Canada: Ovintiv announces agreement to acquire Montney oil producer, Logan Energy Corp.

• Agreement reached to acquire Logan Energy Corp. for C$1.40 per share in cash for total consideration of approximately $890 million (C$1.26 billion) including the assumption of Net Debt
• Ovintiv's shareholder returns plan is unchanged – targeting 2026 shareholder returns of at least 60% of Non-GAAP Free Cash Flow
• Acquisition is expected to add approximately 266,000 net acres and approximately 20 thousand barrels of oil equivalent per day ('MBOE/d') in the oil-rich window of the Montney
• Montney-only inventory additions of approximately 420 total net 10,000-foot equivalent oil well locations, including approximately 220 premium(1) return well locations at an average cost of $1.5 million per premium location(2) and approximately 200 upside locations
• Includes ownership of two new oil batteries and interests in two natural gas processing facilities which are expected to enhance Montney margins and enable future oil growth optionality
• Transaction is expected to be immediately and long-term accretive across all key financial metrics including Non-GAAP Cash Flow per Share accretion of approximately 5% in 2027
• Annual cost synergies expected to total approximately $60 million

Ovintiv and Logan Energy Corp. have entered into a definitive agreement whereby Ovintiv will acquire all of the outstanding shares of Logan in an all-cash transaction that values Logan at approximately $890 million (C$1.26 billion) including expected Net Debt at closing. 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% undeveloped) in the Montney oil window. Current production from the acquired assets is approximately 20 MBOE/d (approximately 7 thousand barrels per day ('Mbbls/d') of oil and condensate, 70 million cubic feet per day ('MMcf/d') of natural gas and 1 Mbbls/d of other NGLs (C2 to C4)). The assets are located in close proximity to Ovintiv's existing Montney operations and include two new oil batteries and additional natural gas processing capacity.

'This bolt-on 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 CEO, Brendan McCracken. 'The Logan assets have demonstrated leading oil productivity performance and will immediately compete for capital alongside the rest of our portfolio.'

The transaction is expected to be funded through a combination of the Company's cash on hand, borrowings under its credit facility and its commercial paper program.

(1) Premium return well locations defined as generating a greater than 35% internal rate of return at $55/bbl WTI oil and $2.75/MMBtu NYMEX natural gas prices.

(2) Assumes PDP value of $27,500/BOE/d.

Transaction Overview:

• Immediately Accretive – The transaction is expected to be immediately and long-term accretive across key operational and financial metrics including Non-GAAP Cash Flow per Share of 5%, and Non-GAAP Free Cash Flow per Share of 3% in 2027.
• Increases Montney Scale – The transaction is expected to add approximately 420 total net 10,000-foot equivalent oil well locations (220 premium return locations and approximately 200 upside locations, all located in the Simonette and Pouce Coupe areas). Ovintiv's core land position in the Montney is expected to increase to approximately 720,000 net acres. Also included in the transaction is approximately 60,000 net acres with exposure to the Duvernay shale. A map of Ovintiv's pro forma acreage is available on its website at: https://investor.ovintiv.com/image/OVV+Pro+Forma+Montney+Map.pdf.
• Significant Synergies – The transaction is expected to generate cost synergies of approximately $60 million annually, comprised primarily of capital savings, production cost savings and overhead cost reductions. Capital cost savings are estimated at more than $2 million per well across the acquired assets, consistent with Ovintiv's current Montney well costs.
• Infrastructure Ownership – Logan has 100% ownership in two new oil batteries in Simonette with combined capacity of 24 Mbbls/d, the first of which came online during the third quarter of 2026, and the second is expected to come online by the end of the first quarter of 2027. Logan also has 50% ownership at a natural gas processing facility in Simonette with total capacity of 90 MMcf/d and 65% ownership in a natural gas processing facility in Pouce Coupe with total capacity of 57 MMcf/d. Ownership in these facilities is expected to enhance Ovintiv's Montney margins and provide future growth optionality.
• Maintains Strong Balance Sheet – Following closing of the transaction early in the first quarter of 2027, Ovintiv expects its Net Debt to be below $4 billion. The Company's targeted shareholder returns remain unchanged with at least 60% 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% to 100%.

Refer to Note 1 for information regarding Non-GAAP Measures in this release.

As part of the transaction, 100% of the shares of Logan Oil Corp., a newly formed wholly owned subsidiary of Logan, will be spun out to the shareholders of Logan and will include select Logan assets outside the Montney and Duvernay fairways. More details specific to Logan Oil Corp. can be found on Logan's website.

Timing and Approvals
The transaction has been unanimously approved by the Boards of Directors of both Ovintiv and Logan and is expected to close early in the first quarter of 2027, subject to the receipt of Logan shareholder, court and regulatory approvals and the satisfaction of other customary closing conditions.

Advisors

RBC Capital Markets is serving as exclusive financial advisor to Ovintiv on the transaction. Blake, Cassels & Graydon LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are serving as legal advisors to Ovintiv on the transaction.

Original announcement link

Source: Ovintiv