US-based exploration and production (E&P) company Ovintiv has agreed to acquire NuVista Energy in a cash and stock transaction valuing the Canadian company at around $2.7bn (C$3.8bn).
Ovintiv previously acquired around 9.6% of NuVista’s shares in a private transaction at C$16.00 per share.
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Under the agreement, Ovintiv will acquire all issued and outstanding common shares of NuVista that Ovintiv does not already own for C$18.00 per share.
The purchase price will be paid 50% in cash and 50% in Ovintiv common stock, producing an effective blended price of roughly C$17.80 per NuVista share.
Upon completion, NuVista shareholders, excluding Ovintiv, will own around 10.6% of the combined company.
This transaction has been unanimously approved by the boards of both companies.
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By GlobalDataIt is expected to close by the end of the first quarter of 2026, subject to approval from NuVista shareholders, courts, and other customary approvals.
Ovintiv president and CEO Brendan McCracken said: “This transaction boosts our free cash flow per share by acquiring top decile rate of return assets in the heart of the Montney oil window at an attractive price.
“The NuVista assets were identified as part of an in-depth technical and commercial analysis to identify the highest-value undeveloped oil resource in North America.
“The position is 70% undeveloped and is an exceptional fit with our existing acreage and infrastructure. The team at NuVista has done a tremendous job building these assets, which have demonstrated top-tier well performance.”
Ovintiv plans to fund the cash portion of the deal through a mix of cash on hand, borrowings under its credit facility and possible proceeds from a term loan.
To finance the acquisition, Ovintiv has paused its share buyback programme for two quarters. Its base dividend, however, is expected to remain the same.
The company also plans to divest its Anadarko asset by the end of 2026, with proceeds intended for debt reduction.
This acquisition adds approximately 930 net 10,000ft equivalent well locations and 140,000 net acres in the Alberta Montney, with around 70% of the acreage undeveloped.
These assets are adjacent to Ovintiv’s current operations and include access to processing and downstream infrastructure.
Morgan Stanley & Co and JP Morgan Securities served as advisors, with Veriten as an independent strategic advisor to Ovintiv on the transaction.
Blake, Cassels & Graydon, Paul, Weiss, Rifkind, Wharton & Garrison, and Gibson, Dunn & Crutcher also served as legal advisors.
McCracken added: “This acquisition, combined with the inventory additions from our bolt-on acquisition work in the Permian, is putting our investors into top-tier resource at very attractive full-cycle returns.
“It demonstrates the power of our durable returns strategy and further reinforces our increasingly distinctive and growing premium-return inventory life.”
Last year, Ovintiv agreed to acquire Montney assets from Paramount Resources in an all-cash transaction worth up to C$3.33bn.
