ASX-listed oil and gas company Calima Energy is reaping the benefits of its 72,000 acre stake in the hydrocarbon-rich Montney basin in British Columbia Canada, raking in C$1.2m in forward sales from its Paradise conventional oil well.
While the main game for Calima is its unconventional gas reserves – with a maiden well drilled and production testing imminent – its Paradise well located 180km southeast of its core tenements has proved an attractive secondary asset.
The well had been shut-in since 2016 and was brought back online by Calima this year for a meagre A$400,000.
Following the well’s refurbishment, it has recorded a stabilised production rate of approximately 16-20 barrels of oil per day.
Calima will receive C$1 million immediately and the net well production payments will be repaid monthly over a period of 36 months.
The cash injection should prove a nice boost for Calima which has been inching towards production testing since completing its maiden well in February 2019.
Recently, a coiled tubing unit required replacing, causing a slight delay but the energy company has confirmed that production testing will commence in approximately two to three days.
Investors will be closely eying the production testing, which will confirm the productivity of the Calima wells.
To date, drilling has exceeded expectations with both core analysis and wireline log data confirming that Calima’s wells represent a valid analogue to other nearby Montney producers.
The Montney continues to represent compelling ground for energy prospectors as Canada’s most active energy play.
It has been estimated that the Montney contains remaining reserves of approximately 449tcf of gas and 14.4 billion barrels of condensate across 130,000km2.