CALGARY, ALBERTA--(Marketwired - Sept. 11, 2017) - NuVista Energy Ltd. ("NuVista" or the "Company") (TSX:NVA) is pleased to provide a significant operational update including the startup at Bilbo block of our largest pad drilled to date; powerful IP30 success from Elmworth block high intensity fractured wells (HiFi); the successful and on-time conclusion of the Keyera Simonette gas plant planned turnaround; and the achievement of a compelling well test in our emerging Pipestone block. This test provides early flow data, increasing our confidence in above-typecurve results.
The Bilbo compression and dehydration facility is now at capacity with peak production up to 20,000 Boe/d depending on normal operational fluctuations. Our largest pad, containing six wells, has now been successfully started up at Bilbo. Initial results are very encouraging as the wells all move through their early days of flowback and cleanup. Despite the shorter lateral length of 1425 to 1500 m on these wells and the early stage of cleanup, they are averaging approximately 3.8 MMcf/d raw gas and over 1,000 Bbl/d of condensate each. We look forward to providing the IP30 flowback information for this pad once available.
Completion activities progressed very well with summer weather, and all 9 planned new Elmworth wells have been completed successfully and are in various stages of tie-in and initial flowback. Two of these wells have HiFi completions and have nearly reached IP30 with flow rates which eclipse prior Elmworth results. The wells flowed an average of 2,200 Boe/d including 9.9 MMcf/d raw gas and 723 Bbl/d of condensate each. This represents more than 2.5x the condensate rate of our Elmworth HiFi typecurve and more than double the condensate rate of our Elmworth historical average results. The IP30 CGR was 73 Bbls/MMcf versus the typecurve CGR of 40. If these results are repeated for the other HiFi wells which are coming on stream in Elmworth, it would represent a step-change improvement in well economics. We expect to see continued production increases in our Elmworth facilities through the fall as these 9 wells are tied in and started up.
As previously reported, we have concluded the drilling of our first well in this emerging block. The well was drilled to a lateral length of 3,100 m in just 19 days, and has now been successfully completed with regular fracture intensity including 26 stages. The initial cleanup and flowtest was conducted within the limit of environmental flaring regulations, with very encouraging results. The well flowed for approximately 3.5 days with the final 24 hour rate being over 1,400 Boe/d including 6 MMcf/d raw gas and 600 Bbl/d condensate, with rates still increasing at the end of the short test period. Although the well was still cleaning up, these early indications provide a CGR greater than 100 Bbl/MMcf versus initial type-curve expectation of 60 Bbl/MMcf. The raw gas result was also favorable. The well will remain shut in until our Pipestone block facilities are in place. We are pleased to note that ongoing positive offsetting industry results also continue to confirm the areal extent and potential of our Pipestone block. The Pipestone stakeholder and development plan is proceeding well to underpin our planned future growth in this area.
NuVista has recently completed the drilling of our first Lower Montney horizontal well, at Bilbo. We expect to complete this test well by early 2018 in this newly emerging layer of the Montney formation.
We continue to be excited and encouraged by the progress across all of our operations. The planned Keyera Simonette gas plant turnaround was completed on schedule, allowing our Bilbo block to resume operations. Current corporate production is returning to the prior run rate of 33,000 Boe/d, and we expect to push beyond those levels in the coming weeks as we remove welltest equipment from these new wells and bring them on to permanent production. With drilling and completion costs continuing in the expected range, we anticipate being in the upper portion of our capital guidance range of $280 - $300 million as previously communicated. We reiterate the production guidance ranges for the third quarter at 26,000 to 29,000 Boe/d and fourth quarter at 35,000 to 38,000 Boe/d. Guidance for the full year of 2017 is also unchanged at 28,000 to 31,000 Boe/d.
Given top quality assets and a management team focused upon relentless improvement, NuVista will continue to optimize well results, improve margins, and grow our production profitably toward our 2021 goal of 60,000 Boe/d. 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 guidance and support as we build an ever more valuable future for NuVista.
Please note that our corporate presentation is being updated and will be available at www.nuvistaenergy.com on September 11, 2017.
Basis of presentation
Unless otherwise noted, the financial data presented in this news 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.
This news release contains the term barrels of oil equivalent ("Boe"). Natural gas is converted to a barrel of oil equivalent ("Boe") using six thousand cubic feet of gas to one barrel of oil. Boes may be misleading, particularly if used in isolation. A conversion ratio of one barrel to six thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion ratio on a 6:1 basis may be misleading as an indication of value.
Initial Production (IP) Rates
Any reference in this news release to IP rates such as IP30 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. Such rates are based on field estimates and may be based on limited data available at this time.
The typecurve information included in this news release represents estimates of the production decline and ultimate volumes expected to be recovered from wells over the life of the well. This information is based on internally generated typecurves based on a combination of historical performance of older wells and management's expectation of what might be achieved from future wells. The information represents what management thinks an average well will achieve. Individual wells may be higher or lower but over a larger number of wells management expects the average to come out to the typecurve. Over time typecurves can and will change based on achieving more production history on older wells or more recent completion information on newer wells. There is no certainty that future wells will generate results to match historic typecurves presented herein.
Advisory regarding forward-looking information and statements
This news 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 news release contains forward looking statements, including anticipated production, expected condensate to gas ratios, anticipated well economics and typecurves, tie-in and completion plans, development plans at Pipestone, our capital and production guidance and our plans to continue to optimize well results, improve margins and grow production. 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 funds from operations, 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 bank 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. NuVista has included the forward-looking statements in this news release in order to provide readers with a more complete perspective on NuVista's future operations and such information may not be appropriate for other purposes. NuVista disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.