CALGARY, Feb. 27, 2020 /CNW/ - Crew Energy Inc. (TSX: CR)
("Crew" or the "Company") is pleased to confirm the
first of two closings of our previously announced strategic
transaction with a third party midstream company (the
"Transaction"), which was announced on January 17, 2020. The Transaction is one of
many innovative value-creation initiatives Crew has undertaken to
streamline our asset base. Over and above the proceeds to be
realized from the Transaction, since 2014 the Company has
successfully generated more than $502
million through portfolio optimization. These proceeds
have supported continued development of our high-quality
Montney assets, including ongoing
drilling and completions in our ultra-condensate rich area at
Greater Septimus. Crew plans to continue pursuing strategic,
non-core dispositions and other value-enhancing transactions to
monetize the inherent value of our vast asset base and further
strengthen our financial position.
Proceeds of $35 Million on
First Closing
Concurrent with this first closing, Crew has received cash
consideration of $35 million in
exchange for the disposition of an 11% net working interest ("WI")
in our Septimus and West Septimus gas processing facilities located
within Crew's northeast B.C. ("NEBC") Montney operations at Greater Septimus (the
"NEBC Facilities"). As part of the broader
transaction, Crew and the midstream company plan to form a
strategic infrastructure alliance with the goal of participating in
future value creation opportunities.
The second closing of the Transaction is expected in Q4, 2020
and will result in Crew receiving an additional $35 million of cash consideration in exchange for
the disposition of another 11% net WI, subject to standard industry
closing conditions. Under the Transaction, Crew's total WI
divestment is 22% for total proceeds of $70
million. As part of the Transaction, Crew has entered
into a long-term processing arrangement with the purchaser which,
after the second closing, is expected to result in annual payments
of approximately $6.36 million to the
purchaser over a 20 year period. Separately from the
Transaction, Crew exercised our option with another third party to
acquire a net WI of approximately 16% in the NEBC Facilities for
$11.7 million, which, subject to
customary closing conditions, is also expected to close in Q4 2020
and is anticipated to result in Crew saving $5.9 million of annual processing fees.
Crew expects to realize the following benefits from the
transactions described above:
- net cash proceeds of $58.3
million;
- retention of an approximate 22% net WI in, and operatorship of,
the NEBC Facilities;
- application of $58.3 million to
outstanding balances on our $235
million credit facility, which was drawn $52.6 million at year end 2019;
- annual cost reduction of approximately $2.1 million; and
- retain an option to convert an additional 11.43% WI to
$37.5 million between January 2021 and June
2023.
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 Greater
Septimus area features an Ultra Condensate-Rich ("UCR")
zone, which offers significant development and value creation
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".
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 anticipated
benefits to be derived from the transactions described herein,
including the anticipated cash proceeds therefrom and the timing of
receipt thereof; the remaining closings, timing of closings and
terms of the Transaction and the related transaction described
herein; the potential for Crew and the Purchaser to complete future
transactions pursuant to the strategic alliance described herein;
the future potential benefits from the strategic alliance with
Purchaser; the anticipated use of net proceeds from the
transactions described herein, including expected debt
reduction; potential future strategic value enhancing
transactions; Crew's commodity risk management programs;
marketing and transportation plans; future liquidity and financial
capacity; and the possible future disposition of an additional
interest in the NEBC Facilities pursuant to the excise of the
option described herein.
Without limiting the generality of the foregoing, there can
be no assurance that the remaining transactions described herein
will be completed or, as to the timing of completion or terms
thereof. The completion of the closings of the transactions
described herein remain subject to a number of assumptions, risks
and uncertainties including, without limitation, that all requisite
third party consents and approvals will be obtained and all other
conditions to completion of the transactions will be satisfied or
waived in a timely fashion. Readers are cautioned that the
foregoing list of factors is not exhaustive.
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.
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, those risks identified herein 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.
SOURCE Crew Energy Inc.