Crew Energy Inc T.CR

Interesting Location for New 7 well Pad

[BeatTheOddsSqua]

I was surprised to find that the location of the new 7 well pad was not offsetting the 3-32 pad where the 5 long reach (>3000 m) horizontals were drilled (4 producing) but rather in the middle of the West Septimus field. It appears that Crew will be drilling 7 wells with horizontal legs of ~2000 m instead. This should greatly reduce the production risk, as these wells are offset buy existing production. Nice safe location with lower per well completion costs.

Some of Crew's ofsetting wells in this area have IP 90 rates of 4 - 5 Mmcf/day which is impressive. This may provide combined IP 90 rates of approximately 28 Mmcf/day for this program. If they can bring those volumes on stream in early Q1 2021, they should benefit from the anticipated winter season natural gas price spike.

To view the new well locations, go to Slide 18 in the investor presentation and look for the well locations with the open circles above the "Septimus" label. You can also see the existing pipeline in black that they will be tieing into.

[Seppelt]

Can’t see the exact location but probably it makes sense for less expensive shorter legs closer to the transition zone which is more gassy. The extra gas can be sold at higher AECO prices, while the oil demand recovery may be lagging. Jet fuel demand alone is currently about 2.5-3 million bb/d less than pre-covid, according to EIA. Full recovery in oil (and Condensate) prices will take some time

[BeatTheOddsSqua]

Seppelt I believe you are correct on the new locations being more gassy. It will be interesting to see what flow rates Crew's enhanced completion techniques can realize from the wells on the new 7 well pad. AECO back over $2 and Alliance Trading Hub over $4 has Canadian gas heading in the right direction. Condensate at $40.24 US per barrel will help Crew's operating income as well. 8

[Seppelt]

Not sure about Crew but producers selling to Sumas WA and Malin CA hubs should benefit from recent spikes due to a heat wave in the west/southwest. The “green” California is probably scrambling to use every natural gas plant, not yet forced to close, to avoid more frequent blackouts. Short term event but will last for a while and, apart from sending a message, should reduce the storage levels in

[Seppelt]

Way to go California, enjoy hot beer in the refrigerator. The solar panels must be overheating plus useless at night anyway, and the wind is not always blowing. https://www.wsj.com/articles/heat-wave-forces-power-outages-in-california-11597511654

[Seppelt]

If unable to read the full article, here is a clip: Today, California faces very different circumstances after spending much of the past two decades greening its power supply with large-scale wind and solar farms. The state has almost eliminated coal-fired generation and has been reducing its reliance on natural gas in favor of renewables, particularly solar power. That poses a supply

[BeatTheOddsSqua]

Seppelt from their presentation slide 17 it shows Crew having 9% of their production allocated to Station 2 which delivers to the Sumas WA hub. Perhaps Crew will benefit from the price spike with these volumes. Good find.

[TheGambler888]

I think If you look at the LSD, it should say what formation theyre drilling into, Upper Montney has 4 different clinoforms.

[BeatTheOddsSqua]

Gambler you are correct and it would appear that Crew is targeting the Upper Montney "B" clinoform with the new 7 well pad. It can be a little confusing as the pool is named the Montney A Pool. This is a proven formation as Crew has drilled the majority of it's horizontals in this zone.