Ovintiv has closed transactions related to Midland Basin and Bakken oil and gas assets, the Denver-based company said in a news release.
The combined transactions are expected to improve capital efficiency by 15 [percent] and sustainably increase cash returns per share by more than 25 [percent]” said Ovintiv.
Ovintiv has closed its acquisition of the core Midland Basin assets involving all leasehold interests and related assets of Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources (NMB’s sellers), which are portfolio companies of funds managed by EnCap Investments LP The cash and stock transaction was valued at $4.275 billion, according to the press release.
The deal adds approximately 1,050 net 10,000-foot well locations to Ovintiv’s Permian inventory and approximately 65,000 net acres in the core of the Midland Basin, strategically located near Ovintiv’s current Permian operations, say the company
“Located in some of the best rock in the Permian, these assets have demonstrated strong performance and are a natural fit with our existing acreage in Martin County. The acquisition ticks all the boxes of our disciplined sustainable returns strategy: it will immediate and long-term positive across all key financial metrics, the acreage is in an area where we have a competitive operating advantage and will significantly increase our premium Permian well inventory,” said Ovintiv President and CEO Brendan McCracken , in a previous statement from the company.
Ovintiv also closed the sale of all of its Bakken assets, located in North Dakota’s Williston Basin, to Grayson Mill Bakken LLC in an all-cash transaction for $825 million. Grayson Mill Bakken is a fund portfolio company managed by EnCap.
Ovintiv’s land holdings in the play totaled 46,000 net acres as of December 31, 2022, and first-quarter Bakken production is expected to average approximately 37,000 barrels of oil equivalent per day (boepd ), the company said.
“The sale of our Bakken asset is aligned with our track record of realizing significant value in non-core assets, while valuing our portfolio and expanding the inventory runway in our core areas,” McCracken said .
Ovintiv’s portfolio will now focus on four major North American basins, each with more than 125,000 net acres of land, according to a previous press release.
With the closing of the transactions, Ovintiv upgraded its second quarter guidance for total production to a range of 520,000 to 540,000 boepd from 515,000 to 535,000 boepd. It also upgraded its full-year 2023 guidance to 521,000 to 546,000 boepd from 520,000 to 545,000 boepd.
By 2024, Ovintiv expects to deliver total company oil and condensate production of more than 200,000 barrels per day (bpd) with a total capital investment of between $2.1 billion and $2.5 billion. The company’s production profile is expected to normalize in mid-2024 with second-half 2024 oil with condensate production stabilizing at 200,000 bpd, according to the press release.
According to its earnings report, Ovintiv said it generated first-quarter 2023 net income of $487 million, or $1.97 per diluted common share, and cash from operating activities of $1.068 billion. The company announced a 20 percent increase in quarterly dividend payments to 30 cents per share, effective for the record date of June 2023.
Ovintiv said its first-quarter average total production volumes were above the company’s guidance for all products by approximately 511,000 bpd, including 166,000 bpd of oil and condensates, 86,000 bpd of other gas liquids natural and 1,555 million cubic feet per day of natural gas.
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