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Calima Energy (ASX:CE1): O&G producer with high-return assets in Western Canada

Summary

  • Calima Energy is a conventional oil & gas producer with high-quality assets in Western Canada.
  • The Company operates oil & gas assets with strong economics and robust rates of return.
  • With crude oil over US$60/bbl, Calima enjoys high operating profit as the breakeven price is US$26/bbl.
  • The Montney lease of the Company holds a significant volume of gas and provides a unique opportunity in the global LNG market.
  • Calima holds a 2P reserve of 22.5MMboe and has estimated an average production of 5,000boe/d in 2022.

Canada-focused conventional oil & gas producer Calima Energy Limited (ASX:CE1) is making major strides at its recently acquired Blackspur assets in the Brooks and Thorsby areas.

The Company has successfully completed a four-hole drilling campaign on the Sunburst formation in the Brooks area. All the four wells were horizontally drilled open holes and do not require additional hydraulic fracturing jobs to commence production.

Latest update: Calima Energy (ASX:CE1) concludes drilling of Gemini #4 well, what’s next?

Outlook for 2021-22

Calima recently provided guidance for production and cash flow through the year 2022. The average production for the period from May to December 2021 is forecast to be around 3,700boe/d with exit production pegged at ~4,500boe/d.

The company expects the four Sunburst wells to bolster the production. Additional drilling campaigns are planned on the Thorsby asset, in what might give further boost to the Company’s production.

Calima has estimated capital expenditure (CAPEX) of C$20 million for the May-December period. For the year 2022, the Company has set aside a CAPEX of C$33 million. This increase in CAPEX is expected to go into additional drilling and development works on other assets of the Company.

Read here: Calima Energy (ASX:CE1) lifts guidance on stellar May operational figures

Oil & Gas Assets of Calima Energy

The oil & gas leases in the Brooks and Thorsby areas represent the cash flowing asset base of the Company with long-term upside. The Brooks asset produces nearly 2,050boe/d, while 850boe/d comes from the Thorsby area.

The Brooks asset has a large resource in place with multiple oil pools identified and developed. The Company has identified 147 net locations in the area.

Of the four wells drilled, three tied to the production system are performing on the basis of their type curves. Production from the fourth one is anticipated by the end of this month.

Recent update: Calima Energy (ASX:CE1) shares soar 12.5% on Brooks Sunburst drilling update

The Thorsby area has the Sparky and Nisku formations with multiple hydrocarbon pools. In the area, a total of 11 wells have been drilled to date. Calima is all set to drill three development wells in the area with a possibility to add three more to the campaign.

The Montney play holds potential for light oil, liquids-rich natural gas and dry gas. Calima holds 100% interest in more than 60,000 acres of Montney drilling rights for 10 years. The Company owns Tommy Lake facilities and pipelines infrastructure in the region. 

The existing pipeline has a capacity of >11,000boe/d, which can be ramped up quickly. The Company has approvals to develop and operate a multi-well production facility. Permits are in place to connect well-pads with regional pipeline and processing infrastructure.

Calima eyeing returns-focused growth for shareholders

Copyright © 2021 Kalkine Media Data source: Company update, 21 July 2021

To know more, read: Three Catalysts Enhancing Calima Energy's (ASX:CE1) Upside Potential

ESG excellence demonstrated by Calima

Calima’s strong commitment to Environmental, Social, and (Corporate) Governance is reflected  by the following features:

  • Since the horizontal wells on Brooks do not require hydraulic fracturing, it saves a lot of water and eliminates the chance of groundwater pollution.
  • Brooks and Thorsby have low CO2 levels of 2% and 0%, respectively, in the reservoir.
  • Montney gas is claimed to support the lowest CO2 emission per tonne of LNG produced than anywhere in the world.
  • The Company provides a safe work environment and has continued to target zero lost time injury.
  • Calima has key risk management practices in place, governing hedging and financial controls.

Future development opportunity

Copyright © 2021 Kalkine Media (Data source: Company update, 21 July 2021)

Shares of CE1 were trading at AU$0.009 on 23 July 2021 (AEST 11:08 AM). The Company has a market cap of AU$102.74 million.

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