The deal marks the latest in a string of intermediate and senior Canadian producers that have been acquired in recent months

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Two noteworthy oilpatch themes emerged from Ovintiv Inc.’s $3.8-billion acquisition this week of growing mid-sized petroleum producer NuVista Energy Ltd.

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First, it marks another big step by Ovintiv in Canada as it sells more assets in the United States and sharpens its focus on two core areas on the continent — the prolific Permian Basin in Texas and the Montney formation in Western Canada.

“It’s hard to read it as anything other than a repositioning of the portfolio to put a higher weight on Canada,” said Michael Tims, vice-chair of Matco Investments.

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It also marks the acquisition of another intermediate-sized petroleum producer in the country, as buyers from Canada and the U.S. look to expand their footprint in the Montney and Duvernay formations in northern British Columbia and Alberta.

“It’s yet another example of the mid-cap space being hollowed out,” said Eric Nuttall, a senior portfolio manager with Ninepoint Partners, one of NuVista’s largest shareholders.

Under an agreement announced Tuesday, Ovintiv offered about $18 per share in cash and stock under a friendly deal.

Denver-based Ovintiv, formerly known as Encana — and previously headquartered in Calgary before re-domiciling to the U.S. in 2020 — has a long history in the Montney, as does its CEO, Brendan McCracken.

“I was around when we drilled some of the first (Montney) horizontal wells in 2006,” McCracken said in an interview.

“The top two oil basins in North America are the Permian in west Texas and Montney in Alberta and British Columbia. They’re the largest remaining undeveloped premium resource in North........

© Edmonton Journal