Denver-based Ovintiv confirmed Monday that it agreed to purchase substantially all leasehold interests and related assets of Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources in Midland Basin in a cash-and-stock deal valued at $4.275 billion ($3.125 billion cash). The acquisition will add about 1,050 net well locations of 10,000 feet to Ovintiv’s Permian inventory (800 premium return locations) and about 65,000 net acres in the core of the Midland Basin near Ovintiv’s current operations. Black Swan, PetroLegacy and Piedra are portfolio companies of funds managed by EnCap Investments.
“Located in some of the best rock in the Permian,” president and CEO Brendan McCracken said, “these assets have demonstrated leading well performance and are a natural fit with our existing Martin County acreage… The acreage is in an area where we have a competitive operating advantage, and it significantly increases our premium Permian well inventory.”
Ovintiv’s land position increases to about 179,000 net acres. At closing by the end of 2023Q2, the company’s Permian oil and condensate production is expected to nearly double to about 125,000 barrels per day. About 97 percent of the acquired acreage is held by production.
Andrew Dittman, director of Enverus Intelligence Research, noted “a bit of luck in the timing of the deal,” which was announced the day after OPEC+ on Sunday “surprised crude markets with a production cut” that may signal an increase in oil prices.