US oil company Ovintiv is contemplating the sale of its oil operations in the Uinta Basin, reported Bloomberg, citing sources.
The potential deal could fetch up to $2bn for Ovintiv, which is working with an advisor to solicit interest from potential buyers for this asset, the sources said.
According to Ovintiv, the Uinta Basin operations involve drilling through approximately 2,600ft of oil-saturated reservoir rock.
The asset is expected to draw attention from private equity-backed energy groups.
However, the discussions are at a preliminary stage, and there is no certainty that they will result in a definitive sale agreement, the sources noted.
An Ovintiv spokesperson declined to comment on the matter.
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By GlobalDataOver the past year, Ovintiv’s shares have declined by 12%, underperforming the S&P 500 Energy Index.
The company currently has a market valuation of around $11.2bn.
Ovintiv’s portfolio includes assets across Texas, Oklahoma, and Utah, US, and Canada.
A potential divestiture of its Utah operations would allow the company to concentrate on its activities in the Permian Basin, a highly productive shale region spanning Texas and New Mexico.
This strategic shift follows Ovintiv’s $4.3bn acquisition in the Permian Basin from EnCap Investments in 2023 and the completion of a $825m asset sale in North Dakota’s Williston Basin.
Oil production in Utah has surged by nearly 40% since late 2022, driven by increased demand for waxy crude oil from Gulf Coast refineries, which utilise it for lubricant production.
Recently, SM Energy also expanded its presence in the basin through a $2.6bn acquisition of assets from XCL Resources.
Any potential transaction involving Ovintiv’s Uinta Basin assets is likely to undergo intense scrutiny by the Federal Trade Commission, which has raised concerns about the dependency of Salt Lake City refineries on the basin’s output.
Despite regulatory hurdles, the oil and gas sector has experienced a surge in deal-making activities, outstripping the overall increase in mergers and acquisitions worldwide.
Most recently, Quantum Capital Group finalised its $1.8bn acquisition of Caerus Oil and Gas’s assets in both the Piceance and Uinta basins.
