Crew Energy Is an Oil Stock Worth Watching

Crew Energy [stock_market_widget type="inline" template="generic" color="default" assets="CR.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock might have been beaten down badly so far this year, but there is no denying that the energy company has been delivering decent operational performances in a tight environment. The story was the same for Crew in the second quarter of 2019, but the stock didn’t show any signs of recovery. Let’s take a closer look at Crew and see if the stock has any chance of making a comeback thanks to its operational improvements.

A Closer Look at Crew Energy’s Second-quarter Performance

Crew Energy’s total production came in at 22,865 barrels of oil equivalent per day during the second quarter of 2019. This was a slight drop from the prior-year period’s output of 23,583 barrels of oil equivalent per day.

Crew announced that liquids accounted for 31% of Crew’s total production during the quarter as compared to 26% in the prior-year period. What’s more, despite the lower production, Crew delivered adjusted funds flow of $0.15 per share as compared to $0.14 per share in the year-ago period.

This increase in the adjusted funds flow was a result of an increment in Crew’s condensate volumes, which increased 36% year over year to 3,127 barrels per day. What’s more, the higher funds flow was achieved despite a small decline in the company’s average realized price.

Crew’s average realized price during the quarter came in at $24.77 per barrel of oil equivalent as compared to $25.18 per barrel of oil equivalent in the prior-year period. So, it can be concluded that the company held its ground during the quarter and that was not surprising. I had written in my earnings preview that its control over costs and stable Western Canadian Select crude oil prices will be a tailwind for Crew.

What Does the Future Look Like?

Crew Energy is delicately placed as far as its balance sheet is concerned. The company had $353 million in debt at the end of the previous quarter, and it needs to repay $300 million of its debt in 2024.

As such, Crew needs to be careful in the current oil pricing environment as it has almost negligible cash on its balance sheet. So Crew needs to spend within its means as any weakness in the oil pricing scenario could pose a big trouble for liquidity.

The good news for Crew is that WCS crude oil prices are gaining momentum once again after dipping in the second half of the second quarter that ended in June. This trend could continue as Canada’s excess oil inventory has receded thanks to Alberta’s production cuts.

As reported by Hellenic Shipping News:

Alberta’s oil production curbs finally appear to be draining inventories, at least for now. Crude supplies in Western Canada fell by 2.75 million barrels last month to the lowest since November 2017, Genscape said Aug. 7.

Moreover, crude-by-rail exports in Canada have also been picking up the pace. As such, it would be a good idea to keep a close eye on Crew Energy stock as it could benefit from oil price improvements.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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