Crew Energy Inc. (TSX:CR) of Calgary, Alberta is pleased to present its
operating and financial results for the three month period ended March 31, 2012.
Highlights
-- Funds from operations increased 99% over the first quarter of 2011 to
$48.1 million;
-- Funds from operations per share increased 38% to $0.40 per share;
-- Record first quarter production for the Company of 30,380 boe per day
represents a 95% increase over the first quarter of 2011 and a slight
increase over the fourth quarter of 2011;
-- Production per share increased 35% over the first quarter of 2011;
-- Oil and liquids production improved significantly to 16,037 bbls per day
(53% of production), increasing from 6,923 bbls per day (44% of
production) in the first quarter of 2011, representing a 132% increase
and a 57% increase on a per share basis;
-- Since deploying its liquids focus strategy in 2007, Crew has increased
its liquids production by 970% (315% per share);
-- Crew drilled 60 wells in the quarter with a 97% success rate;
-- Four first quarter wells were on production at the end of the quarter at
Princess with two vertical wells on production at seven day test rates
of 375 and 133 boe per day and two horizontal wells on production at 348
and 640 boe per day after seven days;
-- Three Montney liquids rich gas wells were completed at Septimus and came
on production at rates of 776, 693 and 588 boe per day;
-- The latest Tower oil well flowed at an average gross rate of 500 boe per
day (375 bbls per day oil and liquids and 0.75 mmcf per day of natural
gas);
-- Completed the annual renewal of the Company's credit facility receiving
approval for a $430 million credit facility.
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Three months Three months
Financial($ thousands, except per share ended ended
amounts) March 31, 2012 March 31, 2011
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Petroleum and natural gas sales 123,075 61,148
Funds from operations (note 1) 48,057 24,111
Per share - basic 0.40 0.29
- diluted 0.40 0.29
Net loss (6,430) (10,126)
Per share - basic (0.05) (0.12)
- diluted (0.05) (0.12)
Capital expenditures 128,743 75,165
Property acquisitions (net of dispositions) - 361
Net capital expenditures 128,743 75,526
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Capital Structure($ thousands) As at
As at December 31,
March 31, 2012 2011
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Working capital deficiency (note 2) 78,424 92,452
Bank loan 320,153 230,676
Net debt 398,577 323,128
Current bank facility 430,000 430,000
Common Shares Outstanding (thousands) 120,760 119,993
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Notes:
(1) Funds from operations is calculated as cash provided by operating
activities, adding the change in non-cash working capital,
decommissioning obligation expenditures and the transportation liability
charge. Funds from operations is used to analyze the Company's operating
performance and leverage. Funds from operations does not have a
standardized measure prescribed by International Financial Reporting
Standards and therefore may not be comparable with the calculations of
similar measures for other companies.
(2) Working capital deficiency includes only accounts receivable less
accounts payable and accrued liabilities.
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Operations Three months Three months
ended ended
March 31, 2012 March 31, 2011
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Daily production
Conventional oil (bbl/d) 6,770 5,794
Heavy oil (bbl/d) 6,162 -
Natural gas liquids (bbl/d) 3,105 1,129
Natural gas (mcf/d) 86,056 52,109
Oil equivalent (boe/d @ 6:1) 30,380 15,608
Average prices (note 1)
Conventional oil ($/bbl) 81.10 69.68
Heavy oil ($/bbl) 71.04 -
Natural gas liquids ($/bbl) 53.05 59.71
Natural gas ($/mcf) 2.34 4.00
Oil equivalent ($/boe) 44.52 43.53
Netback ($/boe)
Operating netback (note 2) 20.35 20.20
Realized gain on financial instruments - (0.01)
G&A 1.91 1.98
Interest on bank debt 1.06 1.06
Funds from operations 17.38 17.17
Drilling Activity
Gross wells 60 40
Working interest wells 57.8 39.3
Success rate, net wells 97% 100%
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Notes:
(1) Average prices are before deduction of transportation costs and do not
include hedging gains and losses.
(2) Operating netback equals petroleum and natural gas sales including
realized hedging gains and losses on commodity contracts less royalties,
operating costs and transportation costs calculated on a boe basis.
Operating netback and funds from operations netback do not have a
standardized measure prescribed by International Financial Reporting
Standards and therefore may not be comparable with the calculations of
similar measures for other companies.
Overview
Operations for the first quarter of 2011 included the drilling of 60 (57.8 net)
wells resulting in 46 (45.0 net) oil wells, 11 (9.8 net) natural gas wells, one
(1.0 net) service well and two (2.0 net) dry and abandoned wells. Of the wells
drilled, 24 were brought on production during the quarter. Drilling during the
quarter was highlighted by 29 (29.0 net) wells at Princess, Alberta. The Company
is currently completing and tying in these new wells and has been very pleased
with the success of the vertical wells extending existing pool boundaries and
identifying new pools at a cost of approximately $25,000 per producing boe. At
Lloydminster, Saskatchewan, the Company drilled 18 (17.8 net) wells adding an
estimated 760 boe per day of new production at a cost of $15,000 per producing
boe. Due to the low natural gas price environment, gas well drilling was focused
on providing production to meet processing commitments and to achieve land
retention in Crew's main liquids rich gas areas at Septimus, British Columbia
and in the Deep Basin of Alberta. During the quarter, the Company drilled five
(5.0 net) wells at Septimus and currently plans to only complete three of these
wells due to the low natural gas price environment. Additional gas drilling was
conducted at Wapiti, in the Deep Basin, where the Company drilled five (4.6 net)
wells and has since completed four wells resulting in successful gas wells
adding average new production at a facility restricted rate of 494 boe per day
per well, including 173 bbl per day per well of liquids.
Production during the quarter averaged 30,380 boe per day (53% liquids),
slightly above the fourth quarter of 2011 and 95% greater than the first quarter
of 2011. Production additions for the quarter were provided by the successful
drilling programs at Princess, Lloydminster, Septimus and in the Deep Basin
which helped to offset declines and 6.3 mmcf per day of Alberta dry natural gas
production that was shut in during the quarter due to the poor natural gas
pricing environment.
Financial
The first quarter saw a dramatic change in Crew's commodity pricing compared to
the fourth quarter of 2011. During the quarter, prices received for the
Company's natural gas production dropped 32% to average $2.34 per mcf for the
quarter. Prices continued to fall throughout the quarter and sunk to a low of
$1.60 per mcf early in the second quarter. This decrease has had a significant
impact on the Company's funds from operations and has resulted in the shut-in of
6.3 mmcf per day of uneconomic dry sour gas production and the planned shut-in
of an additional 4.5 mmcf per day in the second quarter which, when combined,
represents approximately 12.5% of the Company's natural gas production. The
shut-in of this gas is expected to add approximately $600,000 per month in funds
from operations.
The Company's conventional and heavy oil prices were also volatile in the first
quarter experiencing a 6% and 8% respective decline over the previous quarter.
This decrease occurred unexpectedly in late February when the entire Canadian
crude pricing complex declined by as much as $20 per barrel over a seven day
period. This decline was attributed to a combined shortage of pipeline capacity
and refinery demand out of the United States. The decrease in Canadian pricing
continued throughout the remainder of February through to May. We are currently
seeing improvement for the coming months but it is uncertain if the situation is
completely resolved and there remains a possibility that we could see further
weakening.
The Company's capital expenditures for 2012 were planned to be heavily weighted
to the first quarter. During the quarter the Company spent $129 million on its
capital program including $90 million on drilling and completions, as outlined
above, and $22 million on facilities, equipment and tie-ins. The program was
designed to provide production growth throughout the second quarter and into the
early third quarter while the Company's operations were shut down during
break-up. During the quarter, the Company acquired a strategic pipeline in the
Septimus area for $8.1 million. This asset allows access to the Company's
liquids rich natural gas production from the northwest portion of the Company's
Septimus Montney gas field and also provides a short tie-in point for solution
gas from the Company's emerging Tower oil play.
At quarter end, Crew's net debt increased to $399 million compared to the
Company's newly approved $430 million bank facility. This debt level is
projected to be the Company's peak reported debt level during the year as
planned net capital spending for the remainder of the year is forecasted to
bring year-end 2012 net debt back to approximately $350 million not including
any dispositions.
The Company continues to actively protect its cash flow by hedging a portion of
its future production against volatile commodity prices. Crew currently has
hedged approximately 23.3 mmcf day of natural gas for the period of May through
December 2012 at a price of approximately $2.00 per mcf. The Company also holds
hedges against a significant decline in oil prices with an average of 6,600
barrels per day of West Texas Intermediate ("WTI") oil hedged at an average
floor price of $94.25 per barrel for the period April through December 2012 and
2,000 barrels per day of WTI oil hedged at an average floor price of $102.25 per
barrel for 2013. In addition, the Company currently holds hedges that fix the
differential between WTI and Western Canadian Select ("WCS") pricing on an
average of 2,000 barrels a day at a differential of $15.63 per barrel. During
the first quarter, the Company successfully monetized certain 2012 WTI to WCS
differential hedges resulting in realized hedging gains of $3.7 million.
OPERATIONS UPDATE
Pekisko Play, Princess, Alberta
Crew had a successful first quarter at Princess drilling 29 wells including 19
vertical wells and 10 horizontal wells. The Company's first quarter program
focused on development of existing pools with the most appropriate technology
and the drilling of two vertical wells that extended existing pool boundaries.
One of the vertical wells tested at 296 boe per day and the second recently came
on production with a seven day average rate of 375 boe per day. Four vertical
wells were drilled beyond existing pool boundaries discovering new oil pools.
One has come on production at an average seven day rate of 133 boe per day and
the other three are in the process of being completed and brought on production.
Two horizontal wells were brought on production subsequent to the end of the
first quarter with seven day rates of 348 boe per day and 640 boe per day. First
quarter production at Princess has been added at a cost of $25,000 per producing
boe.
PRINCESS WATERFLOOD
Progress was made on infrastructure installation including Crew's 2012
waterflood implementation program where it is expected that all five approved
waterfloods will be in operation by early in the third quarter. Two existing
waterfloods (Pekisko "K" and "N" pools) continue to respond well with oil
production rates increasing 50% and 35%, respectively, from pre-waterflood
conditions with gas-oil ratios down 50% in both pools. Response on the "N" Pool
has been very rapid with injection initiated less than ten months ago. Crew
plans to implement six additional waterfloods in 2013.
HISTORY
Crew acquired the Princess asset in August 2008 which was producing
approximately 2,000 boe per day at the time primarily from the West Tide Lake
area. The Company recognized the significant hydrocarbon potential of the
Pekisko formation on this large land base (300,000 net acres as at December 31,
2011 with only 13% classified as developed) and the potential to apply
horizontal well technology to further enhance productivity. In September of
2008, Crew's first horizontal well was flowing at a rate of 633 bbls of oil per
day and the impact of infill drilling with horizontal wells was confirmed. The
first horizontal development program was at West Tide Lake which had previously
been developed with 40 acre spacing using vertical wells. The vertical well
control allowed Crew to map the distribution of the productive reservoir so that
a horizontal depletion strategy could be undertaken. The Company then drilled 26
net wells (50% horizontal) in 2009 resulting in 22 net oil producing wells. This
program yielded production growth to 5,238 boe per day in December 2009 which
declined to 3,382 boe per day (35% decline) in April 2010 due to the initial
decline rates typically experienced on horizontal wells (60% to 65% decline in
the first year). In 2010, the Company drilled 62 net wells (54% horizontal)
resulting in 54 oil wells. Production peaked at 8,000 boe per day during the
month of December 2010 before declining to 4,948 boe per day (38% decline) in
July 2011. At the time, Crew also recognized that secondary recovery would
become critical to provide a growth platform for the future and started
injection into the Pekisko "K" pool.
In 2011, Crew drilled 119 net wells (54% horizontal) resulting in 104 net oil
wells (64 horizontal wells) and grew production to over 10,000 boe per day
during the month of December 2011. The Company expanded transportation and
processing infrastructure to handle increasing fluid production associated with
the extensive drilling program and initiated the Company's second waterflood in
the Pekisko "N" pool.
Consistent with the Princess production profile of the previous three years,
production declined from 10,400 boe per day in December to current levels of
7,000 boe per day (33% decline). There is currently approximately 550 boe per
day shut-in from single wells batteries due to spring breakup and only ten new
wells from the first quarter drilling program are currently on production.
Infrastructure expansion has been successful in allowing Crew to optimize
production from a number of pools while some areas continue to encounter
gathering system limitations particularly when a prolific well is introduced
into the pipeline system. As the production from individual wells stabilizes
within an area, the Company can better assess if any further facility
enhancements are required.
Crew has historically used both vertical and horizontal wells to exploit and
develop the Pekisko formation at Princess. The vertical wells are very effective
tools to initially evaluate and delineate new pools providing significant data
about the vertical distribution and quality of the reservoir. In cases where
enhanced permeability is encountered as evidenced by high production rates (in
excess of 100 boe per day per well), vertical wells are an economic means of
developing these types of pools. If the permeability is more restricted
resulting in lower production rates from the initial vertical wells (less than
40 boe per day per well), horizontal wells would be used to develop the pool.
The economics of primary pool development are similar for the two methods
described above as individual vertical or horizontal wells achieve an economic
rate of return between 140% and 145% based on the average type wells currently
booked by GLJ Petroleum Consultants ("GLJ") (135 mboe per horizontal well and 64
mboe per vertical well) and the April 1, 2012 GLJ price deck. In all cases,
consideration of future secondary waterflood is also a factor in the selection
and implementation of the most appropriate reservoir drainage architecture.
Heavy Oil, Lloydminster, Saskatchewan
At Lloydminster, Crew drilled 18 (17.8 net) wells and recompleted 20 (19.3 net)
wells targeting oil in various Mannville group formations. The first quarter
program added 760 boe per day of production for total capital expenditures of
$11.5 million resulting in a capital efficiency of $15,000 per producing barrel
of oil equivalent. This area continues to provide the Company with robust
economics and will be a focus for drilling for the remainder of 2012. Crew was
active at Crown land sales increasing its land position in the first quarter and
expects to continue this level of activity through 2012. The Company has
identified a number of reservoirs at Lloydminster that are excellent candidates
for horizontal drilling with secondary recovery potential. With preferential
access to the Manitou pipeline system and its wholly owned battery, water
disposal and sand handling facility, Crew is in the position to expand its heavy
oil program over the next 18 months.
Tower, British Columbia
Crew's second well at Tower was rig released and completed early in the second
quarter with a horizontal section of 1,067 meters. The well was tested up 114 mm
casing and after 12 days of testing was producing at a rate of 500 boe per day
consisting of 375 bbls per day of 46 API oil and liquids and 0.75 mmcf per day
of natural gas. The well is tied-in to the Septimus gas plant and will be able
to be continuously produced following the initial test period. Crew's initial
well at Tower with a horizontal section of 1,835 meters tested at 610 boe per
day (342 bbls of oil and liquids and 1.7 mmcf per day of natural gas) and is
awaiting surface land approval to be tied-in. Crew has a 33% working interest in
both of these wells with the second well drilled adjacent to Crew's 100% working
interest lands. Crew is preparing several multi-well pads to advance this
project as dictated by production results. In addition to the significant oil
test rates, the solution gas is richer than the gas stream at Septimus and is
expected to yield approximately 63 bbls per mmcf which is 2.5 times greater than
the liquids recovery at Septimus.
Crew has 30 net sections of Montney land at Tower including 27 sections with 100
percent working interest. The Company has modelled a depletion strategy that
would require six to eight wells to be drilled per section. Crew is proceeding
with necessary approvals to drill up to eight (6.0 net) additional wells at
Tower and will assess timing based on well performance, capital availability and
economic factors.
Septimus, British Columbia
At Septimus, Crew drilled four Montney horizontal wells and one vertical well.
Three horizontal wells were completed in the quarter (one that was drilled in
2011) with two of the wells on production at initial rates of 776 boe per day
and 693 boe per day (15% liquids) based on the initial ten days of production.
The third well came on production at 588 boe per day (11% liquids) from a lower
stratigraphic Montney interval that had not been previously tested. The test
confirmed productivity from this lower unit and would indicate additional
horizontal wells could be drilled to develop this interval of the Montney.
Crew successfully completed the acquisition of a 35.1 kilometer six inch
pipeline extending through Crew's Septimus and Tower land base. Acquisition of
this pipeline will allow Crew to ultimately develop lands on the far western
edge of the Septimus area. In addition, Crew can immediately increase production
from producing Septimus wells by providing additional pipeline capacity and
reduced operating pressures into the Septimus gas plant. The pipeline provides a
tie-in point for production from Tower wells directly to the Septimus gas plant.
Crew has two horizontal wells to complete and does not have any plans for any
additional drilling at Septimus for the remainder of 2012 pending a recovery in
natural gas prices.
Kobes, British Columbia
Crew continues to flow test its two horizontal wells at Kobes testing the
long-term production characteristics of the Montney in this area. Liquids rates
from the wells are averaging 88 bbls per mmcf per day (33% condensate). The
Company has an inventory of over 200 drilling locations on this block and
continues to work toward long-term processing and takeaway capacity in the area.
Deep Basin, Alberta
In the Deep Basin of Alberta, Crew drilled seven (5.9 net) liquids rich natural
gas wells in the first quarter. The Company also expanded a facility adding
compression in the Elmworth area. Four Cardium horizontal wells were drilled and
completed with better than expected performance resulting in restricted rates of
an average of 494 boe per day per well including 173 bbls per day per well of
liquids (90 bbls/mmcf). One vertical well was drilled at Wanyandie and a
horizontal well was drilled at Wapiti for lease retention as well as one
horizontal Fahler well which is awaiting completion. Crew has an inventory of
185 Cardium drilling locations in the greater Wapiti area, the value of which
will be preserved until the economics of this play compete with the Company's
oil plays.
2012 Guidance
Crew previously announced the 2012 capital expenditure program of $300 million
on January 11, 2012 using the natural gas strip price at the time of $3.25 per
mcf, $95 WTI and a 17% WTI to WCS differential for 2012. Realized commodity
prices have declined precipitously with current natural gas prices now 25% lower
than first quarter realized prices. Differentials between WTI pricing and WCS
and Lloyd blend heavy oil widened significantly in the first quarter and
continue to be volatile as a result of tightening pipeline and refining capacity
in the United States. In light of reduced cash flow from these factors, Crew is
reducing its 2012 capital expenditure budget by $75 million to $225 million.
This will enable the Company to continue to grow its production year over year,
increase its liquid weighting and maintain a strong balance sheet. The funding
of this program will be from funds from operations, asset dispositions and the
existing bank facility.
Crew has shut-in 6.3 mmcf per day of dry gas production and intends to shut-in
an additional 4.5 mmcf per day (1,800 boe per day combined) of natural gas
production in the second quarter which is expected to add approximately $600,000
per month in funds from operations. In addition, a third party facility at
Elmworth, Alberta is going down for an unplanned turnaround which will result in
approximately 2,000 boe per day being shut in for the month of May. With the $75
million (25%) reduction in capital expenditures, 2,500 boe per day of behind
pipe of natural gas weighted production that has been deferred and 1,800 boe per
day of shut-in production, Crew is forecasting to average approximately 28,000
to 29,000 boe per day in 2012 representing a 14% (5% without shut-in and
deferred production) reduction in the Company's previous guidance. Despite the
revised program, the Company is expected to deliver a 25% increase in production
or 8% on a per share basis over 2011, positioning the Company to continue to
grow its production into 2013.
Outlook
When Crew was founded in 2003, the business strategy was to expose our
shareholders to large oil and gas in place reservoirs and to grow per share
production and reserves. The Company has established a sizeable land position of
just under one million net acres focusing on four plays that offer our
shareholders exposure to large accumulations of oil and liquids rich natural
gas. Crew has a history of profitable growth with compounded annual growth per
share in production and reserves of 13% and 28%, respectively. In 2007, Crew
anticipated the growth of unconventional natural gas was going to have a
profound impact on the supply-demand balance of natural gas. At that time, the
Company committed to increase its liquids component of production which was
1,500 bbls per day or 17% of total production of 8,700 boe per day. The liquids
component in the first quarter 2012 increased to 53% of total production and has
grown to over 16,000 bbls per day increasing 970% (315% per share) over 2007.
The strategy remains intact with the focus in the current commodity price
environment to prioritize and invest in the highest return and the most capital
efficient projects while retaining the upside for our shareholders on a
significant resource of natural gas and natural gas liquids.
Crew will focus on oil development at Princess and Lloydminster and the testing
of the emerging oil play at Tower. First quarter drilling results were strong
with the Company discovering several new pools and successfully advancing
secondary recovery programs at Princess as well as adding production at
attractive flowing barrel metrics in all areas of operation. This program also
addressed land retention at Septimus and the Deep Basin that will allow the
Company to retain its resources in these areas. Crew will maintain its capital
discipline by curtailing 2012 capital projects to preserve balance sheet
strength while maintaining its long-term growth profile.
We would like to thank our shareholders for their patience and support in this
environment. We are confident in the quality of our assets and the ability of
our team to continue to build a top tier energy company. We look forward to
updating our shareholders in the second quarter report.
Normal Course Issuer Bid
The Toronto Stock Exchange ("TSX") has accepted Crew's Notice of Intention to
commence a normal course issuer bid (the "NCIB"). Under the NCIB, Crew may
purchase for cancellation, from time to time, as Crew considers advisable, up to
a maximum of 6,038,492 common shares of the Corporation ("Common Shares"), which
represents 5% of the currently issued and outstanding Common Shares. Purchases
of Common Shares will be made on the open market through the facilities of the
TSX. The price which Crew will pay for any Common Shares purchased by it will be
the prevailing market price of the Common Shares on the TSX at the time of such
purchase. The actual number of Common Shares that may be purchased for
cancellation and the timing of any such purchases will be determined by Crew,
subject to a maximum daily purchase limitation of 261,920 Common Shares which
equates to 25% of Crew's average daily trading volume for the six months ended
April 30, 2012.
The NCIB will commence on May 14, 2012 and will terminate on May 13, 2013 or
such earlier time as the NCIB is completed or terminated at the option of Crew.
Macquarie Capital Markets Canada Ltd. will act on the Corporation's behalf to
make purchases of Common Shares pursuant to the NCIB.
Management of Crew believes that, from time to time, the market price of its
Common Shares may not fully reflect the underlying value of the Common Shares
and that at such times the purchase of Common Shares would be in the best
interests of Crew. Such purchases will increase the proportionate interest of,
and may be advantageous to, all remaining shareholders.
Financial statements and Management's Discussion and Analysis for the three
month periods ended March 31, 2012 and 2011 will be filed on SEDAR at
www.sedar.com and are available on the Company's website at www.crewenergy.com.
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" "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 volume and product
mix of Crew's oil and gas production; production estimates including 2012
forecast average production; plans to shut-in production; future oil and natural
gas prices and Crew's commodity risk management programs; future liquidity and
financial capacity; projected debt levels; future results from operations and
operating metrics; management's expectations in regards to waterfloods at
Princess; anticipated reductions in operating costs; 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 and the timing thereof; the number of wells to
be drilled, completed and tied-in and the timing thereof; the number of
potential drilling locations; the amount and timing of capital projects;
operating costs; the total future capital associated with development of
reserves and resources; and methods of funding our capital program.
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. Included herein is an estimate of Crew's year-end net debt based on
assumptions as to cash flow, capital spending in 2012 and the other assumptions
utilized in arriving at Crew's 2012 capital budget. To the extent such estimate
constitutes a financial outlook, it is included herein to provide readers with
an understanding of estimated capital expenditures and the effect thereof on
debt levels and readers are cautioned that the information may not be
appropriate for other purposes.
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 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. 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 a 6:1
conversion basis may be misleading as an indication of value.
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 may not necessarily be
indicative of long term performance or of ultimate recovery.
Crew is an oil and gas exploration and production company whose shares are
traded on The Toronto Stock Exchange under the trading symbol "CR".
Financial statements and Management's Discussion and Analysis for the three
month periods ended March 31, 2012 and 2011 will be filed on SEDAR at
www.sedar.com and are available on the Company's website at www.crewenergy.com.
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