of 2025 total capital is expected to be allocated to the Permian and the Montney.
Ovintiv said it expects to deliver 2025 total average oil and condensate production volumes of approximately 205,000 bpd and total volumes of approximately 620,000 boepd, with capital investment of approximately $2.2 billion, or about $100 million less than it previously expected.
