Hello and welcome to The Market Herald, I’m Daniella Atkinson, and this is The Topline.
Calima Energy is an environmentally responsible gas and oil producer engaged in the exploration and development of oil and natural gas assets in the Sedimentary Basin of Western Canada. They are an Australian-based company bringing Canadian oil to the ASX.
Today I am joined by the company’s CEO, Jordan Kavol. Lovely to see you.
TMH: Can you start by telling us about your experience and background in energy?
JK: Yeah, you bet. So I have a geology background, and I’ve worked at various public and private junior oil and gas companies here in Western Canada prior to Calima, I was the founder of a Canadian private oil and gas company called Blackspur Oil which was acquired by Calima in 2021.
TMH: Could you give us an overview of Calima Energy’s three major projects and their production status?
JK: Yeah. Calima has two producing areas and one large-scale prospective area. So the two producing areas are in the province of Alberta, and they are known as Brooks and Thorsby. Those are the two core areas of the company that were acquired via the Blackspur merger, and this is where the entirety of our 4,000 BOE per day of production comes from and where all of the company’s cash flow comes from. Brooks and Thorsby have grown from 2,400 BOE per day at the time of the Blackspur acquisition to over 4,000 BOE per day today, and our third project is a play known as the Montney formation. It’s located in northeast British Columbia, the next province over from Alberta, and Calima owns 34,000 acres of land in an area that is proven to be prospective for Montney formation gas. The Montney is the largest natural gas play in all of Canada. It encompasses a huge fairway across Alberta and BC, and in 2019, prior to the Blackspur acquisition, Calima drilled and tested two wells into its Montney acreage today, with the strong natural gas prices, we are planning the next state stage of development on our land base. We’re looking for a partner to help us develop this large-scale liquids-rich gas play. We do have tenure on the land until 2029, and that’s very good because Canada’s first LNG project, called LNG Canada, is scheduled to come online in 2025.
TMH: Focusing on your Brooks property, you have 5 new wells that are being drilled. How is this going, and what have the results been so far?
JK: Yeah, as we have announced, we’re right in the middle of drilling a five Well program on our Brooks property. We’re right in the middle of that program, and everything is going as expected so far. We anticipate having the first three wells on production in middle to late Q4 of this year, and then the last two wells will come into production for the first quarter of 2023.
TMH: Going into the financials, your recent Quarter reports are showing improved hedge book pricing, as well as an improved oil price and BOE. Could you talk a bit about that?
JK: Yeah. Calima had a significant number of barrels hedged throughout 2022. It was weighted more towards the first half of the year. So the majority of our hedging losses for 2022 are behind us. The small amount of hedging that we have for Q4 of 2022 is much closer to in the money than the ones earlier this year, and it is a much smaller quantum as well, and in fact, by the end of the year on December 31st, we will have no more hedges as of this time that goes into 2023. Oil prices were extremely strong throughout 2022. They’ve come off their high of about $125 WTI earlier this year, but they’re still very strong at over $85 currently for WTI, and over 60% of Calima’s production is weighted towards oil, and we’re producing a little over 4,000 BOE per day right now.
TMH: Can you tell us the details of your ROC and Maiden Dividend?
JK: Yeah, our Maiden dividend was structured as a return of capital, and it was paid in the first part of October. We paid a total of $2.5 million Australian, which is structured as a half-year return of capital. So if you annualize that, it represents approximately a 7% return based on our current market cap.
TMH: And lastly, what sets Calima Energy apart from other companies that are drilling in similar Western Regions but are also valued higher trading here in Canada on the CSE and TSX?
JK: Calima Energy presents a tremendous value. We’ve grown production significantly through the drill bit year over year, and at current oil and gas prices, our Brooks and Thorsby place has quick payouts, and we have excellent cash flow at 4,000 BOE per day. There’s also significant value yet to be unlocked in our large-scale liquids-rich gas play in the Montney. So based on our trading metrics and where we’re trading on the ASX relative to our Canadian peers on the TSX, it represents an excellent value opportunity on both the ASX and is available on the OTCQB exchange.
Thank you so much for joining me today, Jordan. I look forward to speaking with you again soon.
Calima Energy is trading on the ASX and OTCQB under the symbol CLMEF. You can also learn more at calimaenergy.com.
I’m Daniella Atkinson for the Market Herald. Thanks for watching the Topline.
FULL DISCLOSURE: This is a paid article produced by The Market Herald.