NuVista Energy Ltd. Announces Strategic Property Acquisitions
CALGARY, ALBERTA--(CCNMatthews - May 5, 2006) - NuVista Energy Ltd. ("NuVista") (TSX:NVA) is pleased to announce that it has entered into an agreement to acquire certain natural gas properties concentrated in West Central and Northwest Saskatchewan. These assets are characterized by high working interests, a significant undeveloped land position, seismic database and facility infrastructure. The acquisition cost, payable in cash, for these assets is $81.7 million on closing. The acquisition will be completed through a series of transactions with an effective date, and an expected closing date, of June 1, 2006. It is anticipated that the acquisition will be financed with bank borrowings. The completion of the acquisition is subject to customary regulatory approvals and other conditions.
This acquisition is a significant component of NuVista's 2006 capital expenditure budget of $175 to $190 million. This budget is allocated approximately half to acquisitions, with the remainder to exploration and development activities. The acquisition is consistent with NuVista's strategy of acquiring low operating cost, operated properties with infrastructure, undeveloped land and significant lower risk development potential. With this acquisition, NuVista establishes a new core area in West Central Saskatchewan and solidifies its dominant position in Northwest Saskatchewan. Approximately one-third of the assets acquired are contiguous interests with NuVista's Northwest Saskatchewan core area. The acquisition includes natural gas production of 13.3 mmcf/d (2,200 boe/d), virtually all of which will be operated by NuVista with high working interests. At December 31, 2005, proven plus probable reserves were estimated to be 18.8 bcf (3.1 mmboe). The acquired assets include approximately 106,000 net acres of undeveloped land; 68,000 net acres of which are contiguous lands in Northwest Saskatchewan and 38,000 net acres of which are located in West Central Saskatchewan. NuVista also acquired a seismic database of approximately 1,280 kilometers of 2D seismic and 100 square kilometers of 3D seismic. NuVista has ascribed $15 million of value to the land and seismic associated with this asset purchase.
NuVista has currently identified over 40 drilling locations and 30 recompletions/workovers on these new assets. NuVista believes there is the opportunity for significant reserve additions on the acquired properties prior to year end and will allocate approximately $7 million of NuVista's remaining 2006 exploration and development capital to West Central Saskatchewan. While the current reserves and production are 100% natural gas, NuVista has identified the potential for crude oil reserves and production additions in West Central Saskatchewan. NuVista will conduct an active drilling program for the balance of this year to optimize and increase both oil and gas production and reserves from these assets.
The acquisition provides the following financial and operational benefits to NuVista and its shareholders:
- Accretive to NuVista's cash flow, reserves and production on a per share basis;
- Increases NuVista's production by 19% to 13,600 boe/d;
- High working interest properties averaging 63% in West Central Saskatchewan and 40% in Northwest Saskatchewan and virtually all of the production will be operated by NuVista;
- Includes seismic and a large undeveloped land base of 106,000 net acres;
- Net of land and seismic value of $15 million, the acquisition cost is approximately $30,300 per flowing boe and $21.30 per proven and probable boe of reserves; and
- Creates a new core area for exploitation with significant development opportunities for natural gas and crude oil, providing NuVista with the ability to continue its strategy of increasing production and reserves through internal development and optimization.
NuVista is an independent Canadian oil and natural gas exploration, development and production company with its common shares trading on the Toronto Stock Exchange under the symbol "NVA".
Corporate information provided herein contains forward-looking information. The reader is cautioned that assumptions used in the preparation of such information, which are considered reasonable by NuVista at the time of preparation, may be proven to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein and the variations may be material. There is no representation by NuVista that actual results achieved during the forecast period will be the same in whole or in part as those forecast.