High Asset

Calima Energy buoyed by updated resources and reserves from Canadian oil & gas assets

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A resource update has been completed for the Montney acreage in British Columbia and a reserves evaluation for subsidiary Blackspur Oil Corp encompassing the Brooks and Thorsby projects in Alberta.

Calima Energy Ltd (ASX:CE1) continues to be highly encouraged by progress at its oil and gas assets in western Canada with a resource update completed for the Montney acreage and a reserves evaluation for subsidiary Blackspur Oil Corp encompassing the Brooks and Thorsby projects.

Also supporting the company’s confidence has been a ramping up of activity in the vicinity of Calima’s land at Montney in British Columbia with very encouraging results.

Calima operates more than 34,000 acres of drilling rights in British Columbia with McDaniel & Associates completing resource reports for the period ending December 31, 2021.

Montney resources

A slightly higher 213.3 MMCFG & 10.1 million barrels of light oil and natural gas liquids compared to 2020’s 212.8 MMCFG & 10.8 MMBO of Contingent Resources is continuing to be defined as Development Pending.

This reconfirms that a significant portion of Calima’s Montney acreage is development-ready subject only to securing the necessary funding to construct a tie-in pipeline.

Once the company secures funding then according to the reporting standards these Development Pending resources could be classified as 2P reserves.

Other highlights of the Montney resource report are:

  • The best estimate gross un-risked Contingent Resources (2C) Development on Hold and Development Pending is 748 MMcfg and 35.8 MMbbl (net of royalties);
  • Total best estimate of gross un-risked Prospective Resources (2U) is 588 MMcfg and 28.2 MMbbl (net of royalties); and
  • Estimated Ultimate Recovery (EUR) per type curve well increased to 9BCFG and 131 MMbbls of condensate on average between the upper and middle Montney (2020: 8.4 BCFG 168 MMbbls) due to positive results on gas from offsetting operators.

The estimated quantities of hydrocarbons that may potentially be recovered by the application of a future development project relate to undiscovered accumulations.

These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

McDaniel & Associates has evaluated crude oil, natural gas and natural gas products prospective resources of the Calima Lands according to PRMS standards.

Best estimate Unrisked Contingent (2C) Resources and Prospective (2U) Resources of the Calima Lands as estimated by McDaniel & Associates effective March 31, 2022.

Reserves evaluation

At Brooks and Thorsby in Alberta, InSite Petroleum Consultants Ltd has completed its reserves evaluation as at December 31, 2021, for Calima’s wholly-owned subsidiary Blackspur Oil Corp.

Reserves as at December 31, 2021, are:

  • 3P reserves 24.4 million boe;
  • 2P reserves 20.4 million boe;
  • 1P reserves 15.6 million boe; and
  • PDP reserves 5.1 million boe.

Reserve statement.

Blackspur drilled 12 wells in 2021 of which 11 were proven undeveloped locations (PUD) which moved locations from the 1P category to cash flow generating Proven Developed Producing (PDP) wells.

The focused asset bases of Brooks and Thorsby coupled with high graded infill drilling and prudent production management allowed Blackspur to maintain reserves steady after production of 1.1 million boe since December 31, 2020.

InSite’s Updated Reserve Report and Development Plan incorporates:

  • 60 development wells as 54 PUDs and six probable;
  • Development plan is designed for proved and probable well locations to be drilled within a 5-year period;
  • Costs for abandonment, decommissioning, reclamation and salvage of facilities, and inactive assets for all of the company’s existing and proposed wells; and
  • Preparation in accordance with the Society of Petroleum Engineers’ Petroleum Resources Management System (SPE-PRMS).

Blackspur estimates that approximately 228 net wells will develop the entire reserve position on its existing lands >5 years out.

Around 90% of undeveloped Brooks and Thorsby acreage has no reserves booked currently, representing significant upside to the existing report.

Development plan

The development plan in the December 31, 2021, Reserve Report consists of 60 (gross) wells to be drilled over five years.

Rig and gross well count for each year.

As at December 31, 2021, the 2022 development program includes 13 wells to be drilled including, three Thorsby Sparky wells, four Brooks Sunburst wells and six Brooks Glauconite wells (two are now drilled as part of the Pisces campaign).

Blackspur’s working interest in each well dictates the reserves the company can book during the well’s productive life. On a net well count for the proved reserve category, Blackspur has a ~92% interest in the proved undeveloped wells in the December 31, 2021, development plan for 2022.

As at December 31, 2021, Blackspur held the rights to ~110,500 net acres within the Brooks and Thorsby areas. The company operates 67.6 net wells developing approximately 8,700 net acres of this position.

The year-end reserve development schedule encompasses development of a modest portion of the total acreage position that Blackspur holds. Based on the existing leasehold position, including the acreage associated with the existing producing wells, Blackspur estimates a total of approximately 228 (net) wells will develop the entire reserve position.

The total December 31, 2021, development schedule corresponds to 60 future wells, or 24% of the wells necessary to develop the entire acreage position. Approximately 90% of the undeveloped Brooks and Thorsby acreage does not have reserves booked, representing significant upside.

Pipeline Infrastructure

Progress on the pipeline infrastructure at Brooks is ahead of expectations and is nearly complete and trending to come in under budget.

The Pipeline connects the company’s 2-29 oil battery in the northern portion of the field, to the recently drilled wells (Gemini #5, #6, #7 and Pisces #3) in the southern portion of the field and importantly, will provide egress for planned production growth in the pipeline corridor located in the heart of the Brooks properties.

Exceptional construction efficiencies have been achieved through detailed project management by the engineering team, construction crews and field staff.

Gemini #5, #6 and #7 and Pisces #3 have all been completed and are now tied into the pipeline and producing.

The final section of the pipeline which connects existing producing wells in an area that currently has fluid volumes trucked to 02-29 battery, will be connected and flowing into the battery by early April 2022.

This pipeline will significantly reduce operating costs and will add several significant ESG benefits, including the elimination of flaring of new wells during initial production testing.

Most importantly, it will eliminate trucked volumes of emulsion from existing, newly drilled, and future wells that are or will be connected to the 2-29 battery via the new pipeline. Reducing trucking improves the company’s safety and spill prevention profile and ESG score.

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