NuVista Energy Ltd. Announces First Quarter 2013 Results

NuVista Energy Ltd. Announces First Quarter 2013 Results 
CALGARY, ALBERTA -- (Marketwired) -- 05/08/13 -- NuVista Energy Ltd.
("NuVista") (TSX:NVA) is pleased to announce results for the three
months ended March 31, 2013 and provide an update on its plans for
the remainder of 2013. We have accelerated the advancement of our
condensate-rich Wapiti Montney natural gas play in early 2013 and are
pleased with the results in addition to the recent improvement in
natural gas prices. We had committed to deliver a focused and
repeatable 2013 Montney program, focusing on four key themes: Montney
production growth, continuing improvement in capital and operating
efficiencies, long term processing infrastructure commitments, and
further delineation of the significant resource. We are also
targeting divestitures of non-core assets in the range of $25 million
- $50 million. We are very pleased to report that delivery of all
these targets remains on or ahead of schedule as shown in the
highlights below. 
Significant highlights for the first quarter of 2013 include: 


 
--  Achieved an average production rate of 14,903 Boe/d. First quarter 2013
    production is on track with our first half guidance despite an
    unscheduled third party facility outage that limited Montney production
    by approximately 450 Boe/d for the quarter. We continue to forecast
    first half production of 15,250 Boe/d - 16,250 Boe/d as previously
    announced. As a point of reference, NuVista April full month production
    based on preliminary field estimates was 15,500 Boe/d despite Wapiti
    production restored online only mid month; 
 
--  Achieved funds from operations of $11.6 million compared to $24.1
    million for the same period in 2012 and $16.3 million for the three
    months ended December 31, 2012. First quarter 2013 funds from operations
    reflect the significant dispositions in the fourth quarter of 2012 and
    the challenging first quarter natural gas and liquids pricing; 
 
--  Successfully executed a first quarter capital program of $68.8 million.
    Drilled 9 (6.6 net) wells during the first quarter for a success rate of
    100%. First quarter wells included 4 (3.92 net) Wapiti Montney
    horizontal wells, 1 (1.0 net) Wapiti Montney vertical well, and 1 (1.0
    net) Wapiti Falher horizontal well; 
 
--  Tied-in 2 (1.92 net) Montney wells and 1 (1.0 net) Wapiti Falher well; 
 
--  Divested gross overriding royalty interests and undeveloped land for
    proceeds of approximately $13 million; and 
 
--  Net debt was $79.6 million at the end of the quarter and debt to
    forecast 2013 cashflow from operations was 1.0x. Subsequent to the end
    of the first quarter, NuVista's credit facility was renewed at the
    existing maximum borrowing amount of $240 million. 

 
Wapiti Montney Play Set to Grow 
We are very pleased to report that all Wapiti Montney drilling,
completion, and tie-in activities that were forecast to be completed
prior to spring breakup, have been completed. In addition to the two
wells which have just started up in the first quarter, we now have
two wells which have started up subsequent to the quarter for a
cumulative total of nine Montney wells on production, five in the
North and four in the South. We also have three recently drilled
wells waiting on completion post spring breakup. 
In the first quarter, NuVista achieved significant improvements in
drilling and completion execution and costs: 


 
--  Speed: Due to recent penetration rate improvements in drilling the
    lateral section of our horizontal wells, the last four wells were
    drilled to total depth in an average of 32 days, more than seven days
    faster than even the fastest well drilled in the past; 
--  Cycle time: due to these drilling improvements, and the efficiencies of
    a continuous and consistent 2 rig drilling program, we have recently
    brought on two wells with cycle times under 90 days. The programmed
    cycle times of spud-to-production have decreased by 40% to a current
    average of only four months; 
--  Drilling cost: With these penetration rate improvements, we are now
    budgeting $4.5 million per well. The last five wells have averaged the
    previous "best well" cost of $4.8 million per well despite bearing an
    added $0.3 million per well for winter drilling costs; 
--  Rig count: As a result of the progress noted above, we now forecast that
    we can achieve our previously budgeted growth goals in the near term
    drilling with two rigs for the most part, as opposed to moving to a
    three rig drilling program. We will still look to add additional rigs at
    a prudent pace in the longer term depending on future drilling results
    and commodity prices; and 
--  As discussed in previous disclosure, we have begun to implement larger
    slickwater fracture stimulations on three wells, with promising results
    thus far. Fracture operations went smoothly and we look forward to
    providing full production results as they unfold. 

 
New well results continue to trend toward type curve expectations of
4.4 Bcf of raw natural gas and above liquid type curve expectations
(59 Bbls/MMcf C3+ vs 50 Bbls/MMcf typecurve, including 45 Bbls/MMcf
C5+ vs 35 Bbls/MMcf typecurve). We remain confident in our ability to
improve, over time, the initial production rates and ultimate
reserves of our play type curve. We expect all our pre-spring breakup
wells to reach IP30 in mid-second quarter so we plan to provide an
operational update by early June with updated type curve and IP30
results. 
As announced on April 8, we now have secured firm transportation and
processing through a 10 year arrangement with Keyera Corp. This
capacity, coupled with one and five year arrangements with SemCAMS
ULC at the K3 plant and current production to the CNRL Gold Creek
plant, secures the space needed for several years of steady growth
while reducing operating cost by 25% - 33% due to economies of scale.
NuVista does not have to allocate any capital to transportation and
processing infrastructure but will instead pay a capital and
operating fee, allowing our capital to be focused on drilling
incremental wells. In addition, processing reliability will improve
due to the availability of multiple egress solutions. Finally, an
additional and significant mutual synergy associated with this
project is the transportation, fractionation and marketing of
NuVista's natural gas liquids (NGLs). Keyera has material NGL
marketing and fractionation capability, and this agreement provides
for the fractionation and marketing of the associated NuVista liquids
streams from the Wapiti Montney for the term of the agreement.
NuVista is pleased to have the certainty of delivery and pricing that
comes with this arrangement while being aligned with a vertically
integrated growth oriented NGL midstream company. 
Wapiti Sweet Uphole Cretaceous/Jurassic Update 
NuVista has also been enjoying continued success in the uphole
Cretaceous section at Wapiti. The focus has been primarily on the
Wapiti Montney over the past 18 months, however we have continued to
selectively execute low risk and low cost uphole opportunities to
realize area synergies and value within available infrastructure.
Recently, NuVista brought on production our fourth Falher horizontal
well since January, 2012 at a restricted, raw gas, 30 day IP rate of
7.6 MMcf/d with 58 Bbls/MMcf of NGLs. This amounts to a 30 day IP
over 1,500 Boe/d. To date, the four Falher wells combined have
produced 8.1 Bcfe gross sales gas (4.3 net Bcfe) with a 73 Bbls/MMcf
average liquid yield. These wells are currently producing at a
combined net raw gas rate of 14 MMcf/d, restricted by facilities
based on our "drill to fill" approach to the uphole Wapiti
formations. Total production from the uphole at Wapiti is expected to
remain essentially flat at 4,600 boe/d over the year and flat to
fourth quarter 2012 production even though only $9 million of capital
expenditures has been directed to the area for 2013. 
The natural gas price environment continued to be challenging for all
energy producers for most of the first quarter of 2013. AECO monthly
index natural gas prices remained flat at $2.92/GJ during the quarter
compared to $2.90/GJ in the fourth quarter of 2012. With strong
natural gas withdrawals from storage due to a colder than normal
spring, the AECO monthly index for the remainder of the year is now
trading at a much improved level of $3.45/GJ. This price increase is
very timely as our Montney volumes have just begun to increase
substantially. During the first quarter, condensate and light oil
prices remained strong although heavy oil and other natural gas
liquids continued to experience price weakness. The average realized
combined oil and liquids price in the first quarter of 2013 was
$58.66/Bbl compared to $60.50/Bbl in the fourth quarter of 2012. With
the significant condensate production associated with our now growing
Wapiti Montney play the premium pricing of condensate will drive
these values upwards. 
2013 Guidance 
We are pleased to reiterate our guidance for first half and full year
2013 despite the downtime experienced in the first quarter of 2013.
We still expect to produce in the range of 15,250 Boe/d to 16,250
Boe/d in the first half of 2013, based on the actual production of
14,903 Boe/d in the first quarter of 2013 and a projected range of
16,000 Boe/d to 17,000 Boe/d in the second quarter of 2013. Growth in
production from the Montney program will begin in earnest post spring
breakup with fourth quarter 2013 guidance unchanged at 17,500 Boe/d
to 18,500 Boe/d, for total year guidance in the range of 16,000 Boe/d
- 17,000 Boe/d. We expect to average two rigs in the Montney
formation for the remainder of 2013. Full year 2013 spending is
anticipated to be between $210 million and $220 million, with 2013
cash flow estimated at $75 million - $85 million. 
We have the flexibility to increase or decrease rig count subject to
drilling results, dispositions, and the commodity price environment.
We will also continue to focus on opportunistic asset divestitures,
with a full year 2013 target of $25 million to $50 million in
divestiture proceeds. We will also be carefully managing the balance
sheet to ensure maximum flexibility is maintained going forward. 
We are growing increasingly excited about the tremendous
condensate-rich potential of our Montney play at Wapiti, the
continued growth, and the exceptional value that will be created as
we build our scale and the efficiencies that come with it. We have
the people, we have the assets, and now we also have the processing
capacity to deliver. We look forward to updating you further in early
June. 


 
Corporate Highlights                                                        
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                                                        Three months ended  
                                                                  March 31, 
                                                           2013        2012 
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Financial                                                                   
($ thousands, except per share)                                             
Oil and natural gas revenue                              41,748      73,856 
Funds from operations(1)                                 11,629      24,124 
  Per basic share                                          0.10        0.24 
  Per diluted share                                        0.10        0.24 
Net earnings (loss)                                      (4,061)     (3,147)
  Per basic share                                         (0.03)      (0.03)
  Per diluted share                                       (0.03)      (0.03)
Adjusted net earnings (loss)(1)                          (8,621)    (10,898)
Per basic share                                           (0.07)      (0.11)
Per diluted share                                         (0.07)      (0.11)
Total assets                                            926,852   1,377,819 
Long-term debt, net of adjusted working capital(1)       79,556     337,053 
Capital expenditures, before dispositions                68,789      52,863 
Dispositions                                             12,597       9,163 
Weighted average common shares outstanding                                  
 (thousands):                                                               
  Basic                                                 118,620      99,513 
  Diluted                                               118,620      99,513 
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Operating                                                                   
Production                                                                  
  Natural gas (MMcf/d)                                     62.8       105.5 
  Oil (Bbls/d)                                            1,732       4,477 
  Natural gas liquids, excluding condensate (Bbls/d)      1,716       2,000 
  Condensate (Bbls/d)                                       990       1,196 
    Total oil equivalent (Boe/d)                         14,903      25,250 
Average product prices(2)                                                   
  Natural gas ($/Mcf)                                      3.24        2.47 
  Oil ($/Bbl)                                             66.65       75.74 
  Natural gas liquids, excluding condensate ($/Bbl)       24.88       39.91 
  Condensate ($/Bbl)                                     103.28      110.07 
Operating expenses                                                          
  Natural gas and natural gas liquids ($/Mcfe)             1.86        1.73 
  Oil ($/Bbl)                                             20.12       16.75 
    Total oil equivalent ($/Boe)                          12.20       11.50 
Operating netback ($/Boe)                                 14.02       14.25 
Funds from operations netback ($/Boe)(1)                   8.67       10.50 
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Share trading statistics                                                    
  High                                                     6.75        5.90 
  Low                                                      5.16        3.45 
  Close                                                    6.50        3.69 
Average daily volume                                    212,310     239,721 
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NOTES:  


 
(1) Funds from operations, funds from operations per share, funds from      
    operations netback, operating netback, adjusted net earnings and        
    adjusted working capital are not defined by GAAP in Canada and are      
    referred to as non-GAAP measures. 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 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. Funds from operations     
    netback equals the total of revenues including realized commodity       
    derivative gains/losses less royalties, transportation, operating,      
    general and administrative, restricted stock units, interest expenses   
    and cash taxes calculated on a Boe basis. Adjusted net earnings equals  
    net earnings excluding after tax unrealized gains (losses) on commodity 
    derivatives, impairments and gains (losses) on property divestments.    
    Operating netback equals the total of revenues including realized       
    commodity derivative gains/losses less royalties, transportation and    
    operating expenses calculated on a Boe basis. Adjusted working capital  
    excludes the current portions of the commodity derivative asset or      
    liability. Total Boe is calculated by multiplying the daily production  
    by the number of days in the period. For more details on non-GAAP       
    measures, refer to NuVista's "Management's Discussion and Analysis".    
(2) Product prices include realized gains/losses on commodity derivatives.  

 
CONSOLIDATED FINANCIAL STATEMENTS AND MD&A 
First quarter 2013 interim consolidated financial statements and
notes to the interim consolidated financial statements and
Management's Discussion and Analysis for NuVista Energy Ltd. have
been filed on SEDAR (www.sedar.com) under NuVista Energy Ltd. and can
also be accessed on NuVista's website at www.nuvistaenergy.com. 
ADVISORY REGARDING OIL AND GAS INFORMATION 
This news release contains the terms barrels of oil equivalent
("Boe") and thousand cubic feet equivalent ("Mcfe") and million cubic
feet equivalent ("Bcfe"). Natural gas is converted to a Boe using six
thousand cubic feet of gas to one barrel of oil. In certain
circumstances natural gas liquid volumes have been converted to a
Mcfe on the basis of one barrel of natural gas liquids to six
thousand cubic feet of gas. Boes and Mcfes 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. 
Any references in this news release to initial or test production
rates are useful in confirming the presence of hydrocarbons, however,
such rates are not determinative of the rates at which such wells
will continue production and decline thereafter. Additionally, such
rates may also include recovered "load oil" fluids used in well
completion stimulation. While encouraging, readers are cautioned not
to place reliance on such rates in calculating the aggregate
production for NuVista. 
ADVISORY REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS 
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; production mix;
drilling, development, completion and tie-in plans and results;
ignore expectations of future results, including future production
levels, type curves and well economics, NuVista's planned capital
budget; expectations with respect to NuVista's disposition program
and its effect on debt levels; the benefit to be obtained from
NuVista's transportation, processing and marketing agreements;
targeted debt level; the timing, allocation and efficiency of
NuVista's capital program and the results therefrom; the anticipated
potential of NuVista's asset base; forecast funds from operations and
cash flow; the source of funding of capital expenditures; the
objectives and focus of NuVista's capital program and the allocation
thereof and results therefrom; NuVista's risk management strategy;
expectations regarding future commodity prices and netbacks; 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. 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.
Contacts:
NuVista Energy Ltd.
Jonathan A. Wright
President and CEO
(403) 538-8501 
NuVista Energy Ltd.
Robert F. Froese
VP, Finance and CFO
(403) 538-8530
www.nuvistaenergy.com
 
 
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