Thorsby Drilling Update
- Sparky Formation - Leo #2 to be Spudded
HIGHLIGHTS
The second well in the Leo Drilling Campaign at Thorsby, Alberta is underway with the Leo #2 to be spudded on 27 August 2021
The Leo #1 was drilled horizontal 3,800m and well logs indicate the well is within expected reservoir quality with oil and gas shows as prognosed – type curve production predicted
The Leo Sparky Wells (3rd Generation) have been optimised with respect to horizontal length, and planned fracture stimulation intensity. They will average ~3,800m MD (400m longer than previous generation) and ~50 fracture stages averaging 1.0 tonnes of sand per meter over the horizontal length
IP90 production rates per well are modelled at ~274-460 bbl/d with NPV10 of C$6.5-$8.8 million based on EUR’s of 352,000 – 462,000 boe with 80% oil
Wells average approximately 10 days each to drill and will be subsequently fracture stimulated as part of the completion process. All wells are adjacent to one of Calima’s oil processing facilities. This particular well pad already contains two of the historical best performing Thorsby Sparky wells
These wells are considered development in nature with low geological risk
Jordan Kevol, Calima CEO, states that:
“We are very excited to be back drilling in Thorsby. The last well drilled in this area was in January 2019. We are drilling near some of our best wells to date and planning to implement a higher frac intensity relative to the previous wells with improved economics expected. The 3 wells have minimal on-lease tiein’s and will flow into our existing oil processing facilities that have ample room for the hydrocarbons. We have a lot of running room in the Thorsby Sparky play, and these wells are expected to be very impactful to our bottom line with IP90’s of up to 460 barrels of oil per day.”
RESEARCH REPORT 16 August 2021 CORPORATE CONNECT
INITIATING COVERAGE BLACKSPUR ACQUISITION IS TRANSOFORMATIVE
Summary
We initiate coverage on Calima Energy (“Calima” or the “Company”) on a free cash flow (“FCF”) basis with a value of AUD0.025/share. Calima is an Australian listed exploration and production (E&P) company, and a Canadian oil and gas pure play. Its assets include a large-scale liquids rich gas play in the Montney fairway in British Columbia, a well-established oil and gas producing region with a supportive energy production policy.
On April 30, 2021, Calima completed the acquisition of Blackspur Oil (“Blackspur’). Blackspur was caught out in a poor oil environment while laden with a heavy debt burden and Calima was able to capitalise on the opportunity, acquiring the target at a deep discount of C$61.5m, including C$40.0m in debt. This is against over C$200m invested by Blackspur since inception in 2012. The acquisition is earnings accretive and has raised Calima’s status to the realm of a mid-tier, ASX-listed oil producer.
Our one-year price target of AUD0.025/share implies an upside of over 2.5x
