NVA NuVista Energy Ltd

NuVista Energy Ltd. (“NuVista” or the “Company”) (TSX:NVA) is pleased to announce strong financial and operating results for the three and nine months ending September 30, 2023. We continued to invest in a disciplined manner in new high-return wells to fill and optimize existing facilities. New well production results continue to meet and exceed expectations, driving our production to new highs. At the same time as achieving record production, we made significant progress in returning capital to shareholders under our existing Normal Course Issuer Bid (the “2023 NCIB”) while continuing to reduce debt.

Third Quarter 2023 Operational and Financial Highlights

During the third quarter of 2023, NuVista:

• Produced a record average of 80,382 Boe/d, meeting our guidance expectations and reflecting a 17% increase in production from the third quarter of 2022. The production composition for the third quarter was richer than expected at 33% condensate, 8% NGLs and 59% natural gas, and this included approximately 3,500 Boe/d of planned and unplanned midstream and NuVista downtime;
• Generated adjusted funds flow(1) of $202.0 million ($0.94/share, basic(3)) and delivered $91.2 million of free adjusted funds flow(2);
• Achieved net earnings of $110.3 million ($0.51/share, basic);
• Executed a successful capital expenditures(2) program, investing $110.0 million in well and facility activities including the drilling of 16 gross (16.0 net) wells and the completion of 11 gross (10.5 net) wells in our condensate rich Wapiti Montney asset base;
• Exited the quarter with net debt(1) of $150.2 million, a 43% reduction from the third quarter of 2022 and 13% lower than year end 2022, resulting in a favorable net debt to annualized third quarter adjusted funds flow(1) ratio of 0.2x;
• Repurchased and subsequently cancelled 3.4 million NuVista shares for an aggregate cost of $42.5 million under the terms of our 2023 NCIB(4). Year to date, we have repurchased and subsequently cancelled 8.1 million shares, bringing the total to 21.6 million shares since inception of our share repurchase program in mid-2022, with a weighted average price of $11.73 per share;
• Continued to make significant progress in advancing our environment, social and governance (“ESG”) efforts, as demonstrated by the release of our 2022 ESG report, which is available on our website (see www.nvaenergy.com). Importantly, the report highlights our continued achievements in reducing methane and greenhouse gas (GHG) emissions; and
• Recognized as part of the TSX30 for the second consecutive year. The TSX30 recognizes the thirty top-performing companies on the Toronto Stock Exchange (TSX) over the prior three-year period (see www.tsx.com/tsx30). NuVista placed a very compelling second place overall.

Notes:(1) Each of "adjusted funds flow", "net debt" and “net debt to annualized third quarter adjusted funds flow ratio” are capital management measures. Reference should be made to the section entitled “Non-GAAP and Other Financial Measures” in this press release. (2) Each of "free adjusted funds flow", “capital expenditures” and “net capital expenditures” are non-GAAP financial measures. Reference should be made to the section entitled “Non-GAAP and Other Financial Measures” in this press release.(3) “Adjusted funds flow per share” is a supplementary financial measure. Reference should be made to the section entitled “Non-GAAP and Other Financial Measures” in this press release.(4) In the second quarter of 2023, NuVista received TSX approval for the renewal of its NCIB to allow for the repurchase of up to 16,793,779 common shares, being 10% of the public float at the time of renewal.

Excellence in Operations

We are pleased to provide another operational update that demonstrates excellence in operations and proves the continuing emergence of new opportunities in our expansive resource base. A total of 9 pads will have been brought on production by the end of 2023. Cost and production performance have been strong and predictable. In addition, successful testing of new zones has allowed us to enter the planning stage for additional projects that we expect to underpin growth beyond our existing outlook of 100,000 Boe/d.

We achieved a quarterly production record of just over 80,000 Boe/d(1) with peak-day rates of approximately 85,000 Boe/d(1). Infrastructure capacity in the area has become tight but staged expansions are currently in progress with expected on-stream dates beginning in the second quarter of 2024 and running through to the second quarter of 2025. These are expected to bring our total capacity to over 105,000 Boe/d over that period.

In the Wapiti area, a 6-well pad on the Gold Creek block was drilled in record time, testing full co-development of the Middle Montney with the emerging zone - the Lower Montney. The wells all averaged 1,975 Boe/d (55% condensate)(2) each over the first 30 days of production. The three Lower Montney wells on the pad exhibited strong deliverability and particularly high condensate rates, averaging over 2,200 Boe/d and 63% condensate each(3). This result drives the expansion of the Gold Creek infrastructure capacity in 2024 and reinforces the exceptional economics in this area of growing well inventory. Additionally, a 5-well pad was drilled on the Bilbo block, including one infill pilot well in the C zone, drilled between two legacy wells which have produced for almost a decade from the B zone immediately below. The infill well has produced an IP30 of 1,200 Boe/d (67% condensate)(4), versus the pad average IP30 of 1,400 Boe/d (52% condensate)(5) per well. This is a highly encouraging initial result regarding future infill opportunities on the block, showing depletion from the two legacy wells below the infill is well within acceptable economic bounds.

We have continued to achieve very favorable results in the Pipestone area. We have just finished drilling a 12-well pad that will be completed in early 2024. Drilling costs for this pad were the best achieved in the area in 2023 at $830 per horizontal meter, which is 10% below the 2023 area average. Production results continue to meet or exceed our expectations in a highly repeatable fashion.

The Lower Montney at Pipestone also continues to show significant improvements in productivity on our latest pads. Changes to the completion design have driven a 70% increase in IP90 production from our 2023 vintage Lower Montney wells as compared to our 2022 Lower Montney wells. This reinforces our continued confidence in multi-zone co-development as we continue across the block.

Notes:(1) 33% condensate, 59% natural gas and 8% NGLs.(2) 55% condensate, 40% natural gas and 5% NGLs.(3) 63% condensate, 32% natural gas and 5% NGLs.(4) 67% condensate, 29% natural gas and 4% NGLs.(5) 52% condensate, 44% natural gas and 4% NGLs.

Balance Sheet Strength and Return of Capital to Shareholders

We remain focused on our disciplined and value-adding growth strategy, prioritizing low net debt levels and providing significant shareholder returns. We are committed to returning approximately 75% of free adjusted funds flow (“FAFF”) to shareholders. With net debt already well below our defined soft ceiling level, we regard the remaining 25% of FAFF as going to net debt only temporarily, since this dry powder allows us to take advantage of potential opportunities for tuck-in acquisitions, facility repurchases, or other value-adding items.

At the end of the third quarter, our net debt was $150.2 million, well below our soft ceiling of approximately $350 million, and our net debt to annualized third quarter adjusted funds flow ratio was 0.2x. The net debt ceiling ensures that based on current production levels, our net debt to adjusted funds flow ratio remains comfortably below 1.0x in a stress test price environment of US$45/Bbl WTI oil and US$2.00/MMBtu NYMEX natural gas.

We continue to believe that the best method for return of capital to shareholders is initially to repurchase shares, however we will re-evaluate over the next year as our growth plan proceeds. This evaluation will consider commodity prices, the economic and tax environment, and will include all options including continued disciplined growth of facility capacity, share repurchases, and dividend payments.

Environment, Social and Governance (“ESG”) Update

In September 2023, we proudly published our 2022 ESG Report, underscoring our accomplishments in achieving specific targets and advancing ongoing projects to support our commitment to ESG objectives. Notably, in 2022, we exceeded expectations by achieving a 34% reduction in CO2e emission intensity from our 2020 baseline, surpassing our target of a 20% reduction by 2025. Additionally, our methane emission intensity decreased by 86% compared to our 2012 benchmark. As part of our continuous efforts to improve our emissions performance, we are on schedule with the construction of the Wembley Gas Plant cogeneration project, scheduled to commence operations in early 2024. Our dedication to Social and Governance issues is also prominently featured in our 2022 ESG Report, as we have surpassed our donation targets to the communities in which we live and operate and made significant progress in our First Nations initiatives.

The 2022 ESG Report is available and can be accessed on our Company’s website (see www.nuvistaenergy.com).

2023 Guidance Update

We continue to produce with best-day facility capacity of approximately 85,000 Boe/d and well deliverability that exceeds this figure. Facilities in all areas are performing well, however we did incur planned and unplanned midstream and NuVista outages (including for expansion tie-in work) in October, which totaled approximately 1,000 Boe/d reduction to the fourth quarter production average. Guidance for the fourth quarter of 2023 is set at 82,000 – 84,000 Boe/d. Full year guidance is tightened to 76,000 – 77,000 Boe/d from 76,000 – 78,000 Boe/d.

As a result of mild fall weather and free adjusted funds flow well ahead of expectations, we have moved the completion and facilities work on the recently drilled Bilbo 5-well pad from the first quarter of 2024 into the fourth quarter of 2023. This schedule adjustment smooths out crew and equipment schedules for maximum efficiency, and significantly reduces winter frac water heating costs, leading to expected savings of approximately 10% or $2.5 million. Net capital expenditure guidance for 2023 is therefore changed to approximately $475 million from the previous $450 million ceiling.

With low net debt levels and approximately 85% of our planned capital expenditures completed for the year, we have the flexibility in the fourth quarter to focus on the acceleration of return of capital to shareholders. As such, we expect to more than double the progress on our 2023 return of capital, as compared to the third quarter, to over $100 million in the fourth quarter, assuming November 8th strip prices.

2024 Plan Has Been Set

In 2024 we plan to drill, complete, and tie in 7 pads (approximately 40 wells) which is in line with 2023 activity levels, and they will be split evenly between the Pipestone and Wapiti areas. All pads are located immediately adjacent to existing development so we carry a high level of predictability once again, on the outcome of our capital expenditure program. Capital per well is budgeted to be flat versus 2023 levels on a length-adjusted basis. We currently expect our execution performance to continue trending positively, offsetting any mild inflation.

Several facility debottlenecking and expansion projects are continuing through 2024 in the Wapiti area to enhance corporate facility capacity, in stages, to over 95,000 Boe/d by year end. Subsequently, in Pipestone North we will be adding capacity to reach a corporate total of approximately 105,000 Boe/d facility capacity with the startup of the CSV Midstream Albright gas plant prior to the second quarter of 2025.

Our Board of Directors has approved a capital expenditure budget of approximately $500 million for 2024 which, when coupled with the planned facility capacity expansions, leads to 2024 production guidance of 83,000 – 87,000 Boe/d.

We intend to continue our track record of carefully directing free adjusted funds flow towards a prudent balance of 75% return to shareholders and 25% debt reduction in 2024, while investing in production growth until our existing facilities are filled and debottlenecked to maximum efficiency. NuVista has an exceptional business plan that targets production levels reaching a plateau of approximately 100,000 Boe/d in 2025. As we continue to add to our proven inventory of wells, we are in the early planning stages of adding more capacity to facilitate a plateau production level of approximately 110,000 Boe/d, and thereby extend our prudent growth well through 2026+.

NuVista possesses top-quality assets, supported by a management team dedicated to continuous improvement. With a strong balance sheet and ample liquidity, we are prepared to deliver significant value for our shareholders. We will continue to adjust to the environment in order to maximize the value of our asset base and ensure the long-term sustainability of our business. We would like to thank our staff, contractors, and suppliers for their continued dedication and delivery, and we thank our Board of Directors and our shareholders for their continued guidance and support.

Please note that our corporate presentation will be available at www.nuvistaenergy.com on November 8th, 2023. NuVista’s management’s discussion and analysis, condensed consolidated interim financial statements for the three and nine months ended September 30th, 2023 and notes thereto, will be filed on SEDAR+ (www.sedarplus.com) under NuVista Energy Ltd. on November 8th, 2023 and can also be accessed on NuVista’s website.

FINANCIAL AND OPERATING HIGHLIGHTS
	Three months ended September 30						Nine months ended September 30
($ thousands, except otherwise stated)	2023		2022		% Change		2023		2022		% Change
FINANCIAL
Petroleum and natural gas revenues	360,373		445,007		(19	)	1,032,600		1,290,107		(20	)
Cash provided by operating activities	160,194		228,018		(30	)	509,581		618,128		(18	)
Adjusted funds flow (3)	202,010		246,115		(18	)	554,956		635,818		(13	)
Per share, basic (6)	0.94		1.09		(14	)	2.55		2.79		(9	)
Per share, diluted (6)	0.91		1.04		(13	)	2.47		2.67		(7	)
Net earnings	110,323		223,463		(51	)	278,165		471,673		(41	)
Per share, basic	0.51		0.99		(48	)	1.28		2.07		(38	)
Per share, diluted	0.50		0.95		(47	)	1.24		1.98		(37	)
Net capital expenditures (1)	110,036		111,746		(2	)	405,036		346,733		17
Net debt (3)							150,158		261,409		(43	)
OPERATING
Daily Production
Natural gas (MMcf/d)	283.1		244.7		16		264.4		233.0		13
Condensate (Bbls/d)	26,704		22,478		19		23,873		21,742		10
NGLs (Bbls/d)	6,491		5,529		17		6,295		6,245		1
Total (Boe/d)	80,382		68,792		17		74,240		66,816		11
Condensate & NGLs weighting	41	%	41	%			41	%	42	%
Condensate weighting	33	%	33	%			32	%	33	%
Average realized selling prices (5)
Natural gas ($/Mcf)	3.36		8.32		(60	)	4.49		7.33		(39	)
Condensate ($/Bbl)	103.92		111.14		(6	)	100.33		121.71		(18	)
NGLs ($/Bbl) (4)	29.19		55.14		(47	)	31.54		59.25		(47	)
Netbacks ($/Boe)
Petroleum and natural gas revenues	48.73		70.32		(31	)	50.95		70.73		(28	)
Realized gain (loss) on financial derivatives	1.30		(5.63	)	(123	)	0.39		(8.57	)	(105	)
Royalties	(3.64	)	(6.23	)	(42	)	(4.92	)	(7.92	)	(38	)
Transportation expense	(4.91	)	(5.12	)	(4	)	(4.86	)	(5.09	)	(5	)
Operating expense	(11.49	)	(12.23	)	(6	)	(11.69	)	(11.57	)	1
Operating netback (2)	29.99		41.11		(27	)	29.87		37.58		(21	)
Corporate netback (2)	27.30		38.89		(30	)	27.37		34.87		(22	)
SHARE TRADING STATISTICS
High ($/share)	13.55		11.88		14		13.55		14.29		(5	)
Low ($/share)	10.34		8.11		27		9.93		6.94		43
Close ($/share)	13.00		9.81		33		13.00		9.81		33
Common shares outstanding (thousands of shares)							213,209		224,297		(5	)

Notes:

(1) Non-GAAP financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies where similar terminology is used. Reference should be made to the section entitled “Non-GAAP and other financial measures”. (2) Non-GAAP ratio that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies where similar terminology is used. Reference should be made to the section entitled “Non-GAAP and other financial measures”.(3) Capital management measure. Reference should be made to the section entitled “Non-GAAP and other financial measures”.(4) Natural gas liquids (“NGLs”) include butane, propane and ethane revenue and sales volumes, and sulphur revenue. (5) Product prices exclude realized gains/losses on financial derivatives.(6) Supplementary financial measure. Reference should be made to the section entitled “Non-GAAP and other financial measures”.

Advisories Regarding Oil and Gas Information

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Any references in this press release to initial production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter and are not indicative of long-term performance or ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for NuVista.

This press release contains certain oil and gas metrics, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate NuVista's performance; however, such measures are not reliable indicators of NuVista's future performance and future performance may not compare to NuVista's performance in previous periods and therefore such metrics should not be unduly relied upon. Management uses these oil and gas metrics for its own performance measurements and to provide security holders with measures to compare the NuVista's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this presentation, should not be relied upon for investment or other purposes.

Certain information in this press release may constitute "analogous information" as defined in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") including, but not limited to, information relating to production information related to wells that are believed to be on trend with the Corporation's assets. Management of NuVista believes the information is relevant as it may help to define the reservoir characteristics and production profile of lands in which NuVista may hold an interest. NuVista is unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor and is unable to confirm that the analogous information was prepared in accordance with NI 51‐101 or the COGE Handbook. Such information is not an estimate of the production, reserves or resources attributable to lands held or to be held by NuVista and there is no certainty that the production, reserves or resources data and economic information for the lands held or to be held by NuVista will be similar to the information presented herein. The reader is cautioned that the data relied upon by NuVista may be in error and/or may not be analogous to such lands held or to be held by NuVista.

Basis of presentation

Unless otherwise noted, the financial data presented in this press release has been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) also known as International Financial Reporting Standards (“IFRS”). The reporting and measurement currency is the Canadian dollar. NI 51-101 - "Standards of Disclosure for Oil and Gas Activities" includes condensate within the product type of natural gas liquids. NuVista has disclosed condensate values separate from natural gas liquids herein as NuVista believes it provides a more accurate description of NuVista's operations and results therefrom.

Production split for Boe/d amounts referenced in the press release are as follows:

Reference	Total Boe/d	Natural Gas%		Condensate%		NGLs%
Q3 2023 actual production	80,382	59	%	33	%	8	%
Q3 2023 production guidance(1)	80,000 – 82,000	61	%	30	%	9	%
Q4 2023 production guidance	82,000 – 84,000	61	%	30	%	9	%
2023 annual production guidance (revised)	76,000 – 77,000	61	%	30	%	9	%
2023 annual production guidance (original)	76,000 – 78,000	61	%	30	%	9	%
2024 annual production guidance	83,000 – 87,000	61	%	30	%	9	%

Advisory regarding forward-looking information and statements

This press release contains forward-looking statements and forward-looking information (collectively, “forward-looking statements”) within the meaning of applicable securities laws. The use of any of the words “will”, “expects”, “believe”, “plans”, “potential” and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this press release contains forward looking statements, including management's assessment of: NuVista’s future focus, strategy, plans, opportunities and operations; NuVista’s commitment to returning capital to shareholders through its value-adding growth strategy; the existence of new opportunities in our resource base; the expected onstream timing of 2024 infrastructure expansion projects and the impact to our total production capacity; the anticipated number of pads to be brought on production by the end of 2023; the recent development activity in Gold Creek supports our development plans and economics; the expected timing of the infrastructure expansion project in Gold Creek and anticipated benefits therefrom; that results from a result infill well in Bilbo are supportive of future infill opportunities; the anticipated timing of completion of the 12-well pad in the Pipestone area; our expectations around multi-zone co-development and results thereof; the construction of the Wembley Gas Plant cogeneration project and anticipated timing thereof; NuVista’s ability to meet its target of returning approximately 75% of free adjusted funds flow to shareholders, with the remaining portion of free adjusted funds flow to be allocated to reducing net debt; the anticipated capacity expansion in Pipestone North and benefits therefrom; expectations that allocated free adjusted funds flow will allow for NuVista to take advantage of opportunities to repurchase facilities and/or complete tuck-in acquisitions and the anticipated outcomes thereof; NuVista’s belief that the current best method for returning capital to shareholders is initially to repurchase shares and the anticipated benefits therefrom; NuVista’s progress on ESG targets and advancement of ongoing initiatives; that NuVista’s assets are top-tier with highly favorable economics; that well execution economics remain very strong due to their high condensate weighting; NuVista’s Q4 2023 production guidance; updated guidance with respect to 2023 capital expenditures amounts, spending timing and allocation; revised guidance with respect to 2023 production and production mix; that NuVista will be able to accelerate return of capital to shareholders in the Q4 2023; 2024 drilling activity, allocation and the results thereof; our expectations regarding cost execution in 2024 and inflationary impacts; planned facility startups in 2024 and anticipated corporate production reaching 105,000 Boe/d; our 2024 capital expenditures and production guidance; that NuVista will continue to allocate free adjusted funds flow towards a balance of return to shareholders and debt reduction, while investing in production growth to fill and debottleneck existing facilities; that NuVista’s business plan has the ability to reach production levels of 100,000 Boe/d by 2025 and the anticipated timing thereof; the future capacity of NuVista’s facilities; that NuVista’s business plan and asset base will ensure its long-term sustainability; and the effect of our financial, commodity, and natural gas risk management strategy and market diversification. Statements relating to "reserves" are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.

By their nature, forward-looking statements are based upon certain assumptions and are subject to numerous risks and uncertainties, some of which are beyond NuVista’s control, including the impact of general economic conditions, industry conditions, current and future commodity prices and inflation rates, the impact of ongoing global events including European tensions, with respect to commodity prices, currency and interest rates, anticipated production rates, borrowing, operating and other costs and adjusted funds flow, allocation and amount of capital expenditures and the results therefrom, anticipated reserves and the imprecision of reserve estimates, the performance of existing wells, the success obtained in drilling new wells, the sufficiency of budgeted capital expenditures in carrying out planned activities, access to infrastructure and markets, competition from other industry participants, availability of qualified personnel or services and drilling and related equipment, stock market volatility, effects of regulation by governmental agencies including changes in environmental regulations, tax laws and royalties, the ability to access sufficient capital from internal sources and bank and equity markets, that we will be able to execute our drilling plans and infrastructure expansion plans as expected, our ability to carry-out our 2023 production and capital guidance as expected and including, without limitation, those risks considered under “Risk Factors” in our Annual Information Form. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. NuVista’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, or if any of them do so, what benefits NuVista will derive therefrom. NuVista has included the forward-looking statements in this press release in order to provide readers with a more complete perspective on NuVista’s future operations and such information may not be appropriate for other purposes. NuVista disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

NuVista's 2024 guidance is based on various commodity price scenarios and economic conditions; certain guidance estimates may fluctuate with commodity price changes and regulatory changes. NuVista's guidance provides readers with the information relevant to management's expectation for financial and operational results for 2024. Readers are cautioned that the guidance estimates may not be appropriate for any other purpose.

This press release also contains future-oriented financial information and financial outlook information (collectively, "FOFI") about NuVista's prospective results of operations including, without limitation, expectations with respect to net debt, free adjusted funds flows, capital expenditures and corporate netbacks and production which are based on various factors and assumptions that are subject to change including regarding production levels, commodity prices, operating and other costs and capital expenditure levels, and in the case of 2025 and beyond, such estimates are provided for illustration purposes only and are based on budgets and plans that have not been finalized and are subject to a variety of contingencies including prior years' results. These statements are also subject to the same assumptions, risk factors, limitations, and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. NuVista's actual results, performance or achievement could differ materially from those expressed in, or implied by, these FOFI, or if any of them do so, what benefits NuVista will derive therefrom. NuVista has included the FOFI in order to provide readers with a more complete perspective on NuVista's future operations and such information may not be appropriate for other purposes.

These forward-looking statements and FOFI are made as of the date of this press release and NuVista disclaims any intent or obligation to update any forward-looking statements and FOFI, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities law.

Non-GAAP and other financial measures

This press release uses various specified financial measures (as such terms are defined in National Instrument 52-112 – Non-GAAP Disclosure and Other Financial Measures Disclosure ("NI 51-112")) including "non-GAAP financial measures", "non-GAAP ratios”, “capital management measures" and “supplementary financial measures” (as such terms are defined in NI 51-112), which are described in further detail below. Management believes that the presentation of these non-GAAP measures provide useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis.

Non-GAAP financial measures

NI 52-112 defines a non-GAAP financial measure as a financial measure that: (i) depicts the historical or expected future financial performance, financial position or cash flow of an entity; (ii) with respect to its composition, excludes an amount that is included in, or includes an amount that is excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the entity; (iii) is not disclosed in the financial statements of the entity; and (iv) is not a ratio, fraction, percentage or similar representation.

These non-GAAP financial measures are not standardized financial measures under IFRS and might not be comparable to similar measures presented by other companies where similar terminology is used. Investors are cautioned that these measures should not be construed as alternatives to or more meaningful than the most directly comparable IFRS measures as indicators of NuVista's performance. Set forth below are descriptions of the non-GAAP financial measures used in this press release.

Capital expenditures

Capital expenditures are equal to cash used in investing activities, excluding changes in non-cash working capital, other asset expenditures and proceeds on property dispositions. NuVista considers capital expenditures to be a useful measure of cash flow used for capital reinvestment.

The following table provides a reconciliation between the non-GAAP measure of capital expenditures to the most directly comparable GAAP measure of cash used in investing activities for the period:

	Three months ended September 30				Nine months ended September 30
($ thousands)	2023		2022		2023		2022
Cash used in investing activities	(120,713	)	(128,727	)	(398,940	)	(362,781	)
Changes in non-cash working capital	10,677		16,981		(15,596	)	16,048
Other asset expenditures	—		—		9,500		—
Proceeds on property disposition	—		—		(26,000	)	—
Capital expenditures	(110,036	)	(111,746	)	(431,036	)	(346,733	)

Net capital expenditures

Net capital expenditures are equal to cash used in investing activities, excluding changes in non-cash working capital, and other asset expenditures. The Company includes funds used for property acquisition or proceeds from property dispositions within net capital expenditures as these transactions are part of its development plans. NuVista considers net capital expenditures to be a useful measure of cash flow used for capital reinvestment.

The following table provides a reconciliation between the non-GAAP measure of net capital expenditures to the most directly comparable GAAP measure of cash used in investing activities for the period:

	Three months ended September 30				Nine months ended September 30
($ thousands)	2023		2022		2023		2022
Cash used in investing activities	(120,713	)	(128,727	)	(398,940	)	(362,781	)
Changes in non-cash working capital	10,677		16,981		(15,596	)	16,048
Other asset expenditures	—		—		9,500		—
Net capital expenditures	(110,036	)	(111,746	)	(405,036	)	(346,733	)

Free adjusted funds flow

Free adjusted funds flow is adjusted funds flow less net capital expenditures and asset retirement expenditures. Each of the components of free adjusted funds flow are non-GAAP financial measures. Please refer to disclosures under the headings "Capital management measures" and "Capital expenditures" for a description of each component of free adjusted funds flow. Management uses free adjusted funds flow as a measure of the efficiency and liquidity of its business, measuring its funds available for additional capital allocation to manage debt levels, pay dividends, and return capital to shareholders. By removing the impact of current period net capital and asset retirement expenditures, management believes this measure provides an indication of the funds the Company has available for future capital allocation decisions.

The following table sets out our free adjusted funds flow compared to the most directly comparable GAAP measure of cash provided by operating activities less cash used in investing activities for the period:

	Three months ended September 30				Nine months ended September 30
($ thousands)	2023		2022		2023		2022
Cash provided by operating activities	160,194		228,018		509,581		618,128
Cash used in investing activities	(120,713	)	(128,727	)	(398,940	)	(362,781	)
Excess cash provided by operating activities over cash used in investing activities	39,481		99,291		110,641		255,347
Adjusted funds flow	202,010		246,115		554,956		635,818
Net capital expenditures	(110,036	)	(111,746	)	(405,036	)	(346,733	)
Asset retirement expenditures	(773	)	(1,327	)	(9,987	)	(8,079	)
Free adjusted funds flow	91,201		133,042		139,933		281,006

Non-GAAP ratios

NI 52-112 defines a non-GAAP ratio as a financial measure that: (i) is in the form of a ratio, fraction, percentage or similar representation; (ii) has a non-GAAP financial measure as one or more of its components; and (iii) is not disclosed in the financial statements of the entity. Set forth below is a description of the non-GAAP ratios used in this press release.

These non-GAAP ratios are not standardized financial measures under IFRS and might not be comparable to similar measures presented by other companies where similar terminology is used. Investors are cautioned that these ratios should not be construed as alternatives to or more meaningful than the most directly comparable IFRS measures as indicators of NuVista's performance.

Non-GAAP ratios presented on a "per Boe" basis may also be considered to be supplementary financial measures (as such term is defined in NI 51-112).

Operating netback and corporate netback ("netbacks"), per Boe

NuVista calculated netbacks per Boe by dividing the netbacks by total production volumes sold in the period. Each of operating netback and corporate netback are non-GAAP financial measures. Operating netback is calculated as petroleum and natural gas revenues including realized financial derivative gains/losses, less royalties, transportation expense and operating expense. Corporate netback is operating netback less general and administrative expense, cash share-based compensation expense, financing costs excluding accretion expense, and current tax expense.

Management believes both operating and corporate netbacks are key industry benchmarks and measures of operating performance for NuVista that assists management and investors in assessing NuVista's profitability, and are commonly used by other petroleum and natural gas producers. The measurement on a Boe basis assists management and investors with evaluating NuVista's operating performance on a comparable basis.

Capital management measures

NI 52-112 defines a capital management measure as a financial measure that: (i) is intended to enable an individual to evaluate an entity’s objectives, policies and processes for managing the entity’s capital; (ii) is not a component of a line item disclosed in the primary financial statements of the entity; (iii) is disclosed in the notes to the financial statements of the entity; and (iv) is not disclosed in the primary financial statements of the entity.

Please refer to Note 14 "Capital Management" in NuVista's condensed consolidated interim financial statements for additional disclosure on net debt, adjusted funds flow, and net debt to annualized current quarter adjusted funds flow ratio, each of which are capital management measures used by the Company in this press release.

NuVista calculated net debt to annualized third quarter adjusted funds flow ratio by dividing net debt by the annualized adjusted funds flow for the third quarter.

Supplementary financial measure

This press release may contain certain supplementary financial measures. NI 52-112 defines a supplementary financial measure as a financial measure that: (i) is intended to be disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of an entity; (ii) is not disclosed in the financial statements of the entity; (iii) is not a non-GAAP financial measure; and (iv) is not a non-GAAP ratio.

NuVista calculates “adjusted funds flow per share” by dividing adjusted funds flow for a period by the number of weighted average common shares of NuVista for the specified period.

FOR FURTHER INFORMATION CONTACT:

Jonathan A. Wright	Ivan J. Condic	Mike J. Lawford
President and CEO	VP, Finance and CFO	Chief Operating Officer
(403) 538-8501	(403) 538-1945	(403) 538-1936