The Eagle Ford position was purchased by Ovintiv in 2014. Credit: WORKSITE Ltd. on Unsplash.

Ovintiv has signed an agreement to divest its Eagle Ford assets in Texas, US to Validus Energy in a deal valued at $880m.

The Eagle Ford position was purchased by Ovintiv in 2014 from Freeport-McMoRan for about $3.1bn. This acreage included approximately 45,500 net acres in Karnes, Wilson and Atascosa counties of south Texas.

Last month, the company said that it is on a multi-year plan to reduce a $4.5bn debt by the end of 2022 and generate around $1bn in proceeds by selling assets.

At that time, Ovintiv also agreed to sell its Duvernay assets for $263m. This also includes $12m of contingent payments.

Ovintiv said in a statement: “With this sale, the company has exceeded its divesture target and, with other items, now anticipates year-end 2021 debt to be below $5bn using its 2021 planning price deck of $50 WTI oil and $2.75 NYMEX gas.”

Ovintiv CEO Doug Suttles said: “Today’s Eagle Ford announcement continues our track record of unlocking value from non-core assets.

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“Proceeds will significantly accelerate the achievement of our debt reduction target and allow us to pay off near-term debt maturities with cash on hand. Our 2021 outlook is strong and we expect to generate significant free cash flow for the fourth consecutive year.”

Ovintiv intends to achieve its debt target of $4.5bn in the first half of 2022 while the absolute debt is expected to be under $5bn at the end of this year.

The sale of Eagle Ford assets and the previously announced Duvernay assets are subject to ordinary closing conditions, regulatory approvals and other adjustments.

The firm plans to complete the transactions in the second quarter of this year.