Calima Energy Ltd (ASX:CE1) is bringing forward a four-well horizontal drilling program planned for its Brooks asset in Alberta, Canada, with two wells at Gemini and two at Pisces to start next month.
This program was originallly scheduled for the September quarter but has been brought forward to June owing to the early availability of a preferred rig.
June will be the start of a busy period for the oil and gas producer, developer and explorer with the completion and tie-in of the Leo #4 well, which was in the first quarter of 2022, to also commence.
Calima is also planning a further drilling program for the December quarter of 2022 which will encompass well at both Brooks and Thorsby projects.
The drilling activities are designed to maximise free cash flow while taking advantage of current high commodity prices and maintaining and developing proved developed producing (PDP) reserves.
“Maximise cash flow”
Calima CEO and President Jordan Kevol said: “The current drilling program is designed to grow and maintain the company’s base production and maximise cash flow giving financial flexibility to provide returns to shareholders later this year.
“With continued commodity price strength and a successful Brooks drilling program, Calima will have the flexibility to plan additional drilling in Q4 2022, following a return to shareholders.
“We are excited to be back drilling in our core Brooks area after spring road bans."
Gemini Brooks program
Gemini #8 will be a follow-up to the highly successful vertical well Gemini #5 drilled in the March quarter.
This well will be drilled off of the same pad as Gemini #5 and will be a low-cost on-lease tie-in.
Notably, the well will tie into the recently completed Brooks Pipeline with fluids going directly to the 2-29 battery.
Gemini #9 is a follow-up to Gemini #3. It will be drilled from the same pad and will also be an on-lease tie in.
Gemini #3 was placed on production in July 2021 for a total cost to drill, complete, equip and tie in (DCE&T) of C$924,000 and has returned net earnings of C$3.5 million to the end of March 2022, making it one of the best performing Sunburst wells in the core Brooks region.
Pisces Brooks Program
Following the very successful three-well Pisces program from January 2022, Calima will drill an additional two Pisces wells.
Pisces #4 is a follow-up to one of the best performing Glauconitic wells that Blackspur drilled (15-36 wells).
Pisces #5 is a follow up to a well, drilled by Blackspur in 2014 (04-05 well), the 04-05 well was an early generation Glauconitic fracture stimulated well with an IP30 of 213 bopd and has produced 85,000 barrels of oil to date.
Budgeting
Calima’s program is focused on providing shareholders exposure to high commodity prices through the drilling of its high economic oil plays, as well as taking advantage of recent upgrades to the infrastructure footprint at Brooks.
The company’s budget has been designed to:
- Maintain average daily production levels of 4,100-4,400 BOE;
- Maximise free cash flow while ensuring a healthy balance sheet and providing unhedged exposure to strong energy prices on future production;
- Provide funding for a capital return/buyback during the period o Continue to utilise the new pipeline and recent infrastructure/facilities upgrades at Brooks;
- Better understand the production and resource upside in the high-impact undeveloped area of Holborn Alberta near Thorsby.
Forward plan
With success on the completion and subsequent production of Leo #4,Calima will be able to book new reserves in this area and plan future follow-up drilling.
Production from Leo #4 is expected in September quarter of 2022
Kevol adds: “All four of these new wells are keying off previous successful drilling on our acreage.
“Three of the wells will utilise our recent expansion to our infrastructure in the Brooks area.
“We have been able to contract a preferred drilling rig that we have previous experience within the area.
“Due to the on-lease tie-in nature of these wells, we anticipate expedient drilling to on-stream timeframe for all four wells.
“Additionally, the upcoming completion and testing of the Leo #4 well at Holborn has the potential to be impactful for the Company with respect to additional reserve bookings, and follow-up drilling locations.”