RBC 's take on Q2/23 results - Ahead of Street - Positive RBC
August 9, 2023
Crew Energy Inc.
Q2/23 - Ahead of Street
TSX: CR | CAD 6.25 | Sector Perform | Price Target CAD 6.00
Sentiment: Positive
• Q2/23 results - Ahead of Street. Crew reported Q2/23 production of 30,046 boe/d driving AFFO (f.d.) of $0.36 (RBC/ Street:
$0.31/$0.31). Capital expenditures mapped to $37 million (RBC/Street: $30mm/$29mm). 2023 guidance remains unchanged
and the company continues to evaluate/formalize the 2024 program in the context of lower natural gas prices.
• 2023/24 Guidance - Liquids Focused. Crew reaffirmed its formal 2023 budget of $190-$210mm, inclusive of a drilling program
of 17 (prev. 15) Montney wells and the completion of 13 (prev. 12) wells. Crew will maintain its 2023 average production rate
of 31 mboe/d (at the mid-point) with its reaffirmed capital budget, but tightened its 2023 target exit rate to 33-34 mboe/d
(from 32-34 mboe/d) with a focus on increasing liquids volumes to 7 mboe/d (+17%) by YE23. The company expects to have
an inventory of 11 drilled and uncompleted UCR wells at year-end 2023. Q3 volumes are set to fall slightly to 26-28 mboe/d
(from 28-30 mboe/d), due to offsetting completion activities, third party planned outages and production declines. CR indicated
ir continues to advance its Groundbirch expansion project (while waiting for supportive natural gas prices) and will evaluate
project financing options. See our note on CR’s four-year plan here, and we anticipate that the company will look to trim its
prelim 2024 outlook if natural gas prices remain depressed.
• Operations Update - Liquids Optionality. At 11-27 in Septimus, the average production from its 5-well ERH UCR pad produced
IP150 rates of 1.4 mcf/d and 437 bbl/d of condensate. At 4-17 in Groundbirch, its original three wells produced an average of
6.2 mmcf/d (3.2 bcf over 510 days) which exceeded type curve, and the five ERH wells in its second phase produced an IP300 of
5.6 mmcf/d per well. CR received regulatory approval to drill an additional six wells at 4-17 and expand required infrastructure,
while also holding 25 well permits in the Groundbirch area with an additional 60 well permits awaiting approval. At Tower, CR
has drilled six ERH wells which are expected to be completed in Q1/24. In Q3, Crew intends to complete a 5-well pad at 4-32;
complete its last remaining well on its 11-27 UCR pad; finishing DCET activities on its 7-well 2-24 UCR pad; commence drilling of
its 5-well 6-18 UCR pad; drill and complete a water disposal well and tie-in condensate stabilization and waste heating recovery
facilities at Septimus.