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 provide highlights from our year-end independent
corporate reserves evaluation prepared by Sproule Associates Ltd.
(“Sproule”) with an effective date of December 31, 2022 (the
“Sproule Report”), along with an operations update.
The Company’s two-year plan concluded at the end
of 2022, and the successful execution of this plan is demonstrated
by our year-end 2022 reserves. The updated reserves reflect strong
additions to Proved Developed Producing (“PDP”) reserves along with
meaningful increases in production levels, adjusted funds flow1
(“AFF”) and free AFF2 which were directed to debt repayment,
resulting in significantly improved leverage metrics exiting 2022.
Looking forward, Crew plans to build on this momentum by continuing
to grow PDP reserves while harvesting the Company’s Total Proved
(”1P”) reserves and Total Proved Plus Probable (“2P”) reserves, as
we have consistently done since 2014. Expanding our 1P and 2P
reserves beyond current levels will require additional
infrastructure which is planned with the addition of a new gas
plant at Groundbirch, the timing and sanctioning of which will be
dependent on supportive natural gas prices and other factors as
outlined in our corporate presentation. Crew’s primary goal over
the past two years has been realized with debt being reduced
materially, placing the Company in a strong financial position. Our
primary focus will continue to be maintaining balance sheet
strength while unlocking the inherent value of our vast
resource.
Crew’s 2022 reserves evaluation reflects the
addition of 18.7 million boe of PDP reserves to total 88.6 million
boe, representing an 8% increase year-over-year and a 27% increase
when including the replacement of 2022 production volumes of 12.1
million boe. Crew also materially increased the before tax net
present value discounted at 10% (“NPV10”) of our year-end 2022 PDP
reserves by 46% to $985 million. The Company’s Q4/22 average
production increased to 32,893 boe per day3, above guidance of
30,000 to 32,000 boe per day and an increase of 13% over the 29,142
boe per day3 in Q4/21, while reducing net debt1 by 63% over
year-end 2021 to $150 million at year-end 20224.
2022 RESERVES HIGHLIGHTS
Highlights of our PDP,1P and 2P reserves from
the Sproule Report are provided below. All finding, development and
acquisition (“FD&A”)5,6 costs and finding and development
(“F&D”)5,6 costs below include changes in future development
capital6 (“FDC”) unless otherwise noted.
-
Significant PDP Additions: Crew added 18.7 million
boe of PDP reserves in 2022 to total 88.6 million boe, marking a
record high for the Company and a 32% increase since commencing the
two-year plan in January 2021. The additions were achieved with PDP
F&D costs5,6 of $9.28 per boe and PDP FD&A costs5,6 of
$2.34 per boe in 2022, resulting in recycle ratios5,6 of 3.5 and
14.0 times, respectively.
-
Materially Higher Before Tax NPV: Crew’s before
tax NPV10 for year-end 2022 PDP reserves increased 46% to $985
million ($5.33 debt adjusted per share including $150 million of
year-end net debt1,4, and before any value attributed to
undeveloped reserves) compared to 2021 due to improved pricing and
higher production. 1P and 2P before tax NPV10 increased 46% and 36%
to $1.9 billion ($11.17 debt adjusted per share) and $3.0 billion
($18.19 debt adjusted per share) compared to year-end 2021,
respectively, largely due to improved pricing, extensions on recent
drilling, and enhanced capital efficiencies in the undeveloped
reserve categories primarily as a result of increased well
lengths.
-
1P and 2P Increased: Crew’s 1P and 2P reserves
increased year-over-year to 210.9 mmboe and 374.0 mmboe,
respectively, after taking into account the divestiture of Crew’s
Attachie property in Q3/22. Throughout Crew’s two-year plan, the
Company delineated new areas at Groundbirch South and Septimus
North, and commenced new development in existing areas of Greater
Septimus in the Upper Montney ‘C’ zone to position for additional
development in the future. These new areas position Crew for longer
term 1P and 2P reserve growth as additional facility capacity is
established.
-
Excellent Recycle
Ratios5,6,7
on 1P and 2P FD&A Costs: 1P
and 2P FD&A5,6 costs in 2022 were $8.45 per boe and $3.85 per
boe, respectively, generating recycle ratios of 3.9 times for 1P
FD&A5,6 and 8.5 times for 2P FD&A5,6. These results were
boosted by the successful divestiture of Crew’s Attachie property
which yielded gross proceeds of $130 million and, as of the
Company’s year-end 2021 reserves report, included associated 1P and
2P reserves of 4.7 mmboe and 34.2 mmboe, respectively, as well as
FDC of $25.7 million and $182.9 million, respectively.
2022 F&D and FD&A
Costs5,6 |
|
F&D per boe |
F&D
recycle5,7 |
FD&A per boe |
FD&A
recycle5,7 |
PDP |
$9.28 |
3.5x |
$2.34 |
14.0x |
1P |
$13.97 |
2.3x |
$8.45 |
3.9x |
2P |
$15.35 |
2.1x |
$3.85 |
8.5x |
- 1P and
2P F&D5,6 Costs: Crew’s 2022 1P and
2P F&D costs5,6 were $13.97 per boe and $15.35 per boe,
respectively. These results are largely attributable to our
successful capital program execution in 2022, notwithstanding the
substantial inflation in goods and services experienced during the
year.
- Debt
Adjusted Per Share Reserves Growth: Year-over-year PDP, 1P
and 2P growth per share on a debt adjusted basis was 32%, 25% and
13%, respectively8.
* Information derived from the Company’s
year-ended independent reserves evaluations.
2022 RESERVES DETAIL
The detailed reserves data set forth below is
based upon the Sproule Report with an effective date of December
31, 2022. 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 forecast prices and costs based on 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
Sproule forecast escalated pricing and foreign exchange rates at
December 31, 2022 as outlined in the table herein entitled "Price
Forecast".
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, 2022, which will be filed on the Company's profile at
www.sedar.com on or before March 31, 2023.
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
Reserves9,10,11
|
Light & Medium Crude Oil |
Natural Gas Liquids |
Conventional Natural Gas12 |
Barrels of oil equivalent13 |
|
(mbbl) |
(mbbl) |
(mmcf) |
(mboe) |
Proved |
|
|
|
|
Developed Producing |
131 |
16,467 |
431,930 |
88,587 |
Developed Non-producing |
34 |
119 |
3,497 |
736 |
Undeveloped |
2,463 |
23,833 |
571,575 |
121,559 |
Total Proved |
2,628 |
40,420 |
1,007,002 |
210,882 |
Total
Probable |
5,529 |
28,641 |
773,792 |
163,136 |
Total Proved plus Probable |
8,158 |
69,061 |
1,780,795 |
374,018 |
Reserves
Values10,11,14,15
The estimated before tax net present value
(“NPV”) of future net revenues associated with Crew’s reserves
effective December 31, 2022, and based on the Sproule Report and
the published Sproule (December 31, 2022) future price forecast,
are summarized in the following table:
(M$) |
0% |
5% |
10% |
15% |
20% |
Proved |
|
|
|
|
|
Developed Producing |
1,649,778 |
1,227,777 |
985,006 |
832,477 |
728,483 |
Developed Non-producing |
10,132 |
8,207 |
6,805 |
5,788 |
5,028 |
Undeveloped |
2,367,956 |
1,380,264 |
909,673 |
647,147 |
483,259 |
Total
Proved |
4,027,866 |
2,616,248 |
1,901,485 |
1,485,412 |
1,216,770 |
Total Probable |
4,092,132 |
1,940,081 |
1,132,952 |
751,723 |
542,880 |
Total Proved plus Probable |
8,119,998 |
4,556,329 |
3,034,436 |
2,237,135 |
1,759,649 |
Price
Forecast16,17
The Sproule December 31, 2022 price forecast is
summarized as follows:
Year |
ExchangeRate |
WTI @Cushing |
CanadianLight Sweet |
Henry Hub |
Natural gas atAECO/NIT spot |
WestcoastStation 2 |
|
($US/$/Cdn) |
(US$/bbl) |
(C$/bbl) |
(US$/mmbtu) |
(C$/mmbtu) |
(C$/mmbtu) |
2023 |
0.750 |
86.00 |
110.67 |
5.00 |
4.33 |
4.18 |
2024 |
0.800 |
84.00 |
101.25 |
4.50 |
4.34 |
4.23 |
2025 |
0.800 |
80.00 |
96.18 |
4.25 |
4.00 |
3.89 |
2026 |
0.800 |
81.60 |
98.10 |
4.34 |
4.08 |
3.97 |
2027 |
0.800 |
83.23 |
100.06 |
4.42 |
4.16 |
4.05 |
2028 |
0.800 |
84.90 |
102.06 |
4.51 |
4.24 |
4.13 |
2029 |
0.800 |
86.59 |
104.10 |
4.60 |
4.33 |
4.22 |
2030 |
0.800 |
88.33 |
106.18 |
4.69 |
4.42 |
4.30 |
2031 |
0.800 |
90.09 |
108.31 |
4.79 |
4.50 |
4.39 |
2032 |
0.800 |
91.89 |
110.47 |
4.88 |
4.59 |
4.47 |
2033+(16) |
|
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
+2.0%/yr |
Reserves
Reconciliation11,18
The following reconciliation of Crew’s gross
reserves compares changes in the Company’s reserves as at December
31, 2022, based on the Sproule (December 31, 2022) future price
forecast relative to the reserves as at December 31, 2021.
|
MBOE |
FACTORS |
Total Proved |
Total Probable |
Total Proved + Probable |
December 31, 2021 |
206,807 |
197,878 |
404,684 |
Extensions and Improved Recovery19 |
21,211 |
(3,300) |
17,911 |
Infill Drilling |
864 |
(219) |
646 |
Technical Revisions |
(3,915) |
(591) |
(4,506) |
Discoveries |
- |
- |
- |
Acquisitions |
- |
- |
- |
Dispositions |
(4,713) |
(29,536) |
(34,248) |
Economic Factors |
2,773 |
(1,096) |
1,677 |
Production |
(12,146) |
- |
(12,146) |
December 31, 2022 |
210,882 |
163,136 |
374,018 |
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 operating
cost increases, high-grading future development bookings in context
of COGE Handbook recommended development timing windows,
performance adjustments attributable to the Company’s 2022 capital
program, well performance and type curve changes, and reserves
reclassifications. Other technical revisions were attributable to
the Company’s updated development planning resulting in adjustments
to future development bookings, reflective of a continuing shift
towards extended reach horizontal well designs.
Material changes in other categories were
attributable to divestment of the Company’s Attachie and Portage
assets in Q3/22, pricing, carbon tax, and royalty regime changes,
and infill and extension additions associated with Crew’s 2022
development activity.
Capital Program Efficiency – Including
FDC
|
2022 |
|
PDP |
1P |
2P |
Exploration and Development Expenditures20,21($ thousands) |
$176,637 |
$176,637 |
$176,637 |
Acquisitions/(Dispositions)20,21($ thousands) |
($129,802) |
($129,802) |
($129,802) |
Change in Future Development Capital6,20($ thousands) |
|
|
|
- Exploration and Development |
($3,112) |
$115,883 |
$64,744 |
- Acquisitions/Dispositions |
($3,112) |
($25,701) |
($182,850) |
Reserves Additions with Revisions and Economic Factors (mboe) |
|
|
|
- Exploration and Development |
18,689 |
20,934 |
15,728 |
- Acquisitions/Dispositions |
0 |
(4,713) |
(34,248) |
|
2022 |
|
PDP |
1P |
2P |
Finding &
Development
Costs6,22,23($
per boe) |
|
|
|
- with revisions and economic factors |
$9.28 |
$13.97 |
$15.35 |
Finding, Development
& Acquisition
Costs6,22,23($
per boe) |
|
|
|
- with revisions and economic factors |
$2.34 |
$8.45 |
$3.85 |
Recycle
Ratio23(F&D) |
3.5x |
2.3x |
2.1x |
Reserves Replacement5 |
154% |
134% |
(152%) |
OPERATIONS UPDATE
Production Exceeds
Forecasts
Full year 2022 production exceeded forecasts to
average 33,277 boe per day3, and Q4/22 production surpassed
guidance of 30,000 to 32,000 boe per day to average 32,893 boe per
day3. This strong performance was largely due to the continued
strength of the 4-17 Groundbirch wells and the 4-14
ultra-condensate rich (“UCR”) wells at Septimus, combined with the
encouraging performance of our new wells at the 11-27 pad noted
below.
Strong Condensate-Rich Wells at Greater
Septimus
Five (5.0 net) extended reach horizontal UCR
wells were completed on the 11-27 pad in December 2022. Prior to
shutting in for tubing installation, four of the wells averaged raw
initial production rates of 1.7 mmcf per day of
natural gas and 1,000 bbls per day of condensate
after an average of 19 days flowing. The fifth well is currently
flowing back on cleanup at 2.3 mmcf per day of
natural gas and 1,005 bbls per day of condensate
over the last three days.
Agreement Reached Between B.C.
Government and Blueberry River First Nations
On January 18, 2023, the B.C. Government and
Blueberry River First Nations (“BRFN”) announced the ‘BRFN
Implementation Agreement’ in response to a B.C. Supreme Court
decision issued on June 29, 2021. Following this, on January 20,
2023, the province announced a Consensus Agreement with four Treaty
8 First Nations. Collectively, these agreements outline a
collaborative approach to land and resource planning while
protecting treaty rights. Having this framework in place is
expected to provide stability and predictability for industry
operating within NE BC. While some uncertainty is anticipated to
persist until details are confirmed, the partnership framework
provides guidance related to land, water and resource
stewardship.
As a result of this positive development, Crew
is optimistic about the path forward and our ability to execute an
active drilling and completions program with the ability to make
optimal capital allocation decisions across our asset base. The
Company has submitted additional permit applications for approval,
which include 93 well locations, the planned Groundbirch Plant,
gathering lines, facilities, and other ancillary operations.
ADVISORIES
Unaudited Financial
Information
Certain financial and operating information
included in this press release for the quarter and year ended
December 31, 2022, including, without limitation, exploration and
development expenditures, acquisitions / dispositions, finding and
development costs, finding, development and acquisition costs,
recycle ratio, operating netbacks and 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, 2022 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, 2022, 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, 2023. 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 2022 production averaged 33,277 boe per day.
Management uses these metrics for its own performance measurements
and to provide readers with measures to compare Crew’s performance
over time.
Both F&D and FD&A 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.
NPV10 debt adjusted per share metrics disclosed
herein are based on 156,684,620 common shares issued and
outstanding as at December 31, 2022, on a non-diluted basis, and
year-end net debt of $150 million.
Reserves Reconciliation by Product
Types
TOTAL PROVED |
Light/Med Crude Oil (mbbls) |
NGL's (mbbls) |
Conventional Natural Gas (mmcf) |
Oil Equivalent (mboe) |
December 31, 2021 |
3,457 |
38,891 |
986,753 |
206,807 |
Extensions |
0 |
5,062 |
96,897 |
21,211 |
Infill
Drilling |
311 |
67 |
2,916 |
864 |
Improved
Recovery |
0 |
0 |
0 |
0 |
Technical
Revisions |
(1,127) |
(228) |
(15,361) |
(3,915) |
Discoveries |
0 |
0 |
0 |
0 |
Acquisitions |
0 |
0 |
0 |
0 |
Dispositions |
0 |
(1,034) |
(22,071) |
(4,713) |
Economic
Factors |
23 |
345 |
14,432 |
2,773 |
Production |
(36) |
(2,683) |
(56,564) |
(12,146) |
December 31, 2022 |
2,628 |
40,420 |
1,007,002 |
210,882 |
TOTAL PROBABLE |
Light/Med Crude Oil (mbbls) |
NGL's (mbbls) |
Conventional Natural Gas (mmcf) |
Oil Equivalent (mboe) |
December 31, 2021 |
2,422 |
41,152 |
925,817 |
197,878 |
Extensions |
4,020 |
(4,390) |
(17,577) |
(3,300) |
Infill
Drilling |
(130) |
(11) |
(470) |
(219) |
Improved
Recovery |
0 |
0 |
0 |
0 |
Technical
Revisions |
(710) |
(2,154) |
13,638 |
(591) |
Discoveries |
0 |
0 |
0 |
0 |
Acquisitions |
0 |
0 |
0 |
0 |
Dispositions |
0 |
(5,719) |
(142,899) |
(29,536) |
Economic
Factors |
(72) |
(238) |
(4,716) |
(1,096) |
Production |
0 |
0 |
0 |
0 |
December 31, 2022 |
5,530 |
28,641 |
773,792 |
163,136 |
TOTAL PROVED PLUS PROBABLE |
Light/Med Crude Oil (mbbls) |
NGL's (mbbls) |
Conventional Natural Gas (mmcf) |
Oil Equivalent (mboe) |
December 31, 2021 |
5,879 |
80,044 |
1,912,570 |
404,684 |
Extensions |
4,020 |
672 |
79,319 |
17,911 |
Infill
Drilling |
182 |
56 |
2,447 |
646 |
Improved
Recovery |
0 |
0 |
0 |
0 |
Technical
Revisions |
(1,838) |
(2,382) |
(1,723) |
(4,506) |
Discoveries |
0 |
0 |
0 |
0 |
Acquisitions |
0 |
0 |
0 |
0 |
Dispositions |
0 |
(6,753) |
(164,970) |
(34,248) |
Economic
Factors |
(49) |
107 |
9,716 |
1,677 |
Production |
(36) |
(2,683) |
(56,564) |
(12,146) |
December 31, 2022 |
8,158 |
69,061 |
1,780,795 |
374,018 |
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: Estimates of Q4 operating
netbacks per boe, the potential recognition of significant
additional reserves under the heading 2022 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 product mix of Crew's oil and gas
production; production estimates; Crew's commodity risk management
programs; 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 related production estimates; the potential
attributes of the recently announced agreements among the BC
Government, BRFN and Treaty 8 First Nations, and the anticipated
positive impact on the Company’s ability to execute an active
drilling and completions program across its asset base; 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 and
permits; 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.
In this press release and other disclosures
reference is made to the Company's longer range Four-Year Plan.
Such information reflects internal targets used by management for
the purposes of making capital investment decisions and for
internal long range planning and budget preparation. Readers are
cautioned that events or circumstances could cause capital plans
and associated results to differ materially from those predicted
and Crew's guidance for 2023 and beyond may not be appropriate for
other purposes. Accordingly, undue reliance should not be placed on
same.
The forward-looking information and statements
included in this news release are not guarantees of future
performance and should not be unduly relied upon. Such information
and statements, including the assumptions made in respect thereof,
involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to defer materially from
those anticipated in such forward-looking information or statements
including, without limitation: the continuing and uncertain impact
of COVID-19; changes in commodity prices; changes in the demand for
or supply of Crew's products, the early stage of development of
some of the evaluated areas and zones the potential for variation
in the quality of the Montney formation; interruptions,
unanticipated operating results or production declines; changes in
tax or environmental laws, royalty rates; climate change
regulations, or other regulatory matters; changes in development
plans of Crew or by third party operators of Crew's properties,
increased debt levels or debt service requirements; inaccurate
estimation of Crew's oil and gas reserve volumes; limited,
unfavourable or a lack of access to capital markets; increased
costs; a lack of adequate insurance coverage; the impact of
competitors; and certain other risks detailed from time-to-time in
Crew's public disclosure documents (including, without limitation,
those risks identified in this news release and Crew's Annual
Information Form).
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 (“IP”) rates disclosed herein,
particularly those short in duration, may not necessarily be
indicative of long-term performance or of ultimate recovery.
BOE Conversions
Barrel of oil equivalents or BOEs may be
misleading, particularly if used in isolation. A BOE conversion
ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Given that the value
ratio based on the current price of crude oil as compared to
natural gas is significantly different than the energy equivalency
of 6:1, utilizing the 6:1 conversion ratio may be misleading as an
indication of value.
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 (“AFF”) |
|
|
|
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. |
|
|
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) |
Free
Adjusted Funds Flow |
|
|
|
Free
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. |
|
|
b) |
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. |
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:
|
Crude Oil |
Condensate |
Natural Gas Liquids1 |
Conventional Natural
Gas |
Total (boe/d) |
Q4 2021 Average |
1% |
9% |
8% |
82% |
29,142 |
Q4 2022
Average |
0% |
12% |
8% |
80% |
32,893 |
2022 Average |
0% |
14% |
8% |
78% |
33,277 |
Notes:1) Excludes condensate volumes which
have been reported separately.
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 DETAILED INFORMATION, PLEASE
CONTACT:
Dale Shwed, President and CEO |
Phone: (403) 266-2088 |
John Leach, Executive Vice
President and CFO |
Email:
investor@crewenergy.com |
_______________________________________
1 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.2 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.3 See
table in the Advisories for production breakdown by product type as
defined in NI 51-101.4 All 2022 financial amounts are unaudited.
See “Advisories – Unaudited Financial Information”.5 "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".6 The 2022 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 $154 million
(undiscounted) in the 1P case and $181 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, 2022 Sproule
Report.7 Estimated operating netback per boe in Q4 2022, used in
the above calculations, averaged $32.64 per boe (unaudited). See
‘Advisories - Unaudited Financial Information’ and ‘Advisories -
Information Regarding Disclosure on Oil and Gas Reserves and
Operational Information’.8 Debt adjusted values are based on a 2022
year-end debt of $149.5 million using a year-end share price of
$5.65 as at December 31, 2022. All 2022 financial amounts are
unaudited. See “Advisories – Unaudited Financial Information”.9
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.10 Based on Sproule’s December 31, 2022 escalated
price forecast.11 Columns may not add due to rounding12 Reflects
100% Conventional Natural Gas by product type.13 Oil equivalent
amounts have been calculated using a conversion rate of six
thousand cubic feet of natural gas to one barrel of oil.14 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.15 The after-tax net present
values of future net revenue attributed to Crew’s reserves will be
included in the Company’s 2022 AIF to be filed on or before March
31, 2023.16 Escalated at 2.0% per year starting in 2033 with the
exception of foreign exchange which remains constant.17 Product
sale prices will reflect these reference prices with further
adjustments for quality and transportation to point of sale.18 See
the tables under “Reserves Reconciliation by Product Types”
contained in this news release for a reconciliation by product type
in accordance with NI 51-10119 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".20 The aggregate of the exploration and development costs
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.21 All 2022 financial amounts are
unaudited. See “Advisories – Unaudited Financial Information”.22
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.23 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 2022, used in the above calculations, averaged $32.64 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’.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/653210b1-c81b-4e3c-b03b-65ca608b4888
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