Record revenue marks Calima Energy’s (ASX:CE1) June quarter

Highlights

• Calima Energy registered a revenue of over AU$37 million and a free cash flow of AU$3.7 million during the June quarter.
• The quarter saw an average daily production of 3,839 boe/d.
• CE1 announced a dividend distribution of AU$2.5 million.

Canada-focused oil & gas company Calima Energy Limited (ASX:CE1|OTCQB:CLMEF) has reported a successful and strongly profitable quarter for the period ended 30 June 2022. The company clocked its highest-ever quarterly revenue during the reported period. The revenue stood at around AU$37 million, up 20% quarter-on-quarter. The adjusted EBTDA was up 26.5%.

The company produced 349,403 boe from its assets in the Brooks and Thorsby area of the Alberta region in Canada.

The average daily production was 3,839 boe/d, slightly lower than the expected 4,100boe/d, owing to factors like unfriendly weather and well intervention jobs on Leo#1 and #2 in the Thorsby area.

Image source: CE1 update, 28 July 2022

Exploration & Development activities

Under the ongoing drilling program, Calima drilled four wells in the Brooks region during the quarter and carried out a testing program on one of the wells drilled in the Thorsby area in July.

In Brooks, two wells - Gemini #8 and #9 were drilled to target the Sunburst formation while the other two- Pisces #4 and #5 were drilled to target the Glauconitic formation.

Gemini#8 and #9 are currently producing an average of 185boe/d. The wells entailed a cost of around C$3.2 million for drilling and completion, and the payout period is expected to be around 12 months.

Pisces #4 and #5, which are being fracture stimulated, are expected to join the production stream by mid-August this year.

The Leo #4 well drilled on the Sparky formation in Thorsby in January 2022 is currently undergoing production testing and will be soon put into production.

Enhance oil recovery program on Sunburst formation

To maintain the pressure of formation and increase production from depleting wells, Calima is undertaking a water injection operation, a secondary enhanced oil recovery (EOR) method. In this method, abandoned wells or new wells are drilled in a pattern around a producing well and water is pumped down to the formation.

As pressure in the formation increases due to continuous water pumping, it exerts pressure on hydrocarbon, resting the formation towards the producing well. As a result, production increases.

Calima mentioned that the third-party reservoir modelling data suggests that water injection could increase the production 2-3 folds over a period of 24-36 months of EOR. Field trials by Calima have shown that the output increased by 55boe/d to 210boe/d.    

Unlocking value at large‐scale gas Montney resource play

Calima is in discussions with various parties in Canada, Australia and the UK for farm-in, JVs or outright sales of the Montney asset. The company has been garnering interest from third parties amid soaring natural gas prices.

Dividend distribution due in September

Calima has introduced a half-yearly return policy for shareholders. The company is set to distribute AU$2.5 million by the end of September 2022. The shareholders will receive a return of ~5% on an annual basis under the scheme.

Also, during the quarter, CE1 commenced the buyback of shares. As of 28 July 2022, the company has bought back over 4.5 million shares @ AU$0.1679.

The company received approval for a revolving credit facility of AU$28.7 million from the National Bank of Canada after its semi-annual review. The credit facility will provide exposure to funds at a low rate of approximately 4%.

CE1 shares were trading at AU$0.145 midday on 1 August 2022, up more than 7% from the last close.