Crew Energy Inc. (TSX: CR; OTCQB: CWEGF) ("Crew" or the "Company"),
a growth-oriented natural gas weighted producer operating in the
world-class Montney play in northeast British Columbia (“NE BC”),
is pleased to announce our operating and financial results for the
three and six month periods ended June 30, 2024. Crew’s Financial
Statements and Notes, as well as Management’s Discussion and
Analysis (“MD&A”) are available on Crew’s website and filed on
SEDAR+ at sedarplus.ca.
HIGHLIGHTS
-
29,253 boe per day1 (176 mmcfe per day) average
production in Q2/24 was near the midpoint of quarterly guidance of
28,500 to 30,500 boe per day, reflecting new production from five
ultra-condensate rich (“UCR”) wells brought on at the end of Q1/24,
and partially offset by the impact of dry gas production being
shut-in due to low natural gas pricing.
-
6,131 bbls per day of condensate production in
Q2/24 marked a 67% volume increase over Q2/23 and
a 12% increase from Q1/24, with condensate representing
21% of total production and 71%
of sales7.
-
123,800 mcf per day of natural gas production in
Q2/24 represented 71% of total production and
19% of sales, and is net of approximately 1,700
boe per day of predominantly dry gas that was shut-in to preserve
value given low natural gas pricing.
-
2,425 bbls per day of natural gas liquids5,6
(“ngl”) production in Q2/24 represented 8% of
total production and 9% of sales.
-
$41.4 million of Adjusted Funds Flow (“AFF”)2
($0.26 per fully diluted share3) was generated in Q2/24, exceeding
market expectations and enhanced by higher condensate production.
-
AFF2 as a
percentage of petroleum and natural gas sales (“AFF
Margin”)3 totaled 55% in Q2/24.
-
Operating netbacks4 averaged $17.70 per
boe, while AFF per boe (“AFF Netback”)3 averaged $15.55
per boe in Q2/24.
- $15.9
million of net capital expenditures4 were invested in
Q2/24, lower than guidance for the quarter of $20 to $25 million,
reflecting an efficient capital program which included $5.3 million
allocated to drilling and completion activities, $7.9 million to
facilities, equipment and pipelines and $2.7 million to land,
seismic and other miscellaneous items.
-
During the quarter, five (5.0 net) UCR wells at the 7-18 pad were
tied-in through permanent production facilities, preparation for
six (6.0 net) Tower completions began, and Crew continued to
advance both the West Septimus Gas Plant electrification project
and the future Groundbirch plant project.
-
$25.6 million of free AFF4 was generated in Q2/24,
largely directed to debt reduction in order to enhance long-term
sustainability, with only 39% drawn on Crew’s $250 million credit
facility at period end.
-
$124.5 million in net debt2 at quarter-end,
representing a 16% reduction from the prior quarter, with net debt
to trailing last twelve-month (“LTM”) EBITDA3 of 0.6x. This balance
sheet strength positions the Company to further advance our plan to
enhance reserves and production, supported by strategic
infrastructure investments.
-
$13.5 million in positive after-tax net
income ($0.08 per fully diluted share) was recorded during
the quarter.
-
$10.68 cash costs per boe4 in
Q2/24 increased 10% over Q2/23, primarily reflecting similar costs
spread over lower production volumes, but remaining amongst the
lowest in Crew’s peer group.
FINANCIAL & OPERATING
HIGHLIGHTS
|
FINANCIAL($ thousands, except per share
amounts) |
Three months endedJune 30,
2024 |
Three months endedJune 30, 2023 |
|
Six months endedJune 30,
2024 |
Six monthsendedJune 30, 2023 |
|
|
Petroleum and natural gas sales |
75,824 |
66,623 |
|
160,260 |
167,304 |
|
| Cash provided by
operating activities |
50,823 |
69,952 |
|
96,831 |
136,596 |
|
| Adjusted funds
flow2 |
41,413 |
59,035 |
|
92,610 |
133,552 |
|
| Per share3– basic |
0.26 |
0.38 |
|
0.59 |
0.87 |
|
|
– diluted |
0.26 |
0.36 |
|
0.57 |
0.83 |
|
| Net
income |
13,451 |
33,729 |
|
24,077 |
75,083 |
|
| Per share – basic |
0.09 |
0.22 |
|
0.15 |
0.49 |
|
|
– diluted |
0.08 |
0.21 |
|
0.15 |
0.46 |
|
| Property, plant and
equipment expenditures |
15,856 |
37,657 |
|
93,017 |
59,818 |
|
|
Net property dispositions4 |
- |
(966 |
) |
- |
(996 |
) |
|
Net capital expenditures4 |
15,856 |
36,661 |
|
93,017 |
58,822 |
|
|
Capital Structure($ thousands) |
As atJun. 30, 2024 |
|
As atDec. 31, 2023 |
|
|
Other long-term obligations |
(18,223 |
) |
(18,223 |
) |
| Bank loan |
(97,760 |
) |
(74,259 |
) |
| Working capital
deficiency2 |
(8,535 |
) |
(24,873 |
) |
|
Net debt2 |
(124,518 |
) |
(117,355 |
) |
|
Common shares outstanding(thousands) |
157,252 |
|
156,560 |
|
|
OPERATIONAL |
|
|
Three months endedJune 30,
2024 |
Three months endedJune 30, 2023 |
Six months endedJune 30,
2024 |
Six monthsendedJune 30, 2023 |
|
Daily production |
|
|
|
|
|
|
|
Light crude oil
(bbl/d) |
|
|
64 |
74 |
70 |
73 |
|
Natural gas liquids
(“ngl”)5,6 (bbl/d) |
|
|
2,425 |
2,342 |
2,345 |
2,348 |
|
Condensate
(bbl/d) |
|
|
6,131 |
3,671 |
5,797 |
4,119 |
|
Natural gas
(mcf/d) |
|
|
123,800 |
143,752 |
127,016 |
149,738 |
|
Total (boe/d @
6:1) |
|
|
29,253 |
30,046 |
29,381 |
31,496 |
| Average
realized3 |
|
|
|
|
|
|
|
Light crude oil
price ($/bbl) |
|
|
94.60 |
83.30 |
87.25 |
83.91 |
|
Natural gas liquids
price ($/bbl) |
|
|
29.56 |
23.20 |
30.86 |
30.98 |
|
Condensate price
($/bbl) |
|
|
96.86 |
88.72 |
93.19 |
94.02 |
|
Natural gas price
($/mcf) |
|
|
1.31 |
2.41 |
2.06 |
3.06 |
|
Commodity price
($/boe) |
|
|
28.48 |
24.37 |
29.97 |
29.35 |
|
|
Three months endedJune 30,
2024 |
|
Three months endedJune 30, 2023 |
|
Six months endedJune 30,
2024 |
|
Six monthsendedJune 30, 2023 |
|
|
Netback($/boe) |
|
|
|
|
|
Petroleum and natural gas sales |
28.48 |
|
24.37 |
|
29.97 |
|
29.35 |
|
|
Royalties |
(2.29 |
) |
(1.95 |
) |
(2.52 |
) |
(3.09 |
) |
|
Realized gain on derivative financial instruments |
0.03 |
|
8.87 |
|
0.25 |
|
6.71 |
|
|
Net operating costs4 |
(4.83 |
) |
(4.43 |
) |
(4.57 |
) |
(4.21 |
) |
|
Net transportation costs4 |
(3.69 |
) |
(3.43 |
) |
(3.74 |
) |
(3.36 |
) |
|
Operating netback4 |
17.70 |
|
23.43 |
|
19.39 |
|
25.40 |
|
|
General and administrative (“G&A”) |
(1.15 |
) |
(1.09 |
) |
(1.17 |
) |
(1.12 |
) |
|
Interest expenses on debt4 |
(1.00 |
) |
(0.73 |
) |
(0.90 |
) |
(0.85 |
) |
|
Adjusted funds flow netback2 |
15.55 |
|
21.61 |
|
17.32 |
|
23.43 |
|
1 See table in the Advisories for production
breakdown by product type as defined in NI 51-101.
2 Capital management 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 and Other Financial Measures” contained
within this press release.
3 Supplementary financial 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 and Other Financial Measures” contained
within this press release.
4 Non-IFRS financial measure or ratio that does
not have any standardized meaning as prescribed by International
Financial Reporting Standards, and therefore, may not be comparable
with calculations of similar measures or ratios for other entities.
See “Advisories - Non-IFRS and Other Financial Measures” contained
within this press release and in our most recently filed MD&A,
available on SEDAR+ at sedarplus.ca.
5 Throughout this news release, NGLs 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.
6 Excludes condensate volumes which have been
reported separately.
7 Does not include light crude oil volumes which
totaled 64 bbl/d in Q2/24, and represented approximately 1% of
total production and 1% of sales.
STAYING FOCUSED ON
EXECUTION
Crew’s continued efforts to focus on
higher-value liquids volumes led to a 65% increase in condensate
and light crude oil production in Q2/24 over the same period in
2023, which helped to offset the impact of lower natural gas prices
and drive per share AFF3 that was higher than market expectations.
As outlined in Crew’s Q1 2024 results release, the Company
prudently elected to curtail production of predominantly dry
natural gas in light of ongoing weakness in natural gas prices.
Crew also took the opportunity to layer on additional hedges for
2025 designed to help mitigate volatility in future periods. The
team’s efficient execution supported capital expenditures that were
approximately 29% under the midpoint of quarterly guidance,
resulting in robust free AFF4 and enabling the Company to reduce
net debt2 by 16% in Q2/24 over the previous quarter-end. Crew’s
disciplined capital allocation strategy continued to high-grade
opportunities offering the greatest value creation potential, while
ensuring our ability to advance long-term strategic infrastructure
projects.
During the quarter, the Company continued to
progress both the West Septimus Gas Plant electrification project,
along with the Groundbirch facility project. Electrification
construction at West Septimus is currently anticipated to commence
in the fourth quarter of 2024, and once completed, is expected to
reduce emissions while also projected to result in potential
savings of approximately 10% on operating costs annually. This
project demonstrates our commitment to balancing economic benefit
with responsible resource development. We gratefully acknowledge
the Province of British Columbia’s CleanBC Industry Fund for their
part in supporting this project.
Geographically and operationally, Crew is
strategically positioned for value creation. With over 340 net
sections of Montney rights in the liquids-rich gas, condensate and
oil windows, access to multiple Canadian and US sales hubs, and
being in close proximity to the Coastal GasLink Pipeline, we are
uniquely positioned to capitalize on emerging opportunities.
Additionally, the startup of Canada’s first liquefied natural gas
(“LNG”) export terminal earlier in 2024 offers significant
potential for growth and strengthens Crew’s strategic advantage in
the evolving natural gas supply and demand landscape.
OPERATIONS
UPDATE
NE BC Montney (Greater
Septimus)
- On the 7-18 pad,
five (5.0 net) UCR wells were equipped and tied-in through
permanent production facilities during the quarter, with average
well performance of 65,924 bbls (680 bbls per day) of raw
condensate over the first 97 days on production, flowing against
average pressures in excess of 3,000 kPa.
- Condensate
production was further supported in the period by the performance
of four (4.0 net) UCR Montney B zone wells on the 1-24 pad that
were equipped during Q1/24, which flowed at an average of 118,672
bbls (492 bbls per day) of raw condensate over the first 241
days.
Groundbirch
-
The original three (3.0 net) wells on the 4-17 pad have completed
lateral lengths averaging 3,000 meters and have produced an average
of 4.56 bcf of natural gas over the first 900 days on production,
exceeding Sproule’s year-end 2023 proved plus probable (“2P”)
undeveloped Groundbirch type curve (the “Sproule Groundbirch Type
Curve”) by approximately 33% to date.
-
The second phase of development at Crew’s 4-17 pad has completed
lateral lengths averaging 2,650 meters, featuring a three-zone
development with five (5.0 net) wells that have averaged 4,370 mcf
per day over the first 670 days on production and continue to
exceed the Sproule Groundbirch Type Curve when normalized to 3,000
meters, with estimated average raw gas assignments (EUR) of 12 BCF
per well8.
-
The Company has six (6.0 net) drilled wells on the 4-17 pad at
Groundbirch, which are expected to remain in inventory for
completion when natural gas prices improve. These wells were
drilled during Q1/24 and have average lateral lengths of over 3,000
meters.
Other NE BC Montney
-
The Company commenced preparations for the completion of six (6.0
net) Extended Reach Horizontal (“ERH”) wells on the 15-28 pad at
Tower during the quarter, which targeted light crude oil and
featured lateral lengths of over 4,000 meters.
-
Early in Q3/24, the six (6.0 net) ERH Tower wells, including four
(4.0 net) Upper Montney “B’ wells and two (2.0 net) Upper Montney
“C” wells, have been completed and have just begun flowing back.
Production is expected to be positively impacted once these wells
have cleaned up in the latter part of Q3.
8 See “Advisories – Type Curves / Wells”.
RISK MANAGEMENT PROFILE
Crew uses hedging strategies to mitigate
exposure to fluctuations in commodity prices and foreign exchange
rates. This approach secures a stable base level of AFF2 to support
planned capital projects, while still allowing the Company to
benefit from favorable spot commodity prices.
As of August 7, 2024, our hedging profile
includes:
2024
-
2,500 GJ per day of AECO natural gas at an average price of C$2.88
per GJ, or C$3.51 per mcf using Crew’s heat factor, for the
remainder of 2024;
-
1,750 bbls per day of condensate at an average price of C$104.01
per bbl for 2nd half 2024;
-
500 bbls per day of WTI at C$109.25 per bbl for 2nd half 2024.
2025
-
7,500 GJ per day of AECO natural gas at an average price of C$3.08
per GJ, or C$3.76 per mcf using Crew’s heat factor, for 2025;
-
15,000 GJ per day of AECO natural gas utilizing costless collars at
$2.78 by $3.28 per GJ, for 2025;
-
750 bbls per day of condensate at an average price of C$101.10 per
bbl for 1st half of 2025; and
-
250 bbls per day of condensate at an average price of C$100.00 per
bbl for 2nd half of 2025.
PROTECTING OUR CREW
In Q2/24, Crew continued to prioritize safety,
corporate citizenship and efficient operations and we are proud to
confirm the Company had no recordable injuries or reportable spills
during the period. Crew would like to thank our supervisors,
employees and contractors for their diligent efforts to make the
Company a safe place to work for everyone in our Crew.
Additional highlights for Q2/24 include:
-
Over six years without a lost time injury, and more than two
million consecutive person-hours of work have been completed
without a recordable injury to the end of Q2/24, a corporate
record.
-
Maintained a comprehensive water management strategy that includes
plans for stringent usage and responsible sourcing.
-
The Company’s 2024 summer student program is well underway with
five university students working in various disciplines across the
organization to gain valuable industry experience.
-
Continued our “Crew Cares” program in Q2/24, with volunteering
efforts focused on Ronald McDonald House and Made by Momma, and
financial contributions to community support initiatives and
not-for-profit organizations. Crew’s financial contributions in the
quarter were primarily aimed at supporting children’s sports
events, health and well-being in nearby communities, and local
indigenous events.
OUTLOOK
The Company’s previously announced annual net
capital expenditure and production guidance remains unchanged and
is outlined below.
-
2024 Guidance – Continue to increase the
proportion of higher-value condensate and light crude oil in the
production mix, further enhancing AFF2. The success of this
strategy was demonstrated in Q2/24, with Crew generating robust
condensate volumes that represented the majority of sales and only
one-fifth of total production. The Company will also continue to
preserve the value of our natural gas assets by shutting-in
production during periods of price weakness or by deferring
development. The Company’s previously announced 2024 capital
program is designed to:
- Allocate $165 to
$185 million of planned net capital expenditures4, to be invested
as follows:
- Drill 6.0 net wells
and complete 11.0 net wells, targeting to have an inventory of 10.0
net wells drilled and uncompleted at year-end 2024.
-
Infrastructure spending that includes:
-
Progressing West Septimus electrification.
-
Front-end engineering and design (“FEED”) work along with site
preparation at the future Groundbirch plant.
-
Generate average 2024 production forecasted at 29,000 to 31,000 boe
per day1.
-
Expand annual condensate and light oil production by more than 20%
over 2023.
-
Continue to manage natural gas production to balance the
optimization of AFF2 and preservation of value, by curtailing
approximately 1,700 boe per day of natural gas production through
Q3/24.
-
Maintain the Company’s current strong financial position with
targeted net debt2 to LTM EBITDA3 of <1.0x (Q2/24 was
0.6x).
-
Advance the planned electrification of the West Septimus gas plant.
-
Increase plant capacity by 20 mmcf per day to total 140 mmcf per
day in 2025.
-
Reduce operating costs by more than 10% annually.
-
Target reductions in CO2 emissions and potentially generate carbon
credits under BC’s Output-Based Pricing System.
-
Position the Company to thrive and grow in an improved natural gas
price environment.
-
Q3 Capital Program – Our Q3/24 capital program is
focused on the advancement of our light oil assets at Tower and
continued development of our condensate-rich assets at Greater
Septimus, and includes:
-
Allocation of $60 to $70 million of net capital expenditures4.
-
Ongoing expenditures on electrification at the West Septimus gas
plant.
-
Completion and tie-in of six (6.0 net) wells in the Tower
area.
-
Generate estimated average Q3/24 production of 27,000 to 29,000 boe
per day1, assuming approximately 1,700 boe per day remains
curtailed for the quarter.
-
Wildfire monitoring – At this time, Crew’s
operations have remained unaffected by wildfires in northeast BC.
Our team continues to actively monitor fire risks in the areas
surrounding our operations to ensure the safety of our people and
operations and would be ready to mobilize should circumstances
change.
The following table sets forth Crew’s annual
guidance that is consistent with the guidance outlined in the
Company’s Q1/24 press release:
|
|
|
2024 Guidance and
Assumptions9 |
|
Net capital expenditures4 ($Millions) |
|
165–185 |
|
Annual average production1 (boe/d) |
|
29,000–31,000 |
|
Natural gas weighting |
|
72-74% |
|
Royalties |
|
9–11% |
|
Net operating costs4 ($ per boe) |
|
$4.50–$5.00 |
|
Net transportation costs4 ($ per boe) |
|
$3.50–$4.00 |
|
G&A ($ per boe) |
|
$1.00–$1.20 |
|
Effective interest rate on long-term debt |
|
8.0–10.0% |
Crew remains focused on advancing our strategic
vision to unlock the value of our Montney assets and intensify
efforts to expand condensate production. With the continued support
and dedication of all employees and contractors, along with the
unwavering commitment of our Board of Directors, we look forward to
building on our past success and driving sustainable future growth
for the Company and our shareholders.
9 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.
ABOUT CREW
Crew is a Canadian liquids-rich natural gas
producer committed to pursuing sustainable per share growth through
financially responsible resource development. The Company’s
operations are focused in northeast British Columbia and include a
large contiguous land base with a vast Montney resource. Crew's
liquids-rich natural gas areas of Septimus and West Septimus are
complemented by the inter-connected vast dry-gas resource at
Groundbirch, offering 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 adheres to safe and environmentally responsible
operations while remaining committed to sound environmental, social
and governance practices which underpin the Company’s fundamental
business tenets. Crew’s common shares are listed for trading on the
Toronto Stock Exchange (“TSX”) under the symbol “CR” and on the
OTCQB in the US under ticker “CWEGF”.
FOR FURTHER INFORMATION, PLEASE
CONTACT:
| Dale Shwed, President and
CEO |
Phone: (403) 266-2088 |
| John Leach, Executive Vice
President and CFO |
Email:
investor@crewenergy.com |
ADVISORIES
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" "targets",
"goals" 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 near and longer range
strategic plan (the "Strategic Plan") and underlying strategy,
associated plans, goals and targets, all as more particularly
outlined and described in this press release; our 2024 annual
capital budget range (the "2024 Budget"), associated drilling,
completion and infrastructure plans, the anticipated timing
thereof, and all associated strategies, initiatives, goals and
targets, along with all forecasts, guidance and underlying
assumptions and sensitivities related to the 2024 Budget, along
with Q3 capital plans and associated guidance, as outlined in the
"Outlook" section in this press release; production estimates and
targets under the 2024 Budget and balance of the longer range plan
including expected curtailed volumes, infrastructure plans and
anticipated benefits associated therewith as outlined in this press
release including, without limitation, the planned expansion and
electrification of the West Septimus gas plant and anticipated
associated metrics estimates, economic and other benefits thereof,
expectations in regards to the extent of provincial and federal
government grants, credits and financial incentives related
thereto, the planned construction of the Groundbirch Plant and
anticipated benefits thereof, anticipated timing and assumed
receipt of all regulatory approvals required in connection with our
infrastructure plans and our ability to secure financing for these
plans as may be required, from time to time, and the potential
costs associated therewith; commodity price expectations and
assumptions; Crew's commodity risk management programs and future
hedging plans; marketing and transportation and processing plans
and requirements; the potential for coastal liquids egress via the
CN rail line; estimates of processing capacity and requirements;
anticipated reductions in GHG emissions and decommissioning
obligations; future liquidity and financial capacity and ability to
finance our Strategic Plan; potential hedging opportunities and
plans related thereto; future results from operations and targeted
operating and leverage metrics; world supply and demand projections
and long-term impact on pricing; future development, exploration,
acquisition, disposition and infrastructures activities (including
our capital investment model and associated drilling and completion
plans, associated receipt of all required regulatory permits for
our Strategic Plan, development timing and cost estimates); the
potential to serve a Canadian LNG market including the anticipated
start-up of LNG Canada in 2025 and the anticipated benefits thereof
to the Corporation both strategically and economically; the
potential of our Groundbirch area to be a core area of future
development and the anticipated commerciality of up to four
potential prospective zones to be drilled; and the expected
positive attributes discussed herein attributable to our Strategic
Plan.
The internal projections, expectations, or
beliefs underlying our Board approved 2024 Budget and associated
guidance, as well as management's strategy, and associated plans,
goals and targets in respect of the balance of its strategic plan,
are subject to change in light of, without limitation, the
continuing impact of the Russia/Ukraine conflict, war in the Middle
East and any related actions taken by businesses and governments,
ongoing results, prevailing economic circumstances, volatile
commodity prices, resulting changes in our underlying assumptions,
goals and targets provided herein and changes in 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 and as at the
date of this press release based upon the key assumptions outlined
herein. Readers are cautioned that events or circumstances and
updates to underlying assumptions could cause capital plans and
associated results to differ materially from those predicted and
Crew's guidance for 2024, and more particularly its internal model,
goals and targets for 2025 and beyond which are not based upon
Board approved budget(s) at this time, 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; that future business, regulatory and industry conditions
will be within the parameters expected by Crew; 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,
environmental and indigenous matters in the jurisdictions in which
Crew operates; that regulatory authorities in British Columbia will
continue granting approvals for oil and gas activities on time
frames, and on terms and conditions, consistent with past
practices; 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 the Russia/Ukraine conflict and war in the Middle East; 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 and 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 and identified drilling inventory; 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 MD&A and
Annual Information Form).
This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about Crew's prospective capital
expenditures and all associated guidance, 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.
Risk Factors to the Company's Strategic
Plan
Risk factors that could materially impact
successful execution and actual results of the Company’s strategic
plan include:
- volatility of
petroleum and natural gas prices and inherent difficulty in the
accuracy of predictions related thereto;
- changes in Federal
and Provincial regulations;
- execution of
construction timelines from BC Hydro to support the electrification
of the West Septimus and Groundbirch plants;
- receipt of
high-value regulatory permits required to launch development under
the strategic plan;
- the Company's
ability to secure financing for the Groundbirch plant; and
- those additional
risk factors set forth in the Company's most recently filed
MD&A and Annual Information Form on SEDAR+.
Information Regarding Disclosure on Oil
and Gas Operational Information
All amounts in this news release are stated in
Canadian dollars unless otherwise specified. This press release
contains metrics commonly used in the oil and natural gas industry.
Each of these metrics are determined by Crew as specifically set
forth in this news release. These terms do not have standardized
meanings or standardized methods of calculation and therefore may
not be comparable to similar measures presented by other companies,
and therefore should not be used to make such comparisons. Such
metrics have been included to provide readers with additional
information to evaluate the Company’s performance however, such
metrics are not reliable indicators of future performance and
therefore should not be unduly relied upon for investment or other
purposes. See “Non-IFRS and Other Financial Measures” below for
additional disclosures.
Test Results and Initial Production
Rates
A pressure transient analysis or well-test
interpretation has not been carried out and thus certain of the
test results provided herein should be considered to be preliminary
until such analysis or interpretation has been completed. Test
results and initial production (“IP”) rates disclosed herein,
particularly those short in duration, may not necessarily be
indicative of long-term performance or of ultimate recovery.
Type Curves/Wells
The Groundbirch type curves referenced herein
reflect the average per well proved plus probable undeveloped raw
gas assignments (EUR) for Crew's area of operations, as derived
from the Company's year-end independent reserve evaluations
prepared by Sproule in accordance with the definitions and
standards contained in the COGE Handbook. Unless otherwise stated,
the type wells are based upon all Crew producing wells in the area
as well as non-Crew wells determined by the independent evaluator
to be analogous for purposes of the reserve assignments.
There is no guarantee that Crew will achieve the estimated or
similar results derived therefrom and therefore undue reliance
should not be placed on them. Such information has been prepared by
Management, where noted, for purposes of making capital investment
decisions and for internal budget preparation only.
BOE and Mcfe Conversions
Measurements expressed in barrel of oil
equivalents, BOEs or Mcfe may be misleading, particularly if used
in isolation. A BOE conversion ratio of 6 mcf: 1 bbl and an Mcfe
conversion ratio of 1 bbl:6 Mcf are based on an energy equivalency
conversion method primarily applicable at the burner tip and do 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.
Non-IFRS and Other Financial
Measures
Throughout this press release and other
materials disclosed by the Company, Crew uses certain measures to
analyze financial performance, financial position and cash flow.
These non-IFRS and other specified financial measures do not have
any standardized meaning prescribed under IFRS and therefore may
not be comparable to similar measures presented by other entities.
The non-IFRS and other specified financial measures should not be
considered alternatives to, or more meaningful than, financial
measures that are determined in accordance with IFRS as indicators
of Crew’s performance. Management believes that the presentation of
these non-IFRS and other specified financial measures provides
useful information to shareholders and investors in understanding
and evaluating the Company’s ongoing operating performance, and the
measures provide increased transparency and the ability to better
analyze Crew’s business performance against prior periods on a
comparable basis.
Capital Management Measures
a) Funds from
Operations and Adjusted Funds Flow
Funds from operations represents cash provided
by operating activities before changes in operating non-cash
working capital, accretion of deferred financing costs and
transaction costs on property dispositions. Adjusted funds flow
represents funds from operations before decommissioning obligations
settled (recovered). The Company considers these metrics as key
measures 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. Management believes that
such measures provide an insightful assessment of the Company's
operations on a continuing basis by eliminating certain non-cash
charges, actual settlements of decommissioning obligations and
transaction costs on property dispositions, the timing of which is
discretionary. Funds from operations and adjusted funds flow should
not be considered as an alternative to or more meaningful than cash
provided by operating activities as determined in accordance with
IFRS as an indicator of the Company’s performance. Crew’s
determination of funds from operations and adjusted funds flow may
not be comparable to that reported by other companies. Crew also
presents adjusted funds flow per share whereby per share amounts
are calculated using weighted average shares outstanding consistent
with the calculation of income per share. The applicable
reconciliation to the most directly comparable measure, cash
provided by operating activities, is contained below.
b) Net Debt and Working Capital
Surplus (Deficiency)
Crew closely monitors its capital structure with
a goal of maintaining a strong balance sheet to fund the future
growth of the Company. The Company monitors net debt as part of its
capital structure. The Company uses net debt (bank debt plus
working capital deficiency or surplus, excluding the current
portion of the fair value of financial instruments) as an
alternative measure of outstanding debt. Management considers net
debt and working capital deficiency (surplus) an important measure
to assist in assessing the liquidity of the Company.
Non-IFRS Financial Measures and
Ratios
a) Net Property Acquisitions
(Dispositions)
Net property acquisitions (dispositions) equals
property acquisitions less property dispositions and transaction
costs on property dispositions. Crew uses net property acquisitions
(dispositions) to measure its total capital investment compared to
the Company’s annual capital budgeted expenditures. The most
directly comparable IFRS measures to net property acquisitions
(dispositions) are property acquisitions and property
dispositions.
b) Net Capital Expenditures
Net capital expenditures equals exploration and
development expenditures less net property acquisitions
(dispositions). Crew uses net capital expenditures to measure its
total capital investment compared to the Company’s annual capital
budgeted expenditures. The most directly comparable IFRS measure to
net capital expenditures is property, plant and equipment
expenditures.
c) EBITDA
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. The Company considers this metric as key
measures 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. The most directly
comparable IFRS measure to EBITDA is cash provided by operating
activities.
|
($ thousands) |
Three months ended June 30,
2024 |
Three months ended March 31, 2024 |
Three months ended June 30, 2023 |
Six months ended June
30,2024 |
Six months ended June 30, 2023 |
|
Adjusted funds flow |
41,413 |
51,197 |
59,035 |
92,610 |
133,552 |
|
Interest expense on debt |
2,673 |
2,134 |
2,003 |
4,807 |
4,818 |
|
EBITDA |
44,086 |
53,331 |
61,038 |
97,417 |
138,370 |
d) Free Adjusted Funds FlowFree
adjusted funds flow represents adjusted funds flow less capital
expenditures, excluding acquisitions and dispositions. The Company
considers this metric a key measure that demonstrates the ability
of the Company’s continuing operations to fund future growth
through capital investment and to service and repay debt. The most
directly comparable IFRS measure to free adjusted funds flow is
cash provided by operating activities.
|
($ thousands) |
Three months endedJune 30,
2024 |
|
Three months endedMarch 31, 2024 |
|
Three months endedJune 30, 2023 |
|
Six monthsendedJune
30,2024 |
|
Six monthsendedJune 30, 2023 |
|
|
Cash provided by operating activities |
50,823 |
|
46,008 |
|
69,952 |
|
96,831 |
|
136,596 |
|
|
Change in operating non-cash working capital |
(10,779 |
) |
3,163 |
|
(12,154 |
) |
(7,616 |
) |
(7,634 |
) |
|
Accretion of deferred financing costs |
- |
|
- |
|
(49 |
) |
- |
|
(199 |
) |
|
Funds from operations |
40,044 |
|
49,171 |
|
57,749 |
|
89,215 |
|
128,763 |
|
|
Decommissioning obligations settled excluding government
grants |
1,369 |
|
2,026 |
|
1,286 |
|
3,395 |
|
4,789 |
|
|
Adjusted funds flow |
41,413 |
|
51,197 |
|
59,035 |
|
92,610 |
|
133,552 |
|
|
Less: property, plant and equipment expenditures |
15,856 |
|
77,161 |
|
37,657 |
|
93,017 |
|
59,818 |
|
|
Free adjusted funds flow |
25,557 |
|
(25,964 |
) |
21,378 |
|
(407 |
) |
73,734 |
|
e) Net Operating Costs
Net operating costs equals operating costs net
of processing revenue. Management views net operating costs as an
important measure to evaluate its operational performance. The most
directly comparable IFRS measure for net operating costs is
operating costs.
|
($ thousands, except per boe) |
Three months ended June 30,
2024 |
|
Three months ended March 31, 2024 |
|
Three months ended June 30, 2023 |
|
Six months ended June
30,2024 |
|
Six months ended June 30, 2023 |
|
| Operating expenses |
13,375 |
|
12,130 |
|
12,712 |
|
25,505 |
|
25,270 |
|
|
Processing revenue |
(520 |
) |
(552 |
) |
(610 |
) |
(1,072 |
) |
(1,246 |
) |
|
Net operating costs |
12,855 |
|
11,578 |
|
12,102 |
|
24,433 |
|
24,024 |
|
| Per
boe |
4.83 |
|
4.31 |
|
4.43 |
|
4.57 |
|
4.21 |
|
f) Net Operating
Costs per boe
Net operating costs per boe equals net operating
costs divided by production. Management views net operating costs
per boe as an important measure to evaluate its operational
performance. The calculation of Crew’s net operating costs per boe
can be seen in the non-IFRS measure entitled “Net Operating Costs”
above.
g) Net
Transportation Costs
Net transportation costs equals transportation
costs net of transportation revenue. Management views net
transportation costs as an important measure to evaluate its
operational performance. The most directly comparable IFRS measure
for net transportation costs is transportation expenses.
|
($ thousands, except per boe) |
Three months ended June 30,
2024 |
|
Three months ended March 31, 2024 |
|
Three months ended June 30, 2023 |
|
Six months ended June
30,2024 |
|
Six months ended June 30, 2023 |
|
| Transportation expenses |
12,451 |
|
11,626 |
|
10,967 |
|
24,077 |
|
22,255 |
|
|
Transportation revenue |
(2,634 |
) |
(1,437 |
) |
(1,576 |
) |
(4,071 |
) |
(3,096 |
) |
|
Net transportation costs |
9,817 |
|
10,189 |
|
9,391 |
|
20,006 |
|
19,159 |
|
| Per
boe |
3.69 |
|
3.79 |
|
3.43 |
|
3.74 |
|
3.36 |
|
h) Net
Transportation Costs per boe
Net transportation costs per boe equals net
transportation costs divided by production. Management views net
transportation costs per boe as an important measure to evaluate
its operational performance.
i) Operating
Netback per boe
Operating netback per boe 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 per boe an
important measure to evaluate its operational performance as it
demonstrates its field level profitability relative to current
commodity prices.
j) Cash costs per
boe
Cash costs per boe is comprised of net
operating, transportation, general and administrative and interest
expense on debt calculated on a boe basis. Management views cash
costs per boe as an important measure to evaluate its operational
performance.
|
($/boe) |
Three months ended June 30,
2024 |
Three months ended March 31, 2024 |
Three months ended June 30, 2023 |
Six months ended June
30,2024 |
Six months ended June 30, 2023 |
| Net operating costs |
4.83 |
4.31 |
4.43 |
4.57 |
4.21 |
| Net transportation costs |
3.69 |
3.79 |
3.43 |
3.74 |
3.36 |
| General and administrative
expenses |
1.15 |
1.18 |
1.09 |
1.17 |
1.12 |
|
Interest expense on debt |
1.00 |
0.79 |
0.73 |
0.90 |
0.85 |
|
Cash costs |
10.68 |
10.07 |
9.68 |
10.38 |
9.54 |
k) Interest
expense on debt per boeInterest expense on debt per boe is
comprised of the sum of interest on bank loan and other, interest
on senior notes and accretion of deferred financing charges,
divided by production. Management views interest expense on debt
per boe as an important measure to evaluate its cost of debt
financing.
|
($ thousands, except per boe) |
Three months ended June 30,
2024 |
Three months ended March 31, 2024 |
Three months ended June 30, 2023 |
Six months ended June
30,2024 |
Six months ended June 30, 2023 |
| Interest on bank loan and
other |
2,673 |
2,134 |
1,127 |
4,807 |
1,035 |
| Interest on senior notes |
- |
- |
827 |
- |
3,584 |
|
Accretion of deferred financing charges |
- |
- |
49 |
- |
199 |
|
Interest expense on debt |
2,673 |
2,134 |
2,003 |
4,807 |
4,818 |
| Production (boe/d) |
29,253 |
29,510 |
30,046 |
29,381 |
31,496 |
|
Interest expense on debt per boe |
1.00 |
0.79 |
0.73 |
0.90 |
0.85 |
Supplementary Financial
Measures
"Adjusted funds flow margin" is
comprised of adjusted funds flow divided by petroleum and natural
gas sales.
"Adjusted funds flow per basic
share" is comprised of adjusted funds flow divided by the
basic weighted average common shares.
"Adjusted funds flow per diluted
share" is comprised of adjusted funds flow divided by the
diluted weighted average common shares.
"Adjusted funds flow per boe"
or “AFF netback” is comprised of adjusted funds
flow divided by total production.
"Average realized commodity
price" is comprised of commodity sales from production, as
determined in accordance with IFRS, divided by the Company's
production. Average prices are before deduction of net
transportation costs and do not include gains and losses on
financial instruments.
“Average realized light crude oil
price” is comprised of light crude oil commodity sales
from production, as determined in accordance with IFRS, divided by
the Company’s light crude oil production. Average prices are before
deduction of net transportation costs and do not include gains and
losses on financial instruments.
"Average realized ngl price" is
comprised of ngl commodity sales from production, as determined in
accordance with IFRS, divided by the Company's ngl production.
Average prices are before deduction of net transportation costs and
do not include gains and losses on financial instruments.
“Average realized condensate
price” is comprised of condensate commodity sales from
production, as determined in accordance with IFRS, divided by the
Company’s condensate production. Average prices are before
deduction of net transportation costs and do not include gains and
losses on financial instruments.
"Average realized natural gas
price" is comprised of natural gas commodity sales from
production, as determined in accordance with IFRS, divided by the
Company's natural gas production. Average prices are before
deduction of net transportation costs and do not include gains and
losses on financial instruments.
"Net debt to last twelve months (“LTM”)
EBITDA" is calculated as net debt at a point in time
divided by EBITDA earned from that point back for the trailing
twelve months.
Supplemental Information Regarding
Product Types
References to gas or natural gas and NGLs in
this press release refer to conventional natural gas and natural
gas liquids product types, respectively, as defined in National
Instrument 51-101, Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"), except where specifically noted
otherwise.
The following is intended to provide the product
type composition for each of the production figures provided
herein, where not already disclosed within tables above:
|
|
Light & Medium Crude Oil |
|
Condensate |
|
Natural Gas Liquids1 |
|
ConventionalNatural Gas |
|
Total(boe/d) |
|
Q3 2024 Average |
5 |
% |
17 |
% |
8 |
% |
70 |
% |
27,000–29,000 |
|
2024 Annual Average |
3 |
% |
17 |
% |
8 |
% |
72 |
% |
29,000–31,000 |
Notes:1) Excludes condensate volumes which
have been reported separately.
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