Nuvista Energy posts third quarter results
Nuvista Energy released it's third quarter results on October30, 2014.Revenues and funds from operations were up 15 and 20% for the third quarter and for 9 months.But Nuvista has a large capital expenditure program and is using it to improve it's operation and it's production.Over the duration of 2014 Nuvista's operation has changed substantially.It started 2014 with 16 wells in the Wapiti-Montney region and at year-end it will have 32 operating wells.It also sold off a significant amountof non-core assets and got in return about $67 million in cash as well as more Wapiti-Montney acreage.Nuvista is adding to it's position in this productive gas producing region.
Wapiti-Montney
Nuvista has only recently been in this region but has developed their resources very quickly.For example,at the start of the year they had 16 wells;they were in the Bilbo block.They expect to continue drilling here and ramp up production in 2015.In the third quarter they had 23 producing wells and produced 23,000 boe/day.But they sold off assets that had production of 2200 boe/day.Now after divestitures they have production of 21,500 boe/day.And they expect to have 32 producing wells at the year-end.Wells are producing at about 1000 boe/day.Nuvista is using mechanical interventions to increase production from below typecurve to above typecurve production.If they can do this to all their new wells then total production could be around 35,000 boe/day in the first quarter of 2015.
Gas delivery and processing
Nuvista is developing not only more producing wells but also it has built a raw gas pipeline to connect with Keyera's gas pipeline.Their pipieline goes from the Wapiti-Montney Bilbo block to the Simonette gas processing plant and then connects to the Keyera pipeline.They plan to soon have a second processing plant in the Elmworth block.This will triple it's capacity in comparison to Q1 2014.And they will continue development drilling in the Elmworth block.
The Strategy
The first part of the plan is to continue drilling in the Bilbo block and increase the number of producing wells.But they will continue selling off non-core assets to get cash necessary to develop their property and to get more land in their producing area.For example, they picked up another 3.5 sections of land in the Wapiti-Montney area in 2014.Thus enhancing the possibility of further production in 2016 and 2017.
Long Term Growth
Nuvista is geared to having long tern growth.Capital expenditures were about $320 million in 2014 and is expected to be about $380 million in 2015.Funds from operations were about $120 million in 2014 and should be at least $150 million in 2015.This will make sure that debt does not rise significantly in 2015 and 2016.Also Nuvista is putting money into mechanical devices that will raise production from it's wells from below type curve to above type curve.This helps to ramp up production.In addition, Nuvista gained 3.5 sections of land in the Wapiti-Montney area when it sold off some non-core assets.This will allow Nuvista to have up to 50 producing wells in 2016 with above type curve production.Clearly Nuvista does not trade on it's earnings nor on it's price/earnings ratio.Investors realize that this stock is a growth stock and will have greater production in the long term.
Wapiti-Montney
Nuvista has only recently been in this region but has developed their resources very quickly.For example,at the start of the year they had 16 wells;they were in the Bilbo block.They expect to continue drilling here and ramp up production in 2015.In the third quarter they had 23 producing wells and produced 23,000 boe/day.But they sold off assets that had production of 2200 boe/day.Now after divestitures they have production of 21,500 boe/day.And they expect to have 32 producing wells at the year-end.Wells are producing at about 1000 boe/day.Nuvista is using mechanical interventions to increase production from below typecurve to above typecurve production.If they can do this to all their new wells then total production could be around 35,000 boe/day in the first quarter of 2015.
Gas delivery and processing
Nuvista is developing not only more producing wells but also it has built a raw gas pipeline to connect with Keyera's gas pipeline.Their pipieline goes from the Wapiti-Montney Bilbo block to the Simonette gas processing plant and then connects to the Keyera pipeline.They plan to soon have a second processing plant in the Elmworth block.This will triple it's capacity in comparison to Q1 2014.And they will continue development drilling in the Elmworth block.
The Strategy
The first part of the plan is to continue drilling in the Bilbo block and increase the number of producing wells.But they will continue selling off non-core assets to get cash necessary to develop their property and to get more land in their producing area.For example, they picked up another 3.5 sections of land in the Wapiti-Montney area in 2014.Thus enhancing the possibility of further production in 2016 and 2017.
Long Term Growth
Nuvista is geared to having long tern growth.Capital expenditures were about $320 million in 2014 and is expected to be about $380 million in 2015.Funds from operations were about $120 million in 2014 and should be at least $150 million in 2015.This will make sure that debt does not rise significantly in 2015 and 2016.Also Nuvista is putting money into mechanical devices that will raise production from it's wells from below type curve to above type curve.This helps to ramp up production.In addition, Nuvista gained 3.5 sections of land in the Wapiti-Montney area when it sold off some non-core assets.This will allow Nuvista to have up to 50 producing wells in 2016 with above type curve production.Clearly Nuvista does not trade on it's earnings nor on it's price/earnings ratio.Investors realize that this stock is a growth stock and will have greater production in the long term.
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