Ovintiv (OVV) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of core oil-rich Alberta Montney assets with ~80% undeveloped acreage for $2.377 billion, funded by divesting Uinta Basin assets for $2 billion, streamlines the portfolio and focuses on high-return Montney and Permian plays.

• Expands Montney oil inventory to approximately 15 years and adds about 900 net 10k locations in the core oil window, enhancing scale in two of North America’s largest oil resource basins.

• Leverages operational excellence, proprietary data, and innovation to target valuable undeveloped resources and transfer best practices to new acreage.

• The Montney acquisition is viewed as a rare value opportunity compared to rising costs in the Permian.

• Transaction aligns with strategy to high-grade the portfolio, increase free cash flow, and enhance resiliency.

Financial terms and conditions

• Montney assets acquired for $2.377 billion in cash; Uinta assets sold for $2 billion, with a net cash outlay of $377 million.

• Funded by Uinta sale proceeds, cash on hand, and temporary/bridge financing; no new equity or long-term debt issued.

• Share buyback program paused until short-term borrowings are repaid; expected to resume in Q2 2025.

• Net debt as of October 31, 2024, is projected at $5.65 billion, with a $4 billion debt target reaffirmed.

• Effective date for both transactions is October 1, 2024, with closings expected by end of Q1 2025.

Synergies and expected cost savings

• Annualized cost synergies of $125 million expected, including well cost savings, overhead reductions, and Canadian tax savings.

• Per well cost savings expected to exceed $1.5 million on acquired assets.

• Capital efficiency improvements are projected to yield $300 million more free cash flow for the same oil production in 2025.