What's Happening?
Ovintiv Inc. has announced a definitive agreement to acquire Calgary-based NuVista Energy Ltd. in a cash-and-stock transaction valued at approximately $2.7 billion. This acquisition marks a significant
expansion of Ovintiv's oil-weighted position in Canada's Montney formation. The deal, which has been unanimously approved by both companies' boards, is expected to close by the end of the first quarter of 2026. Under the agreement, Ovintiv will acquire all outstanding NuVista shares it does not already own for C$18.00 per share, split evenly between cash and Ovintiv common stock. The transaction includes NuVista's 140,000 net acres in the Alberta Montney, with about 70% undeveloped, and average production of 100,000 barrels of oil equivalent per day (boed), including 25,000 barrels per day of oil and condensate.
Why It's Important?
The acquisition is strategically significant for Ovintiv as it adds approximately 930 net 10,000-foot equivalent well locations, with 620 classified as premium return opportunities. Ovintiv expects the deal to be immediately accretive across all key metrics, boosting free cash flow per share by about 10% and generating estimated annual synergies of $100 million through capital efficiencies, cost savings, and streamlined operations. This move is part of a broader trend of consolidation in the North American shale industry, as producers aim to scale up high-margin, infrastructure-rich positions in leading basins. The acquisition will expand Ovintiv's Montney position to over 510,000 net acres, with expected 2026 oil and condensate output of roughly 85,000 barrels per day from the play.
What's Next?
Ovintiv plans to fund the cash portion of the acquisition through a mix of existing liquidity and new borrowing, while temporarily pausing its share buyback program. The company also announced plans to divest its Anadarko Basin assets beginning in early 2026, with proceeds earmarked for accelerated debt reduction. Ovintiv aims to reduce its net debt below $4 billion by the end of 2026, enabling increased shareholder returns. The completion of this acquisition will further solidify Ovintiv's position in the Montney formation, enhancing its production capabilities and financial performance.
