Crew Energy Announces Closing the Acquisition of British Columbia Montney Acreage
July 09 2013 - 5:00PM
Marketwired Canada
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:
----------------------------------------------------------------
Natural Gas Resource Categories (1)(2) Tcf
----------------------------------------------------------------
----------------------------------------------------------------
Total Petroleum Initially In Place (TPIIP) 44.6
DiscoverPetroleum Initially In Place (DPIIP)ed 15.8
Undiscovered Petroleum Initially In Place (UPIIP) 28.8
----------------------------------------------------------------
(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.
----------------------------------------------------------------
Oil Resource Categories (1)(2)(3) Mmbbls
----------------------------------------------------------------
----------------------------------------------------------------
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.
----------------------------------------------------------------
Best
Reserves and Contingent Resources (1)(2) Estimate
----------------------------------------------------------------
----------------------------------------------------------------
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
----------------------------------------------------------------
(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.
----------------------------------------------------------------
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".
FOR FURTHER INFORMATION PLEASE CONTACT:
Crew Energy Inc.
Dale Shwed
President and C.E.O.
(403) 231-8850
dale.shwed@crewenergy.com
Crew Energy Inc.
John Leach
Senior Vice President and C.F.O.
(403) 231-8859
john.leach@crewenergy.com
Crew Energy Inc.
Rob Morgan
Senior Vice President and C.O.O.
(403) 513-9628
rob.morgan@crewenergy.com
www.crewenergy.com
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
