CALGARY, Alberta, March 08, 2023 (GLOBE NEWSWIRE) — Crew Energy Inc. (TSX: CR; OTCQB: CWEGF) (“Crew” or the “Company”), a growth-oriented, liquids rich natural gas producer operating in the world-class Montney play in northeast British Columbia (“NE BC”), is pleased to announce our operating and financial results for the three and twelve-month periods ended December 31, 2022. Crew’s audited consolidated Financial Statements and Notes, as well as Management’s Discussion and Analysis (“MD&A”) are available on Crew’s website and filed on SEDAR at www.sedar.com.
HIGHLIGHTS
FINANCIAL & OPERATING HIGHLIGHTS
| FINANCIAL ($ thousands, except per share amounts) |
Three months ended Dec. 31, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Petroleum and natural gas sales | 136,948 | 103,153 | 598,569 | 332,848 |
| Cash provided by operating activities | 62,570 | 45,747 | 317,337 | 119,156 |
| Adjusted funds flow2 | 74,994 | 46,833 | 337,345 | 132,869 |
| Per share3 | ||||
| – basic | 0.49 | 0.31 | 2.21 | 0.87 |
| – diluted | 0.46 | 0.29 | 2.08 | 0.82 |
| Net income | 71,383 | 50,901 | 264,359 | 205,299 |
| Per share | ||||
| – basic | 0.47 | 0.33 | 1.73 | 1.34 |
| – diluted | 0.44 | 0.31 | 1.63 | 1.27 |
| Property, plant and equipment expenditures | 60,639 | 42,341 | 176,621 | 177,924 |
| Net property dispositions4 | (7) | (460) | (129,787) | (8,276) |
| Net capital expenditures4 | 60,632 | 41,881 | 46,834 | 169,648 |
| Capital Structure ($ thousands) |
As at Dec. 31, 2022 |
As at Dec. 31, 2021 |
| Working capital surplus (deficiency)2 | 21,844 | (33,068) |
| Bank loan | – | (75,067) |
| 21,844 | (108,135) | |
| Senior unsecured notes | (171,298) | (297,834) |
| Net debt2 | (149,454) | (405,969) |
| Common shares outstanding(thousands) | 154,377 | 152,480 |
| OPERATIONAL | Three months ended Dec. 31, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Daily production | ||||
| Light crude oil (bbl/d) | 84 | 157 | 98 | 158 |
| Heavy crude oil (bbl/d) | – | – | – | 802 |
| Natural gas liquids (“ngl”)5,6 (bbl/d) | 2,565 | 2,458 | 2,804 | 2,446 |
| Condensate (bbl/d) | 3,955 | 2,596 | 4,546 | 2,667 |
| Conventional natural gas (mcf/d) | 157,732 | 143,584 | 154,971 | 122,217 |
| Total (boe/d @ 6:1) | 32,893 | 29,142 | 33,277 | 26,443 |
| Average realized3 | ||||
| Light crude oil price ($/bbl) | 100.10 | 89.98 | 111.56 | 75.95 |
| Heavy crude oil price ($/bbl) | – | – | – | 59.41 |
| Natural gas liquids price ($/bbl) | 37.42 | 34.50 | 44.42 | 20.75 |
| Condensate price ($/bbl) | 105.30 | 93.90 | 115.43 | 79.86 |
| Natural gas price ($/mcf) | 6.14 | 5.42 | 6.32 | 4.82 |
| Commodity price ($/boe) | 45.25 | 38.47 | 49.28 | 34.49 |
| Three months ended Dec. 31, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
|
| Netback($/boe) | ||||
| Petroleum and natural gas sales | 45.25 | 38.47 | 49.28 | 34.49 |
| Royalties | (6.09) | (2.70) | (4.90) | (2.39) |
| Realized loss on derivative financial instruments | (5.72) | (8.06) | (7.07) | (6.31) |
| Net operating costs4 | (3.47) | (3.49) | (3.65) | (4.47) |
| Net transportation costs4 | (3.05) | (3.52) | (3.23) | (4.07) |
| Operating netback4 | 26.92 | 20.70 | 30.43 | 17.25 |
| General and administrative (“G&A”) | (1.17) | (0.91) | (0.98) | (0.95) |
| Financing costs on debt4 | (0.98) | (2.31) | (1.67) | (2.53) |
| Adjusted funds flow2 | 24.77 | 17.48 | 27.78 | 13.77 |
| ¹ See table in the Advisories for production breakdown by product type as defined in NI 51-101. ² Capital management measure that does not have any standardized meaning as prescribed by International Financial Reporting Standards, and therefore, may not be comparable with the calculations of similar measures for other entities. See “Advisories – Non-IFRS and Other Financial Measures” contained within this press release. ³ Supplementary financial measure that does not have any standardized meaning as prescribed by International Financial Reporting Standards, and therefore, may not be comparable with the calculations of similar measures for other entities. See “Advisories – Non-IFRS and Other Financial Measures” contained within this press release. ⁴ Non-IFRS financial measure or ratio that does not have any standardized meaning as prescribed by International Financial Reporting Standards, and therefore, may not be comparable with calculations of similar measures or ratios for other entities. See “Advisories – Non-IFRS and Other Financial Measures” contained within this press release and in our most recently filed MD&A, available on SEDAR at www.sedar.com. ⁵ Throughout this news release, NGLs comprise all natural gas liquids as defined in National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (“NI 51-101”), other than condensate, which is disclosed separately, and natural gas means conventional natural gas by NI 51-101 product type. ⁶ Excludes condensate volumes which have been reported separately. |
|
NEW FOUR-YEAR PLAN UPDATE
Crew’s recently announced, four-year strategic plan (the “Four-Year Plan”7) is designed to significantly increase the Company’s size and scale through 2026, building on the momentum and stronger financial position realized following the successful execution of our recently completed two-year plan. Successful implementation of this Four-Year Plan would enable Crew to achieve our next phase of growth with significantly increased production, targeting annual volumes of over 60,000 boe per day. With 70,000 net acres of contiguous land in the Groundbirch area, a key driver behind the Four-Year Plan is the expansion of our gas processing infrastructure which is planned to be anchored by the construction of a 180 mmcf per day deep-cut gas plant in an area ideally located to supply natural gas to Canada’s future liquified natural gas (“LNG”) export facilities.
Advancement of our focused Groundbirch development plan is predicated on all necessary permits being obtained, supportive commodity prices and securing the requisite financing while maintaining conservative debt leverage metrics. With current spot and future strip natural gas prices being depressed from a supply/demand imbalance caused by unseasonably warm weather across North America and Europe, the Company plans to methodically, and cost effectively, advance the Four-Year Plan through obtaining the necessary permits, monitoring price signals for additional hedging opportunities and continuing to explore a variety of financing options for the project.
_________________________
⁷ Crew’s plans, goals and targets for 2024 and beyond remain preliminary in nature and do not, at this time, reflect a Board approved capital expenditures budget. Accordingly, undue reliance should not be placed on the same.
OPERATIONS UPDATE & AREA OVERVIEW
NE BC Montney (Greater Septimus)
Groundbirch
Other NE BC Montney
RISK MANAGEMENT PROFILE
To secure a base level of AFF2 to fund planned capital projects, Crew continues to utilize hedging to limit exposure to fluctuations in commodity prices and foreign exchange rates, while allowing for participation in spot commodity prices. As of March 8, 2023, the Company has hedged approximately 72,000 GJ’s at C$4.47 per GJ (or $5.36 per mcf using Crew’s higher heat content factor) and 1,500 bbls per day of condensate at an average price of C$106.00 per bbl for the first six months of 2023, and 1,000 bbls per day at an average price of C$100.25 per bbl for the second half of 2023.
SUSTAINABILITY AND ESG INITIATIVES
Crew strives to be a leader in environmental, social, and governance (“ESG”). With a focus on sustainability initiatives, we are unwavering in our dedication to safe and responsible energy production.
Throughout 2022, some of our key ESG highlights include:
Please visit www.esg.crewenergy.com to learn more about Crew’s latest sustainability initiatives showcased within our digital ESG Report and data performance tables.
OUTLOOK
On January 18, 2023, the B.C. Government and Blueberry River First Nations announced the signing of the ‘Blueberry River First Nations Implementation Agreement’. Additionally, on January 20, 2023, a Consensus Agreement between the B.C. Government and several of the Treaty 8 First Nations was announced. Crew believes this resolution now supports our ability to optimize capital allocation, further enabling the Company to continue to generate value from our vast Montney resource. Permit applications have been submitted for approval to the BC Energy Regulator in respect of 93 well locations, our planned Groundbirch Plant, pipelines, facilities and other investments.
As a result of unseasonably warmer temperatures across parts of North America and Europe through the latter part of 2022 and into 2023, a natural gas supply/demand imbalance has materialized, leading to a sharp price decline for both spot and future natural gas prices. In response, the Company is adjusting our original 2023 budget and associated guidance initially released in early December 2022, summarized below.
Crew’s active development program is designed to continue targeting optimal investment returns in the current environment while maintaining conservative leverage metrics, positioning the Company to prudently and strategically develop our significant resource base under the Four-Year Plan.
The following table sets forth Crew’s updated guidance and underlying material assumptions:
| Previous 2023 Guidance and Assumptions |
Updated 2023 Guidance and Assumptions8 |
|||
| Net capital expenditures4 ($Millions) | 230-250 | 190-210 | ||
| Annual average production1 (boe/d) | 30,000–32,000 | 30,000–32,000 | ||
| Adjusted funds flow2 ($Millions) | 300-320 | 240-260 | ||
| Free adjusted funds flow4 ($Millions) | 50–90 | 30-70 | ||
| EBITDA4 ($Millions) | 310–330 | 250-270 | ||
| Oil price (WTI)($US per bbl) | $80.00 | $75.00 | ||
| Natural gas price (NYMEX) ($US per mmbtu) | $5.00 | $3.20 | ||
| Natural gas price (AECO 5A) ($C per mcf) | $4.25 | $2.85 | ||
| Natural gas price (Crew est. wellhead) ($C per mcf) | $5.25 | $3.30 | ||
| Foreign exchange ($US/$CAD) | $0.75 | $0.74 | ||
| Royalties | 9–11% | 9–11% | ||
| Net operating costs4 ($ per boe) | $4.50–$5.00 | $4.50–$5.00 | ||
| Net transportation costs4 ($ per boe) | $3.50–$4.00 | $3.50–$4.00 | ||
| G&A ($ per boe) | $1.00–$1.20 | $1.00–$1.20 | ||
| Effective interest rate on long-term debt | 6.5–7.5% | 6.5–7.5% | ||
| 2023 Sensitivities | AFF ($MM) | AFF/Share | FD AFF/Share | |||
| 100 bbl per day Condensate | $3.3 | $0.02 | $0.02 | |||
| C$1.00 per bbl WTI | $1.3 | $0.01 | $0.01 | |||
| US $0.10 NYMEX (per mmbtu) | $3.1 | $0.02 | $0.02 | |||
| 1 mmcf per day natural gas | $1.2 | $0.01 | $0.01 | |||
| $0.10 AECO 5A (per GJ) | $2.6 | $0.02 | $0.02 | |||
| $0.01 FX CAD/US | $2.9 | $0.02 | $0.02 | |||
With a world-class Montney asset base that is ideally situated to capitalize on the incredible potential to provide natural gas for Canadian LNG, Crew remains focused on operational excellence and financial strength. With an established track record of successfully navigating a variety of market opportunities and challenges, Crew has a quality asset base and a committed team with the vision to deliver long-term shareholder value. With a strong risk management program and a proven strategy, we look forward to realizing our objectives while upholding our commitment to remain a safe and environmentally responsible operator. Thank you to our stakeholders for your ongoing contributions, dedication, and continued support.
_________________________
⁸ The actual results of operations of Crew and the resulting financial results will likely vary from the estimates and material underlying assumptions set forth in this guidance by the Company and such variation may be material. The guidance and material underlying assumptions have been prepared on a reasonable basis, reflecting management’s best estimates and judgments.
ADVISORIES
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” “targets” 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: the ability to execute on its Four-Year Plan and underlying strategy, plans, goals and targets, all as more particularly outlined and described in this press release; our 2023 annual capital budget range (the “2023 Budget”), associated drilling and completion plans, the anticipated timing thereof, and all associated near term initiatives, goals and targets, along with all guidance and underlying assumptions related to the 2023 Budget as outlined in the “Outlook” section in this press release; production estimates and targets under the 2023 Budget and balance of the Four-Year Plan; infrastructure plans and anticipated benefits outlined in this press release including construction of the Groundbirch Plant, anticipated timing and assumed receipt of all regulatory approvals required in connection therewith; our ability to secure financing for the Groundbirch Plant and timing thereof; forecast improvement in debt and leverage metrics; commodity price expectations and assumptions; Crew’s commodity risk management programs and future hedging plans; marketing and transportation and processing plans and requirements; estimates of processing capacity and requirements; anticipated reductions in GHG emissions and decommissioning obligations; future liquidity and financial capacity and planned redemption of our outstanding senior unsecured notes; future results from operations and operating and leverage metrics; targeted debt levels and leverage metrics over the course of the Four-Year Plan; world supply and demand projections and long-term impact on pricing; future development, exploration, acquisition and disposition activities (including our capital investment model through 2026 and associated drilling and completion plans, associated receipt of all required regulatory permits for our Four-Year Plan, development timing and cost estimates); the potential to serve a Canadian LNG market; the potential of our Groundbirch area to be a core area of future development and the anticipated commerciality of up to four potential prospective zones to be drilled; the successful implementation of our ESG initiatives, and significant emissions intensity improvements going forward; the amount and timing of capital projects; and anticipated improvement in our long-term sustainability and the expected positive attributes discussed herein attributable to our Four-Year Plan.
The internal projections, expectations, or beliefs underlying our Board approved 2023 Budget and associated guidance, as well as management’s preliminary strategy, and associated plans, goals and targets in respect of the balance of its Four-Year Plan, are subject to change in light of, without limitation, the Russia/Ukraine conflict and any related actions taken by businesses and governments, ongoing results, prevailing economic circumstances, volatile commodity prices, resulting changes in our underlying assumptions, goals and targets provided herein and changes in industry conditions and regulations. Crew’s financial outlook and guidance provides shareholders with relevant information on management’s expectations for results of operations, excluding any potential acquisitions or dispositions, for such time periods based upon the key assumptions outlined herein. In this press release reference is made to the Company’s longer range 2024 and beyond internal plan and associated economic model. Such information reflects internal goals and targets used by management for the purposes of making capital investment decisions and for internal long-range planning and future budget preparation. Readers are cautioned that events or circumstances and updates to underlying assumptions could cause capital plans and associated results to differ materially from those predicted and Crew’s guidance for 2023, and more particularly its internal plan, goals and targets for 2024 and beyond which are not based upon Board approved budget(s) at this time, may not be appropriate for other purposes. Accordingly, undue reliance should not be placed on same.
In addition, forward-looking statements or information are based on several 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; that future business, regulatory and industry conditions will be within the parameters expected by Crew; 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, environmental and indigenous matters in the jurisdictions in which Crew operates; that regulatory authorities in British Columbia will resume and continue, as the case may be, granting approvals for oil and gas activities on time frames, and on terms and conditions, consistent with past practices; 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: the continuing and uncertain impact of pandemics and the Russia / Ukraine conflict; 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 and 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 MD&A and Annual Information Form).
This press release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about Crew’s prospective capital expenditures, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. The actual results of operations of Crew and the resulting financial results will likely vary from the amounts set forth in this press release and such variation may be material. Crew and its management believe that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments. However, because this information is subjective and subject to numerous risks, it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, Crew undertakes no obligation to update such FOFI. FOFI contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about Crew’s anticipated future business operations. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein.
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.
Risk Factors to the Company’s Four-Year Plan
Risk factors that could materially impact successful execution and actual results of the Four-Year Plan include:
Information Regarding Disclosure on Oil and Gas Operational Information
All amounts in this news release are stated in Canadian dollars unless otherwise specified. This press release contains metrics commonly used in the oil and natural gas industry. Each of these metrics are determined by Crew as specifically set forth in this news release. 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 are not reliable indicators of future performance and therefore should not be unduly relied upon for investment or other purposes. See “Non-IFRS and Other Financial Measures” below for additional disclosures.
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 preliminary until such analysis or interpretation has been completed. Test results and initial production (“IP”) rates disclosed herein, particularly those short in duration, may not necessarily be indicative of long-term performance or of ultimate recovery.
BOE and Mcfe Conversions
Measurements expressed in barrel of oil equivalents, BOEs or Mcfe may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl and an Mcfe conversion ratio of 1 bbl:6 Mcf are based on an energy equivalency conversion method primarily applicable at the burner tip and do 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.
Non-IFRS and Other Financial Measures
Throughout this press release and other materials disclosed by the Company, Crew uses certain measures to analyze financial performance, financial position and cash flow. These non-IFRS and other specified financial measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures presented by other entities. The non-IFRS and other specified financial measures should not be considered alternatives to, or more meaningful than, financial measures that are determined in accordance with IFRS as indicators of Crew’s performance. Management believes that the presentation of these non-IFRS and other specified financial measures provides useful information to shareholders and investors in understanding and evaluating the Company’s ongoing operating performance, and the measures provide increased transparency and the ability to better analyze Crew’s business performance against prior periods on a comparable basis.
Capital Management Measures
a) Funds from Operations and Adjusted Funds Flow (“AFF”)
Funds from operations represents cash provided by operating activities before changes in operating non-cash working capital, accretion of deferred financing costs and transaction costs on property dispositions. Adjusted funds flow represents funds from operations before decommissioning obligations settled (recovered). The Company considers these metrics as key measures that demonstrate the ability of the Company’s continuing operations to generate the cash flow necessary to maintain production at current levels and fund future growth through capital investment and to service and repay debt. Management believes that such measures provide an insightful assessment of the Company’s operations on a continuing basis by eliminating certain non-cash charges, actual settlements of decommissioning obligations and transaction costs on property dispositions, the timing of which is discretionary. Funds from operations and adjusted funds flow should not be considered as an alternative to or more meaningful than cash provided by operating activities as determined in accordance with IFRS as an indicator of the Company’s performance. Crew’s determination of funds from operations and adjusted funds flow may not be comparable to that reported by other companies. Crew also presents adjusted funds flow per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of income per share. The applicable reconciliation to the most directly comparable measure, cash provided by operating activities, is contained under “free adjusted funds flow” below.
b) Net Debt and Working Capital Surplus (Deficiency)
Crew closely monitors its capital structure with a goal of maintaining a strong balance sheet to fund the future growth of the Company. The Company monitors net debt as part of its capital structure. The Company uses net debt (bank debt plus working capital deficiency or surplus, excluding the current portion of the fair value of financial instruments) as an alternative measure of outstanding debt. Management considers net debt and working capital deficiency (surplus) an important measure to assist in assessing the liquidity of the Company.
Non-IFRS Financial Measures and Ratios
a) Net Property Acquisitions (Dispositions)
Net property acquisitions (dispositions) equals property acquisitions less property dispositions and transaction costs on property dispositions. Crew uses net property acquisitions (dispositions) to measure its total capital investment compared to the Company’s annual capital budgeted expenditures. The most directly comparable IFRS measures to net property acquisitions (dispositions) are property acquisitions and property dispositions.
b) Net Capital Expenditures
Net capital expenditures equals exploration and development expenditures less net property acquisitions (dispositions). Crew uses net capital expenditures to measure its total capital investment compared to the Company’s annual capital budgeted expenditures. The most directly comparable IFRS measure to net capital expenditures is property, plant and equipment expenditures.
| ($ thousands) | Three months ended Dec. 31, 2022 |
Three months ended Sept 30, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Property, plant and equipment expenditures | 60,639 | 53,560 | 42,341 | 176,621 | 177,924 |
| Less: Net property dispositions | (7) | (129,780) | (460) | (129,787) | (8,276) |
| Net capital expenditures | 60,632 | (76,220) | 41,881 | 46,834 | 169,648 |
c) EBITDA
EBITDA is calculated as consolidated net income (loss) before interest and financing expenses, income taxes, depletion, depreciation and amortization, adjusted for certain non-cash, extraordinary and non-recurring items primarily relating to unrealized gains and losses on financial instruments and impairment losses. The Company considers this metric as key measures that demonstrate the ability of the Company’s continuing operations to generate the cash flow necessary to maintain production at current levels and fund future growth through capital investment and to service and repay debt. The most directly comparable IFRS measure to EBITDA is cash provided by operating activities.
| ($ thousands) | Three months ended Dec. 31, 2022 |
Three months ended Sept 30, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Cash provided by operating activities | 62,570 | 82,322 | 45,747 | 317,337 | 119,156 |
| Change in operating non-cash working capital | 7,565 | (16,243) | (668) | 8,331 | 8,844 |
| Accretion of deferred financing costs | (149) | (214) | (246) | (854) | (983) |
| Transaction costs on property dispositions | – | 203 | – | 203 | 2,505 |
| Funds from operations | 69,986 | 66,068 | 44,833 | 325,017 | 129,522 |
| Decommissioning obligations settled excluding government grants | 5,008 | 3,349 | 2,000 | 12,328 | 3,347 |
| Adjusted funds flow | 74,994 | 69,417 | 46,833 | 337,345 | 132,869 |
| Interest | 2,971 | 6,916 | 6,199 | 22,211 | 24,399 |
| EBITDA | 77,965 | 76,333 | 53,032 | 359,556 | 157,268 |
d) Free Adjusted Funds Flow
Free adjusted funds flow represents adjusted funds flow less capital expenditures, excluding acquisitions and dispositions. The Company considers this metric a key measure that demonstrates the ability of the Company’s continuing operations to fund future growth through capital investment and to service and repay debt. The most directly comparable IFRS measure to free adjusted funds flow is cash provided by operating activities.
| ($ thousands) | Three months ended Dec. 31, 2022 |
Three months ended Sept 30, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Cash provided by operating activities | 62,570 | 82,322 | 45,747 | 317,337 | 119,156 |
| Change in operating non-cash working capital | 7,565 | (16,243) | (668) | 8,331 | 8,844 |
| Accretion of deferred financing costs | (149) | (214) | (246) | (854) | (983) |
| Transaction costs on property dispositions | – | 203 | – | 203 | 2,505 |
| Funds from operations | 69,986 | 66,068 | 44,833 | 325,017 | 129,522 |
| Decommissioning obligations settled excluding government grants | 5,008 | 3,349 | 2,000 | 12,328 | 3,347 |
| Adjusted funds flow | 74,994 | 69,417 | 46,833 | 337,345 | 132,869 |
| Less: property, plant and equipment expenditures | 60,639 | 53,560 | 42,341 | 176,621 | 177,924 |
| Free adjusted funds flow | 14,355 | 15,857 | 4,492 | 160,724 | (45,055) |
e) Net Operating Costs
Net operating costs equals operating costs net of processing revenue. Management views net operating costs as an important measure to evaluate its operational performance. The most directly comparable IFRS measure for net operating costs is operating costs.
| ($ thousands, except per boe) | Three months ended Dec. 31, 2022 |
Three months ended Sept 30, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Operating costs | 11,115 | 12,580 | 10,287 | 47,759 | 45,828 |
| Processing revenue | (616) | (520) | (934) | (3,441) | (2,720) |
| Net operating costs | 10,499 | 12,060 | 9,353 | 44,318 | 43,108 |
| Per boe | 3.47 | 4.12 | 3.49 | 3.65 | 4.47 |
f) Net Operating Costs per boe
Net operating costs per boe equals net operating costs divided by production. Management views net operating costs per boe as an important measure to evaluate its operational performance. The calculation of Crew’s net operating costs per boe can be seen in the non-IFRS measure entitled “Net Operating Costs” above.
g) Net Transportation Costs
Net transportation costs equals transportation costs net of transportation revenue. Management views net transportation costs as an important measure to evaluate its operational performance. The most directly comparable IFRS measure for net transportation costs is transportation costs. The calculation of Crew’s net transportation costs can be seen in the section entitled “Net Transportation Costs” of this MD&A.
| ($ thousands, except per boe) | Three months ended Dec. 31, 2022 |
Three months ended Sept 30, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Transportation costs | 10,701 | 11,482 | 10,868 | 45,120 | 44,943 |
| Transportation revenue | 1,485 | 1,485 | 1,421 | 5,892 | 5,638 |
| Net transportation costs | 9,216 | 9,997 | 9,447 | 39,228 | 39,305 |
| Per boe | 3.05 | 3.42 | 3.52 | 3.23 | 4.07 |
h) Net Transportation Costs per boe
Net transportation costs per boe equals net transportation costs divided by production. Management views net transportation costs per boe as an important measure to evaluate its operational performance.
i) Operating Netback per boe
Operating netback per boe equals petroleum and natural gas sales including realized gains and losses on commodity related derivative financial instruments, marketing income, less royalties, net operating costs and transportation costs calculated on a boe basis. Management considers operating netback per boe an important measure to evaluate its operational performance as it demonstrates its field level profitability relative to current commodity prices.
| ($/boe) | Three months ended Dec. 31, 2022 |
Three months ended Sept 30, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Petroleum and natural gas sales | 45.25 | 45.46 | 38.47 | 49.28 | 34.49 |
| Royalties | (6.09) | (6.86) | (2.70) | (4.90) | (2.39) |
| Realized loss on derivative financial instruments | (5.72) | (4.63) | (8.06) | (7.07) | (6.31) |
| Net operating costs | (3.47) | (4.12) | (3.49) | (3.65) | (4.47) |
| Net transportation costs | (3.05) | (3.42) | (3.52) | (3.23) | (4.07) |
| Operating netbacks | 26.92 | 26.43 | 20.70 | 30.43 | 17.25 |
| Production (boe/d) | 32,893 | 31,792 | 29,142 | 33,277 | 26,443 |
j) Cash costs per boe
Cash costs per boe is comprised of net operating, transportation, general and administrative and financing costs on debt calculated on a boe basis. Management views cash costs per boe as an important measure to evaluate its operational performance.
| ($/boe) | Three months ended Dec. 31, 2022 |
Three months ended Sept 30, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Net operating costs | 3.47 | 4.12 | 3.49 | 3.65 | 4.47 |
| Net transportation costs | 3.05 | 3.42 | 3.52 | 3.23 | 4.07 |
| General and administrative expenses | 1.17 | 0.99 | 0.91 | 0.98 | 0.95 |
| Financing costs on debt | 0.98 | 1.70 | 2.31 | 1.67 | 2.53 |
| Cash costs | 8.67 | 10.23 | 10.23 | 9.53 | 12.02 |
k) Financing costs on debt per boe
Financing costs on debt per boe is comprised of the sum of interest on bank loan and other, interest on senior notes and accretion of deferred financing charges, divided by production. Management views financing costs on debt per boe as an important measure to evaluate its cost of debt financing.
| ($ thousands, except per boe) | Three months ended Dec. 31, 2022 |
Three months ended Sept 30, 2022 |
Three months ended Dec. 31, 2021 |
Year ended Dec. 31, 2022 |
Year ended Dec. 31, 2021 |
| Interest on bank loan and other | 4 | 154 | 1,038 | 2,321 | 3,916 |
| Interest on senior notes | 2,818 | 4,607 | 4,915 | 17,095 | 19,500 |
| Accretion of deferred financing charges | 149 | 214 | 246 | 854 | 983 |
| Financing costs on debt | 2,971 | 4,975 | 6,199 | 20,270 | 24,399 |
| Production (boe/d) | 32,893 | 31,792 | 29,142 | 33,277 | 26,443 |
| Financing costs on debt per boe | 0.98 | 1.70 | 2.31 | 1.67 | 2.53 |
Supplementary Financial Measures
“Adjusted funds flow per basic share” is comprised of adjusted funds flow divided by the basic weighted average common shares.
“Adjusted funds flow per diluted share” is comprised of adjusted funds flow divided by the diluted weighted average common shares.
“Adjusted funds flow per boe” is comprised of adjusted funds flow divided by total production.
“Average realized commodity price” is comprised of commodity sales from production, as determined in accordance with IFRS, divided by the Company’s production. Average prices are before deduction of net transportation costs and do not include gains and losses on financial instruments.
“Average realized light crude oil price” is comprised of light crude oil commodity sales from production, as determined in accordance with IFRS, divided by the Company’s light crude oil production. Average prices are before deduction of net transportation costs and do not include gains and losses on financial instruments.
“Average realized heavy crude oil price” is comprised of heavy crude oil commodity sales from production, as determined in accordance with IFRS, divided by the Company’s heavy crude oil production. Average prices are before deduction of net transportation costs and do not include gains and losses on financial instruments.
“Average realized ngl price” is comprised of ngl commodity sales from production, as determined in accordance with IFRS, divided by the Company’s ngl production. Average prices are before deduction of net transportation costs and do not include gains and losses on financial instruments.
“Average realized condensate price” is comprised of condensate commodity sales from production, as determined in accordance with IFRS, divided by the Company’s condensate production. Average prices are before deduction of net transportation costs and do not include gains and losses on financial instruments.
“Average realized natural gas price” is comprised of natural gas commodity sales from production, as determined in accordance with IFRS, divided by the Company’s natural gas production. Average prices are before deduction of net transportation costs and do not include gains and losses on financial instruments.
“Net debt to last twelve months (“LTM”) EBITDA” is calculated as net debt at a point in time divided by EBITDA earned from that point back for the trailing twelve months.
Supplemental Information Regarding Product Types
References to gas or natural gas and NGLs in this press release refer to conventional natural gas and natural gas liquids product types, respectively, as defined in National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (“NI 51-101”), except where specifically noted otherwise.
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:
| Light & Medium Crude Oil | Heavy Crude Oil |
Condensate | Natural Gas Liquids1 | Conventional Natural Gas |
Total (boe/d) |
|
| Q1 2023 Average | 0% | 0% | 14% | 7% | 79% | 31,000-33,000 |
| 2023 Annual Average | 3% | 0% | 13% | 7% | 77% | 30,000-32,000 |
| 2023 Exit Rate | 6% | 0% | 14% | 7% | 73% | 32,000-34,000 |
Notes:
1) Excludes condensate volumes which have been reported separately.
Crew is a growth-oriented natural gas and liquids producer, committed to pursuing sustainable per share growth through a balanced mix of financially and socially responsible exploration and development. The Company’s operations are exclusively located in northeast British Columbia and feature a vast Montney resource with a large contiguous land base in the Greater Septimus and Groundbirch areas in British Columbia, offering significant development potential over the long-term. Crew has access to diversified markets with operated infrastructure and access to multiple pipeline egress options. The Company’s common shares are listed for trading on the Toronto Stock Exchange (“TSX”) under the symbol “CR” and on the OTCQB in the US under ticker “CWEGF”.
FOR DETAILED INFORMATION, PLEASE CONTACT:
| Dale Shwed, President and CEO John Leach, Executive Vice President and CFO |
Phone: (403) 266-2088 Email: investor@crewenergy.com |