Calima Energy (ASX:CE1) – high-margin oil and gas producerCraig Foley
Calima Energy Limited (ASX:CE1) Executive Chairman Glenn Whiddon provides an update on production at the company's projects in British Columbia and its plans for an active, low-risk drilling program developing proven reserves.
Michael Luu: Hi. This is Michael Luu for the Finance News Network, and today I'm joined by the Executive Chairman of Calima Energy (ASX:CE1), Glenn Whiddon. Hi, Glenn. Welcome to the network.
Glenn Whiddon: Good morning. Thank you.
Michael Luu: Now, first up, for those who are unfamiliar with the company, can you give us a quick introduction?
Glenn Whiddon: Calima is a Canadian-based operating company with oil and gas assets in the Montney and the Brooks and Thorsby. We have a large liquid-weighted gas asset that will participate in the LNG story, and we actually have torque and exposure to the rising oil and gas markets.
Michael Luu: Thanks, Glenn. The last time we touched base, you seemed to have a strong focus on the substantial land holding in the Montney in British Columbia. Could you elaborate on this?
Glenn Whiddon: The Montney is the main asset of the company, but unfortunately, when we went into the Montney, we were probably a few years too early in the cycle. Now that cycle is in our favor. Gas prices in Canada are north of $3 in Mcf. LNG is taking off. LNG Canada, operated by Shell, is going to be the lowest CO2 emitter in the world per tonne of LNG. So yes, it's still a core focus for the company.
Michael Luu: OK, Glenn, let's hone in on your drilling and production. Could you start by keeping us up to speed on your latest upgrade to production?
Glenn Whiddon: When we acquired the Blackspur assets, we were producing 2,500 barrels a day. Currently we're doing 3,100 barrels a day and our target is to reach 4,500 barrels a day and north of that in the next 12 months. The assets that we've acquired allow us to aggressively produce more oil and gas because they're onshore assets and we can respond to a rising oil market. On the downside, we can protect ourselves also.
Michael Luu: And what's in the development pipeline in the coming months?
Glenn Whiddon: The development pipeline is very easy. When you have onshore oil and gas assets in Canada, you have existing infrastructure, you have pipelines, you have facilities. We can drill a well every month for the next 24 months without running out of inventory. So, we will be just an aggressive developer of oil and gas assets in Canada with the existing assets.
Michael Luu: Lastly, Glenn, is there anything else you'd like to add?
Glenn Whiddon: I think, from our side, oil is currently today are above $70 a barrel. We think it's going to $100 a barrel. The reason we bought Blackspur was we believe that we can actually respond very, very quickly to a rising oil market. We can actually make a decision to drill a well and bring that well on to production anywhere between 30 and 45 days. And we can drill three wells a month, four wells a month. So, we are very exposed to a rising oil and gas price. However, on the downside, our break even is $26. So if the market does come down, we only have to shut in production at $26 a barrel. And I don't think anyone thinks oil's going to that level any longer.
Michael Luu: Glenn Whiddon, thanks for the update, and we look forward to hearing more from you in the future.
Glenn Whiddon: Thank you.
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