Crew Energy Inc. Announces Closing of First Phase of Strategic Midstream Transaction and Receipt of $35 Million
February 27, 20204:27 PM CNW
CALGARY, Feb. 27, 2020 /CNW/ – Crew Energy Inc. (TSX: CR) (“Crew” or the “Company“) is pleased to confirm the first of two closings of our previously announced strategic transaction with a third party midstream company (the “Transaction“), which was announced on January 17, 2020. The Transaction is one of many innovative value-creation initiatives Crew has undertaken to streamline our 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 our high-quality Montney assets, including ongoing drilling and completions in our ultra-condensate 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 our vast asset base and further strengthen our financial position.Proceeds of $35 Million on First ClosingConcurrent with this first closing, Crew has received cash consideration of $35 million in exchange for the disposition of an 11% net working interest (“WI”) in our Septimus and West Septimus gas processing facilities located within Crew’s northeast B.C. (“NEBC“) Montney operations at Greater Septimus (the “NEBC Facilities“). As part of the broader transaction, Crew and the midstream 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% net WI, subject to standard industry closing conditions. Under the Transaction, Crew’s total WI divestment is 22% 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 our option with another third party to acquire a net WI of approximately 16% 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% net WI in, and operatorship of, the NEBC Facilities;application of $58.3 million to outstanding balances on our $235 million credit facility, which was drawn $52.6 million at year end 2019;annual cost reduction of approximately $2.1 million; andretain an option to convert an additional 11.43% WI to $37.5 million between January 2021 and June 2023.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 northeast British Columbia, and include a large contiguous land base. Crew’s liquids-rich Greater Septimus area features an Ultra Condensate-Rich (“UCR“) zone, which offers significant development and value creation potential over the long-term. The Company has access to diversified markets with operated infrastructure and access to multiple pipeline egress options. Crew’s common shares are listed for trading on the Toronto Stock Exchange (“TSX“) under the symbol “CR”.