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Per sources, Ovintiv Inc. OVV has furthered its talks with a prospective buyer Pontem Energy Capital for the sale of its Eagle Ford acreage at a deal value exceeding $800 million.
In the last reported quarter, the company set a target to trim its total debt to $4.5 billion by 2022 end, reflecting a 35% reduction from the current levels. Also, the plan includes generating $1 billion from asset divestments. Further, the company revised its compensation program so that the remuneration across all categories is in direct proportion to its carbon-reduction targets.
Should the deal go through, the sale of its south Texas shale basin would be the company’s latest strategic step to lower debt and instill investor confidence in the stock.
Over the recent years, many U.S. shale producers including Ovintiv have been producing below average returns. Also, the company’s acquisition of Newfield Exploration shook its shareholder confidence as the takeover resulted in a $7-billion debt and a high executive pay.
This January, Ovintiv was under pressure from the private equity firm Kimmeridge Energy Management Company as that the oil and gas producer was lagging its fellow operators due to its reckless expenditure, expensive acquisitions and inadequate management.
Kimmeridge stated that it is willing to nominate a more general group of candidates for Ovintiv’s board of directors if the latter does not make any attempt to uplift the company’s achievements and restore investor confidence. Kimmeridge is a private investment firm with 2.4% equity interest in Ovintiv.
However, earlier this month, Ovintiv appointed Katherine L. Minyard, the investment principal at Denver-based Cambiar Investors, as an independent member of its board, who will assume responsibility immediately.
Pertaining to this new appointment of Minyard, Ovintiv, formerly known as Encana, signed an agreement with Kimmeridge Energy Management Company wherein the latter decided to withdraw its previously-presented director nominations and vote its shares in favor of Ovintiv's directors.
Ovintiv engages in exploration, development, production and marketing of natural gas, oil and natural gas liquids. The company holds principal assets in Anadarko Basin, located in Western and Central Oklahoma, the Permian Basin located in Western Texas and South Eastern New Mexico, Midland Basin in Texas and the Montney Basin in western Canada.
Zacks Rank & Other Key Picks
Ovintiv currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy space include Matador Resources Company MTDR, Diamondback Energy, Inc. FANG and Denbury Inc. DEN, each presently flaunting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
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