NEWS BRIEF: A Colorado-based Energy Company is Selling 126,000 Acres of Uinta Basin Land for $2.0 Billion

In Utah news not apparently reported previously in the state, Denver, Colorado-based Ovintiv (NYSE:OVV) is selling 126,000 acres of oil-producing land in Utah's Unita Basis for $2.0 billion in cash.

According to the recent Ovintiv news release, Ovintiv announced two separate yet interrelated agreements, specifically:

• In one agreement, Ovintiv will purchase 109,000 net acres of oil and natural gas producing land in Alberta, Canada from Calgary, Alberta, Canada-based Paramount Resources (TSX:POU) for $2.7 billion in cash;
• Ovintiv plans to pay the bulk of this purchase price with cash proceeds of $2.0 billion from a second agreement, specifically the sale of 126,000 acres of oil-producing land it owns in the Unita Basin to FourPoint Resources, headquartered in Denver, Colorado, which is operated and managed by FourPoint Energy.

According to Ovintiv's news release announcing its results for the third quarter (ended 30 September 2024), its 126,000 acres of mostly undeveloped Uinta Basin land are located in the northeastern portion of Utah in Duschene and Uintah Counties.

This land currently has

• 11 active wells on-site, wells which produced an average of 37,000 Barrels of Oil Equivalent/day in the third quarter (aka, 37 MBOE/day), in other words
• Roughly 3.3 million BOE during this year's third quarter.

According to the most recent data available from the U.S. Energy Information Administration, the most recent Utah Crude Oil First Purchase Price was $56.69/barrel as of September 2024.

At that price point per barrel, Ovintiv generated nearly $190 million in topline revenue from its Unita Basin property during the quarter, which translates to an annualized amount of ~$760 million/year.

In other words, at a sale price of $2.0 billion cash, Ovintiv stands to produce 2.65X for its Unita Basin property versus the annual revenue it currently generates.

That was before completing Ovintiv's prior plans to "... bring on 25 to 30 net wells ..." in its Unita Basin property before the end of 2024, at a projected cost to it of between $300 million to $350 million to expand this capacity.

For the record, it appears from the FourPoint Energy website that the soon-to-be-acquired Unita Basin property will be its first holdings in the state of Utah.

According to the news releases from the different parties involved in these transactions, these sales/purchases are expected to close before the end of the first quarter (ended 30 March 2025).

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