NuVista Energy (NVA-T) Halloween Oct 31, '17 Third Quarter Financial and Operating Results and 2018 Outlook web.tmxmoney.com
NuVista Energy after releasing its third quarter results and a much-awaited update on its 2018 guidance (it lowered its 2018 capital budget to a range of $270-million to $310-million, while maintaining production at 35,000 to 40,000 barrels of oil equivalent a day). The stock is up from $7 in the last two weeks on no news, just anticipation. Today, investors and analysts were not disappointed. In the third quarter, NuVista produced 29,405 barrels a day, higher than analysts' predictions of about 27,000 barrels a day. Now, it is producing 35,000 barrels a day, in line with its fourth quarter guidance of 35,000 to 38,000 barrels a day. Its full-year production guidance is unchanged at 28,000 to 31,000 barrels a day.
NuVista's Q3 capital spending of $98-million is higher than analysts' predictions of about $74-million, but the company expects to stay in line with its full-year budget of about $300-million (this is the high end of its capital budget range of $280-million to $300-million). NuVista plans to begin its 2018 winter drilling program early, before the end of this year.
Its accelerated capital spending in the second half of 2017 is partly why NuVista is able to reduce next year's budget while keeping 2018 production intact. Another reason is that NuVista is encountering higher-than-expected condensate proportions, particularly at its Elmworth block. Raymond James analyst Kurt Molnar explains that "growing condensate ratios are one of the most powerful executions that [exploration and production companies] can achieve," because they can result in increased revenues and netbacks, as well as reduced capital costs. Over all, Mr. Molnar is bowled over by "virtually every income statement line item beating our estimates." He has raised his price target to $11 from $9.25 and upgraded his rating to "strong buy" from "outperform." Slightly less excited but still optimistic is BMO Nesbitt Burns analyst Joe Levesque, who maintains his rating of "market perform" but has raised his price target to $9 from $8. Mr. Levesque notes that NuVista has a high-cost structure. In Q3, NuVista's operating cost was $10.26 per barrel of oil equivalent. This is down from $11.31 in the third quarter of 2016. Fellow Alberta Montney producer
Birchcliff Energy (BIR-T) had an operating cost of $4.67 a barrel in the second quarter of 2017, when it produced 64,636 barrels a day. Another Alberta Montney producer.
Delphi Energy Corp. (DEE-T) produced 9,420 barrels a day in Q2 2017 at an operating cost of $12.72 a barrel, though it calculated a lower cost of $8.22 a barrel after excluding one-time expenses. Birchcliff and Delphi have not yet released their third quarter results. |
