Ovintiv has signed a definitive purchase agreement to acquire Montney assets from Paramount Resources in an all-cash transaction valued at approximately $2.37bn (C$3.33bn).

This acquisition will significantly enhance Ovintiv’s portfolio in the Montney region, adding approximately 70,000 barrels of oil equivalent per day of production and 109,000 net acres, with 80% of the property undeveloped.

The assets are strategically located near Ovintiv’s existing operations and have access to midstream infrastructure with available capacity.

The transaction received unanimous approval from Ovintiv’s board of directors.

Ovintiv President and CEO Brendan McCracken said: “We are acquiring top decile rate of return assets in the heart of the Montney oil window. This acquisition is the targeted result of our in-depth technical and commercial analysis of the basin to identify the highest-value undeveloped oil resource.

“The acquired assets have demonstrated leading well performance and are a natural fit with our operating advantage and our existing acreage. The assets come with ample midstream capacity, unlocking optionality for mid-single digit growth in our Montney oil and condensate volumes.

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“The Montney is the second-largest undeveloped oil resource in North America, and with this acquisition, we have solidified our position as the premier operator in the play.”

The Montney acquisition expands Ovintiv’s premium oil and condensate inventory to approximately 15 years, adding 600 premium return locations and 300 upside locations.

As part of the Montney transaction, Ovintiv will transfer ownership of its Horn River asset in British Columbia to Paramount, while Paramount will transfer ownership of its Zama asset in Alberta to Ovintiv.

Ovintiv has also agreed to sell its Uinta Basin assets in Utah to FourPoint Resources for $2bn.

The company anticipates these combined transactions will increase its 2025 non-GAAP free cash flow by approximately $300m, boosting free cash flow per share by 20%.

The Montney acquisition will be funded through proceeds from the Uinta sale, cash on hand and borrowings under Ovintiv’s credit facility.

Ovintiv has secured bridge financing from JPMorgan Chase Bank and Morgan Stanley Senior Funding.

The transactions are expected to generate cost synergies of approximately $125m annually, primarily from well cost savings and overhead reductions.

Post-transaction, Ovintiv’s portfolio will focus on anchor positions in the Montney and Permian, supported by strong cash flows from its Anadarko asset.