Syria is a crucial partner…
The once red-hot labor market…
Ovintiv has struck a deal to buy untapped oil and gas assets in the Permian from EnCap Investments for $4.3 billion.
The deal will expand Ovintiv’s portfolio by 65,000 acres, Reuters reported. The buyer will pay for the assets with a combination featuring $3.125 billion in cash and 32.6 million shares, Bloomberg noted.
To fund the purchase, Ovintiv will sell its assets in the Bakken shale play in North Dakota to a portfolio company of funds that is managed by the Permian asset seller, EnCap. The size of that deal was set at $825 million.
“As shale hits its middle innings, we believe high-return drilling inventory locations are going to be more valuable than ever," Ovintiv’s chief executive, Brendan McCracken, told Reuters.
The purchase will expand Ovintiv’s operations with more than 1,000 well locations in the most prolific part of the Permian Basin—Midland—where the company has already indicated it has substantial growth plans.
“The acquisition checks all the boxes on our disciplined durable returns strategy,” McCracken said, as quoted by Natural Gas Intelligence. The asset package, he said, “is in an area where we have a competitive operating advantage, and it significantly increases our premium Permian well inventory.”
As a result of the acquisition, Ovintiv’s oil and condensate output in the Permian is seen rising almost twofold to 125,000 barrels daily.
The deal has highlighted continued interest in the Permian despite reports of lower-than-expected well productivity across the U.S. shale patch and a more disciplined approach to production growth in the industry.
“The acquisition checks all the boxes on our disciplined durable returns strategy – it will be immediately and long-term accretive across all key financial metrics, the acreage is in an area where we have a competitive operating advantage, and it significantly increases our premium Permian well inventory,” McCracken said.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com