- Paramount Resources (TSX:POU) announced a purchase and sale agreement with Ovintiv (TSX:OVV), who will acquire three properties for $3.32 billion in cash
- The transaction contains around 170 net sections of Montney lands, boasting 114 million barrels of oil equivalent (MMBoe) in proved developed producing reserves, 270 MMBoe in proved reserves, and 523 MMBoe in proved plus probable reserves
- This sale marks an important milestone for Paramount as it continues to implement its strategy of capturing and developing early-stage resources, followed by realizing value
- Paramount Resources stock (TSX:POU) last traded at C$27.28
Paramount Resources (TSX:POU) announced a significant purchase and sale agreement with Ovintiv (TSX:OVV) and one of its wholly-owned subsidiaries, where Ovintiv will acquire Paramount’s Karr, Wapiti, and Zama properties for $3.32 billion in cash, along with certain properties in the Horn River Basin.
The transaction contains around 170 net sections of Montney lands, boasting 114 million barrels of oil equivalent (MMBoe) in proved developed producing reserves, 270 MMBoe in proved reserves, and 523 MMBoe in proved plus probable reserves as of December 31, 2023. The assets also include essential gathering systems and field infrastructure. Upon closing, Ovintiv will take over Paramount’s processing and transportation commitments related to these assets. In Q3 2024, the assets generated sales volumes of about 67,600 barrels of oil equivalent per day (Boe/d), with a netback of $150 million.
As part of the agreement, Paramount will receive Ovintiv’s 50 per cent operated interest in the Two Island Lake field and a similar interest in the Kiwigana field. Prior to being shut-in in March 2024, these fields were producing over 40 million cubic feet per day (MMcf/d) of natural gas.
This sale marks an important milestone for the energy company as it continues to implement its strategy of capturing and developing early-stage resources, followed by realizing strategic value. After the transaction closes, Paramount plans to concentrate on developing its Duvernay assets at Willesden Green and Kaybob North, which present significant growth potential and utilize company-owned infrastructure. The company will also advance the appraisal of its newly acquired Sinclair Montney property.
“We believe this transaction provides an opportunity to realize compelling value for the Assets while retaining a significant inventory of growth opportunities across our land base,” Paramount’s president and chief executive officer, Jim Riddell said in a media release. “The transaction demonstrates Paramount’s ability to provide long-term value creation for its shareholders through the low-cost capture, delineation and organic development of early-stage assets, culminating in the realization of attractive value via strategic divestitures. On completion of the transaction, we will be well positioned to continue the development of our high-growth Duvernay assets, advance a number of our exciting early-stage assets and capitalize on new opportunities. We intend to use a portion of the proceeds of the transaction to provide a meaningful return to our shareholders. We expect to disclose further details of our shareholder return strategy in due course.”
The closing of this transaction is anticipated in Q1 2025, pending regulatory approvals and the fulfillment of customary closing conditions.
Paramount Resources Ltd. explores and develops both conventional and unconventional petroleum and natural gas. It also pursues longer-term strategic exploration, and pre-development plays and holds a portfolio of investments in other entities. Its principal properties are located in Alberta and British Columbia.
Paramount Resources stock (TSX:POU) last traded at C$27.28 and has climbed 5.21 per cent higher since the year began.
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(Top photo: Paramount Resources Ltd.)