Dividend and ESG Strategy
- Based on current commodity price forecasts and expectations with respect to operational and financial performance, Calima expects to be in a position to distribute up to 30% of free cash flow to shareholders from 2022.
- Calima would redeploy the remaining funds to support organic growth through development of Calima’s 2P reserves of 21.4 Mmboe and 64 booked1 drilling locations (approximately 23% of identified drilling inventory).
- Board and management are focused on delivering consistent long term returns to shareholders through financial discipline and ensuring strong environmental stewardship.
Calima Energy Limited is pleased to provide an update on the preliminary 2022 plan1.
With the current strength in the energy markets (WTI US$82/bbl; WCS differential of US$14.50/bbl and AECO gas price of C$4.80/gj) and continued operational success, the Brooks and Thorsby assets generate significant free cash flow, providing the Company with the opportunity to return capital to shareholders while simultaneously providing sufficient funds to grow the business organically from its reserve base and well inventory or via strategic acquisitions complementary to existing operations.
The 2022 plan is modelled on a 13 well drilling program. As the Company has an extensive well inventory, the well count in 2022 can be increased with continued drilling success and a sustained strong commodity price environment. The Company is currently reviewing its scheduling and critical path items are being secured. Prior to year-end 2021, the Company intends to provide updated guidance for 2022.
The Board and Management of Calima are focused on delivering consistent returns to shareholders and based on current expectations with respect to 2022 plans and commodity pricing, expects to be in a position to allocate up to 30% of its free cash flow towards dividends and or other forms of capital returns.
The Company proposes to protect this commitment through a conservative hedging program to manage commodity price risk, thereby securing a base cash flow. Surplus free cash will be redeployed into the development of the Company’s PUD and 2P inventory, which has the ability to generate significant returns utilising existing infrastructure.
Having strategically acquired the Blackspur assets in a lower commodity price environment back in April 2021, Calima’s assets are now delivering significant returns at current commodity prices.
The Company continues to advance the process to realize value from its liquids rich Montney acreage with Peters & Co Limited in Calgary.
Calima is dedicated to conducting its operations to be in full compliance with both provincial and federal environmental regulations and reporting obligations. Calima is fully committed to the continued development of a corporate ESG strategy, and plans to publish a maiden annual sustainability report in the first quarter of 2022.
The Company also takes its asset retirement obligations very seriously and is actively participating in the Government of Alberta’s Site Rehabilitation Program (“SRP”). Since commencement of the SRP program in May 2020, grants totalling C$1.1 million have been utilized to decommission 42 wells in the Brooks and Thorsby core areas.
The Company is focussed on reducing its Asset Retirement Obligation (“ARO") on a continuous and ongoing basis, and plans are to decommission 10-15 wells in 2022 in addition to reclamation work. Calima maintains a peer leading ARO which significantly assists the Company in capital management and additional acquisition opportunities.
Glenn Whiddon, Chairman CEO, states that:
“Our long-term strategic focus is on maintaining the highest ESG standard along with commercial and operational excellence to generate superior returns to shareholders. I wish to thank our team in Canada led by Jordan Kevol for their concerted commitment to the Company’s progress and growth.”