NuVista Energy Ltd. Announces Record Year End 2023 Reserves, Financial and Operating Results
Press Release
CALGARY, Alberta, Feb. 29, 2024 — NuVista Energy Ltd. (“NuVista” or the “Company”) (TSX: NVA) is pleased to announce record-setting reserves and strong financial and operating results for the three months and year ended December 31, 2023. The results of our 2023 program underscore the quality and predictability of our asset base, and the ability of our team to generate robust returns, maintain capital discipline, and return capital to our shareholders. These achievements are underpinned by our unwavering commitment to safety and sustainability. We are entering 2024 in a financially strong position, with the flexibility to continue to execute our value-driven growth strategy and to return capital to shareholders.
Fourth Quarter and Full Year 2023 Operational and Financial Highlights
During the quarter and year ended December 31, 2023, NuVista:
Delivered our highest-ever annual average production rate of 77,185 Boe/d, a 12% increase from 2022 and slightly exceeding the top end of our guidance range of 76,000 – 77,000 Boe/d. This result demonstrates the quality of our asset base despite the temporary operational outages caused by the wildfires in the Grande Prairie region of Alberta (the “Alberta wildfires”) in May. Annual production consisted of 32% condensate, 8% NGLs, and 60% natural gas, and we achieved an average of 85,924 Boe/d for the fourth quarter;
Recorded annual adjusted funds flow(1) of $756.9 million ($3.50/share, basic(4)), with adjusted funds flow from the fourth quarter contributing $202.0 million ($0.95/share, basic(4));
Generated free adjusted funds flow(2) of $210.6 million for the year ($0.97/share, basic(4)), including $70.6 million ($0.33/share, basic(4)) in the fourth quarter;
Achieved annual net earnings of $367.7 million ($1.70/share, basic), including $89.5 million ($0.42/share, basic(4)) in the fourth quarter;
Maintained a strong operating netback(3) at $29.06/Boe and corporate netback(3) at $26.86/Boe for the year, with fourth quarter results at $27.01/Boe and $25.55/Boe, respectively;
Expanded on our existing natural gas diversification strategy by successfully acquiring 50 MMcf/d of net Empress delivery capacity along with TC Energy Mainline capacity to deliver to the U.S. Midwest and Central Canadian markets starting in April 2026. In 2024, our natural gas sales are over 85% exposed to North American markets outside of AECO;
Executed a successful capital expenditure(2) program, investing $500.3 million in well and facility activities including the drilling of 49 gross (48.5 net) wells and the completion of 47 gross (45.7 net) wells in our condensate rich Montney play. Inclusive of property acquisitions of $44.0 million and infrastructure disposition proceeds of $26.0 million, net capital expenditures(2) were $518.3 million in 2023. Predominately located in our core Wapiti area, the property acquisitions immediately contribute to our inventory, enhance our land configuration efficiency, and optimize the utilization of our pipelines and field facilities;
Commissioned the new cogeneration unit at our Wembley Gas Plant, with power generation expenditures totaling $16.9 million in the fourth quarter. This project was built in partnership with our gas plant working interest partners, and five Indigenous Nations on whose traditional territories on which we operate. The five Indigenous Nations invested $20 million in support of this emissions reduction project. In return, the five Indigenous Nations are entitled to defined contractual cash flows, while NuVista will benefit from the cogeneration unit in terms of reduced operating costs and carbon emissions;
Exited the year with $16.9 million drawn on our $450 million credit facility. Net debt(1) at year end was $183.6 million, well below our net debt soft ceiling of $350 million(5). NuVista’s net debt to annualized fourth quarter adjusted funds flow(1) ratio was 0.2x;
Repurchased and subsequently cancelled 15.3 million common shares in 2023, for an aggregate cost of $183.8 million or $12.01 per share under the terms of our current normal course issuer bid (“NCIB”) program. Since the inception of our NCIB program in 2022, we have repurchased and subsequently cancelled 29.7 million common shares for an aggregate cost of $351.3 million or $11.82 per share;
Advanced our commitment to environmental, social, and governance (“ESG”) goals, with notable progress highlighted in our recently released 2022 ESG report, available on our website (see www.nvaenergy.com). Notably, the report highlights our continued achievements in reducing methane and greenhouse gas (“GHG”) emissions; and
Was recognized as part of the TSX30 for the second consecutive year. The TSX30 recognizes the thirty top-performing companies on the Toronto Stock Exchange (TSX) over the prior three-year period (see www.tsx.com/tsx30). NuVista placed a very competitive second place overall.
Notes:
(1)Each of “adjusted funds flow”, “net debt” and “net debt to annualized fourth quarter adjusted funds flow” are capital management measures. Reference should be made to the section entitled “Non-GAAP and Other Financial Measures” in this press release.(
2)Each of “free adjusted funds flow”, “capital expenditures” and “net capital expenditures” are non-GAAP financial measures that do not have any standardized meanings under IFRS Accounting Standards and therefore may not be comparable to similar measures presented by other companies where similar terminology is used. Reference should be made to the section entitled “Non-GAAP and Other Financial Measures” in this press release.
(3)Each of “operating netback” and “corporate netback” are non-GAAP financial ratios that do not have any standardized meaning under IFRS Accounting Standards and therefore may not be comparable to similar measures presented by other companies where similar terminology is used. Reference should be made to the section entitled “Non-GAAP and Other Financial Measures” in this press release.(4)Each of “adjusted funds flow per share” and “free adjusted funds flow per share” are supplementary financial measures. Reference should be made to the section entitled “Non-GAAP and Other Financial Measures” in this press release.
(5)Sustainable net debt target for 2023, in a stress price environment assuming US$45/Bbl WTI and US$2.00/MMBtu NYMEX natural gas.
Significant Reserves Growth
NuVista is pleased to report the results of our year end 2023 independent reserves evaluation by GLJ Ltd. (“GLJ”) (the “GLJ Report”). The efficiency in growing our reserves highlights the quality of our asset base. Our proven track record of continuous improvement, combined with the substantial depth and quality of our undeveloped resources, emphasizes our ability to deliver sustained value for our shareholders in both the short and long term. Reserves replacement(1) and inventory growth are key metrics as we continue to build out infrastructure to support production levels toward 115,000 Boe/d.
Our 2023 reserves report includes the following key accomplishments:
Reported Proved Developed Producing (“PDP”) reserves of 161.9 MMBoe, a year-over-year increase of 14%, or a 20% increase on a per share basis;
Recorded Total Proved plus Probable (“TP+PA”) reserves of 643.0 MMBoe, a year-over-year increase of 6%, or a 12% increase on a per share basis, attributed to the continued success in our multi-layer Montney development, including newly booked Lower Montney locations in Gold Creek;
Replaced 168% and 237% of 2023 production on a PDP and TP+PA basis, respectively, which is reflected in the continued growth of our undeveloped inventory of locations;
Delivered PDP Finding and Development Costs (“F&D”)(1) that exceeded our expectations despite an inflationary environment, at $10.54/Boe, due to strong well performance and execution;
TP+PA F&D was $12.59/Boe, driven by an expected increase in Future Development Capital to account for infrastructure to accommodate growth to 115,000 Boe/d and a 6% increase in undeveloped well costs to reflect 2023 actuals. Three-year average TP+PA F&D is $10.30/Boe;
Achieved a PDP recycle ratio(1) of 2.8x based on our 2023 operating netback(1);
Total wells increased by 47 to 353, while the total undeveloped drilling locations increased by 68 to 1180, which reflects over 25 years of development at the current pace(3); andPDP, TP, and TP+PA before-tax net present value, discounted at 10% (NPV10)(2), are $9.68, $19.52, and $27.03 per share, respectively, at December 31, 2023, reflecting the exceptional current and future underlying value of our assets.