Calima fires up rig for Alberta oil development wells | Ralph-Lauren

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Canada-focused oil and gas producer, Calima Energy has cranked out the rig for a three-well campaign into the oil-rich Sunburst Formation at the Brooks project in Alberta. The Gemini 1 well has already spudded, with the Gemini 2 and Gemini 3 wells due to follow as the company looks to ramp up oil production from its Blackspur facilities.

Calima has only recently transitioned to the sought-after rank of oil producer with its transformational acquisition of private Canadian company, Blackspur Oil.

Prior to the acquisition, Blackspur completed three wells into the target Sunburst Formation at Brooks in March. Calima previously reported that the three wells produced a combined 505 barrels of oil-equivalent per day, ramping up the company’s daily output to 2,818 barrels.

Calima wants to average 3,000 barrels of oil-equivalent per day of production this calendar year and is targeting a 3,400bpd run rate by the end of the year.

Drilling of each of the Gemini 1, Gemini 2 and Gemini 3 horizontal wells should take 7-10 days, with 20 to 35 days allowed for connection into existing Blackspur infrastructure. Calima expects to report in August on initial well production rates over a 30-day period.

Based upon our extensive drilling experience in the area we are confident these three development wells will come in on budget and produce at or above the well type curves. With low geological risk and short tie-ins, our drill-to-onstream time is extremely fast at 30-45 days. If we like what we see on the first three wells, and oil prices continue to be strong, we have two more top-tier Sunburst drill locations ready to go.

The three Gemini wells will tap into existing oil pools at Brooks that were previously delineated with 3D seismic and existing Sunburst wells.

The target zone for the new wells is reportedly around 1,000m true vertical depth with the average lateral span of horizontal sections put at 775m.

Calima believes the shallow target depth and relatively short horizon length, together with the conventional nature of the drilling and short tie-in time, allows for a modest all-in cost of C$1 million per well. Calima is anticipating payback in only six months with a US$60/bbl West Texas Intermediate crude price.

The company has budgeted some C$2.7m for drilling to be funded by operational cashflow and an existing debt facility with the National Bank of Canada.

Calima now has hedging in place to mitigate any downside oil price exposure during the drilling after executing 12-month West Texas Intermediate and Western Canada Select swap contracts. The contracts are said to secure full capital cost recovery of the drilling campaign and allow for net cash flow to be recycled into any future drilling programs over the next two years.

Current proved and probable reserves at Brooks total 11.62 million barrels of oil-equivalent from 48 wells drilled to date.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au



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