Calima Energy Ltd (ASX:CE1)’s preliminary 2022 plan outlook looks bright.
The company expects that due to the current strength of the energy markets (WTI US$82/bbl; WCS differential of US$14.50/bbl and AECO gas price of C$4.80/gj), its Brooks and Thorsby assets in Canada will generate significant free cash flow and the opportunity to return capital to shareholders.
It will also provide sufficient funds to grow the business organically from its reserve base and well inventory or via strategic acquisitions complementary to existing operations.
The Canadian oil and gas producer and explorer recently developed its Leo Sparky Wells contingent of the Throsby development field, ready for this next stage of fracture stimulation with initial production expected in November 2021.
Read: Calima Energy begins Throsby Leo frac program, three high-flow wells to be developed
The 2022 plan is modelled on a 13 well drilling program.
With its extensive well inventory, the well count in 2022 can be increased with continued drilling success and a sustained strong commodity price environment.
CE1 is now reviewing its scheduling and critical path items are being secured and will provide updated guidance for 2022 by the end of the calendar year.
Financial discipline to rewards
CE1 is committed to delivering consistent shareholder returns via astute financial management, helped along by current commodity prices.
The company expects to be able to allocate up to 30% of its free cash flow towards dividends and or other forms of capital returns.
It has implemented a conservative hedging program to manage commodity price risk, thereby securing a base cash flow.
Surplus free cash will be redeployed into the development of CE1’s PUD and 2P inventory, which has the ability to generate significant returns utilising existing infrastructure.
Having strategically acquired the Blackspur assets in a lower commodity price environment back in April 2021, CE1’s assets are now delivering significant returns at current commodity prices.
Environmentally focused
CE1’s financial commitment to shareholders comes with an ESG component.
“Our long-term strategic focus is on maintaining the highest ESG standard along with commercial and operational excellence to generate superior returns to shareholders. I wish to thank our team in Canada led by Jordan Kevol for their concerted commitment to the company’s progress and growth,” CE1 chairman Glenn Whiddon said.
CE1 conducts its operations to be in full compliance with both provincial and federal environmental regulations and reporting obligations and is fully committed to the continued development of a corporate ESG strategy.
The company will publish a maiden annual sustainability report in the first quarter of 2022.
Further to this it is participating in the Government of Alberta’s Site Rehabilitation Program. Since beginning the SRP program in May 2020, grants totalling C$1.1 million have been utilised to decommission 42 wells in the Brooks and Thorsby core areas.
The company is focused on reducing its Asset Retirement Obligation (ARO) on a continuous and ongoing basis, and plans are to decommission 10-15 wells in 2022 in addition to reclamation work.
Calima maintains a peer leading ARO which significantly assists the company in capital management and additional acquisition opportunities.