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UPDATE 2-Ovintiv to sell Duvernay assets, sets new climate change related targets

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(Adds details on deal and debt reduction, shares)

Feb 17 (Reuters) - Ovintiv Inc said on Wednesday itagreed to sell its Duvernay assets in Alberta province for about$263 million and linked employee pay to new emissions intensityreduction targets, weeks after an activist investor launched aproxy fight for three board seats.

Investment firm Kimmeridge Energy Management, one ofOvintiv's top 10 shareholders, had urged the oil producer toalter its capital spending, focus on governance and said theboard had allowed the company to become an environmentallaggard, trailing peers on key environmental metrics.

The company, formerly known as Encana and moved base fromCalgary to the United States, set a 33% methane intensityreduction target by 2025, as energy companies face increasingpressure from investors and climate change campaigners to reducegreenhouse gas emissions.

Ovintiv, once among Canada's largest companies also set atarget to slash debt of $4.5 billion by 2022, a 35% reduction ascompared to end of last year.

The company said the deal for its Duvernay assets isexpected to close in the second quarter of 2021.

Ovintiv's shares fell as much as 39% in 2020 as the COVID-19pandemic dented fuel demand and prices. However, it has gainedmore than 58% so far this year as vaccine rollouts boost oildemand forecasts.

Royal Dutch Shell also said on Wednesday it wouldsell its Kaybob Duvernay assets in Alberta to Canada's CrescentPoint Energy Corp CPG.TO for C$900 million ($708.61 million).(Reporting by Rithika Krishna in Bengaluru; Editing by ArunKoyyur and Shailesh Kuber)