Ovintiv Acquires Montney Neighbor Logan

SUBSCRIBE SEARCH ARTICLES NEWS 'Ovintiv's core land position in the Montney is expected to increase to approximately 720,000 net acres'. Image by songqiuju via iStock

Ovintiv Inc on Monday announced an agreement to acquire Logan Energy Corp, which produces oil near Ovintiv's acreage in the Montney Formation, for around $890 million.

Calgary, Canada-based Logan currently produces about 20,000 barrels of oil equivalent a day of oil and condensate, 70 million cubic feet per day (MMcfd) of natural gas and 1,000 barrels per day (bpd) of other natural gas liquids, Denver, Colorado-based Ovintiv noted in a press release.

"The acquisition is expected to add approximately 420 total net 10,000-foot equivalent oil well locations, and approximately 266,000 net acres (approximately 200,000 core acres, 80 percent undeveloped) in the Montney oil window", Ovintiv said.

"Ovintiv's core land position in the Montney is expected to increase to approximately 720,000 net acres", it said.

"Also included in the transaction is approximately 60,000 net acres with exposure to the Duvernay shale".

Also part of the acquisition are two new oil batteries in Simonette that have a combined capacity of 24,000 bpd, the first of which started up in the third quarter this year, Ovintiv noted. It expects the second to go online in the first quarter of 2027.

Logan also owns 50 percent of a natural gas processing facility in Simonette with a capacity of 90 MMcfd and 65 percent of a natural gas processing facility in Pouce Coupe with a capacity of 57 MMcfd, Ovintiv said.

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The all-cash transaction "delivers value for our shareholders by adding high-margin oil and condensate production and infrastructure, utilizing our operational advantage to drive significant synergies, and adding to our already deep drilling inventory and future growth optionality", said Ovintiv president and chief executive Brendan McCracken.

"The Logan assets have demonstrated leading oil productivity performance and will immediately compete for capital alongside the rest of our portfolio".

Ovintiv expects to fund the purchase with cash on hand and debt.

"Following closing of the transaction early in the first quarter of 2027, Ovintiv expects its net debt to be below $4 billion", Ovintiv said.

"The company's targeted shareholder returns remain unchanged with at least 60 percent of 2026 non-GAAP free cash flow expected to be returned to shareholders via share buybacks and regular dividend payments. Beyond 2026, the target range remains unchanged at 50 percent to 100 percent".

On August 26 Ovintiv said it had thus far entered into transactions that would add about 41,000 net acres of land to its Montney and Permian portfolio, representing over 60 transactions with a total cost of $460 million.

"The transactions will add 240 net 10,000-foot equivalent well locations to Ovintiv's drilling inventory (190 base locations and 50 upside locations)", Ovintiv said at the time.

"The assets are being acquired at an attractive valuation of approximately $11,000 per net acre, and approximately $1.3 million to $1.7 million per well location, when adjusted for minimal production volumes from the assets".

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