NuVista Energy Ltd. Announces Closing of Pipestone Asset Acquisition and Provides Operational Update
CALGARY, Alberta, Sept. 06, 2018 (GLOBE NEWSWIRE) -- NuVista Energy Ltd. ("NuVista" or the "Company") (TSX:NVA) is pleased to announce the successful closing of the previously announced
acquisition of the Cenovus Pipestone Partnership (the "Acquisition") which holds assets in the Pipestone area of Northwest Alberta ("the Acquired Assets").
The Acquisition was partially funded through an offering of 47,415,801 subscription receipts ("Subscription Receipts") at a price of $8.10 per Subscription Receipt for gross proceeds of approximately $384 million. Subscription Receipts totaling 20,990,000 were issued pursuant to a prospectus offering and an additional 26,425,801 Subscription Receipts were issued pursuant to a private placement to certain investors, each led by CIBC Capital Markets., Peters & Co. Limited and RBC Capital Markets which closed on August 30, 2018 (together, the "Financings"). In accordance with their terms, each Subscription Receipt was exchanged for one common share upon the closing of the Acquisition and the proceeds from the sale of the Subscription Receipts were released from escrow to partially fund the purchase price of the Acquisition. The balance of the purchase price was funded through the Company's increased credit facility. Holders of Subscription Receipts are not required to take any action in order to receive common shares.
We are pleased to confirm that the Acquired Assets have continued to perform smoothly during the transition period, with Cenovus Energy Inc. field estimated average production of 10,300 Boe/d for the month of August. The integration of the Acquired Assets and associated staff is ongoing, and development planning has commenced. NuVista’s assets have also continued to perform strongly with several new wells now on production. August field estimated production was 40,500 Boe/d prior to the addition of the Acquired Assets which will be effective September 6th.
We have continued with successful drilling and completion operations, and we are pleased to note that our Bilbo compressor station facility has continued well above the nameplate capacity of 18,000 Boe/d, with several weeks exceeding 20,000 Boe/d. We have recently brought a three-well pad on production at Bilbo, and we are accelerating the completion of a five-well pad this fall to ensure first quarter 2019 facility capacity is maximized.
Our Elmworth compressor station facility has also exceeded nameplate capacity of 18,000 Boe/d, with several weeks surpassing 20,000 Boe/d. We continue to advance our technological progress and we have recently brought a new four-well pad on production at Elmworth including our first well with ultra-high fracture intensity (2.8 Tonnes/metre) with a cemented liner. Fracture operations were completed on plan and within cost expectations, and the well is now on production with a strong start towards the important evaluation of the IP30, IP90, and IP180 results.
At Gold Creek, we are currently drilling a four-well pad to augment Gold Creek volumes available for production commensurate with the planned spring 2019 startup of the SemCAMS Wapiti gas plant. The gas plant project continues on time and on budget.
The compressor station planned for NuVista’s pre-existing Pipestone lands is in the process of being accelerated for startup in late 2019 as recently announced.
NuVista’s production guidance for 2018 excluding the Acquired Assets is re-affirmed in the range of 36,000 to 38,000 Boe/d. This includes the previously announced planned and unplanned outages of 2,350 Boe/d in the third quarter for an expected third quarter production range of 35,000 to 36,250 Boe/d. Production for the fourth quarter is expected in the range of 36,500 to 39,000 Boe/d.
Production from the Acquired Assets has continued slightly above the planned 9,600 Boe/d and so with the effective date of September 6, 2018 now final, third quarter contribution is expected to be 2,650 Boe/d and fourth quarter production approximately 9,500 Boe/d including unplanned downtime allowance.
The 2018 pro-forma post acquisition average annual production guidance range as shown in our press release dated August 9, 2018 showed a production range of 40,000 to 43,000 Boe/d and an adjusted funds flow range of $270 - $290 million. This range included production and adjusted funds flow from the Acquired Assets noted from the effective date of the transaction (July 1st). For accounting purposes, production volumes can only be included effective from when the transaction has closed, so our 2018 guidance below has been adjusted for this new date. The adjusted funds flow between July 1st and September 6th are also now excluded from the 2018 guidance below, as those funds will accrue to NuVista through a closing price adjustment and will not be accounted for as adjusted funds flow. Other than this accounting date adjustment, the underlying base NuVista and Acquired Assets production and anticipated adjusted funds flow performance is materially the same or slightly improved.
As a result of the above, NuVista total guidance including the Acquired Assets contribution from September 6, 2018, is expected to be in the range of 37,500 to 39,000 Boe/d for the third quarter and 46,000 to 48,500 Boe/d for the fourth quarter of 2018. Total combined annual guidance is therefore 38,750 to 40,000 Boe/d.
Capital spending is reaffirmed in the range of $325 to $350 million for 2018, and adjusted funds flow is expected in the range of $260 to $270 million including adjusted funds flow from the Acquired Assets from September 6, 2018 onwards. The associated pricing assumptions for the remainder of 2018 are as follows: $US 67.00/Bbl WTI, $US 2.90/MMBTU Nymex, $C 1.35/GJ AECO, and CAD:USD 1.29 Fx.
NuVista has top quality assets and every team member is focused upon relentless improvement. We are excited to pursue our growth plan to 110,000 Boe/d. We would like to thank our staff, contractors, and suppliers for their continued dedication and delivery, and we thank our board of directors for their continued guidance and support. We would particularly like to thank the existing and new shareholders who supported this transformational Acquisition. Please note that our corporate presentation is being updated and will be available at www.nuvistaenergy.com on or before September 7, 2018.
Basis of Presentation
Unless otherwise noted, the financial data presented in this press release has been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") also known as International Financial Reporting Standards ("IFRS"). The reporting and measurement currency is the Canadian dollar.