NuVista Energy Ltd. (“NuVista” or the “Company”) (TSX: NVA) is
pleased to announce a number of updates which demonstrate continued
successful advancement of our Pipestone and Wapiti Montney play
development.
Fourth Quarter Production
Record
We are very pleased to report that in the fourth
quarter of 2021 NuVista achieved record production with the
continued startup of new production from multi-well pads in
Pipestone North and Elmworth, reaching a quarterly average of just
over 60,000 Boe/d based on field estimates. This represents a
production increase of 18% and 22% compared to the prior quarter
and the fourth quarter of 2020, respectively, and is well above our
fourth quarter guidance range of 56,000 – 58,000 Boe/d.
Additionally, production for the fourth quarter consisted of
approximately 35% condensate, 10% NGLs, and 55% natural gas.
Annual 2021 NuVista production averaged
approximately 52,200 Boe/d, above the top of the annual guidance
range of 51,000 – 52,000 Boe/d. The 2021 capital expenditure amount
is not yet available in final form but is expected to be in line
with the upper end of prior guidance of $275 - $285 million.
Excellence in Operations
Operations continued precisely as planned in all
operating areas in the fourth quarter. In the Wapiti area,
production volumes remained flat versus the third quarter at
approximately 27,000 Boe/d as we ramped up production from the
latest 4-well pad at Elmworth in December. In Elmworth we recently
finished drilling a 6-well pad and have commenced completion
operations. This pad is expected to come on-stream in the first
quarter of 2022. In early January we moved our Wapiti rig to the
Gold Creek property to commence drilling on a 4-well pad, which is
expected to be completed and brought on-stream prior to the end of
the second quarter.
Activity levels in the Pipestone area remain
high and the production ramp-up into the new facilities continues
to go very well. Production for the quarter in Pipestone set a new
record high of approximately 33,000 Boe/d, which is up 38% from the
third quarter. Pad #6 (6-well pad), which was highlighted in our
third quarter results as having exceptionally rapid payout, has now
reached its IP90 milestone of 4.9 MMcf/d including approximately
60% condensate (190 Bbls/MMcf). Pad #7 (6-well pad), which is
located to the southwest of Pad #6, has hit its IP60 milestone of
5.8 MMcf/d including approximately 60% condensate (180 Bbls/MMcf).
With these highly favorable results, we have seen both pads achieve
similar payouts.
Pipestone drilling and completion operations
have continued through December. Pad #8 (6-well pad) was drilled
and completed in the fourth quarter and will be brought on
production in late January. Pad #9 (7-well pad) is anticipated to
be finished drilling in January and it is expected to be completed
and brought on production late in the first quarter. Pad #10
(7-well pad) and Pad #11 (4-well pad) will be drilled next and
these wells are expected to be completed and brought on-stream
prior to the end of the second quarter.
Debt Reduction Exceeds
Expectations
In the fourth quarter of 2021, NuVista reduced
bank debt by $68 million by continuing to direct all free cash flow
towards the reduction of net debt. With the benefit of increased
production and favorable pricing, this exceeded our debt reduction
expectations, ending the quarter with bank drawings of
approximately $197 million. This represents a bank debt reduction
of $169 million during the full year of 2021. NuVista’s credit
facility capacity was redetermined and maintained at $440 million
at the semi annual review in November. These results reaffirm our
confidence that we are on track for reduction of net debt below our
first targeted milestone of $400 million prior to the middle of
2022.
2022 Guidance Reaffirmed
NuVista is pleased to reaffirm all of our
previously disclosed 2022 guidance. Our expectation for annual
production is 65,000 to 68,000 Boe/d, which represents
approximately 30% annual production growth. First quarter
production is expected in the range of 60,000 – 62,000 Boe/d. Our
corporate condensate mix is anticipated to gradually revert to the
historical average of approximately 30% as flush production from
our recent Pipestone pads abates and new pads come onstream at both
Wapiti and Pipestone South. Capital expenditures for 2022 are
reaffirmed in the range of $290 to $310 million with a steady
three-rig drilling program.
New Addition to Board of
Directors
We would like to announce that Ms. Kate
Holzhauser has joined our Board of Directors. Ms. Holzhauser has
extensive experience in the US and internationally in Operations
and Engineering, primarily in the chemicals manufacturing business.
This includes a significant focus on HSE and ESG matters. Her
postings have included senior leadership positions at BP, INEOS,
and ChevronPhillips. We are very pleased to welcome Ms. Holzhauser
to NuVista.
NuVista has top quality assets and a management
team focused upon relentless improvement. We are excited to
continue pursuing our Montney growth plan, and we will adjust the
annual pace of growth as needed to ensure balance sheet strength
comes first, and that profitability and value growth per share is
always maximized. We would like to thank our staff, contractors,
and suppliers for their continued dedication and delivery, and we
thank our board of directors and our shareholders for their
continued guidance and support. Please note that our corporate
presentation is being updated and will be available at
www.nuvistaenergy.com on or before January 11, 2022.
Advisories Regarding Oil And Gas
Information
BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 Mcf: 1 Bbl is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. As the value ratio between natural gas and crude oil
based on the current prices of natural gas and crude oil is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Any references in this news release to initial
production rates are useful in confirming the presence of
hydrocarbons, however, such rates are not determinative of the
rates at which such wells will continue production and decline
thereafter. While encouraging, readers are cautioned not to place
reliance on such rates in calculating the aggregate production for
NuVista.
Payout means the anticipated years of production
from a well required to fully pay for the drilling, completion,
equipping and tie-in of such well.
Basis of presentation
Unless otherwise noted, the financial data
presented in this press release has been prepared in accordance
with Canadian generally accepted accounting principles (“GAAP”)
also known as International Financial Reporting Standards (“IFRS”).
The reporting and measurement currency is the Canadian dollar.
National Instrument 51-101 - "Standards of Disclosure for Oil and
Gas Activities" includes condensate within the product type of
natural gas liquids. NuVista has disclosed condensate values
separate from natural gas liquids herein as NuVista believes it
provides a more accurate description of NuVista's operations and
results therefrom.
Free cash flow is forecast cash flow less
forecast capital expenditures. For ease of readability,
in this press release, we have used the term "cash flow" instead of
"adjusted funds flow" as defined in our MD&A.
Production split for Boe /d amounts referenced
in the press release are as follows:
Reference |
Total Boe/d |
% Natural Gas |
% Condensate |
% NGLs |
|
|
|
|
|
Q4 2021 estimated production |
60,000 |
55 |
% |
35 |
% |
10 |
% |
Q4 2021 production guidance |
56,000 - 58,000 |
62 |
% |
30 |
% |
8 |
% |
2021 estimated annual production |
52,200 |
59 |
% |
31 |
% |
10 |
% |
2021 annual production guidance |
51,000 - 52,000 |
60 |
% |
30 |
% |
10 |
% |
Q4 2021 estimated Wapiti area production |
27,000 |
63 |
% |
29 |
% |
8 |
% |
Q4 2021 estimated Pipestone area production |
33,000 |
50 |
% |
39 |
% |
11 |
% |
Q1 2022 production guidance |
60,000 - 62,000 |
60 |
% |
32 |
% |
8 |
% |
2022 annual production guidance |
65,000 - 68,000 |
62 |
% |
30 |
% |
8 |
% |
Advisory regarding forward-looking
information and statements
This press release contains forward-looking
statements and forward-looking information (collectively,
“forward-looking statements”) within the meaning of applicable
securities laws. The use of any of the words “will”, “expects”,
“believe”, “plans”, “potential” and similar expressions are
intended to identify forward-looking statements. More particularly
and without limitation, this press release contains forward looking
statements, including management's assessment of: NuVista’s future
focus, strategy, plans, opportunities and operations; that NuVista
will move forward through to 2022 with strength and increasing
momentum; expectations with respect to when certain well pads at
Pipestone North, Pipestone South and Gold Creek will be drilled and
or completed; expectations as to when production will be brought on
stream; expectations with respect to 2021 total capital spending
amounts and that such amounts will be in line with upper end of
prior guidance; first quarter and full year 2022 production
guidance and condensate mix; 2022 guidance with respect to capital
spending, production mix and drilling plans; NuVista's plans to
reduce net debt to below $400 million prior to the middle of 2022;
expected well payouts at Pipestone; the quality of NuVista's asset
base; NuVista's focus on value and relentless improvement; the
Company's plans to pursue a Montney growth plan; and NuVista's
plans to adjust the annual pace of growth to ensure balance sheet
strength and to maximize profitability and growth.
By their nature, forward-looking statements are
based upon certain assumptions and are subject to numerous risks
and uncertainties, some of which are beyond NuVista’s control,
including the impact of general economic conditions, industry
conditions, current and future commodity prices, currency and
interest rates, anticipated production rates, borrowing, operating
and other costs and cash flow, the timing, allocation and amount of
capital expenditures and the results therefrom, anticipated
reserves and the imprecision of reserve estimates, the performance
of existing wells, the success obtained in drilling new wells, the
sufficiency of budgeted capital expenditures in carrying out
planned activities, access to infrastructure and markets,
competition from other industry participants, availability of
qualified personnel or services and drilling and related equipment,
stock market volatility, effects of regulation by governmental
agencies including changes in environmental regulations, tax laws
and royalties, the ability to access sufficient capital from
internal sources and debt and equity markets; and including,
without limitation, those risks considered under “Risk Factors” in
our Annual Information Form. Readers are cautioned that the
assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on
forward-looking statements. NuVista’s actual results, performance
or achievement could differ materially from those expressed in, or
implied by, these forward-looking statements, or if any of them do
so, what benefits NuVista will derive therefrom.
This press release also contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about our prospective
results of operations, all of which are subject to the same
assumptions, risk factors, limitations, and qualifications as set
forth in above. Readers are cautioned that the assumptions used in
the preparation of such information, although considered reasonable
at the time of preparation, may prove to be imprecise and, as such,
undue reliance should not be placed on FOFI and forward-looking
statements. Our actual results, performance or achievement could
differ materially from those expressed in, or implied by, these
FOFI and forward-looking statements, or if any of them do so, what
benefits we will derive therefrom.
We have included the FOFI and forward-looking
statements in this press release in order to provide readers with a
more complete perspective on our prospective results of operations
and such information may not be appropriate for other purposes. The
FOFI and forward-looking statements and information contained in
this press release are made as of the date hereof and we undertake
no obligation to update publicly or revise any FOFI or
forward-looking statements, whether as a result of new information,
future events or otherwise, unless so required by applicable
securities laws.
Non-GAAP measurements
Within the press release, references are made to
terms commonly used in the oil and natural gas industry, but do not
have any standardized meaning as prescribed by IFRS and therefore
may not be comparable with the calculations of similar measures for
other entities. Management believes that the presentation of these
non-GAAP measures provide useful information to investors and
shareholders as the measures provide increased transparency and the
ability to better analyze performance against prior periods on a
comparable basis. Management uses "capital expenditures" to analyze
performance.
Capital expenditures are equal to cash flow used
in investing activities, excluding changes in non-cash working
capital, other receivable and property dispositions. Any
expenditures on the other receivable are being refunded to NuVista
and are therefore included under current assets. NuVista considers
capital expenditures to be a useful measure of cash flow used for
capital reinvestment.
The following table provides a reconciliation
between the non-GAAP measure of capital expenditures to the most
directly comparable GAAP measure of cash flow used in investing
activities for the below historical periods:
($ thousands) |
Nine months ended September 30, 2021 |
Year Ended December 31, 2020 |
Cash flow used in investing activities |
(133,638) |
|
|
(201,425) |
Changes in non-cash working
capital |
29,005 |
|
|
25,813 |
Other receivable |
(4,233) |
|
|
(4,830) |
Property dispositions |
(93,578) |
|
|
- |
Capital expenditures |
(202,444) |
|
|
(180,442) |
FOR FURTHER INFORMATION
CONTACT:
Jonathan A.
Wright |
Ross L. Andreachuk |
Mike J. Lawford |
President and
CEO |
VP, Finance and CFO |
Chief Operating Officer |
(403) 538-8501 |
(403) 538-8539 |
(403) 538-1936 |
|
|
|
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