Highlights:

• Calima-1 vertical well drilled to a depth of 1,872.5m.
• Montney Formation is 256.5m thick with the top and base of the sequence being encountered very close to prognosis.
• Wireline log data confirms that porosities and hydrocarbon saturations within the Montney Formation in the Calima-1 well are comparable with adjacent producing wells.
• Core analysis confirms presence of natural gas condensate (calculated API gravity of 520 API).
• The Calima-2 horizontal well has been spudded.

Calima Energy Limited advises that the Calima-1 vertical well (official designation – Calima Tommy A-54-C/94-G-09) has reached a total depth of 1,872.5m*. The top of the Montney Formation was encountered at 1,559.5m against a prognosis of 1,562.2m and it is 256.5m thick against a prognosis of 257.3m.

Alan Stein, Calima’s Managing Director commented:
“We are delighted with the operational progress and initial results from the Calima-1 well. Our prediction that the Montney Formation on the Calima Lands would be comparable to the productive land immediately to the south appears to have been validated. We have encountered zones with enhanced reservoir characteristics containing gas and natural gas condensates with a calculated API gravity of 550. This is particularly significant for our economics because condensates from the Montney are generally priced at a premium to West Texas Intermediate (WTI) crude oil. The Calima 2 horizontal well has been spudded and we look forward to results from an extended production test over the coming weeks.”

Prior to completing the Calima-1 well a full suite of wireline logs were acquired to compliment the 230 m of core already collected (see announcement 15th January 2019). The wireline log data were acquired and evaluated by Schlumberger with a separate evaluation of the logs undertaken by Nutech. The log data are clearly correlateable to nearby wells with preliminary analyses showing hydrocarbon saturations and porosity measurements throughout the Montney to be comparable with offset wells that are currently producing in adjacent acreage.

Analysis of the log and core data from Calima-1 has confirmed the presence of three target zones within the Montney which matches those zones already targeted by other Operators in the region. Most of the horizontal wells in the acreage immediately to the south have targeted the Upper and Middle target zones. Of significance, analyses of the logs and core recovered over the Upper and Middle target intervals has demonstrated the presence of natural gas condensate.

Dr Raphael Wust, Senior Technical Advisor at AGAT Laboratories in Calgary commented:
“The 230m of core recovered by Calima Energy captures almost the entire Montney Formation with all major geological units observed. Initial laboratory results indicate two zones from the upper core barrel with elevated amounts of natural gas condensates with a specific gravity of c. 0.76 and calculated API gravity of 550 API dominated by compounds lighter than C17. Within the lower core barrel, a thermally more mature gas-rich zone is also present. The initial results are encouraging for new opportunities in this underexplored northern part of the Montney Formation. AGAT Laboratories is excited to be involved in the project.”

The new data are being evaluated to determine the precise depth of two planned horizontal wells which will target the Upper and Middle target zones. Both of the wells are planned to have 2,500 m horizontal sections and the first, Calima-2 (official designation, Calima 02 Hz Tommy a-054-C/094-G-09), has already been spudded following completion of the Calima-1 vertical well. The second horizontal well, Calima-3 (official designation, Calima Hz Tommy a-A054-C/094-G-09) will be drilled immediately following completion of Calima-2.

Production testing of fracture stimulated horizontal wells will be required to determine the flow rates that can be achieved from wells in this area and the relative mix of gas and condensate that can be recovered.

* All reference depths and thickness are reported with respect to True Vertical Depth (TVD) after correction for the planned slight deviation on the vertical well.

History of the Montney

The Montney Formation has been the focus of oil and gas exploration since the 1950s, with early efforts targeting the Montney’s conventional sandstone and dolomite reservoirs. However it was the inaccessible oil and gas resources contained within the bounding siltstones, which would eventually prove to be the major prize. In the early years, limitations in technology meant this potentially vast resource remained undeveloped. Efforts to target the unconventional Montney play were restricted to vertical drilling for poor quality, conventional fine-grained sandstone reservoirs. However by 2005, with the advent of horizontal drilling and advancements in multistage horizontal fracturing techniques, the economic development of this extensive, unconventional resource became a possibility.  By the end of 2014, 97% wells drilled in BC were horizontal, with majority targeting the Montney play.

The first attempt to employ multistage hydraulic fracturing in a Montney horizontal well occurred in July 2005, near Dawson Creek. Initial production commenced at rates four-to-five times greater than previously drilled vertical wells in the same target horizon. This was quickly followed by other successful horizontal wells which, along with subsequent drilling and coincident geologic investigation, eventually defined the regional unconventional resource play trend. The Montney Formation has emerged as one of the most commercially attractive and compelling unconventional prospects in North America. More recently, following exceptional results in liquids-rich areas, a rush to find new liquid-rich sweet-spots has ensued.