Calima Energy is now tantalisingly close to drilling its exciting oil and gas play in the revered Canadian Montney formation with the access road to the drill pad for its planned three well program now complete.
Calima’s share price has held steadfast over the last year with only one brief foray below its floor price of 4.5c as investors choose to stay the course and await the moment of truth.
Civil works are also underway now at the drill pad whilst Precision Drilling’s Rig 379, which was contracted to carry out the drilling, is expected to arrive in the final week of December after completing work for ConocoPhillips.
As a point of interest, the drill pad is large enough to accommodate more than 20 producing wells, which provides Calima with a ready made stage to kick off future drilling programs.
The Subiaco based company’s drilling campaign will begin with a vertical well to provide stratigraphic calibration and core samples for measurement and analysis.
This will be followed by two horizontal wells that will be fracture stimulated and put on an extended production test over a period of 4-6 weeks.
A success at this stage will allow Calima to convert at least some of its resources from prospective to the higher confidence contingent level.
Calima currently owns a 100% interest in 72,014 acres of Montney drilling rights that it says could potentially host gross prospective resources of up to 2.16 trillion cubic feet of gas and 114.42 million barrels of liquids.
The Montney is hot property right now with horizontal wells drilled in the play back in 2017 achieving a peak average daily gas production of just over 5.5 million cubic feet per day.
Success rates have also been high with just 2% of the 5000 wells drilled to date failing, due largely to mechanical issues.
This is due in part to the excellent “fracability” of the Montney geology, which increases the likelihood that the formation creates complex fracture networks when fracture stimulated. This in turn allows hydrocarbons to flow at greater quantities.
The Montney is also thicker than most unconventional oil and gas plays, allowing for multi-layer completions from one surface location.
Separately, Calima said it has gained exposure to oil and gas projects in the North Sea and New Zealand earlier this week.
This came about after Bahari Holding Company, which is 8.5% held by Calima, sold its 40% interest in three production sharing contracts in the Comoros Island off the east coast of Africa to UK based Discover Exploration, which holds the remaining 60% interest.
In return, Bahari received 5% of Discover, which is led by the same executive team that took Cove Energy in 2009 from a £1 million shell on the London Stock Exchange to an eventual exit to Thailand’s PTTEP for £1.2 billion in 2012.
UK-based oil mid-cap Tullow Oil simultaneously took a 35% operating interest in the three production sharing contracts by carrying Discover for a 3D seismic survey and drilling of the first exploration well.
The Comoros contracts host two partly stacked prospects that could contain resources of up to 7.1 billion barrels of oil or 49 trillion cubic feet of gas.
Courtesy of its small stake in Discover held through Bahari, Calima now has exposure to a number of North Sea exploration licences off the coasts of Germany, Denmark and the Netherlands and a petroleum exploration permit off New Zealand.