UPDATE 2-Ovintiv to sell Duvernay assets, sets new climate change related targets

(Adds details on deal and debt reduction, shares)

Feb 17 (Reuters) - Ovintiv Inc said on Wednesday it agreed to sell its Duvernay assets in Alberta province for about $263 million and linked employee pay to new emissions intensity reduction targets, weeks after an activist investor launched a proxy fight for three board seats.

Investment firm Kimmeridge Energy Management, one of Ovintiv’s top 10 shareholders, had urged the oil producer to alter its capital spending, focus on governance and said the board had allowed the company to become an environmental laggard, trailing peers on key environmental metrics.

The company, formerly known as Encana and moved base from Calgary to the United States, set a 33% methane intensity reduction target by 2025, as energy companies face increasing pressure from investors and climate change campaigners to reduce greenhouse gas emissions.

Ovintiv, once among Canada’s largest companies also set a target to slash debt of $4.5 billion by 2022, a 35% reduction as compared to end of last year.

The company said the deal for its Duvernay assets is expected to close in the second quarter of 2021.

Ovintiv’s shares fell as much as 39% in 2020 as the COVID-19 pandemic dented fuel demand and prices. However, it has gained more than 58% so far this year as vaccine rollouts boost oil demand forecasts.

Royal Dutch Shell also said on Wednesday it would sell its Kaybob Duvernay assets in Alberta to Canada’s Crescent Point Energy Corp CPG.TO for C$900 million ($708.61 million). (Reporting by Rithika Krishna in Bengaluru; Editing by Arun Koyyur and Shailesh Kuber)