Published On: October 30th, 2023
Calima Energy Limited (ASX: CE1 / OTCQB: CLMEF) (“Calima” or the “Company”), an Australian energy company with operations in both Australia and Canada, announced the successful, cost-effective completion of Q3/Q4 three wells Pisces Drilling Program in Brooks, achieving strong early production in Pisces #10. The other two wells in the Pisces Glauconitic formation are anticipated for peak production by December 2023. This endeavour brings a new phase of expansion, allowing shareholders to benefit from the ongoing upswing in energy prices. Currently, WTI is being traded in the range of CAD 120 per barrel, and WCS has experienced a noteworthy increase, reaching CAD 87 per barrel. The program strategy focuses on maintaining average daily production and generating free cash flow while planning shareholder capital returns.
Drilling and Capital Return Update for The Brooks Project
Calima Energy Limited’s Chairman, Mr Glenn Whiddon, announced the successful completion of the Company’s three-wells Pisces Drilling Program. The program involved drilling three wells, Pisces #10’s, early solid production aligns with the high-performance trend observed in Pisces #6 and #7, which exceeded the typical glauconitic production type curve. Pisces #11 underwent a fracture treatment on October 6-7th, 2023, is currently in the production phase, and is also going through the cleaning-up process. With the final well, Pisces #12 is set to be fracc’d around October 20-22nd, 2023, with the 2.2 km pipeline layout being completed. The well production is expected in late October 2023, leading to on-stream dates projected for Q4-2023 and peak production anticipated in December 2023.
The entire operation was completed under budget, from drilling to initial production, which took only 22 days, with actual Pisces #10 well costs being 10% lower than budgeted. This achievement reflects the Company’s focus in optimising operational efficiency and cost control.
Strategic Objectives of the Drilling Program in Brooks
The drilling program was meticulously designed to:
- Leverage Existing Infrastructure: Tie-ins to existing facilities and infrastructure for operational efficiency
- Sustainable Production: Maintain an average daily production rate of ~4,000 BOE/D range for 2023, ensuring revenue stability
- Cash Flow Optimisation: Priorities free cash flow generation, strengthening the Company’s financial position and utilise the benefit from the surged commodity prices
- Capital Returns and Dividends: To ensure sustained funding for capital returns and dividends to benefit shareholders, the Company plans a capital return of AUD 7.5 million (1.2 cents per share) to shareholders on October 27th, 2023 and an additional AUD 2.5 million (0.4 cents per share) potentially in January 2024
- Timely Execution: Targeted on-stream wells by Q4-2023, with peak production anticipated in December 2023
Promising Progress and Strategic Objectives
Calima Energy Limited has released the latest status quo towards developments in the Company’s Q3/Q4 three-well drilling program in Brooks. Pisces #10 is producing strongly and on par with Pisces #6 and #7. Meanwhile, Pisces #11 has been completed and is undergoing production cleanup. Pisces #12 is nearing completion, with peak production expected by December 2023. Furthermore, Calima Energy Limited is focused on generating free cash flow in their Q1 2024 drilling program, emphasising tie-ins to existing facilities and infrastructure for cost-effectiveness and optimisation of free cash flow. This announcement signifies the Company’s commitment to efficient operations and shareholder value.
Mr Karl DeMong, Managing Director of Calima Energy Limited, commented on this announcement:
“The Company is pleased to announce the successful conclusion of the drilling phase of its 3-well Brooks Pisces program. Production from the first two wells has commenced, and all wells should be on stream in Q4 2023. This drill program was planned to maintain our average daily production at circa 4,000 boe/d for 2023, leveraging the rising commodity price environment. We commend our first-class team on the ground, who have drilled all three wells under budget. On the back of another successful drilling campaign, we are currently finalising our program for Q1 2024, with the Board and management team focused on disciplined spend to maximise free cash flow generation”.
Figure 1: SUMMARY OF THE DRILLING ACTIVITIES BY CALIMA ENERGY
About Calima Energy Limited
Calima Energy Limited, under the leadership of Chairman Mr Glenn Whiddon, has strategically positioned itself as a Canadian Oil and Gas Producer and Explorer, emphasising free cash flow and growth. Through a merger with Blackspur Oil in 2021, the Company transitioned into a high-margin oil and gas producer tied to WTI pricing. With assets in Alberta, including Brooks and Thorsby, Calima is committed to returns-focused growth, positive cash flow, and a strong focus on ESG. Their assets offer substantial upside, with plans to increase production significantly by year-end and strategic acquisitions for further expansion. This proactive approach underscores Calima’s commitment to long-term success in the energy sector.
Figure 2: LOCATIONS OF THE PROJECTS (BROOKS AND THORSBY) OF CALIMA ENERGY LIMITED
About Calima Energy Limited’s Chairman, Mr Glenn Whiddon
The Chairman of Calima Energy, Mr Glenn Whiddon, has extensive experience in equity capital markets, banking, and corporate advisory, particularly in the natural resources sector. He is currently the Director of numerous publicly listed companies in the resources sector. With a background in Economics and extensive corporate leadership, he has a proven track record as the Executive Chairman, Chief Executive Officer, and President of Grove Energy Limited. His notable achievement includes transforming Grove Energy Limited into a substantial entity, which was later acquired for CAD 150 million by Stratic Energy Limited, a TSX-listed oil and gas company.
Investor’s Outlook
- This announcement highlights the completion of 3 Well Pisces Drilling Program; all three wells were completed under budget. This demonstrates cost-efficiency and effective project management.
- Anticipating peak production in December 2023, Calima Energy’s new wells offer shareholders exposure to the current energy price surge, with WTI trading around CAD 120/BBL and WCS at CAD 87/BBL, This can potentially result in higher profits.
- Calima Energy’s drilling program is designed to maintain average daily production levels at around 4,000 boe/d for 2023, ensuring a consistent revenue stream.
- Calima Energy announced a capital return of AUD 7.5 million (1.2 cents per share) scheduled for October 27th, 2023. This return rewards investors and provides a clear plan for distributing profits by the Company.
- Calima Energy Limited’s stock price stood at AUD 0.083 per share as of October 20th, 2023 with an average 52-week range of AUD 0.082 to AUD 0.150.
- As of October 20th, 2023, the Company’s market capitalisation is AUD 51.93 million.
- The Company has 625.72 million shares on issue as of October 20th, 2023.
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