Prices received for the Company's liquids production including conventional oil, heavy oil and natural gas liquids were down 6% compared to those received for the fourth quarter 2012. West Texas Intermediate ("WTI") oil, denominated in Canadian dollars, increased 9% during the quarter compared to the fourth quarter of 2012. The prices received for the Company's conventional and heavy oil sales correlate closely to the price of Western Canadian Select ("WCS"), which traditionally trades at a discount to WTI. During the first quarter the differential between WTI and WCS increased to 34% from 21% in the fourth quarter which resulted in the WCS price decreasing 7% from fourth quarter of 2012 levels. The Company's overall liquids pricing was positively impacted by a 15% increase in the price received for the Company's natural gas liquids. This increase was driven by the increase in the underlying price of WTI and an increase in prices received for condensate, ethane and propane.
The Company's hedging strategy is focused on partially protecting against significant declines in commodity prices that would negatively impact the cash flow needed to fund the Company's on-going capital program. Crew currently has hedged approximately 47% of its forecasted 2013 natural gas production at a price of approximately $3.22 per mcf. The Company also protects its liquids production from a significant decline in WTI and WCS pricing. The Company has approximately 38% of its forecasted 2013 liquids production protected against a decline in WTI pricing with hedged prices fixed at a floor of approximately $92.00 per barrel. The Company has further hedged the differential between WTI and WCS pricing on 4,200 barrels per day at a differential of $21.08 for the second quarter of 2013, 4,500 barrels per day at $22.29 for the third quarter and 2,500 barrels per day at $22.58 for the fourth quarter. Crew has begun building its hedge position to provide a base level of cash flow for 2014. The Company currently has hedged approximately 14.0 mmcf per day of natural gas for 2014 at a price of approximately $3.90 per mcf and 1,500 barrels per day of WTI oil hedged at an average floor price of approximately $95.70 per barrel for 2014 with additional hedges fixing the differential between WTI and WCS pricing on an average of 1,000 barrels per day for 2013 at a differential of $22.75 per barrel
Septimus/Tower, British Columbia
Crew's Septimus development program maintained its active pace into the first quarter with the drilling of four (4.0 net) Montney horizontal wells. Production for the quarter averaged 6,170 boe per day as a compressor outage at the Septimus gas plant in February curtailed production in the quarter by approximately 265 boe per day. Three wells were completed and brought on production in the first quarter which led to record March production of 6,790 boe per day. Production into the second quarter has continued this trend with April field estimates at approximately 7,000 boe per day and more recently approaching 7,500 boe per day (40 mmcf per day plus associated liquids). In addition, approximately 1,100 boe per day of existing production is currently backed out due to the high flowing pressure of the new wells and one additional new well has yet to come on production. One of the wells completed in the first quarter confirmed a more liquids rich area of the Montney producing 74 bbls/mmcf of natural gas liquids in the first 25 days when compared to a field average of approximately 28 bbls/mmcf. Crew now has eight wells which have been completed incorporating advanced completion practices. Based on the initial performance of seven of these wells, the Company's estimated ultimate recoveries ("EURs") of 4.6 BCF per well is a 44% improvement over the average year end 2012 2P booked EURs. In addition, well costs consisting of drilling, completion and equipping have declined 22% to $4.7 million per well which when combined with the improved per well performance results in a very competitive rate of return for Septimus development at current natural gas prices.
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