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Multi-Billion Dollar Deal: Ovintiv to Expand Midland Basin Portfolio with EnCap Acquisition and Exit Bakken
04/24/2023
Ovintiv Strikes Billion-Dollar Oil Deal, Doubling Production in Permian Basin with EnCap's Black Swan, PetroLegacy, and Piedra Resources.
The deal, which was approved unanimously by Ovintiv's board, is slated to close on June 30.
With over $5 billion in transactions announced on April 3, Ovintiv is set to expand its oil production by snatching up 65,000 net acres in the core of the Midland Basin. The deal with EnCap will give them a strategic edge in Martin and Andrews counties, Texas, with approximately 1,050 net, 10,000-ft well locations added to their inventory.
In another separate deal, Ovintiv will be leaving the Bakken to play in Williston Basin with EnCap as the buyer.
Check out these quick-fire highlights from Ovintiv's recent announcement
- Total cash proceeds of $825 million in the definitive agreement with EnCap's Grayson Mill Bakken LLC.
- Ovintiv's Bakken leasehold encompasses 46,000 net acres as of Dec. 31, 2022.
- Estimated production in the first quarter of 2023 is set to average around 37,000 barrels of oil equivalent per day (boe/d), with 60% oil and condensates.
Ovintiv's strategic move to sell its Bakken assets is set to turn the industry on its head. With this decision, the company is primed for growth and expansion, and we're excited to see what they have in store next.
Ovintiv's Permian land position is expected to increase to approximately 179,000 net acres
Ovintiv's latest acquisition is set to change the company's presence in the Permian Basin. With the purchase of a "unique undeveloped asset" in the Northern Midland Basin, Ovintiv is expanding its inventory life and scale in the region.
The Midland deal includes:
- 1,050 locations.
- 800 premium-return well locations.
- Around 250 high-potential upside locations.
Ovintiv President and CEO Brendan McCracken raved about the acquisition, stating that it will be immediately and long-term accretive across all key financial metrics.
As a result of the deal, Ovintiv's Permian land position is set to increase to approximately 179,000 net acres.
Ovintiv anticipates that its Permian oil and condensate production will almost double to about 125,000 bbl/d upon completion. Through optimized operations and economies of scale, the company expects to achieve significant cost savings in well development across its combined Permian assets, as stated in a press release.
McCracken, the company's spokesperson, expressed confidence in their ability to convert this high-quality resource into tremendous value for their shareholders due to their operational efficiency, culture of innovation, and expertise and scale in the Permian Basin.
What we know about Ovintiv
Ovintiv is a Canadian-based oil and natural gas exploration and production company. The company operates in North America, with a significant presence in the Permian Basin, Eagle Ford, and Montney regions.
- Ovintiv has a market capitalization of approximately $7.1 billion, as of April 2023.
- The company had proved reserves of 1.8 billion BOE (barrels of oil equivalent) as of December 31, 2021.
- In 2021, Ovintiv produced an average of 452,100 BOE per day.
- Ovintiv has a workforce of approximately 1,500 employees.
- The company is committed to environmental stewardship and has reduced its greenhouse gas emissions by 30% since 2014.
- Ovintiv has a diverse portfolio of assets, with approximately 55% of its production coming from natural gas and 45% from oil.
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Breaking Barriers FireBird II, Empowered by Quantum Technology, Surpasses $500MM Funding Milestone for Permian Ventures
Following the success of FireBird Energy's $1.75 billion sale to Diamondback last year, the emergence of FireBird II signals a new chapter in the Permian Basin. Get ready for some exciting news from the energy industry. FireBird Energy II, the new player in the Permian Basin, has just secured $500 million in equity funding to fuel their acquisitions. With backing from the esteemed private equity firm Quantum Energy Partners, FireBird Energy II is poised to make waves in the industry.
Exploring the Energy Lifeline: A Tour of Williston Basin's Midstream Infrastructure
The Williston Basin, which spans parts of North Dakota, Montana, Saskatchewan, and Manitoba, is a major oil-producing region in North America. In order to transport crude oil and natural gas from the wells to refineries and other destinations, a vast pipeline infrastructure has been built in the area. The pipeline infrastructure in the Williston Basin consists of a network of pipelines that connect production sites to processing facilities, storage tanks, and major pipeline hubs
In Wyoming during 2023, the oil and gas industry experienced various trends and developments. Wyoming ranked 8th nationally in both crude oil and natural gas production, significantly contributing to the economy through property and severance taxes. The state had a peak of 27,951 producing wells in 2022, including oil and gas wells, with 33 operating gas plants processing nearly 97% of the state's gas production. Notably, 21 of Wyoming's 23 counties produce oil and/or natural gas, with Converse County leading in crude oil production and Sublette County in natural gas production. U.S. Energy Information Administration (EIA) predicted that crude oil production across the United States would increase to 12.8 million b/d in 2024. Throughout 2023, oil production in Wyoming showed an upward trend, with more than 95 million barrels expected to be produced, an increase of about 3 million barrels from 2022. This rise in oil production was partly attributed to the completion of 110 newly drilled oil wells in the first half of the year, mainly in the Powder River Basin. However, natural gas production faced a decline due to the aging of wells and a low number of new gas wells being completed. Only 18 new gas wells were finished in the first half of 2023, with a noted interest in drilling applications, suggesting potential future developments.
XCL Resources is seeking approval from the Federal Trade Commission (FTC) for its proposed acquisition of Altamont Energy LLC, another Utah-based oil producer. This initiative is backed by XCL's parent entity, EnCap Investments LP, a notable private equity firm. Discussions about purchasing Colorado-based Altamont Energy began in the previous summer, as highlighted in FTC documentation.
Tallgrass Energy has started a new open season for the Pony Express Pipeline, and this is the second time they're doing it in 2024. They're looking for companies that want to move their crude oil from the Williston Basin and are offering special rates as an incentive. This 30-day event kicked off on March 11. To get the full details, companies need to sign a confidentiality agreement with Tallgrass.