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Summary
- The year 2020 has been a transformational year so far for Calima Energy.
- Calima attained two significant milestones during the year, including the acquisition of Tommy Lakes Infrastructure and resource upgrade at the Calima Lands.
- The Company now intends to prepare Montney acreage for future development and explore new ventures in 2020.
- 2020 achievements place Calima in good stead to attain its operational objectives in the months ahead.
While the year 2020 has been a dreadful one for most of the Australian businesses reeling from the virus crisis, it has been a transformational year so far for Calima Energy Limited (ASX:CE1).
Calima is an Australian oil & gas entity, which has set up its material spot in Canada’s tier-one petroleum province and the most active oil & gas play, the Montney Formation. The Company holds 61,700 acres of production and drilling rights in the Montney Formation, which contends well with the best of the US resource plays. The Company’s flagship asset is the development ready project, Calima Lands, located in the Montney Formation.
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In 2020, Calima made substantial progress towards its objective of bringing the Calima Lands into the production stage. In line with this aim, the Company attained two significant milestones during the year, including the acquisition of Tommy Lakes Infrastructure and resource upgrade at the Calima Lands.
With that said, let us quickly shed some light on each of these two imperative achievements of Calima in 2020:
Tommy Lakes Acquisition – A Major Breakthrough
Calima concluded the acquisition of Tommy Lakes Infrastructure in 1H 2020, which provided it with cost-effective access to the NorthRiver Midstream pipeline and Jedney processing facility. The Company successfully acquired compression facilities, associated pipelines and infrastructure (the Facilities) in the Tommy Lakes Field, which lie immediately to the north of the Calima Lands.
The acquired compression, processing and associated pipelines are capable of transporting up to 50 Mmcf/d of gas and 2,500 bbls/d of well-head condensate to NorthRiver’s Jedney processing facility. Besides, the Tommy Lakes Facilities provided Calima with the ability to access regional, national and the US markets via the major pipeline networks such as NGTL, Alliance and T-North.
Resource Upgrade at Calima Lands – A Notable Achievement
The acquisition of Tommy Lakes Infrastructure paved the way for resource upgrade at the Calima Lands to Development Pending classification.
In July 2020, the Company announced that 12.4 million barrels of light oil and natural gas liquids and 248.9 billion cubic feet of gas of its Contingent Resources have been upgraded to Development Pending. McDaniel & Associates evaluated crude oil, natural gas and natural gas products prospective resources of the Calima Lands according to 2018 PRMS standards, and provided the following estimates:
Notably, all the upgraded Contingent Resources lie within the acreage recently secured by Calima under a 10-year Continuation Lease.
Following the resource upgrade, the Company regards a significant portion of its Montney acreage as being development ready, subject only to securing the necessary funding to construct a tie-in pipeline. The Company informed that these resources would be categorised as 2P Reserves upon securing funding.
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What Lies Ahead for 2020?
So far, Calima seems to have successfully executed its overarching strategy, which is targeted at creating shareholders value through:
In line with this strategy, the Company has framed two operational objectives for the year 2020, as stated below:
- Prepare Montney Acreage for Future Development
Calima intends to manage Montney and Tommy Lakes assets within a strict budget while ensuring the preservation of assets for future production. The Company believes that Tommy Infrastructure will reduce capital costs, bringing the Calima lands on-stream sooner.
- Explore New Ventures
Calima has planned to engage with Canadian E&P producers to maximise shareholder value via third party investments, joint ventures, partnerships, and/or corporate transactions with Calima Lands & Tommy Lakes. The Company also intends to capitalise on opportunities for corporate activity, as Canadian energy companies struggle in the post COVID environment.
Additionally, the Company has decided to pursue opportunities to add reserves capable of delivering profitable positive EBITDA production as markets adjust.
Undeniably, Calima has walked through a spectacular journey in 2020 despite COVID-19-driven implications, strengthening its position in the Montney Formation. Moreover, the Company’s 2020 achievements place it in good stead to attain its operational objectives in the months ahead.
Stock Performance – On 28 August 2020, CE1 stock zoomed up by 28.571% to settle the day’s trade at $0.009. The stock has delivered a return of 75% in the last one-month period.
