NuVista Energy Ltd. (TSX:NVA) announced its financial and operational results for the first quarter of 2015, which saw production exceed expectations at 23,215 barrels of oil equivalent per day. The company also provided guidance for the remainder of the year. Operating Highlights: Achieved first quarter 2015 production of 23,215 Boe/d, which exceeded our first half […]
NuVista Energy Ltd. (TSX:NVA) announced its financial and operational results for the first quarter of 2015, which saw production exceed expectations at 23,215 barrels of oil equivalent per day. The company also provided guidance for the remainder of the year.
- Achieved first quarter 2015 production of 23,215 Boe/d, which exceeded our first half guidance range of 22,000 to 23,000 Boe/d. Wapiti Montney production for the quarter averaged 16,673 Boe/d, an increase of 9% compared to the preceding quarter production of 15,288 Boe/d;
- Achieved funds from operations of $30.3 million ($0.22/share, basic) for the three months ended March 31, 2015, similar to the $30.9 million ($0.23/share, basic) for the three months ended March 31, 2014, despite the significant reduction in commodity prices with the WTI benchmark price down 51% and the AECO benchmark gas price down 38% over the same period. Funds from operations for the quarter were similar to the first quarter of 2014 due to increased production volumes in the Wapiti Montney area and our favorable hedge position;
- Successfully executed a first quarter capital program of $107.3 million as compared to $126.6 million in the same quarter of 2014. Drilled 6 (6.0 net) wells in our Montney condensate rich resource play, while continuing to construct our Elmworth block compressor station and trunk lines;
- Completed the disposition of certain non-producing assets for net proceeds of approximately $2.8 million;
- Exited the first quarter of 2015 with bank borrowings of $232.5 million on a current facility of $300 million;
- Subsequent to the quarter, successfully issued 11.5 million common shares and 2.5 million flow through common shares for net proceeds of approximately $107.3 million, reducing bank borrowings to approximately $144 million or a ratio of net debt to annualized current quarter funds from operations of approximately 1.2x;
- Subsequent to the quarter, completed the annual renewal of our bank borrowing facility and maintained the facility at $300 million due to increased producing reserves offset by a reduction in the commodity price assumptions used by the banks;
Guidance for 2015:
In response to the recent downturn in commodity prices NuVista announced in early 2015 that we had elected to revise our 2015 capital budget to a range of $270 to $290 million, which is reduced and high-graded from the original capital budget of $340 to $380 million announced in November of 2014. Spending for the first half of 2015 will be approximately 55 to 60% of the annual total.
We have elected to maintain our 2015 capital spending guidance at this time at $270 – $290 million. We remain flexible and could scale spending down further if needed, or alternatively we could scale up our capital program quickly and efficiently to take advantage of higher growth opportunities if the commodity price environment warrants it. In this reduced commodity price environment we are seeing an emerging benefit from reducing service costs.
Our production guidance range for 2015 is unchanged at 22,500 to 24,000 Boe/d and we anticipate production in the range of 21,000 to 22,000 Boe/d for the second quarter of 2015. This is a slight reduction as planned, in comparison to the first quarter of 2015, due to temporary spring breakup conditions and approximately 750 Boe/d of production interruption due to ongoing TransCanada Pipeline (“TCPL”) natural gas mainline maintenance work. Production is then expected to rise through the fourth quarter of 2015 with our increased firm TCPL contract, and likely also the third quarter depending on TCPL availability. We would also like to re-affirm that our 2015 and 2016 production estimate in this environment is forecast to be sufficient to fulfill substantially all Take or Pay (“TOP”) obligations with midstream companies as a result of the flexible terms which we have put in place previously. Despite reduced spending in this environment, our long term plans for 2016 and beyond remain solid and intact.