CALGARY, Jan. 9, 2019 /CNW/ - Crew Energy Inc. (TSX: CR)
("Crew" or the "Company") is pleased to announce an operations
update that builds on our 2019 budget release issued on
December 10th, 2018.
The Company's $95 to $105 million budget is expected to approximate
annual estimated Funds From Operations ("FFO") which is designed to
preserve balance sheet strength and financial
flexibility.
PRODUCTION UPDATE
- Strong December Production: Based on field estimates,
December 2018 average production is
estimated at 24,200 boe per day (70% natural gas) as a result of
higher production rates from Ultra Condensate Rich ("UCR") wells
and a portion of shut-in production being restored as differentials
improved through the month. Average production in Q4 2018 is
estimated at 22,400 boe per day as approximately 1,300 boe per day
of natural gas and 700 bbls per day of heavy oil was shut-in for
the majority of the quarter due to low pricing. Annual production
is estimated at 23,850 boe per day, which is within guidance of
23,500 to 24,500 boe per day.
DRILLING OPERATIONS
- Focus on UCR Drilling: Crew has two drilling rigs
currently working in Northeast B.C. One rig is drilling the last
well on a six well pad (at the 4-21 location) directly south of our
recently completed 15-20 wells in the UCR area. This rig will then
be moved to drill a four well UCR pad directly north of the 15-20
location at 3-32; where lateral lengths are planned at over 3,000
metres. The second rig is drilling a lease retention well at
Attachie before moving to drill an
exploratory horizontal well approximately 18 kilometers northwest
of Crew's UCR area, to delineate Crew's liquids rich play in the
area. The Company has continued to refine a number of variables in
our drilling operations to improve efficiencies and we have seen a
35% reduction in costs per metre of lateral length drilled. Crew
continues to trial different lateral lengths, fluid systems, drill
bits and downhole assemblies in order to optimize
efficiencies.
COMPLETION OPERATIONS
- Increased Lateral Lengths: Crew now has production data
from its three recently completed, extended reach wells in the UCR
area that are exceeding Company forecasts. The wells were drilled
with lateral lengths of 2,500 to 2,700 metres versus previous
average lateral lengths of 1,840 metres in this area.
- Enhanced Completions Design: Crew has used a new
completion design which has the following characteristics:
-
- Perf and plug completions were used to allow for the effective
stimulation of these longer laterals by more evenly distributing
fractures and proppant along their lengths;
- New frac fluids were used to enhance frac geometry, improve
proppant placement, and optimize water usage;
- The number of fracture initiation points were increased
four-fold;
- Inter-well spacing within the same zone was decreased to 250
metres from 400 metres to improve liquids recovery; and
- Microseismic data was recorded to understand the effectiveness
and impact of variations within the completion design.
- 15-20 Pad Shows Positive Initial Results: The three
15-20 wells produced for 25 days in December before being shut-in
to accommodate offsetting fracture operations of adjacent wells in
early January. The three wells were producing at a combined sales
rate of 4,584 boe per day (61% liquids), for an average per well
rate of 1,528 boe per day comprised of 3.6 mmcf (599 boe per day)
of sales gas, 776 bbls per day of condensate and 153 bbls per day
of natural gas liquids ("NGLs"). The condensate gas ratio averaged
216 bbls per mmcf. Since flowback began in mid November, the three
wells have produced over 75,000 bbls of condensate.
- 2019 Fracture Operations: Crew has begun frac operations
on the remaining two wells on the 15-20 pad. One well was drilled
in the same "B" zone as the first three completed wells and the
other was drilled in the "C" zone. Following the completion of the
15-20 pad, Crew plans on fracture treating four wells on the 4-21
pad directly south of the 15-20 pad.
TRANSPORTATION AND RISK MANAGEMENT
- Crew's 2019 natural gas sales exposure is currently expected to
be approximately 43% to Chicago City Gate, 16% to NYMEX, 15% to
Dawn, 10% to Alliance ATP, 8% to Malin, 4% to Station 2 and 4% to
AECO 5A.
- Approximately 30% of our budgeted 2019 volumes are hedged at
$2.59 per GJ or approximately
$2.74 per mcf, which increases to
approximately $3.22 per mcf after
adjusting for Crew's higher heat content natural gas. Natural gas
hedges currently include 22,500 mmbtu per day of Chicago City Gate
gas at C$3.54 per mmbtu, 5,000 mmbtu
per day of Dawn gas at C$3.56 per
mmbtu and 7,500 mmbtu per day of NYMEX gas at US$2.98 per mmbtu.
- 1,874 barrels per day of WTI are hedged at an average price of
C$75.99 per barrel for 2019 and 500
barrels per day of WCS hedged for the first half of 2019 at an
average price of C$52.93 per bbl. In
addition, Crew has 250 bbls per day of WCS differential hedged at
C$25.75 per bbl for the first half of
2019.
Crew is scheduled to report our fourth quarter and year end 2018
results on March 4, 2019 after market
close.
Cautionary Statements
Information Regarding Disclosure on Oil and
Gas and Operational Information and Non-IFRS Measures
This press release contains metrics commonly used in the oil
and natural gas industry, such as "funds from
operations". This term is not defined in IFRS and does not
have a standardized meaning or standardized method 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 herein to provide
readers with additional information to evaluate the Company's
performance, however such metrics should not be unduly relied upon.
Management uses oil and gas metrics for its own performance
measurements and to provide shareholders with measures to compare
Crew's operations over time. Readers are cautioned that the
information provided by these metrics, or that can be derived from
the metrics presented in this press release, should not be relied
upon for investment or other purposes. See "Non-IFRS Measures"
contained within Crew's MD&A for applicable definitions,
calculations, rationale for use and reconciliations to the most
directly comparable measure under IFRS.
Forward-Looking Information and Statements
The Company anticipates remaining disciplined but flexible
with its budgeted 2019 capital expenditures as it monitors business
conditions and commodity prices throughout the fiscal year. Where
deemed prudent, the Company may make adjustments to its 2019
capital budget. Actual spending may vary due to a variety of
factors including, without limitation, drilling results, crude oil
and natural gas prices, economic conditions, prevailing debt and/or
equity markets, field services and equipment availability, and the
impact of any future strategic acquisitions or dispositions. The
Company has flexibility to adjust the level of its capital
investments as circumstances warrant.
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 Company's planned 2019
capital expenditures program, the estimated volumes,
including shut-ins, and product mix of Crew's oil and gas
production; production estimates including December 2018, fourth quarter and annual average
production estimates; Crew's commodity risk management programs;
marketing, transportation and natural gas egress plans; future
liquidity and financial capacity required to carry out our planned
program; future results from operations and operating metrics;
future development activities (including drilling and completion
plans and associated timing and cost estimates); and methods of
funding our capital program.
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: 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; 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 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.
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 rates disclosed herein, particularly those short
in duration, may not necessarily be indicative of long term
performance or of ultimate recovery.
BOE equivalent
Barrel of oil equivalents or BOEs may be misleading,
particularly if used in isolation. A BOE conversion ratio of
6 mcf: 1 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. 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.
Crew is a growth-oriented oil and natural gas producer,
committed to pursuing sustainable per share growth through a
balanced mix of financially 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. Crew's liquids-rich Septimus and
West Septimus areas ("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's common shares are listed for trading on the
Toronto Stock Exchange ("TSX") under the symbol "CR".
SOURCE Crew Energy Inc.