Operational Update Highlighted by Record Production CALGARY, Alberta., Jan. 31, 2022 (GLOBE NEWSWIRE) -- Crew Energy Inc. (TSX: CR; OTCQB: CWEGF) ("Crew" or the "Company") is a growth-oriented natural gas weighted producer operating exclusively in the world-class Montney play in northeast British Columbia. The Company is pleased to announce that we have established a new production record with average volumes estimated at 32,600 boe per day1 in December 2021, and are providing an operational update confirming that Crew’s two-year plan is on track to deliver greater than 20% production per share growth, over 50% Adjusted Funds Flow (AFF) growth and greater than a 45% reduction in net debt / EBITDA ratio in 2022.
Strong Q4 and Start to 2022
- Record Average Production: Crew's December average production is estimated at 32,600 boe per day1 (based on field estimates) and represents a new record high for the Company.
- Q4/21 average production is estimated at 29,100 boe per day1, ahead of previous guidance of 28,000 to 29,000 boe per day1, and an increase of 34% over Q4/20 average production of 21,666 boe per day1.
- Full year 2021 production is estimated to average 26,400 boe per day1, near the midpoint of Crew’s 26,000 to 27,000 boe per day1 previous guidance, and a 20% increase over the prior year.
- Production volumes, based on field estimates, to date in January have averaged approximately 32,500 boe per day1.
- Capital Expenditures and Guidance on Track: While the original plan anticipated the drilling of 26 wells and completion of 21 wells during 2021, the Company elected to complete an additional three Ultra-Condensate Rich (“UCR”) wells in Q4/21 to capture the benefit of stronger commodity prices and mitigate the impact of shut-in production from offsetting wells at the 4-21 pad at West Septimus.
- Capital spending through Q4/21 is estimated at approximately $42 million2.
- Full year 2021 net capital expenditures5 are anticipated at approximately $170 million2, at the high end of Crew guidance of $150 to $170 million, and within the guided range despite completing three additional wells that were not included in the budget.
- First quarter 2022 production is expected to average 31,000 to 33,000 boe per day. Full year 2022 guidance is reconfirmed, for production to average 31,000 to 33,000 boe per day with capital expenditures of $70 to $95 million.
- Strong Liquids Rich Wells at Greater Septimus: Five liquids rich wells were brought on production at Greater Septimus in Q4/21.
- Three Extended Reach Horizontal (“ERH”) wells on the 4-14 pad were drilled to an average lateral length of 4,140 metres in the Upper Montney “B” zone. They were completed and brought on production into the Septimus gas plant on December 23rd and have now been shut-in while we complete the remaining wells on this pad.
- After an average of 27 days on production, following a short clean-up period, the three wells on the 4-14 pad were flowing at an average per well sales rate of 2,585 boe per day, comprised of 9,940 mcf per day of natural gas, 750 bbls per day of condensate and 180 bbls per day of ngl’s3. Comparative type curves for this pad are available within Crew’s updated February 2022 investor presentation available on Crew’s website.
- Two Upper Montney “B” zone wells were completed at Crew’s 4-21 pad with an average lateral length of 2,710 metres. After an average of 33 days on production and following a short clean-up period, the wells were flowing at an average per well sales rate of 1,755 boe per day, comprised of 7,070 mcf per day of natural gas, 404 bbls per day of condensate and 174 bbls per day of ngl’s3. Comparative type curves for this pad are available within Crew’s updated February 2022 investor presentation available on Crew’s website. These wells have been shut-in for facilities construction and are expected to resume production by the end of February.
- Operational Execution a Prime Focus: Currently, Crew has one drilling rig and one fracturing spread in operation.
- The drilling rig is on the second well on Crew’s five-well 4-17 Groundbirch pad, following up on the success of our first three wells that were drilled and completed in 2021. The first three wells at Groundbirch are exceeding Crew’s internal type curve with an initial production rate after 90 days (“IP90”) average raw gas rate of 9,910 mcf per day.
- The remaining seven wells on our ten-well 4-14 pad at Greater Septimus are currently being completed with initial production expected late in Q1/22.
- Leverage Metrics Improving while Retaining Strategic Optionality: Crew has ample liquidity to complete our two-year plan, with leverage metrics expected to continually improve with the Company planning to reduce indebtedness through 20224.
- Crew's net debt5 to the last twelve-months’ ("LTM") EBITDA5 ratio is budgeted to improve to a targeted 1.3 to 1.5 times at the end of 2022, declining from an estimated 2.5 to 2.7 times at the end of 20212.
- The Company’s Free AFF5 is targeted at a range of $95 million to $140 million in 20224 depending on commodity prices.
- Liquidity can be further enhanced given the Company has an option to dispose of an additional 11.43% working interest in our Greater Septimus facilities located in northeast B.C. for incremental proceeds of up to $37.5 million. Crew can elect to exercise this option at any time between now and June of 2023 and have not modeled these proceeds into our current guidance.
- Focus on Environment, Social and Governance (“ESG”) Initiatives:
- With the sale of our Lloydminster assets in September of 2021, which represented Crew’s most emission-intensive asset, approximately 46% of Crew’s direct 2020 GHG emissions (Scope 1) have been removed and we anticipate the Company’s total GHG emissions intensity will be reduced significantly going forward, putting Crew on a path to reach our emissions reduction goals earlier than anticipated.
- Divesting of these assets sets the stage for Crew to streamline operations and improve efficiencies going forward while also reducing our overall Asset Retirement Obligation (“ARO”) liabilities by a targeted 40%, representing approximately $34.5 million associated with 609 gross (539 net) wellbores.
Crew’s team is excited about our future, especially with the progress made on the Company’s two-year asset development plan. We have identified numerous opportunities within our portfolio to expand margins through optimizing production and pricing while reducing unit costs, all while continuing to evaluate our large undeveloped land position, retaining optionality for our shareholders and bondholders. In 2022, we plan to reduce leverage metrics by reducing debt and increasing our AFF, driving enhanced financial flexibility. AFF will be enhanced through increasing production and reducing per unit costs by over 20% respectively. Underpinning these efforts is Crew’s unwavering focus on meeting or exceeding our ESG goals and remaining a safe and responsible operator and good corporate citizen.
https://www.globenewswire.com/news-release/2022/01/31/2375621/0/en/Crew-Energy-Inc-Provides-Operational-Update-Highlighted-by-Record-Production-and-Strong-Well-Results.html