NuVista Energy Ltd. Announces Long Term Gas Processing Agreement for Wapiti Montney Production
CALGARY, ALBERTA--(Marketwired - April 8, 2013) - NuVista Energy Ltd. ("NuVista")(TSX:NVA) is pleased to announce that it has reached an agreement with Keyera Corp. ("Keyera") for the transportation and processing of its Wapiti Montney condensate-rich natural gas production. The companies have agreed to a 10 year arrangement with an initial firm capacity of 35 MMcf/d of raw natural gas production commencing in the second quarter of 2014, and increasing to 65 MMcf/d potentially as early as late 2014. The agreement provides flexible terms through a minimum Take-or-Pay ("TOP") commitment of 75% of these volumes. NuVista will not be contributing any capital towards the arrangement; however, the Keyera processing and transportation fee will include capital and operating fee components. NuVista's area strategy is to reduce operating costs through economies of scale from operated wells and facilities and expects to realize a 25-33% reduction in overall Wapiti Montney operating costs by mid-2014. This arrangement with Keyera, along with the efficiencies continuing to build in our operated field wells and facilities, facilitates our strategy. The Board of Directors of NuVista and Keyera have approved this agreement.
The Keyera agreement will ensure the continued progression of NuVista's Montney development program and result in facilitating the acceleration of production growth, while significantly reducing operating costs over the current cost structure. NuVista is continuing to experience improved well performance; decreasing capital costs and expanding resource size and this agreement will further serve to underpin line-of-sight towards profitable full-field development.
NuVista welcomes Keyera as a reliable operating partner and sees this arrangement creating significant synergies for both parties. NuVista gains valuable access to increased sour processing capacity at a reasonable cost, while meeting the needs of the Keyera Simonette sour gas processing facilities, thereby maximizing plant efficiencies and improving plant economics. In order to accommodate production from the Wapiti development, Keyera will construct a 90 kilometer 12 inch diameter pipeline from a future NuVista compressor station in the South block of its Wapiti Montney lands at 03-36-065-06W6M, to the existing Keyera Simonette gas plant at 09-06-063-25W5M. Keyera will also construct additional plant inlet facilities to accommodate the gas and liquids production from Wapiti. The aforementioned facilities will be subject to receiving all regulatory approvals. NuVista has also been provided in this arrangement the possibility of a future deep cut processing expansion at the Simonette plant, and will participate in that project should it proceed.
An additional and significant mutual synergy associated with this project is the fractionation and marketing of NuVista's natural gas liquids (NGL's). Keyera has material capability in this regard and the agreement provides for the fractionation and marketing of the associated NuVista liquids streams from the Wapiti Montney, for the term of the agreement. NuVista is pleased to have the certainty of delivery and pricing that comes with this arrangement, while being aligned with a vertically integrated NGL midstream company of good scale and competitiveness.
As previously announced, NuVista is entering the second year of a five year firm TOP transportation agreement for processing at the SemCAMS' operated K3 plant. This agreement started at 10 MMcf/d and increases to 17 MMcf/d in July 2013. NuVista has also entered into a short term firm TOP agreement (one year) for an additional 15 MMcf/d or raw gas with another third party for gas gathering services and with SemCAMS' for transportation and onwards for final processing at the SemCAMS' operated K3 plant. This additional capacity was made available to NuVista commencing April 1, 2013 and will provide capacity for NuVista's growing 2013 volumes.
NuVista anticipates utilizing between two and three drilling rigs consistently over the next couple of years in order to provide significant production growth and fulfill this and other processing commitments. A fourth rig is possible in the future, however, that decision will be made later in time and will in part depend upon commodity prices, drilling success, and excess capacity available after the expanded facilities are optimized. NuVista continues to maintain the flexibility to control the pace of activity as the economics dictate. In addition to the economics of this play being dramatically improved as a result of this arrangement, NuVista will also benefit greatly from processing capacity at multiple facilities as noted above, as this will reduce the impact of any single facility outage. NuVista is excited to be taking this next critical step forward in the evolution of this large, condensate-rich, Montney resource play and looks forward to announcing further progress in our Q1 2013 press release on or about May 8, 2013.
ADVISORY REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable securities laws. The use of any of the words "will", "expects", "believe", "plans", "potential" and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this press release contains forward looking statements, relating to: the terms and benefits of the agreement with Keyera including, anticipated future processing commitments and the timing thereof, anticipated accelerated production growth and field development, reduced operating costs, increased economies of scale, flexibility and certainty of marketing, delivery and pricing and a reduction in the impact of any single facility outage; Keyera's plans to construct a pipeline to and inlet plant facilities at its Simonette plant; Keyera's plans for and NuVista's intention to participate in a future deep cut processing expansion at Keyera's Simonette plant; and NuVista's future drilling plans and the results therefrom.
By their nature, forward-looking statements are based upon certain assumptions and are subject to numerous risks and uncertainties, some of which are beyond NuVista's control, including: obtaining all necessary approvals and consents for the construction of the additional facilities at the Simonette plant; construction and input costs; construction scheduling variables; the impact of general economic conditions, industry conditions, current and future commodity prices, currency and interest rates, anticipated production rates, borrowing, operating and other costs, the timing, allocation and amount of capital expenditures and the results therefrom, anticipated reserves and the imprecision of reserve estimates, the performance of existing wells, drilling plans and the success obtained in drilling new wells, the sufficiency of budgeted capital expenditures in carrying out planned activities, competition from other industry participants, availability of qualified personnel or services and drilling and related equipment, stock market volatility, effects of regulation by governmental agencies including changes in environmental regulations, tax laws and royalties; the ability to access sufficient capital from internal sources and bank and equity markets; and including, without limitation, those risks considered under "Risk Factors" in our Annual Information Form.
We have included the above summary of assumptions and risks related to forward-looking statements provided in this news release in order to provide investors with a more complete perspective on our current and future operations and such information may not be appropriate for other purposes. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. NuVista's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, or if any of them do so, what benefits NuVista will derive therefrom. NuVista disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
NuVista is an independent Canadian oil and natural gas exploration, development and production company with its Common Shares trading on the Toronto Stock Exchange under the symbol "NVA".
Jonathan A. Wright
President and CEO