Calima Energy Ltd (ASX:CE1) (FRA:R1Y) is “extremely pleased” with flow rates from three horizontal Sunburst Formation operations performed by subsidiary Blackspur Oil Corp at the core Brooks area in Canada which have exceeded type curve estimates by 28%.
As well as the combined IP30 flow rates of 505 boe/d (80% oil-weighted) in March exceeding the budgeted 393 boe/d for the three wells, capital expenditure was also 20% under budget at C$2.2 million.
These flow rates demonstrate the top tier economics of open hole Sunburst wells.
Improving operational performance
Calima CEO and president Jordan Kevol said: “We are extremely pleased with the results from the most recent three Sunburst wells at our Brooks core area here in Canada.
"Our goal is to exceed our existing type curve averages and to continue to improve operational performance.
"We have done that with this well program. 505 boe/d on C$2.2 million of capital deployed is an excellent result.”
Production increases
Current production is approximately 2,818 boe/d (69% oil), an increase of 14% from Blackspur’s quarter one 2021 production of approximately 2,475 boe/d (68% oil).
For 2021, Calima forecasts 3,000 boe/d average production and a December 2021 exit rate of 3,400 boe/d, delivering approximately C$18 million of adjusted2 EBITDA for the 8 months ending 31 December 2021.
Type Curve Economics
Providing encouragement are the Type Curve Economics for Sunburst conventional wells of US$60 WTI with:
- Payback expected in less than six months;
- Estimated Ultimate Recovery of Sunburst wells is ~218,000 boe (77% Liquids);
- Net back (1st year) C$34.04 boe; and
- Before tax IRR >500%.
These results provide momentum for Calima which this week resumed trading on the ASX as a conventional oil and gas producer.
The company is confident that this will continue after completing the acquisition of Blackspur as well as a strongly supported capital raising which raised A$37.9 and now the flow rate results.
Blackspur is now a wholly-owned subsidiary of Calima, acquired on April 30, 2021.
Active drilling program
Over the coming months, Calima plans an active, low-risk drilling program developing proven reserves.
A total of six Brooks and Thorsby development wells will commence in late May 2021.
Kevol said: "We are optimistic that the results will continue to improve with time, as the most recent well to come on production is still cleaning up and has the potential for increased production.
"We look forward to resuming drilling operations in the coming weeks and are excited about the potential to accelerate our 2021 well programs.”
By drilling multiple wells, the company will benefit in strong economies of scale.
Drilling will be funded with operating revenue (currently C$4 million per month) and the working capital facility provided by National Bank of Canada.
The drilling program for the next three months is:
- Three Brooks (Sunburst) wells commencing late-May 2021; and
- Three Thorsby (Sparky) wells commencing mid-July 2021.
Over the coming weeks, should energy prices remain strong, the company will consider acceleration of its 2021/22 drilling campaign so long as it can be done in a financially prudent manner.