Ovintiv Inc. has formalised an acquisition agreement for NuVista Energy Ltd., valuing the company at $2.7bn (CAD3.8bn), including net debt. The transaction, unanimously approved by the boards of both companies, consists of 50% cash and 50% Ovintiv shares. It also includes the 18.5 million NuVista shares previously acquired by Ovintiv at CAD16.00 per share.
The deal significantly increases Ovintiv’s footprint in Alberta’s Montney basin. Approximately 140,000 net acres—70% of which remain undeveloped—will be added to the company’s existing portfolio. These assets are expected to deliver an average production of 100,000 barrels of oil equivalent per day in 2026, including 25,000 barrels per day of oil and condensates.
Strategic leverage for the Canadian portfolio
The geographical positioning of the newly acquired assets, adjacent to Ovintiv’s infrastructure, is expected to facilitate operational integration. NuVista already holds 600 million cubic feet per day of raw processing capacity and around 250 million cubic feet per day of firm transportation capacity outside the AECO market, providing increased natural gas price diversification.
A total of 930 net 10,000-foot equivalent drilling locations will be added, with an average cost of $1.3mn per site. Of these, 620 are classified as premium-return locations, defined by an internal rate of return above 35% at $55 per barrel and $2.75/MMBtu natural gas. The remaining 310 are considered high-upside future development sites.
Synergies and expected returns
Annual synergies are projected at $100mn, primarily from savings in production costs, facility design optimisation, and reduced overheads. Per-well costs are expected to decrease by approximately $1mn across the acquired assets, aligning with Ovintiv’s current Montney well cost profile.
The deal is expected to be immediately accretive across all key financial metrics, including adjusted free cash flow per share. The combined Montney portfolio will span 510,000 net acres and is projected to reach 85,000 barrels per day of oil and condensates by 2026.
Debt reduction and capital reallocation
Ovintiv plans to initiate the divestiture of its Anadarko Basin assets in Q1 2026. Proceeds from the sale will be directed towards accelerated net debt reduction, with a target below $4bn by year-end 2026. To support this effort, the company has suspended its share buyback programme for two quarters.
Ovintiv’s base dividend is expected to remain unchanged during this period. Once the debt target is met, the company plans to increase the portion of post-dividend free cash flow allocated to shareholder returns.
2026 consolidated outlook
Group-wide, Ovintiv expects to operate six drilling rigs across its Montney acreage post-closing. Five additional rigs will be active in the Permian and one in the Anadarko Basin. Including NuVista’s contribution, total expected production in 2026 should reach around 230,000 barrels per day of oil and condensates, and 715,000 barrels of oil equivalent per day across all resources, with capital investment below $2.5bn.
