Calima Energy Announces Thorsby Drilling Update

Source: 9/13/2021, Location: North America

- The third well in the Leo drilling campaign at Thorsby, Alberta is underway. Leo #3 spudded on 7 September 2021

- Leo #2 was drilled horizontally to a total measured depth (MD) of 3,680m and well logs indicate the well is within expected reservoir quality with oil and gas shows as prognosed

- The Leo Sparky Wells (3rd Generation) have been optimised with respect to horizontal length, and planned fracture stimulation intensity. They will average ~3,800m MD (400m longer than previous generation) and ~50 fracture stages averaging 1.0 tonnes of sand per meter over the productive zone

- IP90 production rates per well are modelled at ~274-460 bbl/d with NPV10 of C$6.5-$8.8 million based on EUR’s of 352,000 – 462,000 boe (80% oil)

- Once drilling of Leo 3 is finished, all three wells will be subsequently fracture stimulated as part of the completion process. Well completion and flow back operations are expected to be initiated immediately after fracture operations. Well production will commence once on lease tie-ins are complete

- These wells are considered development in nature with low geological risk

Jordan Kevol, Calima CEO, states that:
“The Leo drilling program is progressing well. Leo #2 was drilled in the planned 10 days, and the oil and gas shows were excellent. We look forward to drilling Leo #3, and subsequently getting ready for the fracture stimulation program for all three Leo wells. These wells will be very impactful to corporate production, and will enable us to achieve our year-end production guidance of 4,500 boe/d.

Leo #1-3 Wells; 100% WI
Leo #2 completed drilling 3,680m MD through the Sparky Formation and the frac liner has been cemented into place.

The rig has been skidded over to the next Sparky well; Leo #3 was spudded on Tuesday night (Calgary Time). After Leo #3 is finished drilling, the rig will be released, and the Company will begin to prepare for fracture stimulation operations which are anticipated to commence later in the month.

The completion and fracture process for the 3 Leo wells is expected to begin in the fourth week of September with initial production anticipated in late October. All wells were drilled from a single pad location adjacent to the Company’s main Thorsby oil processing facility. This pad contains two of the best performing Thorsby Sparky wells which combined, have produced greater than 370,000 boe (300,000 bbl oil) since July 2018.

Sparky Economics
Prior to this drilling program the Company had drilled 11 Sparky wells. Of this total, the tier 1 wells (2nd Generation) averaged ~3,400m MD and 36 fracture stages with an average of 0.75 tonnes of sand per meter over the horizontal length. The per well cost to drill, equip, and tie-in averaged $2.5 million.

The Leo 1, 2 and 3 (3rd Generation) Sparky Wells have been optimised and will average ~3,800m MD (400m longer) and ~50 fracture stages with an average of 1.0 tonne of sand per meter over the horizontal length. The optimised wells are budgeted for $3.2 million per well and the Company anticipates IP90 rates of 270-460 boe/d (80% oil) with cumulative production of up to 462,000 boe.

Well paybacks are 5-10 months and the NPV at 10% discount is ~C$6.5-$8.8 million.
Thorsby Development Field
Production from the Leo program will come on stream in the fourth quarter of 2021. Thorsby provides a land base of ~108 net sections (69,620 net acres) that can be developed from multi-well pads, all of which have year-round access and minimise the environmental footprint, with oil processing facilities of 3,000 bbl/d oil capacity. Existing Thorsby wells averaged gross production of ~868 boe/d in July 2021 (100% WI) solely from the Sparky Formation. There are 11 wells drilled to date with future well recoveries estimated at 352 - 462 mboe (80% oil).

Well inventory includes 86 net Sparky Formation and 12 net Nisku Formation wells identified with multiple pools to be delineated (27 booked Sparky locations). Selected wells demonstrated significant type curve outperformance in the Sparky Formation.

Typical Sparky drilling and production timeframes

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