Congrats to all on Crew's share price appreciation.
I had some free time so I took a closer look at some of Crew’s recent Press releases, the 2021 AIF and the March 2022 Presentation. Here is a summary of what I believe to be some of the more important highlights that will drive value for Crew shareholders moving forward.
I will break it down into Part 1 (Groundbirch) and Part 2 (Greater Septimus) and Part 3 (TBD).
Groundbirch Drilling: Crew mentions that: “Three new Groundbirch wells were completed in Q3/21, achieving a combined restricted rate of 32 mmcf per day at the end of an 18-day flowback period in October, establishing a promising new development area with over 70,000 acres of contiguous land.”
An important piece of information that Crew doesn’t really highlight is the fact that they are evaluating multiple zones at the Groundbirch 4-17 pad. From slide 19 of the presentation (figure Crew 4-17-81-21 Pilot Well) you can see that Crew drilled two wells into the AA zone which is the same zone that Shell is exploiting in the area. The slide 19 map shows Shell’s wells at an IP 6 rate of 12 mmcf/day and Crew matched that rate with their 2 AA wells. What is more interesting is that Crew also tested the B zone with one of the 4-17 wells, so the 32 mmcf/day was a combined rate from both the AA and the B zones. Furthermore, Crew mentions that they are currently drilling 5 additional wells at the 4-17 pad which will test two additional Upper Montney zones and that they will be completing these wells in Q3 2022. It is important to note that Crew has drilled only 7 horizontal wells (slide 14) at Groundbirch and will currently have very few reserves assigned to this area.
With Crew’s large land position at Groundbirch, you can imagine the number of additional drilling locations there would be, should Crew prove that the Montney under their lands has stacked multi-zone potential in the AA,A,B and C zones. It would be a game changer, possibly allowing Crew to book TCF’s of gas reserves, should the multiple zones be productive across their 70,000 acres of land holdings.
Groundbirch Infrastructure: Crew tied the 4-17 wells into the Greater Septimus gathering system via their new 6 mile, 12 inch diameter pipeline from location 4-17 to 1-21 (slide 19 map). This new pipeline would not have been cheap to build, but it provides Crew with loads of pipeline capacity out of Groundbirch. They also mention that they have made infrastructure modifications that allow volumes from the 4-17 pad to flow to, and be processed at, their Septimus gas processing facility (75 Mmcf/day raw capacity, 60 Mmcf/day sales), which currently has approximately 40 mmcf per day of excess capacity. This frees up space at West Septimus which is requireded for their liquids rich gas.
Crew should be able to keep the Septimus gas plant close to capacity with production from the first 3 Groundbirch wells and the 5 additional wells at 4-17 pad coming on stream in Q3/Q4. Since Grounbirch gas is dry, capacity at Septimus could be increased with additional compression.
Groundbirch production: From slide 19 of the presentation – The graph labeled “Crew 4-17 Well Performance (Average of 3 Wells)” indicates that the Groundbirch 4-17 pad is producing at rates significantly higher than the 2P Type curve had forecast. For instance, the expected 4 month 2P Type curve rate was approximately 5000 mcf/day (black dashed line). The actual production rate (solid pink line) was 7500 mcf/day! Beating the 2P Type curve projection by say 10% would be considered a home run by most production / completions engineers, but achieving a rate that is 50% higher is outstanding!
From the data supplied on the 2P Type curve table, the three wells achieved an IP 120 rate of 9415 mcf/d per well or 4707 BOE/day for the 3 wells. Should the next 5 wells perform in a similar fashion than their combined IP 120 rate would be approximately 7845 BOE/day. Even with the production decline on the first 3 wells over the next 6 months, Groundbirch could still be producing in excess of 10,000 BOE/day in Q4 2022 or approximately 30% of Crew’s forecast production from a single 8 well pad.
Remember Crew’s Lloydminster heavy oil property? More than 600 individual wells producing approximately 1100 BOE/day. Nice that they were able to divest of that asset and replace that production with a single pad.
With the production rates achieved from Crew’s first 8 well pad at 4-17 and with 1,919 two mile drilling locations identified so far (slide 14, look under Groundbirch) Crew has uncovered an absolute gem at Groundbirch. A crown jewel of a property that will produce natural gas for decades to come.
As always please check my math, Working on Part 2 (Greater Septimus).
BTO.