Published On: August 27th, 2023
Calima Energy Limited (ASX: CE1 / OTCQB: CLMEF) (“Calima” or the “Company”) has successfully sold its Montney Assets for C$10 million (equal to AUD 11.4 million). The sale includes 33,643 net acres of Montney licences/acreage and the Tommy Lakes facilities.
The transaction was finalised, and Calima received all the payments from the buyer, a Canadian Montney natural gas producer, Advantage Energy Ltd. After making necessary adjustments and returning an operating bond, the total expected proceeds from this sale are estimated to be AUD 11.8 million.
Commenting on the Asset Sale, Karl DeMong, President and CEO of Calima, commented, “For some time the Company’s share price has not reflected the value of the Montney Assets. While these assets presented significant future value, the substantial cost of maintaining the existing facilities, building new infrastructure, volatile gas price in NEBC and limited hedging opportunities, has made it very challenging for a small junior to finance the development without substantial equity/project dilution. The disposal of the Montney Assets will result in savings of approximately A$1 million pa, and allow our resources to be directed and focused on the Brooks and Thorsby production assets and other ventures requiring appropriate capital allocation for an emerging oil and gas company. Calima had successfully opened an exciting new play fairway in the Montney. Making the decision to sell was challenging but we feel shareholders will be better rewarded from focus on continued emphasis to build profitability.”
Challenges in the NEBC Gas Market
Despite a temporary spike in Canadian gas prices, reaching above C$2.90/GJ in 2022, the North-East British Columbia (NEBC) gas market struggles with subdued prices. This situation has hindered the financing and equity potential for Calima’s Montney Assets. A substantial minimum investment of C$50 – C$100 million would be required to achieve satisfactory returns from these assets. Calima, hence, decided to sell these assets. The company believes this move will be in the best interest of its stakeholders.
Shareholder Reward and Capital Return
Calima Energy (ASX: CE1) has outlined plans to increase the September capital return to AUD 7.5 million (~1.2 c per share) to reward shareholders. The capital return proposal is subject to shareholder approval, scheduled for September 2023.
Additionally, the company has declared a shareholder payout of $3 million scheduled for September 2023 and is committed to providing consistent future distributions to shareholders.
Calima (ASX: CE1) ensures production stability at its Brooks and Thorsby assets in Alberta. For 2023, the company anticipates producing around 4,000 barrels of oil equivalent per day (boe/day). This will be accompanied by a reduced capital expenditure budget, projected to enhance overall profitability. The profitability will also see enhancement due to the cost savings resulting from the Montney Assets sale.
Though operational challenges like above-seasonal temperatures and power interruptions linked to electrical storms have decreased runtime and extra costs, returning to seasonal temperatures is expected to restore reliability and operational efficiency. Additionally, the forthcoming 3-well Pisces program will be pivotal in maintaining the company’s corporate production at the targeted 4,000 boe/day.
Calima Energy Chairman Glenn Whiddon
Mr. Glenn Whiddon, Chairman of Calima Energy Limited, has a rich background in equity capital markets, banking, and corporate advisory, focusing on the natural resources sector. Holding a degree in Economics, Mr. Glenn Whiddon has extensive experience in corporate leadership and management roles.
Presently, Mr. Glenn Whiddon holds Director positions in numerous publicly listed Australian and international companies operating within the resources sector.
Formerly, Mr. Glenn Whiddon served as the Executive Chairman, Chief Executive Officer, and President of Grove Energy Limited. This company was involved in oil and gas exploration and development across European and Mediterranean regions, spanning Italy, Romania, Slovenia, Tunisia, and the UK and Dutch North Seas. Under his guidance, Grove Energy underwent a significant transformation.
Investor’s Outlook and Financials
- The successful sale and the projected financial outcomes could uphold confidence in Calima Energy, reflecting its capability to manage and monetise its assets effectively.
- In 2021, Calima Energy (ASX: CE1) underwent a significant merger with Blackspur Oil, transforming it into a profitable oil and gas producer. This transformation positioned the company advantageously, capitalising on WTI pricing and benefiting from its strategic interests in the Montney Formation. Additionally, Calima stands to gain from the increasing natural gas prices.
- Calima Energy’s share price stands at AUD 0.084 per share as of 25th August 2023, with a 52-week range movement of AUD 0.083 – 0.150 per share.
- The Company’s market capitalisation is AUD 52.6 million as of 25 August 2023.
- Calima Energy has 626 million shares in issue as of date.
About Calima Energy
Calima Energy Limited (ASX: CE1) is a Canadian Oil and Gas Producer and Explorer with a strong emphasis on free cash flow and growth. With its headquarters in Perth, Australia, Calima Energy projects are located in Brooks and Thorsby within Alberta’s southern and central regions.
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