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NuVista Energy Ltd. Announces Year End 2015 Reserves, Financial and Operating Results

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:

  • Materially increased our natural gas and condensate production and reserves;
  • Successfully commenced operation of our new 80 MMcf/d Elmworth compressor station on time and on budget;
  • Improved the performance of our Wapiti wells versus expectations;
  • Significantly reduced total well costs;
  • Continued our successful development and delineation program;
  • Protected corporate netbacks with our rolling commodity hedging program; and
  • Prudently managed our balance sheet.

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:

  • Achieved 2015 average annual production of 22,408 Boe/d, despite approximately 1,250 Boe/d of various third party restrictions encountered throughout the year and 150 Boe/d of production associated with minor divestitures. Production for 2015 was 22% higher than 2014. Production for the fourth quarter of 2015 was 23,355 Boe/d despite previously announced downtime due to temporary Nova and Alliance outages and holdbacks. This is an increase of 8% from the third quarter of 2015;
  • Delivered 2015 funds from operations of $125.0 million ($0.84/share, basic and diluted), a 14% increase from $110.0 million ($0.81/share, basic and diluted) in 2014 due to increased production volumes offset by weaker commodity pricing. Achieved funds from operations of $32.5 million ($0.21/share, basic and diluted) for the fourth quarter of 2015, a slight increase from $31.8 million ($0.21/share, basic and diluted) from the third quarter of 2015 due to increased production volumes more than offsetting weaker commodity pricing;
  • Successfully executed an annual capital program of $273.2 million. Drilled 19 (19 net) wells in our Montney condensate rich resource play while constructing and commencing operations in our Elmworth Block compressor station, trunk lines, and Bilbo Block water disposal facilities;
  • Continued to decrease well costs as drill times improve due to our constant application of new technologies, improved efficiencies and logistics, as well as service providers maintaining their support in this commodity price environment. In the fourth quarter, we achieved a record low drill and complete cost of $4.8MM, setting a new benchmark for our development wells. We continue to see execution progress across many fronts operationally, with the last 5 development wells executed for an average drilling cost of $3.5MM (2000m hz) and average completion cost of $2.2MM (22 stages). The equipping and tie in is currently underway for these wells, and we expect to achieve an average cost of $6.7MM each, which is a 30% reduction from the 2014 average costs for drill, complete, equip, and tie-in;
  • For 2015, reduced total cash costs including operating costs, transportation, and royalties to $14.26/Boe, a 11% reduction compared to 2014; and
  • In 2015, reduced G&A costs to $2.44/Boe, a 23% reduction compared to 2014.

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:

  • Increased proved developed producing reserves ("PDP") by 13% to 37.4MMBoe, replacing 1.6x production. The Montney PDP well count increased by 53% to 52 wells over year end 2014;
  • Increased proved plus probable reserves ("TP+PA") by 15% to 253 MMBoe and total proved reserves ("TP") by 6% to 118 MMBoe as compared to year end 2014;
  • Montney TP+PA average reserves per well increased 4% as compared to the 2014 average, while future development capital ("FDC") per well decreased 19%;
  • Increased Montney TP+PA well locations to 253, an increase of 23% compared to year end 2014;
  • Achieved 2015 corporate finding and development ("F&D") costs of $3.69/Boe on a TP+PA basis, including changes in FDC, which generated a 4.1x recycle ratio(1);
  • Delivered PDP F&D costs of $20.56/Boe, or $13.54/Boe after excluding $93 million of capital which was spent on major facilities expansions underpinning long term Montney infrastructure growth. No major facility spending is planned for 2016 or 2017 at this time;
  • Increased condensate reserves versus the prior year by 16% on a TP+PA basis to 51.9 MMBoe. Condensate volumes now represent 21% of total TP+PA reserves; and
  • Increased our reserve life index(2) ("RLI") on a TP+PA basis from 25.9 years to 27.4 years as compared to year end 2014, and maintained the RLI on a TP basis at 13 years.

Credit Facility Update and Other Items

  • Exited 2015 with long term debt of $196.7 million on a current facility of $300.0 million. Net debt, including the working capital deficiency was $220.6 million and net debt to annualized fourth quarter funds from operations was 1.7x;
  • Completed the disposition of certain assets including production of approximately 345 Boe/d for proceeds, net of property acquisition expenditures, in the amount of $20.5 million;
  • Continued to prudently and selectively add to our hedge positions for 2016, 2017, and 2018. We currently possess hedges which in aggregate cover 57% of 2016 projected liquids production at a price of $77.28/Bbl, and 71% of 2016 projected gas production at a price of $3.36/Mcf. Both of these percentage figures relate to production net of royalty volumes. Combined with our AECO-NYMEX basis hedges, NuVista has very little exposure to AECO in 2016;
  • Initiated new augmented contracts and volumes for NuVista's take-away capacity on the Nova and Alliance natural gas pipeline systems on time in December of 2015. These contracts are anticipated to provide more than enough capacity for NuVista's ongoing 2016 plans, which should result in reduced NuVista production holdback and outages as compared to those experienced in 2015;
  • Achieved strong production levels and well results, which continues to place NuVista in a position to effectively manage minimum Midstream Take or Pay (TOP) commitments with comfort through 2016 and beyond; and
  • Successfully started up a new water disposal well and facilities in December of 2015. As this facility ramps up to full capacity, it is expected to reduce NuVista operating and capital costs for water disposal and trucking by up to $10 million per year.

2016 Guidance

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 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 ( under NuVista Energy Ltd. on or before Wednesday, March 9, 2016 and can also be accessed on NuVista's website.


  1. Recycle ratio is measured by dividing the operating netback by appropriate F&D costs per boe for the year.
  2. RLI reflects the theoretical production life of a property if the remaining reserves were produced out at current rates. 2014 year end RLI is as released at the end of 2014, and was calculated in the same manner as the 2015 year end RLI. The 2015 year end RLI was calculated by dividing the 2015 year end reserves by the midpoint of 2016 production guidance.
Corporate Highlights
Three months ended
December 31
Year ended
December 31
($ thousands, except per share and per $/Boe) 2015 2014 %
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
Net loss (69,072 ) (42,478 ) 63 (172,925 ) (58,881 ) 194
Per basic and diluted share (0.45 ) (0.31 ) 45 (1.16 ) (0.43 ) 170
Total assets 981,637 1,024,080 (4 )
Net debt (1) 220,625 183,770 20
Capital expenditures 52,278 67,968 (23 ) 273,242 312,208 (12 )
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 )
Total (Boe/d) 23,355 23,165 1 22,408 18,391 22
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 )
NGLs ($/Bbl) 8.76 23.48 (63 ) 9.96 32.53 (69 )
Oil and natural gas revenues ($/Boe) 25.88 33.81 (23 ) 27.59 38.60 (29 )
Realized gain (loss) on financial derivatives ($/Boe) 5.15 1.89 172 5.23 (1.31 ) (499 )
Royalties ($/Boe) (0.58 ) (2.09 ) (72 ) (0.83 ) (3.30 ) (75 )
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
High 6.35 10.83 (41 ) 9.54 12.47 (23 )
Low 3.28 5.89 (44 ) 3.28 5.89 (44 )
Close 4.07 7.41 (45 ) 4.07 7.41 (45 )
Average daily volume 582,682 594,394 (2 ) 456,570 486,250 (6 )


  1. See "Non-GAAP Measurements" below.
  2. Natural gas liquids ("NGLs") include butane, propane and ethane.
  3. Product prices exclude realized gains/losses on financial derivatives.
  4. The average NGLs selling price is net of tariffs and fractionation fees.

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
Proved probable Proved probable Proved probable
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


  1. F&D costs are used as a measure of capital efficiency. The calculation for finding and development costs includes all exploration and development capital for that period plus the change in future development capital for that period. This total capital including the change in the future development capital is then divided by the change in reserves for that period including revisions for that same period. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during the year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for the year.

The following table provides summary reserve information based upon the GLJ Report using the published GLJ January 1, 2016 price forecast set forth:

Oil(3) Total
Working Working Working Working
Interest Interest Interest Interest
Reserves category(1) (MMcf) (MBbls) (MBbls) (MBoe)
Developed producing 156,665 11,267 21 37,399
Developed non-producing 21,866 1,506 22 5,172
Undeveloped 312,991 23,128 29 75,322
Total proved 491,521 35,901 72 117,894
Probable 560,849 41,295 63 134,833
Total proved plus probable 1,052,370 77,196 135 252,726


  1. Numbers may not add due to rounding.
  2. Includes conventional natural gas, shale gas and coal bed methane.
  3. Includes light, medium and heavy crude oil.

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:



Total proved
Balance, December 31, 2014 459,195 33,068 1,405 111,006
Exploration and development(2) 111,524 7,985 0 26,573
Technical revisions (29,730) (2,153) (833) (7,941)
Acquisitions 0 0 0 0
Dispositions (15,080) (633) (438) (3,584)
Production (34,388) (2,366) (63) (8,160)
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
Technical revisions (38,848) (2,957) (1,444) (10,876)
Acquisitions 0 0 0 0
Dispositions (27,199) (1,201) (1,010) (6,744)
Production (34,388) (2,366) (63) (8,160)
Balance, December 31, 2015 1,052,370 77,196 135 252,726


  1. Numbers may not add due to rounding.
  2. Reserve additions for drilling extensions, infill drilling and improved recovery.
  3. Includes conventional natural gas, shale gas and coal bed methane.
  4. Includes light, medium and heavy crude oil.

The following table summarizes the future development capital included in the GLJ Report:

($ thousands, undiscounted)

Proved plus
2016 57,374 97,218
2017 151,108 248,593
2018 217,972 337,640
2019 165,904 386,097
2020 152,111 347,701
Remaining 1,514 200,250
Total (Undiscounted) 745,982 1,617,498

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%
Developed producing 427,075 349,249 296,781 259,567 231,996
Developed non-producing 64,905 46,714 35,903 28,868 23,977
Undeveloped 665,202 360,081 191,431 93,590 34,240
Total proved 1,157,182 756,044 524,114 382,025 290,214
Probable 1,911,623 963,952 534,086 314,574 191,335
Total proved plus probable 3,068,804 1,719,996 1,058,200 696,598 481,549
  1. Numbers may not add due to rounding.

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:

Liquids Oil
Gas Price
Par Price
40 API
Rates %
/ Year(1)
2016 2.76 60.79 9.58 41.90 44.00 55.86 2.0 0.725
2017 3.27 68.48 16.00 48.00 52.00 64.00 2.0 0.750
2018 3.45 73.17 20.52 51.29 58.00 68.39 2.0 0.775
2019 3.63 78.91 25.81 55.31 64.00 73.75 2.0 0.800
2020 3.81 84.30 27.58 59.09 70.00 78.79 2.0 0.825
2021 3.90 88.12 28.82 61.76 75.00 82.35 2.0 0.850
2022 4.10 94.41 30.88 66.18 80.00 88.24 2.0 0.850
2023 4.30 100.71 32.94 70.59 85.00 94.12 2.0 0.850
2024 4.50 103.24 33.77 72.36 87.88 96.48 2.0 0.850
2025 4.60 105.30 34.44 73.81 89.63 98.41 2.0 0.850
2026+ +2%/yr +2%/yr +2%/yr +2%/yr +2%/yr +2%/yr 2.0 0.850


  1. Inflation rate for costs.
  2. Exchange rate used to generate the benchmark reference prices in this table.


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.


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 ( under NuVista Energy Ltd. on or before March 30, 2016.

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Calgary, Alberta T2P 1G1
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