Crew Energy Inc. ("Crew" or the "Company") (TSX:CR) is pleased to
announce its Board of Directors has approved a 2013 capital budget
of $219 million. The 2013 program is designed to focus on the
Company's operating strategy to invest in the highest rate of
return projects while also further defining and capturing
hydrocarbon resource. Funding of this program will come from cash
flow from operations and bank debt. The 2013 program is expected to
provide 15% liquids growth spearheaded by the drilling of 101 (99.0
net) wells with 87% of the wells targeting oil and 13% of the wells
targeting liquids rich natural gas.
In 2012, Crew achieved its target exit rate of 28,000 boe per
day prior to the closing of the Kobes disposition (sale of 625 boe
per day) and is estimating fourth quarter production based on
preliminary field estimates of approximately 27,000 boe per day, an
increase of approximately 3% over the prior quarter. With the sale
of 625 boe per day and the shut-in of 400 boe per day of natural
gas production that became uneconomic with the expiration of a
transportation contract late in 2012, Crew is currently producing
approximately 27,000 boe per day. In the fourth quarter, the
Company drilled 24 gross wells including one well at Kobes which
was included in the fourth quarter disposition, one well each at
Septimus and the Deep Basin which were part of the accelerated 2013
program; 13 wells at Princess including a horizontal well that
tested at a rate of 800 boe per day based on 144 hours and eight
heavy oil wells at Lloydminster which included three successful
horizontal wells at Wildmere that tested two separate Mannville
formations. We also initiated water injection on our eighth
waterflood at Princess as part of our long term enhanced recovery
project and completed a produced water disposal well at Septimus
that will eliminate approximately $1.0 million of water handling
costs annually.
Production growth is forecasted to accelerate throughout 2013
with a target exit rate of 29,000 to 30,000 boe per day and an
annual average of 27,500 to 28,500 boe per day. This year's program
will maintain a focus on secondary recovery programs at Princess
and Lloydminster with a forecasted four to six new projects
planned. These investments provide some of the highest rates of
return in the Company and are expected to measurably reduce
corporate declines over time. Capital will also be allocated to
land retention and resource capture initiatives at Septimus and in
the greater Kakwa area of the Deep Basin. Complementary asset
acquisitions are continually being monitored and evaluated but are
presently not part of the exploration and development budget.
Crew plans to invest in its four main operating areas;
Lloydminster, Princess, Septimus and the Deep Basin in 2013. The
Company's ability to invest at attractive economics in these areas
has been enhanced by the Company's 2013 hedging program with 48% of
forecasted natural gas production and 37% of forecasted liquids
production hedged at attractive prices.
At Lloydminster, Crew expects to drill 60 wells where the
Company is following up on a number of 2012 exploration and
development successes on lands acquired in 2011 and on recently
purchased Crown land. Company owned processing infrastructure
provides excellent logistics and superior netbacks and the low
capital costs consistently generate exceptional returns even in the
current wide heavy oil differential environment. In addition to the
drilling program, the Company plans to recomplete 40 to 60 wells in
the area in 2013.
At Princess, Crew will focus on the optimization of existing
production, implementation of three to five new waterfloods and the
drilling of 21 wells. Crew's existing waterfloods have been very
successful in stemming declines in pools where they have been
implemented. Longer term, the Company is targeting decline rates in
the area to be reduced to the 20 to 25% range. Based on this
program, it is expected this area will generate significant
positive free cash flow in 2013.
In the greater Septimus area, Crew will drill 11 (9.0 net) wells
with seven (7.0 net) wells targeting liquids rich natural gas and
two (2.0 net) wells targeting oil at Tower. Crew has reduced costs
in this area by over 10% by optimizing capital efficiencies through
pad drilling and modified completion techniques which have also
resulted in improved individual well performance. The Company has
also invested in water source and disposal infrastructure in the
area to further reduce our cost structure, all of which has
resulted in enhanced economics with rates of return improving from
20% to approximately 40% despite the current commodity price
environment. Crew also plans to work with the owner of the Crew
operated Septimus gas plant to expand the facility from its current
capacity of 46 mmcf per day to 64 mmcf per day with construction
expected to commence in 2013. The planned increase in capacity will
allow for increased production from the area in 2014 and a
corresponding decrease in per unit operating costs of greater than
15% due to a further improvement in operating efficiencies.
In the greater Kakwa area of the Deep Basin, Crew plans to drill
seven (6.8 net) wells targeting liquids rich natural gas. This area
is characterized by lower decline production and high liquids
content in the 90 bbls per mmcf range of which roughly a third is
condensate driving favorable returns. Crew is evaluating a more
significant infrastructure expansion for the Kakwa area to take
advantage of proposed pipeline expansions and provide for future
growth.
2013 CAPITAL EXPENDITURE BY TYPE
----------------------------------------------------------------------------
($million)
Drilling and Completions 151.8
Equip/Tie-in/Facilities 25.6
Optimization 18.3
G & A/Environmental/other 12.8
Land & Seismic 10.5
-----------
Total Capital 219.0
Crew's budget and guidance are best estimates based on certain
assumptions including operating results and commodity prices and
will be regularly monitored by management. Additional information
regarding our 2013 budget can be found within the latest
presentation on the Company's website at www.crewenergy.com. Our
primary goal 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 goals.
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; anticipated reductions in decline rates at Princess,
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 cash flow from operations, future results from
operations; future development and exploration activities and
related capital expenditures and adequacy of anticipated methods of
financing, 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) 513-9628 www.crewenergy.com
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