Evaluate Energy Data: Largest Deals (By Value) Since 2015 Involving Upstream Duvernay Assets

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Two deals involving Duvernay assets were announced yesterday: Crescent Point Energy Corp. has entered into an agreement with Shell Canada Energy, an affiliate of Royal Dutch Shell plc, to acquire Shell’s Kaybob Duvernay assets in Alberta for $900 million. And Ovintiv Inc. has agreed to sell its Duvernay assets for US$263 million including $12 million in contingency payments based on future commodity prices.

“This week’s Duvernay deal activity reflects an incentive generally for producers to shore up cash positions where it makes strategic sense in terms of focus and timing, mitigate debt, or otherwise reposition their portfolio as they pivot to core assets or transition in other ways,” said Mark Young, senior M&A analyst at Evaluate Energy.

 For Shell, the sale of its Duvernay assets to Crescent Point does not represent a major exit or trend away from Canada as it retains interests in LNG Canada, the Scotford complex, and its shale positions in Alberta and B.C., Young noted.

“The reason behind the sale is Shell’s desire to focus on core assets with more integrated value chains, such as its portfolio in the Permian Basin.”

Young added: “For Crescent Point, this acquisition will boost its production to over 130,000 boe/d, based on revised 2021 guidance. Asset sales in 2019 and a reduced 2020 capital program had resulted in the company’s output falling to around 113,000 boe/d in Q3 2020 from almost 156,000 boe/d a year before.”

Meanwhile, Ovintiv’s US$263-million sale of its Duvernay assets is part of its plan to reduce the company’s gross debt to $4.5 billion by year-end 2022, a plan which includes raising $1 billion through divestments.

“This one deal sees Ovintiv pass the quarter pole in this drive for capital generation,” Young said.

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