Oil producer Ovintiv to sell Eagle Ford assets for $880 mln

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March 24 (Reuters) - Debt-ridden Ovintiv Inc (OVV.N) said it will sell its Eagle Ford assets in Texas to Validus Energy for $880 million, as the oil and gas producer seeks to shore up its finances following a tumultuous year for the energy industry.

Ovintiv moved its headquarters from Canada to the United States in 2020 in the hopes of better access to capital. But a pandemic-driven crash in oil prices last year pushed away investors from the shale industry, forcing companies to look at asset sales and mergers for survival.

Oil prices have recovered since as OPEC and its allies made record output cuts.

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With crude prices well above their 2020 lows, "there is a pool of private-equity backed companies looking for opportunities in lower growth" oilfields including the Eagle Ford in south Texas and Bakken in North Dakota, said Enverus M&A analyst Andrew Dittmar.

The $880-million price by Validus, headed by Felix Energy founder Skye Callantine, was higher than the combined value of all transactions in the Eagle Ford shale basin in 2020, Dittmar said.

"It is a strong price that includes value for untapped acreage."

Ovintiv shares closed up a fraction at $23.81.

The sale comes weeks after Ovintiv ended a proxy fight with private equity firm Kimmeridge Energy Management that had urged the company to alter its capital spending and focus on governance.

Ovintiv said on Wednesday, with over $1.1 billion in asset sales, including the Eagle Ford and the previously announced Duvernay sale, proceeds will achieve its debt reduction target. It anticipates year-end 2021 debt to be below $5 billion.

It also expects to achieve its $4.5 billion debt target in the first half of 2022.

The announcement confirms a Reuters story from March 12 that Ovintiv was in talks to sell the asset to Callantine's investment firm Pontem Energy Capital, which is the financial backer of Validus, according to the latter's website. read more

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Reporting by Arundhati Sarkar in Bengaluru; Editing by Shinjini Ganguli

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