CALGARY, Alberta, Feb. 08, 2024 (GLOBE NEWSWIRE) -- 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 the results of our year-end 2023 independent reserves evaluation along with our 2024 capital expenditure budget and guidance. Crew’s 2024 budget builds on the success of our 2023 drilling program, efficient execution and asset development, all of which are demonstrated by growth in our 2023 independent reserves evaluation. Production averaged 30,928 boe per day1 in the final quarter of 2023, a 15% increase from 26,834 boe per day1 in Q3/23 and in-line with guidance of 30,000 to 32,000 boe per day.
The Company invested approximately $54 million in Q4/23, 17% lower than the midpoint of guidance of $65 million, while net debt2 decreased 21% at year-end to approximately $117 million compared to year-end 2022. Crew’s 2024 budget aims to maintain current production levels, support strategic investments to advance long-term growth plans, and preserve a strong balance sheet. Together, this is expected to position Crew to take advantage of what is anticipated to be an improved supply and demand environment for natural gas as North American LNG export growth accelerates into 2025 and forward.
Highlights of our independent reserves evaluation prepared by Sproule Associates Ltd. (“Sproule”) are provided below, effective December 31, 2023 (the “Sproule Report”). All finding, development and acquisition (“FD&A”)3,4 costs and finding and development (“F&D”)3,4 costs below include changes in future development capital4 (“FDC”), unless otherwise noted.
CREW’S 2023 RESERVES & 2024 BUDGET HIGHLIGHTS
2024 BUDGET DETAIL
Crew’s approved 2024 Budget includes net capital expenditures7 of $165 to $185 million and incorporates a conservative drilling and completions program as well as $60 to $70 million in strategic electrification and infrastructure expansion projects. These initiatives support Crew’s longer-term growth prospects while preserving the upside in our large resource base.
Maintenance Capital
Infrastructure Investments
Laying the Groundwork at Groundbirch
With ongoing supply and demand imbalances in global natural gas, the current spot and future strip prices have remained under pressure. In response, we are investing prudently to advance key milestones of the Groundbirch Project while deferring large capital outlays until they are supported by an improved natural gas pricing environment.
2024 Budget Underlying Assumptions
20249 | |
Net capital expenditures7 ($Millions) | 165-185 |
Annual average production1 (boe/d) | 29,000-31,000 |
Liquids Production (%) | 26 |
Royalty Rate (%) | 8-10 |
Net operating costs7 ($ per boe) | 4.50-5.00 |
Net transportation costs7 ($ per boe) | 3.50-4.00 |
General and administrative (“G&A”) ($ per boe) | 1.00-1.20 |
Effective interest rate on long-term debt (%) | 8-10 |
OPERATIONS UPDATE
We would like to recognize our Crew’s commitment to safety in our field operations. We are extremely proud to report that over 1.568-million-person hours of work were undertaken to the end of 2023 without a single recordable injury, further extending our corporate record and underscoring the Company’s firm commitment to safety.
NE BC Montney (Greater Septimus)
Groundbirch
Other NE BC Montney
OUTLOOK
2023 RESERVES DETAIL
The detailed reserves data set forth below is based upon the Sproule Report. The following presentation summarizes the Company’s crude oil, natural gas liquids and conventional natural gas reserves and the net present values before income tax of future net revenue for the Company’s reserves using the forecast prices and costs reflected in the Sproule Report. The Sproule Report has been prepared in accordance with definitions, standards, and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). The reserves evaluation was based on an arithmetic average of the published escalated price forecasts of Sproule, McDaniel & Associates Consultants (“McDaniel”) and GLJ Ltd. (“GLJ”) (the “IC3 Average”) and Sproule’s foreign exchange rates at December 31, 2023 as outlined in the table below entitled "Price Forecast".
See "Information Regarding Disclosure on Oil and Gas Reserves and Operational Information" for additional cautionary language, explanations and discussion and "Forward Looking Information and Statements" for principal assumptions and risks that may apply.
Corporate Reserves11,12,13
Light & Medium Crude Oil | Natural Gas Liquids | Conventional Natural Gas14 | Barrels of oil equivalent15 | |
(mbbl) | (mbbl) | (mmcf) | (mboe) | |
Proved | ||||
Developed Producing | 289 | 15,103 | 417,067 | 84,903 |
Developed Non-producing | - | 675 | 17,475 | 3,587 |
Undeveloped | 3,180 | 28,089 | 767,866 | 159,247 |
Total Proved | 3,469 | 43,867 | 1,202,408 | 247,737 |
Total Probable | 5,146 | 33,157 | 1,122,959 | 225,462 |
Total Proved plus Probable | 8,615 | 77,024 | 2,325,367 | 473,199 |
Reserves Values12,13,16,17
The estimated before tax net present value (“NPV”) of future net revenues associated with Crew’s reserves effective December 31, 2023, and based on the Sproule Report and the published IC3 Average future price forecast, are summarized in the following table:
(M$) | 0% | 5% | 10% | 15% | 20% |
Proved | |||||
Developed Producing | 1,420,905 | 1,023,887 | 795,360 | 652,861 | 556,750 |
Developed Non-producing | 68,211 | 44,028 | 31,526 | 24,171 | 19,395 |
Undeveloped | 2,606,680 | 1,390,732 | 808,917 | 492,904 | 303,203 |
Total Proved | 4,095,795 | 2,458,647 | 1,635,804 | 1,169,936 | 879,348 |
Total Probable | 5,010,049 | 2,393,791 | 1,394,993 | 914,608 | 647,455 |
Total Proved plus Probable | 9,105,844 | 4,852,438 | 3,030,797 | 2,084,544 | 1,526,803 |
Price Forecast18,19
The IC3 Average December 31, 2023, price forecast used for the purposes of preparing the Sproule Report is summarized as follows:
Year | Exchange Rate | WTI @ Cushing | Canadian Light Sweet | Henry Hub | Natural gas at AECO/NIT spot | Westcoast Station 2 |
($US/$/Cdn) | (US$/bbl) | (C$/bbl) | (US$/mmbtu) | (C$/mmbtu) | (C$/mmbtu) | |
2024 | 0.750 | 73.67 | 92.91 | 2.75 | 2.20 | 2.06 |
2025 | 0.750 | 74.98 | 95.04 | 3.64 | 3.37 | 3.25 |
2026 | 0.760 | 76.14 | 96.07 | 4.02 | 4.05 | 3.93 |
2027 | 0.760 | 77.66 | 97.99 | 4.10 | 4.13 | 4.01 |
2028 | 0.760 | 79.22 | 99.95 | 4.18 | 4.21 | 4.09 |
2029 | 0.760 | 80.80 | 101.94 | 4.27 | 4.30 | 4.17 |
2030 | 0.760 | 82.42 | 103.98 | 4.35 | 4.38 | 4.25 |
2031 | 0.760 | 84.06 | 106.06 | 4.44 | 4.47 | 4.34 |
2032 | 0.760 | 85.74 | 108.18 | 4.53 | 4.56 | 4.42 |
2033 | 0.760 | 87.46 | 110.35 | 4.62 | 4.65 | 4.51 |
2034+(18) | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr |
Reserves Reconciliation13,20
The following reconciliation of Crew’s gross reserves compares changes in the Company’s independently evaluated reserves as at December 31, 2023, relative to the reserves as at December 31, 2022.
MBOE | |||
FACTORS | Total Proved | Total Probable | Total Proved + Probable |
December 31, 2022 | 210,882 | 163,136 | 374,018 |
Extensions and Improved Recovery21 | 42,354 | 62,763 | 105,117 |
Infill Drilling | - | - | - |
Technical Revisions | 4,868 | (10) | 4,858 |
Discoveries | - | - | - |
Acquisitions | - | - | - |
Dispositions | - | - | - |
Economic Factors | 648 | (427) | 221 |
Production | (11,015) | - | (11,015) |
December 31, 2023 | 247,737 | 225,462 | 473,199 |
Corporate level technical revisions on a boe basis were 2% at the Proved level and 1% at the Proved plus Probable level. Technical revisions were primarily due to the additional facility capacity available with the development of the Groundbirch Plant, as well as operating cost and well performance changes.
Material changes in other categories were attributable to extensions, which incorporated the addition of 56 locations in the Groundbirch area to fill the new Groundbirch Plant to capacity by 2027.
Capital Program Efficiency – Including FDC
2023 | |||
PDP | 1P | 2P | |
Exploration and Development Expenditures22,23 ($ thousands) | 217,027 | 217,027 | 217,027 |
Acquisitions/(Dispositions)22,23 ($ thousands) | (1,015) | (1,015) | (1,015) |
Change in Future Development Capital4,22 ($ thousands) | |||
- Exploration and Development | 1,127 | 462,771 | 637,564 |
- Acquisitions/Dispositions | - | - | - |
Reserves Additions with Revisions and Economic Factors (mboe) | |||
- Exploration and Development | 7,331 | 47,870 | 110,197 |
- Acquisitions/Dispositions | - | - | - |
2023 | |||
PDP | 1P | 2P | |
Finding & Development Costs4,24,25 ($ per boe) | 29.76 | 14.20 | 7.76 |
- with revisions and economic factors | |||
Finding, Development & Acquisition Costs4,24,25 ($ per boe) | 29.62 | 14.18 | 7.75 |
- with revisions and economic factors | |||
Recycle Ratio25 (F&D) | 0.8 | 1.6 | 2.9 |
Reserves Replacement3 | 67% | 435% | 1000% |
All evaluations and summaries of future net revenue are stated prior to provision for interest, debt service charges and general administrative expenses, the input of hedging activities and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs ("ARC") associated with the Company’s assets in the reserve report and estimated future capital expenditures associated with reserves. It should not be assumed that the estimates of net present value of future net revenues presented in the tables below represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained, and variances could be material. The recovery and reserve estimates of our crude oil, natural gas liquids and conventional natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, conventional natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein. Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without including any royalty interests) unless noted otherwise. In addition to the detailed information disclosed in this news release, more detailed information as prescribed by NI 51-101 will be included in the Company's Annual Information Form (the “AIF”) for the year ended December 31, 2023, which will be filed on the Company's profile at www.sedar.com on or before March 31, 2024.
ABOUT CREW
Crew is a growth-oriented natural gas and liquids producer, committed to pursuing sustainable per share growth through a balanced mix of financially and socially responsible exploration and development. The Company’s operations are exclusively located in northeast British Columbia and feature a vast Montney resource with a large contiguous land base in the Greater Septimus and Groundbirch areas in British Columbia, offering significant development potential over the long-term. Crew has access to diversified markets with operated infrastructure and access to multiple pipeline egress options. The Company’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: [email protected] |
ADVISORIES
Unaudited Financial Information
Certain financial and operating information included in this press release for the quarter and year ended December 31, 2023, including, without limitation, exploration and development expenditures, acquisitions / dispositions, finding and development costs, finding, development and acquisition costs, recycle ratio, reserves replacement, operating netbacks and net debt are based on estimated unaudited financial results for the quarter and year then ended, and are subject to the same limitations as discussed under Forward Looking Information set out below. These estimated amounts may change upon the completion of audited financial statements for the year ended December 31, 2023 and changes could be material.
Information Regarding Disclosure on Oil and Gas Reserves and Operational Information
All amounts in this news release are stated in Canadian dollars unless otherwise specified. Our oil and gas reserves statement for the year ended December 31, 2023, which will include complete disclosure of our oil and gas reserves and other oil and gas information in accordance with NI 51-101, will be contained within our Annual Information Form which will be available on our SEDAR profile at www.sedar.com on or before March 31, 2024. The recovery and reserve estimates contained herein are estimates only and there is no guarantee that the estimated reserves will be recovered. In relation to the disclosure of estimates for individual properties or subsets thereof, such estimates may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.
This press release contains metrics commonly used in the oil and natural gas industry, such as "recycle ratio", "finding and development costs", "finding", development and acquisition costs, “future development capital”, “maintenance capital”, “operating netback per boe”, “exploration and development expenditures” and “reserves replacement”. 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. Recycle Ratio is calculated as operating netback per boe divided by F&D costs on a per boe basis. Exploration and development expenditures as used herein is equivalent to property, plant and equipment expenditures, a term with a standardized meaning prescribed under IFRS. Reserves Replacement is calculated as total reserve additions (including acquisitions net of dispositions) divided by annual production. Crew’s annual 2023 production averaged 30,178 boe per day1. Management uses these metrics for its own performance measurements and to provide readers with measures to compare Crew’s performance over time.
Both F&D3,4 and FD&A3,4 costs take into account reserves revisions during the year on a per boe basis. The aggregate of the costs incurred in the financial year and changes during that year in estimated FDC may not reflect total F&D costs related to reserves additions for that year. Finding and development costs both including and excluding acquisitions and dispositions have been presented in this press release because acquisitions and dispositions can have a significant impact on our ongoing reserves replacement costs and excluding these amounts could result in an inaccurate portrayal of our cost structure.
Net Asset Value (“NAV”)
The following table sets out the calculation of the Company's NAV referred to herein based on the before-tax estimated net present value of future net revenue discounted at 10% ("NPV10 BT") associated with the PDP, 1P and 2P reserves, as evaluated in the Sproule Report:
Proved Developed Producing | Total Proved | Total Proved + Probable | |
NPV10 BT (MM$) | 795.4 | 1,635.8 | 3,030.8 |
Estimated net debt December 31, 2023 (MM$) | 117.4 | 117.4 | 117.4 |
Net Asset Value (MM$) | 678.0 | 1,518.4 | 2,913.4 |
Common shares* (MM) | 156.6 | 156.6 | 156.6 |
Estimated NAV per basic share ($) | 4.33 | 9.70 | 18.61 |
* Issued and outstanding as at December 31, 2023, on a non-diluted basis
Reserves Reconciliation by Product Types
TOTAL PROVED | Light/Med Crude Oil (mbbls) | NGL's (mbbls) | Conventional Natural Gas (mmcf) | Oil Equivalent (mboe) |
December 31, 2022 | 2,628 | 40,420 | 1,007,002 | 210,882 |
Extensions | 1,590 | 6,244 | 207,122 | 42,354 |
Infill Drilling | 0 | 0 | 0 | 0 |
Improved Recovery | 0 | 0 | 0 | 0 |
Technical Revisions | (721) | (416) | 36,033 | 4,868 |
Discoveries | 0 | 0 | 0 | 0 |
Acquisitions | 0 | 0 | 0 | 0 |
Dispositions | 0 | 0 | 0 | 0 |
Economic Factors | 0 | 118 | 3,182 | 648 |
Production | (28) | (2,498) | (50,930) | (11,015) |
December 31, 2023 | 3,469 | 43,867 | 1,202,409 | 247,737 |
TOTAL PROBABLE | Light/Med Crude Oil (mbbls) | NGL's (mbbls) | Conventional Natural Gas (mmcf) | Oil Equivalent (mboe) |
December 31, 2022 | 5,530 | 28,641 | 773,793 | 163,136 |
Extensions | (920) | 3,745 | 359,629 | 62,763 |
Infill Drilling | 0 | 0 | 0 | 0 |
Improved Recovery | 0 | 0 | 0 | 0 |
Technical Revisions | 539 | 855 | (8,422) | (10) |
Discoveries | 0 | 0 | 0 | 0 |
Acquisitions | 0 | 0 | 0 | 0 |
Dispositions | 0 | 0 | 0 | 0 |
Economic Factors | (2) | (84) | (2,042) | (427) |
Production | 0 | 0 | 0 | 0 |
December 31, 2023 | 5,146 | 33,157 | 1,122,958 | 225,462 |
TOTAL PROVED PLUS PROBABLE | Light/Med Crude Oil (mbbls) | NGL's (mbbls) | Conventional Natural Gas (mmcf) | Oil Equivalent (mboe) |
December 31, 2022 | 8,158 | 69,061 | 1,780,795 | 374,018 |
Extensions | 670 | 9,989 | 566,751 | 105,117 |
Infill Drilling | 0 | 0 | 0 | 0 |
Improved Recovery | 0 | 0 | 0 | 0 |
Technical Revisions | (183) | 439 | 27,611 | 4,858 |
Discoveries | 0 | 0 | 0 | 0 |
Acquisitions | 0 | 0 | 0 | 0 |
Dispositions | 0 | 0 | 0 | 0 |
Economic Factors | (2) | 34 | 1,139 | 221 |
Production | (28) | (2,498) | (50,930) | (11,015) |
December 31, 2023 | 8,615 | 77,024 | 2,325,366 | 473,199 |
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 potential recognition of significant additional reserves under the heading 2023 Reserves Detail; the volumes and estimated value of Crew's oil and gas reserves, the future net value of Crew's reserves, the future development capital and costs, the future ARC, the life of Crew's reserves, the estimated volumes, and production mix of Crew's oil and gas production; the ability to execute on its four-year strategic plan and underlying strategy, associated plans, goals and targets, all as more particularly outlined and described in this press release; our 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 as outlined in this press release; production estimates and targets under the 2024 Budget and balance of the longer range plan including, without limitation, Crew’s goal to double annual average production volumes to over 60,000 boe per day through the coming years; 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 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; estimates of processing capacity and requirements; anticipated reductions in GHG emissions and decommissioning obligations; future liquidity and financial capacity and ability to finance our longer range strategic plan; potential hedging opportunities and plans related thereto; future results from operations and operating and leverage metrics; world supply and demand projections and long-term impact on pricing; future development, exploration, acquisition, disposition and infrastructure activities, 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 number of estimated potential identified drilling locations outlined in this press release; 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; the successful implementation of our ESG initiatives, and significant emissions intensity improvements going forward; the amount and timing of capital projects; and anticipated improvement in our long-term sustainability and the expected positive attributes discussed herein attributable to our long range 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 based upon the key assumptions outlined herein. In this press release reference is made to the Company's longer range 2025 and beyond internal plan and associated economic model. Such information reflects internal goals and targets used by management for the purposes of making capital investment decisions and for internal long-range planning and future budget preparation. 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 plan, 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 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 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 Four-Year Plan
Risk factors that could materially impact successful execution and actual results of the Four-Year Plan include:
Drilling Locations
This press release discloses internally identified "potential drilling locations" which are comprised of: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. Proved locations and probable locations are derived from the Company's independent reserve evaluator's report effective December 31, 2023 (the "Sproule Report") and account for drilling inventory that have associated proved and/or probable reserves assigned by Sproule. Unbooked locations are internally identified potential drilling opportunities based on the Company's prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have reserves or resources attributed to them and are not estimates of drilling locations which have been evaluated by a qualified reserves evaluator performed in accordance with the COGE Handbook. There is no certainty that the Company will drill any of these potential drilling opportunities and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors.
The following table provides a detailed breakdown of the identified gross potential drilling locations presented herein:
Total Drilling Locations | Proved Locations | Probable Locations | Unbooked Locations | |
Montney Total Drilling Locations | 2,537 | 132 | 106 | 2,299 |
Groundbirch Locations | 1,717 | 37 | 66 | 1,614 |
West Septimus Locations | 483 | 59 | 28 | 396 |
Septimus Locations | 191 | 36 | 9 | 146 |
Tower Locations | 146 | - | 3 | 143 |
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
Non-IFRS Financial Measures and Ratios
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 and Medium Crude Oil | Condensate | Natural Gas Liquids1 | Conventional Natural Gas | Total (boe/d) | |
Q3 2023 Average | 0% | 14% | 8% | 78% | 26,834 |
Q4 2023 Average | 0% | 20% | 8% | 72% | 30,928 |
Q1 2024 Average | 0% | 16% | 8% | 76% | 29,000-31,000 |
2024 Annual Average | 3% | 15% | 8% | 74% | 29,000-31,000 |
Notes:
1) Excludes condensate volumes which have been reported separately.
1 See table in the Advisories for production breakdown by product type as detailed 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 "Finding, Development and Acquisitions costs" or "FD&A costs", "Finding and Development costs" or "F&D costs", “Reserves Replacement”, “Operating Netback” and “recycle ratio” do not have standardized meanings. See “Capital Program Efficiency” and “Advisories - Information Regarding Disclosure on Oil and Gas Reserves, and Operational Information”.
4 The 2023 change in Future Development Capital (FDC) used in the calculation of Crew’s 1P and 2P F&D and FD&A costs does not include approximately $190 million (undiscounted) in the 1P case and $220 million (undiscounted) in the 2P case of maintenance capital that was reclassified as a capital expense in the December 31, 2021, Sproule Report and maintained the same classification in the December 31, 2023 Sproule Report.
5 Calculated based on the Sproule Report before-tax estimated net present value of future net revenue associated with the reserves and discounted at 10% (“NPV10 BT”), debt adjusted per share. See “Advisories – Net Asset Value” contained within this press release for details of the NAV calculations used in this press release.
6 Estimated operating netback per boe in Q4 2023, used in the above calculations, averaged $22.47 per boe (unaudited). See ‘Advisories - Unaudited Financial Information’ and ‘Advisories - Information Regarding Disclosure on Oil and Gas Reserves and Operational Information’.
7 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 www.sedar.com.
8 Estimated inlet capacity increase reflects internally generated forecasts and is dependent on operating conditions.
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 based on information currently available on a reasonable basis, reflecting management's best estimates and judgments.
10 See “Drilling Locations” in the Advisories.
11 Reserves have been presented on a “gross” basis which is defined as Crew’s working interest (operating and non-operating) share before deduction of royalties and without including any royalty interest of the Company.
12 Based on the IC3 Average December 31, 2023, escalated price forecast as used in the Sproule Report.
13 Columns may not add due to rounding.
14 Reflects 100% Conventional Natural Gas by product type.
15 Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil.
16 The estimated future net revenues are stated prior to provision for interest, debt service charges, general administrative expenses, the impact of hedging activities, and after deduction of royalties, operating costs, ARC associated with the Company’s assets and estimated future capital expenditures.
17 The after-tax net present values of future net revenue attributed to Crew’s reserves will be included in the Company’s 2023 AIF to be filed on or before March 31, 2024.
18 Escalated at 2.0% per year starting in 2034 with the exception of foreign exchange which remains constant.
19 Product sale prices will reflect these reference prices with further adjustments for quality and transportation to point of sale.
20 See the tables under “Reserves Reconciliation by Product Types” contained in this news release for a reconciliation by product type in accordance with NI 51-101
21 Increases to Extensions and Improved Recovery are the result of step-out locations drilled or proposed to be drilled by Crew. Reserves additions for improved recovery and extensions are combined and reported as "Extensions and Improved Recovery".
22 The aggregate of the exploration and development expenditures incurred in the most recent financial year and the change during that year in estimated future development capital generally will not reflect total finding and development costs related to reserve additions for that year.
23 All 2023 financial amounts are unaudited. See “Advisories – Unaudited Financial Information”.
24 F&D and FD&A costs above are calculated, as noted, after changes in FDC required to bring proved undeveloped and developed reserves into production, by dividing the identified capital expenditures by the applicable reserves additions.
25 Recycle ratio is defined as operating netback per boe divided by F&D costs on a per boe basis. Operating netback per boe is a Non-IFRS Measure and is calculated as revenue (excluding realized hedging gains and losses) minus royalties, operating expenses, and transportation expenses. Crew’s estimated operating netback per boe in fourth quarter 2023, used in the above calculations, averaged $22.47 per boe (unaudited). This amount is an estimate and is subject to audit verification. See ‘Advisories - Unaudited Financial Information’ and ‘Advisories - Information Regarding Disclosure on Oil and Gas Reserves and Operational Information’.