Calima Energy has added to the January 2022 drilling program to incorporate a high impact unconventional oil well on its inventory acreage in the Greater Thorsby Area at North Thorsby (Leo #4).

Highlights:

• Leo #4 spudded on 20 January 2022 on North Thorsby acreage
• Calima holds a 50% working interest in the well and is the Operator
• Objective of the well is to successfully expand the greater Thorsby area, providing cash flow generation, reserves growth and drilling inventory in a meaningful way to the company
• Capital program funded from operational cash flows and National Bank debt facility

Jordan Kevol, CEO and President:
“The commencement of the January 2022 drilling campaign reflects a strong start to the year for the Company with the drilling of Leo #4. North Thorsby is a new development area for the Company and Leo #4’s level of success will potentially open up additional reserves to book and subsequently develop.  

Leo #4 Well, 50% WI

Leo #4 is an unconventional oil well at North Thorsby and spudded on 20 January 2022. The Company holds a 50% WI in the well and the North Thorsby prospect area, which is prospective for the development of multiple Sparky age oil bearing channel sands. The Company holds a significant land position in the North Thorsby area with its partner. No reserves are currently booked in the North Thorsby prospect area. No production facilities are currently owned at North Thorsby, and will be added on an as-needed basis upon success.

North Thorsby contains a series of 18-20 API oil charged Sparky Formation channel sands that contain some of the thickest oil columns in the regional area. North Thorsby is estimated to have over 200MMbbl OOIP with some of the sections approaching an OOIP of 28MMbbl. Active drilling to the east provides strong analogues and the Sparky intervals in North Thorsby are expected to be similar. With this resource scope the area provides the potential for significant locations and reserves growth over time
that will be strategically developed.

The well has been designed to test a thick channel for productivity and is the first step in starting to develop the Sparky and expand the greater Thorsby fairway. The well is a horizontal well that will have a cemented liner throughout the horizontal section with a series of multi-cycle frac ports spaced approximately 42 meters apart within the portion of the wellbore that encountered the Sparky Formation.

The Company plans to frac and tie-in the well in late Q2 or Q3 2022, pending spring break-up conditions. Due to weather conditions and spring break-up, timing for this work has not been finalized, however it will be planned to most effectively minimize overall capital expenditures and risk of overruns.

The target Sparky intervals contain 10-30m of pay-zone with an average porosity of 15% and a corresponding average permeability of 15mD. The Company currently has inventory of 20-30 potential HZ locations with room to add additional locations with minor offset land purchases/leasing.

Sparky Economics

Calima has drilled 14 Sparky wells to date. Leo #4 will be a 3rd generation Sparky well utilizing longer lateral length, and more intensive fracture stimulation compared to Generation 2 Sparky wells from 2018-2019. 3rd Generation Sparky wells average 1.0 ton of frac sand per meter over the horizontal length during completion.

The North Thorsby well is budgeted for $3.6 million ($1.8 net) for drilling and completion, as this is a “one-off well” and will not receive the benefits of economies of scale when multiple wells are drilled in a program. The equip and tie-in costs for this well are estimated at $1.1 million ($0.55 net) as the Company does not have any existing infrastructure in the North Thorsby area, therefore this well will be set up as a “single well battery” during its evaluation stage. The Company’s 50% share of initial drilling
costs this quarter will be ~$750,000.

More wells may be drilled in the area upon success with the first North Thorsby well. There are no horizontal Sparky Formation wells drilled in the North Thorsby area, nor any existing production from the Sparky age rock. Therefore, detailed economics on the North Thorsby prospect are not being provided at this time. Once IP90 rates have been achieved later this year, an update on the productivity of Leo #4 will be provided. An update regarding drilling success, and perceived reservoir quality will be provided subsequent to the completion of drilling. 

KeyFacts Energy: Calima Energy Canada Onshore country profile