Calima Energy records 6% increase in oil production in August operation update

Calima Energy Ltd (ASX:CE1) has broken down its production and operating metrics for August in its latest ASX update.

The west Canada-focused oil and gas producer tabled a 6% uptick in average production between July and August, generating just under 3,500 barrels of oil equivalent per day (boe/d).

Calima hopes to produce around 4,500 barrels boe/d by year’s end when wells at the Brooks and Thorsby tenements in Alberta enter production.

The ASX-lister transformed into a high-margin producer earlier this year after it acquired Blackspur Oil Corp, a Canadian company with a five-year, 64-gross well development plan.

Key metrics

Between July and August, Calima recorded a strong increase in operating netback— a consideration used in the oil and gas industry to reflect the net profit on oil and gas after factoring in royalties, production and transportation expenses.

The oil and gas producer brought in A$2.8 million in operating netback over August — a 12% spike on July’s A$2.5 million result.

Revenue also recorded a slight surge, hitting the A$5 million mark after a 2% increase over the final summer month.

However, Calima’s capital expenditure saw the highest increase, marking a 41% surge on the July figures.

This metric jumped from A$2.7 million to A$3.8 million as work ramps up over wells at Blackspur’s Brooks and Thorsby tenements.

Net debt also increased 8% to A$18.6 million as drilling ramped up over the Leo targets within the Thorsby asset.

Production from three of the Leo wells is expected to kick off in November.

In terms of production metrics, Calima generated around 202 boe/d more than the previous month, bringing the total for August to 3,493 boe/d.

Meanwhile, the realised oil price fell 5.4% between July and August to C$70.17 per barrel, while the realised gas price dropped 19.7% to C$3.35 per thousand cubic feet.

Reserves

Calima reported a key milestone in February this year: it executed a C$17 million merger that saw it take control of Blackspur and its Alberta oil and gas portfolio.

Earlier this month, Calima unveiled its reserve evaluation for its newly acquired subsidiary’s oil and gas assets, contracting InSite Petroleum Consultants Ltd to manage the evaluation.

At June 30, 2021, Blackspur’s reserves stood at:

• 25.7 million barrels of oil equivalent (boe) in proved, probable and possible (3P) reserves;
• 21.4 million boe in proved and probable (2P) reserves;
• 16.1 million boe in proved (1P) reserves; and
• 5.2 million boe in proved developing producing (PDP) reserves.

Blackspur has produced 1.2 million boe since December 31, 2019, while just two wells were drilled before the Calima acquisition.

Development plan

Blackspur’s current development plan tees up 64 gross wells for drilling over the next five years, with six of those assets scheduled for drilling over 2021’s second half.

However, the development plan represents just 23% of Blackspur’s well inventory and allows for proved and probable well locations to be executed and drilled within the five-year period.

At June 30, 2021, Blackspur held the rights to 115,720 net acres within the Brooks and Thorsby areas.

The company operates 63.4 net wells, developing approximately 7,500 net acres of this position.

Currently, around 94% of the undeveloped Brooks and Thorsby acreage does not have reserves booked, representing tremendous upside for Calima.