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
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Total Capital $300.0
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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
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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".
Contacts: Crew Energy Inc. Dale Shwed President and C.E.O. (403)
231-8850 Crew Energy Inc. John Leach Senior Vice President and
C.F.O. (403) 231-8859 Crew Energy Inc. Rob Morgan Senior Vice
President and C.O.O. (403) 513-9628www.crewenergy.com
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