Investing.com -- Ovintiv Inc (NYSE:OVV) shares fell 1.5% in premarket trading Monday following the company's announcement of an agreement to acquire Logan Energy Corp (TSXV:LGN) for approximately $890 million.
Under the terms of the deal, Ovintiv will pay C$1.40 per share in cash for total consideration of approximately C$1.26 billion, including the assumption of net debt. The transaction is expected to close early in the first quarter of 2027, subject to shareholder, court and regulatory approvals.
The acquisition will add approximately 266,000 net acres and approximately 20 thousand barrels of oil equivalent per day in the oil-rich window of the Montney. The deal includes approximately 420 total net 10,000-foot equivalent oil well locations, comprising approximately 220 premium return well locations and approximately 200 upside locations.
"This bolt-on transaction delivers value for our shareholders by adding high margin oil and condensate production and infrastructure, utilizing our operational advantage to drive significant synergies, and adding to our already deep drilling inventory and future growth optionality," said Ovintiv President and CEO Brendan McCracken.
The transaction is expected to be funded through a combination of cash on hand, borrowings under its credit facility and its commercial paper program. Ovintiv expects annual cost synergies of approximately $60 million, comprised primarily of capital savings, production cost savings and overhead cost reductions.
The deal includes ownership of two new oil batteries and interests in two natural gas processing facilities. Ovintiv said the transaction is expected to be immediately accretive across key financial metrics, including non-GAAP cash flow per share accretion of approximately 5% in 2027.
Following the closing, Ovintiv expects its net debt to be below $4 billion. The company said its shareholder returns plan remains unchanged, targeting 2026 shareholder returns of at least 60% of non-GAAP free cash flow.
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