CALIMA ENERGY LIMITED
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
CORPORATE INFORMATION
Directors & Officers
Registered Office
Contact information
Auditor
Bankers
Share registry
Securities exchange listing
TABLE OF CONTENTS
Name
Glenn Whiddon
Jordan Kevol
Brett Lawrence
Lonny Tetley
Mark Freeman
Braydin Brosseau
Perth, Australia
(Corporate headquarters)
Suite 4, 246-250 Railway Parade
West Leederville WA
6007
Telephone: +61 (0) 8 6500 3270
Facsimile: +61 (0) 8 6500 3275
Title
Chairman
President, CEO & Managing Director
Non-Executive Director
Non-Executive Director
Finance Director & Company Secretary
CFO, Canada
Calgary, Alberta
(Operations headquarters)
Suite 1000, 205 5 Ave SW
Calgary, Alberta
T2P 0M9
Telephone: +1 403 460 0031
Email: info@calimaenergy.com
Website: www.calimaenergy.com
PricewaterhouseCoopers
Brookfield Place
Level 15, 125 St Georges Terrace
Perth WA 6000
Australian Bankers
National Australia Bank
Level 14, 100 St Georges Terrace
Perth WA 6000
Computershare Investor Services Pty Ltd
Level 11, 172 St. Georges Terrace,
Perth WA 6000
Telephone: +61 (0) 8 9323 2000
Facsimile: +61 (0) 8 9323 2033
The Company is listed on the Australian Securities Exchange (ASX).
ASX Code: CE1
Canadian Bankers
National Bank of Canada
Suite 1800, 311 – 6th Avenue SW
Calgary, Alberta T2P 3H2
Section
Highlights for the year ended 31 December 2021
Chairman & CEO’s letter
About Calima Energy Limited
Operational and financial results
Directors’ report
Consolidated financial statements and notes
Director’s declaration
Independent auditor’s report
Auditor’s independence declaration
Securities exchange information
Advisories & guidance
Appendix A: Schedule of interests in tenements
Page
2
4
5
6
17
27
51
52
60
61
62
65
1
HIGHLIGHTS
For the year ended 31 December 2021
Operational & Financial Results
(A$ thousands, unless otherwise noted)
Sales volumes
Total sales volume (boe)
Average daily sales volume (boe/d)(1)
Liquids percentage
Oil and natural gas sales
Oil
Natural gas
Natural gas liquids
Total oil and natural gas sales(2)
Earnings
Funds flow from operations(2)
Adjusted EBITDA(2)
Net loss(2)
Capital investments
Drilling and completion
Equipping, tie-in and facilities
Land and other
Investments in oil and natural gas assets(2)
Statement of financial position
Available funding(2)
Net debt(2)
Three months
ended
31 December
2021
Year
ended
31 December
2021
Year
ended
31 December
2020
294,561
3,202
68%
779,570
3,182
66%
16,348
3,055
411
19,814
$
$
$
5,849
9,383
(44,759) $
7,817
2,338
862
11,017
$
$
39,668
7,087
958
47,713
$
$
$
13,554
21,557
(31,980) $
19,651
4,934
2,245
26,830
$
$
$
$
$
$
$
$
6,038
16
100%
356
-
-
356
(1,119)
(1,169)
(6,395)
-
516
1,640
2,156
936
(382)
(1) Sales volumes reflect 245 days of contributions from Blackspur following the acquisition on 30 April 2021. Blackspur sales volumes reported on a boe/d basis have been
1,658
$
(27,805) $
1,658
$
(27,805) $
$
$
averaged over 245 days.
(2) Refer to Advisories & Guidance on page 62 and the Operational and Financial Results section on pages 6-16 for additional information regarding the Company’s GAAP and
non-GAAP financial measures.
Transformational growth in 2021
Acquisition of Blackspur – Following a A$38 million equity financing (before transaction costs), Calima completed the
acquisition of Blackspur Oil Corp. (“Blackspur”) on 30 April 2021 for total cash and share consideration of A$22.4 million
paid to Blackspur shareholders and a A$28 million reduction of Blackspur’s Credit Facility (the “Blackspur Acquisition”
or “Acquisition”). Blackspur was a privately held Canadian company which owned producing oil and natural gas assets
in two core operating areas within Alberta, at Brooks and Thorsby.
Blackspur was formed in 2012 and followed through with acquisitions totalling C$74 million and the drilling of 59 oil
wells funded via a combination of equity and debt. Prior to the Acquisition, Blackspur had invested over C$200 million
acquiring and developing its assets, as well as creating inventory and infrastructure to accommodate production growth
to over 10,000 boe/d.
2021 Capital Investments – Following the Acquisition, the Calima Group commenced the 2021 drilling program with
the development of four Sunburst Formation wells that were drilled, completed, and brought on production in the
Brooks area (Gemini 1-4). Two of the four wells were on stream in late June with the other two wells completed and
brought on stream in July. During the second half of the year, the Company also drilled, completed and brought on
stream three wells targeting the Sparky Formation (Leo 1-3) in the Thorsby area.
Production – Production of 294,561 boe (gross) of oil and natural gas, averaging 3,202 boe/d was achieved in the
fourth quarter of 2021. Year to date, the Company produced 779,570 boe (gross) of oil and natural gas, averaging 3,182
boe/d, a 30% increase compared to Blackspur’s average daily production during the year ended 31 December 2020.
Energy Prices – For the full year, benchmark prices averaged US$67.90/bbl WTI, C$68.74/bbl WCS and C$3.50/GJ
AECO. Average prices increased to US$77.19/bbl WTI, C$78.71/bbl WCS and C$4.41/GJ AECO during the fourth quarter
of 2021, reflective of improved demand fundamentals for both oil and natural gas in North America in response to an
ongoing global recovery from the COVID-19 pandemic.
2
Sales and earnings – Oil and natural gas sales were A$19.8 million and the Company delivered Adjusted EBITDA(2) of
A$9.4 million during the fourth quarter of 2021. For the full year, oil and natural gas sales were A$47.7 million and
Adjusted EBITDA(2) was A$21.6 million. The increase in sales and Adjusted EBITDA(2) in 2021 were primarily due to the
Blackspur Acquisition. Whilst Company recognized a net loss of $31.9 million for the year ended 31 December 2021,
this was primarily due to an impairment loss of undeveloped exploration assets.
Reserves – Following the 2021 drilling program, the Calima Group’s independent reserve engineer(1) completed an
updated evaluation of the Brooks and Thorsby assets as at 31 December 2021. The Company has confirmed 5.1 million
boe of proved developed producing (“PDP”) reserves and 20.4 million boe of proved plus probable reserves (“2P”).
Capital investments set to deliver strong free cash flow in 2022
Production ramp up – In the fourth quarter of 2021, the Company commenced flow back operations from the three
Sparky Formation wells (Leo 1-3) in the Thorsby area. Intermittent production commenced in mid-November and oil
and gas volumes from the wells continued to increase well into January as the wells cleaned up. As of March 2022,
corporate production was exceeding 4,000 boe/d.
2022 Forecast – the Calima Group approved a first half (H1) 2022 capital investment program of C$19.5 million for
continued development of the Company’s Brooks and Thorsby core areas. The Company’s capital program includes
three Glauconitic, three Sunburst wells, one step out Sparky well and the new Brooks pipeline. For the six months ending
30 June 2022, Calima is targeting:
(cid:127) Average daily production of 4,000 – 5,000 boe/d; and
(cid:127) Adjusted EBITDA(2)(3) of C$28-33 million based on forecasted production and commodity prices.
The Company commenced its 2022 winter drilling program early in December 2021. Fourth quarter investments
included the drilling of the first two Glauconitic Formation wells at Brooks (Pisces #1 and #2). A third Glauconitic well
(Pisces #3) and three Sunburst wells (Gemini #5-#7) were drilled in January. The wells were on production by the end
of first quarter. An additional step-out Sparky exploration well (Leo #4) was also drilled in the first quarter.
Strategic infrastructure development – On 31 January 2022, the Calima Group entered into a strategic
infrastructure financing arrangement with a third party to construct a field pipeline connecting the Company’s 02-29
battery in the northern portion of its Brooks, Alberta asset area to its wells, lands, and gathering systems in the southern
portion of the Bantry asset base. The pipeline was completed and brought on stream during the first quarter of 2022.
The pipeline is expected to reduce operating costs from the displacement of emulsion hauling and equipment rentals
and most importantly provide egress for many future drilling locations in the Sunburst, Glauconitic and Ellerslie
Formations which will improve full cycle economics of the Bantry field development plan. The pipeline is expected to
also reduce emissions from the displacement of trucking, improve the Company’s safety and spill prevention profile and
reduce flare volumes for each new well tied-into the pipeline as opposed to the allowable flare limits under current
regulations.
Liquidity and Corporate finance
2022 fundraising – On 17 February 2022, the Company successfully raised A$20 million in gross proceeds via a
placement of 100 million new fully paid ordinary common shares to institutional and sophisticated investors at an issue
price of A$0.20 per share. The oversubscribed issuance was strongly supported by existing shareholders and new
Australian and international investors. Proceeds from the issuance were initially used to reduce the amount drawn
under the Company’s revolving Credit Facility and will also fund the completion of the Company’s 2022 capital program.
Liquidity – The Company’s net debt(2) as at 31 December 2021 was A$27.8 million compared to A$16.4 million as at 30
June 2021. Growth in the Company’s net debt(2) in 2021 was primarily due to the Company’s investment in the Leo
drilling program and the acceleration of the 2022 drilling program at Brooks, including the drilling of Pisces #1 and #2
wells in December, as well as additional pipe inventory purchased for the drilling of Gemini #5-7 and Pisces #3.
Including the impact of cash received from the first quarter equity financing, anticipated free cash flow(2) and the
arrangement under the H1 2022 strategic infrastructure development, the Calima Group’s net debt(2)(3) is expected to
decline to C$2-C$5 million by mid-year 2022 following completion of the H1 2022 capital development program.
Share consolidation – On 10 September 2021, the Company completed a 20:1 share consolidation. The consolidation
has successfully reduced arbitrage trading and the Company is very pleased with the results to date.
(1) Refer to Calima's announcement dated 28 March 2022 ("Brooks and Thorsby Reserves Update 2022") (www2.asx.com.au).
(2) Refer to Advisories & Guidance on page 56 for additional information regarding the Company’s GAAP and non-GAAP financial measures.
(3) Based on forward looking assumptions consisting of: US$80/bbl WTI, US-$13.50/bbl WCS differential, 1.25 CAD/USD and C$3.50/GJ AECO.
3
CHAIRMAN & CEO’S LETTER
For the year ended 31 December 2021
To the Shareholders of Calima Energy Limited:
We are pleased to present the annual report of Calima Energy Limited (ASX: CE1) (“Calima”, “Calima Group”, “the
Company”) for the year ended 31 December 2021.
2021 was a monumental year for the Company. The Blackspur Acquisition has transformed Calima from a pre-development
explorer in the NE BC Montney play, to an oil and natural gas producer in Southern and Central Alberta with production
currently exceeding 4,000 boe/d. The recapitalisation was well-timed, with significant gains to the commodity price
environment having been experienced over the past year since that time, following a global demand recovery from the
COVID-19 pandemic. Looking ahead, we believe our investments have provided shareholders with great exposure to the
Canadian oil and natural gas sector and an opportunity for strong returns on these oil-weighted assets.
In 2021, our focus was on our core inventory of Mannville Formation targets, with four Sunburst wells drilled at Brooks and
three Sparky wells drilled at Thorsby. Blackspur also brought on stream three Sunburst wells just prior to the Acquisition.
Despite a number of challenges experienced during the year, the Company was able to successfully execute the program
by the end of the year. The three Sunburst wells at Brooks have since paid out, and production from the Thorsby program
has ramped up significantly during the first quarter of 2022. We continue to de-risk our plays through the drill bit, and the
learnings from the 2021 development activities are expected to provide meaningful efficiencies on future programs.
Safe production is paramount to our business. Calima has continued to build upon the strong safety performance exhibited
by Blackspur both before and after the Acquisition. We are proud to report that our 10-well capital investment program in
2021 was completed with zero lost time incidents or injuries occurring during the year.
The Company approved a H1 2022 capital budget of C$19.5 million for continued development of the Brooks and Thorsby
asset areas. The 7 (6.5 net) well program targeted development of the Glauconitic and Sunburst Formations at Brooks.
Additionally, the Company extended its prospective Sparky Formation by stepping out to the North end of our Thorsby land
position with a joint 50% net well. These programs are expected to greatly contribute to our production growth in 2022
and expand our inventory of high-graded drilling locations and reserves. Capital discipline and execution is a key focus for
Calima in 2022. We are selective and purposeful in the locations we choose to drill and have continued to employ a rigorous
geological and geophysical program aimed at reducing formation uncertainty prior to development.
Our strategy is about flexibility. We intend to grow production while still providing the Company an opportunity to generate
free cash flow for the reduction of debt, acquire new assets, and return capital to shareholders through share buybacks or
dividends. The Calima Group is seeking to take advantage of the current commodity price environment by investing in a
combination of core formation targets that will help grow the business in a profitable manner.
Calima is committed to pursuing a number of ESG initiatives aimed at reducing GHG emissions, reclaiming inactive well sites
and reducing our impact to the environment. We are committed operating safely, being a good neighbour and a being a
good corporate citizen. We are committed to establishing and maintaining strong corporate governance practices that will
lead the organisation to a long-term sustainable future.
Thank you for your continued support.
Glenn Whiddon
Executive Chairman
Jordan Kevol
CEO & Managing Director
4
ABOUT CALIMA ENERGY LIMITED
Calima is a production-focused energy company pursuing the exploration
and development of oil and natural gas assets in the Western Canadian
Sedimentary Basin. The Company is currently developing its oil plays at
Brooks and Thorsby in southern and central Alberta. Additionally, Calima
owns a significant undeveloped Montney acreage position at Tommy Lakes
in north-eastern British Columbia. The Company is dedicated to
responsible corporate practices, and places high value on adhering to
strong Environmental, Social and Governance ("ESG") principles.
Brooks Sunburst & Glauconitic
The Company’s Brooks assets consist of a core land position of >40,000
acres primarily targeting the Sunburst and Glauconitic formations. The
Brooks assets currently has over 60 wells producing >2,300 boe/d. The
Sunburst Formation does not require hydraulic fracture stimulation and
can be developed at low cost (C$1M-$1.4MM per well) delivering attractive
rates of return. The Brooks reservoirs contain a low CO2 content at ~2%,
and the Company’s multi-well pad drilling reduces the environmental
footprint. The Brooks area contains significant infrastructure that creates a
foundation for growth and expansion with year-round access. Blackspur’s
existing infrastructure across the entire Brooks area can process up to 8,200
bbl/d oil, 26,700 barrels per day of water and 12 MMcf/d. The Glauconitic
Formation is a shallower (younger) formation than Calima’s core Sunburst
conventional play and requires hydraulic fracture stimulation. The
combination of the shallow target depth and short tie-in, results in an all-in
cost for each well of C$2-$3M, depending on chosen horizontal length of
the wellbore.
Thorsby Sparky
The Thorsby asset consists of a core land position of >62,000 acres primarily
targeting the Sparky Formation. The Thorsby asset currently has 14 wells
producing >1,800 boe/d. Thorsby has a large well inventory with 86 Sparky
Formation and 12 Nisku Formation wells identified, including 20 Sparky
PUD locations. The Company’s existing Sparky Formation wells are
characterised by low base decline rates, which is expected to average 22%
(average over two years). The Company’s Thorsby position provides a
consolidated land base that can be efficiently developed through a network
of multi-well pads, all of which have year-round access. The contiguous land
base also contributes to lower operating costs through greater logistical
efficiencies. The Calima Group’s facilities currently have oil processing
capacity of up to 4,000 bbl/d oil (subject to emulsion water cut volumes at
the battery).
Tommy Lakes Montney
Calima currently owns and operates more than 33,600 acres of continuing
Montney rights (Calima Lands) in northeast British Columbia (NEBC),
Canada under a 10-year PNG lease over 49 contiguous sections resulting
from the successful 2019 drilling program. The Tommy Lakes field facilities
owned by Calima lies immediately to the north of the Calima Lands. The
facilities are fully permitted and have been preserved for future
recommissioning. Approval to construct and operate a multi-well
production facility has been received, which includes a permit to construct
a pipeline to connect the Calima well-pad with regional pipeline and
processing infrastructure. The pipeline will connect existing and future
Calima wells to the Company’s Tommy Lakes infrastructure with capacity
to transfer up to 50 MMcf/d of wet gas and 2,500 bbl/d of wellhead
condensate through to the North River Midstream sales line, providing
access to the Canadian and US markets to AECO, Alliance and T-
North/Station 2. Calima continues to evaluate strategies with respect to the
Calima Lands to unlock shareholder value through development,
partnerships, farm-out or outright sale.
5
OPERATIONAL AND FINANCIAL RESULTS
For the year ended 31 December 2021 and 2020
Production and sales
Sales volumes
Oil (bbl)
Natural gas (Mcf)
Natural gas liquids (bbl)
Total sales volume (boe)
Average daily sales volume (boe/d)(1)
Liquids percentage
Three months
ended
31 December
2021
193,425
571,942
5,813
294,561
3,202
68%
Year
ended
31 December
2021
497,195
1,597,906
16,058
779,570
3,182
66%
Year
ended
31 December
2020
6,038
-
-
6,038
16
100%
(3) Sales volumes reflect 245 days of contributions from Blackspur following the acquisition on 30 April 2021. Blackspur sales volumes reported on a boe/d basis have been
averaged over 245 days.
Production in 2021 primarily relates to Calima’s two core development areas at Brooks and Thorsby Alberta that were
acquired in the Blackspur Acquisition on 30 April 2021. The production split for 2021 was approximately 70% Brooks and
30% Thorsby. For the year ended 31 December 2021, the Calima Group produced 779,570 boe of oil and natural gas (3,182
boe/d, averaged over 245 days) during the months of May through December. Volumes produced by Blackspur prior the
Acquisition have not been included Calima’s consolidated results.
The following table summarises the historical production of Blackspur before and after the Acquisition as well the
Company’s expected production forecast for H1 2022:
Blackspur’s unconsolidated production during the year ended 31 December 2020 averaged 2,446 boe/d. Growth in
production from the Blackspur assets in 2021 was primarily due to seven Sunburst Formation wells at Brooks brought on
stream during the year. The Company also reactivated a select number of wells during the year which had been suspended
in response to a low commodity price environment stemming from the COVID-19 pandemic.
Calima’s fourth quarter production of 3,202 boe/d was in line with average daily production for the year and the Company
exited the fourth quarter at ~3,500 boe/d, as preliminary volumes from the three Sparky wells at Thorsby (Leo drill program)
late in the quarter were offset by production shut-ins of existing Thorsby wells during the Leo completion activities and
natural declines on base production. Additionally, extreme cold weather in December (minus 35oC and colder), together
with holiday periods and limited-service availability, restricted well and facility operations during the month which impacted
6
the Company’s fourth quarter volumes. Despite these conditions and a resurgence of COVID-19, Calima was able to
successfully complete workover activities on the wells in December and early January with all three wells back on stream
by mid-January, however, production was deferred during this period. The Company expects run-times on the three Leo
wells to improve in 2022 as they continue to clean up from their fracture stimulations. As of March 2022, the Calima Group
is producing over 4,000 boe/d.
In 2021, the Calima Group produced 6,038 bbls (16 boe/d) of light oil from a single producing oil well in Northeastern BC,
south of the Company’s Tommy Lakes Montney asset.
Commodity prices
Benchmark prices and exchange rates
WTI (US$/bbl) – US Dollars
WTI (C$/bbl) – Canadian Dollars
WCS (C$/bbl) - Canadian Dollars
AECO (C$/Mcf) - Canadian Dollars
Foreign exchange (USD/CAD)
Foreign exchange (AUD/CAD)
$
Three months
ended
31 December
2021
77.19
97.20
78.71
4.41
1.26
1.09
$
$
Eight months
Ended(1)
31 December
2021
72.47
90.56
73.67
3.73
1.25
1.08
$
Year
ended
31 December
2021
67.90
85.10
68.74
3.50
1.25
1.06
$
$
Year
ended
31 December
2020
39.25
52.68
35.40
2.25
1.34
1.08
$
$
(1) Figures have been presented for the eight months ended 31 December 2021 in order to provide users of this report with better comparability to the Company’s actual
realised prices and revenues for the 12 months ended 31 December 2021, substantially all of which was incurred subsequent to the Blackspur Acquisition on 30 April 2021.
The price of West Texas Intermediate (WTI) at Cushing, Oklahoma is the primary benchmark for crude oil pricing in North
America. The price that Calima receives for its oil production is primarily based on the Western Canadian Select (WCS)
benchmark price, which is driven by the price of WTI and local supply and demand, adjusted for changes in foreign exchange
rates, transportation and quality differentials. The majority of the Company’s oil production is delivered and sold in central
and southern Alberta at local oil terminals near the Brooks and Thorsby assets.
During the fourth quarter of 2021, WCS pricing averaged C$78.71 per bbl, compared
to C$71.79 per bbl during the third quarter of 2021 and C$66.99 per bbl during the
second quarter. Crude oil prices continued to strengthen throughout 2021 driven by
the global rollout of COVID-19 vaccines. Northern American crude oil inventories
were drawn down for much of the year, particularly in the second and third
quarters, as a result of higher demand for oil as government restrictions were lifted
and economies re-opened. The foreign oil supply policy applied by OPEC+ has also
resulted in strengthening oil prices during the year. Despite these improvements,
the oil markets continued to experience volatility late in the year from the continued
spread of COVID-19 variant strains and rising tensions in the Middle East and Eastern
Europe.
Oil prices during the year ended 31 December 2020 were lower primarily due to reduced demand stemming from global
lockdown measures imposed by Governments in response to the COVID-19 pandemic.
The Calima Group sells its natural gas into the local NGTL system in southern Alberta. Accordingly, the AECO price is the
primary benchmark for the Company’s natural gas sales. The Calima Group’s natural gas is processed primarily at third-
party shallow-cut facilities. Accordingly, the Company generally receives a premium for its natural gas relative to the AECO
benchmark which is largely due to a higher concentration of liquids in the gas stream and, therefore, has a higher relative
heat content compared to the quoted benchmark price (as natural gas is sold by the gigajoule).
Average natural gas prices increased to C$4.41 per Mcf during the fourth quarter of 2021, compared to C$3.41 per Mcf
during the third quarter and C$3.07 per Mcf during the second quarter, primarily due to colder seasonal weather which led
to higher demand for heating. Natural gas fundamentals have remained strong throughout 2021 with prices averaging
C$3.73/Mcf during the eight months ended 31 December 2021. Increasing oil sands production, the phase-out of coal
energy in the Western Canada, an expanding petrochemical industry and increased power generation has led to higher
local demand for natural gas. Lower overall gas supplies as a result of curtailed North American investments in natural gas
developments in response to COVID-19, combined with continued strong LNG exports out the southern United States, are
expected to be constructive for natural gas benchmark prices in the near term.
7
Realised prices and sales
Realised prices
Oil (A$/bbl)
Natural gas (A$/Mcf)
Natural gas liquids (A$/bbl)
Oil and natural gas sales (A$ thousands)
Oil
Natural gas
Natural gas liquids
Total oil and natural gas sales
Adjusted EBITDA
Three months
ended
31 December
2021
Year
ended
31 December
2021
Year
ended
31 December
2020
$
$
$
$
84.52
5.34
70.70
16,348
3,055
411
19,814
$
$
$
$
79.78
4.44
59.66
39,668
7,087
958
47,713
$
$
$
$
58.96
-
-
356
-
-
356
(A$ thousands)
Oil and natural gas sales
Royalties
Operating expenses
Transportation
General and administrative expenses
Other income
Adjusted EBITDA(1)
(1) Refer to Advisories and Guidance on page 56 for additional information regarding the Company’s GAAP and non-GAAP measures.
$
$
$
$
Three months
ended
31 December
2021
19,814
(3,823)
(3,952)
(1,193)
(1,463)
-
9,383
Year
ended
31 December
2021
47,713
(9,136)
(10,079)
(2,700)
(4,241)
-
21,557
Year
ended
31 December
2020
356
(31)
(32)
(31)
(1,450)
19
(1,169)
$
$
Adjusted EBITDA was $21.6 million compared to ($1.2) million in 2020. The increase in adjusted EBITDA was primarily due
to the Blackspur operating results since the date of the Acquisition on 30 April 2021. Adjusted EBITDA in 2020 primarily
related to Calima’s corporate overhead expenses and operating costs incurred on the inactive Montney assets.
The Calima Group pays royalties to various freehold royalty owners under various terms and rates, as well as to the Province
of Alberta, in respect of the Company's production and sales volumes. In 2020 and 2021, Blackspur’s royalty rate has
averaged approximately 18-19% of gross oil and natural gas sales.
The Calima Group’s operating expenses primarily consist of the field lifting costs associated with the Company's production
from the Brooks and Thorsby asset areas, including operatorship labour, chemicals, energy related costs, lease rentals and
property taxes. The Company also incurs processing fees at third-party facilities for the gathering and processing of the
Company’s natural gas production.
Transportation expenses are primarily related to trucking costs associated with the handling and transport of the
Company’s produced emulsion and oil and to local receipt terminals where the oil is then delivered to market. Pipeline
tariffs are also recognised in respect of natural gas deliveries on the Alberta NGTL pipeline transportation system.
General and administrative expenses primarily consist of the Company’s overhead costs at the Australian and Canadian
head offices incurred to support ongoing operations of the Brooks, Thorsby and Montney assets. Compared the prior year,
the increase in G&A expenses in 2021 were primarily due overhead costs associated with Blackspur.
8
Net income (loss)
For the year ended (A$ thousands)
Adjusted EBITDA(1)
Financing and interest
Deferred income tax (expense) recovery
Depletion and depreciation
Exploration expense
Impairment loss
Realised loss on risk management contracts
Unrealised gain on risk management contracts
Gain on acquisition (net)
Transaction costs
Share-based compensation
Foreign exchange and other
Net loss
$
Three months
ended
31 December
2021
9,383
(326)
(1,491)
(4,399)
(11,131)
(37,628)
(3,222)
4,323
-
(112)
(169)
13
(44,759) $
$
$
$
Year
ended
31 December
2021
21,557
(804)
169
(7,531)
(10,927)
(37,628)
(7,210)
816
11,438
(1,032)
(919)
91
(31,980) $
Year
ended
31 December
2020
(1,169)
(155)
-
(261)
-
(4,710)
-
-
-
-
(85)
(15)
(6,395)
(1) Refer to Advisories and Guidance on page 56 for additional information regarding the Company’s GAAP and non-GAAP measures.
During the year ended 31 December 2021, the Calima Group recognised a net loss of $32.0 million compared to a net loss
of $6.4 million in 2020. The net loss in 2021 was primarily due to asset write-downs taken in respect of the Tommy Lakes
Montney assets, partially offset by a net gain on acquisition recognised as part of the Blackspur Acquisition and Blackspur
earnings realised subsequent to the Acquisition. Losses recognised in 2020 primarily consisted of the Calima Group’s
corporate overhead expenses as well as impairment losses related to other E&E expenditures incurred during the year.
In the fourth quarter of 2021, the Calima Group recognised land expiry losses of $10.9 million, primarily in respect of the
Company’s prospective Montney acreages for which there were no drilling plans in the near term that were necessary to
extend the license tenure in the prospective northern region of the play.
Following a strategic review of the assets during the fourth quarter of 2021, the Calima Group determined that indicators
of impairment were present for the residual carrying value of the Montney assets and the Company completed a test for
impairment. The results of the impairment test indicated that the net book value of the assets may exceed its recoverable
value and the Calima Group recognised an impairment loss provision of $37.6 million. The impairment loss primarily consists
of the costs related to pad construction, drilling and completion expenditures associated with Calima’s two-well Montney
exploration program in 2019. The impairment loss could be reversed in future if circumstances indicated a material
improvement in the recoverable value.
Risk management contracts relate to Calima’s commodity price hedging program which is designed to limit downside
exposure to market volatility, ensure a sufficient level of cash flows to service debt obligations and ensure capital is available
to fund the Company’s development and operational programs. The Company also must maintain minimum hedging
requirements under the terms of the Credit Facility. During the year ended 31 December 2021, Calima recognised a $6.4
net loss on risk management contracts primarily due to rising commodity prices, particularly for oil (WTI), relative to the
Company’s fixed contract positions.
As a result of the Blackspur Acquisition, Calima recognised a net gain on acquisition $11.4 million, reflecting the fair market
value of assets acquired and the recognition of associated deferred income tax assets, in excess of the consideration paid.
The Company also recognised $1.0 million in transaction costs associated with the Acquisition.
Depletion and depreciation in 2021 reflects the development cost of Calima’s oil and gas investments which are initially
capitalised and then amortised to net income over their estimated useful lives. The majority of the Company's PP&E is
depleted using the unit-of production method based on the estimated recoverable amount from 2P reserves. The depletion
base consists of the historical net book value of capitalised costs, plus estimated future development costs required to
develop the Company's estimated 2P reserves. For the year ended 31 December 2021, the Calima Group’s depletion and
depreciation expense averaged $9.66/boe.
Calima recognised share-based compensation expense of $0.9 million during 2021 primarily due to the issuance of
incentive-based performance rights and stock options that were granted to the personnel of Calima and Blackspur,
respectively.
9
Development update
(A$ thousands)
Drilling and completion
Equipping, tie-in and facilities
Land and other(1)
Total investment in oil and natural gas assets
Three months
Ended
31 December
2021
7,817
2,338
862
11,017
$
$
Year
ended
31 December
2021
19,651
4,934
2,245
26,830
$
$
Year
ended
31 December
2020
-
516
1,640
2,156
$
$
(1) Primarily consists of land acquisitions, surface and mineral lease rentals, geological and geophysical activities and other carrying costs related exploration assets.
The Calima Group commenced the 2021 drilling program with the development of four Sunburst Formation wells that were
drilled, completed, and brought on production in the Brooks area (Gemini #1-#4). Two of the four wells were on stream in
late June with the other two wells completed and brought on stream in July. During the second half of the year, the
Company drilled, completed and brought on stream three Leo wells targeting the Sparky Formation in the Thorsby area.
Not included in the Company’s consolidated 2021 capital expenditures are the cost of three Sunburst Formation wells at
Brooks that were drilled and brought on stream by Blackspur prior to the Acquisition.
Capital investments in 2020 primarily relate to the acquisition of the Tommy Lakes Montney infrastructure, surface and
mineral lease rentals on undeveloped acreage and other carrying costs related to the Tommy Lakes Montney exploration
assets.
In December, the Company elected to accelerate its H1 2022 drilling program. 2021 capital investments include A$3.1
million invested primarily to drill two Glauconitic Formation wells at Brooks (Pisces #1 and #2) as well as pre-spends for H1
2022 drilling and completion activities. The two Pisces wells were completed and commenced flowback at the end of
January 2022. A third Glauconitic well, Pisces #3, along with one vertical and two horizontal Sunburst wells (Gemini #5-#7)
were drilled in January and were brought on stream during the first quarter of 2022.
Including the acceleration of the 2022 winter drilling program of A$3.1 million, the Company deployed A$26.8 million of
capital expenditures for the full year ended 31 December 2021. The original 2021 capital program was substantially
completed by the end of November with actual costs coming in at A$23.7 million, or approximately 10% higher than the
original budget of A$21.5 million.
10
The following tables summarise the results of the Company’s original seven well program as at 31 December 2021 and
commencement of the 2022 drilling program:
unique
Well
name &
location identifier
Gemini #1 - 02/10-29-19-13W4
Gemini #2 - 03/04-29-19-13W4
Gemini #3 - 00/03-22-18-14W4
Gemini #4 - 03/06-06-18-09W4
Leo #1 - 02/07-07-050-01W5
Leo #2 - 02/06-07-050-01W5
Leo #3 - 00/14-06-050-01W5
Well name & unique location
identifier
Pisces #1 - 04/04-28-19-13W4
Pisces #2 - 03/03-21-19-13W4
Pisces #3 - 02/15-11-19-14W4
Gemini #5 - 00/02-19-19-13W4
Gemini #6 - 00/02-18-19-13W4
Gemini #7 - 02/16-36-18-14W4
Leo #4 - 00/16-11-051-02W5
Target
formation
Sunburst
Sunburst
Sunburst
Sunburst
Sparky
Sparky
Sparky
Target
formation
Glauconitic
Glauconitic
Glauconitic
Sunburst
Sunburst
Sunburst
Sparky
Spud
Date
31/5/21
8/6/21
19/6/21
27/6/21
28/7/21
27/8/21
7/9/21
Spud
Date
30/11/21
07/12/21
02/01/22
09/01/22
15/01/22
21/01/22
19/01/22
Drill
days
10
5
7
9
29
11
17
Drill
days
6
8
7
4
6
6
12
Lateral
length (m)
837
482
622
1,864
2,253
2,055
2,153
Lateral
length (m)
1,400
2,720
1,400
N/A*
646
667
2,473
On
Production
26/6/21
24/6/21
16/7/21
28/7/21
16/11/21
18/11/21
08/11/21
Status
Producing
Producing
Producing
Producing
Producing
Producing
Producing
On
Production
27/1/22
26/1/22
22/03/22
4/03/22
4/15/22
4/2/22
Status
Producing
Producing
Producing
Producing
Producing
Producing
- Awaiting completion
Area
Brooks
Brooks
Brooks
Brooks
Thorsby
Thorsby
Thorsby
Area
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Thorsby
* Vertical well
Strategic infrastructure development
On 31 January 2022 the Company announced an agreement with Pivotal Energy Partners, a strategic infrastructure and
midstream company, to finance the construction of a pipeline connecting the Company’s 02-29 battery in the northern
portion of its Brooks, Alberta asset base to its wells, lands, and gathering system in the southern portion of the Company’s
asset base. The pipeline was completed and brought on stream during the first quarter of 2022.
This project expands the Calima Group’s gathering system significantly and provides for the ability to economically grow
the core area while providing relative short tie-in options for future drilling locations. The Calima Group shall be the sole
owner of the Pipeline and will repay the capital costs to construct the pipeline over a term of seven years at a 12% cost of
financing with estimated fixed monthly payments of approximately C$76,000 based on the estimated cost of the pipeline
project of C$4.3 million. The Company retains the right to payout the financing on 180 days written notice starting on the
3rd anniversary of the agreement, subject to an early termination penalty provision. Current transport costs of ~C$55,000
per month are expected to be displaced once the pipeline becomes fully operational.
The pipeline is also expected to reduce operating costs from the displacement of emulsion hauling and equipment rentals
and most importantly provide egress for many future drilling locations in the Sunburst, Ellerslie and Glauconitic Formations
which will improve full cycle economics of the Bantry field development plan. The pipeline will also reduce emissions from
the displacement of trucking, improve the Company’s safety and spill prevention profile and reduce flare volumes for each
new well tied-into the pipeline as opposed to the allowable flare limits under current regulations.
Calima continues to evaluate strategies with respect to the Calima Lands to unlock shareholder value through development,
partnerships, farm-out or outright sale. A consolidation of the Montney in northeast British Colombia has occurred and
with rising gas prices, currently above US$4 mcf in North America, the Calima Lands provide significant optionality.
Reserves update
Reserves
(Working interest after royalties)(1)(2)
Proved development producing
Proved developed not producing
Proved undeveloped
Total proved
Probable
Total proved plus probable
Possible
Total proved plus probable plus possible
31 December
2021
Natural gas
(MMcf)
11,136
332
21,186
32,654
10,984
43,638
9,067
52,705
Oil and liquids
(Mboe)
3,279
77
6,767
10,122
2,993
13,115
2,521
15,635
30 June
2021
Oil Equivalent
(Mboe)
5,167
176
10,723
16,066
5,368
21,434
4,280
25,714
Oil Equivalent
(Mboe)
5,135
132
10,297
15,564
4,824
20,388
4,032
24,420
(1) Refer to Calima’s announcement dated 28 March 2022 (“Brooks and Thorsby Reserves Update 2022”) (www2.asx.com.au).
(2) Table may not add due to rounding.
11
During the year ended 31 December 2021, the Calima Group’s independent reserve engineers completed an updated
evaluation of the Brooks and Thorsby assets. The Company has confirmed 20.4 million boe of proved plus probable reserves
and an additional 4.0 million boe of possible reserves in place (24.4 mmboe total)1. The Company proved plus probable
reserves remained relatively consistent, declining by approximately 5% compared to the 30 June 2021 reserve report,
primarily due to production in the second half of 2021 and moderate technical revisions following the 2021 development
program.
On a boe basis, 10 million boe of proved plus probable reserves are located at Brooks and 10.4 million located at Thorsby.
The following pie chart illustrates the distribution of the Company’s reserves:
Tommy Lakes Montney
Resources (un-risked)
(Working interest after royalties)(1)(2)
Contingent Resources (2C)
Development on hold
Development pending
Total contingent resources
Prospective Resources (2U)
31 December
2021
Natural gas
(MMcf)
Oil and liquids
(Mboe)
31 December
2020
Oil Equivalent
(Mboe)
Oil Equivalent
(Mboe)
25,644
10,137
35,780
28,240
535,193
213,295
748,488
588,109
114,842
45,686
160,528
126,258
117,050
46,217
163,267
300,781
(1) Refer to Calima’s announcement dated 28 March 2022 (“Montney Resource Update 2022”) (www2.asx.com.au).
(2) Table may not add due to rounding.
During the year ended 31 December 2021, the Calima Group’s independent reserve engineers completed an updated
evaluation of the Tommy Lakes Montney assets. The Company has confirmed 160.5 million boe of contingent resources
(un-risked) and an additional 126.3 million boe of prospective resources in place1.
The Company’s prospective resources declined by 58% in 2021 primarily due to the acreage expiries relating to Montney
leases that the Company elected not to extend through further drilling and delineation activities. The majority of the
expiries related to the Company’s prospective resources located in the peripheral northern sections of the play.
The estimated quantities of hydrocarbons that may potentially be recovered by the application of a future development
project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of
development. Further exploration appraisal is required to determine the existence of a significant quantity of potentially
moveable hydrocarbons.
Despite an improvement in commodity prices, the Company recognized an impairment loss of $37.6 million for the year
ended 31 December 2021. The valuation was primarily based on the estimated net present value of after-tax, future cash
flows from the contingent resources (un-risked) discounted at 36%, reflective of the assessed funding and development
risks associated with the long-dated resource play.
1 Refer to announcements dated 28 March 2022 (“Brooks and Thorsby Reserves Update 2022” and “Montney Resource Update 2022”). The Company is not
aware of any new information or data that materially affects the information included in the referenced ASX announcement and confirms that all material
assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed.
2
12
Liquidity and capital resources
The following table summarises the change in the Company’s cash balance during the year ended 31 December 2021:
Proceeds from the second quarter equity fundraising were utilised primarily to acquire Blackspur and fund a portion of the
Company’s capital investment program subsequent to the Acquisition, along with funds flow from operations generated
during the year.
The Calima Group holds a C$27.0 million demand revolving credit facility with a Canadian chartered bank (the “Credit
Facility”). A borrowing base review was completed during the fourth quarter of 2021 and, based on the Lenders’ updated
interpretation of the Company’s reserves and future commodity prices, the Credit Facility was increased by C$2.0 million.
The Credit Facility is scheduled for its next borrowing base review on or before 31 May 2022.
As at 31 December 2021, the Calima Group had available funding of A$1.7 million which primarily consisted of available
credit under Credit Facility, partially offset by the Company’s working capital deficit at the end of the quarter:
31 December
2021
31 December
2020
As at (A$ thousands)
Available funding
Adjusted working capital(1)
Undrawn Credit Facility capacity
Available funding(1)
Net debt
Credit facility draws
-
Other indebtedness
(857)
Long-term portion of lease liability
(461)
Adjusted working capital(1)
936
Net debt(1)
(382)
(1) Refer to Advisories and Guidance for additional information regarding the Company’s GAAP and non-GAAP measures. As at 31 December 2021, adjusted working capital
is calculated as current assets of $11.3 million less accounts payable and accrued liabilities of $17.1 million. As at December 31, 2020, adjusted working capital is calculated
as current assets of $1.8 million less accounts payable and accrued liabilities of $0.9 million.
(21,739)
-
(265)
(5,801)
(27,805)
(5,801) $
7,459
1,658
936
-
936
$
$
$
The Company’s net debt at 31 December 2021 was A$27.8 million compared to previous 2021 exit guidance of A$19.4
million. Growth in the Company’s net debt during the fourth quarter of 2021 was due to capital cost increases in the Leo
drilling program, delays in start-up of the three Leo wells, the acceleration of the 2022 drilling program at Brooks to drill
Pisces #1 and #2 wells in December, as well as additional pipe inventory purchased for drilling Gemini #5-7 and Pisces #3.
13
While the Leo wells were recovering water and frac fluid in September and October, actual oil and gas production from the
Leo wells did not commence until mid-November and the two Pisces wells were brought on stream in late January 2022.
Further, two of the Leo wells required well interventions in order to optimize subsurface pumping systems and this was
compounded by extremely cold weather in December which restricted well and facility operations during the month, which
impacted the Company’s fourth quarter volumes.
On 17 February 2022, the Calima Group completed a private-placement equity financing arrangement with investors for
gross proceeds of A$20.0 million. The Company plans to utilise the majority of the proceeds to reduce the amounts drawn
under the Credit Facility and complete the H1 2022 capital investment program. Combined with anticipated free cash flows
during the first half of 2022, the Company is now expecting to exit June 2022 with net debt of C$2-5 million, including the
impact of the financing arrangement under the Pipeline Agreement.
The following table summarises the projected change in the Company’s net debt during six months ended 30 June 2022:
Hedging program
The Company’s risk management portfolio consists of instruments that are intended to mitigate Calima’s exposure to
commodity price risks in the Western Canadian Sedimentary Basin, consisting primarily of the US$ WTI benchmark price
and the C$ WCS differential to WTI.
Calima executes a risk management program which is designed to limit downside exposure to market volatility, ensure a
sufficient level of cash flows to service debt obligations and ensure capital is available to fund the Company’s development
and operational programs.
The Company’s risk management contracts consisted of the following position as at 31 December 2021:
Term(1)
2022 (January – December)
bbl/d
800
$
C$/bbl
84.16
C$ WTI
Swaps
C$ WCS/WTI
Differential Swaps
bbl/d
875
$
C$/bbl
(17.98)
C$ AECO
Swaps
Gj/d
1,670
C$/Gj
3.10
(1) Weighted average volumes and prices are presented over the number days in the year (365 days in 2022).
Further hedges (and put contracts) have been layered on in January 2022 to minimise exposure to volatility and ensure
debt reduction targets are achieved. In the current energy price cycle, it is intended that post payout production will be
unhedged and provide exposure to commodity price volatility, subject to the lender’s requirement to hedge 50% of volumes
(net of royalties) for the forward 12-month period should drawdowns exceed 50% over an extended period.
14
In a rising energy cycle, hedging losses will occur on that portion of the production hedged; however, with hedges set on a
staggered basis as capital is committed, the Company views this strategy as an appropriate safeguard for the balance sheet
to limit downside risk. Calima generally hedges oil price exposure on a forward rolling one year basis. The Company’s current
policy is to generally hedge ~50% of forecast oil production (net of royalties) for the upcoming four quarters. Upon
committing capital to drill a well, the Company will hedge sufficient volume (~5 - 7 months) to secure pay-out of the well.
The Company had ~45% of forecast production volumes (net of royalty volumes) hedged for Q1-Q3 2022 on a WTI and WCS
differential basis, leaving the opportunity to layer on additional WTI and WCS hedges as wells are drilled and production
comes on stream. Going forward, as production increases and as drilling locations are committed to, additional WTI and
WCS differential hedges will be layered in to reduce the impact of the WCS differential widening, or the price of WTI
decreasing.
The following tables summarise the Company’s hedge positions over time, based on outstanding contracts in place as 31
December 2021:
OUTLOOK
The Company has sanctioned an H1 2022 capital budget of A$19 million for 6.5 net wells in the Brooks and Thorsby areas:
Three horizontal Glauconitic development wells (Pisces #1-#3) (Pisces #1 and #2 were drilled in December)
o All three wells were brought on stream during the first quarter of 2022
Three Sunburst wells (Gemini #5-#7) (one vertical stratigraphic test well, two horizontal Sunburst appraisal wells)
o All three wells were brought on stream during the first quarter of 2022
One horizontal Sparky well (0.5 net) in the North Thorsby area (Leo #4)
o The well was drilled in the first quarter of 2022; completion and tie-in is scheduled for H2
15
The Sunburst wells are conventional oil wells and therefore do not require fracture stimulation. The stratigraphic vertical
test well (Gemini #5) confirmed the existence of Sunburst sand within a previously undeveloped portion of the field and its
objective was to delineate further drilling locations for future work programs. The Company pipeline connected these wells
into the Company’s field infrastructure network via the new Pipeline during the first quarter of 2022 and the production is
being processed at the 2-29 oil battery.
The Calima Group holds a 50% working interest in the prospective North Thorsby area adjacent to the Company’s core
Thorsby development area in central Alberta. The Company spudded the Leo #4 (50% net well) in the North Thorsby area
on 20 January 2022 and reached TD on 27 January 2022.
The following table summarises the Company’s current outlook for the six months ended 30 June 2022:
Forecast
Average Daily Production (boe/d)(1)
Adjusted EBITDA (C$ millions)(2)(3)
Capital expenditures (C$ millions)
Exit net debt(3) (C$ millions)
(1) H1 2022 average production range of 4,000 – 5,000 boe/d is based on current PDP plus forecasted production from Pisces #1-3 and Gemini #5-#7. Assumes US$80/bbl
H1 2022(2)
4,000 – 5,000
28 – 33
18 – 20
2 – 5
$
$
$
WTI, -US$13.50 WTI/WCS differential, C$3.50/Gj AECO, 1.25 CAD/USD for the first half of 2022.
(2) EBITDA is adjusted for Jan-June 2022 expected realised hedging losses of C$4 million. EBITDA is based on commodity prices stated above, corporate average royalty rates
of 19%, and operating costs and G&A assumptions that are based off historical financial performance. Interest, taxes and abandonment expenses are cashflow items
excluded from EBITDA and estimated at C$0.5 million for Jan – June 2022.
(3) Refer to Advisories and Guidance for additional information regarding the Company’s GAAP and non-GAAP financial measures. The net debt range included in the table
above includes the anticipated impact of the first quarter equity fundraising and the strategic infrastructure financing arrangement.
Calima anticipates production in H1 2022 will be between 4,000 – 5,000 boe/d. Growth in production compared to 2021 is
primarily the result of volumes from the three Sparky Formation wells at Thorsby (Leo #1-3) and 6 of the 6.5 wells drilled
during December and January 2022.
The Company expects to generate Adjusted EBITDA of C$28-C$33 million for the six months ended 30 June 2022 based on
commodity price assumptions and production forecasts presented in the table above. The capital program is anticipated to
be funded with cash provided by operating activities, proceeds from the first quarter equity financing and funding under
the Company’s Credit Facility.
Included in the capital budget is the cost of the new Pipeline (C$4.3 million) which is borne by the Company’s midstream
capital provider under the terms of the Pipeline Agreement. The cost of the Pipeline is expected to be offset by the savings
related to the elimination of trucking of emulsion from some wells, and the elimination of other rental costs related to
single well batteries; the real benefit will accrue from the production growth afforded in the Brooks area and reduction in
future operating costs together with the ESG benefits obtained.
Including the impact of net proceeds received from the first quarter equity financing, anticipated free cash flow and the
arrangement under the H1 2022 strategic infrastructure development, the Calima Group’s net debt is expected to decline
to C$2-C$5 million by mid-year 2022 following completion of the H1 22 capital development program.
16
DIRECTORS’ REPORT
For the year ended 31 December 2021
The Directors of Calima Energy Limited (ASX: CE1) (“Calima” or the “Company”) are pleased to present the Directors’ Report
for the year ended 31 December 2021. This Director’s Report primarily includes the financial results of Calima and its two
wholly-owned Canadian subsidiaries, Blackspur Oil Corp. (“Blackspur”) and Calima Energy Inc. (collectively, the “Calima
Group”). Dollar figures are expressed in Australian currency unless otherwise indicated.
Principal activities
Calima is a production-focused energy company pursuing the exploration and development of oil and natural gas assets in
the Western Canadian Sedimentary Basin. On 30 April 2021, Calima completed a transformative acquisition of Blackspur, a
company that is currently developing oil plays at Brooks and Thorsby in southern and central Alberta, Canada. The Calima
Group also holds an undeveloped Montney acreage position in northeastern British Columbia, Canada.
Significant changes in state of affairs
During the year ended 31 December 2021, the following significant changes in the entity’s state of affairs occurred:
On April 28, 2021, the Company completed an equity financing for gross proceeds of A$38.0 million before transaction
costs, issuing 5.4 billion shares at $0.007 per share ($0.14/share on a 20:1 post share consolidation basis). Funds
raised from the equity financing were primarily utilised to complete the plan of arrangement associated with the
Blackspur Acquisition, which included a reduction of Blackspur’s net debt by A$28.0 million.
On 30 April 2021, met the conditions precedent to finalise a plan of arrangement with Blackspur to acquire 100% of
its issued and outstanding common shares for total cash and share consideration of A$22.4 million in a transaction
valued at approximately A$65.9 million, inclusive of net debt. On 10 May 2021 to satisfy the share component of the
acquisition, the Company issued 2.46 million shares to legacy shareholders of Blackspur Oil Corp.
On May 20, 2021, Calima approved a C$20 million capital budget for the eight months ended 31 December 2021
primarily to complete a seven well drilling program in the Brooks and Thorsby asset areas (four sunburst formation
wells at Brooks and three Sparky formation wells at Thorsby). All seven wells were brought onto production in 2021.
During the year, the Company issued the following equity securities:
o 222.8 million shares to creditors - Shares were issued in lieu of payment for $1.55 million of amounts owing in
respect of Director and Management fees, outstanding indebtedness and service provider billings. The issuance
of these shares occurred during the first half of 2021 prior to the 20:1 share consolidation.
o 96.0 million Class A/B Performance Rights - The Class A/B Performance Rights were vested in 2021 and do not
carry an exercise price, for a term of up to five years (4.8 million units issued on a post share consolidation basis).
o 50.0 million Class C Performance Rights – The Class C Performance Rights will vest following the Calima Shares
reaching AUD $0.015 per share for over 20 consecutive trading days, during a term of up to five years (2.5 million
units exercisable after achieving AUD$0.30/share, on a post share consolidation basis).
o 362.5 million Executive Employee Incentive Options - The incentive options vest over three equal annual
tranches, with an exercise price of $0.01 per unit, during a term of up to five years (18.125 million units
exercisable at $0.20/share, on a post share consolidation basis).
o 50.0 million Broker Incentive Options - The incentive options became vested in 2021, with an exercise price of
$0.01 per unit, during a term of up to three years (2.5 million units exercisable at $0.20/share, on a post share
consolidation basis).
o 381.0 thousand shares to creditors - Shares were issued in lieu of payment for $82 thousand of amounts owing
in respect of service provider billings. The issuance of these shares occurred during the second half of 2021
subsequent to the 20:1 share consolidation.
On 30 August 2021, shareholders of Calima approved a 20:1 consolidation of capital. The post consolidation capital
structure is set out below:
Number of units on issue (thousands)
Common shares
Stock options
Performance Rights
30 August 2021
(post consolidation
513,703
21,663
8,273
30 June 2021
(pre-consolidation)
10,274,055
433,250
165,450
On 1 September 2021 the Company announced updated reserve estimates for Blackspur’s Brooks and Thorsby assets
as at 30 June 2021.
On 1 December 2021, the Board approved a H1 2022 capital budget of C$19.5 million primarily to complete a 6.5 well
(net) drilling program in the Brooks and Thorsby asset areas. The Company commenced its 2022 winter drilling
program early in December 2021. Fourth quarter investments include the drilling of the first two Glauconitic
Formation wells at Brooks (Pisces #1 and #2). A third Glauconitic well (Pisces #3) and three Sunburst wells (Gemini
#5-#7) were drilled in January. The wells are expected to be on production by the end of first quarter of 2022. An
additional step-out Sparky well (Leo #4) was also drilled in January.
17
There was no significant change in the entity's state of affairs other than what has been referred to in this Directors’ report,
the consolidated financial statements or the notes thereto.
Operational and financial results
The operational and financial results for the year ended 31 December 2021 has been presented on pages 6 through 16.
Environmental regulation and performance
The Calima Group’s operations are subject to Canadian Federal and Provincial environmental regulations. These regulations
govern the Company’s exploration, development and production of oil and gas reserves in the Western Canadian
Sedimentary Basin. The regulations include, among other things, standards for emissions management, hydrocarbon
handling and spill response as well as reclamation and abandonment requirements. Compliance with applicable standards
is addressed through regular monitoring by the Company and through external audits conducted by regulatory authorities
and consultants of Calima. There were no significant breaches of environmental regulations during the year ended 31
December 2021.
Events after the reporting period
The following events occurred subsequent to the year ended 31 December 2021:
On 31 January 2022 the Company announced an agreement with Pivotal Energy Partners, a strategic infrastructure
and midstream company, to finance the construction of a C$4.3 million pipeline connecting the Company’s 02-29
battery in the northern portion of its Brooks, Alberta asset base to its wells, lands, and gathering system in the
southern portion of the Company’s asset base. The pipeline was completed and brought on stream during the first
quarter of 2022.
On 17 February 2022, the Calima Group completed a private-placement equity financing arrangement with investors
for gross proceeds of A$20.0 million. The Company plans to utilise a portion of the proceeds to reduce the amounts
drawn under the Credit Facility and complete the H1 2022 capital investment program.
During the first quarter of 2022, the Company issued 1.35 million stock-options to employees of Blackspur. The
primary vesting condition of the stock options is continuous employment and 1/3 of the options vest each year over
three years and are exercisable at $0.20 per unit within five years from the date of grant. There were also 1.0 million
of performance rights that were exercised and converted to common shares.
On 28 March 2022, the Company announced updated reserves and contingent resource estimates for the Company’s
Brooks, Thorsby and Tommy Lakes Montney assets.
Since the year ended 31 December 2021, the Directors are not aware of any other matter or circumstance that has
significantly or may significantly affect the operations of the Company that has not already been disclosed in this Annual
Report.
Likely developments and expected results
For 2022, the Calima Group will continue to focus on its key operations. Further information on the likely developments
and expected results are included in the review of operations on pages 6 through 16.
Dividends
No dividend has been paid or declared by the Company to shareholders since the end of the previous financial year. The
Company may elect to pay future dividends during financial periods when it is considered appropriate to do so.
Stock options and performance rights
Equity compensation arrangements
As at 31 December 2021
Stock options – exercisable at $0.20 per share (employees)
Stock options – exercisable at $0.20 per share (broker options)
Stock options – exercisable at $1.80 per share
Stock options – exercisable at $2.40 per share
Performance rights – August 2017 grant
Class A/B Performance rights – February 2021 grant (fully vested)
Class C Performance rights – May 2021 grant
Number of
unit holders
15
6
5
5
5
6
2
Number of
unlisted units
(thousands)
14,250
2,500
500
500
973
4,800
2,500
Date of
expiry
May 2026
Feb. 2024
Aug. 2022
Aug. 2022
Aug. 2022
Feb. 2026
May 2026
Additional details regarding the Company’s outstanding stock options and performance rights are included in the
remuneration section of the Director’s report and in the consolidated financial statements for the year ended 31 December
2021.
18
Indemnification of officers and insurance
The Calima Group has, during the financial year, entered into an agreement with the Directors and certain officers to
indemnify these individuals against any claims and related expenses which arise because of work completed in their
respective capabilities. The Group has also paid premiums in respect of a contract insuring all the Directors and Officers of
Calima Energy Limited against costs incurred in defending proceedings except for conduct involving a wilful breach of duty
or a contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the Corporations
Act 2001. The total amount of insurance contract premiums paid in the year was $98,312 (2020: $49,350).
Directors and Key Management Personnel (“KMP”)
The names of the Directors of Calima in office as of the date of this report are as follows:
Mr Whiddon has an extensive
background in equity capital
markets, banking and corporate
advisory, with a specific focus on
natural resources. Mr. Whiddon
holds a degree in Economics and has
extensive corporate and
management experience. He is
currently Director of a number of
Australian and international public
listed companies in the resources
sector. Mr. Whiddon was formerly
Executive Chairman, Chief Executive
Officer and President of Grove
Energy Limited, a European and
Mediterranean oil and gas
exploration and development
company.
Jordan was a founder of Blackspur
and has been the President and CEO
since 2012. Mr Kevol holds a BSc
(Geology) with 16 years of public and
private Canadian junior E&P
experience. Jordan is also a Director
of Source Rock Royalties.
Mr. Lawrence is a 15-year veteran of
the oil and gas industry and holds a
Master of Petroleum Engineering, a
Bachelor of Engineering (Mining) and
Bachelor of Commerce (Finance)
from Curtin University in Western
Australia. Mr. Lawrence worked with
Apache Energy for over eight years,
performing roles in drilling
engineering, reservoir engineering,
project development and
commercial management and has
held senior roles in the commercial,
financial and corporate arenas with
various ASX listed public companies.
Appointment to the Board
2 June 2015
Interest in Securities at 31 Dec. 2021
Direct shares
Indirect shares(1)
Performance rights
Performance rights
885,841
12,940,132
1,000,000 (vested)
1,500,000 (unvested)
Other directorships held in listed entities
Minrex Resources Ltd (since 5 June 2020)
Auroch Minerals Ltd. (resigned 31 Oct 2019)
Fraser Range Metals Group Limited (resigned
20 June 2019)
Doriemus PLC (resigned 30 July 2018)
Hear Me Out Limited (since 11 September
2017, entity has since delisted)
Appointment to the Board
On 30 April 2021, Jordan Kevol was appointed
as President & CEO following the Blackspur
Acquisition. On 28 May 2021, Mr. Kevol was
appointed to the Board as Managing Director
Interest in Securities at 31 Dec. 2021
Direct shares
3,569,400
Indirect shares 319,359
Stock options
2,500,000
Other directorships held in listed entities
Source Rock Royalties Ltd. (entity became
publicly listed on 2 March 2022)
Appointment to the Board
29 May 2019
Interest in Securities at 31 Dec. 2021
Direct shares
Indirect shares
Performance rights
-
436,992
300,000 (vested)
Other directorships held in listed entities
Tamaska Oil and Gas Ltd. (since 1 Feb. 2015)
Acacia Coal Ltd (ASX: AJC) (resigned 20
November 2020)
Glenn Whiddon
BCom
Executive Chairman
Jordan Kevol
BSc (Geology)
CEO & Managing Director
Brett Lawrence
MpetEng., Beng., Bcom
Non-Executive Director
19
Appointment to the Board
28 May 2021
Interest in Securities at 31 Dec. 2021
Direct shares
Stock options
-
300,000
Other directorships held in listed entities
None
Appointment to the Board
23 June 2021
Interest in Securities at 31 Dec. 2021
Direct shares
Indirect shares
Performance rights
Performance rights
-
130,598
1,000,000 (vested)
1,000,000 (unvested)
Other directorships held in listed entities
Grand Gulf Energy Ltd – since 27 October 2010
Pursuit Minerals Ltd – since 1 April 2020
Roquefort Therapeutics PLC – 18 October 2021
Appointment to the Board
N/A
Interest in Securities at 31 Dec. 2021
Direct shares
Stock options
621,170
2,250,000
Other directorships held in listed entities
None
Lonny Tetley is a securities lawyer
and partner at Burnet, Duckworth
and Palmer LLP with over 15 years of
experience in corporate finance and
the oil and gas industry. Mr. Tetley
serves on the Board of a number of
companies including Certarus Ltd.,
Beyond Energy Services &
Technology Corp. and Accelerate
Financial Technologies Inc. He is also
a member of the Private Funds
Independent Review Committee of
Deans Knight Capital Management
Ltd.
A Chartered Accountant with more
than 20 years’ experience in
corporate finance and the resources
industry. He has experience in
strategic planning, business
development, mergers and
acquisitions, North American gas
commercialisation, and project
development general management.
Mr. Freeman has worked with a
number of successful public resource
companies. A graduate of the
University of Western Australia with
a Bachelor of Commerce Mr.
Freeman also holds a Graduate
Diploma in Applied Finance from the
Securities Institute of Australia.
Braydin is a Chartered Professional
Accountant, Chartered Accountant
with 15 years of experience in
finance, accounting, treasury, tax,
strategic planning, and M&A. Mr.
Brosseau has worked with a number
of public and private E&P and Asset
Management companies and been
the Chief Financial Officer of
Blackspur Oil Corp. since September
2014. Previous experience gained
was at West Valley Energy Corp.,
Aston Hill Financial Inc., and PwC
LLP. Mr. Brosseau holds a Bachelor
of Commerce (Distinction) from the
University of Saskatchewan.
P.L. (Lonny) Tetley
Blaw, Bcom
Non-Executive Director
Mark Freeman
CA, F.Fin
Finance Director &
Company Secretary
Braydin Brosseau
CPA,CA
VP Finance & CFO, Canada
* Glenn Whiddon: Please note that Mr. Whiddon only has a control in 2,722,539 shares in the indirect holdings. Mr. Whiddon does not control the
remaining indirect holdings. They are held independently of Mr. Whiddon and are only included for good corporate governance purposes. Mr. Whiddon
has no relevant interest in the indirect holdings.
On 23 June 2021, Alan Stein resigned from the Board as a Non-Executive Director. Mr. Stein was appointed to the Board of
Directors on 25 August 2017 and served as Director until his resignation on 23 June 2021.
20
Director meetings
Number of meetings held
Meeting attendance:
Glenn Whiddon
Jordan Kevol
Brett Lawrence
Lonny Tetley
Mark Freeman
Alan Stein
Remuneration report (audited)
Directors’
Meetings
4
4 of 4
2 of 2
4 of 4
2 of 2
4 of 4
2 of 2
Introduction
The Directors and key management personnel have authority and responsibility for planning, directing and controlling the
activities of the Group. Remuneration levels for Directors and key management personnel are competitively set to attract
and retain appropriately qualified and experienced Directors and executives.
The Board is responsible for remuneration policies and practices. The Board assesses the appropriateness of the nature and
amounts of remuneration of officers and employees on a periodic basis and makes recommendations to the Board. The
Board, where appropriate, seeks independent advice on remuneration policies and practices, including remuneration
packages and terms of employment. No independent advice was received in the current year. The Calima Group’s securities
trading policy regulates dealings by Directors, officers and employees in securities issued by the Group. The policy imposes
trading restrictions on all Directors, key management personnel and employees of the Group and their related companies
who possess inside information.
Remuneration strategy
At the Board’s discretion, the Calima Group’s remuneration practices are made available to the Company’s directors, senior
management, employees, consultants and other contractors that may perform work on behalf of the business (collectively,
the “Service Providers”). The remuneration structures are designed to attract suitably qualified candidates, reward the
achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The
remuneration structures take into account a number of factors, including length of service, particular experience of the
individual concerned, and overall performance of the Group.
The Calima Group has the following remuneration plans in place A summary of these Plans is set out below:
A Fixed remuneration Plan that provides for salaries or fees paid to Service Providers in respect of baseline
employment, consulting or contracting activities provided to the Calima Group,
A Short-Term Incentive Plan (“STIP”) that provides for cash bonuses to be paid annually based on a combination of
individual and corporate performance over the previous year,
A Stock Option Plan (“SOP”) that provides for short-term or long-term equity incentives that generally vest over
certain continuous employment conditions; and
A Performance Rights Plan (“PRP”) that provides for long-term equity incentives that may vest upon on the
achievement of certain performance-based thresholds or continuous employment conditions
The Board is of the opinion that these incentive plans achieve the following outcomes:
Attract and retain staff and management to pursue the Group’s strategy and goals;
Align the interests of the Group’s employees with that of the Company’s shareholders;
Provide fair and reasonable reward for past individual and Group performance; and
Incentivise service providers to deliver future individual and Group performance.
Fixed remuneration
Fixed remuneration consists of the base remuneration paid to directors, offices and employees of the Calima Group (which
is calculated on a total cost basis and includes any Fringe Benefit Tax charges related to employee benefits), as well as
employer contributions to superannuation funds. Remuneration levels are reviewed annually by the Board where
applicable. The process consists of a review of Group and individual performance, length of service, relevant comparative
remuneration internally and externally and market conditions.
Short Term Incentive Plan (STIP)
The STIP provides for the payment of discretionary cash bonuses to Service Providers of the Calima Group on an annual
basis in respect of their performance and the overall performance of the Company during the previous financial year. The
STIP establishes maximum bonus levels as a percentage of salary by grade of employee and a guideline framework for
21
calibrating the actual bonus against the maximum according to certain parameters of individual and corporate
performance. However, all bonus payments are entirely at the discretion of the Board and there are no contractual bonus
entitlements under the STIP.
Stock Option Plan (SOP)
The SOP provides for the issuance of stock options to Service Providers of the Calima Group on a periodic basis generally to
provide a long-term equity incentive. Stock options are issued for nil consideration and generally carry an exercise strike
price that is either at or above the Company’s share price at the date of grant. Subject to the satisfaction of the vesting
conditions given to eligible participants, each exercised stock option will be eligible to receive the equivalence of one
common share. In satisfaction of the share issuance from treasury, the option holder pays cash consideration to the
Company equal to exercised strike price.
The primary non-market-based vesting condition for the Company's SOP units issued to employees is generally continuous
employment. However, the Calima Group may also issue stock options to non-employee related Service Providers with
vesting terms that align to performance term under the service contract. Stock options grants may also be subject to certain
other market-based on non-market-based performance conditions, at the Board discretion.
During the second quarter of 2021, Calima’s Board approved 18.1 million stock options for grant to certain Canadian
Officers, Directors and employees of Calima and Blackspur following the closing of the Blackspur Acquisition (post share
consolidation basis). The primary vesting condition of the stock options is continuous employment and 1/3 of the options
vest each year over three years and are exercisable at $0.20 per unit within five years from the date of grant. As at 31
December 2021, the Calima Group recognised 2.3 million forfeitures under the SOP in respect of departing staff members.
The Calima Group also had 1.0 million stock options outstanding from previous incentive grants issued in 2017 (on a post
consolidation basis). The Management Options were issued for nil cash consideration in two classes, Class A and Class B.
The Class A Stock Options are exercisable at $1.80 per unit once vested and the Class B stock options are exercisable at
$2.40 per unit once vested. The Management Options will vest, subject to completion of 18 months’ continuous service, on
satisfaction of at least two of the following three conditions:
The VWAP for Shares for any period of 30 consecutive trading days being above $1.80;
The Company raising more than $5 million at an average price of $1.80; and
The Company’s market capitalisation exceeding $50 million (based on the VWAP for Shares for any period of 30
consecutive trading days).
The Management Options will also vest immediately following a change of control that occurs at an average price per share
greater than $1.80/share. All unvested stock option grants issued in 2017 on expire on 25 August 2022.
Performance Rights Plan (PRP)
The PRP provides for the issuance of stock options to Service Providers of the Calima Group on a periodic basis generally to
provide a long-term equity incentive. The PRP is open to any eligible persons who are full-time or permanent part time
employees of the Company, or a related body corporate which includes directors, the company secretary and officers or
other such persons as the Board determines to be eligible to receive such grants under the PRP. The Performance Rights
are issued for nil cash consideration and no consideration will be payable upon the vesting of the Performance Rights.
Subject to the satisfaction of the vesting conditions given to eligible participants, each PRP unit will be eligible to receive
the equivalence of one common share.
Vesting conditions, if any, are determined by the Board from time to time and set out in individual offers for the grant of
Performance Rights. Performance rights are subject to certain market-based on non-market-based performance conditions,
at the Board discretion, which generally include a share price target and/or continuous employment obligations.
During the year ended 31 December 2021, Calima approved 7.3 million performance rights (on a post-consolidation basis)
for grant to certain Officers and Directors of Calima. The vesting conditions of the performance rights were as follows:
4.8 million Class A/B rights become vested and exercisable following continued service of the holder for a period of
two years retroactively from the date of their appointment. As at December 31, 2021, all of the units were vested.
Should these performance rights not have immediately vested due to the continued service condition, they would
have vested subject to a VWAP of shares trading on the ASX at least 1.0 cent over the 20 consecutive trading days (on
days in which shares actually traded).
2.5 million Class C rights become vested and exercisable if VWAP of shares trades over A$0.30/share over 20
consecutive days on or before 30 April 2026. As December 31, 2021, all of the units were unvested.
The Calima Group also had 973,000 performance rights outstanding from previous incentive grants issued in 2017 (on a
post consolidation basis). The units are subject to 18-month continuous service requirement and on satisfaction of at least
two of the following three conditions:
The VWAP for Calima shares for any period of 30 consecutive trading days being above $3.00;
22
Calima raising more than $5 million (excluding the Public Offer) at an average price of $3.00; and
Market capitalisation exceeds $50 million (VWAP for Calima shares for any period of 30 consecutive trading days).
The vesting conditions for the units were not met in 2021 and no performance rights were redeemed during the year. The
2017 performance rights expire in August 2022 should the vesting conditions not be achieved.
Non-executive Directors
There are no termination or retirement benefits for non-executive Directors (other than statutory superannuation). The
maximum available pool of fees is set by shareholders in general meeting and is currently $350,000 per annum.
Service contracts
Remuneration and other terms of employment for Executive Directors and other key management personnel are formalised
in service agreements and letters of employment (conditions of employment). All parties continue to be employed until
their employment is terminated. For executive employment contracts, at a minimum, employees must provide one months’
notice of departure and the employer must provide at least three-months’ notice (without cause). For non-executive
terminations, at a minimum, employees must give two-weeks’ notice and the employer must give statutory required notice.
The Company may make payment in lieu of notice. Key management personnel are entitled to receive, on termination of
employment, statutory entitlements of vested annual and long service leave, together with post-employment benefits. Any
options or rights awarded but not vested at the time of resignation will be cancelled unless the Board advises otherwise at
its own discretion.
Employment contracts do not prescribe how remuneration levels are modified year to year. Remuneration levels are
reviewed each year with consideration of employment market conditions, changes in the scope of the role performed by
the employee and changes in remuneration policy set by the Board. Details of the remuneration of the Directors of the
Company and key management personnel are set out in the following tables below.
Key management personnel (“KMP”)
The key management personnel of the Company in 2021 included the following executive directors and non-executive
officers:
KMP
Glenn Whiddon
Mark Freeman
Brett Lawrence
Alan Stein
P.L. (Lonny) Tetley
Jordan Kevol
Braydin Brosseau
Role at Calima
Executive Chairman
Finance Director & Company Secretary
Non-Executive Director
Non-Executive Director
Non-Executive Director
CEO & Managing Director
VP Finance & CFO, Canada
2021 Update
-
Appointed 23 June 2021
-
Resigned 23 June 2021
Appointed on 28 May 2021
Appointed on 30 April 2021 & 28 May 2021
Appointed on 30 April 2021
Remuneration overview
Amounts recognised in respect of remuneration plans are detailed in the table below. The STIP, SOP and PRP are considered
performance related. Although the stock options grants have no market-based performance conditions, they were issued
at an exercise price that was out of the money at grant date, which encourages the employees to remain with the Company
and work towards achieving share price growth. The value of options and rights shown in the tables below represent the
vesting expense, measured in accordance with Australian Accounting Standards, for awards granted in the current or
previous financial years.
The Corporations Act requires disclosure of the Calima Group’s remuneration policy to contain a discussion of the
Company’s earnings, performance, and the effect of the performance on shareholder wealth during the current reporting
period and the four previous financial years.
The following table below provides a five-year financial performance summary to the end of 31 December 2021:
As at and for the year ended December 31,
Adjusted EBITDA(1)
Net loss
Earnings (loss) per share (diluted)(2)
Working capital surplus (net debt)(1)
December 31 share price
2021
21,557
(31,980)
(0.08)
(27,805)
0.21
2020
(1,169)
(6,395)
(0.06)
(382)
0.16
2019
(2,582)
(1,584)
(0.02)
4,415
0.14
2018
(3,020)
(3,127)
(0.07)
19,033
0.86
(1)
(2)
Refer to Advisories and Guidance for additional information regarding the Company’s non-GAAP financial measures.
Information presented in this table, including comparative figures, have been adjusted to reflect the impact of the share consolidation on August 30, 2021, at a conversion rate of 20:1.
2017
(1,364)
(2,450)
(0.12)
2,475
1.08
23
Growth in the Company’s Adjusted EBITDA and share price in 2021 was primarily due to the Blackspur Acquisition and an
improved global commodity price environment, particularly for crude oil. Net losses sustained in 2020 and 2021 were
primarily related to impairment losses recognised on certain investments in undeveloped exploration and evaluation assets
made prior to 2020. Growth in Calima’s net debt in 2021 primarily relates to Credit Facility draws that were acquired as
part of Blackspur Acquisition and the utilisation of that financing arrangement to fund the Company’s 2021 capital program.
The following tables summarise the remuneration accrued to KMP during the year ended 31 December 2021 and 2020:
KMP
Glenn Whiddon(2)
Mark Freeman(3)
Brett Lawrence
Alan Stein(4)
P.L. (Lonny Tetley)
Jordan Kevol
Braydin Brosseau
Total
Salaries
and fees
Bonuses
$ 218,400 $ 100,000
75,000
-
-
-
-
-
$ 768,536 $ 175,000
176,476
36,000
9,000
24,000
161,291
143,369
$
Benefits
Perf.
rights(1)
- $ 171,338 $
-
-
-
-
4,243
4,172
$ 8,415
Stock
options(1)
-
-
-
8,575
10,039
83,657
75,308
$492,339 $ 177,579
200,906
42,000
78,095
-
-
-
$
Total
489,738
452,382
78,000
95,670
34,039
249,191
222,849
$1,621,869
Performance
related (%)
55%
61%
54%
91%
29%
34%
34%
52%
Vesting expense for the fair value of share-based awards determined at grant date in accordance with Australian Accounting Standards.
Included are $182,400 paid to Mr. Whiddon for consulting services primarily in respect of financing and other business development related services.
Included are $21,476 paid to Mr. Freeman for consulting services in respect of bookkeeping and other related services.
(1)
(2)
(3)
(4) Mr. Stein resigned on 23 June 2021.
KMP
Glenn Whiddon
Brett Lawrence
Neil Hackett(2)
Alan Stein
Jon Taylor(3)
Mark Freeman
Total
$
Salaries, fees
& benefits
150,860
48,410
32,940
104,759
25,919
159,421
$ 522,309
$
$
Bonuses
Perf.
rights(1)
-
- $
-
-
-
-
8,118
-
24,804
-
-
-
- $ 32,922
$
Stock
options(1)
-
-
-
8,599
8,599
-
$ 17,198
Total
$ 150,860
48,410
32,940
121,476
59,322
159,421
$ 572,429
Performance
related (%)
-
-
-
14%
56%
-
9%
Vesting expense for the fair value of share-based awards determined at grant date in accordance with Australian Accounting Standards.
(1)
(2) Mr. Hackett resigned on 11 November 2020
(3) Mr. Taylor resigned on 20 January 2020
The following table summarises the equity compensation units granted to directors and key management personnel during
the year ended 31 December 2021:
KMP
Glenn Whiddon
Mark Freeman
Brett Lawrence
Alan Stein
P.L. (Lonny) Tetley
Jordan Kevol
Braydin Brosseau
Performance rights
Class A/B(1)
1,000,000
1,000,000
300,000
500,000
-
-
-
Class C(2)
1,500,000
1,000,000
-
-
-
-
-
Stock
Options(3)
-
-
-
-
300,000
2,500,000
2,250,000
Exercise
price
-
-
-
-
0.20
0.20
0.20
$
$
$
Year of
expiry
2026
2026
2026
2026
2026
2026
2026
(1)
(2)
(3)
The Class A and Class B performance rights become vested and exercisable following continued service of the holder for a period of two years retroactively from the date of their original appointment.
As at December 31, 2021, all of the units were vested. Should these performance rights not have immediately vested due to the continued service condition, they would have vested subject to a VWAP
of shares trading on the ASX at least 1.0 cent over the 20 consecutive trading days (on days in which shares actually traded).
The Class C performance rights become vested and exercisable if VWAP of shares trades over A$0.30/share over 20 consecutive days on or before 30 April 2026. As at December 31, 2021, all of the
units were unvested.
The primary vesting condition of the stock options is continuous employment and 1/3 of the options vest each year over three years and are exercisable at $0.20 per unit within five years from the
date of grant. As at December 31, 2021, all of the units were unvested.
The payment of STIP bonuses are at the discretion of the Board, having regard to the overall performance of the Company
and the performance of the individual. Bonuses paid in 2021 were issued following the successful closing of the Blackspur
Acquisition. There were no bonuses paid in 2020.
Calima awarded Class A/B performance rights to certain members of the organisation during the first quarter of 2021. The
awards all became vested in 2021 primarily in satisfaction of previous employment services rendered and for the
recognition of growth in the Company’s share price since 2019, following the execution of the Blackspur Acquisition.
The Class C performance rights and stock options that were issued to Management and the Board in 2021 were granted
primarily in order to retain KMP and incentivise future short-term and long-term share price performance. The
24
performance-based compensation arrangements will vest subject to the satisfaction of certain service terms and
performance criterion as disclosed in this remuneration report.
The following table summarises the valuation assumptions utilised to measure the value of equity compensation issued to
KMP during the year ended 31 December 2021:
Valuation input
assumptions(1)
KMP
Equity unit type
Units granted to KMP
Grant date
Expiry date
Valuation model
Share price at grant date ($)
Exercise price ($/share)
Barrier price ($/share)
Volatility (%)
Risk-free rate (%)
Expected life (years)
Fair value ($/share)
Stock
Options(2)
Braydin
Brosseau
Stock
options
2,250,000
10 May
2021
30 Apr.
2026
Black
Scholes
0.18
0.20
-
75
0.3
3.5
$ 0.09
Jordan
Kevol
Stock
options
2,500,000
30 Aug.
2021
30 Apr.
2026
Black
Scholes
0.18
0.20
-
75
0.3
3.5
$ 0.09
Performance
Rights(2)
Mark
Freeman
Class
C
Class
A/B
Glenn
Whiddon
Class
A/B
Lonny
Tetley
Class
Stock
options
C
300,000 1,000,000 1,500,000 1,000,000 1,000,000
10 May
30 Aug.
30 Aug.
2021
2021
2021
30 Apr.
30 Apr.
30 Apr.
2026
2026
2026
Binomial
Binomial
Black
barrier
barrier
Scholes
0.18
0.18
0.18
-
0.20
-
0.30
0.30
-
75
75
75
0.7
0.6
0.3
5.0
5.0
3.5
$ 0.17
$ 0.16
$ 0.09
16 Apr.
2021
9 Feb.
2026
Black
Scholes
0.14
-
-
75
0.1
3.0
$ 0.14
9 Feb.
2021
9 Feb.
2026
Black
Scholes
0.18
-
-
75
0.1
3.0
$ 0.18
Brett
Lawrence
Class
A/B
300,000
16 Apr.
2021
9 Feb.
2026
Black
Scholes
0.14
-
-
75
0.1
3.0
$ 0.14
Alan
Stein
Class
A/B
500,000
16 Apr.
2021
9 Feb.
2026
Black
Scholes
0.14
-
-
75
0.1
3.0
$ 0.14
1) All information presented in this table have been adjusted to reflect the impact of the Company’s share consolidation which occurred on August 30, 2021, at a conversion rate of 20:1.
2) Units granted to Mr. Kevol, Mr. Whiddon and Mr. Tetley were all subject to shareholder approval.
The following tables summarise the changes in performance rights and stock options held by KMP during the year ended
December 31, 2021:
KMP Performance
rights(1)
Glenn Whiddon
Mark Freeman
Brett Lawrence
Alan Stein
P.L. (Lonny) Tetley
Jordan Kevol
Braydin Brosseau
Total
Balance
Jan. 1, 2021
-
-
-
135,000
-
-
-
135,000
Units
granted
2,500,000
2,000,000
300,000
500,000
-
-
-
5,300,000
Units
Exercised
-
-
-
-
-
-
-
-
Units
expired
-
-
-
-
-
-
-
-
KMP
resignation(2)
-
-
-
(635,000)
-
-
-
(635,000)
Balance
Dec. 31, 2021
2,500,000
2,000,000
300,000
-
-
-
-
4,800,000
Units
Vested
1,000,000
1,000,000
300,000
500,000
-
-
-
2,800,000
(1)
Information presented in this table, including comparative figures, have been adjusted to reflect the impact of the share consolidation on August 30, 2021 at a conversion rate of 20:1.
(2) Mr. Stein resigned from the Board on 23 June 2021. Mr. Stein’s stock options are still issued and outstanding but have been excluded from the KMP table disclosure as at 31 December 2021.
KMP Stock
options(1)
Glenn Whiddon
Mark Freeman
Brett Lawrence
Alan Stein
P.L. (Lonny) Tetley
Jordan Kevol
Braydin Brosseau
Total
Balance
Jan. 1, 2021
-
-
-
330,000
-
-
-
330,000
Units
granted
-
-
-
-
300,000
2,500,000
2,250,000
5,050,000
Units
Exercised
-
-
-
-
-
-
-
-
Units
expired
-
-
-
-
-
-
-
-
KMP
resignation(2)
-
-
-
(330,000)
-
-
-
(330,000)
Balance
Dec. 31, 2021
-
-
-
-
300,000
2,500,000
2,250,000
5,050,000
Units
vested
-
-
-
-
-
-
-
-
(1)
Information presented in this table, including comparative figures, have been adjusted to reflect the impact of the share consolidation on August 30, 2021 at a conversion rate of 20:1.
(2) Mr. Stein resigned from the Board on 23 June 2021. Mr. Stein’s stock options are still issued and outstanding but have been excluded from the KMP table disclosure as at 31 December 2021.
25
The following tables summarise the changes in shareholdings of KMP during the year ended December 31, 2021:
KMP Direct interest(1)
Glenn Whiddon
Mark Freeman
Brett Lawrence
Alan Stein(3)
P.L. (Lonny) Tetley
Jordan Kevol
Braydin Brosseau
Total
Balance
Jan. 1, 2021
1,217,376
-
-
1,316,097
-
-
-
2,533,473
Shares
acquired(2)
-
-
-
-
-
3,569,409
621,170
4,190,579
Shares
Disposed
(1,000,000)
-
-
-
-
-
-
(1,000,000)
Shares Issued
in lieu of fees
668,465
-
-
-
-
-
-
668,465
KMP
resignation(3)
-
-
-
(1,316,097)
-
-
-
(1,316,097)
Balance
Dec. 31, 2021
885,841
-
-
-
-
3,569,409
621,170
5,076,420
(1)
(2)
Information presented in this table, including comparative figures, have been adjusted to reflect the impact of the share consolidation on August 30, 2021 at a conversion rate of 20:1.
Calima shares acquired by Mr. Kevol and Mr. Brosseau, as disclosed in the table above, includes units that were received in respect of the share consideration paid by Calima to acquire the issued and
outstanding shares of Blackspur Oil Corp., as part of the Acquisition.
(3) Mr. Stein resigned from the Board on 23 June 2021. Accordingly, Mr. Stein’s shareholdings have been excluded from the KMP table disclosure as at 31 December 2021.
KMP Indirect interest(1)
Glenn Whiddon(3)
Mark Freeman
Brett Lawrence
Alan Stein
P.L. (Lonny) Tetley
Jordan Kevol
Braydin Brosseau
Total
Balance
Jan. 1, 2021
4,512,037
113,761
358,634
1,268,746
-
-
-
6,253,178
Shares
acquired
8,428,095
16,837
-
-
-
319,359
-
8,764,291
Shares
Disposed
-
-
-
-
-
-
-
-
Shares Issued
in lieu of fees
-
-
78,358
404,870
-
-
-
483,228
KMP
resignation(2)
-
-
-
(1,673,616)
-
-
-
(1,673,616)
Balance
Dec. 31, 2021
12,940,132
130,598
436,992
-
-
319,359
-
13,827,081
Information presented in this table, including comparative figures, have been adjusted to reflect the impact of the share consolidation on August 30, 2021 at a conversion rate of 20:1.
(1)
(2) Mr. Stein resigned from the Board on 23 June 2021. Accordingly, Mr. Stein’s indirect shareholdings have been excluded from the KMP table disclosure as at 31 December 2021.
(3) Mr Whiddon has control of 2,722,539 shares in the indirect holdings. Mr Whiddon does not control the remaining indirect holdings. They are held independently of Mr Whiddon and are only included
for good corporate governance purposes. Mr Whiddon has no relevant interest in the remaining indirect holdings.
END OF REMUNERATION REPORT (AUDITED)
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Company and/or Group are important. Details of the amount paid or payable
to the auditor for services provided during the year are set out in Note 25. For the year ended 31 December 2021, there
were no non-audit related services provided by the Company’s successor auditor, PwC. In 2021, the Calima Group engaged
its predecessor auditor, BDO, for non-assurance services of $10,370 thousand related primarily to the preparation of the
Company’s Australian tax compliance filings.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 60. No officer or director of Calima belonged to an audit practice that audited the Company during the year.
Rounding of amounts
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the “rounding off” of amounts in
the Director’s Report and the financial report. Amounts in the Director’s Report and half year financial statements have
been rounded off to the nearest thousand dollars in accordance with the instrument.
Signed in accordance with a resolution of the Directors.
Glenn Whiddon
Executive Chairman
29 March 2022
26
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
For the year ended 31 December 2021 and 2020
_____________________________________________________
CALIMA ENERGY LIMITED
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(thousands of Australian dollars)
For the year ended
Revenue
Oil and natural gas sales
Royalties expense
Risk management contracts
Realised loss
Unrealised gain
Other income
Expenses
Operating
Transportation
Depletion and depreciation
Exploration expense
Impairment loss
General and administrative
Transaction costs
Financing and interest
Share-based compensation
Foreign exchange (gain) loss
Net loss before the following
Gain on acquisition (net)
Loss on equity investment
Net loss before income taxes
Deferred income tax recovery
Net loss
Other comprehensive income (loss)
Items that may be reclassified subsequently to profit and loss
Gain (loss) on foreign currency translations
Total comprehensive loss
Net loss per share
Basic
Diluted
See accompanying notes to the consolidated financial statements.
Notes
31 December
2021
31 December
2020
$
$
47,713
(9,136)
38,577
(7,210)
816
-
32,183
10,079
2,700
7,531
10,927
37,628
4,241
1,032
804
919
(96)
75,765
(43,582)
11,438
(5)
(32,149)
(169)
(31,980)
356
(31)
325
-
-
19
344
32
31
261
-
4,710
1,450
-
155
85
15
6,739
(6,395)
-
-
(6,395)
-
(6,395)
$
$
$
5,794
(26,186) $
(2,221)
(8,616)
(0.08) $
(0.08) $
(0.06)
(0.06)
18
11
11
19
20
8
8
8
21
5
10
22
5
9
24
15
15
27
CALIMA ENERGY LIMITED
Consolidated Statement of Financial Position
(thousands of Australian dollars)
As at
Assets
Current assets
Cash and cash equivalents
Accounts receivable
Deposits and prepaid expenses
Oil and natural gas assets
Long-term deposits
Investments
Deferred income tax asset
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Credit facility
Risk management contracts
Other indebtedness
Long-term portion of lease liabilities
Restoration provisions
Shareholders’ equity
Share capital
Share-based payments
Foreign currency translations
Accumulated losses
See accompanying notes to the consolidated financial statements.
Subsequent events (Note 28)
Notes
31 December
2021
31 December
2020
6
7
8
9
10
11
12
8
13
14
22
24
$
$
$
3,363
7,186
766
11,315
128,709
614
537
12,154
153,329
17,116
21,739
2,941
-
41,796
265
25,428
67,489
1,697
92
-
1,789
61,399
535
-
-
63,723
853
-
-
857
1,710
461
4,676
6,847
350,461
16,839
5,688
(287,148)
85,840
153,329
$
296,329
15,821
(106)
(255,168)
56,876
63,723
28
CALIMA ENERGY LIMITED
Consolidated Statement of Cash Flows
(thousands of Australian dollars)
For the year ended
Operating activities
Net loss
Items not affecting operating related cash flows:
Gain on acquisition (net)
Impairment loss
Exploration expense
Depletion and depreciation
Unrealised gain on risk management contracts
Deferred income tax recovery
Share-based compensation
Accretion of liabilities
Non-cash expenses and other
Funds flow from operations
Changes in non-cash working capital
Cash provided by (used in) operating activities
Financing activities
Issuance of common shares
Increase in credit facility
Repayment of other indebtedness
Lease payments
Cash provided by (used in) financing activities
Investing activities
Acquisition of Blackspur Oil Corp.
Investments in oil and natural gas assets
Contributions to equity investments
Exploration expense
Cash used in investing activities
Impact of foreign exchange translations
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See accompanying notes to the consolidated financial statements.
Notes
31 December
2021
31 December
2020
$
(31,980) $
5
8
8
8
11
9
22
11414
26
14
10
12
5
8
(11,438)
37,628
10,927
7,531
(816)
(169)
919
350
602
13,554
2,970
16,524
36,178
3,342
(874)
(216)
38,430
(33,162)
(20,013)
(108)
(58)
(53,341)
53
1,666
1,697
3,363
$
6
$
(6,395)
-
4,710
-
261
-
-
85
-
220
(1,119)
458
(661)
-
-
(232)
(260)
(492)
-
(790)
-
-
(790)
(22)
(1,965)
3,662
1,697
29
CALIMA ENERGY LIMITED
Consolidated Statement of Changes in Equity
(thousands of Australian dollars)
For the year ended
Share capital
Balance, beginning of year
Issuance of common shares, net
Share-based compensation
Balance, end of year
Share-based payments reserve
Balance, beginning of year
Share-based compensation
Balance, end year
Foreign currency translation reserve
Balance, beginning of year
Other comprehensive income (loss)
Balance, end of year
Accumulated losses
Balance, beginning of year
Net loss
Balance, end of year
Shareholders’ equity, beginning of year
Shareholders’ equity, end of year
See accompanying notes to the consolidated financial statements.
Notes
31 December
2021
31 December
2020
14
22
22
24
$
$
$
$
$
296,329
54,132
-
350,461
15,821
1,018
16,839
(106)
5,794
5,688
(255,168)
(31,980)
(287,148) $
56,876
85,840
$
$
296,108
25
196
296,329
15,736
85
15,821
2,115
(2,221)
(106)
(248,773)
(6,395)
(255,168)
65,186
56,876
30
CALIMA ENERGY LIMITED
Notes to the Consolidated Financial Statements
As at and for the year ended 31 December 2021 and 2020
Financial statement note
Nature of business
1
Basis of presentation
2
Significant accounting policies
3
Significant accounting judgements, estimates and assumptions
4
Acquisition of Blackspur Oil Corp.
5
Cash and cash equivalents
6
Accounts receivable
7
Oil and natural gas assets
8
Deferred income taxes
9
Credit facility
10
Risk management contracts
11
Other indebtedness
12
Restoration provisions
13
Share capital
14
Per share amounts
15
Capital Management
16
Commitments and contingencies
17
Oil and natural gas revenues
18
Operating expenses
19
Transportation
20
General and administrative
21
Share-based compensation
22
Related party transactions
23
Other comprehensive income
24
Auditor Remuneration
25
Supplemental cash flow information
26
Parent company financial information
27
Subsequent events
28
1. NATURE OF BUSINESS
Page
31
31
32
36
37
38
38
39
40
41
42
43
43
44
44
44
45
46
46
46
46
46
48
48
49
49
49
50
Calima Energy Limited (“Calima” or the “Company”) was incorporated under the Australian Corporations Act 2001. Calima
is a production-focused energy company pursuing the exploration and development of oil and natural gas assets in the
Western Canadian Sedimentary Basin. On 30 April 2021, Calima completed the acquisition of Blackspur Oil Corp.
(“Blackspur”), a company that is currently developing oil and natural gas plays at Brooks and Thorsby in southern and central
Alberta, Canada. Calima also holds an undeveloped Montney acreage position in northeastern British Columbia, Canada.
Calima’s Australian head office is domiciled at 4/46-250 Railway Parade, West Leederville WA 6007. The Company’s
Canadian headquarters are located at 1000, 205 - 5 Avenue SW Calgary AB T2P 2V7. Calima’s voting common shares are
publicly traded on the Australian Stock Exchange under the symbol “CE1”. These audited consolidated financial statements
for the year ended 31 December 2021 (the “annual financial statements”) were approved and authorised by Calima’s Board
of Directors on March 29, 2022.
2. BASIS OF PRESENTATION
These general-purpose financial statements consist primarily of the financial records of Calima and its two wholly-owned
Canadian subsidiaries, Blackspur and Calima Energy Inc. (the “Calima Group”). Blackspur owns and operates the Brooks and
Thorsby oil assets and Calima Energy Inc. owns and operates the undeveloped Tommy Lakes Montney acreage. The
operating results of Blackspur for the months of May through December 2021 have been consolidated into these annual
financial statements. Blackspur’s operating results prior to the date of the acquisition have been excluded. All intercompany
transactions have been eliminated.
These annual financial statements have been prepared in accordance with Australian Accounting Standards and
interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Compliance with
Australian Accounting Standards ensures that these annual financial statements comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Consequently, these annual
financial statements are compliant with IFRS. Calima is a for-profit entity for the purposes of preparing the financial
statements. The statements have been prepared on a historical cost basis except for certain financial instruments which
31
are measured at their estimated fair market value. These annual financial statements follow the same accounting policies
that were utilised to prepare the audited consolidated financial statements for the year ended December 31, 2020, other
than for the utilisation of certain other accounting policies and presentation formats that have been utilised to
accommodate the consolidation of Blackspur’s financial results. The details of these changes are discussed directly below.
Certain comparative figures in these annual financial statements have been adjusted to conform with current period
presentation. Effective January 1, 2021, the Company revised its accounting policy to present the consolidated statement
of cash flows using the indirect method, a change from the direct method previously applied. The indirect method provides
more relevant information on items not affecting cash and a reconciliation of net income from continuing operations to net
cash flows from operating activities directly on the statement. The change in accounting policy was adopted retrospectively,
therefore, the comparative periods are presented using the indirect method. There were no changes to the Company’s
total cash flows arising from operating, investing and financing related activities as a result of the presentation changes.
The Company has reclassified certain comparative profit or loss and financial position account groupings in order to conform
with current period presentation. The Company disaggregated $0.3 million in oil and gas operating results on the income
statement to provide users more detail regarding the components of operating results. The Calima Group also elected to
aggregate its oil and natural gas related assets on the statement of financial position by function in order to streamline the
statement of financial position presentation. A detailed breakdown of the components of oil and natural gas assets is
included in the notes (see Note 8 for further details). The Company has also rounded the comparative information to the
nearest thousand of dollars in order to conform with current period presentation. There were no changes to the Company’s
asset and liability balances or net income (loss) as a result of these presentation modifications.
The functional currency of Calima is the Australian dollar and the functional currency of both Blackspur and Calima Energy
Inc. is the Canadian dollar. All amounts reported have been in presented in Australian dollars (A$ or AUD) unless otherwise
noted. References to C$ denotes Canadian dollars and US$ denotes United States dollars.
3. SIGNIFICANT ACCOUNTING POLICIES
Oil and natural gas assets
Oil and natural gas assets are measured at historical cost less accumulated depletion, depreciation and impairment (net of
reversals). The Company begins capitalising oil and natural gas exploration costs after the right to explore has been obtained
and includes land acquisition costs, geological and geophysical activities, drilling expenditures and costs incurred for the
completion and testing of exploration wells. The Calima Group capitalises all subsequent investments attributable to the
development of its oil and natural gas assets if the expenditures are considered a betterment and provide a future benefit
beyond one year. The Company's capitalised costs primarily consist of pad construction, drilling activities, completion
activities, well equipment, processing facilities, gathering systems, pipelines and employee costs directly attributable to
development.
Capitalised costs are classified as exploration and evaluation assets (“E&E”) if technical feasibility and commercial viability
have not yet been established. Technical feasibility and commercial viability are generally deemed to exist when proved
and probable reserves are present. Generally, the acquisition of undeveloped mineral leases are initially capitalised as E&E
assets and will be expensed if the lease expires, becomes impaired or management determines that no further exploration
or evaluation activities are expected on the lease prior to expiry. If technical feasibility and commercial viability of E&E
assets are established, the E&E assets are tested for impairment and reclassified to property, plant and equipment
(“PP&E”). Costs are capitalised directly as PP&E if they are attributable to the development of oil and natural gas reserves
after technical feasibility and commercial viability have been achieved.
The majority of PP&E is depleted using the unit-of-production method relative to the Company's estimated total
recoverable proved plus probable reserves. For the purposes of the depletion calculation, natural gas reserves and
production are converted to barrels of oil equivalent based upon the relative energy content (6:1). The depletion base
consists of the historical net book value of capitalised costs, plus the estimated future costs required to develop the
Company's estimated recoverable proved plus probable reserves. The depletion base excludes E&E and the cost of assets
that are not yet available for use in the manner intended by Management.
Impairment
The Calima Group reviews its E&E and PP&E for indicators of impairment at each reporting period. For the purposes of the
review, the Company’s assets are grouped into cash-generating units ("CGUs") which are defined as the smallest group of
assets generating cash inflows that are largely independent from the cash inflows of other asset groups. The Calima Group’s
PP&E are currently held in two CGUs (Brooks and Thorsby). The majority of the Company’s E&E assets are held in one CGU
(Tommy Lakes Montney E&E). If impairment indicators exist, the CGU is tested for impairment and a loss is recognised to
the extent that the carrying amount exceeds its estimated recoverable value.
The recoverable amount of the CGU is determined as the greater of its fair-value-less-costs-of-disposal ("FVLCOD") and its
value-in-use ("VIU"). FVLCOD is based on the estimated recoverable amount from the sale of an asset or CGU in an arm’s
32
length transaction between knowledgeable parties, less the cost of disposal. In assessing VIU, the estimated future cash
flows of the CGU are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money, risks specific to the asset and overhead costs associated with operating the CGU.
The recoverable amount of the Calima Group’s CGUs is generally based on after-tax discounted future cash flows from the
Company’s proved plus probable reserves, contingent resources or by observable third-party land transactions adjacent to
the Company's assets (Level 3 valuations).
Following the recognition of an impairment loss, the Company reviews its CGU for indicators of impairment reversal at each
subsequent reporting period. If there is observable evidence that the value of the CGU has increased significantly since the
previous impairment loss, Calima performs a test for impairment reversal by comparing an updated estimate of the CGU’s
recoverable amount to its current carrying amount. If the Company concludes that there has been a material and
substantive change in the estimates used to assess the CGU’s recoverable amount, an impairment loss will be reversed to
the extent that the recoverable amount exceeds its carrying value, less the incremental value of depletion and depreciation
that otherwise would have been recognised by the Company, had the impairment loss not previously occurred.
Business combinations
The Company has recognised the acquisition of Blackspur utilising the acquisition method. The cost of the acquisition was
measured at the fair market value of the consideration paid and liabilities assumed under the terms of the business
combination agreement. Identifiable assets and liabilities acquired are generally measured and recognised at their fair value
and any deferred tax assets or liabilities arising from the business combination were recognised at the acquisition date. The
differential between the consideration paid and assessed fair market value of the assets and liabilities assumed is
recognised as either goodwill or a gain on acquisition. The remeasurement of acquired restoration provisions to the risk-
free discount rate is recognized in profit or loss as incurred. Transaction costs related to business combinations are
expensed.
Financial Instruments
The Company's financial instruments consist of cash and cash equivalents, accounts receivable, deposits, risk management
contracts, accounts payable, accrued liabilities, other indebtedness, investments and a credit facility. The Calima Group’s
financial instruments are measured on the consolidated statement of financial position at either fair market value or
amortised cost. The carrying value of the Company's financial instruments generally approximate their fair market value.
The fair value measurement of the Company's financial instruments are classified according to the following hierarchy
which is ranked based on the amount of publicly observable inputs available to value the instruments:
Level 1 - Quoted prices that are available in active markets for identical assets or liabilities at the reporting date
Level 2 - Values are based on various inputs, including quoted forward prices for commodities, time value of money
and volatility factors, which are observed in the marketplace but are not readily observable in an actively traded market
Level 3 - Valuation inputs that are not based on observable market data
The following table summarises the method by which the Calima Group measures its financial instruments on the
consolidated statement of financial position and the corresponding hierarchy rating for their derived fair value estimates:
Financial Instrument
Cash and cash equivalents
Accounts receivable
Deposits
Accounts payable and accrued liabilities
Credit facility
Risk management contracts
Other indebtedness
Investments
Fair value
Hierarchy
Level 2
Level 2
Level 2
Level 2
Level 2
Level 2
Level 3
Level 3
Classification &
Measurement
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
FV through profit and loss
Amortised cost
Equity method
The Calima Group’s risk management contracts are measured at fair market value at each reporting period. Realised gains
and losses from the settlement of risk management contracts as well as unrealised gains and losses from the
remeasurement of these financial instruments to fair market value at each reporting period are recognised in net income
(loss) as incurred. Transaction costs related to fair value through profit and loss financial instruments are immediately
expensed. Financial instruments recognised at amortised cost are accreted through net income (loss) towards their
settlement value over time. Transaction costs related to financial liabilities measured at amortised costs are initially
capitalised and then amortised to net income (loss) over the life of the related host instrument.
Any impairment loss of financial assets is determined by assessing and measuring the expected credit losses of the
instruments at each reporting period. The Calima Group measures expected credit losses using a lifetime expected loss
allowance model for all trade receivables and contract assets. The credit-loss model groups receivables based on similar
credit risk characteristics and the number of days past due in order to estimate and recognise bad debt expenses. When
33
measuring expected credit losses, the Company considers a variety of factors including: evidence of the debtor's financial
condition, history of collections, the term of the receivable and any changes in economic conditions.
Cash and cash equivalents consist of cash on hand and other short-term liquid investments that carry a maturity term of
three months or less and presented as a current asset on the statement of financial position. All other financial instruments
are presented as a current asset or liability on the statement of financial position if they are expected to be settled within
12 months of the statement of financial position date unless there is an irrevocable right to defer settlement beyond 12
months from the statement of financial position date.
Foreign currency translations
With respect to transactions and balances of the Calima Group that are denominated in a foreign currency other than their
respective functional currency, monetary assets and liabilities are translated at the exchange rate in effect at the statement
of financial position date. Revenues and expenses are translated at the average foreign exchange rates during the period.
Non-monetary items are translated at the foreign exchange rate in effect at the historical date of their last fair value
measurement. The corresponding realised and unrealised gains and losses from these foreign currency translations are
recognised in net income (loss) as incurred.
For financial reporting purposes, the presentation currency of the Calima Group is the Australian dollar. Accordingly, the
Canadian dollar functional currencies of Blackspur and Calima Energy Inc. are translated to the Australian dollar
presentation currency upon consolidation. Revenues and expenses are translated at the average exchange rate during the
year and assets and liabilities are translated at the prevailing exchange rates at the reporting date.
The corresponding unrealised gains and losses stemming from the remeasurement of the subsidiary functional currencies
to the presentation currencies at each reporting period are recognised as other comprehensive income by Calima. The
corresponding cumulative foreign currency translation reserve is reflected in shareholder’s equity on the consolidated
statement of financial position until such time the subsidiary is disposed of, at which point, the balance is reclassified to net
income (loss).
Revenue recognition
Revenues primarily relates to the sale of oil, natural gas and natural gas liquids ("NGLs") in Canada from the Company's
Brooks and Thorsby assets. The products are classified and presented in the financial statements based on the physical
characteristics of the hydrocarbons at the time of sale. Liquids extracted from the natural gas stream are presented as
NGLs. Revenues from liquids, natural gas and NGL sales are presented net of third-party royalty interests held by private
entities or government authorities.
The Calima Group measures revenue from the sale of oil, natural gas and NGLs at the amount the Company expects to
receive, which is based on an agreed upon transaction volume and price with the customer. Revenue is recognised when
the Calima Group transfers control of products or provides services to a customer at the amount to which the Company
expects to receive. If the consideration includes a variable component, the Group estimates the amount of the expected
consideration receivable. Variable consideration is estimated throughout the contract and is constrained until it is highly
probable a significant revenue reversal in the amount of cumulative revenue recognised will not occur. In most cases,
revenue is recognised when the hydrocarbons have been delivered to the customer. Payment terms with the Company's
customers are generally within 30 days following the month of product delivery.
The Calima Group recognises realised and unrealised gains and losses from the Company’s risk management contracts
which are remeasured to fair market value at each reporting period (refer to the financial instruments accounting policy).
The Company also earns other income primarily from interest on its cash and cash equivalent balances held. Excluded from
revenues are amounts received in respect of government grants and subsidies that are instead reflected as a reduction to
the related expenditure to which the recoveries are intended to compensate.
Provisions
Provisions are liabilities that are recognised when the Calima Group has a present legal or constructive obligation as a result
of a past event and it is probable that the Company will be required to settle the obligation. The Calima Group’s provisions
primarily consist of restoration provisions associated with the dismantling, decommissioning and site disturbance
remediation activities for the Company's oil and natural gas assets.
At initial recognition, the Company recognises a restoration provision asset and corresponding liability on the statement of
financial position. Restoration provisions are measured at the present value of expected future cash outflows required to
settle the obligations. Restoration provisions are inflated based on the Bank of Canada's target inflation rate and then
discounted to net present value using a risk-free discount rate. The liabilities are accreted upwards towards their estimated
settlement value over the expected life of the assets in order to reflect the time value of money. Restoration provision
assets are depleted over the remaining useful life of the related assets in order to reflect the associated decommissioning
costs in net income (loss) over time. Restoration provision assets and liabilities are remeasured at each reporting period
34
primarily to account for any changes in estimates or discount rates. Actual expenditures incurred to settle the obligations
reduce the liability.
Income taxes
The Calima Group’s income taxes primarily relate to deferred income taxes that are recognised in respect of the Company’s
earnings, which are expected in future years under the Income Tax Act (Canada) and Income Tax Assessment Act (Australia).
Deferred income tax assets and liabilities are recognised on temporary differences between the current carrying value of
assets and liabilities for financial reporting purposes and their corresponding tax values. Deferred income taxes are
determined on an undiscounted basis using tax rates that have been enacted or substantively enacted and that are
expected to apply in future years when the temporary differences reverse. A deferred tax asset is only recognised to the
extent that it is probable that future taxable profits will arise, such that the available carry-forward tax deduction can be
utilised to shelter the taxable profits from income tax. The recoverability of deferred tax assets is assessed by comparing
the Calima Group’s tax pools to the future undiscounted cash flows from the Company's proved plus probable reserves,
less estimated financing and general and administrative expenses.
Income taxes are recognised in the statement of comprehensive income, except when they relate to share capital, in which
case, the taxes are recognised directly in shareholders equity. Current income tax expense (recovery) is the expected cash
tax payable or receivable on the Company's taxable income (loss) during the year, using tax rates that have been enacted
or substantively enacted.
Stock-based compensation
The Calima Group’s stock-based compensation expense primarily relates to stock options and performance rights that are
granted to employees, service providers and directors of the Company.
Grants issued under the Company’s plans are initially measured at their estimated fair market value and are expensed over
the vesting periods under the terms of the compensation arrangement. Upon exercise, the plans allow the holder of an
award to receive common shares or cash at the Company's discretion. The Company’s plans are all accounted for as equity-
settled share-based compensation arrangements based on their anticipated settlement option. Accordingly, when equity
compensation units are exercised or released, any consideration received, together with the expense previously recognised
as contributed surplus, is recorded as an increase to share capital.
The primary non-market-based vesting condition for all of the Company's stock-based compensation plans is generally
continuous employment. An estimated forfeiture rate is applied to the valuation of the equity units over the vesting period
and is subsequently adjusted to reflect the actual number of equity awards that ultimately vest. In some cases, performance
rights are also granted with certain other market-based or non-market-based vesting conditions which are determined by
the Company's Board of Directors. The fair market value of these performance rights at the date of grant is initially adjusted
to reflect the probability of these possible outcomes.
Stock options and performance rights are valued at the date of grant primarily utilising a Black-Scholes pricing model.
Performance rights that are subject to a minimum share price vesting condition are valued utilising a binomial barrier pricing
model. Performance rights that vest immediately at issuance are valued at the Company's share price at the date of grant.
The stock-based compensation expense attributable to performance factors that are dependent upon market conditions
are not subsequently adjusted for actual results. The stock-based compensation expense attributable to performance
factors dependent upon non-market conditions are subsequently adjusted for actual results.
Leases
At the inception of a contract, the Calima Group assesses if an agreement contains a lease based on whether the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For all in-scope
lease arrangements, a right-of-use asset and corresponding lease liability is initially recognised at the commencement date
of the lease and measured at the net present value of all future non-cancellable lease payments. The payments are
discounted using the rate implicit in the lease unless that rate is not readily determined, in which case, the Company's
incremental borrowing rate is utilised. The estimated lease term consists of all non-cancellable periods under the contract
and includes periods covered by an extension or termination option if the Calima Group is reasonably certain that it will
exercise the option.
Right-of-use assets are depreciated to net income (loss) over the expected utilisation period of the underlying assets using
the straight-line method. The depreciation of right-of-use assets that are utilised in respect of development activities are
initially capitalised to PP&E and then depleted to net income over the remaining life of the developed assets once they are
ready for use in the manner intended. Lease liabilities are accreted upwards toward their settlement value over the
expected life of the contract in order to reflect the cost of borrowing under the indebted contract. The interest portion of
the lease payment is recognised as an operating activity in the consolidated statement of cash flows. The principal portion
of the lease payment reduces the lease liability and is reflected as a financing activity in the consolidated statement of cash
35
flows. Right-of-use assets and lease liabilities are remeasured at each reporting period to reflect any contract modifications
or reassessments that impact the anticipated remaining cash outflows under the contract.
Jointly operated assets
The Calima Group’s oil and natural gas activities include jointly operated oil and natural gas assets and liabilities. These
annual financial statements only include the Company’s share of these jointly operated assets and liabilities and a
proportionate share of the related revenue and expenses.
Per share information
Basic per share information is calculated using the weighted average number of common shares outstanding during the
year. Diluted per share information is calculated using the basic weighted average number of common shares outstanding
during the year, adjusted for the number of shares which could have had a dilutive effect on net income during the year
had outstanding in-the-money equity compensation units been exercised.
4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
Significant judgements
Oil and natural gas assets
Oil and natural gas assets are grouped into CGUs based on their ability to generate largely independent cash flows. The
determination of the Calima Group’s CGUs are subject to judgment as the Company is required to define and establish
these asset groupings based on their specific nature and characteristics in a reasonable manner. The Calima Group applies
judgment when determining the classification of its oil and natural gas assets as either E&E or PP&E assets because it
requires the Company to define and establish thresholds for when a particular project has achieved technical feasibility and
commercial viability. When the Calima Group assesses its CGU for indicators of impairment or impairment reversal at each
reporting period, judgment is applied in establishing the qualitative and quantitative thresholds that are used to assess if
an indicator is present, such that an impairment test is then required.
Liquidity and access to Credit Facility
As at 31 December 2021, the Calima Group’s net debt was A$27.8 million (Note 16). The Company also had a net working
capital deficiency of $30.5 million (current liabilities of $41.8 million in excess of current assets of $11.3 million), which
included C$20.0 million drawn under a C$27.0 million demand revolving credit facility with a Canadian chartered bank (the
“Credit Facility”).
Borrowings under the Credit Facility incur interest at a market-based interest rate plus an applicable margin which varies
depending on Blackspur’s net debt to cash flow ratio. As a demand facility, the Credit Facility does not have a specific
maturity date which means that the lender could demand repayment of all outstanding indebtedness or a portion thereof
at any time. If such an event were to occur, the Calima Group would be required to source alternative sources of capital or
sell assets to repay the indebtedness.
The Calima Group manages liquidity risk by complying with the covenants of the Credit Facility agreement, however, there
can be no assurance that the amount or terms of the revolving credit facility will be maintained at the next annual borrowing
base review. Based on current cash flow forecasts which utilise the Company’s reserves, and the continued support of the
Lender since the inception of the Credit Facility in April 2015, the Calima Group expects to discharge its liabilities in the
normal course of business, the Credit Facility will remain available for the foreseeable future and the lender will not demand
repayment of the amount drawn under Credit Facility.
A borrowing base review was completed by the Company’s lender during the fourth quarter of 2021 and, based on updated
interpretation of the Company’s reserves and future commodity prices, the Credit Facility was increased by 8%, or $2.0
million from the previous borrowing base of $25.0 million. On 17 February 2022, the Calima Group also completed a private-
placement equity financing arrangement with investors for gross proceeds of A$20.0 million. Proceeds from the transaction
effectively reduced the Company’s net debt to approximately A$13.5 million as at 28 February 2022. The Company utilized
the majority of the proceeds to reduce amounts drawn under the Credit Facility and complete the first half 2022 capital
investment program.
Based on these events, the Directors have reasonable grounds to believe that the Calima Group will continue as a going
concern. The Credit Facility is scheduled for its next annual borrowing base review on or before 31 May 2022 and is expected
to be based on the Lenders’ interpretation of the Group’s reserves and future commodity prices, consistent with prior years.
Other significant judgements
The determination of the Company’s income tax and royalty expenses require interpretation of complex laws and
regulations and are subject to judgement. Judgement is also applied when interpreting contractual commitments to assess
whether or not they contain a lease arrangement.
36
Significant estimates
Oil and natural gas assets
Amounts recorded for the depletion of oil and natural gas assets rely on estimates and assumptions regarding the
Company's proved plus probable reserves and future development costs. Fair value estimates that are utilised in a test for
impairment or impairment reversal often rely upon estimates and assumptions regarding the future cash flows from the
Calima Group’s proved plus probable reserves as well as the recoverable resale value of undeveloped exploratory acreage.
Reserve estimates are primarily based on the Calima Group’s reserve reports prepared by an independent third-party
engineering firm. The reports include estimates for the quantity of oil and natural gas volumes, recovery factors, production
rates, future commodity prices, discount rates, and future royalty, operating and capital costs. These estimates were
prepared by experts in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook but are
still subject to measurement uncertainty. The Calima Group may also utilise observable third-party land transactions
adjacent to the Company's assets for estimating the value of undeveloped exploration acreage. Actual results may differ
from the Company's estimates.
Other significant estimates
Estimates and assumptions are utilised to assess the Company’s ability to continue as a going concern which includes future
cash flow projections for operating, investing and financing related activities. The value of the Company's restoration
provisions is based on estimates and assumptions regarding current legal requirements, future costs to settle the provisions
and the expected timing of the remediations. The valuation of level 2 and level 3 financial instruments are subject to
measurement uncertainty because there is no observable actively traded market and, therefore, estimates are required to
estimate their fair market value at each reporting period for the purposes of valuation or disclosure.
The Company records deferred income tax assets and liabilities using income tax rates that are enacted or substantively
enacted at the statement of financial position date, which are subject to change. The recoverability of loss carryforwards,
investment tax credits and royalty incentives require estimates and assumptions regarding future operating results that will
allow the Company to ultimately utilise those assets. All tax filings are also subject to audit and potential reassessment.
The Calima Group's stock-based compensation expense is subject to measurement uncertainty as a result of estimates and
assumptions related to volatility, forfeiture rates, expected life, market-based vesting conditions and non-market-based
vesting conditions. Estimates and assumptions are utilised in the Company's cash flows forecasts in assessing the Company’s
ability to continue as a going concern, including the impacts of COVID-19 on future cash flows and access to credit.
5. ACQUISITION OF BLACKSPUR OIL CORP.
On 30 April 2021, Calima completed a plan of arrangement with Blackspur to acquire 100% of its issued and outstanding
common shares for total cash and share consideration of $22.4 million and a requisite reduction of Blackspur’s outstanding
Credit Facility draws of $28.0 million (the “Blackspur Acquisition”). The following table summarises the allocation of the
consideration to the assets acquired and liabilities assumed by Calima:
Purchase price allocation(1)
Consideration paid
Cash paid to Blackspur shareholders
Common shares issued to Blackspur shareholders (2.46 billion shares at $0.007/share)
Repayment of Blackspur credit facility draws
Net assets acquired
Accounts receivable
Deposits and prepaid expenses
Oil and natural gas assets
Investments
Accounts payable and accrued liabilities
Credit facility
Risk management contracts
Restoration provisions
Deferred income tax asset
Value of net assets acquired in excess of consideration paid
Less: remeasurement of restoration provisions using a risk-free rate
Gain on acquisition (net)
Note
$
14
10
7
8
10
11
13
9
13
$
30 April
2021
5,158
17,222
28,004
50,384
5,423
269
87,521
415
(3,658)
(17,532)
(3,595)
(9,389)
11,438
70,892
20,508
(9,070)
11,438
(1)
The fair value of the identifiable assets and liabilities acquired are Management’s best estimate based on information available at the reporting date. Future revisions to these estimates during the
one-year measurement period could result in a material change from the amounts reported in these annual financial statements.
37
In order the finance the Acquisition, Calima completed an equity fundraising by issuing 5.43 billion common shares at
$0.007/share for gross proceeds of $38.0 million before transaction costs (Note 14). Blackspur shareholders received $22.4
million of cash and share consideration. Pursuant to the terms of the Acquisition, Blackspur also issued a share subscription
to Calima for total proceeds to Blackspur of $28.0 million. The proceeds from Calima were then used to repay borrowings
under its revolving and non-revolving credit facilities (Note 10).
The fair market value of the property, plant and equipment (“PP&E”) was primarily based on the after-tax discounted future
cash flows from Blackspur’s proved plus probable reserves utilising a fair-value-less-cost-of-disposal methodology (Level 3
valuation). Cash flows were based on Blackspur’s 2020 reserve report which was prepared by an independent third-party
engineering firm. The report was updated internally to reflect the passage of time and conditions present as at 30 April
2021, including revised price forecasts. The following table summarizes the price forecast included in the valuation:
($ thousands)
WTI (US$/bbl
Hardisty Bow River (C$/bbl)
AECO (C$/GJ)
FX (C$ to US$)
2021
59.67
60.29
2.70
1.26
2022
57.41
56.95
2.73
1.27
2023
55.62
54.41
2.66
1.28
2024
56.74
55.51
2.71
1.28
2025
57.87
56.62
2.76
1.28
2026
59.03
57.75
2.82
1.28
2027
60.21
58.91
2.88
1.28
2028
61.42
60.08
2.93
1.28
2029
62.64
61.28
2.99
1.28
2030
63.89
62.50
3.05
1.28
Thereafter
+2% per year
+2% per year
+2% per year
1.27 thereafter
Cash flows were discounted at rate of approximately 36%. A 1% reduction in the discount rate would have resulted in an
increase to PP&E of approximately $2.2 million and reduction to the net gain on acquisition of approximately $1.7 million,
net of deferred taxes.
The uninflated, undiscounted restoration provision acquired with Blackspur was estimated to be $17.2 million. The liability
was initially recognised by Calima at a fair market value of $9.4 million utilising an inflation rate of 2% and a discount rate
of 10.5%. The restoration provision was then subsequently remeasured during the second quarter of 2021 using a risk-free
discount rate to align the Blackspur liability with Calima’s existing measurement policy for restoration provisions (Note 13).
Calima recognised a deferred income tax asset of $11.4 million reflecting the after-tax value of Blackspur’s carry-forward
tax pools in excess of the corresponding carrying amount of the assets acquired. Recognition was based on the assessment
that it was probable the acquired tax pools would be utilised from future taxable profits of Blackspur. As a result of the
Blackspur Acquisition, Calima recognised a net gain on acquisition $11.4 million, reflecting the fair market value of assets
acquired and the recognition of associated deferred income tax assets, in excess of the consideration paid.
For the year ended 31 December 2021, the Calima Group recognised oil and natural gas sales of $47.2 million and net
income of $6.6 million from Blackspur operations, which were incurred since 30 April 2021. The following table summarises
what Calima’s operating results would have been, had the Acquisition occurred on January 1, 2021:
Selected operating results (A$ thousands)(1)
Oil and natural gas sales
Royalties
Revenue
Net loss
Pro Forma
results
62,712
(11,839)
50,873
(33,845)
This pro forma information is not necessarily indicative of the results of operations that would have resulted had the acquisition been affected on the dates indicated, or the results that may be
obtained in the future.
Consolidated results
as reported
47,713
(9,136)
38,577
(31,980) $
Blackspur prior to
acquisition
14,999
(2,703)
12,296
(1,865) $
$
$
$
$
(1)
6. CASH AND CASH EQUIVALENTS
As at 31 December 2021, the Calima Group held cash and cash equivalents of $3.4 million (31 December 2020 - $1.7 million).
The Company is exposed to credit risk associated with its cash and cash equivalent balances held by third party institutions.
The credit risk associated with the Calima Group’s cash and cash equivalents was considered low as the Company’s balances
were all held with three large chartered banks located in Australia and Canada.
7. ACCOUNTS RECEIVABLE
As at (A$ thousands)
Oil and natural gas sales
Joint venture billings
GST and other
Accounts receivable
31 December
2021
6,475
517
194
7,186
$
$
31 December
2020
29
-
63
92
$
$
The Calima Group is exposed to collection risk from receivables associated with the Company’s oil and natural gas sales.
The customer base primarily consists of integrated oil and natural gas producers, midstream and downstream companies
and energy traders. The Company manages credit risk by principally transacting with high-quality counterparties.
38
As at 31 December 2021, credit risk from outstanding accounts receivable was considered low given the history of
collections and because greater than 80% of outstanding Company’s outstanding receivables from oil and natural gas sales
were held with four investment-grade counterparties. Substantially all of the Company’s accounts receivable from oil and
natural gas sales were collected within 30 days following the month of sale or settlement date and there were no material
amounts past due as at 31 December 2021 or 2020.
8. OIL AND NATURAL GAS ASSETS
Continuity schedule (A$ thousands)
Investments in capital assets
Balance, 31 December 2019
Capital investments
Non-cash capitalised costs
Impact of foreign currency translations
Balance, 31 December 2020
Acquisition of Blackspur (Note 5)
Capital investments
Non-cash capitalised costs(1)
Release of collateralised assets (Note 12)
Impact of foreign currency translations
Balance, 31 December 2021
Accumulated depletion and depreciation
Balance, 31 December 2019
Depletion and depreciation
Impairment losses
Impact of foreign currency translations
Balance, 31 December 2020
Release of collateralised assets (Note 12)
Depletion and depreciation
Land expiries
Impairment losses
Impact of foreign currency translations
Balance, 31 December 2021
Net book value
Balance, 31 December 2019
Balance, 31 December 2020
Balance, 31 December 2021
$
PP&E
assets
20
502
-
(29)
493
86,313
26,366
2,082
339
4,462
120,055
(8)
(4)
-
-
(12)
(160)
(7,862)
-
(332)
(96)
(8,462) $
12
481
111,593
$
$
$
$
$
$
$
$
$
E&E
assets
62,862
1,654
1,637
(2,303)
63,850
1,208
464
(412)
-
4,296
69,406
-
-
(3,634)
52
(3,582)
-
-
(10,869)
(36,789)
(1,270)
(52,510) $
62,862
60,268
16,896
$
$
$
$
ROU
assets
83
-
920
(53)
950
-
-
-
-
58
1,008
(56)
(257)
-
13
(300)
-
43
-
(507)
(24)
(788) $
27
650
220
$
$
$
Total
62,965
2,156
2,557
(2,385)
65,293
87,521
26,830
1,670
339
8,816
190,469
(64)
(261)
(3,634)
65
(3,894)
(160)
(7,819)
(10,869)
(37,628)
(1,390)
(61,760)
62,901
61,399
128,709
(1) During the year ended 31 December 2021, the Calima Group recognised non-cash capitalised costs of $1.7 million primarily related to restoration provisions added in
respect of the Company’s drilling and development activities (Note 13).
The Calima Group’s PP&E primarily consists of the Brooks and Thorsby CGUs located in Southern and Central Alberta that
were acquired as part the Blackspur Acquisition on 30 April 2021 (Note 5). The Company’s exploration of evaluation assets
(“E&E”) primarily consists of capitalised costs associated with undeveloped Tommy Lakes Montney acreages in North-
eastern British Columbia.
During the year ended 31 December 2021, the Calima Group recognised land expiry losses of $10.9 million, primarily in
respect of the Company’s Tommy Lakes Montney acreages for which there were no drilling plans in the near term that were
necessary to extend the license tenure.
Following a comprehensive strategic review during the fourth quarter of 2021 and the absence of near-term development
plans, the Calima Group determined that indicators of impairment were present as at 31 December 2021 for the residual
carrying value of the Tommy Lakes Montney assets which indicated that the remaining carrying value of the E&E assets
may not be fully recoverable.
The Calima Group performed an impairment test on Tommy Lakes Montney CGU, primarily utilising estimated after-tax,
discounted future cash flows (un-risked) from the CGU’s contingent resources in order to estimate the CGU’s FVLCOD
valuation. As part of the review, the Company also utilised observable third-party land transactions adjacent to the
Company's assets as proxy to estimate fair market value (Level 3 valuations). The results of the impairment test indicated
that the net book value of the CGU exceeded its recoverable value, and the Company recognised an impairment loss
provision of $37.6 million. Following the impairment loss, the carrying value of the Tommy Lakes CGU was $15.9 million.
39
The following table summarises the key forecast assumptions included in the Company’s impairment test:
(A$ thousands)
WTI (US$/bbl
Edm light (C$/bbl)
AECO (C$/GJ)
FX (US$ to C$)
2024
65.03
74.91
2.97
1.25
2025
66.33
76.40
3.02
1.25
2026
67.65
77.93
3.08
1.25
2027
69.01
79.49
3.15
1.25
2028
70.39
81.08
3.21
1.25
2029
71.79
82.70
3.27
1.25
2030
73.23
84.36
3.34
1.25
2031
74.69
86.04
3.41
1.25
2032
76.19
87.76
3.47
1.25
2033
77.71
89.52
3.54
1.25
2034
79.27
91.31
3.61
1.25
Thereafter
+2% per year
+2% per year
+2% per year
1.25 thereafter
Discounted after-tax cash flows from Contingent Resources were calculated with a two percent inflation rate and discount
rate of approximately 35%. A 5% change in the discounted cash flows that were utilised in the Company's impairment test
would result in an increase or decrease to the impairment loss of approximately $1.3 million. An increase in the discount
rate of 100 basis points (1%) would result in further impairment loss of approximately $3.2 million.
There were no indicators of impairment identified for the Company’s Brooks and Thorsby CGUs as at 31 December 2021.
Calima’s outstanding right-of-use assets (“ROU asset”) relates to the leasing of four storage tanks that service produced
water and flowback at the Company’s Montney exploration well sites in North-eastern BC. The four-year lease agreement
commenced on January 1, 2020 and Calima recognised a right-of-use asset and corresponding lease liability on the
consolidated statement of financial position for the discounted value of the minimum lease payments. The lease was valued
utilising a weighted average incremental borrowing rate of 6.5%. As at December 31, 2021, the undiscounted cash flows
required to settle Calima’s lease liability was $0.48 million.
As at 31 December 2021, $17.9 million of oil and natural gas assets, primarily consisting of E&E, were not subject to
depletion and depreciation as they were not ready for use in the manner intended (2020 - $60.7 million).
9. DEFERRED INCOME TAXES
(A$ thousands)
Non-capital losses
Oil and natural gas assets
Restoration provisions
Investments
Risk management contracts
Share issuance costs
Tax credits and other
Unrecognised deferred tax assets
Deferred income tax asset
$
31 December
2019
6,666
(1,455)
895
-
-
-
349
6,455
(6,455)
-
$
Change in
tax position
5,932
$
(5,283)
180
-
-
-
154
983
(983)
-
$
$
31 December
2020
12,598
(6,738)
1,075
-
-
-
503
7,438
(7,438)
-
$
Change in
tax position
13,586
$
3,426
4,930
302
677
747
237
23,905
(11,751)
12,154
$
31 December
2021
26,184
(3,312)
6,005
302
677
747
740
31,343
(19,189)
12,154
$
$
As at 31 December 2021, the Calima Group recognised a deferred income tax asset of $12.2 million primarily in respect of
Blackspur’s carry-forward tax pools in excess of the corresponding accounting values. The Calima Group also held
unrecognised deferred income tax assets of $19.2 million consisting primarily of carry-forward tax losses held by Calima
Energy Limited and Calima Energy Inc.
The following table reconciles the change in the deferred income tax asset during the year ended 31 December 2021:
Continuity schedule (A$ thousands)
Deferred income tax asset, beginning of year
Deferred income tax asset from the Blackspur Acquisition (Note 5)
Deferred income tax recovery recognised through profit or loss
Impact of foreign exchange translations
Deferred income tax asset, end of year
31 December
2021
-
11,438
169
547
12,154
$
$
31 December
2020
-
-
-
-
-
$
$
40
The following table reconciles the Company’s consolidated income tax expense (recovery) compared to that computed
using the current effective Australian tax rate of 30% (31 December 2020 – 30%):
For the year ended (A$ thousands)
Net loss before income taxes
Statutory income tax rate
Expected income tax recovery
Adjustments related to the following:
Impact of gain on acquisition
E&E assets subject to initial recognition exemption
Change in unrecognised deferred income tax assets
Changes in tax rates
Share-based compensation
Impact of foreign exchange translations and other
Deferred income tax recovery
10. CREDIT FACILITY
As at (A$ thousands)
Credit facility details:
Credit facility draws
Issued letters of credit
Undrawn capacity
Credit facility capacity
Credit Facility maturity date
Effective annual interest rate on revolving draws
Covenants(1):
Working capital ratio
$
$
$
$
Financial
Covenant
31 December
2021
(32,149) $
30%
(9,645)
31 December
2020
(6,395)
30%
(1,918)
(6,153)
5,059
8,683
1,953
276
(342)
(169) $
-
-
1,315
454
25
124
-
31 December
2021
31 December
2020
$
$
21,739
150
7,459
29,348
On demand
3.4%
1:1
1.11:1.00
-
-
-
-
-
-
-
(1) The Credit Facility contains certain covenants that limit the Company’s ability to, among other things: incur additional indebtedness; create or permit liens to exist; and
make certain dispositions and transfers of assets.
As at 31 December 2021, the Calima Group held a C$27.0 million demand revolving credit facility with a Canadian chartered
bank (the “Credit Facility”). A borrowing base review was completed during the fourth quarter of 2021 and, based on the
Lenders’ updated interpretation of the Company’s reserves and future commodity prices, the Credit Facility was increased
by 8%, or C$2.0 million from the previous borrowing base of C$25.0 million in place as at 30 April 2021. The Credit Facility
is scheduled for its next borrowing base review on or before 31 May 2022.
Borrowings under the Credit Facility incur interest at a market-based interest rate plus an applicable margin which varies
depending on Blackspur’s net debt to cash flow ratio. Interest charges are between 150 bps to 350 bps on Canadian bank
prime borrowings and between 275 bps and 475 bps on Canadian dollar bankers’ acceptances. Any undrawn portion of the
demand facility is subject to a standby fee in the range of 20 bps to 45 bps. Security for the credit facility is provided by a
$150.0 million demand debenture. A 1% change in the interest rate under the Credit Facility would result in higher
annualised interest expense of $0.2 million based the balance outstanding as at 31 December 2021.
Under the terms of the facility, a financial covenant must be maintained. The Company must not permit the working capital
ratio, as defined by the bank, to fall below 1:1. The bank defines the working capital ratio as the ratio of (i) current assets
plus any undrawn availability under the facility to (ii) current liabilities less any amount drawn under the facilities. For the
purposes of the covenant calculation, risk management contract assets and liabilities are excluded. At 31 December 2021,
the Company was in compliance with its banking covenants.
The following table summarises the change in the Credit Facility during the year ended 31 December 2021:
For the year ended (A$ thousands)
Credit Facility, beginning of year
Credit Facility acquired with the Blackspur Acquisition (Note 5)
Credit Facility draws (net) subsequent to the Acquisition
Impact of foreign currency translations
Credit Facility, end of year
31 December
2021
-
(17,532)
(3,342)
(865)
(21,739)
$
$
41
11. RISK MANAGEMENT CONTRACTS
For the year ended (A$ thousands)
Derivative liability, beginning of year
Derivative liability acquired with Blackspur (Note 5)
Realisation of derivative losses
Net unrealised decrease in fair value
Impact of foreign currency translations
Derivative liability, end of year
31 December
2021
-
(3,595)
7,210
(6,394)
(162)
(2,941)
$
$
The Calima Group is exposed to commodity price fluctuations associated with the production and sale of oil and natural
gas. The Company executes a consistent and mechanical risk management program which is designed primarily to reduce
cash flow volatility, protect a sufficient level of cash flows to service debt obligations and fund a portion of the Company’s
development and operational programs. The Calima Group generally hedges oil pricing exposure on a forward rolling one
year basis. The Company’s current policy is to hedge 50% of forecasted oil production for the upcoming four quarters.
The Company’s risk management portfolio consists of instruments that are intended to mitigate the Calima Group’s
exposure to commodity price risks in the Western Canadian Sedimentary Basin consisting primarily of the US$ WTI
benchmark price and the C$ WCS differential to US$ WTI.
The Company’s risk management contracts consisted of the following positions as at 31 December 2021:
Contract
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
SWAP
Total
Reference
CAD WTI
CAD WTI
AECO 5A
CAD WCS basis
CAD WCS basis
AECO 5A
CAD WCS basis
CAD WTI
CAD WTI
CAD WTI
CAD WTI
CAD WCS basis
AECO 5A
CAD WCS basis
AECO 5A
CAD WCS basis
CAD WCS basis
CAD WTI
CAD WTI
CAD WCS basis
CAD WTI
Remaining term
Jan 2022 - Jun 2022
Jan 2022 - Jun 2022
Jan 2022 - Sept 2022
Jan 2022 - Jun 2022
Jan 2022 - Jun 2022
Jan 2022 - Sept 2022
Jan 2022 - Jun 2022
Jan 2022 - Mar 2022
Jan 2022 - Sept 2022
Jan 2022 - Sept 2022
Jan 2022 - Oct 2022
Oct 2022 - Oct 2022
Jan 2022 - Mar 2022
July 2022 - Sept 2022
Jan 2022 - Mar 2022
July 2022 - Dec 2022
July 2022 - Sept 2022
July 2022 - Sept 2022
July 2022 - Sept 2022
Jan 2022 - Dec 2022
Jan 2022 - Dec 2022
Volume
300
300
500
300
300
1,400
400
100
100
100
150
150
500
450
500
200
200
200
200
100
100
$
Price per unit
(C$/unit)
75.85
74.20
2.70
(18.00)
(17.20)
2.70
(17.20)
85.20
85.15
90.70
94.40
(17.85)
5.40
(19.20)
5.44
(19.30)
(16.85)
88.00
88.00
(18.55)
88.80
Value
(A$ thousands)
(1,009)
$
(1,103)
(68)
(25)
21
(189)
28
(88)
(210)
(51)
109
(1)
79
(154)
80
(93)
(23)
(46)
(46)
(51)
(101)
(2,941)
$
The Calima Group’s risk management contracts are subject to master netting agreements that create the legal right to settle
the instruments on a net basis. The following table summarises the impact of the netting agreements on the Company’s
consolidated statement of financial position presentation as 31 December 2021 and 2020:
(A$ thousands)
Current liability
Net position
$
$
31 December 2021
Asset
317
317
$
$
Liability
(3,258) $
(3,258) $
Net
(2,941) $
(2,941) $
31 December 2020
Asset
-
-
$
$
Liability
-
-
$
$
Net
-
-
42
The following table illustrates the estimated potential impact to the Calima Group’s profit or (loss) before tax from
outstanding risk management contracts in place as at 31 December 2021, following a change in future commodity prices:
As at 31 December 2021 (A$ thousands)
10% increase in WTI price
10% decrease in WTI price
10% increase in WCS price differential
10% decrease in WCS price differential
10% increase in AECO price
10% decrease in AECO price
12. OTHER INDEBTEDNESS
Gain (loss)
(2,915)
2,650
590
(530)
(215)
195
$
$
In 2019, the Calima Group entered into a three-year debt arrangement to borrow C$1.0 million. The facility incurred C$0.2
million of interest over the term and was repayable through monthly remittance of net cash flows from the Company’s
Paradise Well (official designation: Boundary 5-1-86-15 00/11-01-08615W6/0). At the end of the term, any residual amount
not settled through net cash flows from the well was payable in cash upon maturity. During the second quarter of 2021,
the outstanding loan balance of A$0.9 million was extinguished through the issuance of 124.8 million Calima common
shares to the lender (6.24 million common shares issued on a post share consolidation basis) (Note 14).
13. RESTORATION PROVISIONS
As at (A$ thousands)
Restoration provision, beginning of year
Restoration provisions acquired (Note 5)
Remeasurement of acquired provisions using a risk-free rate (Note 5)
Development of oil and natural gas assets
Accretion
Changes in estimate and other
Restoration expenses
Government funded restoration
Impact of foreign exchange translations
Restoration provision, end of year
Presented as:
Accounts payable and accrued liabilities
Restoration provisions
31 December
2021
4,676
9,389
9,070
1,400
325
218
(94)
(288)
1,209
25,905
31 December
2020
3,256
-
-
-
-
1,637
-
-
(217)
4,676
$
$
$
$
477
25,428
-
4,676
The Calima Group’s restoration provisions reflect the estimated cost to dismantle, abandon, reclaim and remediate the
Company's oil and natural gas assets at the end of their useful lives. As at 31 December 2021, the total estimated
undiscounted, uninflated cash flows required to settle the Calima Group’s asset retirement obligations was approximately
$24.9 million (31 December 2020 – $4.1 million). These liabilities are anticipated to be incurred over the next 30 years.
During the second quarter of 2021, Calima increased the restoration provision by $9.1 million primarily to remeasure the
acquired Blackspur liabilities using a risk-free discount rate to align with the Company’s existing measurement policy for
restoration provisions.
As at 31 December 2020, the Company valued the restoration provision by utilising a risk-free rate of 1.8% (31 December
2020 – 0.25%) and an inflation rate of 2.0% (31 December 2020 – 0.7%). A 100-basis point (1%) increase in the discount
rate reduces the Company’s restoration provision by $(3.8) million (1% decrease: $4.7 million).
43
14. SHARE CAPITAL
Equity unit continuity (thousands)
Balance, beginning of year
Shares issued in respect of private placement
Shares issued to acquire Blackspur (Note 5)
Shares issued to repay other indebtedness (Note 12)
Shares issued in lieu of cash (pre-consolidation)
Share consolidation (20:1)
Shares issued in lieu of cash (post-consolidation)
Share issuance costs
Balance, end of year
$
31 December 2021
Shares
2,191,938
5,399,028
2,460,243
124,821
98,025
(9,760,352)
381
-
514,084
Amount
296,329
37,822
17,222
874
676
-
82
(2,544)
350,461
$
$
31 December 2020
Shares
2,155,572
-
-
-
36,366
-
-
-
2,191,938
Amount
296,108
-
-
-
221
-
-
-
296,329
$
On April 28, 2021, the Company completed an equity financing for gross proceeds of $38.0 million, issuing 5.4 billion shares
at $0.007 per share. Funds raised from the equity financing were primarily utilised to complete the plan of arrangement
associated with the Blackspur acquisition, which included a cash payment of $5.2 million to Blackspur shareholders and a
requisite reduction of Blackspur’s Credit Facility by $28.0 million. The Company also incurred $2.5 million of transaction
costs associated with the equity financing.
On 30 April 2021, Calima issued legacy Blackspur shareholders 2.46 billion Calima common shares as part of the
consideration for the business combination (Note 5). During the year, the Company issued 223.2 million shares in
satisfaction of various consulting services, Calima Officer and Director fees as well as the repayment of an outstanding loan
(Note 12). On 30 August 2021, the shareholders of Calima approved a consolidation of the Company’s issued and
outstanding common shares and equity compensation units on 20:1 basis of consolidation.
The following table summarises the post consolidation capital structure following the equity exchange:
Number of units on issue (thousands)
Common shares
Stock options (Note 22)
Performance Rights (Note 22)
15. PER SHARE AMOUNTS
For the year ended (thousands)(1)
Weighted average number of common shares – basic
Dilutive effect of outstanding equity compensation units(2)
Weighted average number common shares - diluted
Net loss
Net loss per share (basic and diluted)
30 August 2021
(post consolidation)
513,703
21,663
8,273
30 August 2021
(pre-consolidation)
10,274,055
433,250
165,450
31 December
2021
382,653
-
382,653
(31,980) $
(0.08) $
31 December
2020
108,334
-
108,334
(6,395)
(0.06)
$
$
(1)
(2)
Information presented in this table, including comparative figures, have been adjusted to reflect the impact of the share consolidation on August 30, 2021 at a conversion rate of 20:1 (Note 14).
Equity compensation units were anti-dilutive in 2020 and 2021.
16. CAPITAL MANAGEMENT
The Calima Group’s objective for managing capital is to maintain a strong statement of financial position in order to provide
financial liquidity to fund ongoing development programs.
The Calima Group manages liquidity risk by complying with debt covenants and designing field development plans in
conjunction with production, commodity price and available credit forecasting which provides the Company with an
opportunity to fund its investments in oil and natural gas assets and expenses within cash flows or available sources of
capital on hand. Calima also manages liquidity risk by preserving borrowing capacity under the Credit Facility.
The Calima Group’s business plan targets a trailing 12-month ratio of net debt to adjusted funds flow from operations of
less than 1.5 in a US$70.00 WTI and C$3.50 AECO 5A commodity price environment. The ratio was 2.0 for the 12 months
ended December 31, 2021. The Company requires a period of allocating free cash flow to net debt reduction for the
Company to reach this target.
Management believes the Company has sufficient funding to meet near-term liquidity requirements. As at December 31,
2021, the Calima Group had A$7.5 million of available credit under the Credit Facility. On 17 February 2022, the Calima
Group also completed a private-placement equity financing arrangement with investors for gross proceeds of A$20.0
million (Note 28). Near-term development activities are anticipated to be funded by the Company's funds flow, cash on
44
hand, proceeds from the equity financing or draws under the Credit Facility (Note 10). In the near term, the Company plans
to utilise any funds flow in excess of investments in oil and natural gas assets to affect a combination of net debt reduction
and production growth.
The following tables reconciles the Company’s net debt and adjusted funds flow from operations as at December 31, 2021:
As at (A$ thousands)
Credit facility draws
Other indebtedness
Long-term portion of lease liability
Current assets
Other current liabilities
Exclude: current portion of risk management assets
Net debt
For the year ended (A$ thousands)
Funds flow from operations (per cash flow statement)
Cash related transaction costs
Adjusted funds flow from operations
31 December
2021
(21,739)
-
(265)
11,315
(20,057)
(30,746)
2,941
(27,805)
31 December
2021
13,554
617
14,171
$
$
$
$
31 December
2020
-
(857)
(461)
1,789
(853)
(382)
-
(382)
31 December
2020
(1,119)
-
(1,119)
$
$
$
$
The Company utilises net debt as an important measure to assess the Company's liquidity by incorporating long-term debt,
lease liabilities and working capital. Adjusted funds flow from operations is utilised as a measure of operational
performance and cash flow generating capability which impacts the level and extent of funding available for capital project
investments, reduction of net debt or returning capital to shareholders. These measures are also consistent with the
formulas prescribed under the Company’s Credit Facility covenants.
Net debt and adjusted funds flow from operations are not standardised measures and may not be comparable with the
calculation of similar measures by other companies without also taking into account any differences in the method by which
the calculations are prepared.
17. COMMITMENTS & CONTINGENCIES
(A$ thousands)
Credit facility draws
Accounts payable and accrued liabilities
Risk management contract liabilities
Long-term portion of lease liabilities
Contractual cash outflows reflected on the statement of financial position
Interest on credit facility draws(1)
Total contractual cash outflows
2022
21,739
17,116
2,941
140
41,936
739
42,675
$
$
$
$
2023
-
-
-
125
125
-
125
$
$
Total
21,739
17,116
2,941
265
42,061
739
42,800
(1) Estimated interest expense in 2022 based on amounts drawn as at the statement of financial position date using an effective interest of 3.4% prescribed under the Credit
Facility.
The Credit facility, accounts payable and accrued liabilities, risk management contract liabilities and the long-term portion
of lease liabilities are recognised on Calima’s consolidated statement of financial position. The interest on the Credit facility
is recognised as a liability on the statement of financial position once it has been incurred, in accordance with IAS 1 -
Presentation of Financial Statements.
In the fourth quarter of 2021, the Calima Group sanctioned a first half 2022 capital budget of C$19.5 million for continued
development of the Brooks and Thorsby asset areas. The program commenced in December 2021.
The Calima Group is currently involved in legal claims of up to $1.0 million arising in the normal course of business. While
the final outcome of such events cannot be predicted with certainty, the Company does not currently anticipate that these
events will have a material impact on the consolidated financial position or results of operations.
45
18. OIL & NATURAL GAS REVENUES
For the year ended (A$ thousands)
Oil
Natural gas
Natural gas liquids
Oil and natural gas sales
Royalties
Oil and natural gas revenues
19. OPERATING EXPENSES
For the year ended (A$ thousands)
Chemicals, power and fuel
Staff and contractor costs
Hauling, processing and disposal
Equipment and maintenance
Taxes, rentals and other
Operating expenses
20. TRANSPORTATION
For the year ended (A$ thousands)
Crude oil and emulsion hauling
Pipeline tariffs and other
Transportation expenses
21. GENERAL & ADMINISTRATIVE
For the year ended (A$ thousands)
Personnel
Professional fees
Information technology, office costs and other
Gross general and administrative costs
Capitalised general and administrative costs
General and administrative expense
22. STOCK-BASED COMPENSATION
For the year ended (A$ thousands)
Stock options
Performance rights
Gross stock-based compensation cost
Capitalised stock-based compensation
Stock-based compensation expense
31 December
2021
39,668
7,087
958
47,713
(9,136)
38,577
31 December
2021
2,644
1,865
2,112
1,679
1,779
10,079
31 December
2021
2,454
246
2,700
31 December
2021
2,449
1,878
372
4,699
(458)
4,241
31 December
2021
259
759
1,018
(99)
919
$
$
$
$
$
$
$
$
$
$
31 December
2020
356
-
-
356
(31)
325
31 December
2020
-
9
15
-
8
32
31 December
2020
31
-
31
31 December
2020
607
714
129
1,450
-
1,450
31 December
2020
26
59
85
-
85
$
$
$
$
$
$
$
$
$
$
The following table summarises the changes in equity compensation units during the year ended 31 December 2021:
Equity unit continuity (thousands)(1)
Balance, 31 December 2019
Units expired
Balance, 31 December 2020
Issuance of stock options to employees
Issuance of stock options to other service providers
Issuance of performance rights to employees
Forfeitures
Expiry of stock options
Balance, 31 December 2021
Stock
options
1,538
(500)
1,038
18,125
2,500
-
(3,875)
(38)
17,750
Performance
rights
973
-
973
-
-
7,300
-
-
8,273
Total
2,511
(500)
2,011
18,125
2,500
7,300
(3,875)
(38)
26,023
(1)
Information presented in this table, including opening balances and comparative figures, have been adjusted to reflect the impact of the Company’s share consolidation which occurred on August 30,
2021 at a conversion rate of 20:1 (Note 14). As at December 31, 2020, there were 40.2 million units outstanding on a pre-consolidation unit basis.
46
Stock options
Grant date(1)
2021 grants
August 2017
August 2017
Outstanding
Exercisable
Number of
options
(thousands)
16,750
500
500
17,750
Weighted
average
remaining
life (years)
4.0
0.7
0.7
3.8
Number of
options
(thousands)
2,500
500
500
3,500
Weighted
average
remaining
life (years)
2.3
0.7
0.7
1.9
$
Exercise price
(A$/share)
0.20
1.80
2.40
$ 0.31
(1) All information presented in this table have been adjusted to reflect the impact of the Company’s share consolidation which occurred on August 30, 2021 at a conversion rate of 20:1 (Note 14).
During the year ended 31 December 2021, Calima’s Board approved 18.1 million stock options for grant to certain Officers,
Directors and employees of Calima and Blackspur following the closing of the Blackspur Acquisition (on a post share
consolidation basis). The primary vesting condition of the stock options is continuous employment and 1/3 of the options
vest each year over three years and are exercisable at $0.20 per unit within five years from the date of grant. During the
year, 3.9 million stock options were forfeited due to staff departures.
The Company granted 2.5 million options (on a post share consolidation basis) to the Company’s finance brokers, forming
a portion of the compensation arrangement for the lead manager in respect of the 28 April 2021 equity financing
placement. The broker options are exercisable at $0.20 per unit on or before 30 April 2024 and became fully vested on 30
July 2021.
There were 1.0 million stock options granted in August 2017 that were issued and outstanding as at 31 December 2020 and
2021. The units are exercisable at $1.80 per share and $2.40 per share and expire in August 2022.
Performance rights
Outstanding
Exercisable
Grant date(1)
February 2021(2)
May 2021(3)
August 2017(3)
Exercise price
(A$/share)
-
-
-
-
1) All information presented in this table have been adjusted to reflect the impact of the Company’s share consolidation which occurred on August 30, 2021 at a conversion rate of 20:1 (Note 14).
2) Units all became fully vested during the year ended 31 December 2021.
3) Units are subject to a market-based and/or non-market based vesting condition.
$
$
Weighted
average
remaining
life (years)
4.1
4.3
0.7
3.8
Number of
performance
options
(thousands)
4,800
-
-
4,800
Number of
performance
rights
(thousands)
4,800
2,500
973
8,273
Weighted
average
remaining
life (years)
4.1
-
-
4.1
During the year ended 31 December 2021, Calima approved 7.3 million performance rights (on a post share consolidation
basis) for grant to certain Officers and Directors of Calima. The vesting conditions of the performance rights were as follows:
4.8 million rights become vested and exercisable following continued service of the holder for a period of two years
retroactively from the date of their original appointment. As at December 31, 2021, all of the units were vested.
2.5 million rights become vested and exercisable if VWAP of shares trades over A$0.30/share over 20 consecutive
days on or before 30 April 2026. As December 31, 2021, all of the units were unvested.
With respect to the 1.0 million performance rights granted in 2017 (on a post share consolidation basis), the units are
subject to 18-month continuous service requirement and on satisfaction of at least two of the following three conditions:
The VWAP for Calima shares for any period of 30 consecutive trading days being above $3.00;
Calima raising more than $5 million at an average price of $3.00; and
Market capitalisation exceeds $50 million (VWAP for Calima shares for any period of 30 consecutive trading days).
The vesting conditions for the units were not met in 2020 or 2021 and no performance rights were redeemed during the
year. There was no change in the balance of performance rights outstanding in 2020.
47
The following table summarises the weighted average assumptions utilised to value equity compensation grants during the
year ended 31 December 2021:
Weighted average valuation assumptions(1)
Valuation model
Number of units granted (thousands)
Share price at grant date ($)
Exercise price ($/share)
Barrier price ($/share)
Volatility (%)
Risk-free rate (%)
Expected life (years)
Fair value ($/share)
Stock
options
Black Scholes
20,625
0.18
0.20
-
75
0.3
3.4
$ 0.08
Performance
rights
Black Scholes Binomial Barrier
2,500
0.18
-
0.30
75
0.64
5.0
$ 0.16
4,800
0.17
-
-
75
0.12
3.0
$ 0.17
3) All information presented in this table have been adjusted to reflect the impact of the Company’s share consolidation which occurred on August 30, 2021 at a conversion rate of 20:1 (Note 14).
23. RELATED PARTY TRANSACTIONS
The Calima Group’s related parties primarily consist of the Company’s directors and officers. Amounts paid to directors and
officers for the year ended December 31, 2021 and 2020 were as follows:
For the year ended (A$ thousands)
Salaries, benefits and other short-term compensation
Stock-based compensation
Total remuneration paid to directors and officers
31 December
2021
952
670
1,622
$
$
31 December
2020
522
50
572
$
$
Prior to April 2021, all directors received a significant portion of their remuneration in shares to preserve cash balances.
For the year ended 31 December 2021, Calima issued 29.8 million shares ($0.2 million) to the Company’s Directors or their
related entities in respect of services rendered (included in the table above). In 2021, Calima resumed its cash-based
remuneration arrangements.
6466 Investments Pty Ltd1 provided a 12-month standby working capital facility for $500,000 to the Company prior to the
Blackspur Acquisition. A facility fee of $30,000 was paid and the facility is now terminated. As part of the $38 million fund
raising completed during the quarter, the Company secured firm commitments on an arms-length basis from a number of
parties to in respect of the $6 million retail component of the capital raising. Lagral Strategies Pty Ltd ITF Lagral Family
Trust1 provided firm commitments for the amount of $1.5 million. The fee to these parties was 6%, resulting in Lagral being
paid $90,000. Jordan Kevol was paid A$15,690 for surface lease rentals in respect of certain Blackspur assets located in the
Thorsby area.
1. These parties are related party to Mr Whiddon as defined in the Corporations Act. However, Mr. Whiddon does not control this entity nor has a relevant interest in Shares
held by this entity.
24. OTHER COMPREHENSIVE INCOME
Continuity schedule (A$ thousands)
Foreign currency reserve, opening
Unrealised gain (loss) recognised through other comprehensive income
Foreign currency reserve, ending
31 December
2021
(106) $
5,794
5,688
$
$
$
31 December
2020
2,115
(2,221)
(106)
Calima’s investments in its two Canadian subsidiaries, Blackspur and Calima Energy Inc., are exposed to fluctuations in
foreign currency exchange rates between the Australian and Canadian dollar. A foreign currency translation reserve is
utilised to record exchange differences arising from the translation of the financial statements of these foreign subsidiaries.
A 10% increase in the Canadian dollar relative to the Australian dollar results in an overall unrealised gain in other
comprehensive income of approximately A$8.5 million relating to net assets of the subsidiaries (10% decrease: unrealised
loss of A$7.7 million). A 10% increase in the Canadian dollar relative to the Australian dollar results in an unrealised loss in
other comprehensive income of approximately A$3.2 million relating to the financial instruments held by the subsidiaries
(10% decrease: unrealised gain of A$2.9 million).
48
25. AUDITOR REMUNERATION
For the year ended (A$)
Audit and assurance related services(1)
Tax and other non-assurance related services
Total remuneration of external auditors
31 December
2021
180,805
-
180,805
$
$
$
$
31 December
2020
53,717
5,150
58,867
(1) 2021 audit and assurance related services includes A$125,725 payable to PricewaterhouseCoopers Canada and A$55,080 payable to PricewaterhouseCoopers Australia.
Total remuneration of A$58,867 was paid to BDO Audit (WA) Pty Ltd. during the year ended 31 December 2020.
In 2021, the Calima Group selected PricewaterhouseCoopers Australia to be the Company’s external auditors for the year
ended December 31, 2021. BDO Audit (WA) Pty Ltd. was the Company’s external auditor for the year ended December 31,
2020.
26. SUPPLEMENTAL CASH FLOW INFORMATION
For the year ended (A$ thousands)
Changes in non-cash working capital:
Accounts receivable
Deposits and prepaid expenses
Accounts payable and accrued liabilities
Working capital acquired from Blackspur (Note 5)
Change in current portion of restoration provisions (Note 13)
Impact of foreign exchange translations and other
Related to:
Operating activities
Financing activities
Investing activities
Other cash flow information:
Cash interest paid
Cash taxes paid
27. PARENT COMPANY FINANCIAL INFORMATION
As at and for the year ended (A$ thousands)
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Net assets
Share capital
Share-based payments
Foreign currency translations
Accumulated losses
Total shareholders’ equity
Statement of profit or loss
Net loss
Total comprehensive loss
31 December
2021
31 December
2020
$
$
$
$
$
$
$
$
(7,094) $
(766)
16,263
8,403
2,034
(477)
(173)
9,787
2,970
-
6,817
455
-
31 December
2021
1,529
84,599
86,128
(254)
-
85,874
350,461
16,839
(118)
(281,308)
85,874
$
$
$
$
$
(25,899) $
(25,899) $
1,426
(218)
622
1,830
-
-
(6)
1,824
458
-
1,366
155
-
31 December
2020
1,569
56,302
57,871
(227)
(1,022)
56,622
296,329
15,821
(119)
(255,409)
56,622
(9,139)
(9,139)
49
28. SUBSEQUENT EVENTS
Strategic infrastructure development
On 31 January 2022 the Calima Group entered into a long-term financing arrangement with a strategic infrastructure and
midstream company to construct a pipeline connecting the Company’s 02-29 battery in the northern portion of its Brooks,
Alberta asset base to its wells, lands, and gathering system in the southern portion of the asset base. The pipeline was
completed and brought on stream during the first quarter of 2022.
Construction of the pipeline is being financed by Pivotal and the estimated cost of the project is C$4.3 million. Blackspur
shall be the sole owner of the pipeline and will repay the capital costs to construct the pipeline over a term of seven years
at a 12% cost of financing with monthly payments of approximately C$76,000, to be finalised based on total installed costs
of the pipeline as determined once the pipeline is commissioned and in service. Blackspur retains the right to payout the
financing on 180 days written notice starting on the third anniversary of the agreement, subject to an early termination
penalty provision.
Equity fundraising
On 17 February 2022, the Calima Group completed a private-placement equity financing arrangement with investors for
gross proceeds of A$20.0 million. The Company expects to have incurred approximately $1.3 million in share issuance costs
in respect of the equity fundraising and will be capitalised to share capital in accordance with the Company’s accounting
policy. The Company plans to utilise a portion of the proceeds to reduce the amounts drawn under the Credit Facility and
complete the H1 2022 capital investment program.
50
DIRECTORS’ DECLARATION
The Directors of Calima Energy Limited declare that:
(a)
In the Directors’ opinion, the annual financial statements and notes and the remuneration report, set out on pages
21 to 50, are in accordance with the Corporations Act 2001, including:
Complying with relevant Australian Accounting Standards
Interpretations) and the Corporations Regulations 2001; and,
Giving a true and fair view of the Calima Group’s financial position as at 31 December 2021 and of its
performance for the financial year ended on that date.
(including the Australian Accounting
i.
ii.
(b)
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable.
Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer, Managing Director and Chief Financial Officer,
Canada required by Section 295A of the Corporations Act 2001 for the financial period ended 31 December 2021.
This Directors’ Declaration is made in accordance with a resolution of the Directors.
On behalf of the Board of Directors:
Glenn Whiddon
Executive Chairman
29 March 2022
51
Independent auditor’s report
To the members of Calima Energy Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Calima Energy Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 31 December 2021
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999
Liability limited by a scheme approved under Professional Standards Legislation.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
•
For the purpose of our audit, we used overall Group materiality of A$1,530,000, which represents
approximately 1% of the Group’s total assets.
• We applied this threshold, together with qualitative considerations, to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on
the financial report as a whole.
• We chose Group total assets because, in our view, it is the benchmark against which the performance of the
Group is most commonly measured and reflects the continued internal and external focus on growth and
development of the Group’s oil and natural gas assets.
• We utilised a 1% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
• Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Board of Directors.
Key audit matter
How our audit addressed the key audit matter
Availability of funding for further
exploration and development activities
Refer to Note 4, 10
We considered the appropriateness of the going concern
assumption used in preparing the financial report by
performing the following procedures, amongst others:
As described in Note 4 to the financial report, the
financial statements have been prepared by the
Group on a going concern basis, which contemplates
that the Group will continue to meet its
commitments, realise its assets and settle its
liabilities in the normal course of business.
As at 31 December 2021, Blackspur has drawn
C$20.0 million (A$21.7 million) of a C$27.0 million
demand revolving credit facility with a Canadian
chartered bank (the “Credit Facility”). As a demand
facility, the Credit Facility does not have a specific
maturity date which means that the lender could
demand repayment of all outstanding indebtedness
or a portion thereof at any time. If such an event
were to occur, the Group would be required to
source alternative sources of capital or sell assets to
repay the indebtedness.
As described in Note 4, the Group expects that the
Credit Facility will remain available for the
foreseeable future and the lender will not demand
repayment of the amount drawn under the Credit
Facility.
Assessing the appropriateness of the Group’s basis
of preparation for the financial report was a key
audit matter due to its importance to the financial
report and the level of judgement involved in
forecasting future cash flows for a period of at least
12 months from the audit report date (cash flow
forecasts).
•
•
•
•
•
•
evaluated the Group’s assessment of its ability
to continue as a going concern, including
whether the period covered is at least 12
months from the date of the audit report and
that relevant information of which we are
aware from the audit was included,
inquired of management and the directors
whether they were aware of any events or
conditions, including beyond the period of the
assessment that may cast significant doubt on
the Group’s ability to continue as a going
concern,
agreed the cash receipts from the capital
placements undertaken during the year to the
relevant bank statements,
compared the key underlying data and
assumptions in the Group’s cash flow forecast
to internal reporting and historical cash
outflows,
developed an understanding of the key forecast
expenditure items, including the amounts that
are contractually committed and required to
be paid to maintain the good standing of the
Group’s oil and natural gas assets as well other
material future capital expenditures, and
evaluated whether, in view of the requirements
of Australian Accounting Standards, the
financial report provides adequate disclosures
about these events or conditions.
Key audit matter
How our audit addressed the key audit matter
Acquisition of Blackspur Oil Corp
Refer to Note 5, 8
We performed the following procedures, amongst
others:
On 30 April 2021, Calima Energy Limited completed
the acquisition of Blackspur Oil Corp (Blackspur) for
consideration of A$22.4 million paid to Blackspur
shareholders and a A$28.0 million requisite
reduction of Blackspur’s Credit Facility.
The acquisition was a key audit matter because it
was a significant transaction for the year given the
financial and operating impact on the Group. In
addition, the Group made complex judgements
when accounting for the acquisition including
identifying all assets and liabilities of the newly
acquired subsidiaries and estimating the fair value
of each item for initial recognition by the Group,
particularly the oil and natural gas assets.
•
•
obtained the board approved purchase
contract to develop an understanding of the
nature of the acquisition and the consideration
payable.
considered how the Group estimated the fair
value of the assets and liabilities in the
acquisition. In particular, we focused on
significant judgements made by the Group in
assessing the identification and fair value of oil
and gas natural assets acquired, over which we
performed the following procedures:
•
•
•
considered the competence and
capabilities of the Group’s experts and
together with PwC valuation experts
evaluated the methods, significant
assumptions and data used to estimate
the reserves acquired.
evaluated the appropriateness of the
method used in determining the fair
value of oil and natural gas assets
acquired by reference to Australian
Accounting Standards.
evaluated the appropriateness of
significant assumptions used in
determining the fair value of oil and
natural gas assets. This included:
•
•
comparing forecast benchmark
commodity prices with third
party industry forecasts.
together with PwC valuation
experts, comparing the discount
rates applied in the model used
to estimate the fair value of oil
and natural gas assets to other
third-party transactions.
Key audit matter
How our audit addressed the key audit matter
•
•
compared the underlying data used by
the Group in the determination of the
fair value of oil and natural gas assets
to the internally and externally
prepared reserve reports.
tested the mathematical accuracy of the
model used to estimate the fair value of
oil and natural gas assets.
•
evaluated the reasonableness of the disclosures
made in Note 5 to the financial statements in
light of the requirements of Australian
Accounting Standards.
Carrying value of exploration and
evaluation
assets
Refer to Note 8
We evaluated the Group’s consideration of internal and
external sources of information in assessing whether
indicators of impairment or reversal of impairment
existed.
Australian Accounting Standards require an entity
to assess throughout the reporting period whether
there is any indication that an asset may be
impaired. If any such indication exists, an entity
shall estimate the recoverable amount of the asset.
At 31 December 2021, the Group concluded that
there were impairment indicators for the Tommy
Lakes Montney cash generating unit (CGU).
Impairment testing was undertaken as outlined in
Note 8, resulting in land expiry losses of A$10.9
million, primarily in respect of acreages for which
there were no drilling plans in the near term, and an
impairment to the CGU of A$37.6 million,
calculated utilising after-tax discounted future cash
flows derived from the CGU’s contingent resources
to estimate the recoverable amount of the Tommy
Lakes Montney CGU.
We performed the following procedures, amongst
others:
•
•
•
examined lease expiries in the Tommy Lakes
Montney CGU and recalculated the land expiry
loss recognised by the Group.
considered the competence and capabilities of
the Group’s experts and together with PwC
valuation experts evaluated the methods,
significant assumptions and data underlying
the contingent resource report used by the
Group to determine the recoverable amount of
the CGU.
tested how the Group determined the
recoverable amount of the Tommy Lakes
Montney CGU, which included the following:
Key assumptions, judgements and estimates, used
in the formulation of the Group’s impairment
testing of the oil and gas properties are disclosed in
Note 8.
• Evaluated the appropriateness of the
methods used by the Group in making
these estimates by reference to
Australian Accounting Standards.
Key audit matter
How our audit addressed the key audit matter
The assessment of indicators of impairment and the
impairment testing process are complex and highly
judgemental and are based on assumptions which
are impacted by expected future performance and
market conditions.
Accordingly, this matter was considered to be a key
audit matter.
• Compared the underlying data used by
the Group in the determination of the
recoverable amount of the CGU to the
externally prepared contingent
resource reports.
• Evaluated the appropriateness
significant assumptions used in
developing the underlying estimates,
including:
•
•
comparing forecast benchmark
commodity prices with third
party industry forecasts.
together with PwC valuation
experts, comparing the discount
rates applied in the impairment
testing model to other third-
party transactions.
•
•
assessed whether the impairment charge
recorded in the financial statements agreed to
the Group’s underlying impairment testing
model.
evaluated the reasonableness of the disclosures
made in Note 8, including those regarding the
significant assumptions and sensitivities to
changes in such assumptions, in light of the
requirements of Australian Accounting
Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2021 but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 21 to 26 of the directors’ report for the
year ended 31 December 2021.
In our opinion, the remuneration report of Calima Energy Limited for the year ended 31 December
2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Craig Heatley
Partner
Perth
29 March 2022
Auditor’s Independence Declaration
As lead auditor for the audit of Calima Energy Limited for the year ended 31 December 2021, I declare
that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Calima Energy Limited and the entities it controlled during the period.
Craig Heatley
Partner
PricewaterhouseCoopers
Perth
29 March 2022
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
SECURITIES EXCHANGE INFORMATION
Additional information required by the ASX Listing Rules and not disclosed elsewhere in the Annual Report is set out below.
The information was applicable for the Company as at 21 March 2022:
Distribution of equity securities
Equity holders by size of holding of ordinary shares
1 to 1000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and above
Total(1)
Number of
Holders
807
818
368
1,051
531
3,575
Number of
shares on issue
331,038
2,350,686
2,893,245
40,755,775
568,753,484
615,084,228
(1) With respect to the voting rights of the Company’s ordinary shares, each shareholder is entitled to receive notice of, attend, and vote at general meetings. At a general
meeting, every shareholder present in person, or by proxy by representative of attorney, is entitled to vote by a show of hands and on a poll, one vote for each share held.
Substantial shareholders
Shareholders who hold greater than 5% issued capital
HSBC CUSTODY NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES LIMITED - A/C 2
Total
Twenty largest shareholders
Shareholder
HSBC CUSTODY NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES LIMITED - A/C 2
CS FOURTH NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
PETERS & CO LIMITED
BNP PARIBAS NOMS PTY LTD
BT PORTFOLIO SERVICES LIMITED
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
MR CRAIG IAN BURTON
CS THIRD NOMINEES PTY LIMITED
ARROCHAR PTY LTD
COMPUTERSHARE INVESTOR SERVICES INC
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
MR CUNTONG CHENG
ARREDO PTY LTD
MR JOHN PHILIP DANIELS
MR FREDERICK BART
BOND STREET CUSTODIANS LIMITED
MRS NICOLE ZDUN
Top 20 holders of common shares
Total remaining holders balance
Total common shares outstanding
Number of
shares held
69,002,108
32,416,520
32,098,840
133,517,468
Number of
shares held
69,002,108
32,416,520
32,098,840
23,943,753
21,037,010
17,730,509
15,171,155
12,000,000
10,932,157
10,127,503
9,368,889
6,241,063
5,731,119
4,761,902
4,512,500
4,278,872
4,244,999
4,190,000
4,000,000
4,000,000
295,788,899
319,295,329
615,084,228
Unlisted securities
Equity compensation arrangement
Stock options – exercisable at $0.20 per share
Stock options – exercisable at $1.80 per share
Stock options – exercisable at $2.40 per share
Performance rights – August 2017 grant
Performance rights – February 2021 grant (fully vested)
Performance rights – May 2021 grant
Number of
unit holders
26
5
5
5
5
2
Number of
unlisted units
18,100
500
500
973
3,800
2,500
% of
shares held
11.22
5.27
5.22
21.71
% of
shares held
11.22
5.27
5.22
3.89
3.42
2.88
2.47
1.95
1.78
1.65
1.52
1.01
0.93
0.77
0.73
0.70
0.69
0.68
0.65
0.65
48.09
51.91
100
Year of
expiry
2026
2022
2022
2022
2026
2026
61
Unitholders with more than 20% of each equity security class
Equity compensation arrangement holder
Unlisted stock options exercisable at $1.40 on or before 25 August 2022 (unvested)
Alan Stein
Jonathan Taylor
Unlisted stock options exercisable at $1.80 on or before 25 August 2022 (unvested)
Alan Stein
Jonathan Taylor
Unlisted Class A/B performance rights issued in 2021 (fully vested)
Aaron Bauer
Glenn Whiddon
Mark Freeman
Unlisted Class C performance rights issued in 2021 (unvested)
Glenn Whiddon
Mark Freeman
Unlisted legacy performance rights issued in 2017 (unvested)
Jonathan Taylor
ADVISORIES & GUIDANCE
Forward Looking Statements
Number of
shares held
% of
units held
165,000
165,000
165,000
165,000
1,000,000
1,000,000
1,000,000
1,500,000
1,000,000
412,500
33%
33%
33%
33%
26%
26%
26%
60%
40%
42%
This release may contain forward-looking statements. These statements relate to the Company’s expectations, beliefs, intentions or strategies
regarding the future. These statements can be identified by the use of words like “anticipate”, “believe”, “intend”, “estimate”, “expect”, “may”,
“plan”, “project”, “will”, “should”, “seek” and similar words or expressions containing same. These forward-looking statements reflect the
Company’s views and assumptions with respect to future events as of the date of this release and are subject to a variety of unpredictable risks,
uncertainties, and other unknowns. Actual and future results and trends could differ materially from those set forth in such statements due to
various factors, many of which are beyond our ability to control or predict. These include, but are not limited to, risks or uncertainties associated
with the discovery and development of oil and natural gas reserves, cash flows and liquidity, business and financial strategy, budget, projections
and operating results, oil and natural gas prices, amount, nature and timing of capital expenditures, including future development costs,
availability and terms of capital and general economic and business conditions. Given these uncertainties, no one should place undue reliance
on any forward-looking statements attributable to Calima, or any of its affiliates or persons acting on its behalf. Although every effort has been
made to ensure this release sets forth a fair and accurate view, we do not undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Non-GAAP measures
This annual report includes certain meaningful performance measures commonly used in the oil and natural gas industry that are not defined
under IFRS, consisting of "adjusted EBITDA”, "adjusted working capital", "available funding” and “net debt”. These performance measures
presented in this annual report should not be considered in isolation or as a substitute for performance measures prepared in accordance with
IFRS and should be read in conjunction with the financial statements. Readers are cautioned that these non-GAAP measures do not have any
standardised meanings and should not be used to make comparisons between Calima and other companies without also taking into account any
differences in the method by which the calculations are prepared. Refer to the other sections of this annual report and the definitions below for
additional details regarding the calculations.
Qualified petroleum reserves and resources evaluator statements1
The petroleum reserves information in this annual report is based on, and fairly represents, information and supporting documentation in a
report compiled by InSite Petroleum Consultants Ltd. (InSite) for the 31 December 2021 Reserves Report. InSite is a leading independent Canadian
petroleum consulting firm registered with the Association of Professional Engineers and Geoscientists of Alberta. These reserves were
subsequently reviewed by Mr. Graham Veale who is the VP Engineering with Blackspur Oil Corp. The InSite 31 December 2021 Reserves Report
and the values contained therein are based on InSite’s 31 December 2021 price deck (https://www.insitepc.com/pricing-forecasts). Mr. Veale
holds a BSc. in Mechanical Engineering from the University of Calgary (1995) and is a registered member of the Alberta Association of Professional
Engineers and Geoscientists of Alberta (APEGA). He has over 25 years of experience in petroleum and reservoir engineering, reserve evaluation,
exploitation, corporate and business strategy, and drilling and completions. InSite and Mr. Veale have consented to the inclusion of the petroleum
reserves information in this announcement in the form and context in which it appears.
The petroleum resources information in this announcement is based on, and fairly represents, information and supporting documentation in a
report compiled by McDaniel and Associates Ltd (McDaniel) for the 31 December 2021 Resource Report. McDaniel is a leading independent
Canadian petroleum consulting firm registered with the Association of Professional Engineers and Geoscientists of Alberta (APEGA) and was
subsequently reviewed by Mr. Veale. McDaniel and Mr. Veale have consented to the inclusion of the petroleum reserves information in this
announcement in the form and context in which it appears.
Corporate governance
Information related to the Calima Group’s corporate governance practices can be found on the Company’s website located here:
(https://calimaenergy.com/corporate-governance/).
1 Refer to announcements dated 28 March 2022 (“Brooks and Thorsby Reserves Update 2022” and “Montney Resource Update 2022”). The
Company is not aware of any new information or data that materially affects the information included in the referenced ASX announcement and
confirms that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to
apply and have not materially changed.
2
62
Oil and Gas Glossary and Definitions
Term
Adjusted EBITDA:
Adjusted working
capital:
ARO / Asset
Retirement Obligation:
Available funding:
Credit Facility Interest:
CO2e:
Conventional Well:
Compression:
Corporate Decline:
Exit Production:
Operating Income:
Financial Hedge:
Free Cash Flow (FCF):
Free Cash Flow Yield:
Funds flow from
operations:
Gathering &
Compression (G&C):
Gathering &
Transportation (G&T):
G&A:
Hyperbolic Decline:
LMR:
LOE:
Midstream:
Net Debt / working
capital surplus
NGL / Natural Gas
Liquids:
Net Debt/Adjusted
EBITDA (Leverage)
Net Revenue Interest:
Operating Costs:
Operating Netback:
Meaning
Adjusted EBITDA is calculated as net income (loss) before interest and financing expenses, income taxes, depletion,
depreciation and amortisation, and adjusted to exclude certain non-cash, extraordinary and non-recurring items
primarily relating to gains on acquisition, gains and losses on financial instruments, transaction and advisory costs,
exploration expenses and impairment losses. Calima utilises adjusted EBITDA as a measure of operational
performance and cash flow generating capability. Adjusted EBITDA impacts the level and extent of funding for
capital projects investments or returning capital to shareholders.
Adjusted working capital is comprised of current assets less current liabilities on the Company's statement of
financial position and excludes the current portions of risk management contracts and credit facility draws.
Adjusted working capital is utilised by Management and others as a measure of liquidity because a surplus of
adjusted working capital will result in a future net cash inflow to the business which can be used for future funding,
and a deficiency of adjusted working capital will result in a future net cash outflow which will require a future draw
from Calima’s existing funding capacity.
the process of permanently closing and relinquishing a well by using cement to create plugs at specific intervals
within a well bore
Available funding is comprised of adjusted working capital and the undrawn component of Blackspur’s credit
facility. The available funding measure allows Management and other users to evaluate the Company’s liquidity.
Borrowings under the Credit Facility incur interest at a market-based interest rate plus an applicable margin which
varies depending on Blackspur’s net debt to cash flow ratio. Interest charges are between 150 bps to 350 bps on
Canadian bank prime borrowings and between 275 bps and 475 bps on Canadian dollar bankers’ acceptances. Any
undrawn portion of the demand facility is subject to a standby fee in the range of 20 bps to 45 bps. Security for the
credit facility is provided by a C$150 million demand debenture
carbon dioxide equivalent
a well that produces gas or oil from a conventional underground reservoir or formation, typically without the need
for horizontal drilling or modern completion techniques
a device or facility located along a natural gas pipeline that raises the pressure of the natural gas flowing in the
pipeline, which in turn compresses the natural gas, thereby both increasing the effective capacity of the pipeline
and allowing the natural gas to travel longer distances
consolidated, average rate decline for net production from the Company’s assets
Exit production is defined as the average daily volume on the last week of the period
Oil and gas sales net of royalties, transportation and operating expenses
a financial arrangement which allows the Company to protect against adverse commodity price movements, the
gains or losses of which flow through the Company’s derivative settlements on its financial statements
represents Hedged Adjusted EBITDA less recurring capital expenditures, asset retirement costs and cash interest
expense
represents free cash flow as a percentage of the Company’s total market capitalisation at a certain point in time
Funds flow is comprised of cash provided by operating activities, excluding the impact of changes in non-cash
working capital. Calima utilises funds flow as a measure of operational performance and cash flow generating
capability. Funds flow also impacts the level and extent of funding for investment in capital projects, returning
capital to shareholders and repaying debt. By excluding changes in non-cash working capital from cash provided by
operating activities, the funds flow measure provides a meaningful metric for Management and others by
establishing a clear link between the Company's cash flows, income statement and operating netbacks from the
business by isolating the impact of changes in the timing between accrual and cash settlement dates.
owned midstream expenses; the costs incurred to transport hydrocarbons across owned midstream assets
third-party gathering and transportation expense; the cost incurred to transport hydrocarbons across third-party
midstream assets
general and administrative expenses; may be represented by recurring expenses or non-recurring expense
non-exponential with subtle multiple decline rates; hyperbolic curves decline faster early in the life of the well and
slower as time increases
The LMR (Liability Management Ratio) is determined by the Alberta Energy Regulator (“AER”) and is calculated by
dividing Blackspur’s deemed assets by its deemed liabilities, both values of which are determined by the AER.
lease operating expense, including base LOE, production taxes and gathering & transportation expense
a segment of the oil and gas industry that focuses on the processing, storing, transporting and marketing of oil,
natural gas, and natural gas liquids
Net debt/working capital surplus is calculated as the current and long-term portions of Calima’s credit facility
draws, lease liabilities and other borrowings net of adjusted working capital. The credit facility draws are calculated
as the principal amount outstanding converted to Australian dollars at the closing exchange rate for the period.
Net debt is an important measure used by Management and others to assess the Company's liquidity by
aggregating long-term debt, lease liabilities and working capital.
hydrocarbon components of natural gas that can be separated from the gas state in the form of liquids
a measure of financial liquidity and flexibility calculated as Net Debt divided by Hedged Adjusted EBITDA
a share of production after all burdens, such as royalty and overriding royalty, have been deducted from the
working interest. It is the percentage of production that each party actually receives
total lease operating expense (LOE) plus gathering & compression expense
Operating netback is calculated on a per boe basis and is determined by deducting royalties, operating and
transportation from oil and natural gas sales, after adjusting for realised hedging gains or losses. Operating netback
63
Term
Physical Contract:
Promote:
PDP/ Proved
Developed Producing:
PV10:
RBL / Reserve Based
Lending
Royalty Interest or
Royalty:
Terminal decline:
tCO2:
Unconventional Well:
Upstream:
Working Capital Ratio:
WI/ Working Interest:
Meaning
is utilised by Calima and others to assess the profitability of the Company’s oil and natural gas assets on a
standalone basis, before the inclusion of corporate overhead related costs. Operating netback is also utilised to
compare current results to prior periods or to peers by isolating for the impact of changes in production volumes.
a marketing contract between buyer and seller of a physical commodity which locks in commodity pricing for a
specific index or location and that is reflected in the Company’s commodity revenues Production Taxes: state taxes
imposed upon the value or quantity of oil and gas produced
an additional economic ownership interest in the jointly-owned properties that is conveyed cost-free to the
operator in consideration for operating the assets
a reserve classification for proved reserves that can be expected to be recovered through existing wells with
existing equipment and operating methods
a standard metric utilised in SEC filings for the valuation of the Company’s oil and gas reserves; the present value
of the estimated future oil and gas revenues, reduced by direct expenses, and discounted at an annual rate of 10%
a revolving credit facility available to a borrower based on (secured by) the value of the borrower’s oil and gas
reserves
Interest in a leasehold area providing the holder with the right to receive a share of production associated with the
leasehold area
represents the steady state decline rate after early (initial) flush production
Tonnes of Carbon Dioxide
a well that produces gas or oil from an unconventional underground reservoir formation, such as shale, which
typically requires hydraulic fracturing to allow the gas or oil to flow out of the reservoir
a segment of the oil and gas industry that focuses on the exploration and production of oil and natural gas
The working capital ratio as the ratio of (i) current assets plus any undrawn availability under the facility to (ii)
current liabilities less any amount drawn under the facilities. For the purposes of the covenant calculation, risk
management contract assets and liabilities are excluded.
a type of interest in an oil and gas property that obligates the holder thereof to bear and pay a portion of all the
property's maintenance, development, and operational costs and expenses, without giving effect to any burdens
applicable to the property
Abbreviation
1P
Abbreviation meaning
proved reserves
2P
3P
bbl or bbls
boe
d
GJ
mbbl
mboe
Mcf
MMcf
NGTL
PDP
PUD
C
Net
NPV (10)
EUR
WTI
WCS
1P or TP
2P or TPP
3P
EBITDA
Net Acres
IP24
TD
proved plus Probable reserves
proved plus Probable plus Possible reserves
barrel of oil
barrel of oil equivalent (1 bbl = 6 Mcf)
suffix – per day
gigajoules
thousands of barrels
thousands of barrels of oil equivalent
thousand cubic feet
million cubic feet
Nova Gas Transmission Line
proved developed producing reserves
Proved Undeveloped Producing
Contingent Resources – 1C/2C/3C – low/most
likely/high
Working Interest after Deduction of Royalty
Interests
Net Present Value (discount rate), before
income tax
Estimated Ultimate Recovery per well
West Texas Intermediate Oil Benchmark Price
Western Canadian Select Oil Benchmark Price
Total Proved
Total Proved plus Probable Reserves
Total Proved plus Probable plus Possible
Reserves
Earnings before interest, tax, depreciation,
depletion and amortisation
Working Interest
The peak oil production rate over 24 hours of
production
Total depth
Abbreviation
IP30
A$ or AUD
C$ or CAD
US$ or USD
($ thousands)
($ 000s)
Q1
Q2
Q3
Q4
YTD
YE
H1
H2
B
MM
M
/d
bbl
boe
scf
Bcf
tCO2
OCF
E
CY
Abbreviation meaning
Average oil production rate over the
first 30 days
Australian dollars
Canadian dollars
United states dollars
figures are divided by 1,000
figures are divided by 1,000
first quarter ended March 31st
second quarter ended June 30th
third quarter ended September 30th
fourth quarter ended December 31st
year-to-date
year-end
six months ended June 30th
six months ended December 31st
Prefix – Billions
Prefix - Millions
Prefix - Thousands
Suffix – per day
Barrel of Oil
Barrel of Oil Equivalent (1bbl = 6 mscf)
Standard Cubic Foot of Gas
Billion Standard Cubic Foot of Gas
Tonnes of Carbon Dioxide
Operating Cash Flow, ex Capex
Estimate
Calendar Year
64
SCHEDULE OF INTEREST IN TENEMENTS AS AT 31 DECEMBER 2021
Country
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
Lease name & number
CR PNG 0488120306
CR PNG 113922
FH PNG M077339 HERITAGE
FH PNG M077343 HERITAGE
CR PNG 0401070798
FH PNG M077354 HERITAGE
FH PNG M077355 HERITAGE
FH PNG M077362 HERITAGE
FH PNG M077365 HERITAGE
FH PNG M057552 HERITAGE
FH PNG M077369 HERITAGE
FH PNG M057230 HERITAGE
FH PNG M057231 HERITAGE
FH PNG M057228 HERITAGE
FH PNG M057229 HERITAGE
FH PNG M077379 HERITAGE
FH PNG M077381 HERITAGE
FH PNG M077383 HERITAGE
FH PNG M077384 HERITAGE
FH PNG M058621 HERITAGE
FH PNG M077385 HERITAGE
FH PNG M077387 HERITAGE
FH PNG M058439 HERITAGE
FH PNG M077388 HERITAGE
FH PET M083475 HERITAGE
FH PNG M057120 HERITAGE
FH PNG M057136 HERITAGE
FH PNG M064409 HERITAGE
CR PNG 0401110596
CR PNG 0489120182
CR PNG 6879A
CR PNG 5697A
FH PNG M087367 HERITAGE
CR PNG 0411110073
CR PNG 0411110085
CR PNG 0411110086
CR PNG 0412030144
FH PNG BENTLEY, CHERYL
FH PNG TKACHUK ET AL
FH PNG BENTLEY ET AL
CR PNG 0413080342
CR PNG 0413080343
CR PNG 0413120217
FH PNG BENTLEY, D.
FH PNG PEDERSON, V.
FH PNG JOHNSON, JO-ANNE
CR PNG 0404010158
CR PNG 0404010157
CR PNG 0414060022
CR PNG 0414070234
FH PNG M110518 HERITAGE
FH PNG M110083 HERITAGE
CR PNG 0499040052
CR PNG 0411090025
FH PNG M059623 HERITAGE
FH PET M200805 PRAIRIESKY
FH PET M201169 PRAIRIESKY
FH PET M201170 PRAIRIESKY
FH PET M201171 PRAIRIESKY
FH PET M201172 PRAIRIESKY
CR PNG 0479060095
CR PNG 0479060094
CR PNG 27346
CR PNG 4678
FH NG M115649 HERITAGE
FH PET M115657 HERITAGE
FH PET M115656 HERITAGE
CR PNG 124433
CR PNG 28705
CR PNG 121449
FH PNG M056870 HERITAGE
FH PNG M056871 HERITAGE
Working
interest
25%
100%
100%
50%
50%
50%
50%
50%
50%
50%
50%
100%
50%
50%
50%
50%
50%
100%
50%
88%
50%
50%
50%
50%
75%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
81%
100%
100%
100%
100%
100%
100%
100%
20%
49%
20%
68%
100%
100%
100%
81%
81%
49%
100%
100%
Country
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
Lease name & number
CR PNG 0417040004
CR PNG 0417040005
CR PNG 0417040006
CR PNG 0417040196
FH PNG HELM, JEFFREY
FH PNG HELM, CRAIG
CR PNG 0417050094
CR PNG 0417060132
CR PNG 0417060139
CR PNG 0496020408
CR PNG 0417070138
CR PNG 0417070139
CR PNG 0417070142
CR PNG 0417080003
CR PNG 0417080004
CR PNG 0417080005
CR PNG 0417080006
FH PET M118153 HERITAGE
FH PET M117918 HERITAGE
FH PET M118154 HERITAGE
FH PET M118155 HERITAGE
FH PET M117917 HERITAGE
CR PNG 0417090049
CR PNG 0417090098
CR PNG 0417090158
CR PNG 0417090164
CR PNG 0417090165
CR PNG 0417100063
CR PNG 0417100064
CR PNG 0417100067
FH PET M120054 HERITAGE
CR PNG 0417100153
CR PNG 0417100154
CR PNG 0417100155
CR PNG 0417100156
CR PNG 0417110088
CR PNG 0417110091
CR PNG 0417120003
CR PNG 0417120041
CR PNG 0417120042
CR PNG 0417120043
CR PNG 0417120044
CR PNG 0417120157
CR PNG 0417120165
CR PNG 0417120166
FH PNG GRITSFELDT, J & J
FH PNG KELSEY, CLIFFORD
FH PNG KELSEY, CLIFFORD
FH PNG OLSON, VIRGINIA
FH PNG OLSON, VIRGINIA
CR PNG 0417090160
CR PNG 0418040094
CR PNG 0404050042
CR PNG 0418070022
CR PNG 0418070024
CR PNG 0418070026
CR PNG 0418070027
CR PNG 0418080186
CR PNG 0418080187
CR PNG 0418080188
CR PNG 0418080189
CR PNG 0418100101
FH PNG WURBAN ET AL
FH PNG WURBAN, LAWRENCE
FH PNG WURBAN, KENNETH
CR PNG 0419010050
CR PNG 0419010051
CR PNG 0419010053
FH PNG FORTIER ET AL
FH PET M121562 HERITAGE
FH PET M121563 HERITAGE
FH PET M121564 HERITAGE
Working
interest
100%
100%
100%
50%
100%
100%
100%
100%
100%
45%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
50%
50%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
65
Country
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
Lease name & number
FH PNG M059315 HERITAGE
FH PNG M059316 HERITAGE
FH PNG M055940 HERITAGE
FH PNG M056875 HERITAGE
FH PNG M056876 HERITAGE
FH PNG M055910 HERITAGE
FH PNG M056877 HERITAGE
FH PNG M055912 HERITAGE
FH PNG M055911 HERITAGE
FH PNG M056878 HERITAGE
FH PNG M055915 HERITAGE
FH PNG M056879 HERITAGE
FH PNG M055916 HERITAGE
FH PNG M056880 HERITAGE
FH PNG M056881 HERITAGE
FH PNG M056883 HERITAGE
FH PNG M056882 HERITAGE
FH PNG M056884 HERITAGE
FH PNG M059251 HERITAGE
FH PNG M060433 HERITAGE
FH PNG M056886 HERITAGE
FH PNG M055922 HERITAGE
FH PNG M060434 HERITAGE
FH PNG M059253 HERITAGE
FH PNG M059255 HERITAGE
FH PNG M059252 HERITAGE
FH PNG M060435 HERITAGE
FH PNG M060437 HERITAGE
CR PNG 2543
FH PNG M059749 HERITAGE
FH PNG M060439 HERITAGE
FH PNG M059566 HERITAGE
FH PNG M060449 HERITAGE
FH PNG M056993 HERITAGE
FH PNG M059767 HERITAGE
FH PNG M060452 HERITAGE
FH PNG M059570 HERITAGE
FH PNG M060429 HERITAGE
FH PNG M059574 HERITAGE
FH PNG CANPAR
FH PET M115852 HERITAGE
FH PET M115854 HERITAGE
FH PNG NORRIS, PAUL J.
FH PNG SCHAFER, S.
FH PNG GAAL, B.
FH PNG JOHN WISE ESTATE
CR PNG 13796
FH PNG NORRIS ET AL
FH PNG NORRIS ET AL
FH PNG COVEY, W.
CR PNG 13803
CR PNG 13797
CR PNG 29277
CR PNG 105092
CR PNG 31715
CR PNG 1711
CR PNG 29278
CR PNG 0483120063
FH PET M114737 HERITAGE
FH NG M114992 HERITAGE
FH PET M115006 HERITAGE
FH PET M115008 HERITAGE
FH PET M115010 HERITAGE
FH PET M115012 HERITAGE
FH PET M115088 HERITAGE
FH PET M115550 HERITAGE
FH PET M115552 HERITAGE
FH NG M115620 HERITAGE
FH PET M115359 HERITAGE
CR PNG 0404050040
FH PET M207756 PRAIRIESKY
FH PET M207757 PRAIRIESKY
FH PET M207758 PRAIRIESKY
FH PET M207759 PRAIRIESKY
CR PNG 0415070077
Working
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
100%
100%
50%
50%
100%
100%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
100%
55%
50%
50%
50%
50%
100%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
100%
50%
50%
50%
50%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Country
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
Lease name & number
FH PET M121565 HERITAGE
FH PET M121566 HERITAGE
FH PET M121567 HERITAGE
FH PET M121568 HERITAGE
FH PET M121569 HERITAGE
FH PET M121570 HERITAGE
FH PET M121571 HERITAGE
FH PET M121572 HERITAGE
FH PET M121573 HERITAGE
FH PET M121574 HERITAGE
FH PET M121575 HERITAGE
FH PET M121576 HERITAGE
FH PET M121577 HERITAGE
FH PET M121587 HERITAGE
FH PET M121586 HERITAGE
FH PET M202676 HERITAGE
FH PET M203053 HERITAGE
CR PNG 0404050038
CR PNG 0418050149
CR PNG 0418010031
CR PNG 0418100105
CR PNG 0418080191
CR PNG 0419010054
CR PNG 0418050150
CR PNG 0417080122
CR PNG 0418010032
FH NG M121990 HERITAGE
FH PET M121991 HERITAGE
CR PNG 0419090100
CR PNG 0419090124
FH PET M122146 HERITAGE
FH PET M122147 HERITAGE
FH PET M122148 HERITAGE
CR PNG 0419120098
FH PET M121624 HERITAGE
FH PET M121623 HERITAGE
CR PNG 0420020014
FH PET M122657 HERITAGE
FH PET PRAIRIESKY
FH PET PRAIRIESKY
FH PET PRAIRIESKY
FH PET PRAIRIESKY
FH PET PRAIRIESKY
FH PET PRAIRIESKY
FH PNG FUHR ET AL
FH PNG FUHR, DARRYL
CR PNG 0421050026
CR PNG 0421070003
CR PNG 0421070004
CR PNG 0421070018
CR PNG 0421070022
FH NG M235624 PRAIRIESKY
FH PET M235625 PRAIRIESKY
FH PET M235626 PRAIRIESKY
FH PET M235627 PRAIRIESKY
FH PET M235628 PRAIRIESKY
FH PET M123889 HERITAGE
FH PET M123890 HERITAGE
FH PET M123891 HERITAGE
FH PET M123892 HERITAGE
FH PET M123893 HERITAGE
FH PET M123894 HERITAGE
FH PET M123895 HERITAGE
FH PET M123896 HERITAGE
FH PET M123897 HERITAGE
FH PET M123898 HERITAGE
FH PET M123899 HERITAGE
FH PET M123900 HERITAGE
FH PET M123901 HERITAGE
FH PET M123902 HERITAGE
FH PET M123903 HERITAGE
FH PET M123904 HERITAGE
FH PNG CAMERON ET AL
FH PNG DAVIDSON, D & M
FH PNG OSLUND ET AL
Working
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
50%
100%
50%
50%
50%
50%
50%
50%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
50%
66
Country
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
Lease name & number
CR PNG 0415070079
CR PNG 0415100024
FH PET M117777 HERITAGE
FH PET M117778 HERITAGE
FH PET M117779 HERITAGE
FH PET M117783 HERITAGE
FH PNG DOOL, DAVID
CR PNG 0415110019
CR PNG 0487060126
CR PNG 0413080292
CR PNG 0490030039
CR PNG 0490030038
CR PNG 2544
FH PET M220458 PRAIRIESKY
FH PET M220457 PRAIRIESKY
FH PET M220456 PRAIRIESKY
FH PET M220455 PRAIRIESKY
FH PET M220453 PRAIRIESKY
CR PNG 0480070319
CR PNG 0493120104
CR PNG 0416080025
CR PNG 0416090101
CR PNG 0413120218
CR PNG 0413120219
FH PET M118341 HERITAGE
FH PET M118342 HERITAGE
FH PET M118347 HERITAGE
FH PET M118348 HERITAGE
FH PET M118353 HERITAGE
FH PET M118356 HERITAGE
FH PET M118358 HERITAGE
FH PET M118359 HERITAGE
FH PET M118370 HERITAGE
FH PET M118371 HERITAGE
FH PET M118372 HERITAGE
FH PET M118373 HERITAGE
FH PET M118374 HERITAGE
FH PET M118375 HERITAGE
FH PET M118376 HERITAGE
FH PET M202723 HERITAGE
FH PET M201227 HERITAGE
FH PET M201223 HERITAGE
FH PET M201225 HERITAGE
FH PET M201221 HERITAGE
FH PET M201222 HERITAGE
FH PET M201026 HERITAGE
FH PET M201010 HERITAGE
FH PET M201015 HERITAGE
FH PET M201016 HERITAGE
FH PET M200640 HERITAGE
CR PNG 0417010014
CR PNG 0417010017
CR PNG 0417010018
CR PNG 0417010152
CR PNG 0417020014
CR PNG 0417020016
FH PNG GODKIN ET AL
FH PNG SPROWL ET AL
FH PNG WATKINS ET AL
FH PNG WURBAN, FRANCES
Working
interest
50%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
77%
77%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Country
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
CANADA
WESTERN SAHARA
WESTERN SAHARA
WESTERN SAHARA
WESTERN SAHARA
Lease name & number
CR PNG 0421090068
CR PNG 0421090086
CR PNG 0413030007
CR PNG 0421100007
CR PNG 0421100016
CR PNG 0421100017
FH NG M124346 HERITAGE
FH NG M HERITAGE
FH NG M124757 HERITAGE
CR PNG 0417030006
CR PNG 0417030109
CR PNG 0417030155
CR PNG 0417030156
CR PNG 0417030158
CR PNG 0417030159
CR PNG 65101
CR DRILL LIC 66255
CR DRILL LIC 66256
CR DRILL LIC 66312
CR DRILL LIC 66313
CR DRILL LIC 66338
CR DRILL LIC 66386
CR DRILL LIC 66419
CR DRILL LIC 66420
CR DRILL LIC 66421
CR DRILL LIC 66422
CR DRILL LIC 66441
CR DRILL LIC 66442
CR DRILL LIC 66443
CR DRILL LIC 66479
CR DRILL LIC 66480
CR DRILL LIC 66481
CR DRILL LIC 66515
CR DRILL LIC 66550
CR DRILL LIC 66581
CR PNG 67035
CR PNG 67036
CR PNG 67042
CR PNG 67043
CR PNG 67044
CR PNG 67045
CR PNG 67046
CR PNG 67047
CR PNG 67048
CR PNG 67049
CR PNG 67050
CR PNG 67026
CR PNG 67027
CR PNG 67028
CR PNG 67029
CR PNG 67031
CR PNG 67030
CR PNG 67032
CR PNG 67033
CR PNG 67034
DAORA
HAOUSA
MAHBES
MIJEK
Working
interest
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
50%
50%
67