Crew Energy Inc. announced a conservative $95 to $105-million capital budget for 2019 leaving some wiggle room should the price of oil improve in the latter part of next year.
The company’s spending guidance for 2018 is $90-$95 million, which compares to original guidance of $80-$85 million.
Drilling activities will continue to focus on the ultra-condensate rich area at Greater Septimus. This includes plans to drill five (5.0 net) and complete three (3.0 net) ultra-condensate rich wells at West Septimus. The company anticipates entering 2019 with seven (7.0 net) drilled but uncompleted wells, which will accelerate condensate production in 2019. Crew plans to drill one Montney lease-retention well and one exploratory horizontal well.
Crew has also allocated capital to its heavy oil business with plans to drill three multi-leg horizontal wells, which are expected to maintain production volumes.
The company plans to maintain an average production of 22,000 to 23,000 boe/d (27 per cent liquids and 73 per cent natural gas). Crew has currently shut in 2,000 boe/d, which includes 1,300 boe/d of non-Montney gas production. It is budgeted to remain shut in for the entire year at current gas prices. In the second and third quarter, 700 bbls/d of shut-in heavy oil is planned to be phased back in production as the price of Western Canadian Select (WCS) is forecast to improve.
On Jan. 1, 2019 the company’s pipeline connecting its West Septimus facility to the existing TCPL Saturn meter station will be commissioned, providing the company with physical access to all three major natural gas egress systems transporting natural gas out of Western Canada.
Of the $95 million to $105 capital expenditures, a total of 75 per cent will be allocated to Greater Septimus, six per cent to lease retention and exploration, and six per cent to heavy oil and 13 per cent to land, seismic, general and administration.
Crew will continue to monitor prices and differentials and will adhere to a disciplined and conservative approach for its 2019 capital budget in an effort to maintain balance sheet strength and flexibility, according to a company release. The company said, “it is prudent to develop a plan that can be adjusted dependent on commodity prices.”
As outlined in the company's third quarter 2018 results, through the fourth quarter of 2018, Crew has been affected by third-party pipeline outages and limited egress across Western Canada. Crew has shut-in production volumes and anticipates that 2018 volumes will average near the low end of its annual guidance range of 23,500 to 24,500 boe/d.