CALGARY, Jan. 17, 2020 /CNW/ - Crew Energy Inc. (TSX: CR)
("Crew" or the "Company") is pleased to announce that
it has entered into a purchase and sale agreement with a third
party midstream company (the "Purchaser") for the
disposition of a 22% net working interest in each of its Septimus
gas processing facility ("Septimus Facility") and West
Septimus gas processing facility ("West Septimus Facility")
located in Northeast British
Columbia (collectively, the "NEBC Facilities") for
aggregate consideration of $70.0
million (the "Transaction"). In conjunction
with completion of the Transaction, Crew and the Purchaser will
form a strategic alliance to participate collaboratively in future
value creation opportunities. Separately, Crew has exercised its
option to acquire an approximate 16% net interest in the NEBC
Facilities for $11.7 million.
Transaction Terms and Metrics
The Septimus Facility currently has a nameplate capacity of 60
mmcf/d, while the West Septimus Facility currently has a nameplate
capacity of 120 mmcf/d. The Transaction is structured with two
closings, whereby half the interest to be disposed of (11% for
$35 million) is expected to close in
the first quarter of 2020 and the remaining half interest (11% for
$35 million) is expected to close in
the fourth quarter of 2020. As part of this Transaction, Crew will
enter into a 20-year processing arrangement with a commitment of
approximately $6.4 million per year
to be paid to the Purchaser. Closing of the Transaction remains
subject to receipt of third party consents and satisfaction of
customary closing conditions.
In a separate transaction, Crew has exercised its option to
acquire an approximate 16% net interest in the NEBC Facilities for
approximately $11.7 million, with an
expected closing and effective date of November 1, 2020, subject to customary
closing conditions. The purchase of this interest will mark the
termination of a 10-year processing agreement resulting in the
elimination of $5.9 million per year
in processing fees that Crew has been paying over the term of the
agreement.
After closing these transactions, Crew will remain as operator
of the NEBC Facilities and will thereafter own an approximate 22%
net interest in the NEBC Facilities.
Option for Future Potential Disposition
Pursuant to the terms of the Transaction, Crew has an option to
dispose of up to an additional 11.43% net interest in the NEBC
Facilities to the Purchaser for consideration of up to $37.5 million exercisable from January 1, 2021 to June 1,
2023. If the option is exercised, Crew would be required to
enter into a 20-year processing commitment with the Purchaser and
pay up to $3.4 million per year in
processing fees.
Use of Proceeds
Upon closing of the Transaction, proceeds from the disposition
will be used to reduce outstanding indebtedness under Crew's
$235 million credit facility, which
had drawings of approximately $53.0
million at December 31, 2019.
The Company continues to retain ample liquidity and unutilized
credit capacity with no material debt maturities until 2024.
Crew expects to release the Company's full year 2020 budget
later in the first quarter.
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".
Forward-Looking Information and Statements
This news release 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
foregoing, this news release contains forward-looking information
and statements pertaining to the following: the benefits to
be derived from completion of the Transaction including the
anticipated cash proceeds therefrom and the timing of receipt
thereof; the closings, timing of closings and terms of the
Transaction and the related transaction described herein; the
potential for Crew and the Purchaser to complete future
transactions pursuant to the strategic alliance described herein;
the potential impact of the Transaction and benefits to be derived
therefrom including any future potential benefits from the
strategic alliance with Purchaser; the anticipated use of proceeds
from the Transaction including potential debt
reduction; Crew's commodity risk management programs;
marketing and transportation plans; future liquidity and financial
capacity; and the possible future disposition of an additional
interest in the NEBC Facilities pursuant to the excise of the
option described herein.
Without limiting the generality of the foregoing, there can
be no assurance that the transactions described herein will be
completed or if it is, as to the timing of completion or terms
thereof. The completion of the transactions described herein
remain subject to a number of assumptions, risks and uncertainties
including, without limitation, that all requisite third party
consents and approvals will be obtained and all other conditions to
completion of the transactions will be satisfied or waived in a
timely fashion. Readers are cautioned that the foregoing list
of factors is not exhaustive.
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.
The forward-looking information and statements included in
this news release 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, those risks identified herein and
certain other risks detailed from time-to-time in Crew's public
disclosure documents (including, without limitation, those risks
identified in this news release and Crew's Annual Information
Form).
The forward-looking information and statements contained in
this news release speak only as of the date of this news release,
and Crew does not assume any obligation to publicly update or
revise any of the included forward-looking statements or
information, whether as a result of new information, future events
or otherwise, except as may be required by applicable securities
laws.
SOURCE Crew Energy Inc.