Good day, ladies and gentlemen, and thank you for standing by. Welcome to Ovintiv's Montney Oil Acquisition Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Members of the investment community will have the opportunity to ask questions and can join the queue at any time by pressing Star 1. For members of the media attending in a listen-only mode today, you may quote statements made by any of the Ovintiv representatives. However, members of the media who wish to quote others who are speaking on this call today, we advise you to contact those individuals directly to obtain their consent. Please be advised that this conference call may not be recorded or rebroadcast without the express consent of Ovintiv.
I would now like to turn the conference call over to Jason Verhaest from Investor Relations. Please go ahead, Mr. Verhaest.
Thank you very much and welcome, everybody. This call is being webcast, and the slides are available on our website at ovintiv.com. Please take note of the advisory regarding forward-looking statements at the beginning of our slides and in our disclosure documents filed on EDGAR and SEDAR+. Following the prepared remarks, we will be available to take your questions. Please limit your time to one question and one follow-up. I will now turn the call over to our President and CEO, Brendan McCracken.
Thanks, Jason. Good morning, everybody, and thanks for joining us. We are excited to talk to you today about two compelling transactions that are set to create exceptional value for our shareholders. The combined transactions are immediately and long-term accretive on all financial metrics, highlighted by a big boost to our go-forward free cash flow, which I'll share more on shortly. We're adding significant inventory depth in the high-return oil window of the Montney, where we are the undisputed leader. This creates a big win for us on capital efficiency. These deals are priced right, and importantly, we maintain our investment-grade rated balance sheet. First, we've entered into an agreement to acquire core oil-rich Alberta Montney assets from Paramount Resources in an all-cash transaction valued at $2.377 billion. Second, we've entered into a separate agreement to sell our position in the Uinta Basin to Four Point Resources for $2 billion.
Collectively, these transactions streamline and high-grade our portfolio and uniquely position us with significant basin scale in the two most valuable plays in North America, the Permian and the Montney. We've been sharing this for a little while. The Montney is an incredibly valuable oil play, and with our low costs and high productivity oil performance, we are generating very high returns. As part of our durable return strategy, we have been building a proprietary data set of geological and engineering data across North America for a number of years. This is the foundation for our rigorous internal analysis to identify the most valuable undeveloped resource across the continent. This work has led us to focus and build our portfolio in the Permian and the Montney. Our findings are echoed in third-party work as well.
Using Enverus Data, we see that approximately 80% of the remaining sub-$50 per barrel break-even oil locations in North America are in the Permian and the Montney. The primary driver of value in the Montney is condensate production, and since there is a structural long-term deficit in the Western Canadian market, Montney condensate will continue to trade tightly to WTI for the foreseeable future. Because of this, we refer to Montney condensate as oil. Our Montney acquisition checks all the boxes for our durable return strategy. It's accretive across key financial metrics, enhances the capital efficiency of our business, extends our future inventory runway in a core area, boosts shareholder returns, and enables us to maintain a strong balance sheet and accelerate debt reduction. We have a track record of taking a disciplined approach to acquisitions as we did with our Permian acquisition last year.
The assets we are acquiring from Paramount were identified through our in-depth technical and commercial analysis of the basin to identify the highest value undeveloped resource. The acreage sits in the core of the oil-rich Alberta Montney Fairway, offsetting our existing Pipestone operations. It is largely undeveloped, and it comes with ample midstream capacity for future growth optionality. We consider it to be one of the most valuable undeveloped acreage positions in all of North America. It's right in our backyard, and we see it as an ideal setup for our team to unlock value. This transaction will add more than 900 net 10,000-foot equivalent well locations to our Montney inventory across 109,000 net acres, extending our oil inventory to 15 years. Notably, these assets generate material free cash flow today.
The acquisition provides strong financial accretion on a standalone basis, and we may combine it with the impact of selling the Uinta. The result is immediate and long-term expansion in our per-share metrics like cash flow and free cash flow, as well as increased ROCE and net asset value. We expect the transactions to drive an approximately 20% increase in 2025 free cash flow per share, with approximately $300 million more dollars in total free cash flow compared to our standalone business. The transactions will also enhance our capital efficiency. Post-close, we will maintain our corporate oil scale of approximately 205,000 barrels per day and add more total production at about 620,000 BOEs per day for $100 million less dollars in annual capital investment. Importantly, we will retain ample liquidity and maintain a strong balance sheet.
We will operate a more streamlined portfolio with anchor positions in the Montney and Permian, supported by the strong free cash generation from our low-decline Anadarko asset. Our existing business, especially our Permian and our Montney assets, have been performing exceptionally well year to date, with multiple beat-and-raise quarters for oil production while holding the midpoint of our capital guidance firm. With these transactions, we are creating an even stronger business that will be even better positioned for near and long-term value creation. Let's dive in with some more details about the Montney asset. The acquisition is highly complementary to what we do best: multi-batch cube development using a customized completion approach. The acquired acreage is 80% undeveloped and contiguous. It is well delineated with more than 250 horizontal wells producing today.
The position is located just south of our existing Pipestone position and immediately to the north of the prolific but now more fully developed ARC Resources Kakwa field. The development by Paramount was concentrated pad development, which leaves the undeveloped part of the acreage, or about 80% of the position, unencumbered by one-off parent wells. At close, we estimate the assets will be producing about 70,000 BOEs per day with about 25,000 barrels per day of oil and condensate, which will nearly double our existing Montney oil production. We will develop the acreage with up to three benches, which is very consistent with our stacking and spacing on our Pipestone acreage and with the stacking and spacing by offset operators. We will also deploy our proven optimization techniques around well design, frac stage architecture, real-time frac monitoring, artificial lift, and accelerated cycle times.
Our expertise has been cultivated not just from our offsetting Montney operations, but also from our lower 48 operations. This differentiates us from other operators in the play. In short, we are very excited to get the keys to these assets and unleash our team on this acreage. We are acquiring a high-quality asset, and we will apply our proven skills and experience to unlock even more value from it. Maintaining our investment-grade credit rating remains a key priority. We anticipate all four rating agencies will reaffirm our investment-grade rating and stable outlook. We are funding the acquisition with cash, primarily from the proceeds we will receive from selling the Uinta, as well as some additional temporary financing. We've chosen to pause our share buyback program until the short-term borrowings have been recovered.
In the fourth quarter alone, approximately $181 million will be redirected to debt reduction from the buyback pause. As such, we expect the buyback will resume in the second quarter of 2025. During this time, we have also effectively paused bolt-on spending. Our base dividend is unchanged and remains committed to the return of capital to our shareholders. We are also reaffirming our $4 billion debt target. As of October 31st, our net debt was about $5.65 billion. Another benefit of this transaction is higher free cash generation driving accelerated deleveraging, which will allow us to reach this target sooner. Let me provide some additional context around how the combined transactions enhance the profitability of our business. With these two deals, we are trading into a high-return, higher free cash flow asset that comes with profitable growth optionality.
The enhanced value of our business is both structural and durable and will support accelerated debt reduction, increased direct returns to shareholders, and higher return on capital employed. As I mentioned, we expect our 2025 free cash flow per share to increase by about 20%, which corresponds to a $300 million increase in total free cash flow. Included in this is about $125 million in annualized cost synergies. This synergy realization will make our organization more efficient and deliver value for our shareholders. We're highly confident in our ability to realize these synergies, given our strong track record of asset integration, which we demonstrated last year with our Permian acquisition. Paramount has been holding activity and production levels fairly steady in the asset, which makes the integration into our program pretty straightforward.
In aggregate, we anticipate executing a similar number of turn-in lines in the play year over year in 2025. We expect to deliver well cost savings greater than $1.5 million per well across the acquired assets, consistent with our current Montney well costs of about $550 per foot. This comes from applying industry-leading data-driven approach to our drilling, completion, and production operations. The balance of our synergies comes from additional savings from lower overhead costs and lower Canadian cash taxes. Our confidence in the quality of the acquired assets is borne out in the strong well results from Paramount on this acreage. The chart on the top right of slide 10 shows that over a robust sample size of more than 100 wells drilled over the last two years, the acquired assets have delivered 40% higher oil productivity compared to the Alberta Montney average.
These results are a powerful demonstration of the underlying rock quality that we've acquired. In fact, the oil productivity of the acquired assets competes heads-up with that of the top counties in the Midland Basin, comparable to a Midland Basin well thanks to lower well costs, lower royalties, and similar oil price realizations at about 97% of WTI for Montney condensate. When we apply recent Montney transaction metrics to the existing production, very attractive price of less than $1 million per well, and we see 300 upside locations on top of that. We have been active in the Montney for over 20 years, and we bring significant expertise there. We truly consider it to be the play that keeps on giving. The low-cost, high-productivity nature of the wells has meant that we've consistently been able to generate highly competitive economics from the play through the commodity price cycle.
The returns in the Montney oil window are competitive with the best basins in North America. These economics are not dependent on higher NYMEX or AECO prices. In fact, AECO could essentially be zero, and these wells would still compete for capital in our portfolio. Our analysis of the pro forma assets shows that at current strip pricing, we expect to generate program-level returns greater than 60%. Across numerous key metrics, Ovintiv screens is one of the top operators in the Montney. There's a wide variety of development approaches being deployed across the play by our peers. Our cube development approach optimizes both the returns and the NPV of each acre we develop. The result is that our capital efficiency makes us the clear winner in the basin, coming in 60% better than the peer average.
We are drilling longer laterals, executing more intense completions, and doing it in less time than our peers. Our spud-to-rig release time is eight days faster than the peer average, and our average well length is 1,500 feet longer. In the third quarter, we drilled an average of 1,820 feet per day, which is about 6% faster than our program average last year. We also drilled the longest well ever in the play at more than 18,000 feet. In fact, we've drilled 14 of the 20 longest wells on record in the Montney. On the completion side, our third quarter average of about 5,100 feet per day was 24% faster than last year and is on par with our Trimul-Frac averages in the Permian. The Montney has the lowest well costs in our portfolio, and our pay center wells are less than $500 per foot for drilling and completions.
We are confident in our ability to unlock significant value from the acquired assets, using our proven development model to generate superior asset-level returns and unmatched capital efficiency. To sum it up, these transactions tick all our boxes on our durable return strategy and build on a business that is already exceeding our targets. The combination is strongly accretive, significantly boosts free cash, increases our premium inventory depth, delivers a big capital efficiency gain, lowers our costs, and maintains our investment-grade rated balance sheet. We're strengthening and expanding our foothold in one of the top two oil basins in North America and realizing full value for a high-quality non-core asset. We have the track record of integration and operational excellence to deliver on the targets we've set out today.
These actions are aligned with our strategic priorities and will enable us to continue generating meaningfully higher durable returns for our shareholders. Operator, we're now ready to open the line for Q&A.
Thank you.
Thank you.
Ladies and gentlemen, as a reminder, you can join the queue to ask a question by pressing star one. We will now begin the question and answer session and go to the first caller. Our first question comes from Neal Dingmann from Truist Securities. Please go ahead.
Morning, guys, and congrats on the deal. Brendan looks nice. My first question is just on your M&A criteria specifically. Maybe just broadly, wondering, how did y'all or why did y'all maybe target specific assets such as this? And then can you remind me? You mentioned that it checks the boxes for the required durable returns. I'm just wondering, could you remind me kind of what that required level is and maybe any other parameters to do a deal like this?
Yeah, Neal, thank you for the question. And look, we have an extremely high hurdle for acquisitions because we've put ourselves in a tremendous position of strength over the last number of years with the deep, high-quality inventory that we've assembled. And this one tops those hurdles, which is why we chose to act. And really, to run through them, what we're looking for is that immediate and long-term financial accretion that we've pointed to here, the extension of premium drilling inventory in the Permian and the Montney, like we've pointed to with these last two transactions. And then the ability to drive these durable returns over the long term. And really, this transaction is a good example of that while maintaining our strong balance sheet and investment-grade rated balance sheet. So those are the boxes we're looking to tick with this one.
If you think about what we've done here, we were exiting an asset that we really liked and was generating returns for us, but when we looked at the future scenarios, we struggled to find a scenario where we would be pulling capital away from our Permian and Montney assets to grow our Uinta further. And so the free cash potential in the Uinta was more limited. And so we really like the free cash upgrade that comes from exiting the Uinta and adding in the Montney, in part because you're unplugging a higher-cost asset with a lower realized oil price and plugging in a very low-cost growth option asset that realizes almost WTI for its oil production.
That was going to be my last question, actually, looking at that slide 20 just tied into the marketing or the midstream. Looks like is the most exposure going to be the AECO, and maybe just talk about how the diff will compare on this versus the prior existing Montney assets.
Yeah, yeah, for sure. And I'll start with the oil side and then come to the gas side. So on the oil side, the realizations that we'll get off of these acquired assets are going to be exactly the same as what we have in our legacy. So we're going to be right on top of WTI because of that structural shortage of condensate in Western Canada. So the oil side, you'll see very high WTI realizations. And then on the gas side, the acquired gas is AECO exposed. And so that's why we've been really pointing out this is driven off of the oil, and the associated gas is kind of along for the ride here.
And so what we should expect us to do over time is, just like we've done in our existing Montney, is move that gas to other price points over time, but initially, out of the gate, it will be AECO exposed.
Very good. Thanks, Brendan.
Yeah, thank you, Neal.
Our next question comes from Gabriel Daoud from TD Cowen. Please go ahead.
Thanks. Hey, morning, Brendan and team, and congrats on the portfolio transformation here. Brendan, I was hoping maybe we could get some higher-level thoughts on the Canadian M&A landscape, and in particular, maybe what was so attractive about this package. I think there are some other assets up there, maybe from Kelt and NuVista, that could also fit in the portfolio. So just love your thoughts on the landscape and if we should maybe think about Ovintiv as being more of an acquirer in Canada on a go-forward basis.
Yeah, Gabe, thanks for the question. I think the focus today is obviously on the transaction we've done. And really, what led us here is we're prioritizing value creation. And so it is hard not to notice the arbitrage here in terms of the cost of entry in comparison to lower 48 and, in particular, the Permian. Since we did our Permian transaction, we've seen the cost of acquiring core Midland Basin and Delaware Basin assets go up pretty significantly. And so it's hard not to notice the disparity here where we're able to acquire these undeveloped locations at under $1 million per location, which is quite unheard of in the lower 48 today. So that's what led us here is the value creation.
We have an enormous advantage in the play because of our technical understanding and our cost leadership, as well as what we're able to do in terms of creating well productivity. And then finally, what we're able to do in terms of market access and understanding the infrastructure in the play. And so that does give us a real advantage here and puts us in a position of strength going forward. And we're going to be really focused on integrating this acquisition extremely well, just like we've done in the past, and creating value for our shareholders.
Thanks, Brendan. That's great detail. And then as a follow-up, as part of the transaction, I guess it was highlighted that your Horn River asset in BC will be transferred to Paramount, and you'd receive the Zama asset. Just any puts and takes there that you can talk about?
Yeah, those are pretty minor components to the deal from a value perspective and made a lot of industrial logic. Our partner and neighbor in the Horn River assets is Paramount, and so it made sense for them to grow their working interest in that asset. In exchange, what we took on was the Zama asset, which is an Alberta asset. The industrial logic made sense for them to core up in an area they are and allow us to white map out of that Horn River area. Then we picked up a really small ARO in the Zama area.
Thanks, Brendan. I'll let someone else on. Congrats again.
One thing I should mention there, Gabe, is year over year, so from 2024 to 2025, our ARO spend is going to go down as part of this transaction and sort of the natural evolution of our ARO portfolio. So that's good to see as well.
Gotcha. Yeah. No, that's good to highlight. Thanks, Brendan.
Thank you.
Our next question comes from Doug Leggate from Wolfe Research. Please go ahead.
Good morning, Brendan. I wonder if I could just probe a little bit on a couple of the numbers you've given because I just want to make sure I'm not imagining the way this accretion works. You've basically said, excuse me, frog in my throat, you basically said that you're going to be AECO exposed to begin with, but you've also said that the accretion on free cash flow is $300 million. If we assume, just rounding it, you're selling for a couple of billion, you're buying for a couple of billion, and you're getting a 300 million free cash flow for, I'm guessing, 20 years of inventory, 30 wells a year, 600 core locations at a one-rig run rate. That's $300 million of incremental free cash over 15-20 years, which is about 10 bucks a share. What am I missing?
Yeah, you nailed it, Doug. Appreciate the question. And those are some pretty eye-popping numbers. And we're really looking forward to getting them on the board and showing them. But they're concrete, rock solid, and we feel comfortable and excited about getting our team in there to see what other opportunities we can unpack. But really, it's driven by a couple of things that I'll just call attention to you to help you kind of get there. First off, we're unplugging a relatively high-cost, low oil price realization asset in the Uinta, and we're plugging in a very low-cost, high oil price realization asset in the Montney. So that's a big part of it there. We're also going to take $1.5 million per well out of the well cost. So you're getting a boost on that front.
And then we're going to take some overhead and cash tax savings with the transaction as well. So that's how you get to the $300 million. And like you said, it's pretty eye-popping.
Just my follow-up, my clarification question is, in that $300 million, you've talked about—I mean, I guess there's two pieces. You've talked about the $125 million of synergies. Is that included in the $300 million? I guess part A and part B is just to make sure we're clear that that $300 million includes your comments about AECO exposure at this point. In other words, not your Canadian average pricing that you've had because of your allocation out of the Montney.
Yes, you're correct, Doug. So the well cost savings, the overhead, and the cash tax are included in the $300 million. And then the AECO exposure is 100% included in the $300 million as well. So we've expected, and you've heard this tone from us all along, we've been pretty cautious on AECO realizations going forward into 2025. And so that's how we've modeled this going forward is using a strip AECO expectation for 2025. So that's built into our numbers.
Terrific. Thanks so much.
Thank you.
Our next question comes from Josh Silverstein from UBS. Please go ahead.
Yeah, thanks. Good morning, guys. You mentioned, Brendan, before that you guys are going to have kind of similar turnarounds to what Paramount was doing. Can that grow oil volume for you guys or oil and condensate volume for you guys? Or is it going to stay relatively flat?
Yeah, if we keep that turn-in-line consistent year over year, Josh, that'll keep the production flat year over year. That's been the trajectory of the asset through 2024 here has been flat, and so we'll, as a base case, run a maintenance program for 2025. That's how our guidance that we've given, soft guidance that we've given here for 2025 is based, so that's the go-in plan here. Obviously, what's attractive about these assets is that it does unlock a long-term mid-single-digit growth option in the Montney oil here for us, so we're pretty excited about that, but for now, the numbers are modeling that flat.
Got it. And then the Montney tends to be a little bit more kind of single project oriented. Is there anything that you guys need to do from an infrastructure standpoint or a development area where you're spending kind of a certain amount for this project and then there's subsequent growth down the line?
Yeah, Josh, I think I caught your question there, but the infrastructure and market access associated with these assets is great, so we've got a well-plumbed gathering network throughout the land base. We've got access to multiple midstream processing plants and all of the downstream market access that we need for NGLs and gas and condensate, so that's one of the things that we always layer on to these assessments, and this makes it an even, in addition to the raw quality that we've pointed to here, this is also a well-plumbed infrastructure asset, so we really aren't going to see anything unusual in terms of non-well capital going forward here.
Our next question comes from Arun Jayaram from JP Morgan. Please go ahead.
Yeah, good morning, Brendan and team. Brendan, I was wondering if you could help us think about kind of the per well economics for premium locations, 600 premium locations, a $5.5 million completed well cost for 10,000-foot lateral. But what kind of NPVs per well do you estimate from your premium locations at strip pricing?
Yeah. Hey, Arun, good morning. Yeah, thanks for the question on the well economics because it's a really important point that we've been talking about in the Montney. These economics stand up with the very best in North America, including the Permian. And on slide 11, I think you can see some of the illustrations of that. So really, the building blocks here are the lowest well costs in North America at that $550 per foot level. You're getting the same cumulative oil production as we're getting out of the Midland Basin wells at kind of that mid-teens per foot number for a cumulative 12 months. You have a lower royalty rate and high realized prices on the oil side, at least. And so even if you factor in that lower gas realized price, you're still delivering very compelling rate of returns.
On the NPV per well, I'm not sure we've quoted that in the materials here. We'll probably follow up with you on that. I just don't have that number right in front of me on my head here, and I don't kind of carry that one around in my head. But happy to follow up, Arun.
Got it. Got it. We'll follow up. Final question. As you're citing $125 million of synergies and you're breaking that down into well costs and some savings on the Canadian cash side, can you just maybe elaborate on the cash tax savings in Canada? How long do these last for? And maybe a per annum impact, want to better understand that favorable benefit on taxes?
Yeah, for sure. And I'll hand it over to Corey here. But at a high level, out of the $125 million, right around $62.5 million of that is the well cost savings. And then the remaining $62.5 million is split between the overhead and the cash tax savings. But Corey, do you want to cover off the details on the cash tax?
Sure. Yeah. Good morning, Arun. So on the cash tax side, you got to think about when we're having an asset acquisition, it does create tax attributes in the Canadian business. And then there's some tax shield created with the financing that goes in place to purchase the assets within Canada. So both of those create a long-term tax shelter that goes with the asset.
Thanks, Arun.
Thanks a lot.
Yeah, thank you.
Our next question comes from Scott Gruber from Citigroup. Please go ahead.
Yes, good morning. Staying on the cost side, can you walk through the outlook for costs in 2025 post-close? Transportation costs should fall with the Uinta barrels coming out. But curious where TNP lands and where LOE can land post-close.
Yeah, we'll get into some of those specifics when we roll out our '25 guide, Scott. But you're directionally, you got it nailed. So we'll take out a lot of TNP. The cost of getting those Uinta barrels either to Salt Lake or the Gulf refineries will come out. And then Montney is a very low LOE asset as well. So directionally helpful on the cash cost. I don't have a specific quantification for you just yet, but that's something we'll continue to disclose as we get closer to the '25 guidance.
Okay. We'll wait for those. And then turning to the upside locations, in the Permian, you're able to tap into the upside benches rather quickly on the EnCap acreage. In the Montney, you mentioned upside on the third bench. Do you look to develop that third bench right away and de-risk the upside locations quickly, or do you look to develop the third bench down the road? How do you think about de-risking the upside locations?
Yeah. Yeah. Perfect. I appreciate the question. Yeah. In the Permian, if you remember, our upside case was based on developing the acquired assets there at a four bench, and the base was at a three bench, so here the upside would be at three benches across the position and the base case at a mix of two and three. And so I think you'll see us do a very similar approach here where we've got a lot of confidence in this rock and the resource in place, and so I think pretty early on you'll see us stepping into that three-bench development and testing that, so we'll have our answers relatively quickly. And I think the Permian gives you a good indication of how that should outcome as we go through the next couple of years.
Our next question comes from Roger Read from Wells Fargo. Please go ahead.
Yeah, thanks. Good morning. Just wanted to follow up. So the suspension of the share repos of $377 million to recover said that you're going to get $181 million of that in the fourth quarter. If the deal closes, call it effective end of Q1. If you can do $180 million in Q4, let's assume kind of similar performance Q1, you could basically close the transaction and be back buying shares, right? I mean, in other words, the $377 million you could almost generate between now and the end of March. 100%, Roger. And that's exactly the math. We're already well on our way here with the $181 million from the Q4. So makes us feel really good about this is just a temporary piece to put us right back on the same debt trajectory that we were on coming into the transaction. Okay.
And then for my sort of, let's call it the touchy-feely question, since we've seen other transactions going on in the Permian Basin, you're already there. You did one, what, a year and a half ago thereabouts. You looked at this. You presumably looked at other things. Just how did this Montney opportunity fit in sort of a hierarchy of opportunities as you were looking at them and valuation opportunities? Yeah. Yeah, for sure, Roger. Yeah, I appreciate the qualitative question. Yeah, I think, look, we're prioritizing value creation, and we're extremely disciplined about capital allocation. And so it's no secret that the cost to acquire core Permian had shifted higher. And we saw this opportunity. And really, this was our target. We did the resource work using our proprietary dataset and really honed in on what we felt like was the top value undeveloped position in North America.
And this is the one that stood out, and we went after it and are very pleased to have the transaction in hand to announce today. And so that's exactly the approach we took was a value-based approach underwritten by our deep technical understanding and underwritten by our pretty unique capabilities in the play, which really set us up to create a lot of value here. I appreciate that. Thanks. And congrats on the deal. Thanks, Roger.
Our next question comes from Ati Modak from Goldman Sachs. Please go ahead.
Hi, good morning, team. Curious if this transaction gets you to where you need to be in the Montney in terms of the scale, or are there other opportunities also that you could be looking for?
Yeah, I think your question is around other opportunities in the Montney. Yeah, look, we're going to be really focused on this one. We're going to be focused on closing it and integrating it. Clearly, we've put ourselves in a position of strength both here and in the Permian where we've got deep, high-quality inventory that's performing extremely well for us in the business as evidenced by our results over the last really couple of years, and we're just going to be extremely disciplined stewards of our shareholder capital going forward. I think that's what I'd leave you with.
I appreciate that. And then can you talk a little bit more about the decision to pause the share repurchase to fund the difference? I mean, it doesn't look like it's adding a lot in terms of debt. You should be able to spread out the paydown. But the decision to pause it means timing versus spread out the paydown of that $377 million. Can you talk about that?
Hey, Ati, I'm sorry. Just your line's a little difficult to hear. I wonder if you could just give me that one again. Sorry, I apologize.
Yeah, no worries. Hopefully, this is better. Wondering if you can talk a little bit more about the decision to pause the share repurchase to fund the difference because the $377 million, you could spread it out a little bit to pay it down versus pull forward that paydown in the next couple of quarters. Just talk about that if you could.
Yeah. No, appreciate it. Thanks for adjusting that, Mike. Yeah, really, our view here is look, debt reduction is important to us. We're in a point in the macro where there's uncertainty on the forward commodity outlook. And so we just felt it was prudent to have that short temporary pause, put us right back on trajectory on the debt reduction, and with the transaction, be able to accelerate the time to the target here because of the extra free cash generation. So it really was prudence in that decision and a recognition of the commodity environment that we're in and wanting to make sure we prioritize that debt reduction. But at the same time, we continue to be committed to shareholder returns.
All right. Thank you.
Thank you.
Our next question comes from Kalei Akamine from Bank of America. Please go ahead.
Hey, good morning, guys. We like this trade and it makes a ton of sense. I think your position that the condensate is driving the economics is very clear, but Federico can still be a tailwind so can you talk about how you see basis changing? and then what are the opportunities, maybe longer term, to upgrade those sales points?
Yeah, Kalei, no, thank you. Appreciate the question. And you've got it right. The near to medium term here is all about the oil. If you think about our Montney position and the role it can play for us strategically down the road, we have an enormous gas opportunity that as gas becomes structurally more important globally and in the continent towards the end of the decade, we think that's a huge opportunity and value in our portfolio. And so that's what we really like about the play is that it provides this near to medium term and really even long-term oil returns and then also has this gas option embedded within it. So yeah, I think structurally what we expect to happen here is with LNG Canada coming on stream, we'll see some AECO strengthening.
We're well documented as suggesting that that likely could be transitory as there's a fair bit of gas capability in the basin. But then longer term, we've got a number of other LNG projects off the West Coast of Canada that are queuing up and set for the latter part of the decade and into the next. And that's where we see a real structural opportunity for Canadian gas. And of course, obviously the same for North American gas as gas becomes more and more of a global commodity going forward.
Got it. I appreciate that. My second question is on the Anadarko. It's an asset that's still in your portfolio. I get the free cash flow, but it's still declining. Why wouldn't there be a second step in kind of repositioning the portfolio?
Yeah, Kalei, great question. Glad to turn to that. Look, the Anadarko is generating significant free cash for us and has a very low decline. So in a lot of ways, it's a really unique shale asset in North America. I don't think there's another asset like it with declines under 20%. And so what that sets up for us is an extremely low reinvestment asset, and with our return to activity just in the last quarter in the Anadarko, which you're going to see there as a very stable production profile going forward, and we really like that value proposition of having the Anadarko in the portfolio because of the free cash generation and the low reinvestment rate associated with the asset.
So it's performing a really important strategic role in enabling the overall free cash generation of the company, but also enabling the focus of our capital into the Permian and the Montney.
Understood. Thanks, Brendan.
Thank you.
Our next question comes from Noel Parks from Tuohy Brothers. Please go ahead.
Hi, good morning. I was curious about what Paramount's development history has been on its acreage, wondering if there was any low-hanging fruit or technical improvement that you're eager to try out there?
Yeah, Noel, appreciate it. Absolutely. I mean, a lot of credit to Jim and the Paramount team. They've built a tremendous asset here. What we're excited about is we're going to take a lot of cost out right out of the gate. We've mentioned the unique capabilities that we have in the basin. That's going to help us really create those synergies that we've pointed to. The well productivity stands alone. I mean, these are some of the most highly productive wells in North America from an oil perspective. And so we're going to kind of keep that rolling. I expect our completion designs have some upside there, but we're not banking on that in the numbers that we've rolled out for you here today. And the stacking and spacing that we'll bring to bear here is more consistent with our approach and Pipestone of that three-bench development.
And we're really confident in that design. So I think a lot of credit to the Paramount team and excited about turning our guys loose on it.
Perfect. And just wondering, any hedges following the transaction or coming to you? And are there any service contracts that are in place as well?
Yeah, great questions. Yeah, no service contracts. So we maintain the flexibility here associated with our existing operations. Really just while I'm there, this is a pretty low activity shift. If you think about the acquisition that we did last year with the Permian, where there was a lot of moving parts from a rig count perspective and frac spreads, this one is much more straightforward. So we're going to operate the pro forma Montney asset at around a three-rig pace and a one frac spread pace, which is actually where we are today. So in fact, what this lets us do is build basin scale in the Montney and fill in the white space in that program that we have already. So we don't need to go grab any new equipment or crews. We're already set up there. So the continuity is going to be pretty seamless.
And then, to your question around hedges, the go forward hedges really aren't going to be much different because really unchanged because we're swapping out a pretty similar oil volume with the sale of the Uinta. So that program, I think you should expect it to be pretty straightforward going ahead. Obviously, over time, what we'll look to do is move some of the price points on gas away from AECO, but that'll be a longer-term project.
Terrific. Thanks a lot.
Thank you, Noel.
At this time, we have completed the question and answer session, and we'll turn the call back to Mr. Verhaest.
Thank you, operator, and thanks everybody for joining us today. Our call is now complete.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.