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Calima Energy Limited (ASX: CE1) is into operations related to oil and gas. CE1 functions in the exploration and production of petroleum products. Calima Energy invests in oil and gas projects internationally. It is a globally renowned company, having more than 72,000 acres of drilling rights in the region of British Columbia and the most active one in the oil and gas region in Canada.
The company today, on 29 March 2019, gave an update on production testing results for the Calima-2 and Calima-3 wells after the first drilling campaign ended on its 72,014-acre asset position in NE British Columbia, Canada. This campaign has developed and confirmed a significant extension of the liquids-rich Montney fairway.
The continued production testing at Calima-2 has resulted in a further increase in the rate of liquid recovery. The well achieved a condensate-gas-ratio (CGR) of 20.06 bbl/mmcf with a peak hourly value of 22.15 bbl/mmcf through a choke size of 38.1mm during the final eight hours of the production testing.
The measured condensate-gas-ratio continued to increase until testing operations were ceased. The company is in anticipation that further enhancement to liquids ratios is possible once both wells start production and the water injected during stimulation operations is recovered.
Several Montney operators have observed substantial improvements, both in total production rates and CGRs, by allowing the wells to sit for a period of typically 6 to 9 months prior to being brought on to production, which is also referred as soak time.
The Calima-3 well testing has performed as expected, until the arrival of an unseasonal early spring melt, which reduced the testing operations requiring a full decommissioning of the drill site over a short period of time.
The rates of Calima-3 test of the Upper Montney remained consistent with the early Calima-2 test rates and encouragingly were reached within a shorter time frame. The management is confident that with additional testing time, Calima-3 would have achieved similar maximum flow rates to Calima-2 as well, as confirmed by preliminary core and log data analysis, which indicates the productive potential of both wells. Moreover, the company will come up with further information over the next 14 days regarding its further analysis of core and log data.
Early stage drilling is executed during the winters when frozen ground allows the movement of heavy equipment on undeveloped access tracks. This is a common practice in many areas in the Montney. This involves the use of snow bridges over creeks. When the frozen ground begins to melt in the spring, it is no longer possible to move heavy equipment, resulting in a halt in the drilling operations. In the future, as development progresses, all-weather roads can be constructed, which allow year-round operations.
The company has earned the right to convert ~35,000 acres of drilling licences to ten-year production leases, through the cumulative drilling of 9,353 meters over the campaign.
On the price-performance front, the stock of Calima Energy Limited was trading at $0.047, a decrease of 6% during the dayâs trade, with a market capitalisation of $72.24 million (At market close on 29 March 2019). The stock has generated a YTD return of 6.38% and generated returns of -10.71%, 16.28% and 13.64% over the past six months, three months and one-month period, respectively. Its 52-week high price stands at $0.067, and 52-week low price stands at $0.039, with an average trading volume of 1,184,322.
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