ASX-listed Calima Energy has released the preliminary findings of an independent technical study which confirms the rich liquids potential and strong gas productivity of the Upper and Middle Montney zones across its 60,000-plus acres of ground in Canada, extending the fairway of strong, liquids-rich gas north onto its drilling leases.
More importantly, the review points to fresh oil and gas resource volumes in the currently ‘unbooked’ Lower Montney interval of Calima’s ground which point to future upside in the potential recoverable oil and gas resources across the leases.
The detailed technical study conducted by leading independent, Western Canada-focussed consulting firm, Canadian Discovery Ltd, or “CDL” has reviewed Calima’s data from its recent wells and integrated that data into its regional models of the Montney across the Province of British Columbia, or “BC”.
Preliminary results suggest Calima’s ground is within a similar, liquids-rich gas, or ‘wet gas’, sweet spot to the producing wells along trend and immediately to the south and southeast.
Calima highlighted some of the conclusions of CDL’s preliminary findings: “Pressure and flow test results from the Upper Middle Montney in Calima-2 and the Upper Montney in Calima-3, in addition to core analysis from Calima-1, indicate the presence of high productivity Montney zones at the northern edge of the current Montney fairway.”
“Regional mapping and the production history of analogue wells at Laprise and Birley Creek also point to Calima’s wells becoming strong performers. While not tested, lower Montney intervals, based on core and log analysis from Calima-1, represent a potential resource that to date has been under-developed elsewhere in northeast BC.”
The company said it had control of 61,735 acres, or around 26,000 hectares of Montney drilling rights with over half converted to leases including expiry dates out past June 2029.
The company recently upgraded its oil and gas resource volumes and currently has 12.4 million barrels of light oil and 248.9 billion cubic feet of gas in the “Development Pending” category - volumes which would immediately be elevated into the 2P Reserves category, once it secures funding.
When combined with its recently acquired Tommy Lakes processing and export infrastructure and a permit to construct a pipeline from its well-pads to the facility, Calima is primed to develop the contingent resources across its land independently when it secures funding.
Calima Energy Canadian President, Michael Dobovich said: “Calima is very pleased with the preliminary results provided by CDL’s technical evaluation confirming the high productivity of the Upper and Middle Montney and provides us a glimpse of the substantial potential of the Lower Montney which currently is not included within our resource statement. We look forward to providing further details once the full study is completed.”
The Perth-based, small-cap oil and gas developer subsequently carved out an impressive advantage for itself in the region on the back of the transformational Tommy Lakes acquisition.
Not surprisingly, Calima also pointed recently to a number of other, rather larger infrastructure projects where it will look to send its gas and oil once it starts development drilling.
The company said construction of LNG Canada’s processing facility near Kitimat on Canada’s west coast remains on track as it continues to tick off the milestones for the $40 billion LNG plant with an initial capacity of 13 million tonnes of LNG per annum, a throughput equivalent to 1,700 million cubic feet of gas per day, or “mmcf/d”.
Yet LNG Canada’s plant is looking to take just a fraction of the huge 7,900 mmcf/d of gas demand slated to be delivered by pipeline infrastructure projects currently underway and due for completion over the next few years.
Calima’s market research has also identified the aristocracy of the oil and gas industry who it says are all currently jostling for position to take fresh gas supplies across Canada and around the northern Pacific region. The names include the likes of Chevron, Woodside, TransCanada, Shell, Petronas, Mitsubishi, Korea Gas and even PetroChina.
The research also highlights why the Montney Formation is Canada’s hottest oil and gas play right now with it containing around four times the gas resource volumes of Western Australia’s revered North West Shelf.
Armed with a significant landholding which is ideally located in the middle of this burgeoning gas show, Calima appears to be making a sneak approach aiming for a front-row seat amongst the A-listers. When the time comes to make a formal development decision, possibly sometime next year, it should be ready to pounce.
Is your ASX listed company doing something interesting? Contact: matt.birney@businessnews.com.au
