MONTNEY: JUST KEEPS GETTING BETTER +25% TCFE TPIIP Resource. Net Sections in the Montney. Production Growth in 2016

Transcription

1 MONTNEY: JUST KEEPS GETTING BETTER 110 TCFE TPIIP Resource 474 Net Sections in the Montney +25% Production Growth in 2016

2 2 CAUTIONARY STATEMENT Forward Looking Statements This presentation 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 forgoing, this presentation contains forwardlooking information and statements pertaining to the following: the volumes and estimated value of Crew's oil and gas reserves; resource estimates and volumes in respect of Crew s Montney lands in northeast British Columbia ( NEBC ); the volume and product mix of Crew's oil and gas production; production estimates including 2016 forecast average and exit productions and production per share growth; the recognition of significant resources in the Montney region of NEBC; 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; forecast 2015 net debt; forecast 2016 cash flow and year end bank debt; future costs, expenses and royalty rates; future interest costs; the exchange rate between the $US and $Cdn; future development, exploration, acquisition and development activities, infrastructure build out and related capital expenditures and the timing thereof; the amount and timing of capital projects; operating costs; the total future capital associated with development of reserves and resources; methods of funding our capital program including possible non-core asset divestitures; and forecast reductions in well costs and operating expenses. In this presentation reference is made to the Company's long range Montney growth scenario and economic analysis. All information derived therefrom are not estimates or forecasts of metrics that may actually be achieved. Such information reflects internal projections used by management for the purposes of making capital investment decisions and for internal long range planning and budget preparation. Accordingly, undue reliance should not be placed on same. The recovery, reserve and resources estimates of Crew's reserves and resources provided herein are estimates only and there is no guarantee that the estimated reserves or resources with be recovered. In addition, 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; risks associated with the degree of certainty in resource assessments; 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; and 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 assigned to lands evaluated in Crew's Montney area of operations in NEBC, including the quality of the Montney reservoir, future drilling programs and the funding thereof, 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 of the lands evaluated in Crew's Montney area of operations in NEBC necessarily involves known and unknown risks and uncertainties, including those identified in this presentation and including the business risks discussed in Crew's annual and quarterly MD&A and other continuous disclosure documents. Crew s 2016 budget guidance and related targets and forecasts disclosed herein are best estimates based on certain assumptions including, without limitation, operating results, known fiscal regimes, commodity prices and risk management contracts and will be regularly monitored by management. Our objective will be to proactively manage our capital program as it relates to operational success and fluctuating commodity prices with a priority to maintain financial flexibility and achieve our production guidance. Crew will closely monitor the budget and financial situation throughout the year to assess market conditions and will quickly adjust budget levels or pace of development in accordance with commodity prices and available funds from operations. The forward-looking information and statements included in this presentation 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 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 inadequate 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 presentation and Crew's Annual Information Form). The forward-looking information and statements contained in this presentation speak only as of the date of this presentation, and Crew does not assume any obligation to publicly update or revise any of the included forwardlooking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

3 CREW CORPORATE SNAPSHOT 3 OPERATING SUMMARY 2015 production (Annual average) 18,542 boe/d Forecast 2016 production range Montney land position (4 th largest NE BC holder) 2P gross reserves (YE 15) 23,000-25,000 boe/d 474 net sections mmboe Upper Montney / Lower Montney booked (% of land) 11% / <0.6% MARKET SUMMARY (TSX: CR) Basic shares outstanding (mm) Trading range (52 week) $ $6.20 Average daily trading volume (m) 839 Market $3.85/sh (mm) $540 Enterprise value (mm) $778 Employee/Director ownership diluted 9% DEBT SUMMARY (mm) YE 2015 bank debt drawn on $250mm facility $81 High yield notes outstanding (maturing Oct. 2020) $147 YE 2015 net debt (includes working capital deficiency) $238 Total current debt capacity ($250 facility + $150 notes) $400 Forecast YE 2016 bank debt $85 - $100 44% hedged On forecast 2016 gas sales at ~$2.88/mcf ~$170 MM Undrawn on $250MM credit facility

4 MONTNEY: JUST KEEPS GETTING BETTER 21% Growth PDP Reserves per Share YoY (1) Strong Balance Sheet Massive Montney Resource Commodity Optionality Access to Infrastructure $400MM total debt capacity <1/3 drawn on $250MM facility No near term maturities 110 TCFE TPIIP 8.3 TCFE best estimate ECR 1.5 TCFE 2P reserves booked (11% of Upper Montney lands) 4 th largest Montney landholder in NE BC; 474 net sections Condensate, light oil, liquids-rich natural gas & dry gas Multiple egress options 215 mmcf/d of long-term takeaway capacity Staged with production and facilities build out 4 (1) Debt adjusted reserves per share

5 2015 HIGHLIGHTS Demonstrated Operational Success in the Montney Production increased 23% to 20,706 boe/d in Q4 15 compared to Q3 15 Commissioned new 60 mmcf/d gas processing facility Reduced drilling, completion and tie-in costs to $4.0 million per well All in cash costs per boe declined 36% year over year Operating costs declined 23% year over year to $8.31/boe and were $6.89/boe in Q4 15 Year end net debt 6% with significant liquidity available 5

6 2015 YEAR END RESERVES SUMMARY Strong Montney Reserves Growth Through Drilling Success Total Reserves (mmboe) 2015 Change (after production) 2015 Change per debt adjusted share 2015 Reserves Replacement 2P: 1P: PDP: % 10% 694% % 6% 318% % 21% 240% 6

7 EXCEPTIONAL CAPITAL EFFICIENCIES + IMPROVING COST STRUCTURE Achieved strong capital efficiencies & recycle ratios across all reserves categories lowest 2P F&D / FD&A costs in company history (1)(2) Netbacks supported in challenging environment with significant reductions in quarterly opex $14 Low Finding & Development Costs with Strong Recycle Ratios Operating Cost Reductions ($/boe) $12 $ $12 $10 $9.05 $9.64 $10 $8 $ $4.87 $8 $6 $4 $4 $2 $2 $ P+P F&D Costs (includes FDC) P+P Recycle $- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q (1) All F&D and FD&A figures include change in future development capital (2) See Appendix for definitions and methodology for calculation of F&D, FD&A and recycle ratios Operating expense ($/boe)

8 It s a Siltstone not a shale World-Class MONTNEY RESOURCE Reservoir is 1,000 feet thick Excellent reservoir continuity and fracability 8

9 IRR BTAX EUR (mboe) SEPTIMUS: SWEET SPOT OF THE MONTNEY Crew s 474 sections of land are situated in the sweet spot of the play (Area 2) TD Focus Areas - Area #1 (Greater Town) - Area #2 (Greater Septimus) - Area #3 (Greater Swan) - Area #4 (Greater Pouce Coupe) - Area #5 (Greater Kakwa) - Area #6 (Greater Kaybob) High IRR & EUR Comparison of IRR s and EUR s across Montney Focus Areas (1) 90% IRR - BTAX EUR (mboe) 1,400 80% 1,200 70% 60% 50% 1, % 30% 20% % Oil Condy Gas Source: TD Securities Show Me the Montney Report, October % Greater Septimus Greater Swan Greater Pouce Coupe Greater Kakwa Source: TD Securities Show Me the Montney Report, October 2015 (1) See Appendix for TD s underlying economic assumptions used in the above graph Greater Kaybob Greater Town 0

10 SUCCESSFUL EXECUTION Growth in Resource & Reserves Liquids tcfe Gas tcf Montney Best Estimate Economic Contingent Resource 8.3 TCFE (2) 1.1 Montney P+P Reserves Growth (MMBOE) (1) Liquids mmbbls Gas mboe TCFE Montney Area Production Growth (BOE/D) ,000 18,000 15,000 Light oil bopd NGLs boepd Gas boepd Forecast ,000 9,000 6,000 April 30, 2014 December 31, , (1) Based on Crew s annual year end independent reserves evaluations (2) Pro-forma the July 2015 petroleum and natural gas rights exchange with the Province of B.C

11 EARLY STAGES: 53.1 NET SECTIONS (11%) HAVE UPPER MONTNEY RESERVES ASSIGNED Flatrock CREW ACREAGE BREAKDOWN: Portage Attachie Goose West Septimus Oil/Condensate Sections: 138 Wet Gas Sections: 265 Dry Gas Sections: 71 Total Net Sections: TCFE 2P Reserves Assigned 1.2 tcf Natural Gas 43.2 mmbbls NGL s 9.6 mmbbls Oil Septimus Tower Land Assigned Reserves by Sproule in 2015 Reserve Report Crew Upper & Lower Montney Booked Reserves Crew Lower Montney Booked Reserves Unbooked Crew Montney Rights Groundbirch Acreage proximal to 6 Bcf/d pipeline capacity Crew Montney Wells Crew Drilled Location with No Reserves Assigned Crew Operated Septimus Gas Plant Crew Operated West Septimus Gas Plant Saturn Meter Station Spectra McMahon Gas Plant Crew Operated Pipeline Alliance Operated Pipeline Spectra Westcoast Operated Pipelines TCPL Operated Pipeline Proposed North Montney Mainline Project 11

12 FIRM TAKEAWAY CAPACITY SECURED Long-term transportation capacity and market planning to facilitate growth opportunities Three pipeline options running West, East and South to reach Canadian and US markets Diversified natural gas marketing strategy with exposure to Chicago City Gate, AECO, ATP, Station II and Sumas markets 215 mmcf/d Long-term takeaway capacity with operational & market diversification 12 2,200 bbls/d Condensate and light oil with long-term transportation capacity secured Source: RBC Capital Markets, TD Securities, NEB and CEPA

13 Natural Gas Prices ($C/MCF) ADVANTAGES OF GAS MARKET DIVERSITY $3.00 Commencement of Alliance Pipeline service and initiation of diversified contract portfolio Crew s Gas Market Diversity Stn 2 $2.50 ATP 10% Chicago 15% City Gate 40% $2.00 AECO 35% $1.50 $1.00 $0.50 Enhanced gas price Enriched by heat content + diversified portfolio 13 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 (1) Crew Realized Price Chicago City Gate at ATP AECO 5A ATP (CREC) Stn #2 (1) Wellhead price before impact of hedging

14 Lower Montney 1,000 Feet Upper Montney CREW MONTNEY STRATIGRAPHIC STACK 2 HZ Wells 2 HZ Wells 2 HZ Wells 34 HZ Wells 69 HZ Wells 1 HZ Well 10 HZ Wells West Portage Groundbirch Attachie West Septimus Septimus Goose Tower Doig 2 1 AA A B C 2 Monias High Crew HZ wells drilled to Q Belloy 14 Crew recognizes four major clinoform units in the Upper Montney (AA, A, B, C) The majority of Crew horizontals (72%) have been drilled in the B clinoform The Lower B and C clinoforms are still essentially undrilled The Lower Montney unit also has excellent prospectivity, especially at Septimus, Tower and Attachie

15 (bcf / well) SEPTIMUS: EXCELLENT RETURNS & IMPROVING RECOVERIES 5.6 bcf EUR (1) per well 100% EUR (1) per well since 2010 Improved efficiencies have lead to 1 bcf of production in one year versus three years in 2011 SEPTIMUS: Increasing average 2P EUR (1) per booked undeveloped location Well costs have declined to the $4 million level and operating costs are down 25% Attractive half cycle well economics of 48% IRR (2) (1) "EUR" is the estimated raw quantity of gas or oil that is potentially recoverable or has already been recovered from a well (2) Based on Sproule s Q forecast price deck which assumes CDN$2.25/mmbtu AECO gas in 2016 and using Sproule s year end 2015 type well for Septimus

16 Daily Gas Production (mcf/d) WEST SEPTIMUS 60 mmcf/d plant with expansion capability to 120 mmcf/d Better Rock with Higher Liquids = Exceptional Returns Step-out area - Montney expansion Over pressured with greater porosity, permeability and liquids than Septimus Up to 220 bbls condensate / mmcf (1) provides strong economics 60 mmcf/d plant commissioned Aug 15 Currently processing 40 mmcf/d; to >50 mmcf/d in 2016 Full 3D seismic coverage Performance of recent wells + reduced costs driving attractive estimated half cycle returns of 60% IRR (4) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 West Septimus Type Curve Comparison (2)(3) (1) Based on initial production data from Crew s W6 well (2) See the Appendix to this presentation for information on Type Wells (3) Sproule s 2015 vs 2014 figures represent average 2P EUR per well for undeveloped locations assigned by Sproule in Crew s annual year end reserves reports (4) Based on Sproule s Q forecast price deck which assumes CDN$2.25/mmbtu AECO gas in 2016, and using Sproule s year end 2015 type well for West Septimus w6 Pad (6 Wells) w6 Pad (3 Wells) Sproule Bcf Time (Days) w6 Pad North (3 Wells) w6 Pad South (Original 6 Wells) Sproule Bcf

17 Cumulative Production (bbls) TOWER 51 net sections Expanding Montney Light Oil Play First of several light oil, high netback areas in Crew s Montney portfolio to be developed 2P reserves 24.1 mmboe at year end 2015 Cost effective water handling solutions to reduce both capital and operating costs being implemented 120, ,000 80,000 60,000 Near to mid-term growth potential Crew Septimus facility Crew 1-24 (2014) 13 day average production: 861 boepd (71% oil) (1) Crew B9-30 (2014) 25 day average production: 695 boepd (63% oil) (1) Recently drilled wells (1) Balance is natural gas and associated liquids Cumulative Production vs Time Plot Crew Operated Pipeline Spectra Westcoast Pipelines Q4/14 wells Crew 5,000 bopd oil facility Phase 1 Q4/2014 operational Improved results with increased sand loading 17 Four well pad drilled; awaiting cost optimization and improved pricing to complete 40,000 20, Time on Production (Months) 4-03 Pad B-Zone Avg Pad B-Zone Avg Pad C-Zone Avg 8-15 / 5-14 Pad (old) B-Zone Avg 8-15 / 5-14 Pad (new) B-Zone Avg Crew Wells B-Zone Avg Crew Well C1 Zone Avg

18 NEXT GROWTH PHASE GROUNDBIRCH Delineation area with long-term upside Over-pressured area with exceptionally liquids-rich natural gas and offsetting vt + hz development Large pay thickness (500 ft. Upper Montney) Ideally situated to access proposed N. Montney Mainline 3D seismic over first development area ATTACHIE Successful pilot wells prove resource with several prolific offsetting producers in Upper and Lower Montney Over-pressured with liquids-rich natural gas Large pay thickness (1,000 Upper + Lower Montney) Crew well tested at ,230 psi FCP (1) Crew well tested at 7.9 1,250 psi FCP (2) Proposed North Montney Mainline Crew 2-4 Pad Crew 3D Seismic Crew Operated Pipeline Crew New Montney Acreage (53 Net Sections) Site of Planned Groundbirch 120 mmcf/d Plant Crew Well Crew Well 2013/14 Drilled Wells Proposed North Montney Mainline Crew Lower Montney Booked Reserves 18 (1) Reflects stabilized nat gas rate at end of 4 day test period (2) Reflects stabilized nat gas rate at end of 2.5 day test period

19 STABLE ASSET: LLOYDMINSTER HEAVY OIL Lloydminster ALBERTA SASKATCHEWAN Area offers low-risk funding source BRIGHTSAND 86,283 net acres of land in the area; average WI of 93.7% Currently ~2,600 boe/d production with ~600 boe/d off-line Operating costs down 13% per boe SWIMMING WILDMERE VIKING / KINSELLA LLOYD Lloydminster UNWIN / EPPING LASHBURN FOREST BANK LOW LAKE NEILBURG $50MM disposition closed Q3 15 BALDWINTON Disposition Area 19 Crew 100% W.I. Dulwich Heavy Oil Facility UNITY

20 MONTNEY: JUST KEEPS GETTING BETTER +25% Production Growth Forecast 2016 over 2015 Strong Balance Sheet 34% drawn on $250MM facility Reserves Additions 21% increase in PDP reserves/share (1) Access to Infrastructure Existing and growing Massive Resource 110 TCFE TPIIP 20 Commodity Optionality Oil/Condensate/Gas (1) Debt adjusted reserves per share

21 Contact Info: Suite 800, 250-5th Street SW Calgary, Alberta T2P 0R4 Telephone: (403) Dale O. Shwed, President & CEO John G. Leach, Senior Vice President & CFO Robert J. Morgan, Senior Vice President & COO 21