Crew Energy Inc. Reports Record 2011 Production and Provides 2012 Guidance
January 11 2012 - 7:00AM
Marketwired Canada
Crew Energy Inc. (TSX:CR) -
2011 Operational Highlights (based on field estimates)
-- Achieved our exit forecast production rate of 32,500 boe per day with an
additional 1,500 boe per day behind pipe;
-- Estimated average production for December is expected to be over 32,000
boe per day;
-- Q4 2011 estimated average production of 30,000 boe per day;
-- Q4 2011 estimated production increased 105% and diluted production per
share increased 38% over Q4 2010;
-- Q4 2011 total liquids production increased an estimated 144% and an
estimated 65% on a per diluted share basis over the same period in 2010;
-- Q4 2011 cashflow per diluted share is estimated to be 46% higher than Q4
2010;
-- Drilled 158 (155.2) net wells, the most active year in the Company's
history, more than doubling the wells drilled in the prior year;
-- Successfully integrated the operations of Caltex Energy Inc. adding
10,500 boe per day weighted 68% to liquids production;
-- Attained production of 10,400 boe per day in December at Princess,
Alberta.
At Princess, Alberta, Crew drilled 62 horizontal, 45 vertical and 13 salt water
disposal wells which was our most active year in the area. Crew drilled more
horizontal wells in 2011 than the prior three years combined. This record
activity level has resulted in significant production gains with five additional
wells waiting to be placed on production and 22 wells to be optimized.
Results at Crew's initial waterflood at the Pekisko "K" pool have been
encouraging. Over the last four months fluid levels in producing wells have
risen and production has increased from 25 bopd to 43 bopd. This 18 bopd
increase is directionally important as it represents a 72% increase in
production. The producing wells will be further optimized by pumping higher
fluid volumes with the current injection rate of 3,400 bbls of water per day
targeted to increase to 6,000 bbls water in Q1 2012. The 72% increase in oil
production was accompanied by only a 19% increase in water production.
At Kobes, British Columbia, Crew drilled two (1.875 net) Montney horizontal
wells in the fourth quarter. The first well (0.875 net) is on production at a
rate of 1.7 mmcf per day and 145 bbls per day of liquids. Although this result
was less than expected as the well encountered difficulties during fracturing
operations, it has confirmed the previously observed high liquids cuts of 85
bbls per mmcf (50 bbls condensate) which were observed in the original vertical
completion. The second well (1.0 net) has just been completed with the
successful placement of 11 fracture treatments and is expected to be on
production within days.
At Tower, British Columbia, Crew participated in a significant Montney oil
discovery. At the end of a 23 day production test, the 13-8 well (0.33 net) was
flowing 610 boe per day comprised of 342 bbls per day of oil and liquids and 1.7
MMcf per day of gas.
2012 Guidance
We are pleased to report Crew's Board of Directors has approved a 2012 capital
expenditure budget of $300 million. This capital budget is approximately 14%
less than the planned 2011 budget of $350 million. It is designed to approximate
cashflow and will concentrate on oil and liquids production at Princess,
Lloydminster and Tower in order to capitalize on strong oil prices. The 2012
capital program will also advance seven of our secondary oil recovery schemes
and will continue to advance and de-risk oil/liquids plays in British Columbia
and the Deep Basin of Alberta. The $300 million capital program will be funded
mainly by cashflow from operations and bank debt with priority given to
maintaining our strong balance sheet.
Our 2012 budget and guidance is a best estimate based on certain assumptions
including operating results and commodity prices and will be regularly monitored
by management. Our priority is to proactively manage our capital program as it
relates to operational success and fluctuating commodity prices with a goal to
maintain financial flexibility and achieve our production guidance.
Highlights of the 2012 capital program include:
-- Drilling of 141 wells (131.6 net)
-- 123 wells or 87% of the wells drilled will target oil representing
approximately 80% of total budgeted capital and the remaining 18 wells
or 13% will target liquid rich gas.
-- Production is forecast to average 32,500 to 33,500 boe per day (57% oil
and liquids) which at the midpoint represents a year over year increase
of:
-- 47% in average production
-- 72% in liquids production
-- 28% in production per share; and
-- 39% in cashflow per share.
Oil Program
Princess, Alberta
Crew will concentrate its drilling capital on horizontal drilling where 87% of
the wells will be drilled horizontally compared to 52% in 2011. Seventy-five
wells are planned at Princess with production forecast to average approximately
12,000 boe per day. The benefits of the aggressive capital program in 2011 will
continue to be captured in 2012 as wells and facilities are further optimized.
In addition, two facilities are budgeted to be expanded and five new waterfloods
are expected to be implemented as well as the completion of a number of pipeline
projects.
Lloydminster, Saskatchewan
Our heavy oil assets will attract more capital in 2012 as only 13 wells were
drilled in 2011. Crew plans to drill 36 wells targeting heavy oil and recomplete
40 wells. Crew is completing the evaluation of enhanced recovery schemes on a
number of Lloydminster oil pools and expects to proceed with the necessary
government approvals for implementation in late 2012 or early 2013.
Southeast Alberta
At Viking-Kinsella, Crew plans to drill four (4.0 net) oil wells and one (1.0
net) salt water disposal well. The Company plans to implement a waterflood at
Killam in Crew's 100% Lloydminster oil pool with the drilling of three (3.0 net)
injectors and one water source well.
Tower, British Columbia
At Tower, Crew plans to follow up on the 2011 discovery by drilling eight (6.0
net) wells targeting oil/condensate. The initial discovery well is expected to
be tied in and on production in the first quarter of 2012. Crew has 30 net
sections at Tower including 27 at 100% working interest.
Liquids Rich Gas Program
Septimus, British Columbia
At Septimus, Crew plans to drill six (6.0 net) wells targeting liquids rich gas.
The Company forecasts to maintain production in this area at approximately 6,100
boe per day during 2012.
Kobes, British Columbia
At Kobes, Crew plans to monitor the production from the two wells drilled in
2011 and drill one to two wells in 2012 further evaluating multiple pay zones in
the Montney.
Wapiti, Alberta
At Wapiti, the Company plans to drill six (5.6 net) wells targeting liquids rich
gas. Two of those wells will be drilled for land retention purposes with all
wells designed to add production and delineate additional resource in the
Cardium Formation where liquids cuts approximate 90 bbl per mmcf.
2012 Capital Expenditure Budget Breakdown ($ million)
Drilling and completions $188.7
Equip, tie-in, facilities $64.7
Optimization $19.8
G&A/Environmental/Other $14.7
Seismic $7.1
Land $5.0
------
Total Capital $300.0
------
2012 Guidance
Production
Light and medium oil 9,650 bbls per day
Heavy oil 6,300 bbls per day
Natural gas liquids 2,800 bbls per day
Natural gas 85.5 mmcf per day
------------------
Average annual production 33,000 boe per day
------------------
Assumptions
Gas (AECO-C $per mcf) $3.25
Oil (WTI-US $per bbl) $95.00
WTI Differential to WCS (% C $) 17%
Royalties 25%
FX ($US/$CDN) $0.98
Costs/boe
Operating $11.25
Transportation $1.55
G&A $1.60
Interest $1.10
Financial
Cashflow (CF) $280 million
CF per diluted share $2.26 per share
2012 CF $300 million
2012 year-end net debt $335 million
Debt to annualized Q4 CF 1.1 X
CAUTIONARY STATEMENTS
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 Company's planned capital
expenditure program, drilling plans, estimated and expected production levels
and commodity mix; future commodity prices, the future differential between WTI
prices and WCS prices, future royalty rates, the future exchange rate for the
Canadian dollar to the US dollar, Operating costs, transportation costs, general
and administrative costs, interest costs, the company's funds flow from
operations, the Company's estimated year end bank debt, future results from
operations; future development and exploration activities and related capital
expenditures and adequacy of anticipated methods of financing; success of future
asset dispositions, the number of wells to be drilled and completed and related
production expectations; and the amount and timing of capital projects.
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; the ability of Crew to successfully market its oil and natural gas
products; ability to improve upon historical recovery factors.
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 statement, 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 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.
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.
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".
Crew Energy (TSX:CR)
Historical Stock Chart
From May 2024 to Jun 2024
Crew Energy (TSX:CR)
Historical Stock Chart
From Jun 2023 to Jun 2024
