Ovintiv Inc. on March 24 announced the sale of its position in the Eagle Ford Shale of South Texas for $880 million, pushing the Denver-based oil and gas producer over its divestiture target for the year.

Privately owned Validus Energy agreed to acquire the assets, which were bought in 2014 by Ovintiv, known as Encana at the time, for about $3.1 billion. Ovintiv said in a company release it expected full-year 2021 volumes from the Eagle Ford to average roughly 21,000 boe/d, including 14,000 bbl/d of crude and condensate.

The Eagle Ford asset sale is the latest step Ovintiv has taken to cut down debt and gain investor confidence. The company had previously been targeted by activist investor Kimmeridge Energy Management last year. Though, the subsequent proxy fight was resolved earlier this month with Oviniv agreeing to add one of Kimmeridge’s nominees to its board.

“Today’s Eagle Ford announcement continues our track record of unlocking value from noncore assets,” Ovintiv CEO Doug Suttles said in a statement. “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.”

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In February, Ovintiv announced a revised plan to cut its debt by around 35% to $4.5 billion. The company said March 24 it now expects to hit this new debt reduction target in the first half of next year instead of year-end 2022 due to proceeds from the recently announced divestitures.

Including the Eagle Ford asset sale, Ovintiv previously announced the sale in February of its Duvernay position for $236 million including contingency payments tied to future commodity prices. Altogether, the company said it has exceeded its divesture target with over $1.1 billion in asset sales and now anticipates year-end 2021 debt to be below $5 billion.

“Our 2021 outlook is strong and we expect to generate significant free cash flow for the fourth consecutive year,” Suttles added in his statement on March 24.

Both divestitures remain pending, subject to ordinary closing conditions, regulatory approvals and other adjustments, and are expected to close in the second quarter.

Based on anticipated closing dates for divestitures, Ovintiv projects its full-year 2021 crude and condensate production to now average approximately 190,000 bbl/d, inclusive of about 10,000 bbl/d from divested assets.

The company added that planned capital investments for 2021 remain unchanged at approximately $1.5 billion with the impact to per unit total cost per box is expected to be minimal.

Ovintiv is one of the largest producers of oil, condensate and natural gas in North America, according to its release. The company currently focuses on developing its assets in the Permian and Anadarko basins in the U.S. and the Montney Shale in Canada within its multibasin portfolio.

The buyer of the Ovintiv Eagle Ford assets, Validus, is an E&P company headed by Felix Energy founder Skye Callantine. The primary objective of the company, also based in Denver, is to “build and operate a large-scale portfolio of producing wells and drilling locations in the Eagle Ford Shale,” according to its website.

Validus Energy is financially backed by equity commitments from Pontem Energy Capital, other institutions and private investors.

This story was updated at 5:56 p.m. CT on March 24.

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