Mr. Dale Shwed reports
CREW ENERGY INC. ANNOUNCES CLOSING OF FIRST PHASE OF STRATEGIC MIDSTREAM TRANSACTION AND RECEIPT OF $35 MILLION
Crew Energy Inc. has confirmed the first of two closings of its previously announced strategic transaction with a third party mid-stream company, which was announced on Jan. 17, 2020. The transaction is one of many innovative value-creation initiatives Crew has undertaken to streamline its asset base. Over and above the proceeds to be realized from the transaction, since 2014, the company has successfully generated more than $502-million through portfolio optimization. These proceeds have supported continued development of its high-quality Montney assets, including continuing drilling and completions in its ultracondensate-rich area at Greater Septimus. Crew plans to continue pursuing strategic, non-core dispositions and other value-enhancing transactions to monetize the inherent value of its vast asset base and further strengthen its financial position.
Proceeds of $35-million on first closing
Concurrent with this first closing, Crew has received cash consideration of $35-million in exchange for the disposition of an 11-per-cent net working interest (WI) in its Septimus and West Septimus gas processing facilities located within Crew's northeastern British Columbia (NEBC) Montney operations at Greater Septimus. As part of the broader transaction, Crew and the mid-stream company plan to form a strategic infrastructure alliance with the goal of participating in future value creation opportunities.
The second closing of the transaction is expected in Q4 2020 and will result in Crew receiving an additional $35-million of cash consideration in exchange for the disposition of another 11-per-cent net WI, subject to standard industry closing conditions. Under the transaction, Crew's total WI divestment is 22 per cent for total proceeds of $70-million. As part of the transaction, Crew has entered into a long-term processing arrangement with the purchaser, which, after the second closing, is expected to result in annual payments of approximately $6.36-million to the purchaser over a 20-year period. Separately from the transaction, Crew exercised its option with another third party to acquire a net WI of approximately 16 per cent in the NEBC facilities for $11.7-million, which, subject to customary closing conditions, is also expected to close in Q4 2020 and is anticipated to result in Crew saving $5.9-million of annual processing fees.
Crew expects to realize the following benefits from the transactions described above:
- Net cash proceeds of $58.3-million;
- Retention of an approximate 22-per-cent net WI in, and operatorship of, the NEBC facilities;
- Application of $58.3-million to outstanding balances on its $235-million credit facility, which was drawn $52.6-million at year-end 2019;
- Annual cost reduction of approximately $2.1-million;
- Retain an option to convert an additional 11.43-per-cent WI to $37.5-million between January, 2021, and June, 2023.
About Crew Energy Inc.
Crew is a growth-oriented oil and natural gas producer, committed to pursuing sustainable per-share growth through a balanced mix of financially responsible exploration and development complemented by strategic acquisitions. The company's operations are primarily focused in the vast Montney resource, situated in northeastern British Columbia, and include a large contiguous land base.
We seek Safe Harbor.
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