Company Overview

In 2010, NuVista’s focus was on evaluating a number of plays, primarily in its Deep Basin Core Region, to identify those plays with the most future potential for material and repeatable drilling programs and with high value and large potential well inventories. In 2011, NuVista focused on advancing three of these plays with repeatable drilling potential W3/W4 heavy oil; W5 Spirit River/Notikewin liquids-rich natural gas; and by far the largest, the W6 Wapiti Montney liquids-rich natural gas play. This decision, coupled with strong drilling and completions execution performance, has lead to a step forward in play advancement and a strong increase of the valuable liquids ratio in our portfolio.

For 2012, we will continue developing our W3/W4 heavy oil plays. We have moved from the pilot to early development phases on our liquids-rich W5 Spirit River/Notikewin and W6 Wapiti Montney plays and the pace of the next steps taken will be commensurate with the commodity price environment. Our W6 Wapiti Montney play has the potential for well over 400 wells and over $3 billion of profitable capital investment. Through the disciplined development and advancement of these plays, we will deliver maximum shareholder value.

Evolution of our Business Strategy

From the creation of NuVista in July 2003 to the end of 2009, we employed an acquire and develop business model. During this period, capital expenditures amounted to approximately $1.8 billion, two-thirds of which was spent on acquisitions. This approach was successful in growing NuVista from a junior to an intermediate exploration and development company with enviable assets: high working interests, low-cost production, and a large, prospective land base.

NuVista’s first priority in 2011 was reducing its debt levels and this occurred in the first quarter with a $99.8 million equity offering and the disposition of $37.2 million of Pembina Cardium assets. NuVista ended 2011 with net debt of $307 million and a trailing 12 month debt to funds from operations of 1.9x, compared to $443 million and 2.6x at the end of 2010, a significant improvement. Following this, NuVista targeted 2011 capital spending to approximately equal funds from operations. With funds from operations reduced due to lower natural gas prices, NuVista prudently managed capital and maintained production volumes at second quarter levels for the remainder of the year. The focus of NuVista’s 2011 capital program was on drilling higher economic return oil and liquids-rich natural gas wells and advancing its three key plays. NuVista significantly increased average oil and liquids production in 2011 as a percentage of total production to 32 percent compared to 27 percent in 2010.

2011 in Review

At NuVista’s W5 Spirit River/Notikewin liquids-rich natural gas play, NuVista drilled four (3.5 net) successful wells in 2011 at Alder Flats. All wells have been placed on production at very strong rates and liquids yields average 20 - 40 Bbls/MMcf. The presence of these liquids is significant because of the substantial economic uplift it provides. In early 2012, NuVista expanded its proven geographic footprint in the W5 Spirit River/Notikewin play, with a successful horizontal multi-fracture test well in our Ferrier area. NuVista has accumulated significant land and access to infrastructure in the area which can provide for significant volume growth in the future. Overall, NuVista’s momentum and positive results continue in W5 with exceptional strength. Ongoing success continues to build confidence in our inventory of up to 75 additional horizontal wells, representing strongly economic and repeatable future investment opportunity of over $350 million.

At NuVista’s W6 Wapiti Montney play, we began a $70 million 12-month capital pilot program in July 2011 to de-risk and advance this play through to early development with five key wells. With successful tests now in both our South and North Blocks of Wapiti Montney land, we have moved a huge milestone forward in stepping out and validating the high quality of both blocks of these lands. The drilling of NuVista’s fourth well had pacesetter results for the entire Wapiti Montney trend with a 23 percent reduction in drilling time compared to the trend average. This is a strong early demonstration of the cost efficiencies possible as NuVista moves towards full development on this repeatable play. NuVista is also in the process of completing the construction of a compression and dehydration facility with an industry partner, to reduce transportation and processing costs and provide the first stage of expandable infrastructure required for the development of this play.

The test rates from the Wapiti Montney wells that NuVista and industry have completed, and the high liquids content of those wells reinforces our confidence in this play. Production from this play is expected to have a liquids yield of approximately 50 Bbls/MMcf of high value natural gas liquids when processed through existing shallow cut facilities, and a yield of approximately 100 Bbls/MMcf.

2011 Priorities

We are focused on building a strategic, sustainable corporate business model with long-term growth opportunities. Our 2012 priorities are directed at achieving our corporate performance targets both operationally and financially, advancing our three key plays, continuing to divest of non-core assets, carefully limiting capital to maintain balance sheet strength and flexibility, and continuing to ensure a high level of employee engagement and accountability.

We continue to feel the effects of low natural gas prices. North America is currently oversupplied with natural gas due to a warm 2011/2012 winter and strong shale gas production growth in the United States in 2010 and 2011. Globally, natural gas prices remain strong as natural gas increasingly becomes a preferred source of energy. NuVista believes that the North American supply demand imbalance will be corrected on the back of the ongoing decline in dry natural gas drilling activity and the growth of new markets for natural gas, although it is difficult to predict the exact timing of this correction. The liquids focus in our plays has never been more important and will continue to be so as gas prices rebound.

NuVista’s operating and financial guidance for the first half of 2012 provides for a capital budget of between $70 million and $80 million and average production within the range of 24,500 Boe/d to 25,500 Boe/d. Funds from operations for the first half of 2012 were originally forecast at between $45 million and $50 million based on a forecast AECO natural gas price of $2.40/Mcf and WTI oil price of US$103/Bbl. The capital budget is planned to modestly exceed funds from operations in the first half of 2012 due to the busy winter drilling season however, as mentioned earlier, proceeds of asset dispositions are expected to make up any cash flow shortfall with $14 million already achieved to date.

July 2012