CALGARY, ALBERTA -- (Marketwired) -- 04/08/13 -- 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.
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