NuVista Energy Ltd. Announces Strategic Property Acquisition and Bought Deal Financing
CALGARY, ALBERTA--(CCNMatthews - June 29, 2005) -
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NuVista Energy Ltd. (TSX:NVA) ("NuVista") is pleased to announce that it has entered into an agreement to acquire certain natural gas-weighted properties concentrated in northwestern Saskatchewan. These assets are characterized by high working interests, with a significant undeveloped land position, seismic database and facility infrastructure. The acquisition cost, payable in cash, for these assets is estimated to be approximately $150 million on closing. The acquisition has an effective date of April 1, 2005, with closing expected on August 2, 2005. The completion of the acquisition is subject to customary regulatory approvals and other conditions.
The acquisition is consistent with NuVista's strategy of acquiring low cost, operated properties with infrastructure, undeveloped land and significant lower-risk development potential. With this acquisition, NuVista continues to improve the quality of its production and increases its overall natural gas exposure. The assets, which will establish a new core region for NuVista in northwest Saskatchewan, contains production of approximately 3,400 barrels of oil equivalent per day ("boe/d"). This production is 90% operated, with an average working interest of 65%. This transaction will increase NuVista's current production by 44% to over 11,200 boe/d. These assets include approximately 175,000 net acres of land, of which 78,500 net acres is undeveloped. NuVista has currently identified approximately 50 drilling locations and 30 recompletions/workovers on the assets. Approximately 10% of the production and substantially all of the undeveloped land are subject to rights of first refusal. If such rights are exercised, then the production and undeveloped land to be acquired will be reduced accordingly.
The acquisition provides the following financial and operational benefits to shareholders:
- Accretive to NuVista's cash flow, reserves, production and net asset value (all on a per unit basis) and to NuVista's reserve life index;
- Attractive reserve and production acquisition costs (before an allocation to undeveloped land and seismic) of $17.50 per boe proved, $14.70 per boe proven and probable, and $44,120 per flowing boe;
- Increases NuVista's total proven and probable reserves by 65% to 25 million boe;
- Virtually all of the proved reserves are proved producing; total proved reserves are 84% of total proven and probable reserves; and the reserve life index is 8.6 years on a proven and probable basis;
- High working interest properties averaging 65%, with 90% of the production operated;
- Improves NuVista's natural gas weighting to 80% of overall production;
- Reduces NuVista's operating costs, on a per boe basis, by approximately 10%, ensuring NuVista will maintain top decile cash costs on a per unit basis;
- Significant development opportunities on key properties, providing NuVista with the ability to continue its strategy of increasing production and reserves through internal development and optimization; and
- Additional critical mass providing for continued growth over the longer-term, additional efficiencies in NuVista's operations and greater access to capital markets.
The following table outlines the reserves, effective April 1, 2005, of the assets to be acquired:
Natural gas Total BOE
Proved Producing 54.0 9,001
Total Proved 54.1 9,011
Proven and Probable 64.1 10,684
The major producing properties were evaluated based on an independent engineering report prepared by NuVista's engineering consultants, Gilbert Laustsen Jung Associates Ltd., in accordance with NI 51-101.
The cash to close the acquisition of approximately $150 million will be funded through a combination of bank debt and an issuance of subscription receipts ("Subscription Receipts"). In conjunction with the acquisition, NuVista has entered into an agreement to sell, on a bought deal basis, 7.5 million Subscription Receipts at a price of $13.60 per Subscription Receipt for gross proceeds of $102 million. The Subscription Receipts will be sold to a syndicate of underwriters co-led by Peters & Co. Limited and TD Securities Inc. and also including BMO Nesbitt Burns Inc., FirstEnergy Capital Corp., CIBC World Markets Inc., GMP Securities Ltd., Tristone Capital Inc., Orion Securities and Sprott Securities Inc.
Each Subscription Receipt represents the right to receive one share of NuVista on the closing of the acquisition. The proceeds from the offering of Subscription Receipts will be deposited in escrow pending closing of the acquisition. If the acquisition closes on or before August 31, 2005, the net proceeds from the offering of subscription receipts will be released to NuVista and used by it to pay part of the purchase price of the acquisition.
If the acquisition fails to close by August 31, 2005, or the acquisition is terminated at an earlier time or there is an unresolved dispute relating to any material rights of first refusal, the escrow agent will return the net proceeds and pro rata entitlement to interest thereon to holders of the Subscription Receipts.
Please visit our website at www.nuvistaenergy.com
for detailed corporate information.
NuVista Energy Ltd. is a natural gas weighted independent Canadian oil and natural gas exploration, development and production company created through the reorganization of Bonavista Petroleum Ltd. on July 2, 2003. NuVista's common shares trade on the Toronto Stock Exchange under the symbol NVA.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy the Subscription Receipts in any jurisdiction. Such securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States, or to a U.S. person, absent registration, or an applicable exemption therefrom.
Forward Looking Statements - Certain information regarding NuVista set forth in this document, including management's assessment of the acquisition and NuVista's future plans and operations, contains forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond NuVista's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, geological and engineering risks, imprecision of reserve estimates, environmental risks, competition from other producers, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. NuVista's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that NuVista will derive therefrom.
Disclosure in respect of 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.