ASX-listed explorer Calima Energy (ASX:CE1) has received oil and gas analysis from its successful maiden wells, located in the Montney basin in Canada, validating its 2014 prediction that a section in the northern tip of the Montney holds major liquids-rich potential.
The Montney is now Canada’s most active oil and gas play, but was significantly less active when Calima moved to acquire land in the region, with the company now holding 72,000 acres of prospective drilling rights.
Calima has just completed a maiden drilling campaign, which intersected a large gas resource and pleasingly for the oiler, a relatively high proportion of condensate, which is sold at a considerable price premium.
Commenting on the result, Calima Energy managing director, Alan Stein said:
“The analyses of gas and liquids compositions have further validated our prediction that the Calima Lands are located within the sought after liquids-rich trend of the Montney. These results complement the core and logging evaluations reported previously.
“It is particularly pleasing to note that this all matches the predictions that were the basis of our initial investment strategy back in 2014. At that time the Calima Lands were unlicensed and considered beyond the limits of the Montney play. This allowed us to acquire 72,000 acres of drilling rights with an average entry cost of C$130 per acre and has given us a strong platform to create value for shareholders in one of the best resource plays in North America.”
Analyses of the collected samples has identified that the composition of Calima’s gas and condensate is almost identical to the average of 33 wells drilled by an adjacent Operator.
Additionally, Calima had based its predrill resource estimates on an approximate 50:50 ratio of condensate to gas but the recent drilling delivered condensate (or light oil) rates that consistently exceeded 70% of all returns.
An estimated 70:30 liquids to gas ratio compares very favourably to the 33 comparison wells and significantly increasing the potential value of its tenements.
The next phase of the company’s testing will focus on Pressure-Volume-Temperature analyses to assist with the determination of the condensate gas ratio to be applied during reserves and resource calculations.
Calima expects to deliver its Reserves report in May this year.