Crew Energy Announces Q1 2024 Results Highlighted by a 61% AFF Margin and a 20% Increase in Condensate Production

May 9, 2024

CALGARY, Alberta, May 09, 2024 (GLOBE NEWSWIRE) — Crew Energy Inc. (TSX: CR; OTCQB: CWEGF) (“Crew” or the “Company”), a growth-oriented natural gas weighted 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-month period ended March 31, 2024. Crew’s 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 sedarplus.ca.

HIGHLIGHTS

29,510 boe per day1 (177 mmcfe per day) average production in Q1/24 was in-line with previous quarterly guidance of 29,000 to 31,000 boe per day and reflects the Company’s focus on liquids production, AFF2 generation and the preservation of value through the curtailment of dry gas production, a result of the low natural gas price environment. 5,540 bbls per day of condensate and light crude oil production in Q1/24, marking a 20% volume increase in condensate compared to Q1/23, and representing 19% of total production and 53% of sales.130,232 mmcf per day of natural gas production in Q1/24 represented 74% of total production and 39% of sales.2,265 bbls per day of natural gas liquids5,6 (“ngls”) production in Q1/24 represented 8% of total production and 8% of sales. $51.2 million of Adjusted Funds Flow (“AFF”)2 ($0.32 per fully diluted share3) was generated in Q1/24 and was supported by an increased proportion of higher-value condensate production. AFF2 as a percentage of petroleum and natural gas sales (“AFF Margin”)3 totaled 61% in Q1/24.Operating netbacks4 averaged $21.05 per boe, while AFF per boe3 (“AFF Netback”) averaged $19.08 per boe in Q1/24. $77.2 million of net capital expenditures4 were invested in Q1/24, in line with guidance of $75 to $85 million, and included $57.8 million allocated to drilling and completion activities, $17.4 million to facilities, equipment and pipelines and $2.0 million to land, seismic and other miscellaneous amounts. The capital program included the drilling of six (6.0 net) wells, completion of five (5.0 net) wells, equipping of six (6.0 net) wells and advancement of the West Septimus Gas Plant electrification project.$147.7 million in net debt2 at quarter-end, with net debt2 to trailing last twelve-month (“LTM”) EBITDA3 of 0.6x. After quarter-end, Crew’s bank facility was reviewed and reconfirmed at $250 million and extended for an additional year.$10.6 million in positive after-tax net income ($0.07 per fully diluted share) was recorded during the quarter.$10.07 cash costs per boe4 in Q1/24 were 7% higher than in Q1/23, notwithstanding production being
10% lower.

FINANCIAL & OPERATING HIGHLIGHTS

FINANCIAL
($ thousands, except per share amounts)  Three months
ended
Mar. 31, 2024Three months
ended
Mar. 31, 2023Petroleum and natural gas sales  84,436100,681Cash provided by operating activities  46,00866,644Adjusted funds flow2  51,19774,517Per share3 – basic  0.330.48– diluted  0.320.46Net income  10,62641,354Per share – basic  0.070.27– diluted  0.070.26Property, plant and equipment expenditures  77,16122,161Net capital expenditures4  77,16122,161

Capital Structure
($ thousands)As at
Mar. 31, 2024As at
Dec. 31, 2023Other long-term obligations(18,223)(18,223)Bank loan(105,323)(74,259)Working capital deficiency2(24,143)(24,873)Net debt2(147,689)(117,355)Common shares outstanding (thousands)156,110156,560

OPERATIONAL    Three months
ended
Mar. 31, 2024Three months
ended
Mar. 31, 2023Daily production       Light crude oil (bbl/d)    7671Condensate (bbl/d)    5,464 4,572Natural gas liquids (“ngl”)5,6 (bbl/d)    2,2652,355Conventional natural gas (mcf/d)    130,232155,789Total (boe/d @ 6:1)    29,51032,963Average realized3      Light crude oil price ($/bbl)    81.0884.56Condensate price ($/bbl)    89.0898.33Natural gas liquids price ($/bbl)    32.2538.80Natural gas price ($/mcf)    2.783.67Commodity price ($/boe)    31.4433.94

   Three months
ended
Mar. 31, 2024Three months
ended
Mar. 31, 2023Netback ($/boe)    Petroleum and natural gas sales  31.4433.94Royalties  (2.75)(4.13)Realized gain on derivative financial instruments  0.464.72Net operating costs4  (4.31)(4.02)Net transportation costs4  (3.79)(3.29)Operating netback4  21.0527.22General and administrative (“G&A”)  (1.18)(1.14)Interest expenses on debt4  (0.79)(0.95)Adjusted funds flow2  19.0825.13       

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 sedarplus.ca.

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.

SETTING THE STAGE FOR LONG-TERM SUCCESS

Crew is excited for the future. This sentiment is upheld by our strategic positioning geographically, financially and operationally, which provides the Company with various opportunities for value creation. With over 340 net sections of Montney rights in the liquids rich gas, condensate and oil windows accessing multiple Canadian and US sales hubs, and proximal to the Coastal Gaslink Pipeline, Crew is strategically positioned to capitalize on emerging opportunities. The anticipated start-up of Canada’s first liquefied natural gas (“LNG”) export terminal presents significant potential for growth and is expected to further solidify Crew’s strategic advantage in the evolving natural gas supply and demand landscape.

In the lead up to these catalysts, Crew is committed to actively navigating periods of commodity price volatility to maintain a strong financial position. Central to this strategy is disciplined capital allocation through investment in high value products and advancing infrastructure projects for long-term growth, as demonstrated in Q1/24 when Crew significantly increased our average condensate production by 20% over the comparable period of 2023.

Our planned electrification projects exemplify our dedication to sustainability and innovation. The ongoing West Septimus Gas Plant electrification project is expected to yield significant benefits once complete, with an anticipated 82% reduction in emissions and operational cost savings of approximately 10%, demonstrating our commitment to both economic and responsible resource development. Crew gratefully acknowledges assistance from the Province of British Columbia’s CleanBC Industry Fund for their part in supporting this project .

OPERATIONS UPDATE

NE BC Montney (Greater Septimus)

Crew completed five (5.0 net) 7-18 ultra-condensate rich (“UCR”) wells and equipped the six (6.0 net) well 1-24 UCR pad and gathering hub during Q1/24.Crew had a successful six (6.0 net) well workover campaign in Q1/24, restoring 1,035 bbls per day of raw wellhead condensate and 4,400 mcf per day of natural gas production, while spending approximately $4.6 million.Over the first 27 days of initial clean-up and testing, the five (5.0 net) 7-18 UCR wells have produced average raw wellhead rates of 907 bbls per day of condensate and 826 mcf per day of natural gas and continue to clean up. These wells are planned to be equipped and tied-in to permanent facilities during Q2/24.Over the first 120 days on production, the four (4.0 net) UCR Montney B zone wells which were completed on the 1-24 pad in Q4/23 have produced average per well raw wellhead condensate of 82,178 bbls, representing a daily average of 685 bbls per day, as well as a daily average natural gas rate of 2,821 mcf per day.

Groundbirch

The original three (3.0 net) wells on the 4-17 pad have completed lateral lengths averaging 3,000 meters and have produced an average of 4.3 bcf of natural gas over the first 810 days on production, exceeding Sproule’s year-end 2023 proved plus probable (“2P”) undeveloped Groundbirch type curve (the “Sproule Type Curve”) by approximately 34% to date. The second phase of development at Crew’s 4-17 pad has completed lateral lengths averaging 2,650 meters, featuring a three-zone development with five (5.0 net) wells that have averaged 5,321 mcf per day over the first 365 days on production and continue to exceed the Sproule Type Curve when normalized to 3,000 meters, with estimated average raw gas Expected Ultimate Recovery (EUR) of 12 BCF per well7.Six (6.0 net) additional wells were drilled on the 4-17 pad during Q1/24 and have average lateral lengths of over 3,000 meters. These wells will remain in inventory for completion when natural gas prices improve.

Other NE BC Montney

The Company has six (6.0 net) drilled Extended Reach Horizontal wells on the 15-28 pad at Tower, targeting light crude oil and featuring lateral lengths of over 4,000 meters. Of these wells, four (4.0 net) Upper Montney “B’ wells and two (2.0 net) Upper Montney “C” wells are awaiting completion, which is currently planned in Q3/24.

RISK MANAGEMENT PROFILE

Crew uses hedging to limit exposure to fluctuations in commodity prices and foreign exchange rates, securing a base level of AFF2 to fund planned capital projects while still allowing for participation in spot commodity prices.

As of May 9, 2024, our hedging profile includes:

2024

2,500 GJ per day of natural gas at an average price of C$2.76 per GJ, or C$3.37 per mcf using Crew’s heat factor, for the remainder of 2024;2,000 bbls per day of condensate at an average price of C$104.04 per bbl for Q2 2024;1,750 bbls per day of condensate at an average price of C$104.01 per bbl for 2nd half 2024;500 bbls per day of WTI at C$112.00 per bbl for Q2 2024; and500 bbls per day of WTI at C$109.25 per bbl for 2nd half 2024.

2025

5,000 GJ per day of AECO natural gas at an average price of C$3.15 per GJ, or C$3.84 per mcf using Crew’s heat factor, for 2025; 15,000 GJ per day of AECO natural gas utilizing costless collars at $2.78 by $3.28 per GJ, for 2025;500 bbls per day of condensate at an average price of C$101.63 per bbl for 1st half of 2025; and250 bbls per day of condensate at an average price of C$100.00 per bbl for 2nd half of 2025.

SUSTAINABILITY AND ESG FOCUS

In Q1/24, our commitment to environmental, social and governance (“ESG”) initiatives remained a central focus and a fundamental element of our long-term sustainability strategy. Key highlights of our ESG initiatives during the quarter include:

Completed over two million consecutive person hours of work without a recordable injury to the end of Q1/24 and marked six years without a lost time injury, demonstrating Crew’s dedication to the safety and protection of our team.Upheld a high standard of environmental protection and sustainability across our operations, achieving zero spills of significance and maintaining a comprehensive water management strategy that includes stringent planning related to water usage and responsible sourcing. Primus spoolable pipeline was successfully utilized in Q1/24 as part of Crew’s 7-18 pad completion, transporting approximately 690,596 bbls (109,796m3) of produced water, removing over 3,660 truckloads of water from the roads, and saving 210 tCO2e in emissions.In Q1/24, Crew continued with financial contributions to community support initiatives and not-for-profit organizations. These efforts were primarily aimed at supporting the health and well-being of our local communities.

OUTLOOK

In response to persistently low natural gas prices, Crew has curtailed approximately 1,700 boe per day of predominantly dry gas production delivered into the Station 2 market, which is expected to remain curtailed through Q2/24 or until prices improve. Crew’s previously announced annual net capital expenditure and production guidance remains unchanged, while the underlying assumptions for natural gas weighting and royalties have been revised, as outlined in the table below.

2024 Guidance –The focus of our 2024 capital program continues to be on adding high valued condensate and light crude oil production to contribute the majority of AFF2, as illustrated in Q1/24 where condensate and light oil volumes generated 53% of revenue while constituting 19% of total production, and to preserve the value of our natural gas assets. The Company’s 2024 capital program is designed to: Allocate $165 to $185 million of net capital expenditures4, including: $105 to $115 million to drilling 6.0 net wells and completing 11.0 net wells, with 10.0 net wells remaining drilled and uncompleted at year-end 2024.$60 to $70 million to infrastructure spending, including: $50 to $55 million to electrification at West Septimus.$10 to $15 million to front-end engineering and design (“FEED”) and site preparation at the future Groundbirch plant. Generate forecasted average 2024 production of 29,000 to 31,000 boe per day1. Increase condensate and light oil production by greater than 20% over 2023. Manage natural gas production to ensure AFF2 optimization and value preservation, with approximately 8% of natural gas production expected to be curtailed in Q2/24.Maintain a strong financial position. Net debt2 to LTM EBITDA3 forecast at <1.0x. Electrify the West Septimus Gas Plant. Increase capacity by 20 mmcf per day to total 140 mmcf per day in 2025.Reduce operating costs by more than 10%.Reduce CO2 emissions by approximately 82%, and potentially generate carbon credits under BC’s Output-Based Pricing System. Position the Company to thrive and grow in an improved natural gas price environment. Q2 Capital Program – Our Q2/24 capital program focuses on the development of our condensate-rich assets at Greater Septimus, and is designed to: Allocate $20 to $25 million of net capital expenditures4.Advance investment in the electrification of the West Septimus gas plant.Equip and tie-in to permanent facilities five (5.0 net) Montney UCR wells.Result in forecast average Q2/24 production of 28,500 to 30,500 boe per day1 assuming approximately 1,700 boe per day of production remains curtailed for the quarter.

The following table sets forth Crew’s annual guidance with minor revisions to certain underlying material assumptions:

 Previous 2024 Guidance
and AssumptionsUpdated 2024 Guidance
and Assumptions8Net capital expenditures4 ($Millions)165–185165–185Annual average production1 (boe/d)29,000–31,00029,000–31,000Natural gas weighting73-75%72-74%Royalties8–10%9–11%Net operating costs4 ($ per boe)$4.50–$5.00$4.50–$5.00Net transportation costs4 ($ per boe)$3.50–$4.00$3.50–$4.00G&A ($ per boe)$1.00–$1.20$1.00–$1.20Effective interest rate on long-term debt8.0–10.0%8.0–10.0%   

ANNUAL SHAREHOLDER MEETING

Crew’s annual meeting of shareholders will be held in the Bow River Room/Bow Glacier Room, 3rd floor, 250-5th Street S.W., Centennial Place, West Tower, Calgary, Alberta on Thursday, the 23rd day of May, 2024, at 3:00 p.m. (MDT). Further meeting details are available within the Company’s 2024 Information Circular, which can be viewed on our profile on SEDAR+ at www.sedarplus.ca and on our website at www.crewenergy.com.

Crew intends to continue upholding our commitment to operational excellence through safe and responsible execution, while maintaining financial flexibility that we believe will drive ongoing success over both the near and longer-term horizons. We extend our appreciation to all the Company’s stakeholders for their trust, confidence and ongoing support while we unlock value from our exciting Montney asset base.

ABOUT CREW

Crew is a Canadian liquids-rich natural gas producer committed to pursuing sustainable per share growth through financially responsible resource development. The Company’s operations are focused in northeast British Columbia and include a large contiguous land base with a vast Montney resource. Crew’s liquids-rich natural gas areas of Septimus and West Septimus are complemented by the inter-connected vast dry-gas resource at Groundbirch, offering 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 adheres to safe and environmentally responsible operations while remaining committed to sound environmental, social and governance practices which underpin the Company’s fundamental business tenets. Crew’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 FURTHER INFORMATION, PLEASE CONTACT:

Dale Shwed, President and CEO
John Leach, Executive Vice President and CFO
Phone: (403) 266-2088
Email: investor@crewenergy.com

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”, “goals” 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 near and longer range strategic plan (the “Strategic Plan”) and underlying strategy, associated plans, goals and targets, all as more particularly outlined and described in this press release; our 2024 annual capital budget range (the “2024 Budget”), associated drilling, completion and infrastructure plans, the anticipated timing thereof, and all associated strategies, initiatives, goals and targets, along with all forecasts, guidance and underlying assumptions and sensitivities related to the 2024 Budget, along with Q2 capital plans and associated guidance, as outlined in the “Outlook” section in this press release; production estimates and targets under the 2024 Budget and balance of the longer range plan including expected curtailed volumes, infrastructure plans and anticipated benefits associated therewith as outlined in this press release including, without limitation, the planned expansion and electrification of the West Septimus gas plant and anticipated associated metrics estimates, economic and other benefits thereof, expectations in regards to the extent of provincial and federal government grants, credits and financial incentives related thereto, the planned construction of the Groundbirch Plant and anticipated benefits thereof, anticipated timing and assumed receipt of all regulatory approvals required in connection with our infrastructure plans and our ability to secure financing for these plans as may be required, from time to time, and the potential costs associated therewith; commodity price expectations and assumptions; Crew’s commodity risk management programs and future hedging plans; marketing and transportation and processing plans and requirements; the potential for coastal liquids egress via the CN rail line; estimates of processing capacity and requirements; anticipated reductions in GHG emissions and decommissioning obligations; future liquidity and financial capacity and ability to finance our Strategic Plan; potential hedging opportunities and plans related thereto; future results from operations and targeted operating and leverage metrics; world supply and demand projections and long-term impact on pricing; future development, exploration, acquisition, disposition and infrastructures activities (including our capital investment model and associated drilling and completion plans, associated receipt of all required regulatory permits for our Strategic Plan, development timing and cost estimates); the potential to serve a Canadian LNG market including the anticipated start-up of LNG Canada in 2025 and the anticipated benefits thereof to the Corporation both strategically and economically; 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 Strategic Plan.

The internal projections, expectations, or beliefs underlying our Board approved 2024 Budget and associated guidance, as well as management’s strategy, and associated plans, goals and targets in respect of the balance of its strategic plan, are subject to change in light of, without limitation, the continuing impact of the Russia/Ukraine conflict, war in the Middle East 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. 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 2024, and more particularly its internal model, goals and targets for 2025 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 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; 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 continue 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 the Russia/Ukraine conflict and war in the Middle East; 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 and identified drilling inventory; 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 and all associated guidance, 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 Strategic Plan

Risk factors that could materially impact successful execution and actual results of the Company’s strategic plan include:

volatility of petroleum and natural gas prices and inherent difficulty in the accuracy of predictions related thereto;changes in Federal and Provincial regulations;execution of construction timelines from BC Hydro to support the electrification of the West Septimus and Groundbirch plants;receipt of high-value regulatory permits required to launch development under the strategic plan;the Company’s ability to secure financing for the Groundbirch plant; andThose additional risk factors set forth in the Company’s most recently filed MD&A and Annual Information Form on SEDAR+.

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 considered to 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.

Type Curves/Wells

The Groundbirch type curves referenced herein reflect the average per well proved plus probable undeveloped raw gas assignments (EUR) for Crew’s area of operations, as derived from the Company’s year-end independent reserve evaluations prepared by Sproule in accordance with the definitions and standards contained in the COGE Handbook. Unless otherwise stated, the type wells are based upon all Crew producing wells in the area as well as non-Crew wells determined by the independent evaluator to be analogous for purposes of the reserve assignments.  There is no guarantee that Crew will achieve the estimated or similar results derived therefrom and therefore undue reliance should not be placed on them. Such information has been prepared by Management, where noted, for purposes of making capital investment decisions and for internal budget preparation only.

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 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 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
March 31, 2024
Three months ended
December 31, 2023Three months ended
March 31, 2023Total property, plant and equipment expenditures77,16153,16522,161Net property dispositions–Net capital expenditures77,16153,16522,161    

b)    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
March 31, 2024
Three months ended
December 31, 2023Three months ended
March 31, 2023Adjusted funds flow51,19767,64374,517Interest expense on debt2,1341,9152,815EBITDA53,33169,55877,332    

c)    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
March 31, 2024
Three months ended
December 31, 2023Three months ended
March 31, 2023Operating costs12,13010,72212,558Processing revenue(552)(622)(636)Net operating costs11,57810,10011,922Per boe4.313.554.02       

d)    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.

e)    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 expenses. 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
March 31, 2024
Three months ended
December 31, 2023Three months ended
March 31, 2023Transportation expenses11,62611,84211,288Transportation revenue(1,437)(2,185)(1,520)Net transportation costs10,1899,6579,768Per boe3.793.393.29       

f)    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.

g)    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.

h)    Cash costs per boe

Cash costs per boe is comprised of net operating, transportation, general and administrative and interest expense 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
March 31, 2024
Three months ended
December 31, 2023Three months ended
March 31, 2023Net operating costs4.313.554.02Net transportation costs3.793.393.29General and administrative expenses1.181.151.14Interest expense on debt0.790.670.95Cash costs10.078.769.40    

i)    Interest expense on debt per boe

Interest expense 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 interest expense on debt per boe as an important measure to evaluate its cost of debt financing.

($ thousands, except per boe)Three months ended
March 31, 2024
Three months ended
December 31, 2023Three months ended
March 31, 2023Interest on bank loan and other2,1341,915(92)Interest on senior notes-2,757 Accretion of deferred financing charges-150 Interest expense on debt2,1341,9152,815 Production (boe/d)29,51030,92832,963 Interest expense on debt per boe0.790.670.95      

Supplementary Financial Measures

“Adjusted funds flow margin” is comprised of adjusted funds flow divided by petroleum and natural gas sales.

“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 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
CondensateNatural Gas
Liquids
1Conventional
Natural GasTotal
(boe/d)Q2 2024 Average0%20%9%71%28,500–30,5002024 Annual Average3%16%8%73%29,000–31,000

Notes:
   1) Excludes condensate volumes which have been reported separately.

7 See “Advisories – Type Curves / Wells”.

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.

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