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ARC Resources(ARX-TSX); BUY, C$10.00― 2019 results and investor day recap | Mullen Group (MTL-TSX); HOLD, C$9.00― FLASH: 4Q19 results and 2020e EBITDAS guidance in line with Street; NCIB planned | NuVista Energy (NVA-TSX); BUY, C$4.75― FLASH: Management update
Companies: ARX MTL NVA
NuVista’s production of 50,391 boe/d matched expectations, although condensate contributions were higher than forecasted. AFFO of $64.3 mm, or $0.29/sh, was lower than GMPFE at $0.33/sh and consensus at $0.31/sh, on low natural gas and NGL pricing. Capital spending of $89 mm was 55% higher than consensus, with phased timing of its 2019 program permitting the acceleration of activity, as well as including ~$26 mm in infrastructure activity. Management did, however, reconfirm it is focused on spen
Companies: NuVista Energy Ltd.
Despite planned facility outages, well freeze-offs, and completion related shut-ins, NuVista still managed to meet the low end of its 43,000-46,000 boe/d guidance range for the quarter.
With production of ~49,000 boe/d previously disseminated, FFO of $63.6 mm, or $0.28/sh, matching our expectations of $0.28/sh (consensus $0.29/sh) was no surprise. Capital spending of $77.4 mm was also aligned with our forecast. Through a busy organic drilling campaign, augmented by the Pipestone acquisition, reserves grew by 20% PDP, 47% 1P and 20% 2P on a per share basis. All-in FD&A performance in 2018 bested 3-yr averages at $8.22/boe 2P, $10.34/boe 1P and 21.53/boe PDP, leading to cash recy
NuVista has gravitated to the low end of prior 2019e guidance, where they will now spend between $300-$325 mm (previously $300-$400 mm) to post average volumes of 51,000 – 54,000 boe/d (formerly 52,000-56,000 boe/d), which still offers 10% PPS growth over 2018e. Planned outages at various non-operated facilities and pipelines will have 1Q19 volumes in the 43,000-46,000 boe/d range before jumping to well beyond 50,000 boe/d for the remainder of the year.
NuVista, as anchor tenant, has entered into a 15-year agreement with Veresen Midstream Limited Partnership for firm transportation and processing of 100 mmcf/d of gas from the recently acquired Pipestone North block (80% take-or-pay terms).
With the closing of the Cenovus Pipestone asset acquisition, we have updated our estimates to reflect closing price, production and cash flow adjustments. Updating for the September 6th closing date, 2018e annual production guidance was formally revised to between 38,750-40,000 boe/d. Management expectations for 3Q18e and 4Q18e have now been refined to 37,500-39,000 boe/d and 46,000-48,500 boe/d, respectively.
4Q17 production volumes of 37,435 boe/d and cash flow of ~$76 mm, or $0.44/sh, were confirmed with the arrival of its year-end audited financials, after previously being disseminated alongside our comment dated February 14, 2018. Subsequent to the quarter, NuVista issued $220 mm in senior unsecured notes at a coupon of 6.5%. Net proceeds were used to redeem an older, ~$70 mm senior unsecured note (coupon at 9.875%). Management’s updated cash flow guidance now includes a one-time charge of $6.6m
NuVista’s 3Q17 results, which included production of 29,405 boe/d and cash flow of $41.5 mm or $0.24/sh, beat corporate guidance, GMP FE ($0.21/sh), and consensus expectations ($0.20/sh).
Current volumes have reached a record high 35,000 boe/d, with production on track to meet unchanged 4Q17e guidance of 35,000 to 38,000 boe/d.
2018 production target of 35,000 to 40,000 boe/d has been reaffirmed, however, ideally achieved through a 5% lower capex range of $270mm to $310 mm.
Latest 3x HiFi
NuVista reported second quarter financial and operating results ahead of our forecast, with strong cash flow generation well ahead of consensus estimates even on adjustment of receipt of infrequent items. Well deliverability is strong and corporate output has recovered to pre-divestiture levels, prompting management to increase its 2016e volume guidance by 1,000 boe/d on unchanged capital inputs. Our forward CFPS estimates are up, though not to the level we anticipated through our initial reacti
Impact: Positive. Cash netbacks were ahead of forecast and NuVista continues to observe strong results within its Montney complex, particularly at Bilbo offsetting Seven Generations. The Company has increased its 2016e volume guidance by 1,000 boe/d on an unchanged capital budget for 2016e so market estimates will be going higher on receipt of this quarter.
Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly rev
Companies: AAV ARX BTE BNP CPG ERF POU PEY PGF PWT PSK TOU VET WCP BNE CJ CR DEE JOY KEL LTS NVA PPY PNE RRX RMP SGY TET TNZ CKE GXE IKM MQL PRQ SPE SKX TVE TVETF YO
NuVista announced a series of transactions providing for improved liquidity and acceleration of its greater Wapiti Montney development, namely a $70 mm non-core asset divestiture, the issue of $70 mm of 5-year notes, and an increase to its 2016e capital budget by ~$40 mm with the advent of a 2nd operated rig immediately added to its fleet. There is no change to our 2017e CFPS, though on the strip, D/CF (trailing) has moved from 1.7x to 1.5x which is positive. We continue to rank the stock as an
Impact: Slightly positive as the offering provides some additionally liquidity and modestly improves debt characteristics for the Company, on the heels of a recently revised credit facility and expanded 2016e capital program.
Impact: Neutral to slightly positive as the positive influence that the W6 Deep Basin transaction should have on netbacks will be partially offset by additional interest expense accrued through a high-yield bond issuance.
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Forecast and valuation update
Companies: IOG PLC
Companies: Savannah Energy Plc
With several opportunistic but timely acquisitions in 2021, coupled with the recent surge in the oil price, Zenith Energy has, in our view, completely transformed itself and its value proposition to investors. While for various reasons it has not been easy for the market to fully recognise and reward this transformation, we expect 1) doubling production, 2) further strengthening of its balance sheet and 3) becoming Free Cash Flow (FCF) generative this year, will make it difficult for the market
Companies: Zenith Energy Ltd.
Alternative Resource Capital
We are increasing our fair value estimate for Pantheon Resources to 208p, from under review (previously 184p). The change reflects what we believe was an unambiguously positive winter drilling campaign. This full note details the background analysis to the change in estimate of fair value, which includes a valuation table and an assessment of the forthcoming Alkaid#2 well.
Companies: Pantheon Resources plc
Chariot has signed a front-end engineering and design (FEED) agreement with Schlumberger and Subsea 7 (the Subsea Integration Alliance) for the Anchois gas development project. Chariot and the Subsea Integration Alliance will adopt a “one team” integrated and collaborative approach to fast-track first gas from Anchois to maximise the return on investment for all stakeholders. The scope of work covers all the development's offshore elements including well completions and subsea production systems
Companies: Chariot Limited
RCS-1 flow testing results
Companies: Arrow Exploration Corp.
Trinity has announced the commencement of its highly anticipated onshore drilling campaign. The Company's fully funded, six well drilling programme will target an aggregate 450-1,100mmbbls of reserves at a cost of US$14-17m. In addition to drilling four “conventional” low angle wells, Trinity will also drill one horizontal well and one deeper appraisal well, with both the horizontal and deeper appraisal wells having the potential to deliver substantially higher production and economic returns ve
Companies: Trinity Exploration & Production Plc
EQTEC has reached a key milestone in its Southport energy from waste project with the appointment of Anaergia as EPC and O&M partner. This is a complex project using multiple waste treatment solutions and we see EQTEC’s inclusion as a demonstration that it’s technology can combine with these to create an optimal outcome.
Companies: EQTEC PLC
Wentworth has announced a positive operational update ahead of its AGM to be held later today. Daily production year-to-date (YTD) has averaged 92.2MMscf/d, a c15% YoY increase (2021: 79.9MMscf/d) and ahead of Wentworth's 2022 guidance of 75-85MMscf/d. As noted previously, the strong performance of the Mnazi Bay asset YTD has allowed Wentworth to increase its total dividend distribution in respect of 2021 to 1.7p per share, a yield of c7.1%. Mnazi Bay continues to supply Tanzania with half of th
Companies: Wentworth Resources PLC
• Section II of the Northern Peruvian Pipeline has been temporary re-opened.
• As a result, 0.72 mmbbl of PetroTal’s Bretana oil has been tendered at the Bayovar port by Petroperu for the July lifting. This oil previously entered the pipeline in late 2020 for which PetroTal was paid just ~US$45/bbl at the time.
• PetroTal will receive the difference between this price and the price at which Petroperu will sell the oil in July (~US$120/bbl), generating over US$60 mm of price adjustment true-up r
Companies: PetroTal Corp.
Wentworth has announced the acquisition of a 25% non-operated working interest in the Ruvuma PSA from Scirocco Energy for an initial consideration of US$3m plus contingent payments of up to US$13m. The consideration is structured to ensure that the majority is only paid in a success case, providing Wentworth with a low-cost entry point into a high growth opportunity. The transaction has the potential to nearly double the Company's production by 2026 and add over 190Bcf of 2P reserves on a Final
Completion of commissioning of Kiln 3 at Vanchem last month keeps Bushveld on track to end 2022 with a sustainable production run rate of 5,000-5,400t V pa, a solid platform from which to refocus on longer-term growth. Fully utilising the vast array of processing infrastructure at Vanchem to treat feed from an expanded mining and ore concentration operation at Vametco makes a lot of sense given the fixed component of costs at the former and the large mineral resource at the latter. Bushveld’s re
Companies: Bushveld Minerals Limited
• 2022 YTD gross production was 92 mmcf/d, ahead of our expectations of 89 mmcf/d for 1H22.
• The FY22 production guidance remains unchanged at 75-85 mmcf/d. It looks very conservative in our view.
• The company currently holds US$26 mm in cash and no debt. This is in line with our expectations.
• TPDC continues to be current with regards to receivables.
• We re-iterate our target price of £0.45 per share.
Steady growth and dividend
Our Core NAV for the company based on its 2P reserves only i
Savannah, which operates the Barroso lithium mine project in Portugal, reports today the results of its locked cycle test to determine optimal flotation reagents to confirm lithium recoveries and spodumene concentrate grades. Savannah is aiming for a 5.5%Li2O concentrate grade with a near 80% recovery. The reported work confirms that these should be possible and that in larger scale, bulk testing these parameters may improve. The work also highlights that there are still optimisations to be h
Companies: Savannah Resources Plc