Heavy Oil, Lloydminster, Saskatchewan
Crew drilled eight gross (8.0 net) wells in the Lloydminster area in the fourth quarter of 2012 for a total of 44 gross (41.8 net) wells for the year. At Neilburg, Crew began delineation of an undeveloped Colony sand prospect by drilling two vertical wells. Both wells have exceeded our type curves with optimized initial production rates of 85 and 65 bbls of oil per day based on a 30 day average. Crew has identified up to 18 additional locations on the lands. At Wildmere, three horizontal wells were drilled targeting both the General Petroleum and Lloydminster formations with initial production rates (60 day average) of 90 bbls of oil per day on average. Crew will be pursuing additional development on this play with three horizontal wells targeted for the first quarter of 2013. Capital efficiencies for the fourth quarter capital program were again consistent with the previous three quarters at $14,200/boe per day (30 day initial production) with an average for the year of $15,600/boe per day. Production for the fourth quarter of 2012 averaged approximately 5,800 boe per day, an increase of 8% from the third quarter on the strength of the Company's successful capital program in the area.
Crew is maintaining its forecasted average production of 27,500 to 28,500 boe per day in 2013. The first quarter has been very active with the Company operating up to six drilling rigs and expecting to drill 35 wells. Crew will continue to invest in projects that provide near term funds flow with the highest rates of return in addition to resource capture initiatives at a reasonable cost. As a result, approximately 87% of the wells planned in 2013 are targeting oil while acquisition targets have focused on scalable resource. The Company has recognized a window of opportunity to consolidate a dominant Montney land position in northeast British Columbia and has acted quickly and decisively to secure this opportunity. Crew now owns 292 sections in the northeast British Columbia Montney resource play and has an option to purchase another 81 sections. The Company believes the accumulation of these assets will prove to add significant value over time.
Crew expects to spend approximately $70 million on exploration and development activities in the first quarter out of an approved $219 million annual exploration and development capital budget. With the recent acquisition of 59 sections of land in northeast British Columbia on the regional Montney resource complex for $20 million, estimated net debt at the end of the first quarter is currently forecast to be $340 to $350 million or 1.8 times annualized fourth quarter 2012 funds from operations.
Crew's 2012 program was executed successfully with a finding, development and acquisition cost of $8.17 per boe yielding a corporate recycle rate of 2.7 times. We were able to reduce our net debt by $31.8 million and increase reserves by 11% per share over 2011. The Company will continue to be disciplined in its capital allocation and capital spending with a focus on the efficient execution of our capital program.
We would like to thank our employees, consultants and Board of Directors for their hard work and dedication in contributing to Crew's success in 2012. On behalf of our Crew, we would like to express our sincere appreciation for the continued supported of our shareholders. We look forward to a very exciting year and reporting our first quarter 2013 results in May.
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