Wells Fargo Raises Ovintiv (OVV) PT to $42, Cites Superior Montney Assets from NuVista Energy Acquisition

Ovintiv Inc. (NYSE:OVV) is one of the most undervalued NYSE stocks to buy right now. On November 18, Wells Fargo analyst Hanwen Chang raised the firm’s price target on Ovintiv to $42 from $38 and kept an Equal Weight rating on the shares. This upgrade was announced as Chang noted that the NuVista Energy acquisition provides Ovintiv with superior Montney assets, boosting productivity and unlocking the potential for over 5% oil growth without significant midstream capital expenditure.

Earlier this month, on November 5, Ovintiv signed a definitive agreement to acquire Canadian company NuVista Energy for ~$2.7 billion (CAD 3.8 billion) in a cash-and-stock transaction. Ovintiv already holds 9.6 percent of NuVista’s outstanding shares, which it obtained in a private transaction at CAD 16 per share. The total consideration for the remaining NuVista shares is structured as a blend of 50% cash and 50% Ovintiv common stock. The total acquisition price for NuVista is ~CAD 17.8 per share.

The acquisition is centered on high-quality assets in the core of the Alberta Montney. The deal provides Ovintiv with ~930 net 10,000-foot equivalent well locations and ~140,000 net acres, with about 70% of the acreage being undeveloped and directly adjacent to Ovintiv’s existing operations. The NuVista assets are projected to produce an average of 100,000 barrels of oil equivalent a day next year, which includes about 25,000 barrels per day of oil and condensate. This infrastructure is expected to allow Ovintiv’s Montney oil and condensate volumes to grow over 5% per year for the next 3-5 years.

Ovintiv Inc. (NYSE:OVV) explores, develops, produces, and markets natural gas, oil, and natural gas liquids in North America.

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Disclosure: None. This article is originally published at Insider Monkey.