Crew Energy Inc. (TSX: CR) (“Crew” or the “Company”) today
announced our operating and financial results for the three-month
period ended March 31, 2021. Crew’s Financial Statements and Notes,
as well as Management’s Discussion and Analysis (“MD&A”) for
the three-month period ended March 31, 2021 are available on Crew’s
website at www.crewenergy.com and filed on SEDAR at www.sedar.com.
“Crew entered 2021 primed to capitalize on
structural improvements in crude oil and natural gas pricing with a
pivotal two-year plan which is designed to increase the pace of
development of our world-class Montney resource while optimizing
production and infrastructure utilization. This is expected to
enhance margins, improve leverage metrics and generate shareholder
value,” said Dale Shwed, President and CEO of Crew. “In Q1 2021, we
saw the initial benefits of our two-year plan, with meaningful
growth across an array of financial and operating metrics both
year-over-year and quarter-over-quarter, including a 124% increase
in revenue, 174% increase in Adjusted Funds Flow1 (“AFF”) and a 10%
increase in production volumes compared to Q1 2020.”
Q1 2021 OPERATING & FINANCIAL
HIGHLIGHTS
-
26,258 boe per day2 (157.5 mmcfe per day) average
production in Q1/21, a 10% increase over Q1/20 and a 21% increase
from the preceding quarter, reflecting the operational success of
Crew’s drilling and completions program.
-
$34.0 million of AFF1 ($0.22 per fully diluted
share) generated in the quarter, a 174% increase over Q1/20 and
118% higher than the preceding quarter, due largely to increased
production, lower costs and stronger commodity pricing,
particularly for natural gas.
-
$4.65 per boe net operating
costs1 in Q1/21, representing a 19%
reduction compared to Q1/20, and a 12% reduction from the prior
quarter, reflecting higher production leading to operational
efficiencies. Q1/21 general and administrative (“G&A”) costs of
$0.93 per boe declined 19% and 28% compared to Q1/20 and Q4/20,
respectively.
-
$50.1 million of net capital
expenditures1 in Q1/21,
at the low end of the previously announced guidance range of $50 to
$53 million, as drilling and completion efficiencies improved in
the quarter. The majority of expenditures were directed towards the
continued development of our world-class Montney resource play,
with $42.3 million invested in drilling and completions activities,
$5.6 million directed to equipment and pipelines, and $2.2 million
on land, seismic, recompletions and other miscellaneous
amounts.
-
11 natural gas wells were drilled in Q1/21, while
six natural gas wells were completed, and seven previously
completed natural gas wells were tied in through permanent
facilities. In Q1/21, Crew drilled two wells over 6,200 meters in
total length, the longest wells drilled in the Company’s
history.
-
4 ultra-condensate rich wells were completed on
Crew’s 3-32 pad with encouraging initial first month average per
well sales rates of 497 bbls per day of condensate, 2.2 mmcf per
day of conventional natural gas and 99 bbls per day of ngl. These
wells had an average condensate to gas ratio of 226 bbls per mmcf
over the first month of production.
-
$375.7 million of net debt1 at March 31, 2021,
with no near-term maturities or repayment requirements on the $300
million of senior notes termed out until 2024, and 38% drawn on our
$150 million credit facility.
FINANCIAL & OPERATING
HIGHLIGHTS
FINANCIAL($ thousands, except per share
amounts) |
Three months endedMar. 31,
2021 |
Three months endedMar. 31, 2020 |
Petroleum and natural
gas sales |
85,517 |
38,094 |
Adjusted funds
flow 1 |
33,995 |
12,400 |
Per share –
basic |
0.23 |
0.08 |
– diluted |
0.22 |
0.08 |
Net income /
(loss) |
1,353 |
(191,909) |
Per share –
basic |
0.01 |
(1.27) |
– diluted |
0.01 |
(1.27) |
Exploration and
development expenditures |
50,090 |
18,029 |
Property acquisitions (net of dispositions) |
- |
(34,940) |
Net capital expenditures |
50,090 |
(16,911) |
|
As atMar. 31, 2021 |
As atDec. 31, 2020 |
Working capital deficiency
1 |
21,739 |
24,361 |
Bank
loan |
56,851 |
35,994 |
|
78,590 |
60,355 |
Senior
Unsecured Notes |
297,097 |
296,851 |
Total net debt 1 |
375,687 |
357,206 |
Common shares outstanding (thousands) |
156,576 |
156,449 |
Notes:
(1) Non-IFRS measure that does not
have any standardized meaning as prescribed by International
Financial Reporting Standards, and therefore, may not be comparable
with the calculations of similar measures for other entities. See
“Advisories - Non-IFRS Measures” contained within this press
release.
Operations |
Three months endedMar. 31,
2021 |
Three months endedMar. 31, 2020 |
Daily
production |
|
|
Light crude oil
(bbl/d) 1 |
155 |
215 |
Heavy crude oil
(bbl/d) |
1,055 |
1,527 |
Natural gas liquids
(“ngl”) 2 (bbl/d) |
2,401 |
2,288 |
Condensate
(bbl/d) |
2,708 |
3,340 |
Conventional
natural gas (mcf/d) |
119,635 |
99,144 |
Total (boe/d @
6:1) |
26,258 |
23,894 |
Average
prices 3 |
|
|
Light crude oil
($/bbl) |
63.97 |
44.81 |
Heavy crude oil
($/bbl) |
52.69 |
20.06 |
Natural gas liquids
($/bbl) |
13.56 |
4.86 |
Condensate
($/bbl) |
69.75 |
54.83 |
Conventional
natural gas ($/mcf) |
5.54 |
1.86 |
Oil equivalent
($/boe) |
36.19 |
17.52 |
Notes:
(1) The Company does not have any
medium crude oil as defined by NI 51-101.(2) Throughout
this news release, natural gas liquids (“ngl”) comprise all natural
gas liquids as defined in National Instrument 51-101, Standards of
Disclosure for Oil and Gas Activities ("NI 51-101"), other than
condensate, which is disclosed separately, and natural gas means
conventional natural gas by NI 51-101 product
type.(3) Average prices are before deduction of
transportation costs and do not include realized gains and losses
on derivative financial instruments.
|
Three months endedMar. 31,
2021 |
Three months endedMar. 31, 2020 |
Netback ($/boe) |
|
|
Petroleum and
natural gas sales |
36.19 |
|
17.52 |
|
Royalties |
(2.21 |
) |
(1.00 |
) |
Realized commodity
hedging gain |
(7.34 |
) |
1.75 |
|
Marketing income
1 |
- |
|
0.11 |
|
Net operating costs
2,3 |
(4.65 |
) |
(5.74 |
) |
Transportation
costs |
(4.17 |
) |
(3.21 |
) |
Operating netback
3 |
17.82 |
|
9.43 |
|
G&A |
(0.93 |
) |
(1.15 |
) |
Financing costs on
long-term debt |
(2.50 |
) |
(2.58 |
) |
Adjusted funds flow
3 |
14.39 |
|
5.70 |
|
Notes:
(1) Marketing income was recognized
from the monetization of forward physical sales contracts offset by
the cost of committed natural gas transportation that was not
available during the period.(2) Net operating costs are
calculated as gross operating costs less processing revenue.
(3) Non-IFRS measure that does not have any standardized
meaning as prescribed by International Financial Reporting
Standards, and therefore, may not be comparable with the
calculations of similar measures for other entities. See
“Advisories - Non-IFRS Measures” contained within this press
release.
SUSTAINABILITY AND ESG
INITIATIVES
Crew's environmental, social and governance
("ESG") initiatives were a prime focus in Q1/21 as we continued our
unwavering commitment to safely and to responsibly operate in the
communities in which we work. The Company expects to release our
inaugural ESG report to stakeholders in mid-2021, while we continue
to advance our sustainability goals:
-
The Company continues to reduce its surface footprint by developing
its resource through the drilling of longer Extended Reach
Horizontal (“ERH”) wells. These longer wells ultimately reduce the
number of wells needed to deplete a reservoir, reduce future
development capital and minimize pipeline requirements.
Additionally, by concentrating the placement of wells on drilling
pads, surface impact is minimized to one area as exhibited on our
Greater Septimus 1-8 pad. Recent wells have exceeded 4,000 meters
in lateral length, allowing access to resource that would otherwise
have been challenging and costly to access due to difficult terrain
and environmental sensitivities.
-
Crew has upheld an exemplary safety record, featuring no employee
or contractor lost time injuries for over 1,000 consecutive days as
of Q1 2021.
-
Crew successfully participated in the provincially funded dormant
well programs, having abandoned 41 wells and initiated 78 site
assessments to date in 2021. Crew expects to abandon approximately
16% of the Company’s idle wells in 2021.
-
Crew continues to leverage the use of next generation, spoolable
surface pipelines for produced water transfer, which removes trucks
from the road, reduces CO2 emissions, and affirms Crew's commitment
to improving efficiencies and reducing our environmental impact. In
addition to meaningful reductions in emissions, the corresponding
removal of vehicles from the road also significantly reduces the
risk of accidents and spills, further contributing to improved
safety and environmental performance.
-
Through Q1/21, Crew’s strong regulatory compliance record remained
consistent with 2019 and 2020, achieving a 96% compliance rating
with 57 regulatory inspections completed across the three provinces
in which we operate.
OPERATIONS & AREA
OVERVIEW
NE BC Montney
Production & Drilling |
Q12021 |
Q42020 |
Q32020 |
Q22020 |
Q12020 |
Average daily production (boe/d) 1 |
23,130 |
18,089 |
17,119 |
18,565 |
19,894 |
Wells drilled |
11 |
6 |
6 |
0 |
1 |
Wells completed |
6 |
7 |
0 |
1 |
0 |
Note: (1) See table in the Advisories
for production breakdown by product type as defined in NI
51-101.
Operating Netback ($ per boe) |
Q1 2021 |
Q4 2020 |
Q3 2020 |
Q2 2020 |
Q1 2020 |
Petroleum and natural gas sales |
36.15 |
20.41 |
15.73 |
11.97 |
17.61 |
Royalties |
(2.07) |
(0.89) |
(0.42) |
(0.36) |
(0.86) |
Realized commodity hedge (loss) gain |
(7.26) |
1.45 |
2.18 |
3.06 |
1.44 |
Marketing (loss) income 1 |
- |
(0.05) |
(0.33) |
(0.31) |
0.13 |
Net operating costs 2,3 |
(3.84) |
(4.33) |
(4.71) |
(4.81) |
(4.52) |
Transportation costs |
(4.25) |
(4.33) |
(3.86) |
(3.37) |
(2.99) |
Operating netback 3 |
18.73 |
12.26 |
8.59 |
6.18 |
10.81 |
Notes: (1) Marketing income was
recognized from the monetization of forward physical sales
contracts offset by the cost of committed natural gas
transportation that was not available during the
period.(2) Net operating costs are calculated as gross
operating costs less processing revenue. (3) Non-IFRS
measure that does not have any standardized meaning as prescribed
by International Financial Reporting Standards, and therefore, may
not be comparable with the calculations of similar measures for
other entities. See “Advisories - Non-IFRS Measures” contained
within this press release.
-
Production at Greater Septimus totaled 23,130 boe per day in
Q1/21, a 28% increase compared to the prior quarter and a 16%
increase year-over-year.
-
Despite extreme cold weather in February, Crew effectively executed
our first quarter drilling and completions program, with 11 wells
drilled and six Montney wells completed. Four wells were drilled
for land tenure extensions with three wells drilled at Groundbirch,
which are expected to be completed in the next year, and one well
drilled at Attachie, which is not expected to be completed until a
development plan for the area has been established. Excluding the
Attachie well, the Company now has an inventory of 10 drilled and
uncompleted wells and has recently paused its drilling program
through spring breakup.
-
At Crew’s 3-32 pad, four wells were completed in the
ultra-condensate rich Upper Montney “B” zone with encouraging
initial first month per well average sales rates of 497 bbls per
day of condensate, 2.2 mmcf per day of conventional natural gas,
and 99 bbls per day of ngl. These wells had an average condensate
to gas ratio of 226 bbls per mmcf over the first month of
production. The 3-32 pad wells were tied into permanent facilities
in mid April.
-
At the 3-32 pad, Crew's commitment to improving efficiencies and
reducing emissions was reaffirmed through the installation of a
licensed temporary surface pipeline for produced water. The
pipeline allows for the safe and environmentally responsible
transportation of produced water, dramatically reducing the
trucking of water in Crew’s area of operations while significantly
reducing emissions. As a result of this pipeline, 7,333 two-way
truckloads were removed from the road during the completion of the
3-32 pad in Q1 2021, which is the approximate equivalent of 329
tCO2e.
-
Drilling of the seven-well 1-8 pad began in Q4 and was finished in
Q1, incorporating the longest wells drilled in the Company's
history. After completing the drilling of the 1-8 pad, the
associated drilling rig was moved to our nine well 4-14 pad,
targeting gas and condensate at Greater Septimus.
Other NE BC Montney
-
Crew continues to evaluate encouraging offset operator activity in
the Attachie and Oak/Flatrock areas.
-
During Q1/21, Crew completed our land retention program
focused in the Groundbirch area to facilitate future growth by
drilling three land tenure extension wells. This program allowed
the Company to hold 53 sections of Montney mineral rights.
AB / SK Heavy Oil
Lloydminster
-
Crew’s dedication to the optimization of operations has led to an
8% year-over-year decline in Q1/21 operating costs in the heavy oil
operating area.
-
In Q1/21, Crew successfully executed 35 well abandonments in the
area.
BOARD OF DIRECTORS
TRANSITION
Crew is pleased to announce that Ms. Gail Hannon
will be standing for election to our Board of Directors at the 2021
Annual General and Special Meeting (“AGSM”), which is to be held on
May 20th, 2021. Ms. Hannon is currently the Vice President of
Corporate and Financial Planning with a private Alberta based oil
and gas company. Bringing over 30 years of diverse accounting and
reporting experience, Ms. Hannon has worked in various management
and executive roles in both private and public companies. She holds
a CPA designation, a CMA certification and currently serves on the
board of a private company. We are very excited to have Ms. Hannon
join our Crew and believe her extensive experience will be an
invaluable contribution to the Board.
The Company also announces that Mr. David Smith
is not standing for re-election at Crew’s 2021 AGSM. On behalf of
our Board of Directors and our Crew, we would like to thank David
for 12 years of outstanding advice and service on Crew’s Board, and
we wish him all the best in his retirement.
OUTLOOK
Crew continues to execute on our two-year plan
with production and AFF ahead of budget assumptions. Both
short-term and long-term fundamentals remain strong for natural gas
while oil prices have recently exhibited positive momentum as the
world begins to recover from the effects of the COVID-19 pandemic.
Crew management anticipates that natural gas will continue to play
a long-term and vital role in the global energy transition as the
world looks to diversify energy sources and reduce emissions.
Two-Year Plan on Track
Crew's pivotal two-year plan, designed to expand
margins and significantly improve leverage metrics by efficiently
matching production volumes with infrastructure and transportation
commitments, has been successfully initiated.
-
Production Growth – Q1/21 production averaged
26,258 boe per day3, representing a 21% increase over Q4/20, as our
drilling and completions program progresses. The Q2/21 capital
program is expected to range between $15 and $18 million, while
production volumes are expected to average between 26,000 and
27,000 boe per day3.
-
AFF Guidance Increased – As a result of strong
first quarter AFF4 and an improved commodity price forecast for the
remainder of the year, the Company now expects 2021 AFF4 to range
between $105 and $125 million5, representing an increase of
approximately 20% over previous guidance.
-
Optimizing Commitments – Increasing Q1/21 natural
gas production has resulted in Crew enhancing the utilization of
our committed transportation by over 30% as compared to Q4/20.
Further improvements are anticipated as production increases
throughout the year and as committed transportation decreases by
over 20% in Q4/21, which is expected to reduce transportation
expenses by over $9 million annually.
-
Enhanced Hedging Program – Crew currently has over
55% of forecast 2021 natural gas production hedged at an average
price of $2.48 per Gigajoule (“GJ”) (or $3.08 per mcf calculated
using Crew’s heat content factor), while approximately 35% of
targeted natural gas production for 2022 is hedged at an average
price of $2.46 per GJ (or $3.05 per mcf using Crew’s heat content
factor).
-
Reduced Costs – Crew’s plan to reduce unit costs
by over 25% is largely based on increasing production volumes into
existing infrastructure, as over 50% of the Company’s expenses are
fixed. As production increases, per unit costs associated with
operating, transportation, G&A and interest expenses are
targeted to decline from $13.19 per boe in 2020 to approximately
$10.00 per boe in 2022. Progress was made in achieving these goals
in Q1, as per unit operating, transportation, G&A and interest
costs declined by 11% from $13.80 per boe in Q4/20 to $12.25 per
boe in Q1/21.
-
Debt Reduction – Based on projected capital
spending, current forward commodity prices and the production
assumptions outlined in Crew’s most recent Corporate Presentation,
we expect that debt metrics will improve to under 2x EBITDA6 by the
end of 2022.
-
Full Year 2021 Guidance – 2021 capital and
production guidance remains unchanged, with plans to invest between
$120 and $145 million of capital throughout the year, resulting in
average annual production of 26,000 to 28,000 boe per day7 and an
exit rate of over 30,000 boe per day7.
Our Crew remains enthusiastic and focussed on
the efficient execution of the Company’s business plan. We have
identified actionable opportunities to grow profitably while
expanding margins and participating in the energy transition. With
a history of low finding and development costs and high recycle
ratios, with access to diversified markets, we are uniquely
positioned to provide superior returns to our shareholders. Crew
retains the financial flexibility and expertise to execute on our
plans, with ample liquidity and the optionality to raise funds
through asset transactions as needed. We commend the hard work of
Crew’s employees, contractors and directors whose commitment and
dedication are critical to our ongoing success and thank all
shareholders and bondholders for your ongoing support.
ADVISORIES
Non-IFRS Measures
Certain financial measures referred to in this
press release, such as adjusted funds flow or AFF, EBITDA,
operating netback, net capital expenditures, net debt, net
operating costs and working capital deficiency and are not
prescribed by IFRS. Crew uses these measures to help evaluate its
financial and operating performance as well as its liquidity and
leverage. These non-IFRS financial measures do not have any
standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other issuers.
“Adjusted funds flow" or “AFF”, presented herein
is equivalent to funds from operations before decommissioning
obligations settled. The Company considers this metric as a key
measure that demonstrate the ability of the Company’s continuing
operations to generate the cash flow necessary to maintain
production at current levels and fund future growth through capital
investment and to service and repay debt. Crew also presents AFF
per share in this presentation whereby per share amounts are
calculated using fully diluted shares outstanding.
“EBITDA” is calculated as consolidated net
income (loss) before interest and financing expenses, income taxes,
depletion, depreciation and amortization, adjusted for certain
non-cash, extraordinary and non-recurring items primarily relating
to unrealized gains and losses on financial instruments and
impairment losses. Crew utilizes EBITDA as a measure of operational
performance and cash flow generating capability. EBITDA impacts the
level and extent of funding for capital projects investments. This
measure is consistent with the EBITDA formula prescribed under the
Company's Credit Facility and allows Crew and others to assess its
ability to fund financing expenses, net debt reductions and other
obligations.
"Operating Netbacks" equals petroleum and
natural gas sales including realized gains and losses on commodity
related derivative financial instruments, marketing income, less
royalties, net operating costs and transportation costs calculated
on a boe basis. Management considers operating netback an important
measure to evaluate its operational performance as it demonstrates
its field level profitability relative to current commodity prices.
The calculation of Crew’s netbacks can be seen under “Operating
Netbacks” within the Company’s most recently filed MD&A."
"Net Capital Expenditures" equals exploration
and development expenditures plus property acquisitions or less
property dispositions.
“Net Debt" is defined as bank debt plus working
capital deficiency or surplus, excluding the current portion of the
fair value of financial instruments.
“Net Operating Costs” equals operating costs net
of processing revenue.
"Working Capital Surplus (Deficiency)" equals
current assets less current liabilities and derivative financial
instruments.
Please refer to Crew’s most recently filed
MD&A for additional information relating to Non-IFRS measures
including a reconciliation of AFF to its most closely related IFRS
measure. The MD&A can be accessed either on Crew’s website at
www.crewenergy.com or under the Company’s profile on
www.sedar.com.
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 ability to execute on its two-year
development plan as described herein; as to our plan to optimize
production and infrastructure utilization, enhance margins,
increase AFF and improve leverage metrics; our Q2 2021 and 2021
annual capital budget range and associated drilling and completion
plans and associated guidance; preliminary capital plans and
targets for 2022; production estimates including forecast Q2 and
2021 annual average and exit production volumes; commodity price
expectations including Crew’s estimates of natural gas pricing
exposure; Crew's commodity risk management programs and future
hedging opportunities; well abandonment plans; marketing and
transportation and processing plans and requirements; estimates of
processing capacity and requirements; future liquidity and
financial capacity; future results from operations and operating
and leverage metrics; anticipated reductions in expenses and
associated estimates including forecast unit costs in 2022 and
expected reductions in transportation expenses by over $9 million
annually; expected debt metric improvements to under 2x EBITDA;
strong capital efficiencies and enhanced returns going forward; the
potential impact of COVID-19 as well as government programs
associated with COVID-19; world supply and demand projections and
anticipated reductions in industry spending as a result, and
long-term impact on pricing; future development, exploration,
acquisition and disposition activities (including drilling and
completion plans, anticipated on-stream dates and associated timing
and cost estimates); infrastructure investment plans; the
successful implementation of our ESG initiatives including the
anticipated release of Crew's inaugural ESG report in 2021; the
amount and timing of capital projects; and anticipated improvement
in our long-term sustainability including the expected positive
attributes discussed herein attributable to our two-year
development plan.
The internal projections, expectations, or
beliefs underlying our Board approved 2021 capital budget and
associated guidance, as well as management's preliminary estimates
and targets in respect of plans for 2022 and beyond, are subject to
change in light of the impact of the COVID-19 pandemic, and any
related actions taken by businesses and governments, ongoing
results, prevailing economic circumstances, commodity prices, and
industry conditions and regulations. Crew's financial outlook and
guidance provides shareholders with relevant information on
management's expectations for results of operations, excluding any
potential acquisitions or dispositions, for such time periods based
upon the key assumptions outlined herein. In this press release
reference is made to the Company's longer range 2022 and beyond
internal plan and associated economic model. Such information
reflects internal targets used by management for the purposes of
making capital investment decisions and for internal long-range
planning and budget preparation. Readers are cautioned that events
or circumstances could cause capital plans and associated results
to differ materially from those predicted and Crew's guidance for
2021 and beyond may not be appropriate for other purposes.
Accordingly, undue reliance should not be placed on same.
In addition, 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: that Crew will continue to conduct its operations in
a manner consistent with past operations; results from drilling and
development activities consistent with past operations; the quality
of the reservoirs in which Crew operates and continued performance
from existing wells; the continued and timely development of
infrastructure in areas of new production; the accuracy of the
estimates of Crew’s reserve volumes; certain commodity price and
other cost assumptions; continued availability of debt and equity
financing and cash flow to fund Crew’s current and future plans and
expenditures; the impact of increasing competition; the general
stability of the economic and political environment in which Crew
operates; the general continuance of current industry conditions;
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; and the ability of Crew
to successfully market its oil and natural gas products.
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: the continuing and uncertain impact
of COVID-19; changes in commodity prices; changes in the demand for
or supply of Crew's products, the early stage of development of
some of the evaluated areas and zones the potential for variation
in the quality of the Montney formation; interruptions,
unanticipated operating results or production declines; changes in
tax or environmental laws, royalty rates; climate change
regulations, 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 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).
This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about Crew's prospective capital
expenditures, all of which are subject to the same assumptions,
risk factors, limitations, and qualifications as set forth in the
above paragraphs. The actual results of operations of Crew and the
resulting financial results will likely vary from the amounts set
forth in this press release and such variation may be material.
Crew and its management believe that the FOFI has been prepared on
a reasonable basis, reflecting management's best estimates and
judgments. However, because this information is subjective and
subject to numerous risks, it should not be relied on as
necessarily indicative of future results. Except as required by
applicable securities laws, Crew undertakes no obligation to update
such FOFI. FOFI contained in this press release was made as of the
date of this press release and was provided for the purpose of
providing further information about Crew's anticipated future
business operations. Readers are cautioned that the FOFI contained
in this press release should not be used for purposes other than
for which it is disclosed herein.
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.
Key Budget and Underlying Material
Assumptions1
|
2021 (Updated)3 |
|
Capital Expenditures ($MM) |
120-145 |
|
Annual Average Production (boe/d) |
26,000 – 28,000 |
|
Adjusted Funds Flow ($MM) |
105-125 |
|
EBITDA ($MM) |
130-149 |
|
Oil price (WTI)($US per bbl) |
$61.00 |
|
WCS price ($C per bbl) |
$61.00 |
|
Natural gas price (AECO 5A) ($C per mcf) |
$2.90 |
|
Natural gas price (NYMEX) ($US per mmbtu) |
$2.80 |
|
Natural gas price (Crew est. wellhead) ($C per mcf) |
$3.80 |
|
Foreign exchange ($US/$CAD) |
$0.80 |
|
Royalties |
4-6% |
|
Net operating costs2 ($ per boe) |
$4.75-$5.25 |
|
Transportation ($ per boe) |
$3.50-$4.00 |
|
G&A ($ per boe) |
$0.90-$1.10 |
|
Interest rate – bank debt |
6.0% |
|
Interest rate – high yield |
6.5% |
|
Notes:
1 The actual results of operations of Crew and
the resulting financial results will likely vary from the estimates
and material underlying assumptions set forth in this guidance by
the Company and such variation may be material. The guidance and
material underlying assumptions have been prepared on a reasonable
basis, reflecting management's best estimates and judgments.
2 Non-IFRS measure that does not have any
standardized meaning as prescribed by International Financial
Reporting Standards, and therefore, may not be comparable with the
calculations of similar measures for other entities. See “Non-IFRS
Measures” contained within this Press Release.
3 See the Guidance section of the Company’s most
recently filed Management’s Discussion and Analysis for additional
information regarding updated guidance and material
assumptions.
Supplemental Information Regarding
Product Types
The following is intended to provide the product
type composition for each of the boe/d production figures provided
herein, where not already disclosed within tables above:
Corporate Production Volume
Breakdown2
|
Crude Oil1 |
Natural gas liquids3 |
Condensate |
Conventional Natural gas |
Total (boe/d) |
2021 Q1 Average |
1,210 bbl/d |
2,401 bbl/d |
2,708 bbl/d |
119,635 mcf/d |
26,258 |
2021 Q2 Average |
4% |
10% |
12% |
74% |
26,000-27,000 |
2021 Annual Average |
4% |
10% |
11% |
75% |
26,000-28,000 |
Greater Septimus Production Volume
Breakdown
|
Crude Oil1 |
Natural gas liquids3 |
Condensate |
Conventional Natural gas |
Total (boe/d) |
Q1/21 |
0% |
10% |
12% |
78% |
23,130 |
Q4/20 |
0% |
10% |
12% |
78% |
18,089 |
Q3/20 |
0% |
11% |
13% |
76% |
17,119 |
Q2/20 |
0% |
11% |
14% |
75% |
18,565 |
Q1/20 |
0% |
11% |
17% |
72% |
19,894 |
Notes:1 Crude oil is comprised
primarily of Heavy crude oil, with an immaterial portion of Light
and Medium crude oil.2 With respect to forward looking
production guidance, given the potential for variability in actual
product type results, the issuer approximates percentages for
budget planning purposes based on management's reasonable
assumptions including, without limitation, historical well
results.3 Excludes condensate volumes which have been
reported separately.
Test Results and Initial Production
("IP") 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, particularly
those short in duration, may not necessarily be indicative of long
term performance or of ultimate recovery. Sales gas used herein
reflects natural gas sales based on historical gas processing
shrinkage and condensate and ngl yields.
BOE, MMCFE and TCFE
Conversions
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 the 6:1 conversion ratio may be misleading as an
indication of value.
TCFe of gas is defined as Trillion Cubic Feet
Equivalent, and MMCFe of gas is defined as Million Cubic Feet
Equivalent. Both terms have been applied using the oil equivalent
conversion ratio of six thousand cubic feet of natural gas (6 mcf)
to one barrel of oil (1 bbl). TCFe and MMCFe amounts may be
misleading, particularly if used in isolation.
Crew is a growth-oriented oil and natural gas
producer, committed to pursuing sustainable per share growth
through a balanced mix of financially and socially responsible
exploration and development complemented by strategic acquisitions.
The Company’s operations are primarily focused in the vast Montney
resource, situated in northeast British Columbia, and include a
large contiguous land base. Greater Septimus along with Groundbirch
and the light oil area at Tower in British Columbia offer
significant development potential over the long-term. The Company
has access to diversified markets with operated infrastructure and
access to multiple pipeline egress options. Crew adhere’s to safe
and environmentally responsible operations while remaining
committed to sound ESG practices that underpin Crew’s fundamental
business tenets. Crew’s common shares are listed for trading on the
Toronto Stock Exchange (“TSX”) under the symbol “CR”.
Financial statements and Management’s Discussion
and Analysis for the three month periods ended March 31, 2021 and
2020 are filed on SEDAR at www.sedar.com and are available on the
Company’s website at www.crewenergy.com.
FOR DETAILED INFORMATION, PLEASE
CONTACT:
Dale Shwed, President and CEO |
Phone: (403) 266-2088 |
John Leach, Executive Vice President and CFO |
Email: investor@crewenergy.com |
|
|
1 Non-IFRS measure that does not have any standardized meaning
as prescribed by International Financial Reporting Standards, and
therefore, may not be comparable with the calculations of similar
measures for other entities. See “Advisories - Non-IFRS Measures”
contained within this press release.2 See table in the
Advisories for production breakdown by product type as defined in
NI 51-101.3 See table in the Advisories for production breakdown by
product type as defined in NI 51-101.4 Non-IFRS measure that does
not have any standardized meaning as prescribed by International
Financial Reporting Standards, and therefore, may not be comparable
with the calculations of similar measures for other entities. See
“Advisories - Non-IFRS Measures” contained within this press
release.5 See table in the Advisories for key budget and underlying
material assumptions related to Crew’s development plan and
associated guidance.6 Non-IFRS measure that does not have any
standardized meaning as prescribed by International Financial
Reporting Standards, and therefore, may not be comparable with the
calculations of similar measures for other entities. See
“Advisories - Non-IFRS Measures” contained within this press
release.7 See table in the Advisories for production breakdown by
product type as defined in NI 51-101.
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