Crew Facility DealWhen I initially heard about the Septimus facility deal I assumed that Crew would use the funds to pay down debt.
Then they announced the 7 well drilling program. And I thought now why are they drilling more wells when no one seems to really care about their oil and gas production rate and are mostly focused on Crew's debt?
Then they start drilling an additional 10 wells and I am thinking "what in the heck are these guys doing?"
I asked myself, " Why would Aux Sable want to increase their interest in an under utilized gas plant"? Then it occurred to me that there is possibly a caveat in the agreement with Crew that the facilities monies must be used towards drilling more wells in order to increase gas production to fill the excess plant capacity. Crew using the funds to reduce debt would be of no benefit to Aux Sable.
The facility deal at first glance appears to be lopsided in Crew's favor. However if the proceeds from the sale must be used to increase production through the Septimus facilities, then Aux Sable is going to benefit greatly from the increased processing and transportation fees. This would seem to create a win win for both Crew and Aux Sable.
When Crew mentioned that they had created a "strategic alliance" with the party acquiring their interests to explore other opportunities on the Montney trend, then perhaps this is a glimpse of things to come.
Please provide feedback as I am interested in hearing other peoples opinions. I have never been accused of being the smartest guy in the room!