CALGARY, ALBERTA--(Marketwired - March 8, 2016) - NuVista Energy Ltd. ("NuVista" or the "Company") (TSX:NVA) is pleased to announce results for the three months and year ended December 31, 2015 and provide an update on our future business plans.
2015 Success Supports NuVista Long Term Strategy
Operationally, 2015 was a very strong year for NuVista. We have:
These factors have placed NuVista in a position to continue to weather the current low commodity price environment with patience and strength. We are prepared to use our flexibility to limit capital spending in the near term without impairing our ability to grow profitably when commodity prices recover. We reiterate that we possess a material position in the Wapiti Montney play, which with our careful management has the ability to deliver top financial returns to shareholders over the long term and across many commodity cycles. Our strategy is to manage the balance sheet carefully at all times, accelerating spending when returns are strong. When commodity prices are low, we moderate our pace to spend the minimum required amount to protect the business. We maintain flexibility to handle near term events while adhering to our long term growth foundations. Our tactics and strategies for significant repeatable value creation are Board-tested and resilient. We ensure strong alignment for every employee through our compensation structure which is linked to key financial metrics and shareholder returns.
Significant Operating Highlights for the quarter and year ended December 31, 2015:
Significant Reserves Highlights for 2015
NuVista is pleased to announce a significant increase in our reserves as a result of the 2015 year end independent reserves evaluation by GLJ Petroleum Consultants Ltd ("GLJ") (the "GLJ Report"). The Wapiti Montney play continues to exceed expectations as our flagship play with line-of-sight to exceptional organic production, reserves, and value growth for shareholders for many years. For the year ended December 31, 2015 NuVista:
Credit Facility Update and Other Items
Given weak and volatile commodity prices, NuVista continues to monitor funds from operations closely to ensure the balance sheet remains the first priority. Our capital programs continue to benefit from improvements in drilling and completions efficiency and service industry cost reductions, and spend levels can be adjusted quickly contingent upon the commodity pricing outlook. NuVista plans to continue drilling with two rigs until spring breakup and then reduce to one rig in operation for the second half of 2016. Pending weather, there are approximately 8 to 11 additional wells expected to come on production prior to spring breakup, with as many as eight of them in the first quarter. As a result of the above, we are reducing our projected 2016 capital spending by $25 million to the range of $115 - $135 million. This includes a reduction of two wells from our originally planned activity. This has the effect of pinning spending at or below projected quarterly funds from operations levels for the second quarter of 2016 and onwards. Our production guidance for 2016 is 24,500 - 25,500 Boe/d, which represents an increase of 11% compared to 2015 average production. Production for the first quarter of 2016 is expected to be approximately 24,500 - 25,000 Boe/d. Funds from operations for the year of 2016 are expected to be within the range of approximately $100 - $110 million based on commodity pricing of $US 40/Bbl WTI and $2.00/Mcf AECO gas. The Company's spending plans will continue to be re-evaluated and adjusted if necessary during the remainder of 2016.
Given top quality assets and every team member focused upon relentless improvement, NuVista will continue to optimize results in the current commodity price environment. We would like to thank our staff, contractors, and suppliers for their continued dedication and delivery, and we thank our board of directors and our shareholders for their continued guidance and support.
Please note that our corporate presentation is being updated and will be available on NuVista's website at www.nuvistaenergy.com on or before midday on Wednesday, March 9, 2016. NuVista's financial statements for the year ended December 31, 2015, notes to the financial statements and management's discussion and analysis will be filed on SEDAR (www.sedar.com) under NuVista Energy Ltd. on or before Wednesday, March 9, 2016 and can also be accessed on NuVista's website.
|Three months ended |
|Year ended |
|($ thousands, except per share and per $/Boe)||2015||2014||% |
|Oil and natural gas revenues||$||55,592||$||72,050||(23||)||$||225,685||$||259,107||(13||)|
|Funds from operations (1)||32,544||36,703||(11||)||124,989||109,975||14|
|Per basic and diluted share||0.21||0.26||(19||)||0.84||0.81||4|
|Per basic and diluted share||(0.45||)||(0.31||)||45||(1.16||)||(0.43||)||170|
|Net debt (1)||220,625||183,770||20|
|Proceeds on property dispositions||12,947||69,377||(81||)||26,858||81,550||(67||)|
|Weighted average common shares outstanding: Basic and diluted||153,305||138,579||11||148,523||136,497||9|
|End of period common shares outstanding||153,310||138,366||11|
|Natural gas (MMcf/d)||96.4||94.6||2||94.3||75.9||24|
|Condensate & oil (Bbls/d)||5,421||5,132||6||5,042||3,751||34|
|NGLs (Bbls/d) (2)||1,875||2,262||(17||)||1,648||1,996||(17||)|
|Condensate, oil & NGLs weighting||31%||32%||30%||31%|
|Condensate & oil weighting||23%||22%||23%||20%|
|Average selling prices (3) (4)|
|Natural gas ($/Mcf)||3.55||3.77||(6||)||3.64||4.19||(13||)|
|Condensate & oil ($/Bbl)||45.28||72.70||(38||)||51.34||87.21||(41||)|
|Oil and natural gas revenues ($/Boe)||25.88||33.81||(23||)||27.59||38.60||(29||)|
|Realized gain (loss) on financial derivatives ($/Boe)||5.15||1.89||172||5.23||(1.31||)||(499||)|
|Transportation expenses ($/Boe)||(1.23||)||(2.28||)||(46||)||(1.55||)||(1.56||)||(1||)|
|Operating expenses ($/Boe)||(11.17||)||(10.92||)||2||(11.88||)||(11.22||)||6|
|Operating netback ($/Boe) (1)||18.05||20.41||(12||)||18.56||21.21||(12||)|
|Funds from operations netback ($/Boe) (1)||15.15||17.22||(12||)||15.28||16.39||(7||)|
|Share trading statistics|
|Average daily volume||582,682||594,394||(2||)||456,570||486,250||(6||)|
Summary of Corporate Reserves Data
The following table outlines NuVista's corporate finding and development costs in more detail:
|3 Year-Average (1)||2015 (1)||2014 (1)|
|Proved plus||Proved plus||Proved plus|
|After reserve revisions and including changes in future development capital|
|Finding and development costs ($/Boe)||$12.96||$9.53||$8.11||$3.69||$13.67||$10.55|
The following table provides summary reserve information based upon the GLJ Report using the published GLJ January 1, 2016 price forecast set forth:
|Total proved plus probable||1,052,370||77,196||135||252,726|
The following table is a summary reconciliation of the 2015 year end working interest reserves with the working interest reserves reported in the 2014 year end reserves report:
|Balance, December 31, 2014||459,195||33,068||1,405||111,006|
|Exploration and development(2)||111,524||7,985||0||26,573|
|Balance, December 31, 2015||491,521||35,901||72||117,894|
|Total proved plus probable|
|Balance, December 31, 2014||906,731||66,071||2,652||219,845|
|Exploration and development(2)||246,073||17,649||0||58,661|
|Balance, December 31, 2015||1,052,370||77,196||135||252,726|
The following table summarizes the future development capital included in the GLJ Report:
($ thousands, undiscounted)
|Proved plus |
Summary of Corporate Net Present Value Data
The estimated net present values of future net revenue before income taxes associated with NuVista's reserves effective December 31, 2015 and based on published GLJ future price forecast as at January 1, 2016 as set forth below are summarized in the following table:
The estimated future net revenue contained in the following table does not necessarily represent the fair market value of the reserves. There is no assurance that the forecast price and cost assumptions contained in the GLJ Report will be attained and variations could be material. The recovery and reserve estimates described herein are estimates only. Actual reserves may be greater or less than those calculated.
|Before income taxes|
|Discount factor (%/year)|
|Reserves category (1) ($ thousands)||0%||5%||10%||15%||20%|
|Total proved plus probable||3,068,804||1,719,996||1,058,200||696,598||481,549|
The following table is a summary of pricing and inflation rate assumptions based on published GLJ forecast prices and costs as at January 1, 2015:
ADVISORIES REGARDING OIL AND GAS INFORMATION
This news release contains the term barrels of oil equivalent ("Boe"). Natural gas is converted to a Boe using six thousand cubic feet of gas to one barrel of oil. Boes may be misleading, particularly if used in isolation. The foregoing conversion ratios are based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As well, given than the value ratio based on the current price of crude oil to natural gas is significantly different from the 6:1 energy equivalency ratio, using a conversion ratio on a 6:1 basis may be misleading as an indication of value.
This news release contains a number of additional oil and gas metrics, including finding and development costs, recycle ratio and reserve life index, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate NuVista's performance; however, such measures are not reliable indicators of the future performance of NuVista and future performance may not compare to the performance in previous periods.
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 strategy, plans, opportunities and operations, forecast production and production mix, our hedging policy and plans, future funds from operations and other financial results, drilling, development, completion and tie-in plans and timing and results therefrom, planned throughput capacity, ability to fulfil all TOP obligations through 2016 and beyond, plans to manage NuVista's balance sheet strength and flexibility, plans to provide long-term profitable growth, repeatable value creation and deliver top financial returns, commodity price expectations, future processing capacity and anticipated future outages and holdbacks, future drilling and completions costs, future supply and service costs, future transportation and water disposal costs, the timing, allocation and efficiency of NuVista's capital program and the results therefrom, anticipated potential and growth opportunities associated with NuVista's asset base and industry conditions.
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, 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.
This press release also contains future-oriented financial information and financial outlook information (collectively, "FOFI") about our prospective results of operations and funds from operations, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth 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. NuVista's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and FOFI, or if any of them do so, what benefits NuVista will derive therefrom. NuVista has included the forward-looking statements and FOFI in this press 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.
Within this new release, references are made to terms commonly used in the oil and natural gas industry. Management uses "funds from operations", "funds from operations per share", "funds from operations netback", "net debt", "net debt to annualized fourth quarter funds from operations", "operating netback" and "funds from operations netback" to analyze operating performance and leverage. These terms do not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures for other entities.
Funds from operations are based on cash flow from operating activities as per the statement of cash flows before changes in non-cash working capital, asset retirement expenditures and environmental remediation expenses. Funds from operations as presented is not intended to represent operating cash flow or operating profits for the period nor should it be viewed as an alternative to cash flow from operating activities, per the statement of cash flows, net earnings (loss) or other measures of financial performance calculated in accordance with GAAP. For more details on non-GAAP measures, including a reconciliation to GAAP measures refer to our Management's Discussion and Analysis.
All references to funds from operations throughout this press release are based on cash flow from operating activities before changes in non-cash working capital, asset retirement expenditures and environmental remediation expenses. Funds from operations per share is calculated based on the weighted average number of common shares outstanding consistent with the calculation of net loss per share. Operating netback equals the total of revenues including realized financial derivative gains/losses less royalties, transportation and operating expenses calculated on a Boe basis. Funds from operations netback is operating netback less general and administrative, restricted stock units and interest expenses calculated on a Boe basis. Net debt is calculated as long-term debt plus adjusted working capital. Adjusted working capital is current assets less current liabilities and excludes the current portions of the financial derivative assets or liabilities and asset retirement obligations. Net debt to annualized fourth quarter funds from operations is net debt divided by annualized fourth quarter funds from operations.
The reserves estimates prepared herein have been evaluated by an independent qualified reserves evaluator in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and are effective as of December 31, 2015. All reserves information has been presented on a gross basis, which are the Company's working interest share before deduction of royalties and without including any royalty interests of the Company. The reserves have been categorized accordance with the reserves definitions as set out in the COGE Handbook.
The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties due to the effects of aggregation.
Further information will be included in our Annual Information Form which will be filed on SEDAR (www.sedar.com) under NuVista Energy Ltd. on or before March 30, 2016.