Following is a summary of the independent reserve evaluation for the year ended December 31, 2016 as prepared by Sproule Associates Ltd. (“Sproule”)(1)(2). Please see Crew's reserves press release issued on February 9, 2017 for further details.
2016 Reserves Highlights
- Strong capital efficiencies and recycle ratios were achieved resulting in finding, development and acquisition (“FD&A”) costs and finding and development (“F&D”) costs, including changes in future development capital (“FDC”), as follows:
- Total proved plus probable (“2P”) FD&A costs were $5.57 per boe with a recycle ratio of 3.1 times and F&D costs were $5.65 per boe with a recycle ratio of 3.0 times;
- Total proved (“1P”) FD&A costs of $6.19 per boe, leading to a recycle ratio of 2.8 times and F&D costs of $6.30 per boe, with a recycle ratio of 2.7 times;
- Proved developed producing (“PDP”) F&D costs (including FDC) were $9.35 per boe in 2016 with a recycle ratio of 1.8 times, compared to $12.87 per boe in 2015, and $22.43 per boe in 2014, a reduction of 27% and 58%, respectively.PDP FD&A costs were $8.68 per boe, leading to a recycle ratio of 2.0 times;
- Three year average F&D costs, including FDC, continued to decline reflecting improved capital efficiencies and the ongoing transformation to a lower-cost, high-netback, Montney-focused producer.Crew’s three year average 1P and 2P F&D costs per boe were $9.15 and $7.39 in 2016, a reduction of 17% and 12%, respectively, compared to 2015 and were 37% and 25% lower, respectively, relative to 2014;
- Reserves increased meaningfully across all categories with significant reserves replacement net of annual production of 8,361 mboe:
- PDP reserves increased 11% to 46.0 mmboe, replacing 154% of produced reserves;
- 1P reserves increased 26% to 153.2 mmboe, replacing 482% of produced reserves;
- 2P reserves increased 24% to 323.9 mmboe, replacing 857% of produced reserves;
- Reserves per share improved across each reserves category, increasing 19% on 2P, 21% on 1P and 7% on PDP;
- The net present value discounted at 10% (before tax) (“NPV10 BT”) of 1P reserves increased by 20% to $1,011 million, and 2P reserves increased by 21% to $2,012 million relative to December 31, 2015; and
- Longer term development was supported with a 32% increase in 2P booked undeveloped future Montney drilling locations in the Sproule report to a total of 356 potential drilling locations.
Click Here for additional information regarding Reserves and Resource Disclosure.
Crew's full 2015 NI 51-101 Reserves Disclosure for year ended December 31, 2015 was filed on SEDAR in March, 2016 within our 2015 Annual Information Form (available on this website or filed on SEDAR) .
The following "Northeast British Columbia Montney Resource Evaluation" is subject to a number of cautionary statements, assumptions and risks as set forth therein. See "Information Regarding Disclosure on Oil and Gas Reserves, Resources and Operational Information" on the "Detailed Resource Disclosure" Page for additional cautionary language, explanations and discussion, and see "Forward-looking Information and Statements" for a statement of principal assumptions and risks that may apply. See also "Definitions of Oil and Gas Resources and Reserves" in this news release. The discussion includes reference to TPIIP, DPIIP and ECR as per the Resource Evaluation as at December 31, 2015, prepared in accordance with the current COGE Handbook guidelines. Unless otherwise indicated in this news release, all references to ECR and prospective volumes are Best Estimate ECR and Best Estimate prospective volumes, respectively.
Amendments to NI 51-101 that came into effect on July 1, 2015 require significant changes to the way resources are disclosed relative to prior years. The most significant changes require:
- The sub-classification of contingent resources into specified project maturity subclasses. Those that apply to Crew's resources include:
- Development Pending
- Development on Hold
- Development not Viable
Sproule considers the 'development pending' and 'development on hold' project maturity subclasses to be economic and are therefore included in ECR. The economic status of the 'development not viable' project maturity subclass is undetermined and is therefore not included in the ECR reported. The "development not viable" sub-classification represented less than 2% of the sum of all three sub-classifications on a BOE basis.
- Changes to the product types, including the addition of new product types and providing new definitions for some existing product types;
- The disclosure of the risked, best estimate of the contingent resources volumes for each product type;
- The disclosure of the risked NPV of future net revenues for any disclosed development pending contingent resources, calculated using forecast prices and costs for each product type, on a before tax basis using discount rates of zero %, five %, 10 %, 15 % and 20 %;
- The disclosure of the chance of development risk for each project maturity sub-class the issuer discloses; and
- The disclosure of the estimated total cost to achieve commercial production, the estimated date of first commercial production and the recovery technology to be used.
The Montney formation in NE BC has been identified as a world-class unconventional resource play with the potential for significant volumes of recoverable resources. The area includes dry gas, liquids-rich gas and light oil development opportunities, with Crew having access to all three hydrocarbon windows. It is one of the largest and lowest cost natural gas resource plays in North America and Crew's land base comprises 474 net sections, ideally situated in some of the most prospective parts of the play, with good access to infrastructure and multiple egress options.
Sproule was engaged to conduct an updated independent Montney resource evaluation of Crew's principal lands in the NE BC Montney region including Septimus, West Septimus, Groundbirch/Monias, Attachie and Tower (the "Evaluated Areas") effective as of December 31, 2015, and based on Sproule's forecast price deck as at December 31, 2015 (the "Resource Evaluation"). The Resource Evaluation highlights the development potential on the Company's undeveloped land base providing Crew with significant opportunities to progress conversion of Resource to ECR and ultimately to increased reserve bookings over time. . Further, the diversity of Crew's NE BC Montney assets with exposure to liquids rich gas, crude oil and dry natural gas allows us to effectively navigate through commodity price cycles.
TPIIP for the natural gas-bearing lands in the Evaluated Areas remains unchanged relative to year end 2014 at 64.3 Tcf. Crew achieved a 15% increase in DPIIP for the Evaluated Areas to 35.2 Tcf, primarily attributed to the 2015 petroleum and natural gas rights exchange with the Province of British Columbia announced in July of 2015.
Natural gas ECR was evaluated on an unrisked and risked basis in the Resource Evaluation and was subdivided into the Maturity Subclasses of 'development pending' and 'development on hold'. The risked 'development pending' natural gas ECR totaled 7.1 Tcf and the risked 'development on hold' ECR totaled 0.4 Tcf. Total risked natural gas ECR increased by 5% primarily attributable to the lands acquired through the July 2015 petroleum and natural gas rights exchange with the Province of BC.
The ECR of our NGL's was also evaluated on an unrisked and risked basis in the Resource Evaluation and was subdivided into the Maturity Subclasses of 'development pending' and 'development on hold'. The risked 'development pending' NGL ECR totaled 209 MMbbl and risked 'development on hold' NGL ECR totaled 16 MMbbl. Total NGL ECR increased by 32% due to improved liquids yields resulting from successful development of Crew's West Septimus lands.
On the oil-bearing Montney lands, TPIIP increased 3% to 7,895 MMbbl and DPIIP increased 7% to 1,613 MMbbl. Oil ECR was evaluated on an unrisked and risked basis in the Resource Evaluation and was subdivided into the Maturity Subclasses of 'development pending' and 'development on hold'. The risked 'development pending' oil ECR totaled 19 MMbbl and risked 'development on hold' oil ECR totaled 4 MMbbl.
Risking of the contingent resources included a quantitative assessment of the contingencies applicable to the project including evaluation drilling, corporate commitment and timing of production and development. Risking of the prospective resources included a quantitative assessment of these same factors, as well as a quantitative assessment of the chance of discovery.
The following tables summarize the results of the Resource Evaluation along with comparatives to the updated December 31, 2014 evaluation (reflecting the impact of the July 2015 petroleum and natural gas rights exchange with the Province of BC), using the resource categories set out in the COGE Handbook on a "best estimate" case.
The tables provided on the Detailed Resource Disclosure page summarize the results of the Resource Evaluation including comparatives to the updated December 31, 2014 evaluation (reflecting the impact of the July 2015 petroleum and natural gas rights exchange with the Province of BC), using the resource categories set out in the COGE Handbook on a "best estimate" case.