Crew Energy Announces Second Quarter 2013 Financial and Operating Results

Crew Energy Announces Second Quarter 2013 Financial and Operating Results 
CALGARY, ALBERTA -- (Marketwired) -- 08/12/13 -- Crew Energy Inc.
("Crew" or the "Company") (TSX:CR) of Calgary, Alberta is pleased to
present its operating and financial results for the three and six
month period ended June 30, 2013. 

--  Funds from operations were $48.1 million or $0.40 per share, a 43%
    increase over the first quarter of 2013; 
--  Second quarter production averaged 27,109 boe per day or 4% higher than
    the 25,961 boe per day produced in the first quarter of 2013; 
--  Reduced net debt by $23.2 million to $315.7 million or 1.6x annualized
    second quarter funds from operations; 
--  Reduced operating costs by 11% over the first quarter of 2013 to $10.76
    per boe; 
--  Recently completed three Septimus, British Columbia Montney wells which
    were drilled during the second quarter in the new Montney "A" zone which
    have seven day production tests of 7.6 mmcf per day and 205 bbls per day
    of ngls, 6.5 mmcf per day and 182 bbls per day of ngls and 6.2 mmcf per
    day and 170 bbls per day of ngls; 
--  Subsequent to the quarter-end, closed the acquisition of 81 additional
    Montney sections bringing Crew's aggregate holdings to 373 net sections
    of Montney rights in northeast British Columbia and adding 15 TCFE of
    Total Petroleum Initially in Place ("TPIIP") for a total of 91 TCFE of
    TPIIP. The Company's July 9, 2013 press release has complete details of
    the independently completed Montney Resource Evaluation; 
--  Crew continues with its front-end engineering work to significantly
    increase natural gas processing capacity in the Septimus area with plans
    to increase its takeaway capacity from its present capacity of 45 mmcf
    per day to up to 180 mmcf per day. 
                                  Three       Three                         
                                 months      months  Six months  Six months 
Financial                         ended       ended       ended       ended 
($ thousands, except per       June 30,    June 30,    June 30,    June 30, 
 share amounts)                    2013        2012        2013        2012 
Petroleum and natural gas                                                   
 sales                          110,793      99,946     202,060     223,021 
Funds from operations (note                                                 
 1)                              48,087      52,027      82,275     100,084 
  Per share - basic                0.40        0.43        0.68        0.83 
            - diluted              0.40        0.43        0.68        0.83 
Net income (loss)                 2,007      24,107     (20,040)     17,677 
  Per share - basic                0.02        0.20       (0.16)       0.15 
            - diluted              0.02        0.20       (0.16)       0.15 
Exploration and Development                                                 
 expenditures                    30,348      30,432      95,600     159,175 
Property acquisitions (net                                                  
 of dispositions)                (5,717)     (4,290)      8,946      (4,290)
Net capital expenditures         24,631      26,142     104,546     154,885 
------------------------------------- ------------- -----------------
------------------------------------- ------------- -----------------
                                              As at             As at
Capital Structure                     June 30, 2013 December 31, 2012
                                      ------------- -----------------
($ thousands)                         
Working capital deficiency (note 2)          27,991            48,522
Bank loan                                   287,687           242,834
Net debt                                    315,678           291,356
Current bank facility                       430,000           400,000
Common Shares Outstanding (thousands)       121,635           121,620
------------------------------------- ------------- -----------------
------------------------------------- ------------- -----------------
(1)    Funds from operations is calculated as cash provided by operating    
       activities, adding the change in non-cash working capital,           
       decommissioning obligation expenditures and the transportation       
       liability charge. 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 less    
       accounts payable and accrued liabilities.                            
                                        Three     Three       Six       Six 
                                       months    months    months    months 
                                        ended     ended     ended     ended 
                                     June 30,  June 30,  June 30,  June 30, 
Operations                               2013      2012      2013      2012 
Daily production (note 1)                                                   
  Princess and other oil (bbl/d)        4,561     5,940     4,748     6,355 
  Lloydminster oil (bbl/d)              5,981     6,040     5,712     6,101 
  Natural gas liquids (bbl/d)           3,085     2,809     3,035     2,957 
  Natural gas (mcf/d)                  80,893    80,419    78,259    83,237 
  Oil equivalent (boe/d @ 6:1)         27,109    28,192    26,538    29,286 
Average prices (notes 1 & 2)                                                
  Princess and other oil ($/bbl)        74.85     70.41     69.43     76.11 
  Lloydminster oil ($/bbl)              67.50     58.95     59.50     65.05 
  Natural gas liquids ($/bbl)           52.16     56.27     53.27     54.58 
  Natural gas ($/mcf)                    3.85      2.06      3.64      2.20 
  Oil equivalent ($/boe)                44.91     38.96     42.07     41.84 
Netback ($/boe)                                                             
  Revenue                               44.91     38.96     42.07     41.84 
  Realized commodity hedging gain                                           
   (loss)                               (1.74)     5.94     (1.16)     3.12 
  Royalties                             (8.52)    (8.86)    (7.98)   (10.05)
  Operating costs                      (10.76)   (11.32)   (11.38)   (11.75)
  Transportation costs                  (1.26)    (1.39)    (1.26)    (1.38)
  Operating netback (note 3)            22.63     23.33     20.29     21.78 
  G&A                                   (1.93)    (1.68)    (1.96)    (1.80)
  Interest on bank debt                 (1.21)    (1.37)    (1.20)    (1.21)
  Funds from operations                 19.49     20.28     17.13     18.77 
Drilling Activity                                                           
  Gross wells                               3         3        42        63 
  Working interest wells                  3.0       1.6      39.8      59.4 
  Success rate, net wells                 100%      100%      100%       97%
(1)    Princess, Alberta oil (20 degrees to 26 degrees API oil) has       
       historically been classified as medium or conventional oil. Effective
       December 31, 2012 Crew's reserves attributable to its Princess       
       property have been classified as heavy oil to accord with definitions
       in the royalty regulations in Alberta. Princess and other oil        
       production and pricing are shown separately from Lloydminster heavy  
       oil volumes for clarity and comparison with historical               
(2)    Average prices are before deduction of transportation costs and do   
       not include hedging gains and losses.                                
(3)    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.                

During the second quarter, operations and drilling activity were
reduced due to spring break-up. The Company continued to follow its
disciplined approach to exploration and development, spending $30.3
million or 13% less than originally budgeted. Drilling activity
during the quarter included three (3.0 net) wells at Septimus
resulting in three natural gas wells. The Company completed three
wells at Septimus and three wells at Lloydminster and also
recompleted 18 wells at Lloydminster. In addition, during the quarter
the Company exercised its option to purchase 81 additional net
sections of Montney acreage in northeastern British Columbia for
$35.2 million which closed in early July.  
Unplanned third party facility outages in the Deep Basin area
impacted second quarter production by 650 boe per day while
production increased 4% over the first quarter of 2013 to average
27,109 boe per day. Production additions were the result of the
Company's successful first quarter drilling program at Septimus,
Princess and Lloydminster. 
The June floods that caused major damage in southern Alberta resulted
in restricted access to downtown Calgary for the week following the
flood, including Crew's head office. The Company activated its
business continuity plan and all critical systems, communications and
business functions continued at remote or disaster recovery sites and
therefore Crew's operations were minimally affected by the floods.  
The Company's second quarter funds from operations increased 43% over
the first quarter 2013 to $48.1 million or $0.40 per share. During
the quarter, the Company's revenue benefited from stronger oil
prices, narrower West Texas Intermediate ("WTI") to Western Canadian
Select ("WCS") differentials and increased natural gas prices. Crew
also successfully decreased its operating, transportation and general
and administrative costs per boe by 9% as compared to the prior
quarter which enhanced its funds from operations netback. After
non-core property dispositions of $5.7 million, net capital
expenditures were $24.6 million which allowed the Company to decrease
its net debt by 7% to $316 million. 
Revenue was bolstered by stronger oil and gas prices during the
second quarter. Canadian dollar WTI averaged $96.43 per bbl for the
second quarter, slightly up from the $95.20 in the first quarter.
More importantly for the Company, the differential between WCS and
WTI narrowed substantially during the quarter resulting in a 22%
quarter over quarter increase in Crew's WCS oil benchmark price.
Crew's Lloydminster heavy oil pricing was further enhanced in the
second quarter by seasonally reduced blending costs. During the
second quarter, AECO natural gas prices continued to benefit from an
extended winter and decreased storage levels. The AECO benchmark
increased 11% over the first quarter to average $3.59 per mcf. 
The Company's hedging strategy is focused on partially protecting
against significant declines in commodity prices that would
negatively impact the cash flow needed to fund the Company's on-going
capital program. Crew currently has hedged approximately 49% of its
forecasted 2013 natural gas production at a price of approximately
$3.22 per mcf. The Company also protects its liquids production from
a significant decline in WTI and WCS pricing. Crew has approximately
43% of its forecasted 2013 liquids production protected against a
decline in WTI pricing with hedged prices fixed at a floor of
approximately $93.26 per barrel. The Company has hedged the
differential between WTI and WCS pricing on 4,200 barrels per day at
a differential of $21.08 for the second quarter of 2013, 5,329
barrels per day at $22.39 for the third quarter and 4,250 barrels per
day at $22.67 for the fourth quarter. Crew has begun building its
hedge position to provide a base level of cash flow for 2014. The
Company currently has hedged approximately 16.6 mmcf per day of
natural gas for 2014 at a price of approximately $3.83 per mcf, 3,000
barrels per day of WTI oil hedged at an average floor price of
approximately $96.51 per barrel with additional hedges fixing the
differential between WTI and WCS pricing on an average of 1,000
barrels per day at a differential of $22.75 per barrel. 
Septimus/Tower, British Columbia 
Septimus area production for the quarter averaged 7,480 boe per day,
up 21% from the first quarter and achieving yet another record for
the area. Current production is in the 7,500 to 8,000 boe per day
range based on field estimates with approximately 1,400 boe per day
behind pipe as we are now running at the current capacity of the
Septimus gas plant. Installation of the fourth compressor is on track
for commissioning and start-up in the fourth quarter which will
increase our processing capacity from the current level of
approximately 45 mmcf per day to approximately 65 mmcf per day.
Concurrent with the plant expansion, Crew is installing a 22.5
kilometer 10" pipeline from the western portion of the property to
the gas plant. The Company anticipates achieving full utilization of
this capacity by the end of the first quarter 2014.  
The Company has been proving additional zones within the Montney to
be productive. Crew drilled three (3.0 net) wells in the top of the
Upper Montney (Montney "A" zone) with excellent results. The three
wells had seven day production tests of 7.6 mmcf per day and 205 bbls
per day of ngls, 6.5 mmcf per day and 182 bbls per day of ngls and
6.2 mmcf per day and 170 bbls per day of ngls. The Company has 29
unbooked locations in the Montney "A" on a 15 section block at
Septimus. As the completion technology continues to evolve at
Septimus, it has become apparent that a number of wells drilled early
in the life of the project were not optimally completed. Crew has
undertaken one of the first workovers in the area by successfully
installing a frac port liner into an existing Montney horizontal well
competed in 2009 with a plug and perf completion. The well was
re-fractured and came on production at 2.2 mmcf per day (428 boe per
day), ten times greater than the well's average production rate, in
the first quarter of 2013 and four times greater than the peak
initial production of the well in December of 2009. The net workover
cost was approximately $1.5 million. The Company is in the process of
identifying additional candidates where this technique can be
Deep Basin, Alberta 
Deep Basin production in the second quarter was 5,410 boe per day as
unplanned third party plant outages and extended turnarounds
experienced in the first quarter continued into the second and early
third quarter, impacting production in the second quarter by
approximately 650 boe per day. No new wells were drilled in the
quarter, and two Cardium horizontal well completions at Elmworth
originally planned for second quarter were not undertaken until early
in the third quarter due to spring road bans being extended into the
third quarter. Current production in the Deep Basin is 6,000 to 6,500
boe per day based on field estimates with all third party facilities
operating as of the first week of August. 
Princess, Alberta 
Production for the second quarter averaged 5,500 boe per day with no
new wells drilled and no completions undertaken due to spring
break-up, high rainfall and approximately 150 boe per day of third
party facility downtime. Two additional waterfloods were initiated in
the quarter bringing the total to 11 pools currently on injection
(approximately 40% of the developed Pekisko resource is now under
waterflood). Crew is currently drilling the first of two 100% working
interest wells targeting oil from the Mannville. Crew has 60 sections
of Crown mineral rights that are prospective for Mannville oil at
Lloydminster, Saskatchewan 
Production for the Lloydminster area averaged 6,015 boe per day for
the quarter as the impact of spring break-up was not as significant
as initially expected. However, the spring conditions did limit rig
activity as no new wells were drilled, only three wells were
completed and 18 wells recompleted. Current production levels are
between 6,000 and 6,500 boe per day based on field estimates. 
Crew is maintaining annual guidance to average 27,500 to 28,500 boe
per day, exploration and development capital budget at $219 million
as well as exit guidance of 29,000 to 30,000 boe per day as
production is forecasted to steadily increase through the remainder
of the year. Funds from operations was markedly improved over the
first quarter as a result of higher production and higher realized
product prices. Funds from operations increased to $48.1 million or
$0.40 per share up 43% from $0.28 per share in the first quarter.
Crew maintained its capital discipline in the second quarter spending
$30.3 million on exploration and development activities, 13% less
than budgeted while reducing net debt by $22.5 million to 1.6 times
annualized second quarter funds from operations.  
The Company's move to capture resource continued in northeastern
British Columbia by closing the third tranche of our Montney
acquisition in July for $35.2 million which added 15 TCFE of TPIIP to
Crew's resource inventory. Crew now has 91 TCFE of TPIIP resource in
the Montney formation comprised of 44.6 TCF of natural gas and 7.8
billion barrels of oil. We plan to continue to increase production
from the current 8,000 boe per day to an estimated 10,000 boe per day
in the first quarter of 2014 once the Septimus gas plant has been
expanded to 65 mmcf per day of capacity. We will also advance the
de-risking of our land base through the planned drilling of five
exploratory horizontal wells over the next six months. Crew now has
five drilling rigs running and expects to drill over 50 wells in the
last half of 2013 as well as recompleting over 40 wells. 
The Company will continue to divest of non-core assets to fund
production growth in its core areas as well as actively engage in
asset swaps to further concentrate our asset base. Crew's capital
program will be funded by funds from operations, long-term debt and
minor asset dispositions. 
Oil prices have continued to strengthen as the WTI/Brent and WTI/WCS
differentials have narrowed significantly over the first half of the
year resulting in much improved price realizations. This has been
partially offset by an approximate $0.50 per mcf reduction in
realized natural gas prices. We are currently forecasting realized
oil prices to be approximately $6 per bbl higher and natural gas
prices to be $0.50 per mcf lower in the third quarter. When combined
with higher forecasted production, funds from operations is expected
to again be strong in the third quarter. Crew has a very active third
quarter planned which we look forward to reporting in November. 
Our thoughts are with those who were affected by the floods in
southern Alberta. We would like to commend our staff and the people
of southern Alberta for their resolve and community spirit in helping
in this time of need. 
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"
"forecast" 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 including 2013 forecast average and exit production and
first quarter 2014 production estimates at Septimus; future oil and
natural gas prices and Crew's commodity risk management programs;
future liquidity and financial capacity; future results from
operations and operating metrics; anticipated reductions in operating
costs; future costs, expenses and royalty rates; future interest
costs; the exchange rate between the $US and $Cdn; 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; increased processing
capacity at Septimus; the total future capital associated with
development of reserves and resources; and methods of funding our
capital program, including possible non-core asset divestitures and
asset swaps.  
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. There are a
number of assumptions associated with the potential of resource
volumes including the quality of the Montney reservoir, future
drilling programs, continued performance from existing wells and
performance of new wells, the growth of infrastructure, well density
per section, and recovery factors and discovery and development
necessarily involves known and unknown risks and uncertainties,
including those identified in this press release.  
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; the early stage of
development of some areas in the Evaluated Areas; the potential for
variation in the quality of the Montney formation; 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. 
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 rates disclosed herein may not necessarily be indicative
of long term performance or of ultimate recovery. 
Resource Estimates 
This news release contains references to estimates of oil and gas
classified as Total Petroleum Initially In Place ("TPIIP") in the
Montney region in northeastern British Columbia which are not, and
should not be confused with, oil and gas reserves. Such estimates are
based upon an independent resource evaluation effective as at May 1,
2013, prepared in accordance with the Canadian Oil and Gas Evaluation
Handbook. Such estimates are subject to a number of cautionary
statements, assumptions, risks, positive and negative factors
relevant to the estimates and contingencies, the details of which
were set forth in Crew's previously disseminated press release dated
July 9, 2013. Accordingly, readers are referred to and encouraged to
review the sections entitled "Montney Resource Evaluation",
"Definitions of Oil and Gas Resources and Reserves" and "Information
Regarding Disclosure on Oil and Gas Reserves, Resources and
Operational Information" in the July 9, 2013 press release for
applicable definitions, cautionary language, explanations and
discussion of resources estimated herein, all of which is
incorporated herein by reference.  
Crew is an oil and gas exploration and production company whose
shares are traded on The Toronto Stock Exchange under the trading
symbol "CR". 
Financial statements and Management's Discussion and Analysis for the
three and six month periods ended June 30, 2013 and 2012 will be
filed on SEDAR at and are available on the Company's
website at
Crew Energy Inc.
Dale Shwed
President and C.E.O.
(403) 231-8850 
Crew Energy Inc.
John Leach
Senior Vice President and C.F.O.
(403) 231-8859 
Crew Energy Inc.
Rob Morgan
Senior Vice President and C.O.O.
(403) 513-9628
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