Post by
mrmomo on Oct 25, 2023 9:37am
Nuvista at a Xroads.........
Ahhhh Nuvista, an old Fav of mine that never came into it's own OR was acquired. But i think it's finally reaching a BIG fork in the road, a major pivot point, where it has to do decide what to do. Do they want in or do they want out? And what i mean by this, is that IF they decide to still keep operating as an indepedent operator, they need to get much bigger in order to compete & remain viable.......to stay alive.
So if being acquired, swallowed by a larder operator isn't in the books or of interest to mgmt, then Nuvista has to do some major swallowing themselves to stay relevant in this fractured Canadian O&G sector. Becuase imho, any Canadian producer below 100K of boepd will be irrelevant to the market & investors in 2024 and beyond, AND they will have a very difficult time attracting capital/investment.
In all honesty, i REALLY thought Nuvista would have been boughtout by this time, but it never really materialized. Whether it's the same case as Crew, another perplexing one that's still hanging around for some reason, where mgmt/bod aren't willing to sell...... remains to be seen. But you have to believe, that mgmt/bod influence or reluctance to sell may have played at least a small part in Nuvista still being around. You'd at least figure with Paramount taking a huge chunk of interest in the company a few years back, that would eventually lead to somekind of merger between the two. But even THAT never truly came to bare or materialized.
So what's Nuvista to do? I think they've grown as much as they could under current conditions and they've gone as far as they possibly could with the "current" assets they have. But in order to grow further & compete beyond 2024, they need SIZE.....and a lot of it! So if they wish not to sell out & remain solely indepedant, then they MUST look for possible acquisitions. The low hanging fruit & most obvious here would be a merger with Paramount, but it seems either they or the folks over at POU aren't to keen or interest.........YET! But MAYBE, just maybe, it may still be on the intinerary later down the road. I think it's a natural fit now for both........
But just in case that never materializes either, what other suitable, affordable targets can Nuvista consider? Well, there WAS Pipestone, but unfortunately, that was swallowed by the unscrupulous bottom feeding StrathCona. I think the only VIABLE ones left, within Nuvista's scope are Kelt, Birchcliff & Advantage. And anyone else is either to large to swallow or not relevant to Nuvista's objectives. Out of those three, i think Kelt would make the best sense, as they are more or less debt free and ~50% liquids. The other two are heavily weighted NG producers, where at current NG pricing, would make it tough to justify & a hard sell to s/h. Especially in Birchcliff'd case where they have no hedges in place to protect cashflow. But in Kelt's case, it's a no brainer and easy sell to holders.
It's been quite some time i haven't posted on this board, but with all the M&A happening on both sides of the border, i all thought you should be aware of your current situation if you're a long term Nuvista shareholder. That's about it for now, and i guess we'll see where Nuvista mgmt take this company in the next 6 months. For sure, there will be some more M&A activity in the Canadian sector as those operating in it will have no other option but to choose whether to hang up the gloves & exit by being swallowed OR be on the hunt themselves for existential survival.........
GLTA