Crew Energy Inc. (TSX:CR) of Calgary, Alberta ("Crew" or the "Company") is
pleased to provide an operational update and announce the results of its
independent reserve evaluation for the year ended December 31, 2008 as evaluated
by GLJ Petroleum Consultants Ltd. ("GLJ") and the findings of its independent
supplemental evaluation of Crew's Montney lands in the Septimus area of
northeast British Columbia.
2008 Highlights
- Crew's production during the fourth quarter of 2008 averaged 14,869 boe per
day, a 54% increase over the fourth quarter of 2007 and a 29% increase over the
third quarter of 2008. Production for 2008 averaged 11,617 boe per day, a 34%
increase over 2007.
- Production per diluted share increased 14% in the fourth quarter of 2008
compared to the fourth quarter of 2007.
- The Company's proved plus probable reserves as at December 31, 2008 increased
76% to 59.1 MMboe including 35.9 MMboe of proved reserves.
- December 31, 2008 proved plus probable reserves per diluted share increased
33% over 2007.
- Reserve replacement was 411% on proved reserves and 703% on proved plus
probable reserves.
- Achieved finding and development costs of $15.64 per boe and all in finding,
development and acquisition costs of $21.24 per boe on a proved plus probable
basis.
- 2008 expenditures included $87.9 million spent on land acquisition, the
majority of which was on the acquisition of undeveloped lands on the Company's
prospective northeast B.C. Montney natural gas play.
- Crew's proved plus probable reserve life index (RLI), based on fourth quarter
average production, increased by 15% to 10.9 years from 9.5 years at December
31, 2007.
- At December 31, 2008 Crew held mineral interests in 1.7 million acres of land
including 627,000 net acres of undeveloped land with an internally estimated
value of $227 million.
- The net present value of Crew's estimated future net revenue before income
taxes from proved plus probable reserves, discounted at 10%, was $1.04 billion,
an increase of 80% over the previous year.
- Crew's net asset value increased to $14.22 per diluted share based on
estimated future net revenues discounted at 10%.
- Crew engaged GLJ to prepare an independent evaluation of the Discovered
Petroleum Initially in Place ("DPIP") on 50 net sections of Crew's Montney lands
in the Septimus area of northeast British Columbia. The report has identified a
current best estimate of a net 2.4 TCF of DPIP in the upper Montney on the
Company's lands of which 0.08 Tcf of proved plus probable reserves have been
recognized in the December 31, 2008 GLJ Report.
Operations Update
As a result of the current economic environment and continued weakening of
commodity prices, Crew has curtailed activity levels to match capital
expenditures with expected cash flow. The Company has high graded its drilling
program in order to optimize economic returns in the current price environment.
In addition to well optimization programs in all areas of operation, the
majority of the 2009 capital program will be directed to operating cost
reductions at Princess and facility construction, minor land acquisitions and
drilling at Septimus, British Columbia. Crew has had very positive developments
on its two resource plays.
Montney Play, Northeast British Columbia
Crew controls 184 net sections on the Montney play in northeast British
Columbia. The Company has now drilled or re-completed 12 wells targeting the
Montney. Crew continues to concentrate its drilling efforts in the Septimus area
experiencing exceptional results with wells testing at rates as high as 15 mmcf
per day. Crew is currently producing at a restricted rate of seven mmcf per day
from the Montney at Septimus and has an estimated seven to eight mmcf per day of
additional production capacity. The drilling program at Septimus has resulted in
finding and development costs, including land expenditures on the developed
lands and future development capital, of $9.56 per boe. Equipment has been
ordered and applications have been submitted for approval to the British
Columbia regulatory authorities for construction of a 25 mmcf per day
(previously estimated at 20 mmcf per day) natural gas processing facility
planned for after spring breakup. Commissioning of this facility is currently
planned for late in the third quarter. The gas plant has been designed to be
expanded to 50 mmcf per day. Current plans are to drill four to seven wells
targeting the Montney in 2009 and evaluate the gas plant expansion in late 2009.
Pekisko Play, Princess Alberta
The drilling program at Princess has been another positive development for Crew
with production from the property increasing from 2,400 boe per day in August to
its current rate of over 3,500 boe per day. The prospect inventory continues to
expand and horizontal well production rates have exceeded Company expectations.
Crew owns and controls over 440 net sections of land on this play providing the
Company with a multi year drilling inventory. In 2009 Crew has been pipeline
connecting and equipping wells drilled in 2008 resulting in a steady increase in
production. The focus in this area will be on production optimization and the
reduction of operating costs. Significant progress has been made on both of
these initiatives to date.
Hedging Activity
Crew now has over 40% of the Company's current non-royalty natural gas volumes
hedged at an average floor price of $6.13 per gigajoule from April through
October 2009, in order to protect its capital program and balance sheet through
the current economic downturn. These hedges include a 5,000 gigajoule per day
collar with a floor of $6.50 per gigajoule and a ceiling of $8.40 per gigajoule
for calendar 2009. Crew has also acquired natural gas puts on 15,000 gigajoules
per day at $6.00 per gigajoule for the period April 1, 2009 through October 31,
2009. These puts were paid for with the sale of natural gas calls on 15,000
gigajoules per day at an average price of $7.83 per gigajoule for the period
January 1, 2010 through December 31, 2010.
Currently all of Crew's production is sold in Canadian markets and denominated
in Canadian dollars. Canadian commodities trade independently of US commodities;
however, prices in Canada are closely correlated with prices in the US and are
impacted by fluctuations in the exchange rate between the Canadian and US
dollar. When the Canadian dollar strengthens in relation to the US dollar we
generally experience a decrease in Canadian commodity prices in comparison to US
commodity prices. As a result, Crew has entered into contracts that fix the
exchange rate on US $4 million per month at 1.2400 for the period February 2009
through December 2009.
The majority of Crew's bank borrowings are drawn in the form of banker's
acceptances with 30, 60 or 90 day floating interest rates plus a stamping fee
which ranges from 0.95% to 1.75% depending on the Company's trailing debt to
EBITDA ratio. As a result of the current economic downturn and the decrease in
central banks' prime lending rates, the interest rates charged on banker's
acceptances are at levels not seen in decades. In order to reduce the risk of a
future increase in the interest rate charged on banker's acceptances, the
Company has entered into contracts fixing the rate on $100 million of banker's
acceptances for 24 months at a rate of 1.10% plus the applicable stamping fee.
Outlook
The oil and gas industry has historically experienced many boom and bust cycles;
however, this cycle is decidedly different in that the downturn is global and
pervasive. The Board of Directors, management and staff of Crew are well
prepared and equipped to deal with the current and potentially worsening
economic environment. Priorities in 2009 are to:
- Maintain or reduce debt levels by spending within cash flow and/or disposing
of non core assets.
- Improve operating efficiencies to lower costs and improve netbacks.
- Actively engage in hedging activities to protect capital programs and Crew's
balance sheet.
- Continue to exhibit steady production growth. With current production of
15,200 boe per day and over 1,500 boe per day of expected production additions
behind pipe, Crew remains positioned to increase average production by a minimum
of 20% year over year.
- Preserve the value and future growth of Crew.
- Continue to capture additional resource opportunities.
- Position the Company to exit this recession in a position of strength.
Crew plans to update operations and guidance on or about March 9th when its 2008
year end financial results are released.
On behalf of the Board of Directors, management and staff, I would like to thank
our shareholders for their continued support. We strongly believe your patience
will be rewarded.
Land Holdings
During 2008, Crew was very active acquiring developed and undeveloped lands
through acquisitions and Crown land sales in Alberta and British Columbia. In
the first half of 2008 the Company acquired an interest in over 119 sections of
undeveloped land for approximately $78.3 million in northeast British Columbia
which is prospective for the Triassic Montney formation. In August, Crew closed
the acquisition of Gentry Resources Ltd. involving approximately 608,000 acres
of land including 280,000 net acres of undeveloped land. The focus of these
acquisitions was to expose the Company's shareholders to the underlying
significant resource potential of these lands.
The Company has completed an internal evaluation of the fair market value of the
Company's undeveloped land holdings as at December 31, 2008. This evaluation was
completed principally using industry activity levels, third party transactions
and land acquisitions that occurred in proximity to Crew's undeveloped lands
during the past year. The Company has estimated the value of its net undeveloped
acreage at $227 million. This amount includes the value for 91,000 acres of
undeveloped Montney land in north east British Columbia at $127 million and the
remaining 536,000 acres of undeveloped land at $100 million.
A summary of the Company's land holdings at December 31, 2008 is outlined below:
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Developed Undeveloped Total
Gross Net Gross Net Gross Net
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Alberta 419,645 228,063 586,376 433,960 1,006,021 662,023
British Columbia 108,497 47,520 213,969 155,010 322,466 202,530
Other 6,601 2,440 377,599 37,891 384,200 40,331
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Total 534,743 278,023 1,177,944 626,861 1,712,687 904,884
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Reserves
The reserves data set forth below is based upon an independent reserve
assessment and evaluation prepared by GLJ with an effective date of December 31,
2008 and dated February 25, 2009 (the "GLJ Report"). The following presentation
summarizes the Company's crude oil, natural gas liquids and natural gas reserves
and the net present values before income taxes of future net revenue for the
Company's reserves using forecast prices and costs based on the GLJ Report. The
GLJ Report has been prepared in accordance with the standards contained in the
COGE Handbook and the reserve definitions contained in NI 51-101.
All evaluations and reviews of future net cash flows are stated prior to any
provisions for interest costs or general and administrative costs and after the
deduction of estimated future capital expenditures for wells to which reserves
have been assigned. It should not be assumed that the estimates of future net
revenues presented in the tables below represent the fair market value of the
reserves. There is no assurance that the forecast prices and cost assumptions
will be attained and variances could be material. The recovery and reserve
estimates of our crude oil, natural gas liquids and natural gas reserves
provided herein are estimates only and there is no guarantee that the estimated
reserves will be recovered. Actual crude oil, natural gas and natural gas
liquids reserves may be greater than or less than the estimates provided herein.
Reserves Summary
The Company's total proved plus probable reserves increased by 76% in 2008 to
59.1 MMboe. Proved reserves increased by 59% to 35.9 MMboe and comprised 61% of
the Company's total proved plus probable reserves. Proved producing reserves of
23.5 MMboe were 65% of total proved reserves. Crew's probable reserves totaled
23.2 MMboe of which 31% are producing probable reserves.
The following table provides summary reserve information based upon the GLJ
Report and using the published GLJ (2009-01) price forecast.
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Natural gas Barrels of oil
Oil (1) liquids Natural gas(2) equivalent
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Comp Comp Comp Comp
Int.(3) Net(4) Int.(3) Net(4) Int.(3) Net(4) Int.(3) Net(4)
(Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mmcf) (Mmcf) (Mboe) (Mboe)
Proved
Producing 3,726 3,041 3,051 2,160 100,282 81,593 23,491 18,799
Non-
producing 536 412 375 285 24,642 19,207 5,018 3,899
Undeveloped 1,398 1,025 585 463 32,438 25,063 7,389 5,665
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Total proved 5,659 4,478 4,012 2,909 157,362 125,863 35,898 28,363
Probable 3,518 2,779 2,551 1,899 102,937 80,165 23,225 18,039
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Total proved
& probable 9,178 7,256 6,563 4,808 260,298 206,028 59,123 46,402
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Notes:
(1) Includes 799 mbbl of proved and 1,062 mbbl of proved plus probable
company interest heavy oil reserves that have been classified under NI
51-101 as light/medium oil reserves in prior years. As a result of
changes implemented under Alberta's New Royalty Framework (NRF)
regarding the classification of heavy oil for royalty purposes, NI
51-101 as of January 1, 2009 requires the classification of these
reserves as Heavy Oil. For the purpose of the press release the Company
has determined that these amounts are not material for separate
disclosure.
(2) Includes 8.7 bcf of proved and 16.2 bcf of proved plus probable company
interest coal bed methane nature gas reserves. For the purpose of the
press release the Company has determined that these amounts are not
material for separate disclosure.
(3) "Comp Int." reserves means Crew's working interest (operating and
non-operating) share before deduction of royalties and including any
royalty interest of the Company.
(4) "Net" reserves means Crew's working interest (operated and
non-operated) share after deduction of royalty obligations, plus Crew's
royalty interest in reserves.
(5) Oil equivalent amounts have been calculated using a conversion rate of
six thousand cubic feet of natural gas to one barrel of oil.
(6) May not add due to rounding.
Reserves Values
The estimated before tax future net revenues associated with Crew's reserves
effective December 31, 2008 and based on the published GLJ (2009 - 01) future
price forecast are summarized in the following table:
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(MM$) 0% 5% 10% 15% 20%
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Proved
Producing 771 597 495 426 377
Non-producing 152 122 102 88 76
Undeveloped 184 129 95 73 57
----------------------------------------
Total proved 1,106 848 692 587 510
Probable 879 511 347 256 199
----------------------------------------
Total proved plus probable 1,986 1,359 1,039 843 709
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Notes:
(1) The estimated future net revenues are stated before deducting future
estimated site restoration costs and are reduced for estimated future
abandonment costs and estimated capital for future development
associated with the reserves.
(2) The values reflected in the above table have been determined under
Alberta's New Royalty Framework ("NRF") which became effective
January 1, 2009. The Alberta Government has announced, but has not yet
enacted, provisions that allow for transitional royalties ("Transitional
Royalties") to the NRF for certain elected wells. These Transitional
Royalties are not reflected in the GLJ Report.
(3) May not add due to rounding.
Price Forecast
The GLJ (2009-01) price forecast is summarized as follows:
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$US/$Cdn Natural gas
Year Exchange WTI @ Edmonton light at AECO-C Westcoast
Rate Cushing crude oil spot Station 2
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(US$/bbl) (C$/bbl) (C$/MMbtu) (C$/MMbtu)
2009 0.825 57.50 68.61 7.58 7.38
2010 0.850 68.00 78.94 7.94 7.74
2011 0.875 74.00 83.54 8.34 8.14
2012 0.925 85.00 90.92 8.70 8.50
2013 0.950 92.01 95.91 8.95 8.75
2014 0.950 93.85 97.84 9.14 8.94
2015 0.950 95.73 99.82 9.34 9.14
2016 0.950 97.64 101.83 9.54 9.34
2017 0.950 99.59 103.89 9.75 9.55
2018 0.950 101.59 105.99 9.95 9.75
2019 + 0.950 +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr
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Notes:
(1) Inflation is accounted for at 2.0% per year.
Reserves Reconciliation
The following summary reconciliation of Crew's Company Interest reserves
compares changes in the Company's reserves as at December 31, 2007 to the
reserves as at December 31, 2008 based on the GLJ (2009 - 01) future price
forecast.
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Proved Total Total Proved
Producing Proved plus
Probable
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(Mboe) (Mboe) (Mboe)
Balance December 31, 2007 16,382 22,632 33,498
Technical revisions 736 (364) (2,045)
Exploration discoveries 733 733 1,081
Drilling extensions 2,429 7,768 17,404
Infill drilling 10 139 174
Improved recoveries 426 140 160
Acquisitions 7,027 9,111 13,117
Dispositions -- (9) (14)
Production (4,252) (4,252) (4,252)
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Balance December 31, 2008 23,491 35,898 59,123
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Notes:
(1) "Company Interest" reserves means, Crew's working interest (operating
and non-operating) share before deduction of royalties and including
any royalty interest of the Company.
(2) May not add due to rounding.
Capital Program Efficiency
The efficiency of the Company's capital program for the year ended December
31, 2008 is summarized below.
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Three Year Average
2008 2007 2006-2008
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Proved Proved Proved
plus plus plus
Proved Probable Proved Probable Proved Probable
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Exploration and
Development
expenditures
($ thousands)
(note 5) 191,677 191,677 102,092 102,092 417,628 417,628
Acquisitions
($thousands)
(note 3&5) 312,446 312,446 136,685 136,685 536,035 536,035
Change in future
development
capital
($ thousands)
- Exploration and
Development 56,303 102,613 (3,959) (12,038) 63,442 120,123
- Acquisitions 20,898 27,789 9,750 15,445 32,761 49,964
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Reserves
additions after
revisions (Mboe)
- Exploration and
Development 8,416 16,774 4,049 4,613 15,678 25,599
- Acquisitions 9,102 13,104 8,407 10,943 19,956 27,886
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17,518 29,878 12,456 15,556 35,634 53,485
Finding &
Development Costs
($/boe)(note 1&2) 28.24 15.64 24.23 15.00 28.00 16.89
Finding,
Development &
Acquisition Costs
($/boe)
Exploration and
development 29.47 17.54 24.24 19.52 30.68 21.01
Acquisitions 36.62 25.96 17.42 13.90 28.50 21.01
---------------------------------------------------------
Total F,D&A
(note 4) 33.18 21.24 19.63 15.57 29.46 21.01
Reserves
Replacement Ratio 412% 703% 392% 490% 375% 563%
Recycle Ratio
based on annual
operating
netbacks
(est.2008 -
$32.80 per
boe) (note 5) 1.0 1.5 1.5 1.8 1.0 1.5
Reserve Life
Index based on
fourth quarter
production
(years) 6.6 10.9 6.4 9.5
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Notes:
(1) The aggregate of the exploration and development costs incurred in the
most recent financial year and the change during that year in estimated
future development costs generally will not reflect total finding and
development costs related to reserve additions for that year.
(2) Calculation does not include technical revisions.
(3) The acquisition costs related to corporate acquisitions reflects the
consideration paid for the shares acquired plus the net debt assumed,
both valued at closing and does not reflect the fair market value
allocated to the acquired oil and gas assets under Generally Accepted
Accounting Principles.
(4) Calculation includes reserve revisions and changes in future development
costs. Crew also calculates finding, development and acquisition
("FD&A") costs which incorporate both the costs and associated reserve
additions related to acquisitions net of any dispositions during the
year. Since acquisitions can have a significant impact on Crew's annual
reserve replacement costs, the Company believes that FD&A costs provide
a more meaningful portrayal of Crew's cost structure.
(5) 2008 figures include information based on estimated unaudited financial
results that may change on the completion of the audited financial
statements.
Net Asset Value
The following table provides a calculation of Crew's estimated net asset value
based on the estimated future net revenues associated with Crew's proved plus
probable reserves discounted at 10% as presented in the GLJ Report.
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Forecast Prices and Costs before tax ($ thousands)
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Proved plus probable reserves - discounted at 10% 1,039,000
Undeveloped Land (note 1) 227,000
Bank debt as at December 31, 2008 (note 2) (224,000)
Estimated working capital deficiency as at December 31, 2008
(note 2&3) (31,000)
Proceeds from stock options 27
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Net asset value 1,011,027
Common shares outstanding (thousands) 71,090
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Net asset value per share $ 14.22
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Notes:
(1) Internally estimated value (see "Land Holdings")
(2) Figures include information based on unaudited financial results that
may change.
(3) Working capital deficiency includes an estimate of the Company's
accounts receivable less accounts payable and accrued liabilities as at
December 31, 2008.
Montney Evaluation
Crew engaged GLJ to prepare a best estimate of the Discovered Petroleum
Initially in Place ("DPIP"), as such term is defined in the COGE Handbook, on 52
(50 net) sections of Crew's Montney lands in the Septimus area. This report is
dated February 24, 2009 and has an effective date of November 30, 2008. Unless
noted otherwise, the DPIP estimates and reserve information are presented on a
Company Interest basis.
Based on the independent evaluation, it is estimated that the DPIP for the 50
net sections of Montney rights owned in Crew's Septimus area is a net 2.4 Tcf,
of which 0.72 Tcf is on sections to which reserves have been assigned. GLJ have
assigned proved plus probable non-associated gas reserves of 81.5 bcf to the
Septimus area, which includes 35 bcf of proved reserves. The assigned reserves
are booked based on three wells per section and will require an additional 11
wells to be drilled with future development capital of $58.36 million including
the completion and tie in of two additional wells. This reserve assignment
represents a 5.2% recovery on proved reserves and a 12.1% recovery on proved
plus probable reserves. Once there is more production history for Crew's wells,
the Company believes that the opportunity exists for improving recoveries in
line with other area operators.
GLJ has estimated there exists 1.7 Tcf of DPIP (of the 2.4 Tcf in total DPIP) on
sections of the Company's lands at Septimus that do not currently have any
reserves assigned and there are additional Crew interest lands adjacent to these
lands that have not yet been assigned any DPIP. Continued step-out drilling into
the future will provide information to help assess the potential of these lands.
GLJ has provided a best estimate of the DPIP for the upper Montney on 50 out of
184 controlled net sections or 27% of Crew's prospective Montney land base. It
should be noted that given the current stage of development the best estimate of
DPIP might change significantly in the future and Contingent Resources as
defined in the COGE Handbook have yet to be estimated. Crew is in the early
stages of development of this Montney asset and while management is encouraged
by the results to date additional drilling and testing is required to confirm
deliverability potential and economic development. See "Cautionary Statements"
below.
Cautionary Statements
Unaudited financial information
Certain financial and operating information included in this press release for
the quarter and year ended December 31, 2008, such as finding and development
costs, production information, recycle ratios, operating netbacks and net asset
value, are based on estimated unaudited financial results for the quarter and
year then ended, and are subject to the same limitations as discussed under
Forward Looking Information set out below. These estimated amounts may change
upon the completion of audited financial statements for the year ended December
31, 2008 and changes could be material.
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" and similar expressions are intended to
identify forward-looking information or statements. In particular, but without
limiting the forgoing, this news release contains forward-looking information
and statements pertaining to the following: the volumes and estimated value of
Crew's oil and gas reserves; the life of Crew's reserves; resource estimates;
the volume and product mix of Crew's oil and gas production; future oil and
natural gas prices and Crew's commodity risk management programs; future
liquidity and financial capacity; future results from operations and operating
metrics; future costs, expenses and royalty rates; future interest costs; the
exchange rate between the $US and $Cdn; future development, exploration,
acquisition and development activities and related capital expenditures; the
number of wells to be drilled and completed; the amount and timing of capital
projects; operating costs; the total future capital associated with development
of reserves and resources; and forecast reductions in operating expenses.
The recovery, reserve and resources estimates of Crew's reserves and resources
provided herein are estimates only and there is no guarantee that the estimated
reserves or resources with be recovered. 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: the impact of
increasing competition; the general stability of the economic and political
environment in which Crew operates; 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 and
environmental matters in the jurisdictions in which Crew operates; 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: changes
in commodity prices; changes in the demand for or supply of Crew's products;
unanticipated operating results or production declines; changes in tax or
environmental laws, royalty rates 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 and resource volumes; limited, unfavourable or a lack
of access to capital markets; increased costs; a lack of inadequate 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.
BOE equivalent
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.
Discovered Petroleum Initially in Place
This press release contains references to estimates of gas classified as
Discovered Petroleum initially in Place (DPIP) in the Company's Septimus area in
British Columbia which are not, and should not be confused with oil and gas
reserves. "Discovered Petroleum Initially in Place" is defined in the Canadian
Oil and Gas Evaluation Handbook (the "COGE Handbook") as the quantity of
hydrocarbons that are estimated, as of a given date, to be contained in known
accumulations. DPIP is divided into recoverable and unrecoverable portions, with
the estimated future recoverable portion classified as reserves and contingent
resources. There is no certainty that it will be economically viable or
technically feasible to produce any portion of this discovered petroleum
initially in place except to the extent identified as proved or probable
reserves. Resources do not constitute, and should not be confused with,
reserves.
There are a number of assumptions associated with the development of the
Company's lands at Septimus relating to performance from new and existing wells,
future drilling programs, the lack of infrastructure, well density per section,
recovery factors and development necessarily involves known and unknown risks
and uncertainties, including those risks identified in this press release.
Crew is a Calgary, Alberta based oil and gas exploration, development and
production company whose shares are traded on The Toronto Stock Exchange under
the trading symbol "CR".
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