v3.26.1
Business Combination
 3 Months Ended
Mar. 31, 2026
Business Combination [Abstract]  
Business Combination

9.

Business Combination

 

Acquisition of NuVista Energy Ltd. (“NuVista Acquisition”)

 

On February 3, 2026, Ovintiv completed the acquisition of all issued and outstanding common shares of NuVista Energy Ltd. (“NuVista”), a corporation organized under the laws of the Province of Alberta, Canada, in a cash and stock transaction valued at approximately $2.8 billion (C$3.8 billion), including Ovintiv’s previous purchase of 18.5 million common shares of NuVista. The Company issued approximately 30.1 million shares of Ovintiv common stock representing a value of approximately $1.3 billion (C$1.8 billion) and paid cash consideration of approximately $1.2 billion (C$1.6 billion) which was primarily funded with proceeds from the Term Credit Agreement as discussed in Note 12. Total transaction costs of approximately $22 million and $4 million have been included in administrative expense and interest expense, respectively.

 

The acquisition is strategically located in close proximity to Ovintiv’s current operations and adds approximately 930 net well locations and approximately 140,000 net acres in the core of the condensate-rich Montney in Alberta. The assets acquired generated revenues of $159 million and direct operating expenses of $64 million for the period from February 3, 2026, to March 31, 2026. The results of operations from the acquired NuVista assets have been included in Ovintiv’s consolidated financial statements since February 3, 2026.

 

 

Purchase Price Allocation

 

The NuVista Acquisition has been accounted for under the acquisition method of accounting, which requires that the assets and liabilities assumed be recognized at their fair values as of the acquisition date, with any excess of the purchase price over the estimated fair value of identified net assets acquired recorded as goodwill. The preliminary purchase price allocation represents the consideration paid and the fair values of the assets acquired and liabilities assumed as of the acquisition date.

 

The preliminary purchase price allocation was based on the initial valuation from estimates and assumptions that management believes are reasonable. These will be subject to change based on the determination of the final closing adjustments and when the remaining information necessary to complete the valuation is obtained. The Company expects the purchase price allocation to be completed within 12 months following the acquisition date, during which time the value of net assets and liabilities acquired may be revised as appropriate.

 

Preliminary Purchase Price Allocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consideration:

 

 

 

 

 

 

 

 

Fair value of shares of Ovintiv common stock issued (1)

 

 

 

 

 

 

$

1,277

 

Consideration paid in cash (2)

 

 

 

 

 

 

 

1,204

 

Total Consideration

 

 

 

 

 

 

 

2,481

 

 

 

 

 

 

 

 

 

 

Fair value of 18.5 million NuVista common shares held by Ovintiv (3)

 

 

 

 

 

 

 

270

 

Total Consideration and Fair Value of NuVista Shares held by Ovintiv

 

 

 

 

 

 

$

2,751

 

 

 

 

 

 

 

 

 

 

Assets Acquired:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

$

12

 

Accounts receivable and accrued revenues

 

 

 

 

 

 

 

157

 

Income tax receivable

 

 

 

 

 

 

 

12

 

Risk management assets, net

 

 

 

 

 

 

 

169

 

Proved properties

 

 

 

 

 

 

 

2,481

 

Unproved properties

 

 

 

 

 

 

 

596

 

Other property, plant and equipment

 

 

 

 

 

 

 

19

 

Operating lease right-of-use assets

 

 

 

 

 

 

 

111

 

Goodwill

 

 

 

 

 

 

 

283

 

 

 

 

 

 

 

 

 

 

Liabilities Assumed:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

 

 

 

 

 

(108

)

Debt

 

 

 

 

 

 

 

(229

)

Operating lease liabilities

 

 

 

 

 

 

 

(111

)

Asset retirement obligation

 

 

 

 

 

 

 

(51

)

Other long-term liabilities

 

 

 

 

 

 

 

(13

)

Deferred income taxes

 

 

 

 

 

 

 

(577

)

Total Purchase Price

 

 

 

 

 

 

$

2,751

 
(1)
Based on approximately 30.1 million Ovintiv shares of common stock at $42.47 per share (C$58.08 per share using the closing price as of February 2, 2026, on the TSX).
(2)
Includes approximately $53 million paid to NuVista employees in respect of liability awards held.
(3)
On October 1, 2025, Ovintiv purchased 18.5 million NuVista common shares for $212 million (C$296 million). As at December 31, 2025, these shares were remeasured at fair value and presented as investment in marketable securities in the Consolidated Balance Sheet. On February 2, 2026, the NuVista shares were remeasured at fair value using Ovintiv common stock at $42.47 per share (C$58.08 per share using the closing price on February 2, 2026, on the TSX).

The Company used the income approach valuation technique for the fair value of assets acquired and liabilities assumed. The carrying amounts of cash and cash equivalents, accounts receivable and accrued revenues, income tax receivable, risk management assets, net, accounts payable and accrued liabilities, and debt approximate their fair values due to their nature and/or short-term maturity of the instruments. The fair values of operating lease assets and liabilities, and other long-term liabilities were classified within Level 2 of the fair value hierarchy and were determined using quoted prices and rates from an available pricing source. The fair values of proved properties, unproved properties, other property, plant and equipment, and asset retirement obligation were categorized within Level 3 and were determined using relevant market assumptions, including discount rates, future commodity prices and costs, timing of development activities, projections of oil and gas reserves, and estimates for abandonment and reclamation. Level 3 inputs require significant judgment and estimates to be made.

Goodwill arose from the NuVista Acquisition primarily from the requirement to recognize deferred taxes on the difference between the fair value of the assets acquired and liabilities assumed and the respective carry-over tax basis. Goodwill is not amortized and is not deductible for tax purposes.

 

Unaudited Pro Forma Financial Information

 

The following unaudited pro forma financial information combines the historical financial results of Ovintiv with NuVista and has been prepared as though the acquisition had occurred on January 1, 2025. The pro forma information is not intended to reflect the actual results of operations that would have occurred if the NuVista Acquisition had been completed at the date indicated. In addition, the pro forma information is not intended to be a projection of Ovintiv’s results of operations for any future period.

 

Additionally, pro forma net earnings were adjusted to exclude transaction-related costs incurred of approximately $26 million recognized by Ovintiv and $22 million recognized by NuVista during the three months ended March 31, 2026. The pro forma financial information does not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been incurred to integrate the assets.

 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 31,

 

(US$ millions, except per share amounts)

 

 

 

2026

 

 

2025

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

$

2,666

 

 

$

2,633

 

Net Earnings (Loss)

 

 

 

$

(594

)

 

$

(119

)

 

 

 

 

 

 

 

 

 

Net Earnings (Loss) per Share of Common Stock

 

 

 

 

 

 

 

 

Basic

 

 

 

$

(2.22

)

 

$

(0.41

)

Diluted

 

 

 

 

(2.22

)

 

 

(0.41

)