Crew Energy Announces Strategic Transactions in Northeast British Columbia3 minutes ago by Marketwire Canada
Crew Energy Inc. ("Crew" or the "Company") (TSX:CR) of Calgary, Alberta is pleased to announce two transactions in the Company's British Columbia Montney resource play area of operations.
Through the combination of these two transactions, Crew will increase its Montney land position from 130,748 net acres to over 150,000 net acres. The Company is consolidating Montney lands within the Septimus/Groundbirch corridor proximal to Company infrastructure and reducing the Company's net debt position by approximately $86 million subject to closing adjustments.
Crew has executed a definitive agreement to sell, for $108 million prior to closing adjustments, approximately 15,800 net acres of liquids rich Montney land in the Kobes area with current production of approximately 625 boe per day (29% liquids) and one cased horizontal well awaiting completion which was expected to add approximately 1,100 boe per day of production in January 2013. The lands have proved developed producing reserves of 444 mboe, total proved reserves of 3,541 mboe, and proved plus probable reserves of 11,862 mboe as assigned by GLJ Petroleum Consultants as at December 31, 2011. Future development capital of $112.3 million was attributed to the proved plus probable reserve assignment. This transaction has an effective date of December 1, 2012 and is expected to close by December 28, 2012, subject to satisfaction of standard industry closing conditions.
The second transaction involves assets that are contiguous to Crew's Septimus area of operation and involves the purchase, for $22.0 million, of approximately 36,000 net acres of primarily liquids rich Montney rights, current production of 52 boe per day, proved developed producing reserves of 152 mboe, total proved reserves of 1,077 mboe and proved plus probable reserves of 3,280 mboe assigned by GLJ Petroleum Consultants as at December 31, 2011. Future development capital of $26.1 million was attributed to the proved plus probable reserve assignment. Crew has retained an exclusive option to purchase, by March 15, 2013, an additional 140 sections of land, total proved reserves of 1,850 mboe and proved plus probable reserves of 9,970 mboe, as assigned by GLJ Petroleum Consultants effective December 31, 2011, for $56 million on the option lands. Future development capital of $77 million was attributed to the proved plus probable reserve assignment. The bulk of the reserves and land in the option area are in the Altares and Attachie liquids rich areas of the Montney play. This option, if exercised, is expected to close by March 31, 2013.
These transactions are consistent with Crew's strategy of building a significant resource base at a reasonable cost while maintaining a strong balance sheet.
-- Crew's balance sheet is improved with an $86 million net reduction of debt to an estimated year-end total debt forecast of $294 million assuming completion of both transactions;-- Crew's northeast British Columbia Montney ownership has increased by 16% to over 150,000 net acres. A map of the acreage acquired in the Septimus/Groundbirch transaction will be posted on the Company's website;-- The Kobes lands were purchased by Crew for $3.4 million resulting in significant value creation from the Kobes transaction;-- A greater concentration of lands proximal to Company infrastructure at Septimus and west Septimus/Groundbirch will result in enhanced economies of scale and improved economics;-- Crew's infrastructure and lands are situated to take advantage of our current "flow east" economic solution or can be re-directed for a "flow west" solution;-- Of the 36,000 net acres acquired in the first phase of the Septimus/Groundbirch transaction, approximately 29,000 net acres are in the "wet gas" window, most of which are in a "sweet spot" with expected yields of 45 to 59 bbls per mmcf of liquids (17% to 32% condensate), 5,700 net acres are within the Montney "oil" window and 1,300 net acres are located within the "dry gas" window;-- The upper Montney at west Septimus/Groundbirch has thicknesses of 450 to 525 feet compared to Septimus at 260 to 450 feet with a total Montney thickness of approximately 800 feet. While no horizontal wells have been drilled on the lands to date, the results from tests on several vertical wells located on the lands and reservoir quality as determined from petrophysical analysis are similar to vertical tests in significant high deliverability horizontal Montney developments nearby;-- Crew has identified and will continue to pursue additional Montney consolidation opportunities;-- The addition of the prospective lands will require the expansion of the Aux Sable Canada, Crew operated Septimus gas plant.