Published On: November 24th, 2023
Calima Energy Limited (ASX: CE1 / OTCQB: CLMEF) (“Calima” or the “Company”) is a Western Australia-based oil and gas producer and explorer company with operations in both Canada and Australia. A recent announcement by the Company outlines a strategic move to address challenges in retaining and attracting team members in today’s competitive job market, exacerbated by widespread staff shortages. To align stakeholders’ interests and enhance employee retention, Chairman Mr Glenn Whiddon and the team plan to issue performance shares to its entire team, encompassing permanent contractors, field staff, office staff, management, and directors.
Key Pointers in the Announcement
Performance Shares to Align Stakeholder Interests:
The Company intends to issue performance shares to Chairman Glenn Whiddon and all team members, spanning permanent contractors, field staff, office staff, management, and directors. This move aims to align the stakeholders’ interests and fortify the workforce’s commitment.
Cost Optimisation and Staffing Efficiencies:
In the past 12 months, Calima Energy has successfully reduced overall cash staff costs by 23% through strategic consolidation and reorganisation of responsibilities within the Company. This cost-optimisation effort sets the stage for increased operational efficiency.
Strategic Utilisation of Performance Rights for Employee Alignment and Retention:
In its latest Annual General Meeting (AGM), Calima Energy affirmed its commitment to using medium-dated performance rights as a critical mechanism for aligning the interests of employees and consultants with those of stakeholders. Notably, 7.7 million Performance Class D securities are set to expire (not vested) in December 2023. As a strategic response, the Board has resolved to issue a total of 11,680,000 Performance Rights of Class G. Out of this, 7,230,000 Performance Rights will be issued immediately, demonstrating the Company’s dedication to immediate action. The remaining balance of 4,450,000 Performance Rights is contingent upon shareholder approval.
Figure 1: The breakdown of Class G Performance Rights allottees
Managing Uncertainty Strategic Response to Asset Purchase Offers:
In a significant development, as disclosed in the ASX announcement on June 26th, 2023, and reiterated in the Company’s Half-Year Report released on September 13th, 2023, Calima Energy Limited has encountered a pivotal situation. The Company has received three unsolicited non-binding offers to purchase specific assets in the Brooks and Thorsby areas. Additionally, there is an anticipation of future proposals for these assets.
Navigating Uncertainty and Ensuring Team Stability:
This influx of offers has created substantial doubt and uncertainty within the Company’s team. Recognising the potential impact on employee morale and the work environment, Calima Energy Limited’s Chairman, Mr Glenn Whiddon and the Board have strategically decided to issue Class G Performance Rights. The Board believes issuing these performance rights is appropriate and essential in ensuring critical personnel retention and maintaining a positive work atmosphere during this uncertain period.
Terms of the Performance Rights Class G (PFG):
The Performance Rights Class G (PFG) terms reveal a structured vesting schedule, with 50% time vesting after 12 months and the remaining 50% after 24 months of continuous service from December 1st, 2023. These rights expire 3 years from the issue date. An acceleration clause triggers immediate vesting upon a change of control or the sale of Brooks or Thorsby Assets, provided the sales values exceed AUD 80 million. This arrangement aims to incentivise employee retention while aligning with potential significant corporate events.
Figure 2: Currently issued securities of Calima Energy Limited
About Calima Energy and Its Projects
Calima Energy is a thriving Western Australian Oil and Gas Producer, having undergone a transformative merger with Blackspur Oil in 2021. Calima, now positioned as a high-margin producer linked to WTI pricing, concentrates on growth driven by returns and has premium assets in Alberta’s Brooks and Thorsby regions. These de-risked assets, with their extensive 3D seismic, booked reserves, and existing wells, provide the basis for a low-cost, cash-flowing business.
About Brooks Project
Calima Energy’s Brooks Project encompasses a core land position exceeding 69,000 acres, targeting Sunburst and Glauconitic formations. With 75+ wells producing over 2,600 boe/d, the Sunburst Formation’s cost-effective development (CAD 1.4 million per well) yields attractive returns without hydraulic fracture stimulation. The Brooks area, featuring low CO2 content and year-round access, boasts substantial infrastructure supporting growth, including Blackspur’s capacity to process 8,200 bbl/d oil and more. It boasts an impressive reserve base, with 8 million barrels of 1P (Proven) reserves and 10 million barrels of 2P (Proven and Probable) reserves.
Figure 3: Location of Calima Energy Limited Brooks Project
About Thorsby Project
Calima Energy’s Thorsby Project boasts a significant land position exceeding 62,800 acres, primarily targeting the Sparky Formation. With 14 wells producing over 1,100 boe/d and a substantial well inventory, Thorsby uses efficient development through multi-well pads, benefitting from year-round access and lower operating costs. The Sparky Formation’s wells exhibit a low average base decline rate of 22% over 2 years. It boasts an impressive reserve base, with 7.6 million barrels of 1P (Proven) reserves and 10.4 million barrels of 2P (Proven and Probable) reserves. 
Figure 4: Location of Calima Energy Limited Thorsby Project
About Calima Energy’s Chairman, Mr Glenn Whiddon
Mr. Glenn Whiddon, Chairman of Calima Energy Limited, has a strong background in finance and corporate strategy, especially in the natural resources sector. His current responsibilities include serving as a director of various public companies in the resources sector in Australia and abroad. Previously, he served as the executive chairman, CEO, and president of Grove Energy Limited, an oil and gas exploration and development company, which was acquired for CAD 150 million in 2007, marking a remarkable increase from less than CAD 5 million in 2002.
Investor’s Outlook
- Calima Energy’s strategic issuance of performance shares and cost reductions demonstrate a commitment to aligning team interests with stakeholders, enhancing workforce stability
- Calima Energy Limited is committed to using medium-dated performance rights to connect its workforce with stakeholders’ interests. This proactive approach fosters investor confidence in the Company’s resilience and strategic management amid asset sale uncertainties
- As of November 21st, 2023, Calima Energy’s share price stood at AUD 0.083 per share, with a 52-week average range of AUD 0.080 to AUD 0.150
- As of November 21st, 2023, Calima Energy Limited’s market capitalisation is AUD 51.934 million
- The Company has 625.72 million shares on issue as of November 21st, 2023
For more information, visit the official website of the Company.
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