Summary
NuVista reported good Q1 result. Production was higher than anticipated and will continue to grow. The balance sheet is very sound. NuVista is very profitable and Q1 profit was above expectation due to higher production and lower cost. Shareholder returns are high. NuVista is robust under low oil prices.
In my oil and gas ranking system NuVista ranks in the top 10 as a high 8th.
Production
• NuVista production has been growing with 8-9%/year, from 50.8 K BoE/d (2019) to 83.1 K BoE/d (2024). See chart below.
• Production in Q1 (89.5 K BoE/d) was well up to Q4 (85.6 K BoE/d). Outlook was 87-88 K BoE/d
• Q2 production (outlook 75-77 K BoE/d) will be down due to planned shutdowns
• After Q2 production will increase. Q4 production is targeted at 100 K BoE/d.
• 2025 outlook (90-92 K BoE/d) is 9.5% up from 2024, indicating continued strong growth.
• 2025 production is dependent on the realization of the start-up date of the Pipestone facility in Q2. If the Q2 start-up date is achieved, then production will drift towards the higher end of the guidance.
• NuVista strives to grow production to 125 K BoE/d in 2029 with facility expansions at Pipestone and Gold Creek.
• I assume for 2029 a more modest growth to 115-118 K BoE/d. I will keep the rest as an upside.
- NuVista - production.jpg (51.37 KiB) Viewed 393 times
Balance sheet
• The NuVista balance sheet is extremely sound.
• Q1 equity ratio (=equity/balance sheet total) is a high 67.8%, a similar level in Q4 (68.2%).
• Q1 long-term debt was a low C$ 163.7 M, flat compared to the C$ 163.2 M in Q4.
• Q1 debt/EBITDA ratio is a very low 0.20.
• I expect the balance sheet to remain strong in the future.
• The balance sheet allows generous return of funds to shareholders.
Profitability
• NuVista is a very profitable company.
• Q1 eps was C$ 0.55, well above the C$ 0.50 in Q4.
• Royalties are a reasonable 10-12% of the revenues.
• Realized NGL prices were higher than expected. Gas prices were lower than expected.
• Costs (operation, transport, depreciation) were lower than expected.
• NuVista does not produce oil. However, the condensate price is linked to the oil price.
• For 2025, with WTI at $ 60-65/bbl I expect an eps C$ 1.43-1.53 (PE=7.9-8.5).
• In 2029 the eps can increase to C$ 1.54-1.82 (PE=6.7-7.9).
• Canada is slowly running out of NGL’s. As such Nuvista expects strengthening of the local NGL market. This is left as a future upside.
- NuVista - profit.jpg (44.56 KiB) Viewed 393 times
Shareholder returns
• NuVista targets to return 75% of the free cash flows to shareholders.
• NuVista does not pay dividends. Shareholder returns are made solely through share buy backs.
• In Q1 NuVista bought back 3.6 M shares for C$ 45.8 M.
• For 2025 with WTI at $ 60-65/bbl, shareholder returns can be 6.6-7.3%%.
• In 2029 share buybacks can reach 9.7-11.8% per year.
- NuVista - returns.jpg (38.11 KiB) Viewed 393 times
NuVista reported good Q1 result. Production was higher than anticipated and will continue to grow. The balance sheet is very sound. NuVista is very profitable and Q1 profit was above expectation due to higher production and lower cost. Shareholder returns are high. NuVista is robust under low oil prices.
In my oil and gas ranking system NuVista ranks in the top 10 as a high 8th.