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Calima Energy spuds Leo #3 with fracturing just weeks away

“We look forward to drilling Leo #3 and subsequently getting ready for the fracture stimulation program for all three Leo wells. These wells will be very impactful to corporate production, and will enable us to achieve our year-end production guidance of 4,500 boe/d.”

Calima Energy spuds Leo #3 with fracturing just weeks away
Leo #2: Sparky oil shows in cuttings

Calima Energy Ltd (ASX:CE1) has spudded Leo #3, the third well in the Leo drilling campaign at Thorsby in Alberta, Canada.

Calima has wasted no time spudding the Leo wells in the Thorsby development field after putting it in hiatus in January 2019.

Leo #3 was spudded on September 7, directly after the completion of well #2, where it conducted 3,680 metres (measured depth – MD) of drilling through the Sparky Formation.

Well logs at Leo #2 indicate the well is within expected reservoir quality with oil and gas shows as prognosed.

Calima expects to complete Leo #3 in the next two weeks, with the fracture process for all three wells expected to begin in the fourth week of September.

Initial production is anticipated in late October once on lease tie-ins are complete.

Year-end production guidance on track

Calima CEO Jordan Kevol is highly optimistic about the impact of the Leo campaign.

“The Leo drilling program is progressing well. Leo #2 was drilled in the planned 10 days, and the oil and gas shows were excellent,” Kevol said.

“We look forward to drilling Leo #3, and subsequently getting ready for the fracture stimulation program for all three Leo wells. These wells will be very impactful to corporate production, and will enable us to achieve our year-end production guidance of 4,500 boe/d.”

Calima’s three wells were drilled from a single pad location adjacent to its main Thorsby oil processing facility. This pad contains two of the best performing Thorsby Sparky wells which combined, have produced greater than 370,000 boe (300,000 bbl oil) since July 2018.

Calima’s drilling program has incorporated 11 Sparky wells, of which the tier 1 wells (2nd Generation) averaged ~3,400 metres MD and 36 fracture stages with an average of 0.75 tonnes of sand per metre over the horizontal length.

The per well cost to drill, equip and tie-in averaged $2.5 million.

The Leo 1, 2 and 3 (3rd Generation) Sparky Wells have been optimised and will average ~3,800 metres MD (400 metres longer) and ~50 fracture stages with an average of 1.0 tonne of sand per metre over the horizontal length.

The optimised wells are budgeted for $3.2 million per well, with Calima anticipating IP90 rates of 270-460 boe/d (80% oil) with cumulative production of up to 462,000 boe.

Well paybacks are 5-10 months and the NPV at 10% discount is ~C$6.5-$8.8 million.

The well economics are shown below:

Future recoveries at Throsby

The Thorsby Development Field Production from the Leo program will come on stream in the fourth quarter of 2021.

Thorsby provides a land base of ~108 net sections (69,620 net acres) that can be developed from multi-well pads, with year-round access and minimal environmental footprint.

Thorsby has oil processing facilities of 3,000 bbl/d oil capacity.

Existing Thorsby wells averaged gross production of ~868 boe/d in July 2021 (100% WI) solely from the Sparky Formation.

Estimated future recoveries from the 11 wells drilled to date stand at 352 - 462 mboe.

Importantly, this is 80% oil.

What does this mean?

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 (80% oil).

Quick facts: Calima Energy Ltd

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