Calima Energy Ltd (ASX:CE1) will add two more conventional horizontal wells targeting the Sunburst Formation within Bantry Field of the core Brooks area in Alberta, Canada, following favourable commodity pricing and short payback periods.
Commodity prices have risen to US$84/barrel of crude West Texas Intermediate oil, about US$69/ barrel of crude Western Canadian Select oil, and about C$4/gigajoule, with payback periods dropping to less than six months.
Much like the oil price, investors appear to have warmed to the news, raising the company’s share price as much 6.38% intraday to A$0.25 per share, with a market cap of approximately A$125.95 million.
Calima says the Gemini #5 vertical well has proven the presence of Sunburst sand within a previously undeveloped portion of the field, which will provide further drilling locations for future programs and assist in reserve growth.
Spudding of the second Sunburst Well (Gemini #6), the first of the two additional horizontal wells, began on January 15, 2022.
It will be drilled to about 2,300 metres, which should take seven days. Once Gemini #6 is completed, the drill rig will begin work on Gemini #7.
Strong single well economics
“We are happy to be drilling additional Sunburst horizontal locations in the Bantry Field,” Calima Energy CEO and president Jordan Kevol said.
“Historically, our Sunburst type curve represents some of the best single well economics in our inventory. These wells are quick to drill and complete without requiring any fracture stimulation.”
As with the first Sunburst Well, Gemini #6 and #7 will not require fracture stimulation, as they are true conventional wells.
Both wells will be tested in the first quarter of 2022, and then tied into the 2-29 oil battery facility in Q1 2022.
Calima anticipates the Sunburst horizontal wells will have an expected ultimate recovery (EUR) of more than 200 million barrels of oil equivalent, with IP90s (average over 90 days) of about 140 barrels of crude oil per day without including associated gas production.
The new wells have been funded from operational cash flows and the company’s C$27 million credit facility.
About Calima Energy
Calima Energy’s business strategy is counter-cyclical, designed to take advantage of momentum returning to the oil and gas sector after the savage downturn in global oil and gas prices that started in 2014.
The company’s core asset lies within a liquids-rich sweet-spot of the Monetary Formation in northeast British Columbia where it has been able to convert around 60% of its total 63,000 acres holding to 10-year lease through a successful exploratory drilling program.
Calima also merged with Blackspur Oil Corp, a privately held Canadian company with oil and natural gas production assets in two core areas within Alberta, Canada - at Brooks and Thorsby.