Published On: October 4th, 2023
Calima Energy Limited (ASX: CE1/ OTCQB: CLMEF) (“Calima” or the “Company”) is a prominent energy company operating in both Australia and Canada. Calima Energy has shared a promising update on its Q3/Q4 drilling program in Brooks. The program, which includes drilling three wells in the Pisces Glauconitic formation, marks a further step forward in growing production.
Figure 1: Assets Location Of Calima Energy Limited
Drilling and Operations Update For The Brooks Project
The program involved drilling three wells, with the final well, Pisces #12, reaching the rig release stage on September 29th, 2023.
Notably, Pisces #10, spudded on September 8th, 2023, stands out as a remarkable feat. This well was drilled, underwent hydraulic fracturing, equipment installation, and tie-in, and was put into production in just three weeks, setting a new record for the Company. Pisces #10’s production performance aligns with the impressive Pisces #6 and #7, which exceeded the typical glauconitic production curve.
Crucially, the entire program was completed under budget, benefiting from favourable weather conditions and the availability of drilling services. Leveraging their strategic mineral leasing deal from 2022, Calima focused on core operations and infrastructure within the Brooks Project, ensuring optimal capital efficiency. This announcement underscores Calima Energy’s commitment to efficient operations, cost-effectiveness, and leveraging strategic advantages to maximise returns in their energy endeavours.
Strategic Objectives of the Drilling Program in Brooks
The drilling program was meticulously designed to:
- Leverage Existing Infrastructure: Integration with Calima’s oil batteries and infrastructure for operational efficiency
- Sustainable Production: Maintain a consistent average daily production rate of ~4,000 boe/d in 2nd Half of 2023, ensuring revenue stability
- Cash Flow Optimisation: Prioritise free cash flow generation, strengthening the Company’s financial position and utilise the benefit from the surged commodity prices
- Capital Returns and Dividends: Ensure sustained funding for capital returns and dividends to benefit shareholders
- Timely Execution: Targeted on-stream wells by Q4-2023, with peak production expected in December 2023
- Adaptability: To maintain operational resilience, address challenges like 3rd quarter disruptions from weather-related energy cuts and unforeseen work-overs
Promising Progress and Strategic Objectives
Calima Energy Limited’s senior management has also reported the latest developments in the Company’s Q3/Q4 three-well drilling program in Brooks. Pisces #10 has been completed and is undergoing production cleanup. Meanwhile, Pisces #11 and #12 are suspended for stimulation, with peak production expected by December 2023. The program’s primary goals include sustaining corporate production levels, expanding PDP reserves, and capitalising on recent infrastructure enhancements in Brooks. Additionally, these new wells offer shareholders exposure to the current surge in energy prices, with WTI at CAD 123.82/bbl and WCS at CAD 98.55/bbl, providing strong cash flow from operations.
Mr Karl DeMong, Managing Director of Calima Energy Limited, commented on this announcement:
“The Company has finished the drilling phase of its 3-well Brooks Pisces program. Production from the first well has commenced, and all wells should be on stream in Q4 2023.”
Figure 2: Summary Of The 2nd Half of 2023 Drilling Campaign
About Brooks Project
Calima Energy’s Brooks Project is a pivotal asset, comprising over 69,000 acres of prime land primarily focused on tapping into the Sunburst and Glauconitic formations. With a significant working interest of 90%, the project has already demonstrated its potential, with an average production of 3,300 barrels of oil equivalent per day (Boe/d) in June 2023. It boasts an impressive reserve base, with 8 million barrels of 1P (Proven) reserves and10 million barrels of 2P (Proven and Probable) reserves.
What sets the Brooks Project apart is its cost-effective development approach. The Sunburst Formation, in particular, offers low-cost development opportunities at approximately CAD 1.4 million per well, delivering attractive returns. Furthermore, the environmental impact is minimised through multi-well pad drilling, reducing the carbon footprint.
Additionally, the Brooks area enjoys year-round access and features substantial infrastructure, providing a solid foundation for growth. With Blackspur’s infrastructure capacity to process significant oil, water, and gas volumes, the Brooks Project represents a promising avenue for Calima Energy’s expansion and continued success in the energy sector.
Figure 3: Detailed View Of The Brooks Assets Of Calima Energy Limited
About Calima Energy’s Chairman, Mr Glenn Whiddon
Chairman Mr Glenn Whiddon of Calima Energy is well-versed in equity capital markets, banking, and corporate advisory, specifically focusing on natural resources. He holds a degree in Economics and has held various leadership roles in Australian and international publicly-listed companies in the resources sector. Previously, he served as the Executive Chairman, CEO, and President of Grove Energy Limited, overseeing oil and gas exploration and development operations across Europe and the Mediterranean.
Investor’s Outlook
- The announcement of the progress in Brooks assets signals the potential for improved financial performance, strengthened by sustained production and optimised cash flow, providing a positive outlook for returns and dividends in the future
- Investors are positioned to benefit from the recent rise in energy prices, with WTI and WCS prices mentioned. Higher energy prices can lead to increased revenue and profits for the Company
- The stock price of Calima Energy Limited stood at AUD 0.094 per share as of October 3rd, 2023, with an average 52-week range of AUD 0.082 to AUD 0.150
- As of October 3rd, 2023, the Company’s market capitalisation is AUD 58.68 million
- The Company has 625.7 million shares on issue as of October 3rd, 2023
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