The New Year has got off to a positive start for investors in Calima Energy (ASX: CE1) with the spudding of the oil and gas play’s first well to test the prospectivity of its vast 72,000-acre land holding in the Montney Basin, Canada’s most active hydrocarbon basin.
Calima-1 vertical well, the first of the much-anticipated maiden three-drill rig program which will also include two horizontal wells, has now spudded and is planned to be drilled to a total depth of 1,860m.
We are delighted to get this drilling campaign underway and are appreciative of the support of our shareholders which has enabled us to reach this milestone,” said Calima’s Managing Director Alan Stein.
The operations team are doing an outstanding job and we look forward to presenting further results over the next few weeks.”
The company will collect core data over a substantial section of the Montney interval from Calima-1. This will be followed by the acquisition of a full suite of wireline logs.
Data from the wireline logs will be used to confirm the depth of the two horizontal wells which will be drilled immediately after Calima-1 logging operations.
According to Calima, the wireline and core data combined will provide essential stratigraphic and rock property data that will be integrated with the results of the two horizontal wells to determine the productivity of the Montney Formation over the Calima Lands.
Calima said the operations remain on schedule and on budget with the company having raised a substantial $25 million in an oversubscribed placement back in August last year.
The company is hoping the initial drill program will hit a liquids-rich northern extension of the Montney Formation.
Calima is also planning on drilling three additional production wells and a pipeline (C$9m) connecting its wells to nearby infrastructure. Once the pipeline is complete, the company plans on connecting all five horizontal wells.
In a research note released late last year by Morgans, Calima was valued in the range of A$0.09-$0.30ps with Morgans analyst Adrian Prendergast noting positive results from drilling could lead to shorter term production scenarios which would boost Calima’s long term corporate appeal particularly to potential LNG developers.
Shares in Calima have gained 0.1c, or 2.2%, to 4.7c in afternoon trading on Monday.