NuVista Energy Ltd.: Announcing 2003 Year End Results
CALGARY, ALBERTA--NuVista Energy Ltd. ("NuVista") is pleased to
announce today its financial and operating results for the three
and six months ended December 31, 2003 as follows:
/T/
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Corporate Highlights
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Three Months Period
ended ended
December December
31, 2003 31, 2003 (1)
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Financial
($ thousands, except per share amounts)
Production Revenue 12,735 25,134
Cash flow from operations (2) 8,052 15,606
Per share - basic 0.22 0.43
Per share - diluted 0.21 0.42
Net income 2,900 5,668
Per share - basic 0.08 0.16
Per share - diluted 0.08 0.15
Total assets 91,674
Bank loan, net of working capital 13,077
Shareholders' equity 71,062
Net capital expenditures 13,437 20,960
Weighted average common shares outstanding
(thousands)
Basic 37,338 36,360
Diluted 38,355 37,337
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Operating
(boe conversion - 6:1 basis)
Production:
Natural gas (mmcf/day) 19.7 18.7
Crude oil (bbls/day) 1,035 1,009
Total oil equivalent (boe/day) 4,316 4,133
Product prices:
Natural gas ($/mcf) 5.64 5.81
Crude oil ($/bbl) 26.56 28.08
Operating expenses:
Natural gas ($/mcf) 0.60 0.58
Crude oil ($/bbl) 4.38 4.32
Total oil equivalent ($/boe) 3.79 3.69
General and administrative expenses ($/boe) 0.35 0.35
Cash costs ($/boe) 4.38 4.56
Cash flow netback ($/boe) 20.28 20.63
Undeveloped land:
Gross acres 254,156
Net acres 221,389
Average working interest 87%
Reserves (NI 51 - 101) - January 1, 2004
Proven and probable:
Natural gas (bcf) 39.8
Oil and liquids (mbbls) 3,313
Total barrels of oil equivalent (mboe) 9,949
% of Reserves Proven Producing 59%
% of Reserves Total Proven 78%
% of Reserves Probable 22%
Net present value of future cash flows
before tax ($ millions):
@ 10% discount rate 121.6
@ 15% discount rate 107.3
Net present value of future cash flows
after tax ($ millions):
@ 10% discount rate 97.1
@ 15% discount rate 84.9
Finding and development costs ($/boe): (3)
Total Proven 7.82
Proven and Probable 9.08
Recycle Ratio (Cash flow netback per boe/finding
and development costs per boe):
Total Proven 2.6
Proven and Probable 2.3
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(1) Period from July 2, 2003 to December 31, 2003
(2) Cash flow from operations is used before changes in non-cash
working capital to analyze operating performance and leverage.
Cash flow does not have a standardized measure prescribed by
Canadian Generally Accepted Accounting Principles and therefore
may not be comparable with the calculations with similar measures
for other companies.
(3) Calculated in accordance with National Instrument 51 - 101, which
is after reserve revisions and includes changes in future capital
expenditures.
/T/
MESSAGE TO SHAREHOLDERS
NuVista Energy Ltd. ("NuVista") is pleased to report to
shareholders its audited consolidated financial and operating
results for the period from July 2, 2003 to December 31, 2003.
NuVista was formed as part of the Plan of Arrangement dated July
2, 2003 involving Bonavista Petroleum Ltd. ("Bonavista"). As part
of the reorganization, Bonavista Energy Trust (the "Trust")
retained approximately 90% of the oil and natural gas properties,
with the remainder transferred to NuVista. In this initial period
of operations, NuVista has employed the same strategies adopted
by Bonavista, through focus on operatorship, high working
interest ownership, concentrating and dominating in select core
regions and low cost operations. Significant highlights of
NuVista from July 2, 2003 to December 31, 2003 include:
- Increased production by 30% from the 3,500 boe per day
(consisting of 15.0 mmcf per day of natural gas and 1,000 bbls
per day of crude oil) on July 2, 2003 to the 2003 exit production
level of 4,550 boe per day consisting of 20.0 mmcf per day of
natural gas and 1,215 bbls per day of crude oil. NuVista exceeded
its initial 2003 exit volume target of 4,400 boe per day while
spending only 70% of its capital expenditure budget;
- Added 3.0 mmboes of proven reserves resulting in a 55% increase
in proven reserves since July 2, 2003, which have been determined
in accordance with NI 51 - 101. These additions equate to a
finding and development cost of $7.82 per boe for proven reserves
and replaced production by approximately 400%;
- Increased undeveloped land by 28% to over 221,000 net acres in
NuVista's Eastern Alberta Core Region from the 172,000 net acres
on commencement of operations, further enhancing the drilling
prospect inventory in this Core Region;
- Participated in 40 (27.4 net) wells with an overall success
rate of 90%;
- Shot 45 km of 2D and 100 square km of 3D seismic to further
enhance the prospectivity of NuVista's undeveloped land;
- On completion of the Plan of Arrangement, NuVista commenced
operations seamlessly and through the Technical Services
Agreement with Bonavista was able to average general and
administrative expenses of $0.35 per boe and overall cash costs
(operating, general and administrative, interest expenses and
capital taxes) of $4.56 per boe for the period, ranking in the
top decile of its industry peers; and
- Completed the issuance of 2.5 million shares for gross proceeds
of $18.4 million, providing NuVista significant flexibility to
finance current and future capital programs.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's discussion and analysis ("MD&A") of financial
conditions and results of operations should be read in
conjunction with the audited consolidated financial statements
for the period from July 2, 2003 to December 31, 2003. Barrels of
oil equivalent ("boe") have been calculated using a conversion
rate of six thousand cubic feet of natural gas to one barrel of
oil.
Operating activities - NuVista's exploration and development
program from July 2, 2003 to December 31, 2003 led to the
drilling of 40 (27.4 net) wells, with an overall success rate of
90%. This program resulted in 18.7 net natural gas wells, 4.7 net
oil wells and 4.0 net dry holes. NuVista operated 31 of the 40
wells, with an average working interest of 82% in the operated
wells. During the period, NuVista also participated in nine
non-operated wells with an average working interest of 22.5%.
NuVista continues to actively drill, with 70-80 wells planned for
2004.
Reserves - An evaluation of all of NuVista's reserves as at
January 1, 2004 was conducted by independent engineers in
accordance with the new reporting guidelines of NI 51 - 101.
NuVista's reserves were not significantly impacted by the
adoption of these new reporting guidelines. Proven reserves
experienced a positive revision of 7.1% or 392 mboe, largely due
to the conversion of reserves from the probable to proven
categories because of enhanced performance on certain natural gas
properties. Total proven and probable reserves experienced a
negative revision of 5.3% or 428 mboe, primarily due to the
application of risk on the opening balance of the probable
reserve category. Finding and development costs for proven
reserves calculated in accordance with NI 51 - 101 policy were
$7.82 per boe and proven and probable finding and development
costs were $9.08 per boe. These costs are presented after
revisions and include the change in future capital expenditures
required to bring base reserves on-stream. Removing the impact
of revisions would result in proven finding and development costs
of $8.98 per boe and proven and probable finding development
costs of $7.82 per boe.
Production - NuVista's production for the period between July 2,
2003 and December 31, 2003 averaged 4,133 boe per day
representing an 18% increase since commencement of operations. At
December 31, 2003, production for NuVista was 20.0 mmcf per day
of natural gas and 1,215 bbls per day of crude oil for a total of
4,550 boe per day.
The increase in production over the period occurred as a result
of an active and successful natural gas drilling program in its
Eastern core region. Natural gas volumes exceeded our forecast to
average 19.7 mmcf per day for the three months ended December 31,
2003. Crude oil volumes remained relatively flat for the three
months ended December 31, 2003 compared to the three months ended
September 30, 2003, however, a 100% success rate in the oil
drilling program at Amisk, occurring late in the three months
ended December 31, 2003 resulted in NuVista attaining its exit
rate of 1,215 bbls per day.
Revenues - Revenues for the period from July 2, 2003 to December
31, 2003 were $25.1 million, comprised of $19.9 million from
natural gas revenues and $5.2 million from crude oil. The average
natural gas price for the period was $5.81 per mcf and $28.08 per
bbl for crude oil.
Royalties - Royalties for the reporting period were $6.1 million,
an average royalty rate of 24.2%. Natural gas royalties were $5.3
million, an average royalty rate of 26.6% and crude oil royalties
were $774,000 for an average royalty rate of 15.0%.
Operating expenses - Operating expenses for the period ended
December 31, 2003 were $2.8 million. Natural gas operating
expenses averaged $0.58 per mcf and crude oil expenses were $4.32
per bbl. On a boe basis, operating costs were $3.69 leaving
NuVista in the top decile for oil and natural gas companies in
its peer group.
General and administrative - General and administrative expenses,
net of overhead recoveries, were $268,000 or $0.35 per boe for
the period from July 2, 2003 to December 31, 2003. Included in
these expenses is an allocation of $372,000 from Bonavista,
pursuant to the technical services agreement entered into as part
of the Plan of Arrangement. The technical services agreement has
allowed NuVista to initiate and continue with its successful and
active programs through the use of Bonavista's personnel in
managing its operations and at the same time benefit from
Bonavista's low overhead cost structure. In addition, NuVista
recorded a non-cash stock based compensation charge of $104,000
in connection with the issue of the Class B Performance shares.
Interest expenses - Interest expenses for the reporting period
were $282,000 or $0.37 per boe. Currently, NuVista's average
borrowing rate is approximately 3.5%.
Depreciation, depletion and site restoration expenses -
Depreciation, depletion and site restoration expenses were $6.4
million for the period. The average unit cost was $8.52 per boe
and is based on the cost of proven reserve additions and
allocation of Bonavista's net book value of assets transferred to
NuVista, in accordance with the Plan of Arrangement.
Income and other taxes - The provision for income and other taxes
was $3.5 million. Included in income taxes for the period is a
provision of $107,000 for the Large Corporations Tax.
Capital expenditures - Capital expenditures were $21.0 million
during the period and consisted of only exploration and
development spending. These expenditures were considerably lower
than the planned amount of approximately $30 million for the
period due to the reallocation of expenditures from acquisitions
to more attractive exploration and development opportunities. In
spite of the $9 million reduction in budgeted capital
expenditures, NuVista exceeded its 2003 exit by 150 boe per day
to achieve 4,550 boe per day.
Cash flow and net income - For the period from July 2, 2003 to
December 31, 2003, NuVista's cash flow was $15.6 million or $0.43
per share. Net income during the period was $5.7 million or $0.16
per share. This resulted in a strong net income to cash flow
ratio of 36% for the reporting period.
Liquidity and capital resources - As at December 31, 2003, total
bank debt (net of working capital) was $13.1 million, resulting
in a debt to cash flow ratio of approximately 0.4 to 1. This
leaves NuVista with approximately $18.9 million of unused bank
borrowing capability and combined with the equity issue completed
in September 2003, NuVista has significant financial flexibility
to carry out the capital programs for 2004 and for future years.
BUSINESS RISKS AND OUTLOOK
NuVista's management remains committed to the same principles and
disciplined growth strategy that led to the tremendous success of
Bonavista. With an undeveloped land base exceeding 221,000 net
acres, an increasing drilling inventory, coupled with a strong
balance sheet, NuVista is strategically positioned to continue
posting strong operational and financial results for 2004 and
beyond.
The Board of Directors of NuVista has approved a base capital
budget of $70 million for 2004, which will result in the drilling
of 70 to 80 wells. NuVista will continue to focus on its core
strategy of applying technical expertise to its operating regions
in a prudent and disciplined manner, through both the drill bit
and strategic acquisitions. The execution of these strategies
will enable NuVista to continue to grow its production, cash flow
and net income consistently and profitably both in aggregate and
on a per share basis. With current production levels at 4,600 boe
per day and continued expectations of exploration, development
and acquisition success, NuVista is in an excellent position to
achieve its forecasted average production level of 5,600 boe per
day in 2004. Assuming an AECO natural gas price of $6.00 per gj
and an oil price US $32.50 WTI, NuVista expects cash flow of $43
million or $1.15 per share.
Furthermore, our strong balance sheet with a 0.4:1 debt to cash
flow ratio will enable us to execute our 2004 capital program and
pursue additional strategic opportunities as they arise.
Regardless of price volatility, NuVista has positioned itself to
deliver profitable growth now and into the future. We remain
unwavering in our commitment to enhance shareholder value by
utilizing the broad depth and expertise of our dedicated team in
a diligent and cost-effective manner.
/T/
Balance Sheet
(thousands) December 31, 2003
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(audited)
Assets
Accounts receivable $ 6,251
Oil and natural gas properties and equipment 76,752
Future tax asset 8,671
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$ 91,674
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Liabilities and Shareholders' Equity
Accounts payable and accrued liabilities $ 12,400
Bank loan 6,928
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Total current liabilities 19,328
Site restoration provision 1,284
Shareholders' equity:
Share capital 65,394
Retained earnings 5,668
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71,062
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$ 91,674
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Statements of Operations and Retained Earnings
Three Months Period (1)
ended ended
December December
(thousands, except per share amounts) 31, 2003 31, 2003
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(unaudited) (audited)
Revenues:
Production $12,735 $25,134
Royalties, net of Alberta Royalty Tax Credit (2,950) (6,079)
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9,785 19,055
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Expenses:
Operating 1,505 2,792
General and administrative 141 268
Financing charges 38 282
Stock based compensation 52 104
Depreciation, depletion and site restoration 3,238 6,444
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4,974 9,890
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Income before income and other taxes 4,811 9,165
Income and other taxes 1,911 3,497
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Net income 2,900 5,668
Retained earnings, beginning of period 2,768 -
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Retained earnings, end of period $ 5,668 $ 5,668
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Net income per share - basic $ 0.08 $ 0.16
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Net income per share - diluted $ 0.08 $ 0.15
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(1) Period from July 2, 2003 to December 31, 2003
Statement of Cash Flows
Three Months Period (1)
ended ended
December December
(thousands, except per share amounts) 31, 2003 31, 2003
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(unaudited) (audited)
Cash provided by (used in):
Operating Activities:
Net income $ 2,900 $ 5,668
Items not requiring cash from operations:
Depreciation, depletion and site restoration 3,238 6,444
Stock based compensation expense 52 104
Future income taxes 1,862 3,390
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Funds flow from operations 8,052 15,606
Decrease in non-cash working capital items 134 106
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8,186 15,712
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Financing Activities:
Issuance of share capital, net of share
issue costs (48) 17,478
Increase (decrease) in bank loan 2,940 (18,163)
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2,892 (685)
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Investing Activities:
Oil and natural gas properties and
equipment additions (13,437) (20,960)
Site restoration expenditures (109) (110)
Decrease in non-cash working capital items 2,468 6,043
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(11,078) (15,027)
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Decrease in cash - -
Cash, beginning of period - -
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Cash, end of period $ - $ -
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(1) Period from July 2, 2003 to December 31, 2003.
/T/
NUVISTA ENERGY LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Period from July 2, 2003 to December 31, 2003.
1. Significant accounting policies:
As the determination of many assets, liabilities, revenues and
expenses is dependent upon future events, the preparation of
these financial statements requires the use of estimates and
assumptions, which have been made using careful judgement. In the
opinion of management, these financial statements have been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below.
NuVista Energy Ltd. ("NuVista") was established with an effective
date of July 2, 2003 under a Plan of Arrangement entered into by
Bonavista Energy Trust (the "Trust"), Bonavista Petroleum Ltd.
("Bonavista") and NuVista. Under the Plan of Arrangement, various
assets of Bonavista comprising certain producing and exploration
assets were transferred to NuVista. As NuVista is a new entity,
these financial statements reflect the results of operations for
the period from July 2, 2003 to December 31, 2003.
(a) Oil and natural gas operations:
NuVista follows the full cost method of accounting, whereby all
costs associated with the exploration for and development of oil
and natural gas reserves are capitalized in cost centres on a
country-by-country basis. Such costs include land acquisitions,
drilling, well equipment and geological and geophysical
activities. General and administrative costs are not capitalized.
Gains or losses are not recognized upon disposition of oil and
natural gas properties unless crediting the proceeds against
accumulated costs would result in a change in the rate of
depletion of 20 percent or more.
Costs capitalized in the cost centres, including well equipment,
together with estimated future capital costs associated with
proven reserves, are depreciated and depleted using the
unit-of-production method which is based on gross production and
estimated proven oil and natural gas reserves as determined by
independent engineers. The cost of significant unproven
properties is excluded from the depreciation and depletion base.
For purposes of the depreciation and depletion calculations, oil
and natural gas reserves are converted to a common unit of
measure on the basis of their relative energy content. Facilities
are depreciated using the declining balance method over their
useful lives, which range from 12 to 15 years.
The provision for future site restoration costs are calculated
using the unit-of-production method and is included within the
provision for depreciation, depletion and site restoration. Costs
are estimated each year by management based upon current
regulations, costs, technology and industry standards. Actual
costs as incurred are charged against the accumulated liability.
In applying the full cost method, NuVista calculates a ceiling
test which restricts the capitalized costs less accumulated
depreciation and depletion from exceeding an amount equal to the
estimated undiscounted value of future net revenues from proven
oil and natural gas reserves, based on year end prices and costs,
plus the cost, net of impairments, of unproved properties and
after deducting estimated future site restoration costs, general
and administrative expenses, financing costs and income taxes.
(b) Joint venture accounting:
A portion of NuVista's oil and natural gas operations is
conducted jointly with others. Accordingly, the financial
statements reflect only NuVista's proportionate interest in such
activities.
(c) Financial instruments:
From time to time, NuVista may use swap agreements or other
financial instruments to hedge its exposure to fluctuations in
oil and natural gas prices. Gains and losses arising from these
swap arrangements are reported as adjustments to the related
revenue account over the term of the financial instrument.
Financial instruments are not used for speculative purposes. The
carrying values of NuVista's monetary assets and liabilities
approximate their fair values.
(d) Stock based compensation:
NuVista has equity incentive plans, which are described in note
5. These stock based compensation plans for employees do not
involve the direct award of stock, or call for the settlement in
cash or other assets. Any consideration received on exercise of
the stock options is credited to share capital. Compensation
costs are recognized in the financial statements for the
performance shares. Compensation expense relating to stock
options is disclosed in note 5.
(e) Income taxes:
NuVista follows the liability method of accounting for future
income taxes.
(f) Per share amounts:
Diluted per share amounts reflect the potential dilution that
could occur if securities or other contracts to issue common
shares were exercised or converted to common shares. The treasury
stock method is used to determine the dilutive effect of stock
options and other dilutive instruments.
2. Transfer of assets and commencement of operations:
Under the Plan of Arrangement, Bonavista transferred to NuVista
certain assets, being certain producing and exploratory oil and
natural gas properties in Bonavista's Eastern Core Region, and an
allocation of its bank loan. The producing oil and natural gas
properties were transferred into a general partnership that is
70% owned by NuVista and 30% owned by Bonavista. As this was a
related party transaction, assets and liabilities were
transferred at its book value. Details are as follows:
/T/
Amount
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(thousands)
Oil and natural gas assets and equipment $ 61,825
Future income tax asset 11,751
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Total assets transferred 73,576
Bankloan (29,103)
Provision for site restoration (983)
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Net assets received and common shares issued $ 43,490
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/T/
The above amounts are estimates, which were made by management at
the time of the Plan of Arrangement based on information
available at the time. Under the Plan of Arrangement, NuVista
entered into a Technical Services Agreement with Bonavista. Under
this agreement, Bonavista receives payment for certain technical
and administrative services provided by it to NuVista, on a cost
recovery basis. Pursuant to the Technical Services Agreement,
there was $372,000 of fees were charged relating to general and
administrative activities and $317,000 of fees were charged
relating to capital expenditure activities for the period from
July 2, 2003 to December 31, 2003.
3. Oil and natural gas properties and equipment:
/T/
Accumulated
depreciation
and Net book
December 31, 2003 Cost depletion value
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(thousands)
Oil and natural gas properties $ 65,307 $ 5,518 $ 59,789
Facilities and well equipment 17,478 515 16,963
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$ 82,785 $ 6,033 $ 76,752
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/T/
Unproved property costs of $10,713,000 as at December 31, 2003
were excluded from the depreciation and depletion calculation.
During the period ended December 31, 2003, NuVista recorded a
provision of $411,000 for site restoration in the consolidated
financial statements.
4. Bank loan:
NuVista has a $32 million revolving production loan facility with
a syndicate of Canadian chartered banks, which provides that
borrowings may be made by way of prime loans, bankers'
acceptances and/or US dollar LIBOR advances. These advances bear
interest at the banks' prime rate and/or at money market rates
plus a stamping fee. The bank loan facility is secured by a first
floating charge debenture, general assignment of book debts and
NuVista's oil and natural gas properties and equipment. The
facility is subject to an annual review by the lenders.
5. Share capital:
(a) Authorized:
Unlimited number of voting Common Shares and 1,200,000 Class B
Performance Shares.
(b) Issued:
Prior to the Plan of Arrangement, NuVista completed the private
placement of 2,000,000 Common Shares and 1,200,000 Class B
Performance Shares for gross proceeds of $4,012,000.
/T/
(i) Common Shares
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Number Amount
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(thousands)
Outstanding as at July 2, 2003 2,000 $ 4,000
Issued pursuant to the Plan of
Arrangement (Note 2) 32,839 43,490
Issued for cash 2,500 18,375
Stock based compensation - 104
Reacquired and cancelled (1) (2)
Costs associated with shares issued,
net of future tax benefit - (585)
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Outstanding as at December 31, 2003 37,338 $ 65,382
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/T/
(ii) Class B Performance Shares
Each Class B Performance Share was sold for a price of $0.01 per
share and is convertible into the fraction of a Common Share
equal to the closing trading price of the Common Shares on the
Toronto Stock Exchange on the day prior to such conversion less
$2.00, if positive, divided by the Common Share closing price.
The Class B Performance Shares will automatically convert into
Common Shares as to 25% of the Class B Performance Shares
outstanding on a pro-rata basis from holders on each of July 1,
2004, 2005, 2006 and 2007. If the NuVista Closing Price less
$2.00 is not positive on any conversion date, NuVista will,
subject to applicable law, redeem the Class B Performance Shares
that would have otherwise been converted at the redemption price
of $0.01 per share. The fair value of each Class B Performance
Share was determined, at date of issuance, using the
Black-Scholes model with the variables described in Note 5(e).
This amount is amortized over the life of the Class B Performance
Share and is included in stock based compensation expense.
/T/
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Number Amount
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(thousands)
Outstanding as at July 2, 2003 1,200 $12
Reacquired and cancelled (4) -
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Outstanding as at December 31, 2003 1,196 $12
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/T/
(c) Per share amounts:
During the period from July 2, 2003 to December 31, 2003, there
were 36,359,841 weighted average shares outstanding. On a diluted
basis, there were 37,336,785 weighted average shares outstanding
after giving effect for dilutive stock options.
(d) Stock Options:
NuVista has established a stock option plan whereby officers,
directors, employees and service providers may be granted options
to purchase Common Shares. Options granted vest at the rate of 25
percent per year and expire two years after the date of vesting
to a maximum term of six years. The total stock options
outstanding plus the Class B Performance Shares cannot exceed 10%
of the outstanding Common Shares. During the period from July 2,
2003 to December 31, 2003, 1,369,800 stock options were granted
with prices ranging from $6.30 per share to $7.42 per share.
Stock option summary of transactions for the period from July 2,
2003 to December 31, 2003 are as follows:
/T/
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Weighted average
Number exercise price
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Outstanding as at July 2, 2003 - -
Granted 1,369,800 $ 6.35
Exercised - -
Cancelled (4,500) $ 6.30
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Outstanding, December 31, 2003 1,365,300 $ 6.35
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Exercisable, December 31, 2003 - -
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/T/
(e) Stock-based compensation:
Under the intrinsic value method, no compensation costs are
recorded in the financial statements for stock options granted.
If the fair value based method had been used, the stock-based
compensation costs, pro forma net income and pro forma net income
per share would be as follows:
/T/
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Three Months Period from
ended July 2, 2003 to
December 31, 2003 December 31, 2003
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(thousands, except per share
amounts)
Stock based compensation
(stock options) $ 29 $ 357
Net income
As reported $ 2,900 $ 5,668
Pro forma $ 2,871 $ 5,311
Net income per common share
Basic
As reported $ 0.08 $ 0.16
Pro forma $ 0.08 $ 0.15
Diluted
As reported $ 0.07 $ 0.15
Pro forma $ 0.07 $ 0.14
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/T/
The pro forma amounts include the compensation costs associated
with stock options granted subsequent to July 2, 2003. The fair
value of each option granted was estimated on the date of grant
using the Black-Scholes option pricing model. In the pricing
model the fair value of stock options granted was $2.41 per
share; risk free interest rate was 3.5%; volatility of 40%; and
an expected life of 4.5 years.
6. Income taxes:
The provision for income tax differs from the result of which
would have been obtained by applying the combined Federal and
Provincial income tax rate to the income before taxes. This
difference results from the following items:
/T/
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Three Months Period
ended from July 2, 2003
December 31, 2003 to December 31, 2003
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(thousands)
Expected tax expense at 40.6% $ 1,954 $ 3,723
Non deductible crown payments, net 1,014 1,846
Resource allowance (993) (1,809)
Effect of change in tax rate (134) (412)
Other 21 42
Capital taxes 49 107
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Provision for income taxes $ 1,911 $ 3,497
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The provision for income taxes
consists of:
Current $ 49 $ 107
Future 1,862 3,390
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Provision for income taxes $ 1,911 $ 3,497
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The significant components of the future tax asset as at December
31, 2003 are:
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Amount
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(thousands)
Oil and natural gas properties $ 6,915
Facilities and well equipment 1,073
Site restoration provision 444
Share issue costs 239
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Future tax asset $ 8,671
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/T/
7. Hedging activities:
As at December 31, 2003, NuVista has entered into physical
purchase contracts to sell 200 bbls per day for the period from
January 1, 2004 to September 30, 2004 at prices ranging from U.S.
$27.50 per bbl to U.S. $31.70 per bbl. In addition NuVista has
sold 1,000 gj's per day for the period from April 1, 2004 to
October 31, 2004 by way of a costless collar with a floor price
of $5.00 per gj and a ceiling price of $6.25 per gj at AECO.
INVESTOR INFORMATION
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".
Corporate information provided herein contains forward-looking
information. The reader is cautioned that assumptions used in the
preparation of such information, which are considered reasonable
by NuVista at the time of preparation, may be proven to be
incorrect. Actual results achieved during the forecast period
will vary from the information provided herein and the variations
may be material. There is no representation by NuVista that
actual results achieved during the forecast period will be the
same in whole or in part as those forecast.
-30-NuVista Energy Ltd.
Keith A. MacPhail
Chairman
(403) 213-4315
or
NuVista Energy Ltd.
Alex G. Verge
President and Chief Executive Officer
(403) 213-4306
or
NuVista Energy Ltd.
Glenn A. Hamilton
Vice President and Chief Financial Officer
(403) 213-4302
