Ovintiv's NuVista Deal Expands Montney Scale, Adds 930 Drilling Locations and Immediate Free Cash Flow Accretion

Acquisition Delivers Scale and Quality in the Montney

Ovintiv Inc. (NYSE:OVV, TSX:OVV) has agreed to acquire NuVista Energy Ltd. for approximately $2.7 billion (C$3.8 billion), a transformative move that adds 140,000 net acres and around 100 MBOE/d (thousand barrels of oil equivalent per day) in the heart of the oil-rich Alberta Montney region. This transaction is expected to deliver an immediate and long-term boost to all key financial metrics—including a projected 10% increase in non-GAAP free cash flow—and provide substantial annual synergies of $100 million.

Deal Details Highlight Significant Drilling Upside and Infrastructure

With this acquisition, Ovintiv will add roughly 930 total net 10,000-foot equivalent well locations—comprising approximately 620 premium return wells (defined as greater than 35% internal rate of return at $55/bbl WTI and $2.75/MMBtu NYMEX prices) and about 310 upside locations. The average cost per new location stands at $1.3 million. NuVista’s assets are largely undeveloped (70%), giving Ovintiv future growth options, enhanced by access to 600 MMcf/d of secured processing capacity and 250 MMcf/d of firm natural gas transportation outside the local AECO market, reducing Ovintiv’s Montney AECO exposure from 30% to 25%.

Financial Strength Maintained Amidst Growth

Despite the scale of the transaction, Ovintiv’s balance sheet strength remains a priority. As of September 30, 2025, non-GAAP net debt stands at $5.19 billion, and the company expects to reduce this to below $4 billion by the end of 2026, largely using proceeds from a planned divestiture of its Anadarko assets. This discipline is designed to support further share buybacks and enhanced shareholder returns once leverage targets are met.

Synergies and Strategic Flexibility for Future Growth

The merger unlocks substantial cost and operational efficiencies: annual savings of $100 million and estimated per-well cost reductions of about $1 million, aligning NuVista’s operations with Ovintiv’s streamlined practices. Enhanced infrastructure and strategic natural gas market access support more than 5% annual growth in Montney oil and condensate output over the next three to five years. After closing, NuVista shareholders (excluding Ovintiv) will own approximately 10.6% of the pro forma company, while Ovintiv’s core Montney land base will expand to 510,000 net acres.

Key Takeaways for Investors: Immediate Upside and Long-Term Optionality

This acquisition stands out for its immediate accretion to key per-share metrics, significant inventory of high-return wells, and access to underutilized processing and downstream capacity—without sacrificing financial strength or capital discipline. With annual synergies projected at $100 million, new drilling locations and production capacity, and continued focus on shareholder returns once net debt targets are achieved, the deal could prove transformative for Ovintiv’s profile in North American energy.

Looking Ahead: Transaction Timing and Investor Updates

The transaction has received unanimous board approval from both Ovintiv and NuVista, with closure anticipated by the end of Q1 2026 pending shareholder, court, and customary regulatory consents. Ovintiv will discuss further details on a November 5, 2025, conference call, with access details on their website for investors seeking to learn more about this strategic pivot.

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