Ovintiv is reportedly set to sign a deal to acquire private equity firm EnCap Investments’ oil exploration and production assets in the Permian Basin, US.

A potential deal is expected to be valued at $4bn, including debt, reported Reuters citing people familiar with the matter.

The move is part of Ovintiv’s efforts to expand its operations in the Permian basin, where the firm has already committed to undertaking additional drilling work.

EnCap’s assets that could be covered under the deal are in the Midland portion of the Permian basin in Texas.

These assets are currently owned by three EnCap-controlled companies, including Black Swan Oil & Gas, Piedra Resources, and PetroLegacy II.

The sources told the publication that a deal between the firms could be finalised and announced as early as this week. 

The North American exploration and production company could make a cash payment and use stock as currency to fund the deal, the report added.

In July 2022, Ovintiv agreed to divest portions of its oil and gas assets, located in the Uinta and Bakken basins in the US, to an undisclosed firm for $250m.

The Uinta Basin assets include about 3,000 gross vertical wells, which are mature waterflood assets.

The Bakken assets cover 88 wells, located primarily in Richland County, Montana, around 30 miles (48km) from the company’s primary Bakken position.