Ovintiv acquires EnCap's assets for US$ 4.3 billion

On April 3, 2023, Ovintiv Inc. announced its acquisition of assets from Black Swan Oil & Gas, PetroLegacy Energy, and Piedra Resources, managed by EnCap Investments L.P., in a deal valued at CAD 5.703 billion (U$4.275 billion). This cash and stock transaction is set to bolster Ovintiv's Permian operations by adding around 1,050 net well locations and 65,000 net acres in the Midland Basin. The agreement entails the NMB sellers receiving about 32.6 million Ovintiv shares and CAD 4.169 billion (US$3.125 billion) in cash. Funding for the cash portion will come from existing cash, the CAD 1.1 billion (US$825 million) sale of Bakken assets in North Dakota to Grayson Mill Bakken, LLC (another EnCap portfolio company), and potential borrowings or new debt. Ovintiv secured bridge financing from Goldman Sachs Bank USA and Morgan Stanley.

President and CEO Brendan McCracken highlighted the acquisition's alignment with Ovintiv's durable returns strategy, expecting immediate and long-term financial accretion. The company anticipates over 25% higher cash returns per share in the next twelve months and more than 40% in 2024.

Advisors for Ovintiv in this transaction included Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, and TPH&Co., with legal counsel from Gibson, Dunn & Crutcher LLP, Kirkland & Ellis LLP, and Blake, Cassels & Graydon LLP. EnCap's financial advisor was Jefferies LLC, and their legal counsel was Vinson & Elkins LLP.

Deal Type

Merger & Acquisition

Industry

Energy

Transaction

$ 5,703,448,500

Deal Status

Closed

Closing Date

12 June 2023