Crew Approves $120MM Exploration Budget, Targets 34% Production Increase
Crew has provided the following operational update and 2009 Guidance.
Crew is currently producing approximately 15,200 boe per day and expects to meet forecasted 2008 exit production of 15,500 to 16,000 boe per day. The Company has 11 wells to place on production with six wells expected to be on production prior to year end. Crew drilled 46 (42.4 net) wells in 2008 with a 95% success rate.
Crew's Board of Directors has approved a 2009 exploration and development budget of $120 million. This capital program targets 2009 average production of approximately 15,500 boe per day which represents an approximate 34% increase in production and a 15% increase in production per share over 2008. The average 2009 target assumes the Company will have approximately 970 boe per day shut in during a planned 21 day turnaround in June at the third party operated Fort Nelson natural gas processing facility in north east British Columbia.
The 2009 $120 million exploration and development program will be funded by 2009 cash flow from operations ("cash flow") which is currently budgeted at approximately $135 million based on various assumptions including consensus commodity price and exchange rate forecasts. The capital expenditure program is designed to spend less than cash flow while increasing production to a targeted exit rate of 16,500 to 17,000 boe per day. Under these assumptions Crew targets to end the year with approximately $224 million in debt and $60 million of available borrowing capacity on the Company's recently confirmed $285 million bank facility. Should the Company experience weaker than forecasted commodity prices resulting in cash flow below planned expenditure levels, Crew will adjust capital expenditures to accommodate the lower cash flows in order to maintain balance sheet integrity.
Crew has been successful in 2008 at accumulating large acreage positions on resource based prospects which have shown significant promise. In 2009, Crew will concentrate on two of those prospects, focusing its drilling program on Septimus British Columbia and Princess, Alberta. The Company is currently planning to tie-in eight wells drilled in 2008, drill 15 to 18 new wells and perform workovers or recomplete a total of 20 to 30 wells in 2009. The first quarter will be active with development drilling at Septimus, British Columbia and Princess, Alberta and exploratory wells planned for Strachan and Wapiti, Alberta and at Moberly in British Columbia. In addition, Crew's previously disclosed success on its Montney development at Septimus has resulted in the Company moving forward with its plans to construct a 20 mmcf per day gas facility in this area. Design work and equipment procurement for the facility is underway with construction currently expected to begin late in the first quarter and commissioning planned for the third quarter of 2009.
Over the past few months we have seen a dramatic global economic slowdown that has had a significant impact on all aspects of our business. Crew believes that the quality of the resource based prospects that it has successfully accumulated over the past year positions the Company to continue to grow in 2009 while maintaining a disciplined spending program that is intended to preserve financial strength. We look forward to reporting our progress in 2009.