- Calima Energy Limited (ASX:CE1) has decided to merge with Blackspur Oil Corp, which owns low-cost oil-producing assets within Alberta.
- With the acquisition of Blackspur’s assets, Calima intends to increase exposure to growing oil prices and recurring cash flow stream.
- Calima has recently received shareholders’ approval for the Blackspur acquisition transaction.
Oil and gas entity Calima Energy Limited (ASX:CE1) has been garnering significant attention since the Company announced a transformational merger with Blackspur Oil Corp. in February 2021. The Company is looking forward to acquiring a 100 per cent interest in Blackspur, which is a conventional oil & gas producer based in Alberta, Canada.
The acquisition will provide the Company with a high-grade portfolio of Canadian oil & gas projects, adding Blackspur’s low-cost oil-producing assets to its existing assets - Tommy Lakes and Calima Lands. With the acquisition of Blackspur’s assets, Calima intends to increase exposure to growing oil prices and recurring cash flow stream.
In this article, we will introduce our readers to the firm Calima has chosen to merge with, i.e., Blackspur, and its high-quality assets.
Blackspur is a privately held Canadian entity, which owns two core production areas in Southern Alberta - Thorsby and Brooks. Over the past eight years, the Blackspur team has assembled as well as de-risked its assets via a combination of drilling and acquisitions.
Since its formation in 2012, Blackspur has drilled 59 oil wells on its asset base. The firm reached peak production of more than 5,000 boe/d in Q3 2018. The Brooks asset produced about 1,860 boe/d in Q4 2020, while Thorsby produced around 740 boe/d.
Blackspur has established a core position of land in Brooks, with about 83 net sections across 53,093 net acres in total. Over the years, the firm has identified, delineated, and developed multiple oil pools in Brooks, with 48 wells drilled to date.
The Brooks production stems from the Glauconitic Formation and Sunburst Formation. The Sunburst Formation can be advanced at a low cost of less than CAD 1 million per well, delivering economic rates of return.
Blackspur has set up a significant infrastructure in Brooks that provides the foundation for growth in an area with significant room for expansion. Here, the lands have year-round access and are proximal to oilfield services. Also, the established infrastructure footprint facilitates sizeable production growth. Interestingly, the existing infrastructure can process up to 7,000 bbl/d oil.
The future growth from this asset will emerge from the 147 net locations that have already been discovered. Additional reserves are also likely to be realized via the implementation of enhanced oil recovery projects.
With a consolidated land base of about 108 net sections on 63,946 net acres, Thorsby presents an opportunity to efficiently develop the resource with multi-well pads while reducing overall capital costs. Blackspur has drilled a total of 11 Thorsby wells so far.
In terms of infrastructure, the Thorsby asset is development ready and can be scaled up quickly with the use of existing pads and facilities. Some Thorsby wells have also demonstrated significant type curve outperformance in the Sparky Formation. The Thorsby asset has year-round access, and its current infrastructure has an oil processing capacity of 3,000 bbl/d oil.
The future growth of this asset is expected to come from 12 Nisku Formation and 89 Sparky Formation wells, which have already been identified. Furthermore, upside exists in sixty-six net sections of Duvernay Formation lands incorporated in the merger.
Calima’s strategy is to complete the merger with Blackspur and grow production from the Brooks and Thorsby assets to over 5,500 boe/d by December 2022. The Blackspur acquisition transaction is expected to complete in late April 2021, with shareholders’ approval already received in Calima’s recent General Meeting.
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