CALGARY, Alberta – NuVista Energy Ltd. (“NuVista” or the “Company”) (TSX: NVA) is pleased to announce a number of updates which demonstrate continued successful advancement of our Pipestone and Wapiti Montney play development.
Fourth Quarter Production Record
We are very pleased to report that in the fourth quarter of 2021 NuVista achieved record production with the continued startup of new production from multi-well pads in Pipestone North and Elmworth, reaching a quarterly average of just over 60,000 Boe/d based on field estimates. This represents a production increase of 18% and 22% compared to the prior quarter and the fourth quarter of 2020, respectively, and is well above our fourth quarter guidance range of 56,000 – 58,000 Boe/d. Additionally, production for the fourth quarter consisted of approximately 35% condensate, 10% NGLs, and 55% natural gas.
Annual 2021 NuVista production averaged approximately 52,200 Boe/d, above the top of the annual guidance range of 51,000 – 52,000 Boe/d. The 2021 capital expenditure amount is not yet available in final form but is expected to be in line with the upper end of prior guidance of $275 – $285 million.
Excellence in Operations
Operations continued precisely as planned in all operating areas in the fourth quarter. In the Wapiti area, production volumes remained flat versus the third quarter at approximately 27,000 Boe/d as we ramped up production from the latest 4-well pad at Elmworth in December. In Elmworth we recently finished drilling a 6-well pad and have commenced completion operations. This pad is expected to come on-stream in the first quarter of 2022. In early January we moved our Wapiti rig to the Gold Creek property to commence drilling on a 4-well pad, which is expected to be completed and brought on-stream prior to the end of the second quarter.
Activity levels in the Pipestone area remain high and the production ramp-up into the new facilities continues to go very well. Production for the quarter in Pipestone set a new record high of approximately 33,000 Boe/d, which is up 38% from the third quarter. Pad #6 (6-well pad), which was highlighted in our third quarter results as having exceptionally rapid payout, has now reached its IP90 milestone of 4.9 MMcf/d including approximately 60% condensate (190 Bbls/MMcf). Pad #7 (6-well pad), which is located to the southwest of Pad #6, has hit its IP60 milestone of 5.8 MMcf/d including approximately 60% condensate (180 Bbls/MMcf). With these highly favorable results, we have seen both pads achieve similar payouts.
Pipestone drilling and completion operations have continued through December. Pad #8 (6-well pad) was drilled and completed in the fourth quarter and will be brought on production in late January. Pad #9 (7-well pad) is anticipated to be finished drilling in January and it is expected to be completed and brought on production late in the first quarter. Pad #10 (7-well pad) and Pad #11 (4-well pad) will be drilled next and these wells are expected to be completed and brought on-stream prior to the end of the second quarter.
Debt Reduction Exceeds Expectations
In the fourth quarter of 2021, NuVista reduced bank debt by $68 million by continuing to direct all free cash flow towards the reduction of net debt. With the benefit of increased production and favorable pricing, this exceeded our debt reduction expectations, ending the quarter with bank drawings of approximately $197 million. This represents a bank debt reduction of $169 million during the full year of 2021. NuVista’s credit facility capacity was redetermined and maintained at $440 million at the semi annual review in November. These results reaffirm our confidence that we are on track for reduction of net debt below our first targeted milestone of $400 million prior to the middle of 2022.
2022 Guidance Reaffirmed
NuVista is pleased to reaffirm all of our previously disclosed 2022 guidance. Our expectation for annual production is 65,000 to 68,000 Boe/d, which represents approximately 30% annual production growth. First quarter production is expected in the range of 60,000 – 62,000 Boe/d. Our corporate condensate mix is anticipated to gradually revert to the historical average of approximately 30% as flush production from our recent Pipestone pads abates and new pads come onstream at both Wapiti and Pipestone South. Capital expenditures for 2022 are reaffirmed in the range of $290 to $310 million with a steady three-rig drilling program.
New Addition to Board of Directors
We would like to announce that Ms. Kate Holzhauser has joined our Board of Directors. Ms. Holzhauser has extensive experience in the US and internationally in Operations and Engineering, primarily in the chemicals manufacturing business. This includes a significant focus on HSE and ESG matters. Her postings have included senior leadership positions at BP, INEOS, and ChevronPhillips. We are very pleased to welcome Ms. Holzhauser to NuVista.
NuVista has top quality assets and a management team focused upon relentless improvement. We are excited to continue pursuing our Montney growth plan, and we will adjust the annual pace of growth as needed to ensure balance sheet strength comes first, and that profitability and value growth per share is always maximized. 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 at www.nuvistaenergy.com on or before January 11, 2022.