Nuvista Energy Ltd T.NVA

Alternate Symbol(s): NUVSF

Energy Oil & Gas E&P

NuVista Energy Ltd. is an oil and natural gas company, which is engaged in the exploration for, and the development and production of, oil and natural gas reserves in the Western Canadian Sedimentary Basin. Its primary focus is on the scalable and repeatable condensate rich Montney formation in the Alberta Deep Basin (Wapiti Montney). Its core operating areas of Wapiti and Pipestone in the Montney formation are located near the City of Grande Prairie, Alberta, approximately 600 kilometers northwest of Calgary. Its Montney Formation is a shale gas and shale oil resource. The Montney formation in the Wapiti area is a thick (200m+) section of hydrocarbon-charted fine-grained reservoir found at depths ranging from 2,500-3,500m.

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Nuvista Energy Ltd

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Post by retiredcfon Nov 10, 2024 8:55am

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Post# 36305167

RBC

Their upside scenario target is $19.00. GLTA

November 8, 2024

Sector Perform

TSX: NVA; CAD 11.70

Price Target CAD 14.00

NuVista Energy Ltd.
Q3/24 Model Update - Lower Montney Weighs In

Our view: NuVista reported Q3/24 production of 83,475 boe/d (RBC/ Street: 83,099/82,025 boe/d) driving AFFO (f.d.) of $0.67/sh (RBC/ Street: $0.49/$0.56). 2024 production guidance with the company unveiling a 2025 capital budget of $450mm driving volumes of 90,000 mboe/d (39% liquids). Notably, the company also added an LNG netback agreement with Trafigura (21,000 mmbtu/d; 13 years) commencing in January 2027.

Key points:

• Q3/24 Results. NuVista reported Q3/24 production of 83,475 boe/ d (RBC/Street: 83,099/83,025 boe/d) driving AFFO (f.d.) of $0.67/sh (RBC/ Street: $0.49/$0.56); volumes and realizations were the key driver. Capital expenditures were $118mm (RBC/Street: $135mm/$129mm) in the quarter. Exit net debt for the quarter was $261mm (D/CF: 0.5x) which is well below NVA's net debt target of $350mm. NVA bought and cancelled 817k shares for ~$11.3mm during the quarter. The company reaffirmed its RoC commitment of 75%.

Unveiled 2025 Budget/Reaffirmed 2024 Guidance. The company reiterated its existing 2024 guidance of 83,500-86,000 boe/d and left its capital guidance unchanged at $500mm, with Q4/24 volumes positioned to be 89,000-91,000 boe/d which includes the minor impact associated with temporary shut-ins. The company unveiled its 2025 capital budget of $450mm driving volumes of 90,000 mboe/d; the plan includes a six- week turnaround for maintenance and expansion of major third-party facilities in Wapiti which will occur in Q2/Q3. The majority of production growth will occur from its Pipestone North asset (coinciding with startup of CSV Albright) in 2025; Gold Creek the focus of growth in 2026/27.
Adding 2027 LNG Exposure. The company added LNG exposure to its natural gas diversification strategy, through a JKM netback agreement with Trafigura based on 21,000 mmbtu/d of LNG for 13 years commencing in January 2027.
Operational highlights - Lower Montney. (1) During the quarter, NVA drilled 14 wells, completed 12; (2) NVA completed a 4-well pad in Pipestone South in H1/24, achieved average IP90 rates per well of 1.3 mboe/d (40% liquids) despite restricted rates due to infrastructure capacity; (3) NVA's southern pad in Pipestone North (a co-development of Lower Montney) reached an IP60 of 1.7 mboe/d (50% liquids); (4) NVA intends to complete a 14-well pad in Pipestone North in Q1/25 to coincide with the startup of CSV Albright gas plant; (5) a southern Elmworth pad co-developed the entire Montney stack (including Lower Montney) averaged 1.7 mboe/d (15% liquids); (6) NVA brought on a 6- well pad between Gold Creek and Elmworth where it reached an IP30 of 1.7 mboe/d (40% condensate), and the Lower Montney well reached 1.9 mboe/d (38% liquids).
Updates to Estimates. We update our estimates to reflect Q4/24 production guidance and the newly unveiled 2025 capital budget with tweaks to our liquids mix driving our 2024/25/26 CFPS estimates to increase by +10%/+1%/+9%.