Alberta’s oilpatch dealmaking boom continues as Ovintiv buys Logan Energy for $1.26 billion

Denver-based Ovintiv Inc. is extending its push into Alberta, agreeing to buy Calgary-based Logan Energy Corp. in an all-cash deal valued at about $1.26 billion, including debt.

Under the agreement announced Monday, Ovintiv will pay $1.40 a share in cash for Logan, a TSX Venture-listed producer.

The deal adds to a busy stretch of dealmaking in Canada’s oilpatch, driven by elevated oil prices and pro-development federal and provincial governments.

It comes a few weeks after Cenovus Energy Inc. agreed to buy Athabasca Oil Corp. for $5.7 billion and follows Tamarack Valley Energy Ltd.‘s $10-billion merger with Headwater Exploration Inc. In early September.

By the end of September, oil and gas producers had announced over $30 billion in mergers and acquisitions, with analysts expecting 2026 to top the record of $53 billion set in 2017.

Logan’s management team will use the sale to launch a new heavy-oil company called Logan Oil Corp., which will hold a heavy oil project, a separate producing oil asset and exploration lands.

For Ovintiv, the deal adds about 266,000 net acres and roughly 20,000 barrels of oil equivalent a day of production. About 200,000 of those acres are core, and 80 per cent are undeveloped.

Current output from the assets is about 7,000 barrels a day of oil and condensate, 70 million cubic feet a day of natural gas and 1,000 barrels a day of other natural gas liquids.

“This bolt-on transaction delivers value for our shareholders by adding high margin oil and condensate production and infrastructure, utilizing our operational advantage to drive significant synergies,” Ovintiv president and chief executive Brendan McCracken said in a statement.

He added that Logan’s assets “will immediately compete for capital alongside the rest of our portfolio.”

The deal is the latest in a string of Montney purchases by the company, formerly Calgary’s Encana Corp. The Montney formation is a massive, underground rock layer in Western Canada that holds one of the largest stores of natural gas and oil in the world.

In January 2025, Ovintiv closed its all-cash acquisition of Montney assets from Paramount Resources Ltd. for about $3.28 billion. In February this year, it closed its cash-and-stock takeover of NuVista Energy Ltd., valued at about $3.8 billion.

Ovintiv also picks up infrastructure. Logan fully owns two new oil storage facilities in Simonette with a combined capacity of 24,000 barrels a day. The first came online in the third quarter, and the second is expected by the end of the first quarter of 2027. Logan also holds a 50 per cent stake in a day gas processing plant in Simonette and a majority stake in a separate plant in Pouce Coupe.

Ovintiv expects about $85 million in annual cost synergies, mainly from capital, production cost and overhead savings — which could mean potential job losses.

Ovintiv will fund the purchase with cash on hand, borrowings under its credit facility and its commercial paper program.

It expects net debt to remain below about $5.7 billion after the deal closes, early in the first quarter of 2027. Its shareholder returns plan is unchanged, which is to return at least 60 per cent of 2026 free cash flow through buybacks and dividends.

Logan was formed in July 2023 when Spartan Delta Corp. spun out its early-stage Montney assets.

The company says it has since grown production from about 4,500 barrels of oil equivalent a day to a record 18,775 in the third quarter. It expects to average more than 22,000 in the fourth quarter and has expanded its Montney land base to 415 net sections from 300.

“We are incredibly proud of what the Logan team has accomplished in just over three years,” Logan chief executive Richard McHardy and president Brendan Paton said in a joint statement.

Logan said an unsolicited expression of interest from a third party in July prompted the board to begin a confidential sale process in August.

Most of Logan’s staff will move to Logan Oil, which will be run by Paton as president and chief executive, with McHardy as executive chair.

Analysts like the deal.

“Over the past decade, there have only been a few management teams that can point to a track record of M&A success and a capacity to generate meaningful shareholder value,” said Jeremy McCrea, managing director of oil and gas equity research at BMO Capital Markets, in a note.

“Logan’s team appears to be repeating that success.”

Ovintiv shares fell about 1.5 per cent in premarket trading in New York Monday before reversing course. By mid-morning they were up about one per cent and touched a new 52-week high. The stock has risen about 87 per cent so far this year.

Logan shares are hovering at $1.45 on the TSX Venture Exchange in morning trading. Bloomberg reported late last week that the company was weighing a possible sale, and the stock has gained 63 per cent over the past year.

The new company’s flagship asset is the undeveloped Sawn Lake heavy oil project in the Peace River region.

Logan Oil is buying it through the $30-million acquisition of Andora Energy Corp. from CanAsia Energy Corp., with up to $25 million more in milestone-based payments.

That deal is expected to close Friday. It will be funded on Logan’s credit facility, and that debt will stay with Logan, and therefore with Ovintiv, after the sale.

According to Logan, the first phase of its forthcoming heavy oil program will involve brownfield expansion, taking production from 3,000 barrels a day, toward a full design capacity of 15,000.

Logan Oil will also buy privately held Woodcote Inc. for $110 million.

Woodcote’s Clearwater assets area produce about 1,650 barrels of oil a day, with 4.4 million barrels of proved-plus-probable reserves.

Rounding out the portfolio are 81 exploration sections prospective for Charlie Lake light oil, and more than 40 sections of heavy-oil and bitumen lands in the greater Peace River and Clearwater areas.