for 65,000 acres of largely undeveloped resources and 1,050 well locations in the prolific Permian Basin in Texas.Saudi Arabia and other major oil producers said they will cut output by more than a million barrels a day.
The 65,000 acres are in the core of the Midland Basin, close to Ovintiv’s existing operations in the Permian oil field, the company said. The land is in “some of the best rock in the Permian” and is an area where the company has a competitive operating advantage, said Ovintiv President and CEO Brendan McCracken.
The company also said it has an agreement to sell all its assets in the Bakken oil shale field in North Dakota to EnCap for about $825 million.The company moved its headquartersEncana had extensive oil and gas operations in Colorado for a while. Ovintiv doesn’t currently have sites in the state, according to its website.
The $4.275 billion purchase materially boosts Ovintiv’s “corporate inventory life,” said Andrew Dittmar, director at“That addresses one of the most significant concerns with Ovintiv, which was the relatively short runway of core locations in its portfolio,” Dittmar said in an email.
Dittmar said investors are closely scrutinizing the life of the inventory when valuing companies focused on oil production. He said there’s “a bit of luck in the timing” of Ovintiv’s announcement, coming a day after OPEC+, a trading bloc that includes Russia, said it will slash output by more than a million barrels a day.
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