Ovintiv Terminates Duvernay Shale JV with PetroChina
Ovintiv Inc. has closed an agreement with PetroChina Company Ltd. to terminate their Duvernay Shale joint venture, with each company assuming ownership and independent operation of certain assets in proportion to their previous interest in the JV. Ovintiv Canada ULC previously held a 50.1% operated interest in the JV assets located in west-central Alberta, while PetroChina Canada Ltd. (PCC) held the remaining 49.9% interest. No penalties or fees were associated with the transaction.
During the interim period, PCC will subcontract the operatorship of its Duvernay assets to Ovintiv until PCC takes on the role of sole operator. Ovintiv stated that its net production, proved reserves, and acreage in the Duvernay area will remain unchanged after the completion of the transaction.
The JV assets included approximately 488,000 net acres of Duverney Shale properties in west-central Alberta. Also included in the package are 201 gross (15 oil, 186 natural gas) producing wells, three Simonette natural gas processing plants, and an associated gathering and compression facility. The JV reported average daily production of 26,000 barrels of oil equivalent (boe/d) during Q2-2020, of which 46% was oil and natural gas liquids.
PetroChina and Ovintiv had entered into a JV agreement in December 2012, under which PetroChina acquired a 49.9% working interest in the assets in exchange for capital funding commitments amounting to approximately C$2.2 billion. Under the terms of the agreement, PetroChina had paid an initial consideration of C$1.8 billion. In February 2018, Ovintiv received the final investment tranche from PetroChina, satisfying the commitments under the original 2012 agreement.
Formerly known as Encana Corp., Denver-based Ovintiv completed a corporate reorganization in January this year that included a move in domicile from Canada to the United States. The company is currently engaged in operations across the Duvernay and Montney formations in Alberta and British Columbia, as well as the STACK oil window of the Anadarko Basin in Oklahoma, and the Permian and Eagle Ford formations in Texas.