Paramount Resources (POU.TO) on Thursday signed a purchase and sale agreement that will see Ovintiv (NYSE and TSX: OVV) acquire Paramount's Karr, Wapiti and Zama properties for $3.33 billion in cash plus certain Horn River Basin properties of Ovintiv.

At last look, Ovintiv shares were up 0.6% in US premarket trade.

Ovintiv said the combined transactions are immediately and long-term accretive across all key financial metrics, with 2025 non-GAAP free cash flow expected to increase by about $300 million at current commodity strip pricing. Annual cost synergies from the combined transactions are expected to total approximately $125 million.

Ratings agencies are expected to maintain Ovintiv's investment grade rating and stable outlook, the company said in a statement. It cited Non-GAAP Net Debt of approximately $5.65 billion, as of October 31, 2024.

For its part, Paramount in a separate statement noted the assets include approximately 170 net sections of Montney lands with 114 MMBoe of proved developed producing reserves, 270 MMBoe of proved reserves and 523 MMBoe of proved plus probable reserves as at December 31, 2023. The assets also include the related gathering systems and other field infrastructure. Ovintiv will assume Paramount's processing and transportation commitments relating to the assets on closing of the transaction. Third quarter 2024 sales volumes and netback for the assets were approximately 67,600 Boe/d (50% liquids) and $150 million, respectively.

Thursday's statement also noted the Horn River Basin properties to be received by the company as part of the transaction include Ovintiv's 50% operated interest within the current joint venture with Paramount at the Two Island Lake field and a 50% operated interest at the Kiwigana field. The Two Island Lake field and Ovintiv's interest in the Kiwigana field were producing over 40 MMcf/d of natural gas prior to being shut-in in March 2024.

The transaction is expected to close in the first quarter of 2025, subject to the receipt of regulatory approvals and the satisfaction of other customary closing conditions.

The agreement provides for a $100 million deposit by Ovintiv. If the transaction is not completed, the deposit may be forfeited by Ovintiv to Paramount in certain circumstances set out.

"We believe this transaction provides an opportunity to realize compelling value for the Assets while retaining a significant inventory of growth opportunities across our land base", said Jim Riddell, president and CEO of Paramount. "The transaction demonstrates Paramount's ability to provide long-term value creation for its shareholders through the low-cost capture, delineation and organic development of early-stage assets, culminating in the realization of attractive value via strategic divestitures. On completion of the transaction, we will be well positioned to continue the development of our high-growth Duvernay assets, advance a number of our exciting early-stage assets and capitalize on new opportunities. We intend to use a portion of the proceeds of the transaction to provide a meaningful return to our shareholders. We expect to disclose further details of our shareholder return strategy in due course."

POU rose $0.11, or 0.4% to $27.28 on the TSX yesterday.