Management Shift to Canada - Calima Energy's Strategic Forward Plan towards Commercialisation

Western Australia-based international oil & gas (O&G) company, Calima Energy Limited (ASX: CE1), on 23 March 2020, announced shift of the management to Canada. The move signifies growth, development and evolution of CE1 from an explorer towards being an operating company, according to Chairman Glenn Whiddon.

CE1 with Ready-For-Development Project

Calima Energy owns and operates drilling and production rights for 63,103 acres in British Columbia's Montney Formation.

During last year (2019), CE1 drilled three successful wells, which led to a maiden contingent resource of 196.1 Mmboe and a best estimate gross-unrisked prospective resources of 497.3 Mmboe. The Company also recently in February 2020 announced to have strategically secured Tommy Lakes Infrastructure, giving access to processing facilities and a range of North American markets for its gas and light oil (condensate) future products.

With this, Calima Lands, the Company’s key asset in Montney Formation, is now considered as a ready-for-development project, with all permits and approvals in place, allowing production to commence six months from Final Investment Decision (FID), which is subject to securing funds, either through JV, partnership and/or corporate transaction.

Management Shift – To Strengthen Balance Sheet, Preserve Flexibility and Slashing Overhead Cost

As of now, the Company is perfectly placed to sustain its business operation via a volatile commodity price environment with no debt and committed development expenditures. Calima Energy has a A$4.15 million working capital, as of 28 February 2020, that includes a Canadian GST receivable of A$1.3 million currently awaiting refund and excludes the Tommy Lakes Facilities acquisition closing costs of ~A$825,000 due in Q2 2020.

The Company has announced a shift of management to Canada with other key changes, including conversion of director and executive fees to shares to return maximum shareholder value and securing fund for the Calima Lands’ commercialisation.

Key initiatives undertaken are -

• Mr Micheal Dobovich, based in Calgary, will assume the role of President (currently Country Manager). He was previously a senior executive with Statoil Canada. He will be the Company's only full-time executive.
• Dr Alan Stein, presently Managing Director of the Company, will move to a Non-Executive role. Also, it is worth mentioning that Dr Stein, along with the Havoc team, was responsible for the original Montney acquisition strategy and the success in delivering a maiden contingent resource.
• Whereas, Mr Mark Freeman, Chief Financial Officer, will take up additional responsibility of Company Secretary in Perth, Western Australia.

In the milieu of the Board and management commitment towards the Company's future, a diligent control over costs is planned in future. For the same, all the Directors have agreed to convert their director and executive fees to shares, a quintessential step in rendering confidence among the investors.

Appointment of Mr Chase Edgelow in Advisory Capacity

After all the permits, approval and cost reduction strategy in place, along with the shift of management to Canada, the next steps are focused on securing funds for FDP and thus the development of Calima Lands. For which, the Company has appointed Mr Chase Edgelow to join Mr Ed Mason (ex-Royal Bank of Canada, Sydney), in an advisory capacity and pursue the strategic corporate opportunity.

Significance of Mr Chase Edgelow

Mr Edgelow has over 14 years of experience in the international energy and investment banking sectors. In his last organisation, i.e. Macquarie Bank, he spent around 11 years at senior client advisory and principal investing roles in both Calgary (Canada) and Sydney (Australia). It is also pertinent to mention that Mr Edgelow was also part of the successful acquisition of Apache's Western Australian portfolio, including the Dorado field, which was later disposed to Santos Ltd (ASX:STO).

Mergers & Acquisitions (M&A) in Montney Formation in February 2020

Consolidation of the Montney acreage is a quintessential and logical step towards the expected LNG feedstock demand in Canada vis-à-vis expanding pipeline capacity.

Canada's largest natural gas producer Tourmaline Oil Corp, during late-February 2020, announced the acquisition of Chinook Energy (TSX:CKE), Polar Star Canadian Oil and ~17 sections (75% working interest) or 8,460 net acres in the North Montney for a total consideration of C$82 million.

Interestingly, the acquired asset lies south-east (Polar Star acreage) and further south (Chinook acreage) of Calima Lands. This gives an immense sense of positivity for securing funds for Calima Lands, either through M&A or partnership via JV or project finance by investors for the project commercialisation.

Stock Information - CE1 stock last traded at A$0.003 on 23 March 2020. The Company has a market capitalisation of A$6.47 million.

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