Ovintiv announced Monday it is acquiring oil exploration and production assets in the Permian Basin, in the United Stataes from Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources, companies controlled by private equity firm EnCap Investments, for about $4.275 billion in cash and stock.
The acquisition supports the company’s efforts to expand its operations in the Permian Basin, where it has already committed to undertaking additional drilling work.
Upon closing, the acquisition will add 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 in close proximity to Ovintiv’s current Permian operations, the company said in a statement.
Ovintiv will pay for the assets with 32.6 million shares and $3.125 billion in cash.
The cash potion is expected to be funded through a combination of cash on hand, cash proceeds from the company’s pending sale of its Bakken assets in North Dakota to Grayson Mill Bakken LLC totalling about $825 million, and borrowings under the company’s credit facility and/or proceeds from new debt financing.
“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,” said Ovintiv CEO Brendan McCracken.
“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.”
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