Calima’s Contingent Resources Elevated to Development Pending Status Post Resource Upgrade

Summary

• Calima has attained a significant milestone with a resource upgrade at Calima Lands asset in British Columbia, Canada.
• The Company’s Contingent Resources have been elevated to the Development Pending category, that would be categorised as 2P Reserves upon securing funding.
• Best estimate gross un-risked Contingent Resources – Development Pending is 248.9 Bcfg and 12.4 Mmbo, while total best estimate of gross un-risked Prospective Resources (2U) is 1.68 Tcfg and 84 Mmbo.

Australia-based oil & gas company, Calima Energy Limited (ASX:CE1) has attained a significant milestone with a resource upgrade at Calima Lands asset in British Columbia, Canada.

The Company has announced that 248.9 billion cubic feet of gas (Bcfg) and 12.4 million barrels of light oil (Mmbo) and natural gas liquids of its Contingent Resources have been upgraded to the Development Pending category following the acquisition of Tommy Lakes Facilities. The resource upgrade is the outcome of an updated independent resource assessment undertaken by McDaniel & Associates.

McDaniel’s Best Estimates of total un-risked contingent resources within the Calima Lands are summarised in the below table:

Following the resource upgrade, the Company considers a substantial portion of its Montney acreage as being development ready, which is subject to securing the necessary funding to build a tie-in pipeline. The Company mentioned that these Development Pending resources could be classified as 2P reserves as per reporting standards, once it secures funding.

It is imperative to note that these Resources lie within the acreage that the Company lately obtained under a continuation lease for a 10-year period.

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McDaniel 2020 Resource Estimate

McDaniel assessed natural gas, crude oil and natural gas products prospective resources of the Calima Lands in line with 2018 PRMS (Petroleum Resources Management System) standards.

While McDaniel’s 2019 resource assessment contained only Contingent Development on Hold (2C) and Prospective (2U) resources, the latest resource estimate comprises both Best Estimate Contingent Development on Hold and Development Pending (2C) and Prospective (2U) resources. The below table demonstrates the comparison between 2019 and 2020 resource estimates:

As indicated in the above table, the best estimate gross un-risked Contingent Resources (2C) Development Pending and Development on Hold is 888.1 Bcfg and 44.4 Mmbo; however, the total best estimate of gross un-risked Prospective Resources (2U) stands at 1.68 Tcfg and 84 Mmbo.

Besides, EUR (Estimated Ultimate Recovery) has been evaluated at 8.4 billion cubic feet per well, yielding ~50 barrels per million cubic feet of gas.

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Classification of Resources

The Contingent Resources (2C) in Tommy Lakes have been sub-classified as “Development on Hold” and “Development Pending” on the following basis:

• Development on Hold - Accumulation is well defined and does signify a viable drilling target
• Development Pending – Acquisition of Tommy Lakes facilities offers Calima with processing capacity and access to the NorthRiver Jedney pipelines and facilities to get product to the market

The drilling target is further validated by the high level of Montney development in the area by offsetting producers. For the Montney Upper and Middle zones, a 70 per cent chance of development has been assigned to the Development on Hold Resources while a 90 per cent chance of development has been earmarked to the Development Pending Resources, as Calima is in relatively early stages of development at this point.

On the other hand, the Prospective Resources (2U) in Tommy Lakes have been sub-classified as a “Prospect” as accumulation is well defined and does represent a feasible drilling target. This sub-classification is further verified by the high level of Montney development in the area by offsetting producers.

For the Montney Upper, Middle and Lower zones, a 90 per cent chance of discovery factor and a 70 per cent chance of development have been assigned, as Calima is in relatively early stages of development at this point. The chance of discovery in an unconventional resource such as the Montney is connected with the possibility that commercially viable concentrations of hydrocarbon exist within a given region, and not necessarily whether hydrocarbons of any concentration will be discovered.

Management Commentary

CE1 last traded at $0.004 on 14^th July 2020.

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