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NuVista Energy Ltd. Announces Strategic Dispositions and Sharpened Focus On Condensate-Rich Montney

CALGARY, ALBERTA--(Marketwire - Sept. 10, 2012) - NuVista Energy Ltd. ("NuVista") (TSX:NVA) is pleased to announce the achievement of a significant milestone in the transformation of its business model with the disposition of three property packages for gross proceeds of approximately $236 million. These dispositions will significantly improve NuVista's financial flexibility and are a key component of NuVista's strategic plan to create sustainable organic growth and shareholder value through the accelerated development and continued delineation of the condensate-rich Alberta Montney in our Wapiti area.

The dispositions include a large portion of NuVista's W5 natural gas assets plus selected W4 heavy oil assets. Specific assets in the disposition include: Ferrier, Alder Flats and Easyford in the W5 operating area; and Chauvin, Auburndale and Wildmere in the W4 operating area. NuVista has entered into three separate asset purchase and sale agreements for the divestitures and expects closing of all three transactions by early October. W5 assets that have been retained include our Fir/Waskahigan liquids-rich gas areas. These three dispositions will materially sharpen the focus of NuVista's business and will allow the company's technical and operating staff to focus on our world class condensate-rich Montney play. Please see below for disposition metrics and NuVista proforma information post disposition.

Gross proceeds from all transactions (1) $236 million
Production sold (2) 7,200 Boe/d (69% natural gas)
Reserves sold (3)
Proved 15.3 million Boes
Proved and probable 25.4 million Boes
Properties sold
W5 Operating area Ferrier, Alder Flats, Easyford
W4 Operating area Chauvin, Wildmere, Auburndale
Disposition metrics
Flowing Boe/d $32,850 per Boe/d
Proved reserves $15.48/Boe
Proves plus probable reserves $9.28/Boe

(1) Includes non-cash proceeds of $3 million of undeveloped land.

(2) Based on field estimates for July 2012.

(3) As evaluated by GLJ Petroleum Consultants Ltd. at December 31, 2011 and mechanically updated to remove production from January 1, 2012 to June 30, 2012.

The net proceeds from these dispositions will initially be used to reduce outstanding bank debt. Our syndicate of lenders is reviewing the revised limit of our credit facility as part of their semi-annual review. NuVista expects the gross proceeds from the dispositions to materially exceed the borrowing base associated with the assets sold. The improved financial flexibility is expected to result in an accelerated capital program in 2012 and 2013 as we focus on our condensate-rich Alberta Montney gas play in the Wapiti area.

BMO Capital Markets has acted as financial advisor for these dispositions.

The Rationale

The Alberta Montney is rapidly emerging as one of the premiere condensate-rich resource plays in North America. Continued delineation drilling by NuVista as well as by industry to the north and south of our Wapiti position has solidified our resolve in committing to the Alberta Montney as the vehicle for our future profitable growth. Repeatable/ predictable drilling and production performance, a large proportion of condensate associated with the gas, and accessible current and future egress options have all been established, indicating that the play is ready to proceed to the early stages of development.

A strategic review of our portfolio and business plan was required to unlock the next steps in value creation. After a detailed review of individual assets, the acquisition and divestiture market conditions, and retention values relative to associated borrowing base, the decision was made that disposition of these non-strategic assets was the next step. It has created balance sheet capacity that will enable us to advance the Montney development at a more rapid pace. The disposed assets are good quality and will benefit from the increased investment focus of the purchasers. Additional non-core assets will continue to be reviewed for potential disposition at the right time.

These divestitures position NuVista towards a more focused, organic growth business plan with the financial flexibility to deliver per share growth in production, reserves, cash flow and value.

Wapiti Area: The Alberta Montney Continues to Deliver Positive Results

NuVista's five well pilot and delineation program is now essentially complete with excellent success. All wells have been tested and results previously released. Only the fifth well remains to be tied in and it is expected to be brought on stream at the end of September. Further development and delineation drilling continues now with one rig drilling steadily. Given the additional flexibility created by the dispositions, we are now analyzing various activity ramp-up scenarios in the Montney. We are in a favorable land expiry position therefore there is significant optionality in capital ramp-up, particularly with the financial flexibility being created by these dispositions. We expect to activate a second rig in late 2012, however, further ramp-up beyond this level will be determined upon completion of our upcoming budget review. Our full field development plan is well underway with completion expected in early Q4 2012.

NuVista, Proforma Post Disposition

Proforma (1)
Post Dispositions
Production - July(2) (Boe/d) 23,400 16,200
Natural gas weighting - July 70% 70%
Reserves(3) (million Boes)
Proved 67.0 51.7
Proved + Probable 107.3 81.8
Total land ('000 net acres) 1,489 1,360
Net long-term debt - June 30 (4) ($ million) 339 108
Funds from operations - 1st Half 2012 ($million) 42.2 26.5
Operating costs - 1st Half 2012 ($/Boe) 11.21 11.43

(1) Proforma assuming dispositions closed on dates specified.

(2) Based on field estimates. Consists of 4,975 Boe/d of natural gas, 1,125 Bbls/d of heavy oil, 925 Bbls/d of natural gas liquids, and 175 Bbls/d of light oil.

(3) As evaluated by GLJ Petroleum Consultants Ltd. at December 31, 2011 and mechanically updated to remove production from January 1, 2012 to June 30, 2012.

(4) Assumes net cash proceeds of $231 million before closing adjustments.

2012 Annual Guidance

Capital expenditures $110 - 125 million
Production (Boe/d) (1) 21,500 - 22,500
Oil & liquids weighting 29 %
Funds from operations $62 - 69 million
$/share, basic 0.62 - 0.69
Benchmark price assumptions (2)
Natural gas (NYMEX) ($US/Mmbtu) 2.68
Natural gas (AECO) ($/Mcf) 2.28
Oil and liquids (WTI) ($US/Bbl) 96.00
F/X ($US/$CDN) 1.00

(1) Assumes closing dates of September 30, 2012 for the three dispositions.

(2) Before price risk management transactions.

An updated version of our Corporate Presentation will be available on our website at the morning of Tuesday September 11, 2012.

We look forward to providing additional detail on our forward spending plans and condensate-rich Alberta Montney results with our Q3 press release as we drive forward with enhanced focus.


This news release contains the terms 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. 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 on a 6:1 basis may be misleading as an indication of value.


Management uses funds from operations to analyze operating performance and leverage. Funds from operations as presented, does not have any standardized meaning prescribed by GAAP and therefore it may not be comparable with the calculation of similar measures for other entities. 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. All references to funds from operations are based on cash flow from operating activities before changes in non-cash working capital and asset retirement expenditures. Funds from operations per share is calculated based on the weighted average number of common shares outstanding consistent with the calculation of net earnings (loss) per share.


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, completion of the proposed dispositions and on the timing contemplated, the amount of and use of proceeds and the benefits to be obtained therefrom; future dispositions, expectations regarding the next scheduled review of NuVista's credit facility and the expected results therefrom: NuVista's future strategy, plans, opportunities and operations; forecast production; production mix; drilling, development, completion and tie-in plans and results; future land expiries; NuVista's planned capital program and budget; and the anticipated potential of NuVista's asset base. 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 failure to satisfy the closing conditions for the dispositions, 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 and future 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. 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 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.

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