Ovintiv Inc is trying to promote its Eagle Ford acreage in south-central Texas, a number of individuals accustomed to the matter mentioned on Friday, the most recent debt-laden oil and gasoline producer to place property on the block to boost money throughout this 12 months’s coronavirus-fueled oil droop.
The Denver-based firm’s Eagle Ford place, which it purchased in 2014 from Freeport-McMoRan Inc for $3.1 billion, may assist it repay among the $7.14 billion in long-term debt it had as of the top of September.
The coronavirus pandemic triggered a worldwide droop in gasoline demand. Restoration has begun however is threatened by the surge in infections in america, Europe and elsewhere. The crash in oil costs made buyers flip their backs on the shale trade and pushed corporations to take a look at asset gross sales and mergers for survival.
Shale manufacturing has dropped sharply in response to the falloff in demand, with U.S. output right down to 10.5 million barrels per day from almost 13 million bpd on the finish of 2019.
The property may fetch round $600 million to $700 million, one of many sources mentioned. The divestiture plan is at an early stage, the sources mentioned, requesting anonymity whereas discussing a confidential course of.
Ovintiv mentioned it doesn’t touch upon questions associated to potential transactions.
Quite a few corporations have gone into chapter 11 whereas others have mixed to outlive the downturn. When requested about that exercise, Ovintiv high boss Doug Suttles advised analysts on a quarterly earnings name that the corporate is “the place we have to be” and that its focus might be on debt discount.
On the finish of final 12 months, the corporate held 517 producing wells with complete oil output of 25,300 bpd within the Eagle Ford.
Ovintiv reduce its workforce by 25% earlier this 12 months and slashed 2020 capital funding by $500 million. The corporate posted a second straight quarterly loss within the three months ended Sept. 30, with oil manufacturing down 22%.
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