With positive study results in hand and improving petroleum market conditions, Perth gas junior, Calima Energy is set to benefit from its liquids-rich gas play in Canada’s lucrative Montney oil and gas field in Canada. The company was an early mover in the east of the Montney, picking up leases in the Government auctions for a fraction of what nearby ground is now selling for.
Recent months have seen a significant hike in gas prices in Canada and the US, with Canadian prices alone up more than 13 per cent compared to a year ago. In the US, weekly natural gas cash prices recently jumped significantly on the back of an intense cold front across much of the northern United States, leading to a major increase in heating demand.
The recent price increases have provided a shot in the arm for Calima’s plans to get the old Tommy Lakes petroleum processing facility back into production.
Whilst Tommy Lakes continues to be managed on care and maintenance, Calima management says the improvement in gas prices supports the case for field development.
The company acquired the Tommy Lakes project, which includes 11 gas production wells, in February last year. The facilities lie just 20km to the north of its flagship liquids-rich landholdings.
Tommy Lakes is of a particularly strategic value to Calima as it is the closest and most cost-effective tie-in point to major processing facilities and regional pipeline networks from the Calima ground.
Improving crude oil prices in the USA and Canada also offer some hope of a general petroleum industry upswing.
Calima recently obtained some preliminary results in further understanding the Middle and Upper Montney potential on its acreage.
It says a recent study of core and testing data has confirmed the presence of high productivity zones in the sections tested by the Calima-2 and Calima-3 wells.
Notably, core data from the Calima-1 well indicates a resource potential in the Lower Montney that is underdeveloped in the basin and currently not incorporated in the company’s resource statement, potentially delivering some upside for the future.
The company’s previous studies of the Calima wells also confirmed the liquids-rich Montney fairway extends further north than previously thought.
Management recently said: “Pressure and flow test results from the Upper Middle Montney in Calima-2 and the Upper Montney in Calima-3, in addition to core analysis from Calima-1, indicate the presence of high productivity Montney zones at the northern edge of the current Montney fairway.
“Regional mapping and the production history of analogue wells at Laprise and Birley Creek also point to Calima’s wells becoming strong performers.”
As of November 2020, Calima held approximately 26,000 hectares or 61,735 acres of Montney rights, over half of which have been converted to leases, with expiry dates no earlier than June 2029.
According to the National Energy Board of Canada, the siltstones of the Montney Formation are expected to contain 449 trillion cubic feet, or “TcF” of marketable natural gas, 14,521 million barrels of marketable Natural Gas Liquids and 1,125 million barrels of marketable oil. One of the most notable features of the Montney is its vertical thickness, which exceeds 300m in some places.
Calima used a proprietary geological workflow to identify and capture a significant land position within the super liquids-rich window of the Montney play in British Columbia where the presence of a significant proportion of natural gas liquids and oil results in improved economics.
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