CALGARY, ALBERTA–(Marketwired – Jan. 18, 2016) – NuVista Energy Ltd. (“NuVista” or the “Company”) (TSX:NVA) is pleased to announce a number of updates that highlight the economic viability and flexibility of NuVista’s ongoing business. Corporate metrics have met all original guidance expectations for 2015, while well results continue to improve and outperform. The company is entering 2016 with a healthy balance sheet and a plan underpinned by new data showing the lowest well costs and best well performance we have ever achieved. Specific highlights include the following:
- Field-estimated production for the fourth quarter of 2015 was approximately 23,400 Boe/d despite previously announced downtime due to temporary Nova and Alliance outages and holdbacks. This is an increase of 9% from the third quarter of 2015, and meets fourth quarter guidance which was 23,250 – 24,000 Boe/d. 2015 production met the lower end of the original guidance range of 22,500 – 24,000 Boe/d as expected due to approximately 1,250 boe/d of various third party restrictions encountered throughout the year and 150 boe/d of production associated with minor divestitures. These shortfalls were mostly offset by continued strong performance of recent wells; and
- Due to a number of recent tie-ins, December field estimated production exceeded 27,000 Boe/d, which underpins a strong base entering 2016.
- Seven new well IP30’s are noted in the table below, including new record results. We are very encouraged with the continued improvements in Bilbo, and the early results at Elmworth as we ramp up the new facility. In addition, the Northeast Elmworth step-out results at 1-1 provide increased confidence in a growing inventory toward Gold Creek. As a result, we have recently expanded the Elmworth Development block by 20%.
New Well IP30 Results (1)
|Well #48 (Bilbo) 1-34-65-6W6M||12.8||1,623||3,496||124|
|Well #49 (Bilbo) 16-27-65-6W6||9.3||1,165||2,529||123|
|Well #44 (Elmworth) 02/1-21-68-8W6(3)||5.5||154||954||28|
|Well #45 (Elmworth) 00/1-21-68-8W6||8.6||339||1,581||39|
|Well #46 (Elmworth) 8-21-68-8W6(4)||7.6||294||1,369||38|
|Well #47 (Elmworth) 9-21-68-8W6||6.5||221||1,209||31|
|Well #50 (Elmworth Stepout) 1-1-69-8W6(5)||7.4||513||1,655||69|
|(1)||Well numbering refers to the numbered wells in our corporate presentation available on our website. They are effectively in chronological order since our inception in the play. All numbers shown are based on field estimate data.|
|(2)||Typecurves are based on NuVista’s internal best estimates.|
|(3)||Intervention in-progress. IP30’s will be updated post-intervention.|
|(4)||88% of typecurve despite mechanical issues encountered on completion.|
|(5)||IP 30 estimated based on 23 days of field estimated production projected to 30 days.|
- Well costs continue to decrease as drill times improve due to our ever-improving application of new technology, and service providers maintaining their support in this commodity price environment. We are working hard with providers and succeeding in ensuring the best crews, the best efficiency, and the lowest cost possible. In the fourth quarter, we achieved a new 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; and
- Due to ongoing reductions in drilling and completion costs, NuVista’s 2015 capital program came in at $273 million, $12 million below the midpoint of the guidance range which was $285 million.
Credit Facility Update and Other Items
- NuVista’s revolving credit facility was reconfirmed in November 2015 at $300MM, the same as the prior level. Underpinned by continued strong well results and a growing proved producing reserve base NuVista’s syndicate of lenders have supported the current level despite the reduced commodity price environment. The strength of our balance sheet is our dominant priority, so capital spending levels are being regularly evaluated to ensure abundant room within our credit facility;
- We have continued to prudently and selectively add to our hedge positions for 2016, 2017, and 2018. We currently possess hedges which in aggregate cover 49% of 2016 projected liquids production at a price of $80.12/Bbl, and 69% of 2016 projected gas production at a price of $3.36/Mcf. Both of these percentage figures relate to production net of royalty volumes;
- New augmented contracts and volumes for NuVista’s take-away capacity on the Nova and Alliance natural gas pipeline systems were initiated 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 significantly reduced NuVista production holdback and outages as compared to those experienced in 2015;
- With strong production levels and well results, NuVista continues to be in a position to manage minimum Midstream Take or Pay (TOP) commitments with comfort through 2016 and beyond; and
- NuVista successfully started up a new water disposal well and facilities in December of 2015. As this facility ramps up to full capacity, it will reduce NuVista operating costs for water disposal and trucking significantly. The costs for this well and facilities are expected to reduce operating costs by approximately $10 million per year, resulting in a payout period of approximately one year.
2016 Outlook and Guidance Reaffirmed
2016 will be yet another year where close attention will need to be paid to management of our capital program in light of weak commodity prices. For now, NuVista plans to continue drilling with two rigs until spring breakup. 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. The company’s second half capital spending plans will be re-evaluated during the first quarter of 2016, and the pace of spending will be contingent on the commodity price outlook. We have significant flexibility to reduce the capital program if required, as maintaining a strong balance sheet remains NuVista’s primary focus. As a result of the above, we are re-affirming our projected 2016 capital spending in the range of $140 – $160 million, which would be quickly adjusted should weak commodity prices persist. We also reaffirm production guidance for 2016 in the range of 24,500 – 26,000 Boe/d.
Condensate production continues to strongly support NuVista’s economics and netbacks despite historically low pricing for WTI oil. In 2016, roughly 22% of our production will be derived from condensate. Even at current strip pricing, this translates to almost 50% of NuVista’s revenue. This significantly boosts funds from operations per Boe and also provides material upside to a recovery in benchmark oil prices. We have improved our corporate capital efficiency from $27,000/Boed in 2015 to under $14,000/Boed for the 2016 budget, and our costs continue to fall further as shown above in the most recent 5-well average results. We benefit from condensate-boosted netbacks coupled with the benefit of finding and development costs which rival those of dry gas plays.
Given top quality assets and a management team 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 www.nuvistaenergy.com on or before midday on January 19, 2016.