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Crew Energy Issues 2012 Fourth Quarter and Annual Financial and Operating Results

Crew Energy Issues 2012 Fourth Quarter and Annual Financial and Operating 
Results 
CALGARY, ALBERTA -- (Marketwire) -- 03/07/13 -- Crew Energy Inc.
(TSX:CR) of Calgary, Alberta ("Crew" or the "Company") is pleased to
present its financial and operating results for the three month
period and year ended December 31, 2012.  
Highlights  


 
--  Funds from operations in the fourth quarter increased 20% over the prior
    quarter to $47.1 million or $0.39 per share which was an 18% increase
    over the prior quarter funds from operations per share; 
--  Net income in 2012 was $21.5 million or $0.18 per share versus a loss of
    $130.2 million in 2011; 
--  2012 production averaged 27,963 boe per day representing a 25% increase
    over the 22,452 boe per day produced in 2011; 
--  Fourth quarter production of 27,027 boe per day was 3% higher than the
    26,281 boe per day in the prior quarter; 
--  Initial drilling of the Mannville at Princess has been successful with
    the first producing well having an optimized rate after six months of
    production of 285 bbls per day of oil and the second more recent well
    with a 30 day rate of 305 bbls per day of oil; 
--  Completed a well at Kakwa, Alberta which tested at 10.5 mmcf per day
    with 35 bbls/mmcf of free condensate at a flowing casing pressure of
    3,560 psi; 
--  Previously, Crew released 2012 reserves resulting in finding,
    development and acquisition costs of $8.17 per boe leading to a recycle
    ratio of 2.7x while increasing reserves per share by 11%;  
--  Crew now owns 292 sections and has an option to purchase 81 sections of
    land in northeast British Columbia on the Montney resource play; and 
--  Crew strengthened its balance sheet in the fourth quarter reducing debt
    by $81.3 million over the prior quarter. 
 
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                        Three months Three months                           
Financial                     ended        ended   Year ended   Year ended  
($ thousands, except    December 31, December 31, December 31, December 31, 
 per share amounts)             2012         2011         2012         2011 
-----------------
-----------------------------------------------------------
Petroleum and natural                                                       
 gas sales                   102,473      142,063      417,763      388,166 
Funds from operations                                                       
 (note 1)                     47,110       64,841      186,604      172,103 
  Per share - basic             0.39         0.54         1.54         1.69 
   - diluted                    0.39         0.54         1.54         1.67 
Net income (loss)             21,812     (148,529)      21,542     (130,162)
  Per share - basic             0.18        (1.24)        0.18        (1.28)
   - diluted                    0.18        (1.24)        0.18        (1.28)
                                                                            
Capital expenditures          55,173      108,854      258,791      375,874 
Property acquisitions                                                       
 (net of dispositions)       (86,395)     (13,203)     (96,557)     (25,492)
Net capital                                                                 
 expenditures                (31,222)      95,651      162,234      350,382 
                                                                            
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                                                        As at        As at  
Capital Structure                                 December 31, December 31, 
($ thousands)                                             2012         2011 
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Working capital                                                             
 deficiency (note 2)                                    48,522       92,452 
Bank loan                                              242,834      230,676 
Net debt                                               291,356      323,128 
Bank facility                                          400,000      430,000 
                                                                            
Common Shares                                                               
 Outstanding                                                                
 (thousands)                                           121,620      119,993 
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Notes:                                                                      
(1) Funds from operations is calculated as cash provided by operating       
    activities, adding the change in non-cash working capital,              
    decommissioning obligation expenditures, the transportation liability   
    charge and acquisition costs. Funds from operations is used to analyze  
    the Company's operating performance and leverage. Funds from operations 
    does not have a standardized measure prescribed by International        
    Financial Reporting Standards and therefore may not be comparable with  
    the calculations of similar measures for other companies.               
(2) Working capital deficiency includes only accounts receivable and assets 
    held for sale less accounts payable and accrued liabilities.            
                                                                            
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                        Three months Three months                           
                              ended        ended   Year ended   Year ended  
                        December 31, December 31, December 31, December 31, 
Operations                      2012         2011         2012         2011 
----------------------------------------------------------------------------
                                                                            
Daily production                                                            
  Conventional oil                                                          
   (bbl/d)                     5,258        6,784        5,792        5,737 
  Heavy oil (bbl/d)            5,644        6,145        5,765        3,221 
  Natural gas liquids                                                       
   (bbl/d)                     3,294        2,995        3,091        2,035 
  Natural gas (mcf/d)         76,983       84,657       79,889       68,756 
  Oil equivalent (boe/d                                                     
   @ 6:1)                     27,027       30,034       27,963       22,452 
Average prices (note 1)                                                     
  Conventional oil                                                          
   ($/bbl)                     68.46        86.34        72.66        78.05 
  Heavy oil ($/bbl)            60.00        77.47        62.93        70.30 
  Natural gas liquids                                                       
   ($/bbl)                     47.14        64.15        50.06        62.68 
  N
atural gas ($/mcf)           3.38         3.43         2.54         3.81 
  Oil equivalent ($/boe)       41.21        51.41        40.82        47.37 
Netback ($/boe)                                                             
  Operating netback                                                         
   (note 2)                    22.14        26.03        21.35        23.61 
  G&A                           1.83         1.70         1.79         1.72 
  Interest on bank debt         1.38         0.87         1.31         0.88 
  Funds from operations        18.93        23.46        18.25        21.01 
                                                                            
Drilling Activity                                                           
  Gross wells                     24           37          112          158 
  Working interest wells        24.0         35.0        107.2        154.5 
  Success rate, net                                                         
   wells                          98%          97%          98%          99%
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Notes:                                                                      
(1) Average prices are before deduction of transportation costs and do not  
    include hedging gains and losses.                                       
(2) Operating netback equals petroleum and natural gas sales including      
    realized hedging gains and losses on commodity contracts less royalties,
    operating costs and transportation costs calculated on a boe basis.     
    Operating netback and funds from operations netback do not have a       
    standardized measure prescribed by International Financial Reporting    
    Standards and therefore may not be comparable with the calculations of  
    similar measures for other companies.                                   

 
2012 OVERVIEW 
Crew's fourth quarter was highlighted by the strengthening of the
Company's balance sheet through the sale of the Company's 23 sections
of Montney lands in the Kobes, British Columbia area for proceeds of
$108 million. The sale included the disposition of 625 boe per day of
production and 11.9 mboe of proved plus probable reserves. A portion
of the proceeds, $22 million, were used to replace the disposed
Montney acreage with 56 net sections of Montney lands proximal to the
Company's operations in the Septimus/Groundbirch area. With these
transactions completed before year end, the Company ended 2012 with
total net debt of $291 million representing 1.55 times net debt to
annualized fourth quarter funds from operations. 
The Company's fourth quarter funds from operations increased, as
compared to the third quarter of 2012, to $47.1 million or $0.39 per
share. This increase resulted from a 3% quarter over quarter
production increase from successful drilling at Lloydminster and
Kakwa, Alberta. The increased production was enhanced by a 13%
quarter over quarter increase in operating netbacks driven by
increased pricing. The Company's price received (excluding hedging
gains) for its production increased 8% while total cash costs per boe
including royalties, operating costs, transportation, general and
administrative and interest costs were consistent with third quarter
levels. The Company's net income increased to $21.8 million during
the quarter for total net income in 2012 of $21.5 million primarily
due to a gain of $70.8 million on the disposition of the Kobes
property.  
Prices received for the Company's liquids production including
conventional oil, heavy oil and natural gas liquids were consistent
with those received for third quarter production as the price for
West Texas Intermediate ("WTI") oil denominated in Canadian dollars
decreased 5% during the quarter compared to the third quarter of
2012. The prices received for the Company's conventional and heavy
oil sales correlate closely to the price of Western Canadian Select
("WCS"), which traditionally trades at a discount to WTI. During the
fourth quarter the differential between WTI and WCS decreased to 21%
from 24% in the third quarter partially offsetting the decline in WTI
pricing. Finally, the Company's overall liquids pricing was
positively impacted by a 5% increase in the price for the Company's
natural gas liquids production. This increase was driven by an
increase in prices received for condensate, ethane and propane. 
Crew's revenue from natural gas continued to be positively impacted
by pricing that outperformed market expectation as above average
temperatures experienced in the highly populated eastern regions of
Canada and the U.S. resulted in above average power generation demand
for natural gas through the summer. This resulted in a smaller than
expected inventory build during the summer and drove a positive
market sentiment into the early winter heating season. The price for
natural gas delivered at the Canadian AECO hub during the fourth
quarter averaged $3.26 per mcf, an increase of 41% over the third
quarter of 2012. The average price received for Crew's natural gas
sales during the fourth quarter was $3.48 per mcf, a 39% increase
over the third quarter. 
The Company actively protects its cash flow by hedging a portion of
its future production. Crew currently has hedged approximately 38.8
mmcf per day of natural gas for 2013 at a price of approximately
$3.19 per mcf. The Company also has hedges to protect from a
significant decline in oil prices with an average of 5,500 barrels
per day of WTI oil hedged at an average floor price of approximately
$92.00 per barrel for 2013. In addition, the Company currently has
hedges that fix the differential between WTI and WCS pricing on an
average of 500 barrels per day for 2013 at a differential of $25 per
barrel. Crew has also begun building its hedge position to protect
cash flow for 2014. The Company currently has hedged approximately
11.7 mmcf per day of natural gas for 2014 at a price of approximately
$3.76 per mcf and 1,750 barrels per day of WTI oil hedged at an
average floor price of approximately $96.00 per barrel with
additional hedges fixing the differential between WTI and WCS pricing
on an average of 1,000 barrels per day for 2014 at an average
differential of $22.75 per barrel. 
OPERATIONS UPDATE 
Septimus, British Columbia 
In British Columbia, Crew drilled two (2.0 net) Montney horizontal
wells in the fourth quarter including one well at Kobes which was
subsequently sold as part of the Kobes disposition announced in
December 2012. Total drilling activity for the year was sev
en (7.0
net) wells targeting liquids rich natural gas in the Montney
formation. Production for the fourth quarter averaged approximately
6,400 boe per day as wells brought on in the third quarter of 2012
continued to outperform historical type curves. Crew has announced
the acquisition of approximately 115 net sections of land that are
adjacent or proximal to our Septimus operating area. The Company
plans to drill up to 11 (9.0 net) wells in this area in 2013,
commence the expansion of the pipeline infrastructure to the west of
Septimus, install the fourth compressor at the Crew operated Septimus
facility boosting processing capacity to 60 to 65 mmcf per day and
install a water handling and disposal system in the area that is
expected to reduce operating costs. 
Tower, British Columbia 
At Tower, the initial Montney oil well (Crew 33% working interest)
completed in the third quarter of 2011 was brought on continuous
production at an average rate (latest 60 days) of 310 boe per day
consisting of 210 bbls per day of oil, 20 bbls per day of ngl and 490
mmcf per day of natural gas. Crew has included capital in the 2013
program to drill two Montney oil wells at Tower and currently has
licensed eight (5.3 net) wells. 
Deep Basin, Alberta 
In the Deep Basin, Crew drilled one (1.0 net) Falher horizontal well
at Kakwa which tested at average production rates of 10.5 mmcf per
day with 35 bbl/mmcf free condensate at a flowing casing pressure of
3,560 psi at the end of an 11 day production test period. The well
was brought on production at a restricted rate due to capacity
limitations at third party facilities. In total for the year, Crew
drilled nine (7.2 net) wells primarily targeting liquids rich natural
gas in the Cardium formation on Crew's Elmworth and Kakwa lands. In
the fourth quarter of 2012, production averaged approximately 4,800
boe per day with Cardium horizontal well performance exceeding
historical type curves allowing the Company to exit the year
producing approximately 6,000 boe per day. 
Pekisko Play - Princess, Alberta 
In the fourth quarter, Crew drilled 13 (13.0 net) wells for a total
of 51 (51.0 net) wells for the year. In addition to the Company's
ongoing Pekisko development, Crew drilled two Mannville horizontal
wells on Crown land which were brought on production in 2012 with an
optimized rate after six months of production of 285 bbls of oil per
day and the second more recent well with a 30 day rate of 305 bbls of
oil per day. Crew has approximately 55 net sections of Crown rights
in the Princess area and is in the process of delineating the extent
of the Mannville potential on Company lands. Production at Princess
for the fourth quarter averaged approximately 5,900 boe per day
consistent with the third quarter as the combination of production
from new wells and the early impact from our waterflood projects have
offset historical production declines in the order of 35 to 40%. 
Current production at Princess is 6,000 to 6,500 boe per day. 
Pekisko Secondary Recovery 
In the fourth quarter, Crew initiated waterflooding of the Pekisko
"DD" pool bringing the total to eight pools currently under
waterflood. The original Tilley Pekisko "K" and "N" pools have
consistently exceeded expectations with current oil production levels
254% and 176%, respectively, above pre-waterflood levels (waterfloods
initiated in January 2010 and July 2011, respectively). At Alderson
the Pekisko "M", "KK" and "HH" have been under waterflood since July
2012 and have shown positive initial response with gas oil ratio
reductions of up to 70% over pre-waterflood levels and some early
flush oil production. At West Tide Lake the Pekisko "CC" and "KK"
pools have been under waterflood since September 2012, and are
showing indications of initial response through reduction in the gas
oil ratio on the order of 27% on a combined basis. In aggregate, the
eight pools under waterflood represent approximately 25% of the
currently developed Pekisko resource (approximately 16% of Crew's
Pekisko land base is currently developed). 
Heavy Oil, Lloydminster, Saskatchewan 
Crew drilled eight gross (8.0 net) wells in the Lloydminster area in
the fourth quarter of 2012 for a total of 44 gross (41.8 net) wells
for the year. At Neilburg, Crew began delineation of an undeveloped
Colony sand prospect by drilling two vertical wells. Both wells have
exceeded our type curves with optimized initial production rates of
85 and 65 bbls of oil per day based on a 30 day average. Crew has
identified up to 18 additional locations on the lands. At Wildmere,
three horizontal wells were drilled targeting both the General
Petroleum and Lloydminster formations with initial production rates
(60 day average) of 90 bbls of oil per day on average. Crew will be
pursuing additional development on this play with three horizontal
wells targeted for the first quarter of 2013. Capital efficiencies
for the fourth quarter capital program were again consistent with the
previous three quarters at $14,200/boe per day (30 day initial
production) with an average for the year of $15,600/boe per day.
Production for the fourth quarter of 2012 averaged approximately
5,800 boe per day, an increase of 8% from the third quarter on the
strength of the Company's successful capital program in the area. 
OUTLOOK 
Crew is maintaining its forecasted average production of 27,500 to
28,500 boe per day in 2013. The first quarter has been very active
with the Company operating up to six drilling rigs and expecting to
drill 35 wells. Crew will continue to invest in projects that provide
near term funds flow with the highest rates of return in addition to
resource capture initiatives at a reasonable cost. As a result,
approximately 87% of the wells planned in 2013 are targeting oil
while acquisition targets have focused on scalable resource. The
Company has recognized a window of opportunity to consolidate a
dominant Montney land position in northeast British Columbia and has
acted quickly and decisively to secure this opportunity. Crew now
owns 292 sections in the northeast British Columbia Montney resource
play and has an option to purchase another 81 sections. The Company
believes the accumulation of these assets will prove to add
significant value over time. 
Crew expects to spend approximately $70 million on exploration and
development activities in the first quarter out of an approved $219
million annual exploration and dev
elopment capital budget. With the
recent acquisition of 59 sections of land in northeast British
Columbia on the regional Montney resource complex for $20 million,
estimated net debt at the end of the first quarter is currently
forecast to be $340 to $350 million or 1.8 times annualized fourth
quarter 2012 funds from operations.  
Crew's 2012 program was executed successfully with a finding,
development and acquisition cost of $8.17 per boe yielding a
corporate recycle rate of 2.7 times. We were able to reduce our net
debt by $31.8 million and increase reserves by 11% per share over
2011. The Company will continue to be disciplined in its capital
allocation and capital spending with a focus on the efficient
execution of our capital program. 
We would like to thank our employees, consultants and Board of
Directors for their hard work and dedication in contributing to
Crew's success in 2012. On behalf of our Crew, we would like to
express our sincere appreciation for the continued supported of our
shareholders. We look forward to a very exciting year and reporting
our first quarter 2013 results in May. 
Cautionary Statements 
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" 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 volume and product mix of
Crew's oil and gas production; production estimates; year-end
production; future oil and natural gas prices and Crew's commodity
risk management programs; future liquidity and financial capacity;
estimated first quarter net debt; future results from operations and
operating metrics; future development, exploration, acquisition and
development activities and related capital expenditures and the
timing thereof; the number of wells to be drilled, completed and
tied-in and the timing thereof; the amount and timing of capital
projects including new infrastructure; operating costs; the potential
of the Montney resource play. 
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: the impact of increasing
competition; the general stability of the economic and political
environment in which Crew operates; the timely receipt of any
required regulatory approvals; the ability of Crew to obtain
qualified staff, equipment and services in a timely and cost
efficient manner; drilling results; the ability of the operator of
the projects in which Crew has an interest in to operate the field in
a safe, efficient and effective manner; the ability of Crew to obtain
financing on acceptable terms; field production rates and decline
rates; the ability to replace and expand oil and natural gas reserves
through acquisition, development and exploration; the timing and cost
of pipeline, storage and facility construction and expansion and the
ability of Crew to secure adequate product transportation; future
commodity prices; currency, exchange and interest rates; regulatory
framework regarding royalties, taxes and environmental matters in the
jurisdictions in which Crew operates; the ability of Crew to
successfully market its oil and natural gas products; ability to
improve upon historical recovery factors.  
The forward-looking information and statements included in this news
release are not guarantees of future performance and should not be
unduly relied upon. Such information and statements, including the
assumptions made in respect thereof, involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to defer materially from those anticipated in such
forward-looking information or statements including, without
limitation: changes in commodity prices; changes in the demand for or
supply of Crew's products; unanticipated operating results or
production declines; changes in tax or environmental laws, royalty
rates 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 and resource volumes; limited, unfavourable or a
lack of access to capital markets; increased costs; a lack of
adequate insurance coverage; the impact of competitors; and certain
other risks detailed from time-to-time in Crew's public disclosure
documents (including, without limitation, those risks identified in
this news release and Crew's Annual Information Form). 
The 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. 
BOE equivalent 
Barrel of oil equivalents or BOEs may be misleading, particularly if
used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl is based on
an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different than
the energy equivalency of 6:1, utilizing a 6:1 conversion basis may
be misleading as an indication of value. 
Test Results and Initial Pr
oduction Rates 
A pressure transient analysis or well-test interpretation has not
been carried out and thus certain of the test results provided herein
should be considered to be preliminary until such analysis or
interpretation has been completed. Test results and initial
production rates disclosed herein may not necessarily be indicative
of long term performance or of ultimate recovery. 
Crew is an oil and gas exploration and production company whose
shares are traded on The Toronto Stock Exchange under the trading
symbol "CR". 
A complete copy of the Company's consolidated financial statements
and Management's Discussion and Analysis for the years ended December
31, 2012 and 2011 will be filed on SEDAR at www.sedar.com and are
available on the Company's website at www.crewenergy.com.
Contacts:
Crew Energy Inc.
Dale Shwed
President and C.E.O.
(403) 231-8850
dale.shwed@crewenergy.com 
Crew Energy Inc.
John Leach
Senior Vice President and C.F.O.
(403) 231-8859
john.leach@crewenergy.com 
Crew Energy Inc.
Rob Morgan
Senior Vice President and C.O.O.
(403) 513-9628
rob.morgan@crewenergy.com
www.crewenergy.com