Canada NewsWire
CALGARY, March 10, 2020
CALGARY, March 10, 2020 /CNW/ - Crew Energy Inc. (TSX: CR) ("Crew" or the "Company") is pleased to announce our operating and financial results for the three and twelve month periods ended December 31, 2019. Crew's full audited consolidated Financial Statements and Notes, as well as Management's Discussion and Analysis ("MD&A") for the three and twelve month periods ended December 31, 2019 are available on Crew's website and filed on SEDAR at www.sedar.com.
Q4 & FULL YEAR 2019 HIGHLIGHTS
__________________________________ |
(1) Condensate is defined as a mixture of pentanes and heavier hydrocarbons recovered as a liquid at the inlet of a gas processing plant before the gas is processed and pentanes and heavier hydrocarbons obtained from the processing of raw natural gas. |
(2) Ultra-Condensate Rich" or "UCR" is not defined in NI 51-101 and means a fairway of land at Crew's Greater Septimus area of operations where productive zones have high condensate rates (initial 30-day condensate / gas ratio rates of greater than 75 bbls per mmcf). |
(3) Non-IFRS Measure. "Operating netback", "adjusted funds flow" and "net capital expenditures" do not have standardized measures prescribed by International Financial Reporting Standards ("IFRS"), and therefore may not be comparable with the calculations of similar measures for other companies. See "Information Regarding Disclosure on Oil and Gas Reserves, Operational Information and Non-IFRS Measures" within this press release and the Company's MD&A for details including reasons for use. |
(4) Throughout this news release, natural gas liquids ("ngl") comprise all natural gas liquids as defined by NI 51-101 other than condensate, which is disclosed separately. |
(5) "Finding, Development and Acquisitions costs" or "FD&A costs", "Finding and Development costs" or "F&D costs" as previously disclosed in Crew's February 10, 2020 reserves press release, do not have standardized meanings. See "Information Regarding Disclosure on Oil and Gas Reserves and Operational Information" contained in this news release. |
(6) All reserves information is derived from the Company's independent reserves evaluation prepared by Sproule Associates Ltd effective December 31, 2019 (the "Sproule Report"). See the Company's press release dated February 10, 2020 filed on SEDAR for a more detailed summary of the results of the Sproule Report. |
Financial & Operating Highlights:
FINANCIAL | Three months | Three months | Year ended | Year ended |
Petroleum and natural gas sales | 44,941 | 50,838 | 193,532 | 218,385 |
Adjusted Funds Flow (1) | 16,086 | 23,712 | 81,034 | 91,996 |
Per share - basic | 0.11 | 0.16 | 0.53 | 0.61 |
- diluted | 0.11 | 0.16 | 0.53 | 0.61 |
Net (loss) income | (6,235) | 18,771 | 12,071 | 12,799 |
Per share - basic | (0.04) | 0.12 | 0.08 | 0.08 |
- diluted | (0.04) | 0.12 | 0.08 | 0.08 |
Exploration and Development expenditures | 26,390 | 33,174 | 114,094 | 103,219 |
Property acquisitions (net of dispositions) | 82 | 175 | (19,084) | (9,806) |
Net capital expenditures | 26,472 | 33,349 | 95,010 | 93,413 |
Capital Structure | As at | As at | ||
Working capital surplus (2) | (149) | (11,984) | ||
Bank loan | 52,136 | 59,904 | ||
51,987 | 47,920 | |||
Senior Unsecured Notes | 295,868 | 294,885 | ||
Total Net Debt (3) | 347,855 | 342,805 | ||
Common Shares Outstanding (thousands) | 151,534 | 151,730 |
Notes: | |
(1) | Non-IFRS Measure. AFF is calculated as cash provided by operating activities, adding the change in non-cash working capital, decommissioning obligation expenditures and accretion of deferred financing costs on the senior unsecured notes. AFF does not have a standardized measure prescribed by International Financial Reporting Standards, ("IFRS") and therefore may not be comparable with the calculations of similar measures for other companies. See "Non-IFRS Measures" contained within Crew's MD&A for details including a reconciliation of AFF to its most closely related IFRS measure. |
(2) | Non-IFRS Measure. Working capital surplus includes accounts receivable and net assets held for sale; less accounts payable and accrued liabilities. See "Non-IFRS Measures" contained within Crew's MD&A |
(3) | Non-IFRS Measure. Net debt is defined as outstanding long-term debt and net working capital. See "Non-IFRS Measures" within the Company's MD&A. |
Operations | Three months | Three months | Year ended | Year ended |
Daily production | ||||
Light crude oil (bbl/d) | 251 | 260 | 216 | 276 |
Heavy crude oil (bbl/d) | 1,600 | 1,634 | 1,639 | 1,782 |
Natural gas liquids (bbl/d) | 2,011 | 1,832 | 2,056 | 1,761 |
Condensate (bbl/d) | 2,455 | 2,446 | 2,693 | 2,380 |
Natural gas (mcf/d) | 96,776 | 97,265 | 97,398 | 106,116 |
Total (boe/d @ 6:1) | 22,446 | 22,383 | 22,837 | 23,885 |
Average prices (1) | ||||
Light crude oil ($/bbl) | 62.85 | 38.18 | 63.24 | 65.32 |
Heavy crude oil ($/bbl) | 44.76 | 10.38 | 50.65 | 39.27 |
Natural gas liquids ($/bbl) | 8.66 | 14.71 | 6.78 | 23.18 |
Condensate ($/bbl) | 63.29 | 52.85 | 64.40 | 72.22 |
Natural gas ($/mcf) | 2.36 | 3.80 | 2.53 | 2.80 |
Oil equivalent ($/boe) | 21.76 | 24.69 | 23.22 | 25.05 |
Notes: | |
(1) | Average prices are before deduction of transportation costs and do not include realized gains and losses on financial instruments. |
Three months | Three months | Year ended | Year ended | |
Netback ($/boe) | ||||
Petroleum and natural gas sales | 21.76 | 24.69 | 23.22 | 25.05 |
Royalties | (1.97) | (1.67) | (1.77) | (1.73) |
Realized commodity hedging gain/(loss) | 0.78 | (0.63) | 0.28 | (1.22) |
Marketing income(1) | (0.02) | 1.03 | 0.99 | 0.45 |
Net operating costs(2) | (5.51) | (5.78) | (5.93) | (6.22) |
Transportation costs | (2.88) | (1.81) | (2.74) | (1.84) |
Operating netback(3) | 12.16 | 15.83 | 14.05 | 14.49 |
G&A | (1.33) | (1.55) | (1.40) | (1.39) |
Other income | - | - | - | 0.11 |
Financing costs on long-term debt | (3.06) | (2.77) | (2.94) | (2.67) |
Adjusted funds flow | 7.77 | 11.51 | 9.71 | 10.54 |
Drilling Activity | ||||
Gross wells | 0.0 | 8.0 | 8.0 | 14 |
Working interest wells | 0.0 | 8.0 | 8.0 | 14 |
Success rate, net wells (%) | N/A | 100% | 100% | 100% |
Notes: | |
(1) | Marketing income was recognized from the monetization of forward physical sales contracts offset by the cost of committed natural gas transportation that was not available during the period. |
(2) | Net operating costs are calculated as gross operating costs less processing revenue. |
(3) | Non-IFRS Measure. Operating netback equals petroleum and natural gas sales including realized hedging gains and losses on commodity contracts, marketing income, less royalties, net operating costs and transportation costs calculated on a boe basis. Operating netback does not have a standardized measure prescribed by IFRS and therefore may not be comparable with the calculations of similar measures for other companies. See "Non-IFRS Measures" contained within Crew's MD&A. |
COMMITMENT TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE INITIATIVES
Environmental Leadership is a Priority
Social Impacts and Safety are at the Forefront
Good Governance is Good Business
FINANCIAL OVERVIEW
Production Stable and In-Line
Macro Factors Lead to Continued Pricing Volatility
Focus on Controlling Cash Costs
Financial Results Driven by Pricing
Efficient Capital Program Focused in UCR Area
Balance Sheet Strength Remains a Priority
TRANSPORTATION, MARKETING & HEDGING
Active Marketing Program Underpins Strategy
Natural Gas & Liquids Hedging
OPERATIONS & AREA OVERVIEW
NE BC Montney - Greater Septimus
Greater Septimus
Production & Drilling | Q4 | Q3 | Q2 | Q1 | Q4 | |
Average daily production (boe/d) | 18,720 | 19,648 | 19,594 | 19,535 | 18,447 | |
Wells drilled (gross / net) | 0 | 0 | 1 / 1.0 | 6 / 6.0 | 6 / 6.0 | |
Wells completed (gross / net) | 4 / 4.0 | 1 / 1.0 | 0 | 8 / 8.0 | 3 / 3.0 | |
Operating Netback | Q4 | Q3 | Q2 | Q1 | Q4 | |
Revenue | 20.13 | 17.38 | 22.20 | 25.61 | 26.53 | |
Royalties | (1.76) | (1.04) | (1.27) | (1.56) | (1.58) | |
Realized commodity hedge gain / (loss) | 0.90 | 1.78 | 0.28 | (0.74) | (1.79) | |
Marketing income(1) | (0.02) | 1.55 | 1.43 | 1.66 | 1.23 | |
Net operating costs(2) | (3.99) | (4.41) | (4.46) | (4.65) | (4.51) | |
Transportation costs | (2.61) | (2.62) | (2.81) | (1.73) | (1.35) | |
Operating netback(3) | 12.65 | 12.64 | 15.37 | 18.59 | 18.53 |
Notes: | |
(1) | Marketing income was recognized from the monetization of forward physical sales contracts offset by the cost of committed natural gas transportation that was not available during the period. |
(2) | Net operating costs are calculated as gross operating costs less processing revenue. |
(3) | Non-IFRS Measure. Operating netback equals petroleum and natural gas sales including realized hedging gains and losses on commodity contracts, marking income, less royalties, net operating costs and transportation costs calculated on a boe basis. Operating netback does not have a standardized measure prescribed by IFRS and therefore may not be comparable with the calculations of similar measures for other companies. See "Non-IFRS Measures" contained within Crew's MD&A. |
Other NE BC Montney
AB / SK Heavy Oil - Lloydminster
OUTLOOK
Focus on Financial and Corporate Sustainability
2020 Full Year Capital Budget and Guidance
Optimally Positioned for Diversified Market Access
With continued challenges facing our industry, we appreciate the tireless efforts of Crew's employees and Directors whose commitment and dedication is critical to the success of our Company. We thank all of our shareholders and bondholders for your ongoing support.
Advisories
Information Regarding Disclosure on Oil and Gas Reserves, Operational Information and Non-IFRS Measures
All amounts in this news release are stated in Canadian dollars unless otherwise specified. Our oil and gas reserves statement for the year ended December 31, 2019, which will include complete disclosure of our oil and gas reserves and other oil and gas information in accordance with NI 51-101, will be contained within our Annual Information Form which will be available on our SEDAR profile at www.sedar.com on or before March 30, 2020. The recovery and reserve estimates contained herein are estimates only and there is no guarantee that the estimated reserves will be recovered. In relation to the disclosure of estimates for individual properties or subsets thereof, including the UCR area of operations, such estimates may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. The Company's belief that it will establish additional reserves over time with conversion of probable undeveloped reserves into proved reserves is a forward-looking statement and is based on certain assumptions and is subject to certain risks, as discussed below under the heading "Forward-Looking Information and Statements".
This press release contains metrics commonly used in the oil and natural gas industry, such as "finding and development costs" and "finding, development and acquisition costs". Each of these metrics are determined by Crew as specifically set forth in its press release dated February 10, 2020 filed on SEDAR. These terms do not have standardized meanings or standardized methods of calculation and therefore may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons. Such metrics have been included to provide readers with additional information to evaluate the Company's performance however, such metrics should not be unduly relied upon for investment or other purposes. Management uses these metrics for its own performance measurements and to provide readers with measures to compare Crew's performance over time.
Both F&D and FD&A costs take into account reserves revisions during the year on a per boe basis. The aggregate of the costs incurred in the financial year and changes during that year in estimated FDC may not reflect total F&D costs related to reserves additions for that year. Finding and development costs both including and excluding acquisitions and dispositions have been presented in this press release because acquisitions and dispositions can have a significant impact on our ongoing reserves replacement costs and excluding these amounts could result in an inaccurate portrayal of our cost structure.
This press release contains financial and performance metrics that are not defined in IFRS and do not have standardized meanings or standardized methods of calculation, such as "adjusted funds flow", "operating netbacks", "net capital expenditures", "working capital surplus" and "net debt". As such, these terms may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons. Such metrics have been included herein to provide readers with additional information to evaluate the Company's performance, however such metrics should not be unduly relied upon. Management uses oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare Crew's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this press release, should not be relied upon for investment or other purposes.
With respect to the use of terms used in this press release identified as Non-IFRS Measures, see Non-IFRS Measures contained in Crew's MD&A for applicable definitions, calculations, rationale for use and, where applicable, reconciliations to the most directly comparable measure under IFRS.
Reference is made in this news release to the Company's annualized production decline rate at Septimus. The decline rate is derived from the Sproule Report and reflects the average decline rate of all of Crew's producing wells in the Septimus area of operations.
Forward-Looking Information and Statements
This news release contains certain forward–looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" "forecast" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward-looking information and statements pertaining to the following: as to the execution of Crew's business plan including guidance as to its capital expenditure plans in the first half and balance of 2020; the anticipated receipt of net cash proceeds of $58.3 million upon remaining closings of the Company's previously announced strategic transactions; as to the Company's ongoing goal of increasing the overall weighting of condensate in its production mix; the volumes and estimated value of Crew's oil and gas reserves; the estimated future net value of Crew's reserves in its UCR area of operations; the estimated volumes, including shut-ins, and product mix of Crew's oil and gas production; production estimates including first half and full year 2020 average production guidance; production decline estimates; commodity price expectations including Crew's estimates of natural gas pricing exposure; Crew's commodity risk management programs including its forecast for natural gas sales exposure in 2020; marketing and transportation plans; future liquidity and financial capacity; future results from operations and operating metrics; potential for lower costs and efficiencies going forward; expectations regarding the potential impact of COVID-19, world supply and demand projections and possible reductions in industry spending as a result, and long-term impact on pricing; future development, exploration, acquisition and disposition activities (including drilling and completion plans and associated timing and cost estimates); infrastructure investment plans and associated production capacity; and the amount and timing of capital projects.
In addition, forward-looking statements or information are based on a number of material factors, expectations or assumptions of Crew which have been used to develop such statements and information but which may prove to be incorrect. Although Crew believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Crew can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: that Crew will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities consistent with past operations; the quality of the reservoirs in which Crew operates and continued performance from existing wells; the continued and timely development of infrastructure in areas of new production; the accuracy of the estimates of Crew's reserve volumes; certain commodity price and other cost assumptions; continued availability of debt and equity financing and cash flow to fund Crew's current and future plans and expenditures; the impact of increasing competition; the general stability of the economic and political environment in which Crew operates; the general continuance of current industry conditions; the timely receipt of any required regulatory approvals; the ability of Crew to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which Crew has an interest in to operate the field in a safe, efficient and effective manner; the ability of Crew to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Crew to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Crew operates; and the ability of Crew to successfully market its oil and natural gas products.
The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to defer materially from those anticipated in such forward-looking information or statements including, without limitation: changes in commodity prices; changes in the demand for or supply of Crew's products, the early stage of development of some of the evaluated areas and zones the potential for variation in the quality of the Montney formation; interruptions, unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates; climate change regulations, or other regulatory matters; changes in development plans of Crew or by third party operators of Crew's properties, increased debt levels or debt service requirements; inaccurate estimation of Crew's oil and gas reserve volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Crew's public disclosure documents (including, without limitation, those risks identified in this news release and Crew's Annual Information Form).
The internal projections, expectations or beliefs underlying the Company's 2020 capital budget and corporate outlook for 2020 and beyond are subject to change in light of ongoing results, prevailing economic circumstances, commodity prices and industry conditions and regulations. Crew's outlook for 2020 and beyond provides shareholders with relevant information on management's expectations for results of operations, excluding any potential acquisitions, dispositions or strategic transactions that may be completed in 2020 and beyond. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted and Crew's 2020 guidance and outlook may not be appropriate for other purposes. The forward-looking information and statements contained in this news release speak only as of the date of this news release, and Crew does not assume any obligation to publicly update or revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Supplemental Information Regarding Product Types
This news release includes references to 2019 production, 2020 first half and 2020 annual average daily production volumes. The following is intended to provide the product type composition for each of the production figures provided herein, where not already disclosed within tables above:
Production Weighting by Product Type | ||||||
Light Crude Oil(1) | Heavy | Natural gas | Condensate | Natural gas | Total (boe/d) | |
Production guidance for | 1% | 7% | 10% | 13% | 69% | 22,000 - 23,000 |
Average 2020 annual | 1% | 7% | 10% | 12% | 70% | 20,500 - 21,500 |
Greater Septimus Production | ||||||
Q4/19 | - | - | 10% | 13% | 77% | 18,720 |
Q3/19 | - | - | 11% | 13% | 76% | 19,648 |
Q2/19 | - | - | 10% | 16% | 74% | 19,594 |
Q1/19 | - | - | 10% | 13% | 77% | 19,535 |
Q4/18 | - | - | 9% | 13% | 78% | 18,447 |
Notes: | |
(1) | Medium oil amounts are immaterial. |
(2) | Throughout this news release, natural gas liquids ("ngl") comprise all natural gas liquids as defined by NI 51-101 other than condensate, which is disclosed separately. |
Test Results and Initial Production Rates
A pressure transient analysis or well-test interpretation has not been carried out and thus certain of the test results provided herein should be considered to be preliminary until such analysis or interpretation has been completed. Test results and initial production rates disclosed herein, particularly those short in duration, may not necessarily be indicative of long term performance or of ultimate recovery.
BOE equivalent
Barrel of oil equivalents or BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of 6:1, utilizing the 6:1 conversion ratio may be misleading as an indication of value.
Crew is a growth-oriented oil and natural gas producer, committed to pursuing sustainable per share growth through a balanced mix of financially and socially responsible exploration and development complemented by strategic acquisitions. The Company's operations are primarily focused in the vast Montney resource, situated in northeast British Columbia, and include a large contiguous land base. Crew's ultra-condensate-rich Septimus and West Septimus areas ("Greater Septimus") along with Groundbirch and the light oil area at Tower in British Columbia offer significant development potential over the long-term. The Company has access to diversified markets with operated infrastructure and access to multiple pipeline egress options. Crew's common shares are listed for trading on the Toronto Stock Exchange ("TSX") under the symbol "CR".
Financial statements and Management's Discussion and Analysis for the three and twelve month periods ended December 31, 2019 and 2018 are filed on SEDAR at www.sedar.com and are available on the Company's website at www.crewenergy.com.
SOURCE Crew Energy Inc.
View original content: http://www.newswire.ca/en/releases/archive/March2020/10/c3494.html
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