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CALIMA ENERGY LIMITED

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Calima Completes Drilling Completions Review

ASX Announcement 10 August 2018


Highlights: 

  • Calima is proposing to drill three wells in its British Columbia acreage later this year. 
  • Two of the wells will have 2,500 m horizontal sections which will be fracture stimulated before being put on an extended production test. 
  • The Company has reviewed completion techniques (1) employed on over 500 wells within a 75 km radius of its first drilling location to ensure its well designs are optimized to match the performance improvements of other Operators in British Columbia.

Calima Energy Limited (ASX:CE1) (“Calima” or the “Company”) owns 72,000 acres of drilling rights in British Columbia prospective for the Montney Formation. The Company is planning to drill its first wells later this year. Commencing in December it is proposed to drill one vertical well and then two horizontal wells (Figure 1).

The vertical well will provide stratigraphic calibration and will be cored to recover samples of rock for measurement and analysis. The horizontal wells will be stimulated with hydraulic fractures and put on an extended production test over a period of 4-6 weeks. This is a well-established technique in the Montney with more than 5,000 horizontal wells having been drilled to date. It is worth noting that less than 2% of these wells are non-productive(2) which is indicative of the pervasive hydrocarbon saturation within the Montney Formation.

Calima has completed a review of more than 500 multi-stage drilling completions in the Montney Formation that lie within a 75km radius of its first drilling location within the Calima Lands in British Columbia. The study undertaken for Calima by Canadian Discovery Limited (“CDL”), one of Canada’s leading independent oil and gas services companies, compares the effectiveness of the various kinds of completion techniques used in northern British Columbia as well as the evolution of well performance over time as completion techniques have evolved. The purpose of the study is to ensure that the completion techniques being adopted by Calima take full advantage of the increases in well performance being achieved by other Operators in the region

(1) A study of drilling completions is focussed on the events and equipment necessary to bring a wellbore into production once drilling operations have been completed. 

(2) RBC Energy Insights – October, 2017

The productivity of wells drilled into the Montney has improved significantly year on year as Operators have optimised the completion techniques being adopted. A comparison of average daily gas production rate in Figure 2 shows the year on year increases in productivity in Northern British Columbia.

Click here to view the full announcement

Quarterly Activities Report - 30 June 2018

ASX Announcement 30 July 2018

Calima is a public company listed on the ASX (ASX:CE1). The principal activity of Calima is investing in oil and gas exploration and production projects internationally. Calima’s core asset lies within a liquids-rich sweet-spot of the Montney Play in Northeast British Columbia.

Calima Energy Limited (ASX: CE1) (Calima or the Company) is pleased to provide shareholders with the following summary of its activities during the June 2018 quarter

Key Activities and Highlights 

Operations 

Calima’s Q2 operations focused on the Company completing its acreage position in Northeast British Columbia, considered to be prospective for the Montney Formation (Calima Lands) and the award of a Petroleum Agreement for offshore Block 2813B in Namibia.

Calima Lands 

Calima has completed its core acreage acquisition strategy through the acquisition and now holds 72,014 acres of drilling rights (105 sections) over acreage considered to be highly prospective for the Montney Formation.

No additional drilling rights were acquired during the June 2018 quarter with technical activity focused primarily on well planning and in-country logistics in readiness for the 2018/2019 winter drilling campaign.

Namibia – New Portfolio Asset 

During the quarter, the Company expanded its asset portfolio in Africa through the award of a Petroleum Agreement for offshore Block 2813B, covering an area of 5,433 km2 in the Orange River Basin of Namibia (Figure 1). The award was made following an application to the relevant authorities representing the Government of Namibia. The agreement has an initial investment term of four years. During the first year of the initial term the Company will undertake an evaluation of the existing data in, an around, the block. Over the four years of the initial term Calima has committed to acquire 2D or 3D seismic data and undertake a detailed prospectivity review. The investment obligations associated with the agreement are comfortably within the Company’s financial capabilities.

Namibia has recently experienced a significant upsurge in industry interest following some encouraging drilling results which demonstrated the presence of thick, oil-prone mature source rocks and high-quality sandstone reservoirs. In the past nine months Exxon, Total, Tullow, ONGC, Africa Energy Corporation and BW Offshore have all farmed-in to projects offshore Namibia and over the next twelve months at least four deepwater wells are expected to be drilled. Of direct relevance in supporting the value proposition offered by Block 2813B, Total farmed-in to the acreage immediately south in October 2017 and, over the next 12 months, Shell are reported to be drilling two wells in acreage immediately to the southeast.

This investment in Namibia provides shareholders with an interest in a high-profile emerging hydrocarbon province alongside major oil companies.

The interests in the Block 2813B Petroleum Agreement are: 

  • Calima Energy (Namibia) Ltd 56% (Operator) 
  • Trago Energy Pty Ltd 20%
  • Harmattan Energy Ltd 14% 
  • NAMCOR 10%

Harmattan Energy Ltd (Harmattan) is a wholly-owned subsidiary of Havoc Partners LLP (Havoc). Havoc developed this opportunity using its existing knowledge and network of contacts in Africa and then, under the terms of the Management Services Agreement entered into between Havoc and the Company in June 2017, offered participation in the project to Calima.

During the initial four-year term of the Petroleum Agreement the minimum investment obligation is US$2,000,000. Harmattan, NAMCOR and Trago Energy Pty Ltd are financially carried through the initial term.

Click here to view the full announcement

Independent Investment Research recently completed a July update on Calima Energy Limited. Key points from the research note include:

  • Ownership Consolidation - Streamline administration, decision making and overheads and remove the time and program constraints in the original Farm-in agreement.
  • Upcoming Drilling - A three hole drill program is planned for the 2018/2019 winter.
  • First Reserves expected to be booked - Positive results from the upcoming drilling program should lead to the booking of first reserves for the Calima Lands in 2019.
  • World class liquids play - Montney has been transformed into a world-class unconventional liquids producer.
  • Thick, stacked, shallow reservoirs - Combined pay thickness of 200m to 300m and depths of between 1,200m and 1,650m within the Calima Lands, the liquids-rich Montney provides an excellent opportunity to develop multi-layer completions from single surface sites.
  • Leverage off well-developed IP - Work in the liquids-rich Montney has lead to improvements in drilling and completion techniques.
  • Improving West Coast gas prices- Significant improvement in the AECO gas price is expected over the next few years.
  • Calima ideally placed to benefit - Calima is primarily a liquids rich-play, gas provides significant potential additional revenue and upside for the company.

Click here to view the research Note

Calima moves to compulsory acquire remaining TMKM and TSVM shares, consolidates 100% of Montney Project

ASX Announcement 16 July 2018 


Highlights: 

  • Calima has acquired >98% of the shares of TMKM and >91% of the shares of TSVM. Calima has moved to compulsorily acquire the remaining shares in both TMKM and TSVM. 
  • Completion of the Offers and the compulsory acquisition of the remaining TVSM and TMKM's shares will consolidate 100% of the Montney Project into Calima, creating a leading Montney-focused exploration, appraisal and production company. 
  • TMKM shareholders who accepted the Calima's takeover offer were issued Calima shares on 13 July 2018. Compulsory acquisition settlement will occur approximately 2 to 4 weeks later. 
  • TSVM shareholders who accepted the Calima's takeover offer will be issued on the 27July 2018. Compulsory acquisition shares will settle mid-August 2018 
  • Calima is well advanced in its preparations for drilling its first wells in late 2018, recently announcing the appointment of key engineering contracts1 .

The Board of Calima Energy Limited (ASX:CE1) (“Calima” or the “Company”) is pleased to provide an update on the acquisition of TMK Montney Limited (TMKM) and TSV Montney Limited (TSVM), which was announced to the market on the 2 May 2018.

Under the Calima takeover offers to the ordinary shareholders of each of TSVM and TMKM (Offers), as at the date of this announcement Calima has acquired 98.08% of TMKM's and 91.20% of TSVM shares on issue, and, as a result, has moved to compulsorily acquire the remaining shares it does not already own in both companies.

On the compulsory acquisition of the TSVM and TMKM shares, and imminent consolidation of 100% of the Montney Project into Calima, Calima Managing Director, Alan Stein, said,

“As we complete the acquisition of TSVM and TMKM we welcome new shareholders to the Company and look forward to developing the benefits that come from the simplified ownership structure over the 72,000 acres of drilling rights in the Calima Lands. “

“Our plans for drilling late in 2018 remain on track and we are excited by continued drilling successes in the Montney near the Calima Lands and the overall improved outlook for infrastructure across the whole play, which we believe will have a positive impact on valuations.”

As previously highlighted, completion of the Proposed Transaction will result in a number of key benefits, including, but not limited, to: 

  • Consolidation of the Montney Project 100% into a single entity, which is likely to attract greater market interest; 
  • The enhanced structure and larger market capitalisation will likely provide improved access to capital to fund the forward work program and removes any risk associated with TSVM and/or TMKM funding its share of development costs; 
  • Consolidation removes any potential impediments or misalignment of separate JV interests; and 
  • Additional synergies include the removal of duplicated technical and administrative costs.

Click here to view the full announcement





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