Company Overview

During 2010, we advanced a number of resource plays with the potential for repeatable drilling opportunities and strong economic returns. This activity has yielded the largest and most diverse inventory of drilling opportunities in our history, positioning NuVista for the next phase of growth.

In 2011, our business plan will place less emphasis on the evaluation of resource plays and more emphasis on the development of individual plays with the most attractive economics to deliver near-term operating and financial results. In addition, we are continuing to selectively evaluate existing resource plays within our core regions, targeting oil and liquids-rich natural gas, to provide for long-term growth.

Evolution of our Business Strategy

From the creation of NuVista in July 2003 to the end of 2009, we employed an acquire and develop business model. During this period, capital expenditures amounted to approximately $1.8 billion, two-thirds of which was spent on acquisitions. This approach was successful in growing NuVista from a junior to an intermediate exploration and development company with enviable assets: high working interests, low-cost production, and a large, prospective land base.

In 2010, less than 10% of our capital program was allocated to acquisitions. With sufficient critical mass and organic drilling opportunities, we are now transitioning from a business model dependent on acquisitions to a model where growth is achieved through internally generated opportunities. These opportunities provide both near-term and longer-term growth and include light oil, heavy oil, and liquids-rich natural gas plays.

2010 in Review

Our teams executed a $225 million capital program almost entirely devoted to exploration and development activities. We participated in 70 (51.2 net) wells, of which 56 were operated and 41 were horizontal wells. This drilling program resulted in 38 oil wells, 31 natural gas wells and one dry and abandoned well.

We made significant progress evaluating six resource plays with a view to the longer term, and were successful in delivering growth in reserves per share.

The declining natural gas price environment impacted our cash flow and reduced our financial flexibility. In early 2011, steps were taken to significantly improve our balance sheet and give us the confidence to proceed with the next phase of our business plan focused on the development of our large and diverse opportunity inventory.

2011 Priorities

For 2011, our energy and activity will focus on five priorities:

1. Achieving Corporate Performance Targets
Our leadership team has set four key performance targets for 2011:

2. Driving for Operational Excellence
With our focus in 2010 on evaluating resource plays, in most cases we were drilling concept wells into plays with greater risk and less ability to control costs. As we shift to lower risk activities and drill follow-up wells into our resource plays, we will be looking for ways to reduce drilling costs, optimize completions, maximize production and minimize operating costs. These principles have always been core to NuVista’s success and will continue to be emphasized in 2011 as we drive for operational excellence in all areas of our business. As we strive to create value and plan for growth, we need to ensure we have effective and efficient processes in place to deliver results that meet or exceed our targets.

3. Increasing Financial Flexibility
Financial flexibility is imperative for a sustainable business model, so our focus in early 2011 was to reduce debt. In March, we closed a private placement and public offering of 10.5 million common shares for gross proceeds of $99.8 million. In April, we entered into an agreement for the sale of Pembina Cardium lands with approximately 250 Boe/d of production for proceeds of $36.5 million. Reflecting these two transactions, our proforma 2010 year end debt to funds from operations ratio improved to 1.8 times from 2.6.

In addition to reducing our debt, we are striving to maximize available cash flow by focusing on the near-term economics of our drilling program and reducing the geological and execution risk of our capital program. In February, we also discontinued our dividend in order to retain financial flexibility and to reinvest in our growth opportunities.

While we have made significant progress in improving our financial flexibility, we will continue to evaluate opportunities to reduce debt and redeploy capital through the sale of non-core assets.

4. Advancing the Wapiti Montney Play
The Wapiti Montney liquids-rich natural gas play has attractive economics in the current natural gas price environment and has the potential to augment NuVista’s value creation over the long term. Our Montney land holdings are extensive (140 net sections) and we are advancing the program in a measured way. In 2011, our goal is to further delineate the play by investing approximately $35 million and prepare it for larger scale development.

5. Maintaining a High Level of Employee Engagement
Value creation requires every employee to be fully engaged, and we are counting on our talented and empowered employees to help us achieve our performance targets. It is critical that our employees – both in the office and in the field – focus on execution and delivery of both operating and financial results. We have been very pleased with our team’s ability to deliver on our 2011 priorities thus far.

2011 Business Plan

The primary objective of our business plan in 2011 is to balance near-term operating and financial results with the continued evaluation of our extensive portfolio of resource plays.

Our emphasis will be on execution and delivering profitable growth through our core business principles:

Our capital program of between $160 and $180 million will be allocated primarily to high return oil and liquids-rich natural gas opportunities in our W3M/W4M and Deep Basin Core Regions. Approximately two-thirds of our capital spending is planned for the second half of 2011.

Although prudent financial management dictates that we limit our 2011 capital expenditures given low natural gas prices and an uncertain economic environment, we continue to plan for the future. About 20% of our 2011 capital is allocated to de-risking our Wapiti Montney play. This liquids-rich natural gas play is at an early stage of evaluation but has the potential to create significant long-term growth and value for our shareholders. The Wapiti Montney play derives a significant portion of its cash flow from natural gas liquids (which are leveraged to oil prices) and therefore exhibits good economics even at current natural gas prices. We expect to spend approximately $35 million on this play in the second half of 2011, and a further $35 million in the first half of 2012. With continued success, we plan to investigate gas processing alternatives in order to control the development of this property and maximize economic returns.

Leadership Transition

In November 2010, we announced the departure of Mr. Alex Verge, our President and CEO. We would like to thank Alex for the key role he played in NuVista’s development during his 7½-year tenure. We are pleased to announce the recent appointment of Mr. Jonathan Wright as President and CEO, effective May 9, 2011. Jonathan brings a wealth of experience in the energy sector spanning more than 22 years, most recently as a senior vice president directing Talisman Energy’s conventional operations in North America.

With a disciplined approach to adding value, a talented, empowered, and accountable work force of highly motivated employees under new leadership, we are confident that our prudent business plan and disciplined approach to business will result in superior performance over the long term.

May 2011