Crew Energy Review March 2022 – Part 2 Greater Septimus Greater Septimus: Crew mentions that “ Nine ultra-extended reach horizontal natural gas wells were drilled and seven wells were completed in Q3/21 at Greater Septimus. One of the wells accomplished a new corporate record with a total drilled length of 6,634 meters. The seven well 1-8 pad has been producing at restricted rates with the 9-5 pad into a 10-inch pipeline at approximately 50,000 mmcf per day.”
So the 1-8 and 9-5 pads (Slide 17 March Presentation) alone were responsible for supplying 40% of the West Septimus plant’s gas production. The 9-5 pad paid out in 330 days and the 1-8 pad is 54% paid out in 120 days. These payout periods will continue to shrink due to the recent increase in commodity pricing. The main point here is that Crew is drilling some very technical long lateral wells and completing them with outstanding production results and the rate of return on these projects is off the charts.
I believe that the 1-8 and 9-5 pads are Montney B zone wells only but it gets more interesting when we look at the North Septimus pads. First off from the map on Slide 17 you will notice green, pink and blue colored well paths at the North Septimus 3-32, 4-21 and 4-14 pads. The green represents the B zone, the pink is the C Zone and the blue is the Lower Montney zone. Crew has quietly begun exploiting the other zones in the Montney at Greater Septimus as well, just as they are doing at Groundbirch. They must be seeing positive results in the other Montney zones, as the 3-32 pad which has 2 C zone wells is 85% paid out in 260 days.
Once again the presence of stacked potential in the other Montney zones at Greater Septimus is a game changer. From slide 14 Crew has identified 356 drilling locations at West Septimus and 136 at Septimus. The number of drill locations, reserves and production rates could increase significantly if the other zones underlying Crew’s lands prove to be as productive as the B zone wells . The infrastructure is already in place at Greater Septimus so the other Montney zones could be developed at a significantly lower cost.
Greater Septimus Production: Slide 18 of the March Presentation show the production results from 4-14 Pad (see map slide 17) where Crew drilled wells that were over 4000 meters in length. The average per well flow rate after 32 days of production was an astounding 2588 BOE per day! That is a combined rate of 7764 BOE per day from the 3 wells which were completed in the B zone. The 4-14 production rates of 2588 BOE per day are well above Crew’s 2P type curve which forecast the 1 month production rate to be 2000 BOE per day. The 4-14 well results are now forecasting a 300% IRR and a 6 month payout. Simply outstanding.
The results from the 4-21 Pad (Slide 18) where Crew drilled shorter 2700 meter wells were beyond outstanding. The 2 Montney B zone wells averaged per well flow rates after 31 days of production of 1755 BOE per day. That is a combined rate of 3510 BOE per day from the 2 wells. The 4-21 production rates of 1755 BOE per day are well above Crew’s 2P type curve which forecast the 1 month production rate to be 1000 BOE/day. That is a whopping 75.5% increase above Crew’s 2P forecast! The 4-21 shorter length well results are forecasting a 280% IRR and a 7 month payout.
So what can we expect going forward? From slide 17 they say they will be completing 7 additional wells at the 4 -14 pad in January 2022. That would provide an additional 18,116 BOE per day at 30 day production rates if the wells perform the same as the first 3 wells on the pad. The wildcard here is the C zone and lower Montney zone wells. They are already producing the C zone in the 4-21 pad and if the C and lower Montney zones show promising results it will open up Greater Septimus for an entirely new productive horizon.
Crew can now stagger the on production timing for their wells to easily meet their production guidance for 2022.
Greater Septimus Infrastructure: Crew mentions the West Septimus gas processing facility (Slide 17 Gas plant symbol on left) recently achieved a new throughput record of 125 mmcf per day with working interest sales of 115 mmcf per day (119 mmcf gross) and a nameplate capacity of 120 mmcf per day of sales gas. They are telling us that they filled the West Septimus plant, so they had to re-route gas from the Groundbirch 4-17 Pad to the Septimus plant (Slide 17 gas plant on bottom right side) which had 40 mmcf per day of spare capacity.
In Q3/21, Crew completed the construction of a 4.3 kilometre, 12-inch gas trunkline and a 4.3 kilometre, 8-inch liquids gathering pipeline into North Septimus to allow for further development in the area (Slide 17 bubble with 12” and 18” Pipelines). These pipelines connected production from the ten well 4-14 pad. The pipe diameters used are an indication of the production rates they expect to see out of North Septimus.
So what kind of Plant capacity does Crew have to support this new production? Well the presentation (Slide 3) mentions 40,000 BOE per day but doesn’t give a break down or whether it is raw or sales. I calculated 25,000 BOE per day sales at West Septimus (20,000 BOE gas and 5,000 BOE liquids) and 15,000 BOE per day at Septimus ( 10,000 BOE gas and 5000 BOE liquids).
Crew is sending the dry Groundbirch gas to Septimus where it appears they have excess liquids capacity but they may need to increase compression in order to accommodate the higher gas volumes from Groundbirch or liquids rich gas from Greater Septimus.
All in all the future is looking very bright for Crew.
As always please check my math.
BTO