Ovintiv Builds Permian West Texas Options, Dumps Bakken in Twin Deal with EnCap
Monday, April 3, 2023

Ovintiv Inc. signaled last month that the focus this year would be Permian Basin oil, and on Monday, the Denver independent advanced those ambitions by striking a nearly $4.3 billion cash-and stock deal to build West Texas inventory. 

“Substantially all leasehold interest and related assets” were acquired from companies managed by private equity (PE) giant EnCap Investments LP: Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources. The 65,000 net-acre leasehold in Martin and Andrew counties is near Ovitiv acreage, and it includes around 1,050 well locations.

“We are acquiring a unique undeveloped asset in the Northern Midland Basin,” CEO Brendan McCracken said. “Located in some of the best rock in the Permian, these assets have demonstrated leading well performance and are a natural fit with our existing Martin County acreage.

“The acquisition checks all the boxes on our disciplined durable returns strategy,” he said. Along with being “accretive across all key financial metrics,” the leasehold “is in an area where we have a competitive operating advantage, and it significantly increases our premium Permian well inventory.”

Bye Bye, Bakken
During the fourth quarter 2022 conference call, McCracken had said Permian oil and liquids would be the independent’s No. 1 target in 2023. 

To that end, Ovintiv is selling all of its Bakken Shale assets in North Dakota to EnCap’s Grayson Mill Bakken LLC portfolio company for around $825 million. 

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