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Calima readies three new wells for oil production in Canada

Calima Energy says it is on the cusp of new oil production from three third-generation “Leo” oil wells in its productive Thorsby oil field near Edmonton in Alberta, Canada. Full oil flows are expected to be achieved between Christmas and Valentine’s Day and according to the company, each new Leo well is targeted to flow oil at between 270 and 460 barrels of oil equivalent per day.

The Leo Sparky wells were completed with 50 stages, 42 metres apart and 44 tonnes of sand per stage with an additional 320m horizontal section per well.

A planned 7-day shut in period, now complete, allows the proppant to heal into the formation ensuring good conductivity and minimising future well bore clean-outs

The three new Leo wells are now open to flow and awaiting the installation of pumping equipment and final on-lease tie-in to production facilities.

The Leo wells receive 6,000 cubic metres of fluid stimulation of which 50 per cent will be recovered during the initial 30 to 60 day flow back leading to stabilised production rates anticipated to achieve initial 90-day production rates of between 270 and 460 barrels of oil equivalent per day. First hydrocarbons are expected within 7 to 10 days and the flow after 30 days is expected to include oil/gas/formation water and stimulation fluids. According to the company, by 60 to 90 days, the wells will achieve their full hydrocarbon production capacity.

The wells have been budgeted at $3.2 million per well with anticipated pay back forecasts of 5 to 10 months from initial drilling and a net present value C$6.5 million to C$9.0 million. With break-even to WTI modelled at US$33 to US$35.10 and WTI over US$83 the economics are looking solid for Calima.

The fracture stimulation of the Leo wells went off without a hitch. Every bit of sand that was programmed to be placed, was successfully placed. The three wells were pumped back-to-back, on time and on budget. After the shut-in period of one week, each of the wells multiple frac ports were opened, and will now begin the flow-back process as soon as downhole pumping equipment is installed and on-lease tie-ins are completed. We anticipate seeing first oil within 7-10 days of pumping.

Calima Energy recently announced it expects to distribute up to thirty per cent of the free cash flows from its Canadian oil and gas operations back to shareholders in 2022 by way of a maiden dividend. The remainder of the operational cash flows will be ploughed back into the development of Calima’s twenty-one million barrels of oil reserves with 64 locations booked for drilling.

Meanwhile, the company continues to look for a sale or farm-in for its rich Montney acreage in British Columbia with the help of Calgary based Peters and Company Limited.

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

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