Crew Energy Inc. ("Crew" or the "Company") (TSX:CR) of Calgary,
Alberta is pleased to announce that it has closed the acquisition
of the third tranche of Montney acreage in British Columbia for a
purchase price of $35.2 million.
Third Tranche Highlights
-- Acquisition of 81 sections of highly prospective Montney acreage
proximate to Crew's existing 292 sections.
-- The 18 section portion in the Altares area, as evaluated by Sproule
Associates Ltd. ("Sproule") effective May 31, 2013, has a proved and
proved plus probable reserve assignment of 2.0 mmboe and 7.6 mmboe,
respectively.
-- The net present value of the reserves at Altares discounted at 10% is
$19.4 million for the proved reserves and $76.6 million for the proved
plus probable reserves.
-- An updated post acquisition independent resource evaluation by Sproule
assigns a Total Petroleum Initially in Place ("TPIIP") of 91 TCFE on
Crew's aggregated northeast British Columbia Montney acreage, up from
the previously announced 76 TCFE.
OVERVIEW
The closing of the third tranche of Crew's Montney acquisition
is consistent with the Company's consolidation efforts in the
Greater Septimus area and continues to build on Crew's significant
Montney position. The strategic location and importance of this
world class Montney play positions Crew for a methodical
exploitation of this resource over the next five to ten years. An
updated map of the Company's Montney acreage is posted on the
Company's website at www.crewenergy.com.
MONTNEY RESOURCE EVALUATION
The following discussion is subject to a number of cautionary
statements, assumptions and risks as set forth therein. See
"Information Regarding Disclosure on Oil and Gas Reserves,
Resources and Operational Information" for additional cautionary
language, explanations and discussion and "Forward Looking
Information and Statements" for a statement of principal
assumptions and risks that may apply. See also "Definitions of Oil
and Gas Resources and Reserves". The discussion includes reference
to TPIIP, DPIIP, UPIIP and Contingent Resources per the Sproule
Associates Ltd. ("Sproule") Resources Evaluation effective as at
May 1, 2013, prepared in accordance with the Canadian Oil and Gas
Evaluation Handbook ("COGE Handbook"). Unless indicated otherwise
in this news release, all references to Contingent Resource volumes
are Best Estimate Contingent Resource volumes.
Sproule was engaged to conduct an updated independent Montney
Resource Evaluation of Crew's 373 net Montney sections located in
Northeast British Columbia ("NEBC"). The update includes the third
tranche of Crew's acquired lands (the "Acquisition Lands")
effective as of May 1, 2013 as well as Crew's previous Montney
Resource Evaluation announced on May 13, 2013 (collectively, the
"Resource Evaluation"). The Resource Evaluation confirms the
development and resource potential on 100 percent of Crew's Montney
land base.
The following tables summarize the results of the updated
Resource Evaluation including the third tranche of the Acquisition
Lands:
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Natural Gas Resource Categories (1)(2) Tcf
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Total Petroleum Initially In Place (TPIIP) 44.6
DiscoverPetroleum Initially In Place (DPIIP)ed 15.8
Undiscovered Petroleum Initially In Place (UPIIP) 28.8
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(1) All volumes in table are company gross and raw gas
volumes.
(2) Sproule's analysis identified four intervals in the Montney
consisting of one interval in the Upper Montney and three intervals
in the Lower Montney.
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Oil Resource Categories (1)(2)(3) Mmbbls
----------------------------------------------------------------
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Total Petroleum Initially In Place (TPIIP) 7,812.5
Discovered Petroleum Initially In Place (DPIIP) 880.0
Undiscovered Petroleum Initially In Place (UPIIP) 6,932.5
----------------------------------------------------------------
(1) All volumes in table are company gross.
(2) The oil volumes are quoted as Stock Tank Barrels
("STB").
(3) Sproule's analysis identified four intervals in the Montney
consisting of one interval in the Upper Montney and three intervals
in the Lower Montney.
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Best
Reserves and Contingent Resources (1)(2) Estimate
----------------------------------------------------------------
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Natural Gas (Tcf)
Reserves (3) 0.3
Contingent Resources (6) 3.2
----------------------------------------------------------------
Natural Gas Liquids (mmbbls) (4)(5)
Reserves (3) 8.7
Contingent Resources (6) 142.5
----------------------------------------------------------------
Oil (mmbbls)
Reserves (3) 0.3
Contingent Resources 7.7
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(1) All DPIIP other than cumulative production, reserves, and
Contingent Resources has been categorized as unrecoverable at this
time.
(2) All volumes in table are company gross and sales
volumes.
(3) For reserves, the volume under the heading Best Estimate are
proved plus probable reserves. The third tranche acquisition
effective May 31, 2013 was added to the previously disclosed
reserves evaluated at December 31, 2012.
(4) The liquid yields are based on average yield over the
producing life of the property.
(5) Liquid yields are unique to each area. They are estimated
based on gas composition of gas samples in the area and expected
plant recoveries.
(6) Project economic Status is currently undetermined. There is
no certainty that it will be commercially viable to produce any of
the resources.
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Best
Prospective Resources (1)(2) Estimate
----------------------------------------------------------------
----------------------------------------------------------------
Natural gas (Tcf) 4.2
Natural gas liquids (mmbbls) 174.6
Oil (mmbbls) 17.8
----------------------------------------------------------------
(1) All UPIIP other than Prospective Resources has been
categorized as unrecoverable at this time.
(2) All volumes in table are company gross and sales
volumes.
Based upon the foregoing analysis and Crew's expertise in the
Montney formation in NEBC, it is expected that significant
additional reserves will be developed in the future with continued
drilling success on currently undeveloped Montney acreage together
with further development, completion refinements and improved
economic conditions. Additional drilling, completion, and test
results are required before Crew can commit to development and
these contingent resources can be converted to reserves and a
larger component of Prospective Resources is converted to
Contingent Resource.
Definitions of Oil and Gas Resources and Reserves
Reserves are estimated remaining quantities of oil and natural
gas and related substances anticipated to be recoverable from known
accumulations, as of a given date, based on the analysis of
drilling, geological, geophysical and engineering data; the use of
established technology; and specified economic conditions, which
are generally accepted as being reasonable. Reserves are classified
according to the degree of certainty associated with the estimates
as follows:
Proved Reserves are those reserves that can be estimated with a
high degree of certainty to be recoverable. It is likely that the
actual remaining quantities recovered will exceed the estimated
proved reserves.
Probable Reserves are those additional reserves that are less
certain to be recovered than proved reserves. It is equally likely
that the actual remaining quantities recovered will be greater or
less than the sum of the estimated proved plus probable
reserves.
Possible Reserves are those additional reserves that are less
certain to be recovered than probable reserves. It is unlikely that
the actual remaining quantities recovered will exceed the sum of
the estimated proved plus probable plus possible reserves.
Cumulative Production is the cumulative quantity of petroleum
that has been recovered at a given date.
Resources encompasses all petroleum quantities that originally
existed on or within the earth's crust in naturally occurring
accumulations, including Discovered and Undiscovered (recoverable
and unrecoverable) plus quantities already produced. "Total
resources" is equivalent to "Total Petroleum Initially-In-Place".
Resources are classified in the following categories:
Total Petroleum Initially-In-Place ("TPIIP") is that quantity of
petroleum that is estimated to exist originally in naturally
occurring accumulations. It includes that quantity of petroleum
that is estimated, as of a given date, to be contained in known
accumulations, prior to production, plus those estimated quantities
in accumulations yet to be discovered.
Discovered Petroleum Initially-In-Place ("DPIIP") is that
quantity of petroleum that is estimated, as of a given date, to be
contained in known accumulations prior to production. The
recoverable portion of discovered petroleum initially in place
includes production, reserves, and contingent resources; the
remainder is unrecoverable.
Contingent Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology
under development but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include such factors as economic, legal,
environmental, political and regulatory matters or a lack of
markets. It is also appropriate to classify as Contingent Resources
the estimated discovered recoverable quantities associated with a
project in the early evaluation stage.
Undiscovered Petroleum Initially-In-Place ("UPIIP") is that
quantity of petroleum that is estimated, on a given date, to be
contained in accumulations yet to be discovered. The recoverable
portion of undiscovered petroleum initially in place is referred to
as "prospective resources" and the remainder as
"unrecoverable."
Prospective Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective resources have both an associated chance of
discovery and a chance of development.
Unrecoverable is that portion of DPIIP and UPIIP quantities
which is estimated, as of a given date, not to be recoverable by
future development projects. A portion of these quantities may
become recoverable in the future as commercial circumstances change
or technological developments occur; the remaining portion may
never be recovered due to the physical/chemical constraints
represented by subsurface interaction of fluids and reservoir
rocks.
Uncertainty Ranges are described by the Canadian Oil and Gas
Evaluation Handbook as low, best, and high estimates for reserves
and resources. The Best Estimate is considered to be the best
estimate of the quantity that will actually be recovered. It is
equally likely that the actual remaining quantities recovered will
be greater or less than the best estimate. If probabilistic methods
are used, there should be at least a 50 percent probability (P50)
that the quantities actually recovered will equal or exceed the
best estimate.
Information Regarding Disclosure on Oil and Gas Reserves,
Resources and Operational Information
All amounts in this news release are stated in Canadian dollars
unless otherwise specified. Throughout this press release, the
terms Boe (barrels of oil equivalent), Mmboe (millions of barrels
of oil equivalent), and Tcfe (trillion cubic feet of gas
equivalent) are used. Such terms when used in isolation, may be
misleading. Where applicable, natural gas has been converted to
barrels of oil equivalent ("BOE") based on 6 Mcf:1 BOE and oil and
liquids have been converted to natural gas equivalent on the basis
of 1 bbl:6 mcfe. The BOE rate is based on an energy equivalent
conversion method primarily applicable at the burner tip, and 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 the 6:1 conversion ratio, utilizing the 6:1
conversion ratio may be misleading as an indication of value. The
BOE rate is based on an energy equivalent conversion method
primarily applicable at the burner tip and does not represent a
value equivalent at the wellhead. In accordance with Canadian
practice, production volumes and revenues are reported on a company
gross basis, before deduction of Crown and other royalties, unless
otherwise stated. Unless otherwise specified, all reserves volumes
and net present value of reserves in this news release (and all
information derived therefrom) are based on "company gross
reserves" using forecast prices and costs. Our oil and gas reserves
statement for the year-ended December 31, 2012 includes complete
disclosure of our oil and gas reserves and other oil and gas
information in accordance with NI 51-101, and is contained within
our Annual Information Form which is available on our SEDAR profile
at www.sedar.com.
This news release contains references to estimates of oil and
gas classified as TPIIP and DPIIP in the Montney region in
northeastern British Columbia which are not, and should not be
confused with, oil and gas reserves. See "Definitions of Oil and
Gas Resources and Reserves". TPIIP, DPIIP and UPIIP have been
estimated using a zero percent porosity cutoff.
Projects have not been defined to develop the resources in the
Evaluated Areas as at the evaluation date. Such projects, in the
case of the Montney resource development, have historically been
developed sequentially over a number of drilling seasons and are
subject to annual budget constraints, Crew's policy of orderly
development on a staged basis, the timing of the growth of third
party infrastructure, the short and long-term view of Crew on gas
prices, the results of exploration and development activities of
Crew and others in the area and possible infrastructure capacity
constraints. As with any resource estimates, the evaluation will
change over time as new information becomes available.
Prospective Resources have not been risked for chance of
discovery. There is no certainty that any portion of the
Prospective Resources will be discovered. The Prospective and
Contingent Resources have not been risked for chance of
development. There is no certainty that it will be commercially
viable to produce any portion of the Prospective (if discovered) or
Contingent Resources. The Contingent Resource contingencies are
identified as economic or non-technical, there are no technical
contingencies. Significant positive factors are historic drilling
success and production history on the more fully developed Montney
acreage, abundant well log and production test data. Potential
negative factors include lack of long term production history over
the majority of Crew lands, lack of infrastructure, potential for
variations in the quality of the Montney formation where minimal
well data currently exists, access to the substantial amount of
capital which would be required to develop the resources, low
commodity prices that would curtail the economics of development
and the future performance of wells, regulatory approvals, access
to the required services at the appropriate cost and topographic or
surface restrictions.
Crew's belief that it will establish significant additional
reserves over time with the conversion of Prospective Resource into
Contingent Resource, Contingent Resource into probable reserves and
probable reserves into proved reserves is a forward looking
statement and is based on certain assumptions and is subject to
certain risks, as discussed below under the heading "Forward
Looking Information and Statements".
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; the recognition of significant resources under the
heading "Montney Resource Evaluation"; future oil and natural gas
prices and Crew's commodity risk management programs; future
liquidity and financial capacity; future results from operations;
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. There are a number of assumptions associated with the
potential of resource volumes assigned to the Evaluated Areas
including the quality of the Montney reservoir, future drilling
programs, continued performance from existing wells and performance
of new wells, the growth of infrastructure, well density per
section, and recovery factors and discovery and development
necessarily involves known and unknown risks and uncertainties,
including those identified in this press release.
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; the early stage of
development of some areas in the Evaluated Areas; the potential for
variation in the quality of the Montney formation; 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.
Crew is an oil and gas exploration 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)
231-8850dale.shwed@crewenergy.com Crew Energy Inc. John Leach
Senior Vice President and C.F.O. (403)
231-8859john.leach@crewenergy.com Crew Energy Inc. Rob Morgan
Senior Vice President and C.O.O. (403)
513-9628rob.morgan@crewenergy.com www.crewenergy.com
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