Calima Energy Ltd (ASX:CE1) has completed its drilling program over the Leo well contingent, a string of oil and gas assets within the Thorsby development field in Alberta, Canada.
The energy stock drilled three wells during the campaign and spudded the concluding Leo #3 asset on September 7.
On average, the Leo wells reached a measured depth of roughly 3,270 metres, while their 90-day initial production (IP) estimates are set between 274 and 460 barrels of oil per day.
Moving ahead, the fracture stimulation process is poised to kick off across all three Leo wells next month, with initial production expected in November.
Shows “as good or better than expected”
Calima CEO Jordan Kevol spoke to the Leo drilling program’s conclusion in an ASX announcement on Monday.
“All three wells have been drilled and cased and the oil and gas shows were as good or better than expected.
“We are getting the site ready for the fracture stimulation program and expect it to be positive for corporate production as we move towards 4,500 barrels of oil equivalent per day.”
Leo #3 was drilled to a total measured depth of 3,681 metres earlier this month, bringing the drilling portion of the Leo program to a close.
As they move into the fracture stimulation stage in early-mid October, it’s anticipated each well will have between 46 and 51 fracture stages, averaging one tonne of sand per metre over the productive zone.
Flow back operations should kick off one week after fracture operations, while well production will commence once on-lease tie-ins are complete.
These wells are considered development in nature with low geological risk.
Location of the Thorsby development field and gas plant.
Developing oil & gas assets in western Canada
In February this year, Calima inked a C$17 million merger with Blackspur Oil Corp, a Canadian company with a five-year, 64-gross well development plan.
The deal saw the ASX-lister strengthen its foothold in western Canada’s oil and gas province, acquiring producing assets within the Brooks and Throsby development fields.
At Thorsby, Calima is focused on the Sparky Formation, where It has drilled 11 wells to date outside of the Leo contingent.
Meanwhile, at the Brooks tenement, the company has drilled 48 wells.
By the end of 2022, Calima hopes to grow the combined production rates across the Brooks and Thorsby fields to 5,500 barrels of oil equivalent a day.
Drilling the Sparky Formation
Of the 11 wells drilled over the Sparky Formation at Thorsby, the tier-one (or second-generation) wells averaged a measured depth of roughly 3,400 metres.
It cost around $2.5 million to drill, equip and tie-in each well.
Meanwhile, the Leo well contingent has been optimised, with all three wells — which are also drilled along the Sparky Formation — averaging 320 more metres of measured depth.
The wells are expected to have around 50 fracture stages and cost $3.2 million each to bring online.
At the 90-day IP mark, Calima expects the Leo wells to generate as much as 460 barrels of oil equivalent per day — with 80% of that expected to be oil.
This means there’s cumulative production potential of up to 462,000 barrels of oil equivalent.
In terms of economics, the Sparky wells are expected to reach payback roughly five to 10 months after they come online, while the net present value at a 10% discount lands between C$6.5 million and C$8.8 million.
Some of the other key statistics are::