NuVista Energy Ltd. Announces Record Year end 2023 Reserves, Financial and Operating Results

Source Company Press Release
Company NuVista Energy Ltd.
Tags Corporate: Corporate Results, Guidance, Overview/Strategy, Country: Canada, Financial - Costs & Metrics: Capital Expenditures, Upstream: Drilling Activity, Upstream News, Upstream - Costs & Metrics: Reserves
Date February 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 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 tsx.com). 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.
Notes: 
(1)  Each of “reserve replacement”, “F&D costs”, “recycle ratio” and “operating netback” are non-GAAP financial ratios. See “Oil and Gas Advisories” and “Non-GAAP and Other Financial Measures” in this press release for information relating to these specified financial measures. 
(2)  Reference to “net present value per share” is a supplementary financial measure. Reference should be made to the section entitled “Non-GAAP and Other Financial Measures” in this press release. 
(3)  Total undeveloped locations include 336 undeveloped proved plus probable drilling locations and 844 undeveloped contingent resource drilling locations. 
   

The detailed summary of our year end 2023 reserves disclosure and other oil and gas information is included below, and further information will be included in our Annual Information Form which will be filed on or before March 29, 2024 on SEDAR+ at sedarplus.ca.

Excellence in Operations

Operations through the end of 2023 and now into the first two months of 2024 continue to exceed our expectations. The consistency in our service providers has been one of the keys to the continued improvements we are seeing across all aspects of our field operations. Our two drilling rigs finished tandem-drilling a six-well pad in Elmworth and are now drilling a 4-well pad in Pipestone and a 4-well pad in Gold Creek. Completion operations are also progressing very well and we expect six additional pads to come on-stream this year. Despite the severe cold experienced in late January, continued performance improvements and some continued savings on the materials side have allowed us to meet budgeted well costs year to date.

Infrastructure debottlenecking and expansion projects are progressing well in 2024 at both NuVista and third-party facilities. In the Wapiti area an expansion of the NuVista Elmworth Compressor Station is ongoing through the first half of 2024 with a start up planned for early in the third quarter. Additionally, a debottleneck project is being executed at the third-party Pembina Gas Infrastructure (PGI) Wapiti gas plant in the first quarter. These projects will enhance corporate facility capacity, in stages, to over 95,000 Boe/d. Concurrently, in the Pipestone North area, construction is well underway at the third-party CSV Midstream Albright gas plant with anticipated start up in late 2024 or early 2025. Once online NuVista’s facility capacity is expected to reach a corporate total of approximately 105,000 Boe/d.

Cycle time improvements have been impressive. Since our 2019-2020 program we have reduced the average number of days from the start of drilling to the on-stream date by 54%. This has significant impact to the rate of return for projects that reach payout in less than one year.

One of the most significant performance highlights continues to be the 6-well pad at Gold Creek that was brought on-stream in the fourth quarter of 2023. Notably, this is our first fully co-developed pad in Gold Creek, including 3 wells from the Middle Montney layer plus 3 wells from the emerging Lower Montney layer. In February, this pad reached its IP90 milestone of 1,570 Boe/d on average per well, including 50% condensate, which represents nearly 90% more condensate produced over its IP90 compared to the Gold Creek historical average well result. A strong production result combined with continued progress in execution which created record NuVista drilling performance on this pad, is forecast to result in a first year capital efficiency of less than $8,000 per flowing Boe – a leading result for the area.

Balance Sheet Strength and Return of Capital to Shareholders

We ended the year in a position of low debt and significant financial flexibility. At December 31, 2023, our net debt was $183.6 million, well below our soft ceiling of approximately $350 million. We were minimally drawn on our $450 million covenant-based credit facility, at $16.9 million, with a net debt to annualized fourth quarter adjusted funds flow ratio of 0.2x. The net debt ceiling ensures that based on current production levels, our net debt to adjusted funds flow ratio remains at or below 1.0x in a stress test price environment of US$45/Bbl WTI oil and US$2.00/MMBtu NYMEX natural gas.

We remain focused on our disciplined and value-adding growth strategy, and providing significant shareholder returns. We continue to believe that the best method for return of capital to shareholders is initially to repurchase shares, however we will continue to re-evaluate over the next year as our growth plan proceeds. This evaluation will consider commodity prices, the economic and tax environment, and will include all options including share repurchases and dividend payments.

Presently, our Board has set a target of returning approximately 75% of free adjusted funds flow to shareholders through the repurchase of the Company’s common shares pursuant to our current NCIB. The remaining free adjusted funds flow can be allocated towards debt reduction, land acquisitions, infrastructure repurchases, or selective mergers and acquisitions that add value for shareholders.

Environment, Social & Governance (“ESG”) Highlights

In September 2023, we proudly published our 2022 ESG Report, underscoring our accomplishments in achieving specific targets and advancing ongoing projects to support our commitment to ESG objectives. Notably, in 2022, we exceeded expectations by achieving a 34% reduction in CO2e emission intensity from our 2020 baseline, far surpassing our target of a 20% reduction by 2025. Additionally, our methane emission intensity decreased by 86% compared to our 2012 benchmark. As part of our ongoing commitment to enhance our emissions performance, the newly commissioned cogeneration unit at our Wembley Gas Plant in the Pipestone area became operational in the fourth quarter of 2023. This initiative aligns with our broader social responsibility efforts to contribute positively to the communities in which we reside and operate. Notably, the cogeneration unit received support from five Indigenous Nations, who are entitled to defined contractual cash flows, while NuVista will benefit from the cogeneration unit in terms of reduced operating costs and carbon emissions. We also progressed in a number of social and governance matters. More details are available in our 2023 management discussion and analysis and our 2022 ESG report. The 2022 ESG Report is available and can be accessed on our Company’s website (see nuvistaenergy.com).

Executive Staff Announcement

NuVista is pleased to announce the appointment of Michael Lawford, currently Chief Operating Officer, to President & Chief Operating Officer, effective immediately.

Mr. Lawford joined NuVista in 2012 in the role of Vice President Development, and in 2017, he was promoted to Chief Operating Officer. Mr. Lawford played a pivotal role in transforming the Company into the leading pure-play Montney producer that NuVista is recognized as today.  He continues to be a central leader in advancing NuVista’s strategic priorities and operational success. Mr. Lawford holds a Bachelor of Science Degree in Geology from the University of Alberta and is a member of the Association of Professional Engineers, Geologists, and Geophysicists of Alberta. Prior to joining NuVista, Mr. Lawford held various roles, including leading the North American New Plays group at a large Canadian independent oil and gas firm.

We offer our warmest congratulations to Mr. Lawford as he takes this next step in the Company’s long-term succession plan. Jonathan Wright will continue in the role of Chief Executive Officer.

2024 Guidance Update

As demonstrated above, we continue to execute according to our plans, with well and facility outperformance in several areas. Production is tracking ahead of plan, and as a result we expect to land near the top of our first quarter 2024 production guidance range of 77,000 – 80,000 Boe/d. We expect volumes to reach over 90,000 Boe/d at some point in the second half of 2024.

Our outlook for the full year of 2024 still anticipates excellent well economics with sub one-year payouts, and significant free adjusted funds flow net of capital expenditures despite the temporary significant reduction in natural gas prices. As our adjusted funds flow is primarily driven by condensate pricing, we are making no changes to our capital plans at this time, which allow us to maintain the efficiencies of steady 2-drill-rig execution. We re-affirm our 2024 full year production and capital expenditure guidance ranges of 83,000 – 87,000 Boe/d and $500 million.

We intend to continue our track record of carefully directing free adjusted funds flow towards a prudent balance of return to shareholders and debt reduction, while investing in disciplined production growth towards 115,000 Boe/d. NuVista has top quality assets and a management team focused on relentless improvement. We have the necessary foundation and liquidity to continue adding significant value for our shareholders. We will continue to closely monitor and adjust to the environment in order to maximize the value of our asset base and ensure the long-term sustainability of our business. 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 will be available at nuvistaenergy.com on February 29, 2024. NuVista’s audited financial statements, notes to the financial statements and management’s discussion and analysis for the year ended December 31, 2023, will be filed on SEDAR+ (sedarplus.ca) on February 29, 2024 and can also be obtained at nuvistaenergy.com.

 
FINANCIAL AND OPERATING HIGHLIGHTS 
  Three months ended December 31    Year ended December 31   
($ thousands, except otherwise stated)  2023    2022    % Change            2023             2022    % Change   
FINANCIAL             
Petroleum and natural gas revenues  365,497    455,868    (20  1,398,097    1,745,975    (20 
Cash provided by operating activities  211,761    226,688    (7  721,342    844,816    (15 
Adjusted funds flow (3)  201,987    256,983    (21  756,943    892,801    (15 
Per share, basic (6)  0.95    1.16    (18  3.50    3.94    (11 
Per share, diluted (6)  0.93    1.12    (17  3.40    3.78    (10 
Net earnings  89,513    159,372    (44  367,678    631,045    (42 
Per share, basic  0.42    0.72    (42  1.70    2.78    (39 
Per share, diluted  0.41    0.69    (41  1.65    2.67    (38 
Total assets        3,058,053    2,821,666     
Net capital expenditures (1)  113,258    72,743    56    518,294    419,476    24   
Net debt (3)        183,551    171,805     
OPERATING             
Daily Production             
Natural gas (MMcf/d)  310.5    259.3    20    276.0    239.6    15   
Condensate (Bbls/d)  26,889    25,112      24,633    22,591     
NGLs (Bbls/d)  7,287    5,918    23    6,545    6,162     
Total (Boe/d)  85,924    74,252    16    77,185    68,690    12   
Condensate & NGLs weighting  40  42    40  42   
Condensate weighting  31  34    32  33   
Average realized selling prices (5)             
Natural gas ($/Mcf)  3.45    7.55    (54  4.19    7.39    (43 
Condensate ($/Bbl)  99.20    109.69    (10  100.02    118.34    (15 
NGLs ($/Bbl) (4)  32.46    41.28    (21  31.80    54.90    (42 
Netbacks ($/Boe)             
Petroleum and natural gas revenues  46.24    66.73    (31  49.62    69.64    (29 
Realized gain (loss) on financial derivatives  0.46    (1.17  (139  0.41    (6.56  (106 
Royalties  (4.50  (7.94  (43  (4.80  (7.92  (39 
Transportation expense  (4.54  (5.33  (15  (4.77  (5.16  (8 
Net operating expense (2)  (10.65  (11.94  (11  (11.40  (11.67  (2 
Operating netback (2)  27.01    40.36    (33  29.06    38.33    (24 
Corporate netback (2)  25.55    37.62    (32  26.86    35.60    (25 
SHARE TRADING STATISTICS             
High ($/share)  13.72    14.67    (6  13.72    14.67    (6 
Low ($/share)  10.40    10.22      9.93    6.94    43   
Close ($/share)  11.04    12.48    (12  11.04    12.48    (12 
Common shares outstanding (thousands of shares)        207,584    219,346    (5 
NOTES: 
(1)  Non-GAAP financial measure that does 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 “Specified Financial Measures”. 
(2)  Non-GAAP ratio that does 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 “Specified Financial Measures”. 
(3)  Capital management measure. Reference should be made to the section entitled “Specified Financial Measures”. 
(4)  Natural gas liquids (“NGLs”) include butane, propane and ethane revenue and sales volumes, and sulphur revenue. 
(5)  Product prices exclude realized gains/losses on financial derivatives. 
(6)  Supplementary financial measure. Reference should be made to the section entitled “Specified Financial Measures”. 
   

Detailed Summary of Corporate Reserves Data

The following table provides summary reserve information based upon the GLJ Report using the published 3 Consultants’ Average January 1, 2024 price forecast:

  Natural Gas(2)    Natural Gas
Liquids(4) 
  Oil(3)    Total   
Reserves category(1)(5)  Company
Gross 
  Company
Gross 
  Company
Gross 
  Company
Gross 
 
  (MMcf)    (MBbls)    (MBbls)    (MBoe)   
Proved                 
Developed producing  616,871    59,132    –    161,944   
Developed non‑producing  77,237    8,099    –    20,972   
Undeveloped  852,363    76,901    –    218,961   
Total proved  1,546,471    144,132    –    401,877   
Total probable  959,423    81,243    –    241,147   
Total proved plus probable  2,505,894    225,374    –    643,023   
NOTES: 
(1)  Numbers may not add due to rounding. 
(2)  Includes conventional natural gas and shale gas. 
(3)  Includes light and medium crude oil. 
(4)  NGLs includes ethane, propane, butane, condensate and pentane plus. 
(5)  Reserves have been presented on gross basis which are the Company’s total working interest share before the deduction of any royalties and without including any royalty interests of the Company. 
   

The following table is a summary reconciliation of the 2023 year end working interest reserves with the working interest reserves reported in the 2022 year end reserves report:

Company Gross  Natural Gas(1)(3)
(MMcf) 
Natural Gas
Liquids(1)(5)
(MBbls) 
Oil(1)(4)
(MBbls) 
Total Oil Equivalent(1)
(MBoe) 
Total proved         
Balance, December 31, 2022  1,305,462    122,546    –    340,123   
Exploration and development(2)  316,314    30,879    –    83,598   
Technical revisions  26,392    2,159      6,561   
Acquisitions  –    –    –    –   
Dispositions  –    –    –    –   
Economic Factors  (943  (75  –    (232 
Production  (100,754  (11,377  (4  (28,173 
Balance, December 31, 2023  1,546,471    144,132    –    401,877   
Total proved plus probable         
Balance, December 31, 2022  2,358,924    211,259    –    604,413   
Exploration and development(2)  223,367    23,490    –    60,718   
Technical revisions  26,177    2,148      6,514   
Acquisitions  –    –    –    –   
Dispositions  –    –    –    –   
Economic Factors  (1,820  (145  –    (448 
Production  (100,754  (11,377  (4  (28,173 
Balance, December 31, 2023  2,505,894    225,374    –    643,023   
NOTES: 
(1)  Numbers may not add due to rounding. 
(2)  Reserve additions for drilling extensions, infill drilling and improved recovery. 
(3)  Includes conventional natural gas and shale gas. 
(4)  Includes light, medium crude oil. 
(5)  NGLs includes ethane, propane, butane, condensate and pentane plus. 
   

The following table summarizes the future development capital required to bring undeveloped reserves and proved plus probable undeveloped reserves on production:

($ thousands, undiscounted)  Proved(1)    Proved plus
Probable(1) 
 
2024  325,745    325,745   
2025  393,667    393,667   
2026  368,537    368,537   
2027  386,461    405,245   
2028  252,032    291,758   
Remaining  –    867,117   
Total (undiscounted)  1,726,442    2,652,067   
NOTE: 
(1)  Numbers may not add due to rounding. 
   

The following table outlines NuVista’s corporate finding, development and acquisition (“FD&A”) costs in more detail:

  3 Year-Average (1)    2023 (1)    2022 (1)   
      Proved plus        Proved plus        Proved plus   
  Proved    probable    Proved    probable    Proved    probable   
Finding and development costs ($/Boe)  10.15    10.30    10.92    12.59    9.48    8.38   
Finding, development and acquisition costs ($/Boe)  9.60    10.09    11.12    12.86    9.48    8.38   
NOTE: 
(1)  F&D costs and FD&A are used as a measure of capital efficiency. The calculation for F&D costs includes all exploration and development capital for that period as outlined in the Company’s year-end financial statements plus the change in future development capital for that period. This total capital including the change in the future development capital is then divided by the change in reserves for that period including revisions for that same period. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during the year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for the year. FD&A costs are calculated in the same manner except in addition to exploration and development capital and the change in future development capital, acquisition capital (net of any disposition proceeds) is also included in the calculation. 
   

Summary of Corporate Net Present Value Data of Future Net Revenue

The estimated net present values of future net revenue before income taxes associated with NuVista’s reserves effective December 31, 2023 and based on the published 3 Consultants’ Average price forecast as at January 1, 2024 as set forth below, are summarized in the following table:

  Before Income Taxes 
  Discount Factor (%/year) 
Reserves category (1)(2) ($ thousands)  0%  5%  10%  15%  20% 
Proved           
Developed producing  3,359,306    2,518,100    2,010,245    1,683,220    1,458,573   
Developed non‑producing  484,705    352,217    277,661    230,826    198,755   
Undeveloped  4,350,139    2,644,846    1,764,108    1,252,617    927,660   
Total proved  8,194,151    5,515,164    4,052,014    3,166,663    2,584,989   
Probable  6,090,431    2,803,913    1,559,783    989,124    685,752   
Total proved plus probable  14,284,581    8,319,077    5,611,797    4,155,786    3,270,741   
NOTES: 
(1)  Numbers may not add due to rounding. 
(2)  All future net revenues are stated prior to the provision for interest income and other general and administrative expenses and after deduction of royalties, operating costs, estimated well and facility abandonment and reclamation costs and estimated future capital expenditures. 
   

The following table is a summary of pricing and inflation rate assumptions based on published 3 Consultants’ Average forecast prices and costs as at January 1, 2024:

Year    AECO Gas ($Cdn/ MMBtu)    NYMEX
Gas
($US/ MMBtu) 
  Midwest
Gas at Chicago ($US/ MMBtu) 
  Edmonton C5+ ($Cdn/Bbl)    Edmonton Propane ($Cdn/Bbl)    Edmonton Butane ($Cdn/Bbl)    WTI
Cushing Oklahoma ($US/Bbl) 
  Edmonton Par Price
40 API ($Cdn/Bbl) 
  Exchange Rate(2) ($US/$Cdn)   
Forecast                                       
2024    2.20    2.75    2.58    96.79    29.65    47.69    73.67    92.91    0.752   
2025    3.37    3.64    3.46    98.75    35.13    48.83    74.98    95.04    0.752   
2026    4.05    4.02    3.85    100.71    35.43    49.36    76.14    96.07    0.755   
2027    4.13    4.10    3.92    102.72    36.14    50.35    77.66    97.99    0.755   
2028    4.21    4.18    4.01    104.78    36.87    51.35    79.22    99.95    0.755   
2029    4.30    4.27    4.08    106.87    37.60    52.38    80.80    101.95    0.755   
2030    4.38    4.35    4.17    109.01    38.35    53.43    82.42    103.98    0.755   
2031    4.47    4.44    4.25    111.19    39.12    54.50    84.06    106.07    0.755   
2032    4.56    4.53    4.34    113.41    39.90    55.58    85.75    108.18    0.755   
2033    4.65    4.62    4.43    115.67    40.70    56.70    87.46    110.35    0.755   
2034    4.74    4.71    4.51    117.98    41.52    57.83    89.21    112.56    0.755   
2035    4.84    4.80    4.60    120.34    42.35    58.99    90.99    114.81    0.755   
2036    4.94    4.90    4.70    122.75    43.20    60.17    92.82    117.10    0.755   
2037    5.03    5.00    4.80    125.20    44.06    61.37    94.67    119.44    0.755   
2038    5.13    5.10    4.88    127.71    44.94    62.60    96.56    121.83    0.755   
2039+    +2.0%/yr    +2.0%/yr    +2.0%/yr    +2.0%/yr    +2.0%/yr    +2.0%/yr    +2.0%/yr    +2.0%/yr    0.755   
NOTES: 
(1)  Costs were not inflated in 2024 and inflated at 2% per annum thereafter. 
(2)  Exchange rate used to generate the benchmark reference prices in this table. 
(3)  NuVista’s future realized gas prices are forecasted based on a combination of various benchmark prices in addition to the AECO benchmark in order to reflect the favorable price diversification to other markets which NuVista has undertaken. Pricing at these markets has been accounted for in the GLJ Report. Additional information on NuVista’s gas marketing diversification will be available in our corporate presentation. 
Reference  Total Boe/d  Natural Gas
Condensate
NGLs
           
Q4 2023 production – actual  85,924    60  31 
Q4 2023 production guidance  82,000 – 84,000    61  30 
2023 annual production – actual  77,185    60  32 
2023 annual production guidance  76,000 – 77,000    61  30 
Q1 2024 production guidance  77,000 – 80,000    61  30 
2024 annual production guidance  83,000 – 87,000    61  30 
  Three months ended December 31    Year ended December 31   
($ thousands)  2023    2022    2023    2022   
Cash provided by operating activities  211,761    226,688    721,342    844,816   
Cash used in investing activities  (132,646  (79,310  (531,586  (442,091 
Excess cash provided by operating activities over cash used in investing activities  79,115    147,378    189,756    402,725   
         
Adjusted funds flow  201,987    256,983    756,943    892,801   
Net capital expenditures  (113,258  (72,743  (518,294  (419,476 
Power generation expenditures  (16,904  —    (16,904  —   
Asset retirement expenditures  (1,208  (1,223  (11,195  (9,302 
Free adjusted funds flow  70,617    183,017    210,550    464,023   
                 
Three months ended December 31    Year ended December 31   
($ thousands)  2023    2022    2023    2022   
Cash used in investing activities  (132,646  (79,310  (531,586  (442,091 
Changes in non-cash working capital  2,484    6,567    (13,112  22,615   
Other asset expenditures  —    —    9,500    —   
Power generation expenditures  16,904    —    16,904    —   
Property acquisition  44,000    —    44,000    —   
Proceeds on property disposition  —    —    (26,000  —   
Capital expenditures  (69,258  (72,743  (500,294  (419,476 
  Three months ended December 31    Year ended December 31   
($ thousands)  2023    2022    2023    2022   
Cash used in investing activities  (132,646  (79,310  (531,586  (442,091 
Changes in non-cash working capital  2,484    6,567    (13,112  22,615   
Other asset expenditures  —    —    9,500    —   
Power generation expenditures  16,904    —    16,904    —   
Net capital expenditures  (113,258  (72,743  (518,294  (419,476 
                 

The following table provides a breakdown of capital expenditures, net capital expenditures and power generation expenditures by category for the applicable periods:

  Three months ended December 31    Year ended December 31   
($ thousands, except % amounts)  2023    % of
total 
  2022    % of
total 
  2023    % of
total 
  2022    % of
total 
 
Land and retention costs  15    —    20    —    7,507      3,378     
Geological and geophysical  249    —    139    —    691    —    386    —   
Drilling and completion  51,413    74    61,348    84    392,663    79    345,735    83   
Facilities and equipment  16,193    23    9,882    14    93,252    19    64,386    15   
Corporate and other  1,388      1,354      6,181      5,591     
Capital expenditures  69,258        72,743        500,294        419,476       
Property acquisitions  44,000        —        44,000        —       
Proceeds on property disposition  —        —        (26,000      —       
Net capital expenditures  113,258        72,743        518,294        419,476       
Power generation expenditures  16,904        —        16,904        —       
                             
  Three months ended December 31    Year ended December 31   
($ thousands)  2023    2022    2023    2022   
Operating expense  85,207    81,570    324,196    292,568   
Other income  (1,038  —    (3,058  —   
Net operating expense  84,169    81,570    321,138    292,568 
  Three months ended December 31    Year ended December 31   
  2023    2022    2023    2022   
Cash provided by operating activities          211,761    226,688            721,342    844,816   
Asset retirement expenditures  1,208    1,223    11,195    9,302   
Change in non-cash working capital  (10,982  29,072    24,406    38,683   
Adjusted funds flow          201,987    256,983            756,943    892,801 
    2023      2022   
Cash and cash equivalents  —    (41,890 
Accounts receivable and prepaid expenses    (163,987    (194,128 
Inventory    (20,705    (9,613 
Accounts payable and accrued liabilities    157,711      185,129   
Current portion of other liabilities    14,082      15,375   
Long-term debt (credit facility)    16,897      —   
Senior unsecured notes    162,195      215,392   
Other liabilities    17,358      1,540   
Net debt  183,551    171,805   
Annualized current quarter adjusted funds flow  807,948    1,027,932   
Net debt to annualized current quarter adjusted funds flow    0.2      0.2   
Adjusted funds flow  756,943    892,801   
Net debt to adjusted funds flow    0.2      0.2 
Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd