Calima on course for Alberta oil flow windfall
Calima Energy remains on course for a bumper cash windfall from rising production at its Brooks oil and gas project in Alberta, Canada, after reporting higher month-on-month average output for May. Calima’s 3,100 barrels per day oil-equivalent in the final week of May compares with 2,800bpd a month earlier. It aims to exit 2021 at 4,500bpd from Brooks.
Rising operational cash flows from the recently acquired Blackspur Oil Corp asset on the back of stronger oil prices point to the value to be unlocked from the C$60 million deal.
Calima says Brooks operational cash flow was up 18 per cent from April to May with a 5 per cent improvement in its realised oil price adding to the higher production rate. It helped the company to trim its net debt by C$1 million to C$11 million in the period.
Calima’s May-to-end-December forecast average production for Brooks has been raised from 3,000bpd oil-equivalent to 3,700bpd, while adjusted EBITDA for the eight months is now guided to be C$21.2 million, 18 per cent higher than the previous guidance.
The company says better production rates and sales, and the improved oil price, are underpinning the revised guidance.
Calima commenced drilling three new development wells at Brooks earlier this month.
Management reports that drilling of the three wells remains on track with the first well, Gemini 1, spudding in late May. Completion works on Gemini 1 are due to commence in the coming days with the well set to tap into the Blackspur oil producing infrastructure soon after.
The rig has relocated for drilling of the second well, Gemini 2.
Calima now has hedging in place to mitigate any downside exposure to the oil price during drilling of the wells after executing West Texas Intermediate and Western Canada Select swap contracts for the next 12 months.
The contracts are said to secure full capital cost recovery of the drilling campaign and allow for net cash flows to be recycled into future drilling 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.
Meanwhile at the Thorsby project operated through Blackspur in Alberta, Calima is finalising plans to drill a further three development wells into the existing Sparky oil pools in the middle of the year.
To date, 11 wells have been drilled into the Sparky formation with well recoveries estimated to range between 358 mboe and 468 mboe with a 79 per cent oil component.
The new wells will flow into the company’s existing Blackspur oil facilities.
Current proved and probable reserves at Thorsby total 10.9 mboe.