Ovintiv Expands in Canada’s Montney Shale With $2.4 Billion Deal
Ovintiv Expands in Canada’s Montney Shale With $2.4 Billion Deal | OilPrice.com
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The oil and gas industry’s mergers and acquisitions continue to expand to Canada, with Ovintiv agreeing to buy assets of Paramount Resources in the Montney shale play for US$2.37 billion (C$3.325 billion).
Under the terms of the deal announced on Thursday, Paramount Resources will sell to Ovintiv its Karr, Wapiti, and Zama properties in the Montney shale play for US$2.37 billion (C$3.325 billion) in cash plus certain properties of Ovintiv in the Horn River Basin, a major shale gas play in British Columbia.
The assets Paramount Resources is selling include approximately 170 net sections of Montney lands with 114 million barrels of oil equivalent proved developed producing reserves.
“We believe this transaction provides an opportunity to realize compelling value for the Assets while retaining a significant inventory of growth opportunities across our land base,” said Jim Riddell, president and CEO of Paramount.
“On completion of the transaction, we will be well positioned to continue the development of our high-growth Duvernay assets, advance a number of our exciting early-stage assets and capitalize on new opportunities.”
The next M&A wave in Canada will consist of opportunistic – rather than necessary – deals, analysts say. And many of these would likely be focused on non-oil sands assets such as the Duvernay Shale or Williston Basin. Likely buyers include U.S. firms seeking inventory at lower valuations compared to the top U.S. shale plays.
Canada has already seen in recent months several deals including Baytex Energy acquiring Ranger Oil Corporation for US$2.2 billion including debt, Crescent Point Energy buying Hammerhead Energy, and ConocoPhillips buying the remaining 50% interest in Surmont from TotalEnergies for approximately US$2.7 billion in cash.
Things are looking up for Canada's oil and gas sector this year, which could lead to more mergers and not fire sales.
U.S. companies, including corporations and private equity firms, have shown growing interest in Canadian oil and gas players due to their lower valuations, high reserves, and increasing takeaway capacity, analysts and dealmakers told Reuters at the end of last year.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
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