CALGARY, ALBERTA–(Marketwired – Dec. 11, 2013) – NuVista Energy Ltd. (“NuVista”) (TSX:NVA) is pleased to announce the disposition of non-core assets in its W3/W4 operating areas for gross proceeds of $30.2 million. This transaction continues to sharpen NuVista’s focus on our condensate-rich Wapiti Montney play. The divestiture, coupled with our year-to-date disposition proceeds of $13.2 million, brings NuVista well within our previously stated annual target range for non-core dispositions of $25 million to $50 million.
NuVista has entered into a definitive purchase and sale agreement with a private company for the disposition of these non-core assets. The gross proceeds of $30.2 million consist of $25.2 million in cash and a $5.0 million interest bearing secondary charge debenture with a three year term. The disposition has an effective date of September 1, 2013, an expected closing date of December 18, 2013, and is subject to financing and customary industry closing terms and conditions.
The disposed assets include the Northwest Saskatchewan natural gas area and the West Central Saskatchewan and Provost heavy oil areas. The majority of these assets are characterized by mature shallow dry gas and high watercut heavy oil production. Current production from these assets averages approximately 1,800 Boe/d, comprised of 6.5 MMcf/d of natural gas and 715 Boe/d of heavy oil. With the vast majority of NuVista’s capital program going into the Wapiti area and virtually none into the assets being disposed, NuVista has determined that this is an opportune time to continue our successful rationalization strategy by disposing of non-strategic assets and applying the proceeds in Wapiti where we are confident we can achieve much improved rates of return over time. This transaction provides NuVista an exit from our W3/W4 area with the exception of approximately 1,000 Boe/d of heritage assets within the Oyen operating area.
The net proceeds from this transaction will initially be used to reduce outstanding bank debt, then ultimately re-deployed into profitable investment in our Wapiti Montney play. NuVista would like to confirm that its previously announced guidance range for full year 2013 production and funds from operations remain unchanged post this disposition. NuVista expects production for the fourth quarter of 2013 to be within the guidance range of 17,000 Boe/d to 18,000 Boe/d including the effect of the divestiture. 2014 annual production after the effect of this divestiture is expected to be 17,500 Boe/d to 18,500 Boe/d, with fourth quarter 2014 production forecast to be in the range of 20,000 Boe/d to 21,000 Boe/d. This results in fourth quarter 2013 to fourth quarter 2014 pro forma absolute production growth of approximately 25% as previously disclosed, after bringing on the new South Block facilities, which are currently under construction. Our 2014 capital expenditure guidance at this time remains unchanged at $240 million to $260 million. With the redeployment of proceeds into the Wapiti area over time, we also confirm there are no changes to our previous production guidance for 2015, where we forecast at some point in the year to exceed 25,000 Boe/d.
These dispositions move NuVista one step further along the ongoing process of significantly sharpening the focus of the company as a condensate-rich Montney resource growth engine. We look forward to providing additional detail on our 2014 production and capital plan and further Montney results in the near future.
ADVISORY REGARDING OIL AND GAS INFORMATION
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 ratio is 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 significantlydifferent