Crew Energy Inc. (TSX: CR; OTCQB: CWEGF) ("Crew" or the "Company")
is a growth-oriented natural gas weighted producer operating
exclusively in the world-class Montney play in northeast British
Columbia. The Company is pleased to announce that we have
established a new record production rate in Q1 2022, and strong
condensate rates from our latest completion program, setting the
stage to deliver greater than 20% production per share growth and
an enhanced financial position.
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RECORD Q1/22 PRODUCTION
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Q1/22 estimated average production totaled 33,300 boe per
day1 (200 mmcfe), based on field
estimates, a Company record representing a 27%
increase over Q1/21 average production of 26,257 boe per
day1 (157 mmcfe) and a 14% increase sequentially
over Q4/21 average production of 29,142 boe per day1 (175
mmcfe).
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Based on field estimates, Q1/22 natural gas production increased
33% to 159 mmcf per day, condensate production
increased 45% to 3,900 bbls per day, natural gas
liquids2 (“NGLs”) increased 19% to 2,800 bbls per
day and crude oil production decreased by 25% to
115 bbls per day, compared to Q1/21.
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With a strong start to 2022, full year average production is
anticipated to be in-line with previously announced guidance of
31,000 to 33,000 boe per day1, which at the
midpoint, represents a 21% increase over 2021.
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At these production levels, Crew’s unit costs will continue to
decline, expanding margins and generating higher Adjusted Funds
Flow (“AFF”).
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STRONG CONDENSATE-RICH WELLS AT GREATER SEPTIMUS
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Eight (8.0 net) extended reach horizontal ultra-condensate rich
wells on the 4-14 pad were brought on stream in late Q4/21 and
Q1/22, and have been flowing for periods of between 11 to 66 days
before being shut-in for tie-in to permanent facilities. Last full
day single well production rates from the eight wells averaged a
cumulative total of 11,285 boe per day, comprised
of 30,523 mcf per day of natural gas,
5,717 bbls per day of condensate and 480
bbls per day of NGLs2.
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At Crew’s 4-21 pad, two (2.0 net) Upper Montney “B” zone wells have
now produced for 90 days (“IP90”) with average per well sales rates
of 1,486 boe per day, comprised of 6,070
mcf per day of natural gas, 307 bbls per
day of condensate and 167 bbls per day of
NGLs2.
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In Q1/22, Crew drilled five (5.0 net) additional wells that will
evaluate two additional zones on the Groundbirch 4-17 pad,
following the success of our first three wells in the area that
were drilled and completed in 2021. The initial three (3.0 net)
Groundbirch wells are exceeding our Proved plus Probable area type
curve forecasts, as reflected in Crew’s year-end 2021 independent
reserves evaluation, with an average per well raw gas production
rate after 150 days (“IP150”) of 8,976 mcf per
day.
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CAPITAL EXPENDITURES ON TRACK
-
Net capital expenditures3 in Q1/22 are expected to be approximately
$56 million, while full year net capital
expenditure3 guidance remains at $80 to $95
million with five Groundbirch wells currently planned to
be completed and tied-in the last half of the year. Crew’s focus in
2022 is to generate meaningful Free Adjusted Funds Flow (“FAFF”) to
reduce debt and enhance corporate sustainability.
Our team is excited with the progress made on
the Company’s Two-Year Plan. In 2022, we expect to improve leverage
metrics by reducing debt and increasing AFF, driving enhanced
financial flexibility. AFF is expected to be enhanced through
increasing production and significantly reducing per unit costs
from 2020 to 2022. Underpinning these efforts is Crew’s unwavering
focus on meeting or exceeding our ESG goals and remaining a safe
and responsible operator and a good corporate citizen. We look
forward to reporting our Q1/22 financial results on May 5th,
2022.
Footnote References
1) See table in the Advisories for production
breakdown by product type as detailed in NI
51-101.2) Excludes condensate volumes which have been
reported separately.3) Non-IFRS financial measure that does
not have any standardized meaning as prescribed by International
Financial Reporting Standards, and therefore, may not be comparable
with calculations of similar measures or ratios for other entities.
See “Advisories – Non-IFRS and Other Financial Measures” contained
within this press release.
ADVISORIES
Forward-Looking Information and
Statements
This news release contains certain
forward–looking information and statements within the meaning of
applicable securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "may", "will", "project",
"should", "believe", "plans", "intends" “forecast” and similar
expressions are intended to identify forward-looking information or
statements. In particular, but without limiting the foregoing, this
news release contains forward-looking information and statements
pertaining to the following: the ability to continue to execute on
its two-year development plan and underlying strategy, targets and
guidance as described herein; as to our plan to optimize and
increase production and infrastructure utilization, reduce unit
costs, improve leverage metrics and generate increasing Adjusted
Funds Flow and meaningful Free Adjusted Funds Flow; our 2022 annual
capital budget range including forecast net capital expenditures,
associated drilling and completion plans and all associated near
term initiatives and targets; production estimates including
forecast production per share growth, 2022 annual averages and Q1
2022 production estimates; future liquidity and financial capacity;
world supply and demand projections and long-term impact on
pricing; future development, exploration, acquisition and
disposition activities (including drilling and completion plans,
anticipated on-stream dates and associated development timing and
cost estimates); the successful implementation of our ESG
initiatives; and anticipated improvement in our long-term debt and
sustainability and the expected positive attributes discussed
herein attributable to our two-year development plan.
The internal projections, expectations, or
beliefs underlying our Board approved 2022 capital budget and
associated guidance are subject to change in light of the impact of
the COVID-19 pandemic and the Russia/Ukraine conflict, and any
related actions taken by businesses and governments, ongoing
results, prevailing economic circumstances, commodity prices, and
industry conditions and regulations. Crew's financial outlook and
guidance provides shareholders with relevant information on
management's expectations for results of operations, excluding any
potential acquisitions or dispositions, for such time periods based
upon the key assumptions outlined herein. Such information reflects
internal targets used by management for the purposes of making
capital investment decisions and for internal long-range planning
and budget preparation. Readers are cautioned that events or
circumstances could cause capital plans and associated results to
differ materially from those predicted and Crew's guidance for 2022
and may not be appropriate for other purposes. Accordingly, undue
reliance should not be placed on same.
In addition, forward-looking statements or
information are based on a number of material factors, expectations
or assumptions of Crew which have been used to develop such
statements and information but which may prove to be incorrect.
Although Crew believes that the expectations reflected in such
forward-looking statements or information are reasonable, undue
reliance should not be placed on forward-looking statements because
Crew can give no assurance that such expectations will prove to be
correct. In addition to other factors and assumptions which may be
identified herein, assumptions have been made regarding, among
other things: that Crew will continue to conduct its operations in
a manner consistent with past operations; results from drilling and
development activities consistent with past operations; the quality
of the reservoirs in which Crew operates and continued performance
from existing wells; the continued and timely development of
infrastructure in areas of new production; the accuracy of the
estimates of Crew’s reserve volumes; certain commodity price and
other cost assumptions; continued availability of debt and equity
financing and cash flow to fund Crew’s current and future plans and
expenditures; the impact of increasing competition; the general
stability of the economic and political environment in which Crew
operates; that future business, regulatory and industry conditions
will be within the parameters expected by Crew; the general
continuance of current industry conditions; the timely receipt of
any required regulatory approvals; the ability of Crew to obtain
qualified staff, equipment and services in a timely and cost
efficient manner; drilling results; the ability of the operator of
the projects in which Crew has an interest in to operate the field
in a safe, efficient and effective manner; the ability of Crew to
obtain financing on acceptable terms; field production rates and
decline rates; the ability to replace and expand oil and natural
gas reserves through acquisition, development and exploration; the
timing and cost of pipeline, storage and facility construction and
expansion and the ability of Crew to secure adequate product
transportation; future commodity prices; currency, exchange and
interest rates; regulatory framework regarding royalties, taxes,
environmental and indigenous matters in the jurisdictions in which
Crew operates; that regulatory authorities in British Columbia will
resume granting approvals for oil and gas activities on time
frames, and on terms and conditions, consistent with past
practices; and the ability of Crew to successfully market its oil
and natural gas products.
The forward-looking information and statements
included in this news release are not guarantees of future
performance and should not be unduly relied upon. Such information
and statements, including the assumptions made in respect thereof,
involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to defer materially from
those anticipated in such forward-looking information or statements
including, without limitation: the continuing and uncertain impact
of COVID-19; changes in commodity prices; changes in the demand for
or supply of Crew's products, the early stage of development of
some of the evaluated areas and zones the potential for variation
in the quality of the Montney formation; interruptions,
unanticipated operating results or production declines; changes in
tax or environmental laws, royalty rates; climate change
regulations, or other regulatory matters; changes in development
plans of Crew or by third party operators of Crew's properties,
increased debt levels or debt service requirements; inaccurate
estimation of Crew's oil and gas reserve volumes; limited,
unfavourable or a lack of access to capital markets; increased
costs; a lack of adequate insurance coverage; the impact of
competitors; and certain other risks detailed from time-to-time in
Crew's public disclosure documents (including, without limitation,
those risks identified in this news release and Crew's Annual
Information Form).
The forward-looking information and statements
contained in this news release speak only as of the date of this
news release, and Crew does not assume any obligation to publicly
update or revise any of the included forward-looking statements or
information, whether as a result of new information, future events
or otherwise, except as may be required by applicable securities
laws.
Information Regarding Disclosure on Oil
and Gas Operational Information
This press release contains metrics commonly
used in the oil and natural gas industry. Each of these metrics are
determined by Crew as specifically set forth in this news release.
These terms do not have standardized meanings or standardized
methods of calculation and therefore may not be comparable to
similar measures presented by other companies, and therefore should
not be used to make such comparisons. Such metrics have been
included to provide readers with additional information to evaluate
the Company’s performance however, such metrics are not reliable
indicators of future performance and therefore should not be unduly
relied upon for investment or other purposes. See "Non-IFRS and
Other Financial Measures" below for additional disclosures.
BOE Conversions
Barrel of oil equivalents or 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. Given that the value
ratio based on the current price of crude oil as compared to
natural gas is significantly different than the energy equivalency
of 6:1, utilizing the 6:1 conversion ratio may be misleading as an
indication of value.
Non-IFRS and Other Financial
Measures
Throughout this press release and other
materials disclosed by the Company, Crew uses certain measures to
analyze financial performance, financial position and cash flow.
These non-IFRS and other financial measures do not have any
standardized meaning prescribed under IFRS and therefore may not be
comparable to similar measures presented by other entities. The
non-IFRS and other financial measures should not be considered
alternatives to, or more meaningful than, financial measures that
are determined in accordance with IFRS as indicators of Crew’s
performance. Management believes that the presentation of these
non-IFRS and other financial measures provides useful information
to shareholders and investors in understanding and evaluating the
Company’s ongoing operating performance, and the measures provide
increased transparency and the ability to better analyze Crew’s
business performance against prior periods on a comparable
basis.
Included in this Press Release are references to
"net capital expenditures", "Adjusted Funds Flow (AFF)" and "Free
AFF" which are Non-Gaap financial measures or capital management
measures, as the case may be, as defined in National Instrument
52-112. Certain additional disclosures for these financial measures
including composition and usefulness have been incorporated by
reference herein and can be found in the "Advisories-Non-IFRS and
Other Financial Measures" section (pages 25-28) of the Company's
MD&A for the year ended December 31, 2021, available on SEDAR
at www.sedar.com and on the Company's website under the Investors
section.
Supplemental Information Regarding
Product Types
References to gas or natural gas and NGLs in
this press release refer to conventional natural gas and natural
gas liquids product types, respectively, as defined in National
Instrument 51-101, Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"), except where specifically noted
otherwise.
The following is intended to provide the product
type composition for each of the production figures provided
herein, where not already disclosed within tables above:
|
Crude Oil |
Natural Gas Liquids2 |
Condensate |
ConventionalNatural Gas |
Total(boe/d) |
Q1 2021 Average |
1,210 bbls/d |
2,401 bbls/d |
2,708 bbls/d |
119,635 mcf/d |
26,258 |
Q4 2021
Average |
157 bbls/d |
2,454 bbls/d |
2,592 bbls/d |
143,379 mcf/d |
29,142 |
Q1 2022 Est.
Average |
115 bbls/d |
2,850 bbls/d |
3,900 bbls/d |
159,000 mcf/d |
33,300 |
2022 Annual Est. Average1 |
0% |
8% |
10% |
82% |
31,000-33,000 |
Notes:1) With respect to forward looking
production guidance, given the potential for variability in actual
product type results, the issuer approximates percentages for
budget planning purposes based on management's reasonable
assumptions including, without limitation, historical well
results.2) Excludes condensate volumes which have been
reported separately.
Test Results and Initial Production
Rates
A pressure transient analysis or well-test
interpretation has not been carried out and thus certain of the
test results provided herein should be considered to be preliminary
until such analysis or interpretation has been completed. Test
results and initial production rates disclosed herein, particularly
those short in duration, may not necessarily be indicative of
long-term performance or of ultimate recovery.
Crew is a growth-oriented oil and natural gas
producer, committed to pursuing sustainable per share growth
through a balanced mix of financially and socially responsible
exploration and development complemented by strategic acquisitions.
The Company’s operations are primarily focused in the vast Montney
resource, situated in northeast British Columbia, and include a
large contiguous land base. Greater Septimus along with Groundbirch
and the light oil area at Tower in British Columbia offer
significant development potential over the long-term. The Company
has access to diversified markets with operated infrastructure and
access to multiple pipeline egress options. Crew’s common shares
are listed for trading on the Toronto Stock Exchange (“TSX”) under
the symbol “CR”.
FOR DETAILED INFORMATION, PLEASE
CONTACT:
Dale Shwed, President and CEO |
Phone: (403) 266-2088 |
John Leach, Executive Vice President and CFO |
Email: investor@crewenergy,com |
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