Latest News and Analysis
Deals and Transactions
Track Drilling (Rigs by operator) | Completions (Frac Spreads)

Quarterly / Earnings Reports | Environmental, Health & Safety | Fourth Quarter (4Q) Update | Financial Results | Capital Markets | Capital Expenditure | Drilling Activity

Crew Energy Fourth Quarter, Full Year 2020 Results; Outlook

emailEmail    |    printPrint    |    bookmarkBookmark
   |    Monday,March 15,2021

Crew Energy Inc. reported its Q4/full year 2020 results.

Company commentary: "While 2020 proved to be one of the most challenging years in recent memory for commodities and energy companies due to the economic fallout caused by the COVID-19 pandemic, Crew remained focused on the Company’s long-term sustainability. In December, we announced a strategic asset development plan for 2021 and 2022 designed to increase the pace of development of our world-class Montney resource, capturing value from stronger commodity pricing while optimizing production and infrastructure utilization, enhancing margins and ultimately improving leverage metrics. As a result, we anticipate generating meaningful Free Adjusted Funds Flow1 targeting a range of $35 to $65 million2 in 2022, depending on commodity prices."

2020 Operating & Financial Highlights:

  • 21,955 boe per day3 (131.7 mmcfe per day) average annual production in 2020, 4% lower than 2019 on 24% less capital invested, reflecting the quality of Crew’s asset base and low base decline rate. Q4/20 production averaged 21,666 boe per day3, 7% higher than Q3/20.
  • $41.2 million of Adjusted Funds Flow (AFF”)1 ($0.27 per fully diluted share) in 2020, with $15.6 million ($0.10 per fully diluted share) generated in Q4/20, 82% higher than Q3/20 due to stronger commodity pricing and lower operating costs.
  • 8% lower net operating costs1 in Q4/20 over Q3/20, averaging $5.30 per boe, while 2020 net operating costs of $5.61 were 5% lower than 2019. General and administrative (“G&A”) costs declined 28% to $1.01 per boe in 2020.
  • $28.1 million ($86.3 million gross) net capital expenditures1 in 2020, 48% of which was invested during Q4/20, marking the start of Crew’s two-year asset development plan.
  • 15.0 net wells were drilled in 2020, including 12.0 net natural gas wells, 2.0 net heavy oil wells and 1.0 net disposal well, while 10.0 net wells were completed (including 7.0 net natural gas wells) at Crew’s Septimus and West Septimus areas (“Greater Septimus”), primarily in Q4/20. In Q1/21, Crew drilled and cased the longest well in our history, drilled to a total depth of over 20,000 feet in under 11 days at West Septimus.
  • 7.0 net wells were drilled, completed, equipped and tied-in on our 9-5 pad at Greater Septimus in 2020, with per well costs 12% lower than originally budgeted, averaging an estimated $5 million.
  • Continued positive performance from the 9-5, seven well pad, with average IP60 production sales rates per well of 1,500 boe per day (21% condensate and ngl’s) with flowing metrics of approximately $3,300 per boe4.
  • Over 50% of forecast 2021 natural gas production is hedged at an average price of $3.08 per mcf, reflecting the success of our marketing activities in 2020.
  • Record low Proved Developed Producing (“PDP”) F&D costs5 of $6.83 per boe and FD&A costs5 of $2.00 per boe in 2020, resulting in recycle ratios5 of 1.8x and 6.1x, respectively.
  • 12.0 MMboe of PDP reserves added in 2020, prior to accounting for production, bringing the total to 67.1 MMboe at year-end, a 6% increase over 2019.
  • $357.2 million of year-end net debt6, with no near-term maturities or repayment requirements on the $300 million of senior notes termed out until 2024, and 24% drawn on our $150 million credit facility which was reconfirmed until June 2021.


Underpinning Crew’s long-term strategy is our unwavering commitment to safely and responsibly operating in the communities in which we work, while focussing on our environmental, social and governance (“ESG”) initiatives. The Company expects the release of our inaugural ESG report to stakeholders by mid-2021, meanwhile, we continue to advance our sustainability goals:

  • In the summer of 2021, Crew plans to install a waste heat recovery system at our West Septimus facility, which is expected to reduce emissions and increase condensate stabilization capacity. The system is expected to reduce total greenhouse gas emissions from the facility by approximately 10-15% and increase condensate stabilization capacity by 20% to around 5,000 bbls per day. Crew gratefully acknowledges assistance from the Province of British Columbia for their support of this project.
  • Crew is the first Canadian energy producer to receive regulatory approval from the B.C. Oil and Gas Commission for the installation and operation of a next-generation, spoolable surface pipeline for produced water transfer, confirming Crew’s commitment to improving efficiencies and reducing emissions. The pipeline allows for the safe and environmentally responsible transportation of produced water, dramatically reducing the trucking of water in Crew’s area of operations while significantly reducing emissions. As a result of this pipeline, 5,940 two-way truckloads were removed from the road during the completion of the 3-32 pad in Q1 2021, which is the equivalent distance of three trips around the globe. In addition to the CO2 emission reductions, removing vehicles from the road also significantly reduces the risk of accidents and spills, further contributing to improved safety and environmental performance.
  • We are proud of Crew’s safety record, which in 2020 featured no lost time injuries for a second consecutive year. In 2020, the Company had only two recordable injuries across our employee and contractor workforce.
  • Crew successfully participated in the provincially funded dormant well programs and initiated abandonment and reclamation activities on 79 wells in 2020.
  • Through 2020, Crew’s regulatory compliance remained on par with 2019 as we achieved a 95% compliance rating, with 220 regulatory inspections across the three provinces in which we operate.
  • Crew has established a new committee, constituted with members of our Board of Directors, which has a specific focus on our ESG initiatives.

Ops & Area Overview

NE BC Montney – Greater Septimus

  • The seven wells on Crew’s 9-5 pad at Greater Septimus were drilled, completed, equipped and tied-in with all wells currently flowing through permanent facilities. The estimated per well costs at this pad averaged $5 million, 12% lower than the original $5.7 million budgeted. Average per well sales production over the first 60 days was approximately 1,500 boe per day (21% condensate and ngl’s) with a flowing IP60 efficiency of approximately $3,300 per boe7.
  • From the 9-5 pad, over 120,000 m3 of produced water has been transferred through above ground lines, saving approximately $550,000 while reducing emissions by removing trucks from the road.
  • At Crew’s 3-32 pad, five wells were drilled in Q4/20 and six wells were completed in Q1/21, with encouraging initial condensate rates. Production from the 3-32 pad is expected to start in Q2/21.
  • Drilling of our seven-well, 1-8 pad began in Q4 and has incorporated the longest wells drilled in the Company’s history. As part of our drive to improve returns, and our ongoing ESG strategy, these ultra-extended reach horizontal wells will reduce future development capital and minimize surface footprint by eliminating the number of wells required to effectively deplete the reservoir while reducing the need for additional pipelines. Following the finalization of the 1-8 pad, the associated drilling rig is scheduled to move to our 4-14 pad, targeting gas and condensate in our ultra-condensate rich area at Greater Septimus.


Crew continues to look forward and plan for the future, which we believe to be bright for natural gas. Despite the last six years being challenging for natural gas producers, we have learned to do more with less which has also led to a period of cost cutting and under-investment. We strongly believe that natural gas is and will continue to be an important source of energy as the world transitions to more socially responsible and cleaner energy. With society requiring more environmentally-friendly energy sources, the underlying fundamentals are constructive for natural gas with demand projected to grow by 33% from 2019 to 2050, rivalling the growth of renewables as reported by the Energy Information Administration8. With this important backdrop as support, and as previously announced, Crew developed our strategic asset development plan to enhance long-term sustainability and create meaningful value.

Progress on our Two-Year Plan

Crew’s pivotal two-year plan, designed to expand margins and significantly improve leverage metrics by efficiently matching production volumes with infrastructure and transportation commitments, has been successfully initiated.

  • Production Growth – Q1/21 production is expected to average between 25,500 and 26,500 boe per day9, representing a 20% increase at the midpoint over Q4/20 production while also accounting for wells shut-in for offsetting completion operations as the Company ramps up activity.
  • Optimizing Commitments – Increasing Q1/21 natural gas production has resulted in Crew increasing the utilization of our committed transportation by over 30% as compared to Q4/20. Further improvements are anticipated as production increases throughout the year and the Company’s committed transportation decreases by over 20% in Q4/21 which is expected to reduce transportation expenses by over $9 million annually.
  • Enhanced Hedging Program – Crew currently has over 50% of forecast 2021 natural gas production is hedged at an average price of $2.48 per Gigajoule (“GJ”) (or $3.08 per thousand cubic feet (“mcf”) calculated using Crew’s heat content factor). In addition, approximately 35% of targeted natural gas production for 2022 is hedged at an average price of $2.46 per GJ (or $3.05 per mcf using Crew’s heat content factor).
  • Reduced Costs – Crew’s plan to reduce unit costs by over 25% is largely based on increasing production volumes into existing infrastructure, as over 50% of the Company’s expenses are fixed. As production increases, per unit costs associated with operating, transportation, general and administrative and interest expenses are expected to decline from $13.19 per boe in 2020 to approximately $10.00 per boe in 2022.
  • Q1 2021 Capital Expenditures are expected to range between $50 and $53 million, a slight increase over initial projections as the Company was able to access and drill a lease expiry well in Q1/21 that was originally planned for Q3/21.
  • Full Year 2021 Guidance remains unchanged, with plans to invest between $120 and $145 million of capital over the year, resulting in average annual production of 26,000 to 28,000 boe per day9 and an exit rate of over 30,000 boe per day9.

Related Categories :

Fourth Quarter (4Q) Update   

More    Fourth Quarter (4Q) Update News

Canada News >>>

North America News >>>