US independent Ovintiv announced on 14 November that it has agreed to purchase Paramount Resources' core assets in Alberta's Montney Shale in an all-cash deal valued at over $2.3 billion. Ovintiv also disclosed it is divesting its entire position in Utah's Uinta Basin for $2.0 billion in cash.
The Denver-based tight-oil producer said its Montney acquisition includes approximately 109,000 net acres, producing about 70,000 BOE/D. Ovintiv highlighted the upside potential, adding that the asset includes around 900 horizontal well locations, expected to extend its Montney runway by 15 years.
On a pro forma basis, the acquisition boosts Ovintiv’s Montney holdings to nearly 369,000 net acres, with oil and condensate production projected to reach 55,000 B/D. The transaction terms include transferring Ovintiv’s Horn River asset in British Columbia to Paramount and Paramount’s Zama asset in Alberta to Ovintiv.
“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 CEO Brendan McCracken said in a statement.
Ovintiv is doubling down on the Montney at a time when many North American onshore operators are consolidating assets regionally, with Canada emerging as a top target. Since 2022, four other operators have struck billion-dollar deals to enter or expand their positions in the liquids-rich Montney.
The acquisition will be largely financed by Ovintiv’s sale of its Uinta assets to independent FourPoint Resources. The company’s big entry comes after those by Quantum Capital Group and SM Energy which acquired their Uinta assets earlier this year in deals valued at $1.8 billion and $2.0 billion, respectively.
The company anticipates $125 million in annual cost savings through its integration with Paramount, chiefly from reducing well costs by an average of $1.5 million per well, lowering corporate overhead, and leveraging Canadian cash tax savings.
Ovintiv’s portfolio also includes significant positions in the Permian and the Anadarko basins.
