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PLAINS CORE
Princess, Alberta
The Princess area comprises 454 contiguous sections of Crew controlled freehold and crown land southeast of Brooks, Alberta. The area lies in a unique geographic position in Alberta where the structural effects of the Sweetgrass Arch and the regional dip of the Western Canadian Sedimentary basin intersect to form an area where the subsurface structure is essentially flat. Numerous northwest trending Mannville channels have eroded the Mississippian Pekisko formation forming hydrocarbon traps on the subcrop edge (Tilley and West Tide Lake) and in elongated outliers (Alderson). These outliers can be two to three miles wide and up to 12 miles long. Crew has three dimensional seismic control over the block and has in excess of 500 drilling locations identified. In 2009, production from this area averaged 4.5 mmcf/d of natural gas and 2,861 bbl/d of oil and ngls. At December 31, 2009 the Company owned 7 (5.0 net) producing gas wells, 111 (110.6 net) producing oil wells and 14 (14 net) service wells in the area along with three 100% owned oil batteries. In 2009, Crew drilled twenty-six (26.0 net) wells in this area resulting in twenty-two (22.0 net) oil wells, three (3.0 net) service well and one (1.0 net) dry and abandoned well.
Crew plans to drill 50 horizontal wells in 2010 in the Princess area where over 500 locations have been identified.
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Central Alberta
Central Alberta encompasses all of the Company’s Alberta operations stretching north from Calgary to Grande Prairie in the north and running from the Alberta/Saskatchewan border in the east to Grande Prairie to the west. Production from this area is a mix of mainly high heat content natural gas with associated natural gas liquids produced from several Cretaceous and Jurassic sandstone formations in the Pine Creek area to dry gas from multi-zone shallow gas wells in the east. The Company also has a Cretaceous, Lloydminster formation medium gravity oil play in the area of Killam, Alberta. At December 31, 2009 the Company had 151 (131.6 net) producing gas wells and 47 (26.0 net) producing oil wells in the area. Production averaged 1,479 bbl/d of oil and ngls along with 30.8 mmcf/d of natural gas in 2009. Crew owns several compression and dehydration facilities throughout this area.
Crew lands in the Pine Creek area of central Alberta include 27 net sections of land that have been identified as prospective for the Cardium resource light oil play. Crew plans to drill two to three Cardium horizontal wells in 2010 in the Pine Creek area where 80 locations have been identified. The Company also plans to drill three to four oil wells in the Killam area during 2010.
On April 1, 2010, Crew announced that it closed the sale of Edson area assets in central Alberta (excluding Cardium formation rights) for $126 million. Crew also entered into a farm-out arrangement with respect to the Cardium rights on the same lands. Under the arrangement, the purchaser commits to drill and complete two horizontal Cardium wells to earn a 50% interest in eight sections of Cardium mineral rights. The purchaser has the right to drill additional wells on a rolling option basis, to earn a 50% interest in four sections of Cardium mineral rights for every option well drilled. The purchaser will have until December 31, 2011 to drill up to nine earning wells.
NORTH CORE
Septimus, British Columbia
The Septimus area is located 15 kilometers south of Fort St. John, British Columbia. The Company’s operations at Septimus include liquids rich natural gas production from the Montney formation. At December 31, 2009 the Company had an interest in 9 (8.7 net) producing gas wells in this area. Production averaged 313 bbl/d of oil and ngls along with 6.0 mmcf/d of natural gas in 2009. The Company drilled a total of four (3.2 net) wells in the Septimus area in 2009.
Crew constructed a 25 mmcf per day Septimus gas plant which became operational on October 1, 2009 allowing the Company to increase production volumes. In December, Crew completed the sale of the Septimus gas processing facility to a third party for the as built cost of approximately $19 million. Under the sale arrangement, Crew operates the facility and retained an option to expand the facility to 50 mmcf per day and equalize into a 50% ownership position. The third party recently announced regulatory approval of a 20 inch pipeline connecting the Septimus gas plant to the Alliance pipeline. Construction of the pipeline is currently underway and will facilitate a significant (350 mmcf per day) increase in takeaway capacity from the greater Septimus area.
Current plans for 2010 are to drill ten wells targeting the Montney formation and expansion of the Septimus gas processing facility to a capacity of 50 mmcf per day including Crew’s equalization to a 50% owner in the facility.
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Sierra, British Columbia
The greater Sierra area includes Crew’s operations situated near Fort Nelson, British Columbia. Natural gas production from this area comes predominantly from a Pine Point natural gas well. Production from this well is tied into a Crew owned compression facility that compresses the gas for delivery to the Fort Nelson natural gas processing facility. At December 31, 2009, the Company had an interest in 11 (6.9 net) producing gas wells in this area. In 2009, Crew produced an average of 6.4 mmcf/d of natural gas from the Sierra area.
Crew lands in the Sierra area include 15 net sections of land that have been identified as prospective for the Horn River Basin’s Muskwa Shale natural gas resource play. The Muskwa Shale is approximately 500 feet thick and appears to be prospective over a large area in a relatively homogeneous geologic environment. Crew does not have any drilling plans for the Muskwa Shales in 2010. The Company continues to monitor the evolution of this prospect and gain knowledge that will aid in the future development of Crew’s lands.
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