Ovintiv agrees to buy Logan Energy in $890 million all-cash deal for Montney assets

Ovintiv Inc. (OVV) agreed on Monday to acquire Logan Energy Corp. in an all-cash transaction valued at approximately $890 million (C$1.26 billion), including expected net debt at closing, a regulatory filing showed.

Logan shareholders will receive C$1.40 in cash for each common share, except holders who validly exercise dissent rights. The deal will be carried out as an arrangement under Alberta's Business Corporations Act.

The company said the acquired assets sit close to its existing Montney operations. They include approximately 266,000 net acres in the Montney oil window and approximately 420 total net 10,000-foot equivalent oil well locations.

Current production from the assets is approximately 20 thousand barrels of oil equivalent per day (MBOE/d), including approximately 7 thousand barrels per day of oil and condensate.

Ovintiv President and CEO Brendan McCracken said the transaction "delivers value for our shareholders" and uses "our operational advantage to drive significant synergies."

McCracken also said, "The Logan assets have demonstrated leading oil productivity performance and will immediately compete for capital alongside the rest of our portfolio."

The company said the locations include approximately 220 premium return well locations, at an average cost of $1.5 million per premium location, and approximately 200 upside locations. Premium locations are defined as generating an internal rate of return greater than 35% at $55 per barrel WTI oil and $2.75 per MMBtu NYMEX natural gas.

Logan owns 100% of two new oil batteries in Simonette with combined capacity of 24 thousand barrels per day. The first came online in the third quarter of 2026, and the second is expected by the end of the first quarter of 2027. Logan also holds 50% of a natural gas processing facility in Simonette with 90 million cubic feet per day of capacity and 65% of one in Pouce Coupe with 57 million cubic feet per day.

The company expects cost synergies of approximately $60 million a year, mainly from capital savings, production cost savings and overhead reductions. Capital savings are estimated at more than $2 million per well, consistent with its current Montney well costs.

Ovintiv expects the deal to be immediately and long-term accretive. It forecasts non-GAAP cash flow per share accretion of approximately 5% in 2027 and non-GAAP free cash flow per share accretion of approximately 3%. Non-GAAP measures are figures the company calculates outside standard U.S. accounting rules.

The transaction is expected to be funded through cash on hand, borrowings under its credit facility and its commercial paper program.

The deal is expected to close early in the first quarter of 2027. After closing, Ovintiv expects net debt to be below $4 billion. Net debt is long-term debt, including the current portion, less cash and cash equivalents.

The company said its shareholder returns target is unchanged, with at least 60% of 2026 non-GAAP free cash flow to be returned through share buybacks and regular dividends. Beyond 2026, the target range remains 50% to 100%.

Before closing, Logan will complete a reorganization in which certain assets are conveyed to a new subsidiary, Logan Oil Corp., which will acquire Andora Energy Corporation. Logan Oil Corp. shares and warrants will be distributed to Logan shareholders, and Ovintiv will not acquire them. The new entity will include select Logan assets outside the Montney and Duvernay fairways.

Closing requires approval of at least 66 2/3% of the votes cast by Logan shareholders at a special meeting, approval by the Court of King's Bench of Alberta and clearance under Canada's Competition Act. No more than 5.0% of Logan's outstanding shares can validly exercise dissent rights.

The outside date is February 26, 2027, which either party can extend by up to two one-month periods if Competition Act approval is still pending. Logan would pay a C$44 million termination fee in certain circumstances, and a C$5 million expense reimbursement if termination follows a failure to complete the reorganization.

The boards of both companies unanimously approved the agreement. RBC Capital Markets is exclusive financial adviser to Ovintiv, while Blake, Cassels & Graydon LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are its legal advisers.