Calima Energy Ltd (ASX:CE1) has incorporated a high impact unconventional oil well (Leo #4) on its inventory acreage in the Greater Thorsby Area at North Thorsby in Canada.
Notably, the Leo #4 well spudded on January 20, 2022, and is prospective for the development of multiple sparky age oil-bearing channel sands.
Looking ahead, the objective of the well is to successfully expand the greater Thorsby area, providing cash flow generation, reserves growth and drilling inventory in a meaningful way to the company.
“Open up additional reserves”
Calima CEO and president Jordan Kevol said: “The commencement of the January 2022 drilling campaign reflects a strong start to the year for the company with the drilling of Leo #4.
“North Thorsby is a new development area for the company and Leo #4’s level of success will potentially open up additional reserves to book and subsequently develop.”
Leo #4 well
Calima holds a 50% working interest in the well and is the operator of the Leo #4 unconventional oil well at the North Thorsby prospect area.
North Thorsby area contains a series of 18-20 API oil charged Sparky Formation channel sands that contain some of the thickest oil columns in the regional area.
The well has been designed to test a thick channel for productivity and is the first step in starting to develop the Sparky and expand the greater Thorsby fairway.
Looking ahead, the company plans to frac and tie in the well in late Q2 or Q3 2022, pending spring break-up conditions.
Sparky Economics
Calima has drilled 14 Sparky wells to date. Leo #4 will be a third-generation Sparky well utilizing longer lateral length, and more intensive fracture stimulation compared to Generation 2 Sparky wells from 2018-2019.
Notably, the third-generation Sparky wells average 1.0 ton of frac sand per metre over the horizontal length during completion.
The North Thorsby well is budgeted for $3.6 million ($1.8 net) for drilling and completion, as this is a “one-off well” and will not receive the benefits of economies of scale when multiple wells are drilled in a program.
The equip and tie-in costs for this well are estimated at $1.1 million ($0.55 net) as the company does not have any existing infrastructure in the North Thorsby area, therefore this well will be set up as a “single well battery” during its evaluation stage of which the company’s 50% share of initial drilling costs this quarter will be ~$750,000
Furthermore, the capital program will be funded from operational cash flows and the National Bank debt facility.