CALIMA ENERGY LIMITED
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
ABN 17 117 227 086
CORPORATE INFORMATION
Directors & Officers
Registered Office
Contact information
Auditor
Bankers
Share registry
Securities exchange listing
TABLE OF CONTENTS
Name
Glenn Whiddon
Jordan Kevol
Karl DeMong
Lonny Tetley
Mark Freeman
Jerry Lam
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
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) and the
OTCQB.
ASX Code: CE1 OTCQB: CLMEF
Canadian Bankers
National Bank of Canada
Suite 1800, 311 – 6th Avenue SW
Calgary, Alberta T2P 3H2
Section
Highlights for the year ended 31 December 2022
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
6
7
16
29
55
56
62
63
65
68
1
HIGHLIGHTS
For the year ended 31 December 2022
Operational & Financial Results
Year
ended
31 December
2022
Year
ended
31 December
2021
$
779,570
3,182
66%
1,431,288
3,921
66%
(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 income (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)
(1) Year end 2021 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
101,606
18,269
2,590
122,465
34,552
13,538
1,582
49,672
39,668
7,087
958
47,713
19,651
4,934
2,245
26,830
13,554
21,557
(31,980)
$
18,401
(11,021) $
49,628
67,225
22,807
1,658
(27,805)
$
$
$
$
$
$
$
$
$
$
$
$
$
have been averaged over 245 days.
(2) Refer to Advisories & Guidance on page 65 and the Operational and Financial Results section on pages 7-15 for additional information regarding the Company’s GAAP and
non-GAAP financial measures.
HIGHLIGHTS FOR THE COMPANY DURING THE 2022 FINANCIAL YEAR WERE:
Calima made significant progress in the 2022 financial year with increased production, sales and earnings, and
confirmed reserves.
o Production of 1,431,288 boe (gross) of oil and natural gas, averaging 3,921 boe/d, a 23% increase over
average daily production during the year ended 31 December 2021.
o Oil and natural gas sales for 2022 were A$122.5 million and Adjusted EBITDA (1) was A$67.2 million. The
increase in sales and Adjusted EBITDA in 2022 were primarily due to production from the 2022 drilling
program, resulting in net income of $22.8 million for the year ended 31 December 2022 (after the impact
of $16 million in hedge losses).
Following the 2022 drilling program, the Calima Group’s independent reserve engineer1 completed an
updated evaluation of the Brooks and Thorsby assets as at 31 December 2022. The Company has
confirmed 7 million boe of proved developed producing (“PDP”) reserves and 20.5 million boe of proved
plus probable reserves (“2P”) net of royalties.
o
The completion of the Brooks pipeline and expansion of the waterflood project were significant capital
investments made by the Company.
Calima Energy Limited maintained an active drilling program and successfully completed and placed 16 wells on
production.
Post year end the Company approved and completed a 2 well Brooks drilling program and the re-testing of our 2
Montney wells in North East BC.
o Two Glauconitic Formation wells (Pisces #8 and #9) in Brooks area were drilled, completed and tied-in
late in the first quarter of 2023 with the majority of production from these wells to show up in the June
quarter’s results.
(1)
(2)
Refer to Advisories & Guidance on page 65 for additional information regarding the Company’s GAAP and non-GAAP financial measures.
Refer to Calima's announcement dated 30 March 2023 ("Brooks and Thorsby Reserves Update 2022") (www2.asx.com.au).
2
In Q1 2023 the Company reported positive initial results for its Calima #2 and Calima #3 Montney re-testing
program. The wells were flowed at multiple constrained rates and pressurized gas sampling was performed. The
Calima #2 Middle Montney test had a peak 24 hour condensate rate of 396 bbl/d, which was associated with a gas
rate of 3.4 mmcf/d compared to 22 bbls/d in 2019. The Calima #3 Upper Montney had a peak 24 hour condensate
rate of 21.7 bbl/d, which was associated with a gas rate of 4.9 mmcf/d, whereas it did not produce any condensate
in 2019. More than 5,900 bbls of cumulative condensate was produced during the testing. Within that volume,
the clean condensate was sold at a premium to WTI resulting in the net cost of the testing being below budget on
a net basis. Initial construction of the pipeline connecting the Calima well pad to the Tommy Lakes Field also
commenced during the testing period.
The Company paid its inaugural dividend of A$2.5 million in conjunction with a share buy-back program that
cancelled ~4.9 million shares.
o The Company’s net debt (1) as at 31 December 2022 was A$11 million compared to A$27.8 million as at
31 December 2021. Proceeds from the successful fundraising completed on 17 February 2022 was used
to reduce the amount drawn under the Company’s revolving Credit Facility and to assist in funding the
Company’s $49.6 million 2022 capital program.
Calima is committed to pursuing ESG initiatives aimed at reducing GHG emissions, reclaiming inactive well sites,
reducing its impact on the environment and participating in and supporting the communities in which it does
business. The Company is committed to strong corporate governance practices and delivering value for
stakeholders in the future.
(1)
Refer to Advisories & Guidance on page 65 for additional information regarding the Company’s GAAP and non-GAAP financial measures.
3
CHAIRMAN & CEO’S LETTER
For the year ended 31 December 2022
It is with great pleasure that we present to you our annual report for the 2022 financial year. We are pleased to report that
it was a year of significant progress for Calima Energy Limited (ASX: CE1) (“Calima”, “Calima Group”, “the Company”), as we
continued to focus on delivering value for our stakeholders.
2022 was Calima’s first full year of operating the acquired Blackspur Oil Corp assets. It was a great year for the Company
with average production on the year up by 23%; 2022 average production was 3,921 boe/d compared to the 8 months
ending 31 December 2021 at 3,182 boe/d. During that time, we experienced dynamic oil and gas prices with the benchmark
West Texas Intermediate (“WTI”) ranging from US$82.98/bbl at the start of 2022, peaking in June at US$114.34/bbl, and
ending the year at US$76.52/bbl. In addition, our natural gas benchmark, AECO ranged from C$4.48/mcf to C$6.20/mcf
from the start to the end of 2022, with a peak of C$7.57/mcf during May 2022. Calima used the opportunity of higher
pricing to not only grow our production and cash flow, but also reduce indebtedness. Calima entered the year with net
debt of $27.8 million, and exited the year with net debt of $11 million, a reduction of 65%. In addition to that, the Company
also returned its first distribution to shareholders, paying a $2.5 million dividend in the form of a return of capital. As well,
the Company implemented a share buy-back program that cancelled ~4.9 million of our outstanding shares.
2022 was a very active year in operations. Calima drilled a total of 16 wells in 2022 at both Brooks and Thorsby. 15 of those
wells were in the Brooks area, advancing our Gemini count to a total of 12 wells to date, and Pisces to a total of 7, and one
well at Holborn in our Greater Thorsby Area for our 4th Leo well to date. We had excellent overall results from our wells
throughout the year, with some wells exceeding our expectations, particularly on the Brooks Pisces program. Pisces #7 has
been the most productive oil well drilled by the Company since the Blackspur transaction, averaging 2.5x budgeted
production over its first 60 days. This drilling and resultant new production not only contributed to additional cash flow for
the Company, but also led to an increase to corporate reserves, particularly in the valuable Proven Developed Producing
(“PDP”) category. Other capital investments included the installation of 19kms of pipeline at Brooks which not only reduced
operating costs and reduced trucking of production fluids, but also facilitated the on-lease tie-in of new wells drilled at
Brooks during the year.
Inflation was a hot topic throughout the year in 2022. Costs around the world for all goods and services rose drastically
throughout the year. Calima was not immune from these inflationary pressures and this translated to additional costs
across all aspects of our business. All tangible and intangible items saw sharp cost increases throughout 2022; in particular,
steel, labour, electricity, chemicals, and trucking saw the biggest increases when compared to the related costs for those
items in 2021. These increases resulted in higher capital expenditures related to our new drills, and also translated into
higher operating costs across the board for our existing production. Despite these cost increases, we were still able to
meaningfully grow our production, and create enough cash flow to reduce indebtedness and provide returns to
shareholders during the year.
Looking ahead to the current year, commodity prices continue to be volatile, with global macro events affecting oil and gas
pricing. However, our business is resilient and our strong production rates are currently ahead of forecasts with 2023 year
to date production averaging 4,550 boe/d at the time of this letter, versus the forecast of 4,378 boe/d for Q1. This will be
a record quarterly production number for Calima. This increased production is helping offset the recent gyrations in
commodity prices, mitigating somewhat the effect of commodity fluctuations on our operating cashflow. As well, in the
fourth quarter of 2022, Calima implemented a hedging policy which primarily uses put-call collars to offer the Company
protection from downside oil price movements while still allowing exposure to upside in commodity price. We believe this
strategy is prudent to allow investors to benefit from potentially higher commodity prices while at the same time retaining
the strength in Calima’s balance sheet. As a general policy, the Company targets placing hedges on 20% of oil production
three quarters out. The Company also continues to look for opportunities to use hedging mechanisms to protect against
rising costs. The Company was successful in placing an electricity price hedge in the fourth quarter of 2022 on over 50% of
forecasted electricity usage over the next four years. Given the continued increase in electricity rates in 2023, this hedge
has been successful in helping to limit operating costs increases for the first quarter of 2023.
4
Our world-class Montney project in NE British Columbia has gained significant steam in early 2023, with our recent
successful re-testing program. This re-testing has reaffirmed the highly productive nature of our liquids-rich natural gas
resource. This has been a key step forward in planning for a future development program and helping to solidify the
technical merit of the asset. This should ultimately result in turning this vast resource into a cash flow generating machine
in the upcoming years as we work towards a development that unlocks the value held in this large-scale asset. The focus
on Canada’s first LNG mega-project via LNG Canada will be a boon for natural gas export in this county and will hopefully
unlock the potential in the Montney in general and further prove it to be one of the best and most productive oil and natural
gas fairways in North America.
Calima is committed to being a responsible operator across all of our asset bases, as we continue to pursue a number of
ESG initiatives. We are cognizant of our environmental impacts in all of our areas and continually look for ways to minimize
our environmental footprint including reducing our use of surface water, using multi-well pad drilling to minimize
disturbance to the land, and reducing GHG emissions by limiting the amount of trucking incurred where possible. The
Company also continues with its program to allocate a portion of capital to the abandonment and reclamation of legacy
well sites to restore the land to its original state. We have a history of participating in the social aspect of the communities
in which we operate and have a culture of “safety first” for all employees, consultants, and contractors. Our attention to
corporate governance is captured by our emphasis on appropriate policies and procedures around financial reporting, audit
oversight, as well as our key risk management practices in place to govern hedging and financial controls. All of these
initiatives are in place to ensure that we are continuing to work towards a long-term sustainable future for our company,
our community and our shareholders.
As we navigate through the events of today and into the future, Calima will continue its plans to maintain a prudent balance
sheet, while taking advantage of its projects that generate strong economics. In addition, we continually look for other
opportunities that will make our business stronger and more sustainable for the future while providing shareholder value.
On behalf of Management and the Board, we would like to thank you for your continued support and look forward to
growing and developing our business together with you, the shareholders, for the years to come.
Thank you for your continued support.
Glenn Whiddon
Executive Chairman
Jordan Kevol
CEO & Managing Director
5
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 >69,000 net
acres which includes ~32,000 acres to be earned under an option to lease
agreement primarily targeting the Sunburst and Glauconitic formations. The
Brooks asset currently has ~75 wells with recent production peaking over 3,500
boe/d with the 2 well Q1 drilling programming coming on stream. The Sunburst
Formation does not require hydraulic fracture stimulation and can be
developed at low cost (~C$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 nearly year-round access. Blackspur has an extensive network
of existing infrastructure including oil treating facilities and water disposal
across the entire Brooks area that can process up to 7,200 bbl/d oil, 25,000
barrels per day of water and 10.8 MMcf/d. The Glauconitic Formation is a
shallower (younger) formation than Calima’s core Sunburst conventional play
and requires 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 >48,000 net acres primarily
targeting the Sparky Formation. The Thorsby asset currently has 14 wells
producing ~1,000 - 1,100 boe/d. Thorsby has a large well inventory with ~70 net
Sparky Formation and 12 net Nisku Formation wells identified, including 24
Sparky PUD locations. The Company’s existing Sparky Formation wells are
characterised by low base decline rates, which is expected to average ~17% per
year over the upcoming 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
1,450 bbl/d oil (subject to emulsion water cut volumes at the battery).
Tommy Lakes Montney
Calima owns 100% of ~34,000 acres of Montney rights (Calima Lands) in
northeast British Columbia (NEBC), which have been continued until 2029, as
well as the owned-Tommy Lakes Field facilities. The Tommy Lakes Field
facilities are located immediately to the north of the Calima Lands and will
support initial development. The facilities were properly decommissioned for
future recommissioning and will also support full field development as they can
be relocated to support our ultimate development plan. The Company has
permitted a multi-well production pad and pipeline connecting the Calima
Lands to the Tommy Lakes field facilities which provides connection to the
regional pipeline and processing infrastructure. Pipeline construction was
underway in Q1 2023. In February 2023, the Company reported positive results
from its Calima #2 and Calima #3 re-test program. This production data analysis
will support and aid in the design of a full field development program and
further assist in evaluating strategies to unlock shareholder value through
development, partnerships, farm-out or outright sale.
6
OPERATIONAL AND FINANCIAL RESULTS
For the year ended 31 December 2022 and 2021
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
Year
ended
31 December
2022
909,666
2,942,815
31,153
1,431,288
3,921
66%
Year
ended
31 December
2021
497,195
1,597,906
16,058
779,570
3,182
66%
(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.
Calima's production for 2022 was centered around its two primary development areas located in Brooks and Thorsby
Alberta. Approximately 65% of the output was from Brooks while the remaining 35% was from Thorsby. Over the course of
the year ending 31 December 2022, the Calima Group produced a total of 1,431,288 barrels of oil equivalent (boe) of both
oil and natural gas, with an average production rate of 3,921 boe/d.
Growth in production in 2022 was due to the development wells at Brooks and Thorsby that were brought on stream during
the year. The following table summarises the Company’s production since the acquisition of the Thorsby and Brooks assets:
The Commencement of 2023 saw the full impact on production from the 5 well development program drilled in Q4, with
the Company’s average production for 2023 averaging ~4,500 boe/d. In Q1 2023, the Company successfully drilled and
completed two additional wells at Brooks (Pisces #8 and #9); the impact of these wells will be realised in Q2 2023.
7
Commodity prices
The benchmark for crude oil pricing in North America is West Texas Intermediate (WTI) at Cushing, Oklahoma. However,
Calima's oil production's selling price is largely based on the Western Canadian Select (WCS) benchmark price. This
benchmark is influenced by the WTI price, local supply and demand, and modifications for changes in foreign exchange
rates, transportation, and quality differentials. Calima delivers and sells the majority of its oil production in central and
southern Alberta, near the Brooks and Thorsby assets, at local oil terminals.
In the fourth quarter of 2022, the average WCS pricing was C$72.52 per bbl, which
was lower than the third-quarter average of C$89.95 per bbl and the second-quarter
average of C$125.29 per bbl. In the fourth quarter, Western Canadian Select
differentials continued to widen due to multiple factors such as scheduled and
unscheduled refinery maintenance in the United States, the release of medium-
grade oil barrels from the United States Strategic Reserve, and domestic pipeline
shut-in problems. However, subsequent to year-end, the differentials began to
tighten as these issues began to subside.
Calima sells its natural gas into the local NGTL system in southern Alberta, utilizing
the AECO benchmark. The natural gas is mainly processed at third-party facilities typically generating a premium sales price
compared to AECO. This premium is mainly due to the gas stream containing a higher concentration of liquids, resulting in
a higher relative heat content compared to the quoted benchmark price. As natural gas is sold based on the gigajoule, this
factor contributes to the premium received by Calima.
Average natural gas prices increased to C$5.42 per Mcf during the fourth quarter of 2022, compared to C$3.55 per Mcf
during the third quarter of 2022 primarily due to the anticipation of colder seasonal weather which led to higher demand
for heating. Natural gas fundamentals have remained strong throughout 2022 with prices averaging C$5.02/Mcf during the
year ended 31 December 2022 compared to C$3.50/Mcf during the year ended 31 December 2021. Natural gas prices
increased early in 2022 due primarily to cold weather and geo-political uncertainty as a result of the war in Ukraine,
increasing oil sands production and the phase-out of coal energy in the Western Canada. Subsequent to year end, natural
gas prices have fallen due to a warmer than anticipated winter season, particularly in the east coast of North America.
Realised prices and sales
Realised prices
Oil (A$/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
(A$ thousands)
Oil and natural gas sales
Royalties
Operating expenses
Transportation
General and administrative expenses
Adjusted EBITDA(1)
Year
ended
31 December
2022
Year
ended
31 December
2021
$
$
$
$
111.70 $
6.11
81.86 $
101,606 $
18,269
2,590
122,465 $
79.78
4.44
59.66
39,668
7,087
958
47,713
Year
ended
31 December
2022
122,465
(23,567)
(21,235)
(5,072)
(5,366)
67,225
$
$
Year
ended
31 December
2021
47,713
(9,136)
(10,079)
(2,700)
(4,241)
21,557
$
$
(1) Refer to Advisories and Guidance on page 65 for additional information regarding the Company’s GAAP and non-GAAP measures.
8
Adjusted EBITDA was $67.2 million compared to $21.6 million in 2021. The increase in adjusted EBITDA was primarily due
to an increase in average sales volumes as well as realised prices for the 2022 year compared to 2021. As well, EBITDA for
2021 only included Blackspur operating results from the date of acquisition 30 April 2021, compared to a full year of
Blackspur operating results recognised in 2022.
The Calima Group pays royalties to various freehold royalty owners under various terms and rates, as well as to the Province
of Alberta and British Columbia, in respect of the Company’s production and sales volumes. In 2021 and 2022, 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.
Both operating and transportation costs for 2022 have increased compared to 2021 due to increased inflationary pressure
on costs in Canada as well as a full year of costs recognised in 2022 compared to costs in 2021.
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 to the prior
year, the increase in G&A expenses in 2022 was primarily due to additional G&A expenses incurred with a full year of
Blackspur operating results compared to costs only recognised in the prior year from the date of acquisition.
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
Loss on equity investment
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 income / (loss)
Year
ended
31 December
2022
$
$
67,225
(1,170)
(8,142)
(18,945)
(180)
-
(415)
(16,326)
3,219
-
-
(2,459)
-
22,807
$
$
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)
(1) Refer to Advisories and Guidance on page 65 for additional information regarding the Company’s GAAP and non-GAAP measures.
During the year ended 31 December 2022, the Calima Group recognised net income of $22.8 million compared to a net loss
of $32 million in 2021. The net loss in 2021 was primarily due to asset write-downs taken in respect of the Tommy Lakes
Montney assets. No asset impairment losses were recognized in the 2022 financial statements other than a write-down in
the value of the Company’s investment in H2Sweet Inc.
9
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. In early 2022, the Company was required to maintain
minimum hedging requirements under the terms of the Credit Facility. A majority of the hedging contracts to meet these
requirements were put in place in late 2021. By March 2022, due to capital raised by the Company to offset the Credit
Facility borrowings, the Company was no longer subject to the clauses in the Credit Facility with regards to minimum
hedging requirements. However, due to the amount of hedging in place prior in 2021 and rising commodity prices,
particularly for oil (WTI) relative to the Company’s fixed contract positions throughout 2022, the Company recognized
realised hedging losses of $16.3 million for the year.
Depletion and depreciation 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 2022, the Calima Group’s depletion and depreciation
expense averaged $13.24/boe compared to $9.66/boe for the year ended 31 December 2021.
Calima recognised share-based compensation expense of $2.5 million during 2022 primarily due to the issuance of
incentive-based performance rights and stock options that were granted to office and field staff.
Development update
(A$ thousands)
Drilling and completion
Equipping, tie-in and facilities
Land and other (1)
Total investment in oil and natural gas assets
Year
ended
31 December
2022
34,552
13,538
1,582
49,672
Year
ended
31 December
2021
19,651
4,934
2,245
26,830
$
$
$
$
(1) Primarily consists of land acquisitions, surface and mineral lease rentals, geological and geophysical activities and other carrying costs related to Calima’s assets.
Quarterly Capital Expenditures Summary
18
16
14
12
10
8
6
4
2
-
)
M
M
$
(
s
e
r
u
t
i
d
n
e
p
x
E
l
a
t
i
p
a
C
Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023
Forecast
The Calima Group commenced the 2022 drilling program with the development of four Sunburst Formation wells that were
drilled, completed, and brought on production in early April in the Brooks area (Gemini #5-#7), one Glauconitic Formation
well at Brooks (Pisces #3) that was brought on production in late March, and one Leo well targeting the Sparky Formation
in the Thorsby area (Leo #4). During the second half of the year, the Company drilled, completed and brought on stream
four Glauconitic Formation wells (Pisces #4-#7) and five Sunburst Formation wells (Gemini #8-#12).
10
The Company deployed A$49.7 million of capital expenditures for the year ended 31 December 2022 compared to A$26.8
million for the full year ended 31 December 2021. Capital spending in 2022 also included approximately $4.2 million spent
on the 19km Brooks pipeline running north-south in the Brooks field and connecting the northern portion of the field to its
lands, wells, and gathering facilities in the southern portion of the field.
The following tables summarise the results of the Company’s well program as at 31 December 2022 and commencement
of the 2023 drilling program:
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
Pisces #4 – 02/03-36-19-14W4
Pisces #5 – 02/03-05-20-15W4
Pisces #6 – 03/02-26-19-14W4
Pisces #7 – 02/01-26-19-14W4
Gemini #5 - 00/02-19-19-13W4
Gemini #6 - 00/02-18-19-13W4
Gemini #7 - 02/16-36-18-14W4
Gemini #8 – 03/16-19-19-13W4
Gemini #9 – 03/06-22-18-14W4
Gemini #10-02/14-23-18-14W4
Gemini #11-02/11-18-19-13W4
Gemini #12-02/06-19-19-13W4
Leo #4 - 00/16-11-051-02W5
Spud
Target
formation
Date
Glauconitic 30/11/21
Glauconitic 07/12/21
Glauconitic 02/01/22
Glauconitic 22/06/22
Glauconitic 02/07/22
Glauconitic 10/11/22
Glauconitic 19/11/22
Sunburst 09/01/22
Sunburst 15/01/22
Sunburst 21/01/22
Sunburst 01/06/22
Sunburst 12/06/22
Sunburst 05/10/22
Sunburst 15/10/22
Sunburst 26/10/22
Sparky 19/01/22
Drill
days
6
8
7
9
7
10
11
4
6
6
12
11
11
12
15
12
Lateral
length (m)
1,400
2,720
1,400
1,727
1,369
1,325
1,498
N/A*
646
667
672
529
1,253
927
423
2,473
On
Production
27/1/22
26/1/22
22/03/22
15/08/22
12/08/22
31/12/22
31/12/22
4/03/22
4/15/22
4/2/22
06/07/22
01/07/22
31/10/22
23/11/22
29/11/22
25/07/22
Area
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Brooks
Thorsby
* Vertical well
Area
Brooks
Brooks
Spud
Target
Well name & unique
Date
location identifier
formation
Pisces #8 – 02/05-03-18-14W4 Glauconitic
06/01/23
Pisces #9 – 03/05-03-18-14W4 Glauconitic 19/01/23
Drill
days
13
16
Lateral
length (m)
2,750
2,750
On
Production
14/03/23
14/03/23
Status
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Producing
Status
Producing
Producing
Strategic infrastructure development
On 31 January 2022 the Company announced its agreement with Pivotal Energy Partners, a strategic infrastructure and
midstream company, to fund 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 significantly expanded the Calima Group's gathering system and allows for cost-effective growth in the core
area, while also providing short tie-in options for future drilling locations. Calima Group is the sole owner of the Pipeline
and will repay the construction costs over a seven-year period at a 12% financing cost with fixed monthly payments of
approximately $72,500 based on the pipeline project's cost of C$3.7 million. The Company reserves the right to settle the
financing with a 180-day written notice starting from the third anniversary of the agreement, subject to an early termination
penalty provision.
The construction of the pipeline has resulted in significant capital savings of approximately $2.8 million in 2022. Specifically,
the Gemini 7, Pisces 3, and Gemini 6 wells, as well as the 15-18 surface (with four wells off it), would have required the
construction of single or multi-well batteries costing approximately $665,000 and $1.3 million respectively each if not for
the pipeline. Additionally, all wells would have required gas pipelines, estimated to cost approximately $835,000 each.
The pipeline construction not only resulted in capital savings but also in operational expenditure savings. The pipeline now
allows for the transportation of approximately 680m3 (4,277 bbl) of emulsions daily, which would have required trucking
to the facility for processing/disposal. Without the pipeline, trucking costs would have amounted to approximately $11.50
per m3, resulting in savings of approximately $8,000 per day. In total, these operational savings amount to approximately
$3.2 million per annum gross or $2.3 million per annum net of the finance payment.
The pipeline will continue to reduce operating and capital costs improving 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.
Calima continues to evaluate strategies with respect to the Calima Lands to unlock shareholder value through development,
partnerships, or farm-out.
11
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
2022
Natural gas
(MMcf)
16,454
379
18,644
35,477
10,035
45,512
8,820
54,332
Oil and liquids
(Mboe)
4,236
95
5,832
10,163
2,720
12,883
2,474
15,357
31 December
2021
Oil Equivalent
(Mboe)
5,135
132
10,297
15,564
4,824
20,388
4,032
24,420
Oil Equivalent
(Mboe)
6,978
158
8,939
16,076
4,392
20,468
3,944
24,412
(1) Refer to Calima’s announcement dated 30 March 2023 (“Brooks and Thorsby Reserves Update 2022”) (www2.asx.com.au).
(2) Table may not add due to rounding.
During the year ended 31 December 2022, 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
(31 December 2021 – 20.4 million boe) and an additional 3.9 million boe of possible reserves in place (24.4 mmboe total)1.
The Company proved plus probable reserves remained consistent primarily due to production in 2022 and new well
additions following the 2022 development program.
On a boe basis, 10.2 million boe of proved plus probable reserves are located at Brooks and 10.2 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
31 December
2022
Natural gas
(MMcf)
Oil and liquids
(Mboe)
31 December
2021
Oil Equivalent
(Mboe)
Oil Equivalent
(Mboe)
20,464
8,374
28,837
553,648
225,539
779,187
112,739
45,963
158,702
114,842
45,686
160,528
Prospective Resources (2U)
18,607
502,094
102,289
126,258
(1) Refer to Calima’s announcement dated 30 March 2022 (“Montney Resource Update 2022”) (www2.asx.com.au).
(2) Table may not add due to rounding.
During the year ended 31 December 2022, the Calima Group’s independent reserve engineers completed an updated
evaluation of the Tommy Lakes Montney assets. The Company has confirmed 158.7 million boe of contingent resources
(un-risked) and an additional 102.2 million boe of prospective resources in place1.
12
The Company’s prospective resources declined by 19% in 2022 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 30 March 2023 (“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.
The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered
accumulations. These estimates have both a risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine
the existence of a significant quantity of potentially recoverable hydrocarbons. Resource classes in the summation were not adjusted for risk.
Liquidity and capital resources
The following table summarises the change in the Company’s cash balance during the year ended 31 December 2022:
The Calima Group holds a C$24.2 million demand revolving credit facility with a Canadian chartered bank (the “Credit
Facility”). The borrowing base review was completed as at 22 March 2023 and resulted in a decrease to the credit facility
from $24.2M to $20.0M as well as the removal of the affirmative covenant which had a mandatory hedging requirement if
the Company were to utilize the bank line at greater than 50% over any quarter end. The next semi-annual review of the
credit facility is scheduled to take place no later than 31 October 2023.
13
As at 31 December 2022, the Calima Group had available funding of A$18.4 million which primarily consisted of available
credit under the Credit Facility, partially offset by the Company’s working capital deficit at the end of the quarter:
As at (A$ thousands)
Available funding
Adjusted working capital (1)
Undrawn Credit Facility capacity
Available funding (1)
31 December
2022
31 December
2021
$
$
(7,652) $
26,053
18,401
$
(5,801)
7,459
1,658
Net debt
(21,739)
Credit facility draws
-
Long-term portion of term loan
(265)
Long-term portion of lease liability
Adjusted working capital (1)
(5,801)
Net debt (1)
(27,805)
(1) Refer to Advisories and Guidance for additional information regarding the Company’s GAAP and non-GAAP measures. As at 31 December 2022, adjusted working capital
is calculated as current assets of $14.2 million less accounts payable and accrued liabilities of $21.9 million. 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.
-
(3,369)
-
(7,652)
(11,021)
$
$
The Company’s net debt at 31 December 2022 was A$11.0 million compared to 31 December 2021 net debt of A$27.8
million. Growth in the Company’s net debt during the fourth quarter of 2022 was primarily due to funding the Q4 Brooks
drilling program.
On 17 February 2022, the Calima Group completed a private-placement equity financing arrangement with investors for
gross proceeds of A$20 million. The Company used the majority of the proceeds to reduce the amounts drawn under the
Credit Facility and to complete the H1 2022 capital investment program.
Hedging program
The Company’s risk management portfolio consists of instruments that are intended to mitigate Calima’s exposure to
commodity price risks in the Western Canadian Sedimentary Basin, consisting primarily of the US$ 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 while still
providing for upside exposure to commodity price increases in the form of put-call collars for the 2023 year.
The Company’s risk management contracts consisted of the following position as at 31 December 2022 with US$3.50/bbl
premiums payable monthly on settled barrels:
Contract
Reference
Term
Three-way Collar US NYMEX - WTI
Jan. 2023 – Mar. 2023
Three-way Collar US NYMEX - WTI
Apr. 2023 – Jun. 2023
Three-way Collar US NYMEX - WTI
Jul. 2023 – Sept. 2023
Volumes
(bbl/day)
400
Sold Put
$US/bbl
62.50
Bought Put
$US/bbl
82.50
Sold Call
$US/bbls
110.05
400
250
60.00
60.00
80.00
80.00
110.05
105.25
The Company also had the following WCS basis swap contracts in place as at 31 December 2022:
Contract
Reference
Term
Swap
Swap
Swap
US NGX OIL-WCS-BLENDED
Jan. 2023 – Mar. 2023
US NGX OIL-WCS-BLENDED
Apr. 2023 – Jun. 2023
US NGX OIL-WCS-BLENDED
Jul. 2023 – Sept. 2023
Volumes
(bbl/day)
100
200
100
Price per Unit
(US$/Unit)
(27.00)
(23.40)
(21.40)
Further hedge contracts have been layered on in the first quarter of 2023 to minimise exposure to downside commodity
price volatility while still giving the Company exposure to an increase in commodity prices.
14
In a rising energy cycle, hedging losses may 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 attempts to hedge oil price exposure on a forward rolling quarterly basis up
to a full year out.
OUTLOOK
The Company sanctioned a Q1 2023 capital budget of A$9.7 million for 2 net Glauconitic wells in the Brooks area along with
land and seismic costs and abandonment and maintenance capital as well as an additional A$2 million allocated to the
retesting of the Upper and Middle Montney zones from each of the horizontal Montney wells (Calima #2 and #3) originally
drilled in British Columbia in 2019.
The Glauconitic wells (Pisces #8 and #9) are follow-up wells to the 12-23 successful Glauconitic horizontal well drilled in
2020 which peaked at a rate of 217 boe/d (30 day average) and has cumulated over 132,000 boe to date. The wells were
spudded in January and completed via fracture stimulation in late February and came on production in March 2023. Results
from these wells on average have met budgeted type curve. Combined initial production from both wells has been in excess
of 500 boe/d.
The following table summarises the Company’s current outlook for the six months ended 30 June 2023:
Forecast
Average Daily Production (boe/d) (1)
Adjusted EBITDA (C$ millions) (2)(3)
Capital expenditures (C$ millions)
Exit net debt (3) (C$ millions)
(1) H1 2023 average production range of 4,000 – 5,000 boe/d is based on current PDP plus forecasted production from Pisces #1-7 and Gemini #5-#12. Assumes US$80/bbl
H1 2023(2)
4,300 – 4,600
19 – 21
18 – 20
8 – 10
$
$
$
WTI, -US$25/bbl WTI/WCS differential, C$3.50/Gj AECO, 1.34 CAD/USD for the first half of 2023.
(2) EBITDA is adjusted for Jan-June 2023 expected realised hedging losses of C$0.2 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 2023.
(3) Refer to Advisories and Guidance for additional information regarding the Company’s GAAP and non-GAAP financial measures.
Calima anticipates production in H1 2023 will be between 4,300 – 4,600 boe/d. Growth in production compared to 2022 is
primarily the result of volumes from the two Glauconitic wells drilled in the first quarter of 2023 (Pisces #8 and #9) as well
as the successful Brooks program (Pisces #6 and #7, Gemini #10, #11 and #12) drilled during the fourth quarter of 2022.
The Company expects to generate Adjusted EBITDA of C$21-C$24 million for the six months ended 30 June 2023 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 and funding under the Company’s Credit Facility.
Considering anticipated free cash flow, the Calima Group’s net debt is expected to be C$6-C$7 million by mid-year 2023
following completion of the H1 23 capital development program.
15
DIRECTORS’ REPORT
For the year ended 31 December 2022
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 2022. 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 2022, the following significant changes in the entity’s state of affairs occurred:
During the year, the Company issued the following equity securities:
o 100 million shares issued to raise A$20 million in gross proceeds- Calima completed a private-placement equity
financing arrangement with investors and used proceeds to reduce the amounts drawn under the Credit Facility
and to complete the H1 2022 capital investment program.
o 4.921 million share buy-back- Calima completed an on-market buy-back of ordinary shares for an average price
of $0.17 per share during the second and third quarters of 2022.
o A$2.5 million dividend payment- Due to strong performance of its production assets, Calima commenced a half
yearly dividend program with a A$2.5 million dividend payment in the third quarter of 2022.
o 9.2 million Class D Performance Rights - The Class D Performance Rights will vest following the Calima shares
reaching a volume weighted average price of $0.25 per share over 20 consecutive trading days on which the
shares have actually traded. These rights expire on 13 December 2023.
o 9.2 million Class E Performance Rights – The Class E Performance Rights will vest following the Company
achieving average production greater than 4,300 boe/day for a total of 30 non-consecutive days over a 3-month
period up to 30 April 2023. This condition was met subsequent to the year end, and all performance rights have
vested.
o 7.0 million Class F Performance Rights – The Class F Performance Rights will vest in tranches of 50% following
continuous service of 12 months from issuance and the remainder following continuous service of 24 months
from issuance.
o 1.35 million Employee Incentive Options - The incentive options vest over three equal annual tranches, with an
exercise price of $0.20 per unit, during a term of up to five years.
o 3.5 million Incentive Options to service providers - The incentive options vest upon issuance, with an exercise
price of between $0.16 and $0.20 per unit.
o 788,000 shares issued to creditors - Shares were issued in lieu of payment for A$153,000 of amounts owing in
respect of service provider billings. The issuance of these shares occurred during the second quarter of 2022.
On 7 December 2022, the Board approved a Q1 2023 capital budget of A$9.7 million primarily to complete a 2 well
(net) drilling program in the Brooks area. The Company commenced its 2023 winter drilling program early in January
2023.
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 2022 have been presented on pages 7 through 15.
Principal Risks Affecting the Group
Calima’s management team is focused on long-term strategic planning and has identified the key risks, uncertainties and
opportunities associated with the Company’s business that can impact the financial results. They include, but are not limited
to, the items listed below.
16
Prices, Markets and Marketing
The Company’s operational results and financial condition, and therefore the amount of capital expenditures, are
dependent on the prices received for oil, natural gas, and natural gas liquids (“NGLs”) production. Prices for oil, natural gas
and NGLs are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil,
natural gas and NGLs, market uncertainty and a variety of additional factors beyond the control of the Company. A material
decline in prices could result in a reduction of net production revenue. The economics of producing from some wells may
change because of lower prices, which could result in reduced production of oil, natural gas or NGLs and a reduction in the
volumes of Calima’s reserves. Management might also elect not to produce from certain wells at lower prices.
The Company’s ability to market its oil and natural gas may depend upon its ability to acquire space on pipelines or rail cars
that deliver oil and natural gas to commercial markets. Deliverability uncertainties related to the distance that Calima’s
reserves are to pipelines, processing and storage facilities, operational problems affecting pipelines and facilities as well as
government regulation relating to prices, taxes, royalties, land tenure, allowable production, the export of oil and natural
gas and many other aspects of the oil and natural gas business may also affect the Company.
These factors could result in a material decrease in the Company’s expected net production revenue and a reduction in its
oil and natural gas acquisition, development, and exploration activities. Any substantial and extended decline in the price
of oil and natural gas would have an adverse effect on the Company’s carrying value of its assets and its borrowing capacity,
revenues, profitability, and funds from operations.
Inflation and Cost Management
Operating costs could escalate and become uncompetitive due to supply chain disruptions, inflationary cost pressures,
equipment limitations, escalating supply costs, commodity prices, and additional government intervention through
stimulus spending or additional regulations. Calima’s inability to manage costs may impact project returns and future
development decisions, which could have a material adverse effect on its financial performance and cash flows.
The cost or availability of oil and gas field equipment may adversely affect the Company’s ability to undertake exploration,
development, and construction projects. The oil and gas industry is cyclical in nature and is prone to shortages of supply
of equipment and services including drilling rigs, geological and geophysical services, engineering and construction services,
major equipment items for infrastructure projects and construction materials generally. These materials and services may
not be available when required at reasonable prices. A failure to secure the services and equipment necessary to Calima’s
operations for an expected price, on the expected timeline, or at all, may have an adverse effect on the Company’s financial
performance and cash flows.
Operational Matters
Drilling hazards, environmental damage and various field operating conditions could greatly increase the cost of operations
and adversely affect the production from successful wells. While diligent well supervision and effective maintenance
operations can contribute to maximizing production rates over time, it is not possible to eliminate production delays and
declines from normal field operating conditions, which can negatively affect revenue and cash flow levels to varying
degrees. Oil and natural gas exploration, development and production operations are subject to all the risks and hazards
typically associated with such operations, including, but not limited to, fire, explosion, blowouts, cratering, sour gas
releases, and spills or other environmental hazards. These typical risks and hazards could result in substantial damage to
oil and natural gas wells, production facilities, other property, the environment, and personal injury. As is standard industry
practice, Calima is not fully insured against all risks, nor are all risks insurable. Although the Company maintains liability
insurance in an amount that it considers consistent with industry practice, liabilities associated with certain risks could
exceed policy limits or not be covered. In either event, the Company could incur significant costs.
Reserve Estimates
The reserves and recovery information contained in Calima’s independent reserves evaluation is only an estimate. The
actual production and ultimate reserves from the properties may be greater or less than the estimates prepared by the
independent reserves evaluator. The reserves report was prepared using certain commodity price assumptions. If lower
prices for crude oil, natural gas and NGLs are realized by the Company and substituted for the price assumptions utilized in
those reserves reports, the present value of estimated future net cash flows as well as the amount of the reserves would
be reduced and the reduction could be significant.
17
Acquisitions
The price paid for acquisitions is based on engineering and economic estimates of the potential reserves made by
independent engineers modified to reflect the technical views of Management. These assessments include a number of
material assumptions regarding such factors as recoverability and marketability of oil, natural gas, and NGLs, future prices
of oil, natural gas and NGLs, and operating costs, future capital expenditures and royalties and other government levies
that will be imposed over the producing life of the reserves. Many of these factors are subject to change and are beyond
the control of Management. In particular, changes in the prices of and markets for oil, natural gas and NGLs from those
anticipated at the time of making such assessments will affect the value of Calima. In addition, all such estimates involve a
measure of geological and engineering uncertainty that could result in lower production and reserves. Actual reserves could
vary materially from these estimates.
Royalty Regimes
There can be no assurance that the federal government and the provincial governments of the western provinces will not
adopt new royalty regimes or modify the existing royalty regimes which may have an impact on the economics of the
Company’s projects. An increase in royalties would reduce Calima’s earnings and could make future capital investments, or
operations, less economic.
Variations in Foreign Exchange Rates and Interest Rates
World commodity prices are quoted in United States dollars. The Canadian/United States dollar exchange rate, which
fluctuates over time, consequently, affects the price received by Canadian producers of oil and natural gas. Material
increases in the value of the Canadian dollar negatively affects production revenues. Future Canadian/United States
exchange rates could accordingly affect the future value of reserves as determined by independent evaluators.
An increase in interest rates could result in a significant increase in the amount Calima pays to service debt, resulting in a
reduced amount available to fund its exploration and development activities.
Third Party Credit Risk
Calima assumes customer credit risk associated with oil and gas sales, financial risk management contracts and joint venture
participants. In the event that Calima’s counterparties default on payments to Calima, cash flows will be impacted. A
diversified customer base is maintained and exposure to individual entities is reviewed on a regular basis.
ENVIRONMENTAL RISKS
General Risks
All phases of the oil and natural gas business present environmental risks and hazards and are subject to environmental
regulation pursuant to a variety of federal, provincial and local laws and regulations. Environmental legislation provides for,
among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in
association with oil and natural gas operations. The legislation also requires that wells and facility sites be operated,
maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. The Company conducts its
operations with high standards in order to protect the environment, its employees and consultants, and the general public.
Although Calima believes that it is in material compliance with current applicable environmental regulations, no assurance
can be given that environmental laws will not result in a curtailment of production or a material increase in the costs of
production, development or exploration activities or otherwise have a material adverse effect on Calima’s business,
financial condition, results of operations and prospects.
There remains a great deal of uncertainty as to what regulatory measures will be developed by the provinces or in concert
with the federal government to address the decommissioning liabilities and environmental liabilities in the future. In
addition, the provincial and/or federal government decisions has had an impact and is expected to continue to have an
impact on how much credit lenders are willing to provide to oil and gas companies. This could impact Calima’s ability to
obtain financing on acceptable terms and the willingness of the Company’s lenders to continue to provide credit to the
Company.
18
Climate Change Risks
Our exploration and production facilities and other operations and activities emit greenhouse gasses ("GHG") which may
require us to comply with federal and/or provincial GHG emissions legislation. Climate change policy is evolving at
regional, national, and international levels, and political and economic events may significantly affect the scope and
timing of climate change measures that are ultimately put in place to prevent climate change or mitigate our effects. The
direct or indirect costs of compliance with GHG-related regulations may have a material adverse effect on our business,
financial condition, results of operations and prospects. Some of our significant facilities may ultimately be subject to
future regional, provincial and/or federal climate change regulations to manage GHG emissions. In addition, climate
change has been linked to long-term shifts in climate patterns and extreme weather conditions both of which pose the
risk of causing operational difficulties.
PROJECT RISKS
Calima manages a variety of small and large projects. Project delays may delay expected revenues from operations.
Significant project cost over-runs could make a project uneconomic. Calima’s ability to execute projects and market oil and
natural gas depends upon numerous factors beyond the Company’s control, including:
commodity prices and oil differentials;
the availability of processing capacity;
the availability and proximity of pipeline capacity;
the availability of storage capacity;
the availability of, and the ability to acquire, water supplies needed for drilling and hydraulic fracturing, or Calima’s
ability to dispose of water used or removed from strata at a reasonable cost and within applicable environmental
regulations;
the supply of and demand for oil and natural gas;
the availability of alternative fuel sources;
the effects of inclement weather;
the availability of drilling and related equipment;
unexpected cost increases;
accidental events;
currency fluctuations;
changes in regulations;
the availability and productivity of skilled labour; and
the regulation of the oil and natural gas industry by various levels of government and governmental agencies.
Because of these factors, Calima could be unable to execute projects on time, on budget, or at all, and may be unable to
market the oil and natural gas that the Company produces.
CYBER-SECURITY
The Company employs and depends upon information technology systems to conduct its business. These systems have the
potential to introduce information security risks, which are growing in both complexity and frequency and could include
potential breakdown, invasion, virus, cyber-attack, cyber-fraud, security breach, and destruction or interruption of Calima’s
information technology systems by third parties or insiders. Unauthorized access to these systems by employees or third
parties could lead to corruption or exposure of confidential, fiduciary or proprietary information, interruption to
communications or operations or disruption to our business activities or our competitive position. Further, disruption of
critical information technology services, or breaches of information security, could have a negative effect on the Company's
assets, performance and earnings, as well as on the Company's reputation. The significance of any such event is difficult to
quantify but may in certain circumstances be material and could have a material adverse effect on the Company’s business,
financial condition and results of operations.
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 2022.
19
Events after the reporting period
The following events occurred subsequent to the year ended 31 December 2022:
On 14 February 2023, the Calima Group disposed of its investment in H2Sweet Holdings Inc. A loss of $0.4 million
had been previously recognized in the 31 December 2022 financial statements related to this disposal.
On 24 February 2023, the Calima Group entered into a commitment to backstop cost of approximately C$0.3 million
to be incurred in connection with the Tommy Lakes pipeline.
On 13 March 2023, 500,000 Class A and 500,000 Class B performance rights were converted to common shares.
On 22 March 2023, the Company’s borrowing base review was completed and resulted in a decrease to the credit
facility to C$20M, as well as the removal of the affirmative covenant which had a mandatory hedging requirement if
the Company were to utilize the credit facility at greater than 50% over any quarter end. The next semi-annual review
of the credit facility is scheduled to occur no later than 31 October 2023.
Since the year ended 31 December 2022, 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 2023, 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 7 through 16.
Dividends
No dividend has been paid or declared by the Company to shareholders since the end of the 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 2022
Unlisted options – exercisable at $0.20 per share (employees)
Unlisted options – exercisable at $0.20 per share (employees)
Unlisted options – exercisable at $0.16 per share (service provider-fully vested)
Unlisted options – exercisable at $0.20 per share (service provider-fully vested)
Class A/B Performance rights – February 2021 grant (fully vested)
Class C Performance rights – May 2021 grant
Class D Performance rights – May 2022 grant
Class E Performance rights – May 2022 grant
Class F Performance rights – May 2022 grant
Number
of unit
holders
19
3
1
1
2
2
36
36
36
Number of
unlisted
units
(thousands)
10,950
850
1,000
1,500
2,000
2,500
9,204
9,204
6,954
Date of
expiry
May 2026
Jan. 2027
Oct. 2025
Nov. 2024
Feb. 2026
May 2026
Oct. 2023
Oct. 2023
Jun. 2026
Additional details regarding the Company’s outstanding unlisted 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
2022.
Indemnification of officers and insurance
The Calima Group has indemnified Directors and certain officers 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 $197,727 (2021: $98,312).
20
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:
Appointment to the Board
2 June 2015
Interest in Securities at 31 Dec. 2022
Direct shares
1,385,841
Indirect shares (1)
16,940,132
Performance rights
1,000,000 (vested)
Performance rights
3,300,000 (unvested)
Other directorships held in listed entities
Minrex Resources Ltd - since 5 June 2020,
resigned 14 February 2022
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. 2022
Direct shares
3,819,409
Indirect shares 319,359
Unlisted options
2,500,000
Performance rights
2,640,000 (unvested)
Other directorships held in listed entities
Source Rock Royalties Ltd. (entity became
publicly listed on 2 March 2022)
Appointment to the Board
1 April 2022
Interest in Securities at 31 Dec. 2022
Direct shares
Performance rights
160,000
600,000
Other directorships held in listed entities
None
Glenn Whiddon
BCom
Executive Chairman
Jordan Kevol
BSc (Geology)
CEO & Managing Director
Karl DeMong
BSc (Mechanical
Engineering)
Non-Executive Director
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.
Karl is a Canadian oil and gas
engineer based in Calgary. He is an
experienced technical advisor in
unconventional and conventional
fields both domestic (in the Brooks
and Thorsby areas) and
international. He holds several
patents in surface and downhole oil
and gas technologies. Karl will be
focused on bringing his substantial
well operations management
expertise to bear on the Company’s
work program at Brooks and
Thorsby, as well as assisting in the
management of Montney
assets. Mr. DeMong’s prior roles
include Apache Corporation,
QuickSilver Resources Canada, Inc,
Quantum Reservoir Impact,
Sabretooth Energy and Halliburton
Drilling Services.
21
P.L. (Lonny) Tetley
Blaw, Bcom
Non-Executive Director
Mark Freeman
CA, F.Fin
Finance Director &
Company Secretary
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.
Jerry is a seasoned CFO with over 18
years’ experience in the Canadian Oil
and Gas market having worked with
Legacy Oil, Seven Generations
Energy and KPMG.
Appointment to the Board
28 May 2021
Interest in Securities at 31 Dec. 2022
Direct shares
Unlisted options
Performance rights
180,000
300,000
600,000 (unvested)
Other directorships held in listed entities
None
Appointment to the Board
23 June 2021
Interest in Securities at 31 Dec. 2022
Direct shares
Indirect shares
Performance rights
Performance rights
-
638,492
1,000,000 (vested)
3,160,000 (unvested)
Other directorships held in listed entities
Grand Gulf Energy Ltd – since 27 October 2010,
resigned 8 April 2022
Pursuit Minerals Ltd – since 1 April 2020
Doriemus Energy Ltd – since 25 May 2022
Roquefort Therapeutics PLC – 18 October
2021, resigned 16 September 2022
Appointment to the Board
N/A
Interest in Securities at 31 Dec. 2022
Performance rights
1,500,000 (unvested)
Other directorships held in listed entities
None
Jerry Lam
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 1 April 2022, Brett Lawrence resigned from the Board as a Non-Executive Director. Mr. Lawrence was appointed to the
Board of Directors on 29 May 2019 and served as Director until his resignation. Braydin Brosseau resigned on 16 May 2022.
22
Director meetings
Number of meetings held
Meeting attendance:
Glenn Whiddon
Jordan Kevol
Karl DeMong
Lonny Tetley
Mark Freeman
Remuneration report (audited)
Directors’
Meetings
7
7 of 7
7 of 7
5 of 5
7 of 7
7 of 7
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.
23
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
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.
No stock options were issued to key management personnel during the financial year.
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 2022, Calima approved 7.8 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:
3.25 million Class D rights become vested and exercisable if VWAP of shares trades over A$0.25/share over
20 consecutive days on or before 13 December 2023, subject to a continuous service condition. As at 31
December 2022, all of the units were unvested.
3.25 million Class E rights become vested and exercisable following the Company achieving average
production greater than 4,300 boe/d for a total of 30 days (non-consecutive) over a 6 month period up until
30 April 2023, subject to a continuous service condition. As at 31 December 2022, all of the units were
unvested. The vesting hurdle was achieved subsequent to year end.
1.3 million Class F rights become vested and exercisable following continued service of the holder for periods
of one to two years from issue date. As at 31 December 2022, all of the units were unvested.
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.
24
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 2022 included the following executive directors and non-executive
officers:
KMP
Glenn Whiddon
Mark Freeman
Brett Lawrence
P.L. (Lonny) Tetley
Jordan Kevol
Karl DeMong
Jerry Lam
Braydin Brosseau
Role at Calima
Executive Chairman
Finance Director & Company Secretary
Non-Executive Director
Non-Executive Director
CEO & Managing Director
Non-Executive Director
VP Finance & CFO, Canada
VP Finance & CFO, Canada
2022 Update
-
-
Resigned 1 April 2022
-
-
Appointed 1 April 2022
Appointed 13 October 2022
Resigned 16 May 2022
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 2022:
As at and for the year ended 31 December
Adjusted EBITDA (1)
Net income (loss)
Earnings (loss) per share (diluted) (2)
Working capital surplus (net debt) (1)
December 31 share price
2022
67,225
22,807
0.04
(11,021)
0.13
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) Refer to Advisories and Guidance for additional information regarding the Company’s non-GAAP financial measures.
(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.
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.
25
The following tables summarise the remuneration accrued to KMP during the year ended 31 December 2022 and 2021:
KMP
Glenn Whiddon
Mark Freeman (2)
Brett Lawrence (3)
P.L. (Lonny) Tetley (4)
Jordan Kevol
Karl DeMong (5)
Jerry Lam (6)
Braydin Brosseau (7)
Total
Salaries, fees
& benefits
186,400
207,000
9,000
41,333
311,836
161,959
109,157
106,141
Stock
options
-
-
Benefits
Perf.
rights (1)
Bonuses
30,000 12,000 207,571
224,035
-
53,521
235,493
53,521
40,233
-
30,000
-
-
66,425
-
13,838
-
140,263
8,000
-
-
12,826
-
8,947
8,419
50,192
10,248
85,395
-
-
(13,464)
814,374 82,179
1,132,826
Total
435,971
469,035
9,000
105,102
711,975
215,480
172,175
101,096
2,219,834
Performance
related (%)
54%
54%
-
61%
54%
25%
31%
(13%)
47%
(1) Vesting expense for the fair value of share-based awards determined at grant date in accordance with Australian Accounting Standards.
(2) Excluded is $32,000 paid to Meccano Consulting Pty Ltd, a company controlled by Mr. Freeman for third party bookkeeping services.
(3) Mr. Lawrence resigned on 1 April 2022.
(4) Excluded is $118,033 paid to Burnett, Duckworth & Palmer LLP, a legal firm which Mr. Tetley is a partner. These fees are in relation to legal services. The salaries, fees & benefits reported in the chart above
represents the value of 180,000 common shares issued to Mr. Tetley as compensation for serving as a director.
(5) Mr. DeMong was appointed 1 April 2022.
(6) Mr. Lam was appointed 13 October 2022.
(7) Mr. Brosseau resigned on 16 May 2022.
KMP
Glenn Whiddon (2)
Mark Freeman (3)
Brett Lawrence
Alan Stein (4)
P.L. (Lonny) Tetley(5)
Jordan Kevol
Braydin Brosseau
Total
Salaries
Bonuses
and fees
100,000
218,400
75,000
176,476
-
36,000
-
9,000
-
24,000
-
161,291
143,369
-
768,536 175,000
Benefits
-
-
-
-
-
4,243
4,172
8,415
Perf.
rights (1)
171,338
200,906
42,000
78,095
-
-
-
Stock
options (1)
-
-
-
8,575
10,039
83,657
75,308
492,339 177,579
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%
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) Vesting expense for the fair value of share-based awards determined at grant date in accordance with Australian Accounting Standards.
(2)
(3)
(4) Mr. Stein resigned on 23 June 2021.
(5) Amount reported in chart above represents accrued value of common shares to be issued to Mr. Tetley as compensation for serving as a director in 2021.
The following table summarises the equity compensation units granted to directors and key management personnel during
the year ended 31 December 2022:
KMP
Glenn Whiddon
Mark Freeman
P.L. (Lonny) Tetley
Jordan Kevol
Karl DeMong
Jerry Lam
Class D (1)
750,000
-
900,000
-
250,000
-
1,100,000
-
250,000
-
600,000
-
Performance rights
Class E (2)
750,000
-
900,000
-
250,000
-
1,100,000
-
250,000
-
600,000
-
Class F (3) (4)
-
300,000
-
360,000
-
100,000
-
440,000
-
100,000
-
300,000(4)
Exercise
price
-
-
-
-
-
-
-
-
-
-
-
Year of
expiry
2023
2026
2023
2026
2023
2026
2023
2026
2023
2026
2023
2026
(1) The Class D performance rights become vested and exercisable if VWAP of shares trades over A$0.25/share over 20 consecutive days on or before 13 December 2023, subject to a continuous
service condition. As at 31 December 2022, all of the units were unvested.
(2) The Class E performance rights become vested upon the Company achieving average production greater than 4,300 boe/d for a total of 30 days(non-consecutive) over a 6 month period up until
30 April 2023, subject to a continuous service condition. As at 31 December 2022, all of the units were unvested.
(3) 40%/40%/20% of the Class F performance rights become vested following continued service of the holder as a consultant or employee of the Company for 12/24/36 months from issuance date.
(4) 50%/50% of the Class F performance rights become vested following continued service of the holder as a consultant or employee of the Company for 12/24 months from issuance date.
The Class D, E and F performance rights that were issued to Management and the Board in 2022 were granted primarily in
order to retain KMP and incentivise future short-term and long-term share price performance. The performance-based
compensation arrangements will vest subject to the satisfaction of certain service terms and performance criterion as
disclosed in this remuneration report.
26
The following table summarises the valuation assumptions utilised to measure the value of equity compensation issued to
KMP during the year ended 31 December 2022:
Valuation input
assumptions (1)
KMP
Equity unit type
Units granted to KMP
Grant date
Expiry date
Valuation model
Share price at grant date ($)
Exercise price ($/share)
Barrier price ($/share)
Volatility (%)
Risk-free rate (%)
Expected life (years)
Fair value ($/share)
Glenn Whiddon
Jordan Kevol
Karl DeMong
P.L. (Lonny) Tetley
Performance
Rights
Class D/E
1,500,000
31 May
2022
13 Dec 23
Monte
Carlo/Black
Scholes
0.20
Nil
90.00
2.484
1.5
0.1729 /
0.20
Class F
Class D/E
300,000 2,200,000
31 May
31 May
2022
2022
13 Jun 26 13 Dec 23
Monte
Carlo/Black
Scholes
0.20
Nil
Black
Scholes
0.20
Nil
90.00
3.029
4.0
0.20
90.00
2.484
1.5
0.1729 /
0.20
Class F
440,000
31 May
2022
13 Jun 26
Black
Scholes
0.20
Nil
90.00
3.029
4.0
0.20
Class D/E
500,000
31 May
2022
13 Dec 23
Monte
Carlo/Black
Scholes
0.20
Nil
90.00
2.484
1.5
0.1729 /
0.20
Class F
100,000
31 May
2022
13 Jun 26
Black
Scholes
0.20
Nil
90.00
3.029
4.0
0.20
Class D/E
500,000
31 May
2022
13 Dec 23
Monte
Carlo/Black
Scholes
0.20
Nil
90.00
2.484
1.5
0.1729 /
0.20
Class F
100,000
31 May
2022
13 Jun 26
Black
Scholes
0.20
Nil
90.00
3.029
4.0
0.20
KMP
Mark Freeman
Jerry Lam
Equity unit type
Units granted to KMP
Grant date
Expiry date
Valuation model
Share price at grant date ($)
Exercise price ($/share)
Barrier price ($/share)
Volatility (%)
Risk-free rate (%)
Expected life (years)
Fair value ($/share)
Class D/E
1,800,000
31 May
2022
13 Dec 23
Monte
Carlo/Black
Scholes
0.20
Nil
90.00
2.484
1.5
0.1729 /
0.20
Class F
Class D/E
360,000 1,200,000
11 Oct
31 May
2022
2022
13 Jun 26 13 Dec 23
Monte
Carlo/Black
Scholes
0.12
Nil
Black
Scholes
0.20
Nil
90.00
3.029
4.0
0.20
90.00
3.203
1.2
0.0647 /
0.12
Class F
300,000
11 Oct
2022
13 Jun 26
Black
Scholes
0.12
Nil
90.00
3.566
3.7
0.12
The following tables summarise the changes in performance rights held by KMP during the year ended 31 December 2022:
KMP Performance
rights
Glenn Whiddon
Jordan Kevol
Karl DeMong (1)
P.L. (Lonny) Tetley
Mark Freeman
Jerry Lam (2)
Brett Lawrence (3)
Braydin Brosseau (4)
Total
Balance
Jan. 1, 2022
2,500,000
-
-
-
2,000,000
-
300,000
-
4,800,000
Units
granted
1,800,000
2,640,000
600,000
600,000
2,160,000
1,500,000
-
-
9,300,000
Units
Exercised
-
-
-
-
-
-
-
-
-
Units
expired
-
-
-
-
-
-
-
-
-
KMP
resignation
-
-
-
-
-
-
(300,000)
-
(300,000)
Balance
Dec. 31, 2022
4,300,000
2,640,000
600,000
600,000
4,160,000
1,500,000
-
-
13,800,000
Units
Vested
-
-
-
-
-
-
-
-
-
(1) Mr. DeMong was appointed 1 April 2022.
(2) Mr. Lam was appointed 13 October 2022.
(3) Mr. Lawrence resigned on 1 April 2022.
(4) Mr. Brosseau resigned on 16 May 2022.
KMP
Options (1)
Glenn Whiddon
Mark Freeman
Brett Lawrence
P.L. (Lonny) Tetley
Jordan Kevol
Braydin Brosseau (1)
Total
Units
vested
-
-
-
100,000
833,333
750,000
1,683,333
(1) Mr. Brosseau resigned from the Board on 16 May 2022. Accordingly, Mr. Brosseau’s shareholdings have been excluded from the KMP table disclosure as at 31 December 2022. There were 750,000
Balance
Dec. 31, 2022
-
-
-
300,000
2,500,000
-
2,800,000
KMP
resignation(2)
-
-
-
-
-
(2,250,000)
(2,250,000)
Balance
Jan. 1, 2022
-
-
-
300,000
2,500,000
2,250,000
5,050,000
Units
Exercised
-
-
-
-
-
-
-
Units
granted
-
-
-
-
-
-
-
Units
expired
-
-
-
-
-
-
-
options issued in 2021 that vested prior to Mr. Brosseau’s resignation, with continuous employment the only performance condition.
27
The following tables summarise the changes in shareholdings of KMP during the year ended 31 December 2022:
KMP Direct interest
Glenn Whiddon
Mark Freeman
Karl DeMong
Brett Lawrence
P.L. (Lonny) Tetley
Jordan Kevol
Jerry Lam
Braydin Brosseau (2)
Total
Balance
Jan. 1, 2022
885,841
-
-
-
-
3,569,409
-
621,170
5,076,420
Shares
acquired (1)
500,000
-
160,000
-
-
250,000
-
-
910,000
Shares
Disposed
-
-
-
-
-
-
-
-
-
Shares Issued
in lieu of fees
-
-
-
-
180,000
-
-
-
180,000
KMP
resignation
-
-
-
-
-
-
-
(621,170)
(621,170)
Balance
Dec. 31, 2022
1,385,841
-
160,000
-
180,000
3,819,409
-
-
5,545,250
(1) Calima shares acquired on-market.
(2) Mr. Brosseau resigned from the Board on 16 May 2022. Accordingly, Mr. Brosseau’s shareholdings have been excluded from the KMP table disclosure as at 31 December 2022.
Balance
Dec. 31, 2022
16,940,132
638,492
-
-
-
319,359
-
-
17,897,983
(1) 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
KMP Indirect interest
Glenn Whiddon (1)
Mark Freeman
Brett Lawrence (2)
Karl DeMong
P.L. (Lonny) Tetley
Jordan Kevol
Jerry Lam
Braydin Brosseau
Total
Shares Issued
in lieu of fees
-
-
-
-
-
-
-
-
-
Balance
Jan. 1, 2022
12,940,132
130,598
436,992
-
-
319,359
-
-
13,827,081
KMP
resignation
-
-
(436,992)
-
-
-
-
-
(436,992)
Shares
acquired
4,000,000
507,894
-
-
-
-
-
-
4,507,894
Shares
Disposed
-
-
-
-
-
-
-
-
-
for good corporate governance purposes. Mr Whiddon has no relevant interest in the remaining indirect holdings.
(2) Mr. Lawrence resigned on 1 April 2022. Accordingly, Mr. Lawrence’s indirect shareholdings have been excluded from the KMP table disclosure as at 31 December 2022.
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 26. For the year ended 31 December 2022, there
were non-audit related services provided by the Company’s auditor, PricewaterhouseCoopers (PwC).
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 62. 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
30 March 2023
28
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
For the year ended 31 December 2022 and 2021
_____________________________________________________
CALIMA ENERGY LIMITED
Consolidated Statement of Profit or Loss and Other Comprehensive Income (Loss)
(thousands of Australian dollars)
For the year ended
Revenue
Oil and natural gas sales
Royalties expense
Risk management contracts
Realised loss
Unrealised gain
Expenses
Operating
Transportation
Depletion and depreciation
Exploration expense
Impairment loss
General and administrative
Transaction costs
Financing and interest
Share-based compensation
Foreign exchange gain
Net income (loss) before the following
Gain on acquisition (net)
Loss on equity investment
Net income (loss) before income taxes
Deferred income tax expense (recovery)
Net income (loss)
Other comprehensive income (loss)
Items that may be reclassified subsequently to profit and loss
Gain (loss) on foreign currency translations
Total comprehensive income (loss)
Net income (loss) per share
Basic
Diluted
See accompanying notes to the consolidated financial statements.
Notes
31 December
2022
31 December
2021
$
18
11
11
19
20
8
8
8
21
5
22
23
5
9
25
$
15 $
15 $
$
122,465
(23,567)
98,898
(16,326)
3,219
85,791
21,235
5,072
18,945
180
-
5,366
-
1,170
2,459
-
54,427
31,364
-
(415)
30,949
8,142
22,807
(1,040)
21,767
0.04
0.04
$
$
$
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)
5,794
(26,186)
(0.08)
(0.08)
29
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
Risk management contracts
Oil and natural gas assets
Long-term deposits
Investments
Deferred income tax asset
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Credit facility
Term loan
Risk management contracts
Lease liabilities
Current restoration provisions
Long-term portion of lease liabilities
Term loan
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 29)
Notes
31 December
2022
31 December
2021
6 $
7
11
8
9
10
12
11
8
13
8
12
13
14
23
25
$
$
3,848
9,677
674
218
14,417
154,860
646
129
4,012
174,064
20,939
-
418
-
252
242
21,851
-
3,369
23,069
48,289
3,363
7,186
766
-
11,315
128,709
614
537
12,154
153,329
16,639
21,739
-
2,941
-
477
41,796
265
-
25,428
67,489
366,055
19,413
4,648
(264,341)
125,775
174,064
$
350,461
16,839
5,688
(287,148)
85,840
153,329
30
CALIMA ENERGY LIMITED
Consolidated Statement of Cash Flows
(thousands of Australian dollars)
For the year ended
Operating activities
Net income (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 expense (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 operating activities
Financing activities
Issuance of common shares
Purchase of common shares
Increase in (repayment of) credit facility
Term loan proceeds
Repayment of term loan
Return of capital
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
Loss on equity investment
Exploration expense
Changes in non-cash working capital
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
6 $
See accompanying notes to the consolidated financial statements.
Notes
31 December
2022
31 December
2021
$
22,807
$
(31,980)
5
8
8
8
11
9
23
114
14
14
10
12
12
5
8
-
-
-
18,945
(3,219)
8,142
2,367
597
(11)
49,628
651
50,279
18,823
(818)
(22,142)
3,980
(192)
(2,508)
-
(266)
(3,123)
-
(47,816)
-
415
-
1,080
(46,321)
(350)
485
3,363
3,848
$
(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
31
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
Purchase of common shares
Return of capital
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 income (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
2022
31 December
2021
$
14
14
$
350,461
18,920
(818)
(2,508)
366,055
23
25
16,839
2,574
19,413
5,688
(1,040)
4,648
(287,148)
22,807
(264,341)
85,840
125,917
$
$
$
$
$
$
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
32
CALIMA ENERGY LIMITED
Notes to the Consolidated Financial Statements
As at and for the year ended 31 December 2022 and 2021
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
Term loan
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
Financing and interest
22
Share-based compensation
23
Related party transactions
24
Other comprehensive income
25
Auditor Remuneration
26
Supplemental cash flow information
27
Parent company financial information
28
Subsequent events
29
1. NATURE OF BUSINESS
Page
33
33
34
38
40
41
41
42
43
44
45
46
47
47
48
48
49
49
49
50
50
50
50
52
53
53
53
54
54
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” and on the OTCQB under the symbol “CLMEF”.
These audited consolidated financial statements for the year ended 31 December 2022 (the “annual financial statements”)
were approved and authorised by Calima’s Board of Directors on 30 March 2023.
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. For the
2021 comparison period, 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.
33
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
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 31 December 2021, 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.
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
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). Key assumptions used to determine the recoverable amount of the CGUs include
production rates, future commodity prices, discount rates and future royalty, operating and capital costs.
34
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. rea 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, a term loan 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
Term loan
Other indebtedness
Investments
Fair value
Hierarchy
Level 1
Level 2
Level 2
Level 2
Level 2
Level 2
Level 3
Level 3
Level 3
Classification &
Measurement
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
FV through profit and loss
Amortised cost
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
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.
35
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 relate 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.
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
primarily to account for any changes in estimates or discount rates. Actual expenditures incurred to settle the obligations
reduce the liability.
36
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 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.
37
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
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 and Term Loan
As at 31 December 2022, the Calima Group’s net debt was A$11 million (Note 17). The Company also had a net working
capital deficiency of $7.7 million (current liabilities of $21.9 million in excess of current assets of $14.2 million). There was
no amount drawn under the C$24.2 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. The borrowing base review was completed as at 22 March 2023 and resulted in a decrease to the credit facility
from $24.2M to $20.0M as well as the removal of the affirmative covenant which had a mandatory hedging requirement if
the Company were to utilize the bank line at greater than 50% over any quarter end. The Company has reviewed its ability
to continue as a going concern based on its cash flow forecast up to 31 March 2024 and concluded there are reasonable
grounds to believe that the Company will continue as a going concern based on the projected cash flows and current access
to funding. Management used significant judgements and assumptions in developing the cash flow forecast. These
assumptions included expected revenue, forecast of operating and capital expenditures, ability to reduce capital and other
operating expenditures as well as the ability to maintain existing funding. The next semi-annual review of the credit facility
is scheduled to take place no later than 31 October 2023.
38
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 Calima Group is
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 fixed monthly payments of approximately C$65,000 based on the cost of the pipeline project of C$3.7
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. The Company anticipates funding the term loan
repayments with cash from operations.
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.
Significant estimates
Depletion of 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 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.
39
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 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 (123 million shares at $0.14/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.
In order to finance the Acquisition, Calima completed an equity fundraising by issuing 270.2 million common shares at
$0.14/share for gross proceeds of $38 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 $28 million. The proceeds from Calima were then used to repay borrowings
under its revolving and non-revolving credit facilities (Note 10).
The fair market value of the property, plant and equipment (“PP&E”) was primarily based on the after-tax discounted future
cash flows from Blackspur’s proved plus probable reserves utilising a fair-value-less-cost-of-disposal methodology (Level 3
valuation). Cash flows were based on Blackspur’s 2020 reserve report which was prepared by an independent third-party
engineering firm. The report was updated internally to reflect the passage of time and conditions present as at 30 April
2021, including revised price forecasts. The following table summarizes the price forecast included in the valuation:
($ thousands)
WTI (US$/bbl
Hardisty Bow River (C$/bbl)
AECO (C$/GJ)
FX (C$ to US$)
2025
Thereafter
2021
2023
2022
2024
2027
2028
2030
2029
+2% per year
61.42 62.64 63.89
56.74 57.87 59.03 60.21
59.67 57.41 55.62
+2% per year
60.29 56.95 54.41 55.51 56.62 57.75 58.91 60.08 61.28 62.50
3.05
+2% per year
1.28 1.27 thereafter
2.73
1.27
2.76
1.28
2.70
1.26
2.88
1.28
2.93
1.28
2.99
1.28
2.82
1.28
2.71
1.28
2.66
1.28
2026
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.
40
For the year ended 31 December 2021, the Calima Group recognised oil and natural gas sales of $47.2 million and net
income of $6.6 million from Blackspur operations, which were incurred since 30 April 2021. The following table summarises
what Calima’s operating results would have been, had the Acquisition occurred on 1 January 2021:
Selected operating results (A$ thousands)(1)
Oil and natural gas sales
Royalties
Revenue
Net loss
$
Consolidated results
as reported
47,713
(9,136)
38,577
(31,980)
$
$
Blackspur prior to
acquisition
14,999
(2,703)
12,296
(1,865)
$
Pro Forma
results
62,712
(11,839)
50,873
(33,845)
$
$
(1) 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.
6. CASH AND CASH EQUIVALENTS
As at 31 December 2022, the Calima Group held cash and cash equivalents of $3.8 million (31 December 2021 - $3.4 million).
The Company is exposed to credit risk associated with its cash and cash equivalent balances held by third party institutions.
The credit risk associated with the Calima Group’s cash and cash equivalents was considered low as the Company’s balances
were all held with three large chartered banks located in Australia and Canada.
7. ACCOUNTS RECEIVABLE
As at (A$ thousands)
Oil and natural gas sales
Joint venture billings
GST and other
Accounts receivable
31 December
2022
31 December
2021
$
$
7,480
1,513
684
9,677
$
$
6,475
517
194
7,186
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.
As at 31 December 2022, credit risk from outstanding accounts receivable was considered low given the history of
collections and because the majority of the 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 2022 or 2021.
41
8. OIL AND NATURAL GAS ASSETS
Continuity schedule (A$ thousands)
Investments in capital assets
Balance, 31 December 2020
Acquisition of Blackspur (Note 5)
Capital investments
Change in restoration provision (1)
Release of collateralised assets (Note 10)
Impact of foreign currency translations
Balance, 31 December 2021
Capital investments
Change in restoration provision (1)
Impact of foreign currency translations
Balance, 31 December 2022
Accumulated depletion and depreciation
Balance, 31 December 2020
Release of collateralised assets (Note 10)
Depletion and depreciation
Land expiries
Impairment losses
Impact of foreign currency translations
Balance, 31 December 2021
Depletion and depreciation
Impact of foreign currency translations
Balance, 31 December 2022
Net book value
Balance, 31 December 2021
Balance, 31 December 2022
PP&E
assets
493
86,313
26,366
2,082
339
4,462
120,055
47,751
(1,424)
(441)
165,941
E&E
assets
63,850
1,208
464
(412)
-
4,296
69,406
65
(1,227)
(255)
67,989
(12)
(160)
(7,862)
-
(332)
(96)
(8,462) $
(18,851)
432
(26,881)
$
(3,582)
-
-
(10,869)
(36,789)
(1,270)
(52,510) $
-
194
(52,316)
ROU
assets
950
-
-
-
-
58
1,008
-
-
(3)
1,005
(300)
-
43
-
(507)
(24)
(788) $
(94)
4
(878)
Total
65,293
87,521
26,830
1,670
339
8,816
190,469
47,816
(2,651)
(699)
234,935
(3,894)
(160)
(7,819)
(10,869)
(37,628)
(1,390)
(61,760)
(18,945)
630
(80,075)
111,593
$
$ 139,060
(1) During the year ended 31 December 2022, the Calima Group recognised non-cash capitalised costs of $3.1 million (31 December 2021 - $1.7 million) primarily related to
128,709
154,860
16,896
15,673
220
127
$
$
$
$
$
$
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.
2021 Impairment Charges and Reversals
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 $15.9 million.
The following table summarises the key forecast assumptions included in the Company’s impairment test:
(A$ thousands)
WTI (US$/bbl)
Edm light (C$/bbl)
AECO (C$/GJ)
FX (US$ to C$)
2025
2023
2024
2026
2022
2032
2027
72.50 67.32 65.03 66.33 67.65 69.01 70.39 71.79 73.23 74.69 76.19
86.25 77.90 74.91 76.40 77.93 79.49 81.08 82.70 84.36 86.04 87.76
3.47
3.15
2.97
1.25
1.25
1.25
3.27
1.25
3.41
1.25
3.34
1.25
3.21
1.25
3.02
1.25
2.97
1.25
3.08
1.25
3.02
1.25
2030
2028
2031
2029
Thereafter
+2% per year
+2% per year
+2% per year
1.25 thereafter
42
Discounted after-tax cash flows from Contingent Resources were calculated with a 2% 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.
2022 Impairment Charges and Reversals
During the year ended 31 December 2022, the Calima Group did not recognise any land expiry losses (31 December 2021 -
$10.9 million) in respect of the Company’s Tommy Lakes Montney acreages for which there were no drilling plans in the
near term that were necessary to extend the license tenure.
As at 31 December 2022, an impairment test was conducted on the Company’s PP&E assets given the book value of the
Company’s net assets was greater than its market capitalization. This was performed on both of the PP&E CGUs based on
the fair value less costs of disposal method which uses after-tax, discounted future cash flows model using the CGU’s proved
plus probable reserves to estimate the CGU’s recoverable amounts (Level 3 valuations). Management applied a 16%
discount rate on both of the CGUs. Given the recoverable amount was greater than the carrying amount, no impairment
loss was recognized.
The following table summarizes the key forecast assumptions included in the Company’s impairment test:
($ thousands)
WTI (US$/bbl)
Hardisty Bow River (C$/bbl)
AECO (C$/GJ)
FX (C$ to US$)
2027
2026
2029
77.01 78.55 80.12 81.72
2030
2031
2023
2025
2024
80.00 77.00 75.50
83.36 85.03
78.67 79.67 79.67 82.18 83.73 85.41 87.12 88.86 90.64
4.82
4.45
4.33
1.33
1.33
1.33
4.63
1.33
4.54
1.33
4.73
1.33
4.30
1.33
4.37
1.33
4.50
1.33
2028
Thereafter
+2% per year
+2% per year
+2% per year
1.30 thereafter
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 1 January 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 31 December 2022, the undiscounted cash flows
required to settle Calima’s lease liability was $0.24 million (31 December 2021 - $0.48 million).
As at 31 December 2022, $16.6 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 (31 December 2021 - $17.9 million).
9. DEFERRED INCOME TAXES
(A$ 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
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
$
31 December
2022
$
Change in
tax position
3,159
$
(8,136)
988
281
(742)
398
69
(3,983)
(4,159)
(8,142) $
$
29,343
(11,448)
6,993
583
(65)
1,145
809
27,360
(23,348)
4,012
As at 31 December 2022, the Calima Group recognised a deferred income tax asset of $4.0 million (31 December 2021 -
$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 $23.3 million (31 December 2021 - $19.2 million)
consisting primarily of carry-forward tax losses held by Calima Energy Limited and Calima Energy Inc.
43
The following table reconciles the change in the deferred income tax asset during the years ended 31 December 2022 and
31 December 2021:
Continuity schedule (A$ 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
2022
12,154
-
(8,871)
729
4,012
$
$
31 December
2021
-
11,438
169
547
12,154
$
$
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 2021 – 30%):
For the year ended (A$ thousands)
Net income (loss) before income taxes
Statutory income tax rate
Expected income tax expense (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
Foreign rate differential
Share-based compensation
Impact of foreign exchange translations and other
Deferred income tax expense (recovery)
Tax loss carryforwards by jurisdiction (A$ thousands)
Canada
Australia
Total tax losses
31 December
2022
31 December
2021
$
30,949
$
30%
9,285
-
-
513
(3,194)
809
729
8,142
31 December
2022
21,876
7,467
29,343
$
$
$
$
$
$
(32,149)
30%
(9,645)
(6,153)
5,059
8,683
1,953
276
(342)
(169)
31 December
2021
19,241
6,943
26,184
As at 31 December 2022, the Company had estimated non-capital losses (“NCL”) that may be applied to reduce future
Canadian taxable income, expiring starting in 2032. Non-capital losses in Australia can be carried forward indefinitely.
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
2022
31 December
2021
$
$
- $
155
26,053
26,208 $
21,739
150
7,459
29,348
On demand
3.4%
On demand
8.2%
1:1
1.82:1.00
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 2022, the Calima Group held a C$24.2 million demand revolving credit facility with a Canadian chartered
bank (the “Credit Facility”). The borrowing base review was completed as at 22 March 2023 and resulted in a decrease to
the credit facility from $24.2M to $20.0M as well as the removal of the affirmative covenant which had a mandatory hedging
requirement if the Company were to utilize the bank line at greater than 50% over any quarter end. The next semi-annual
review of the credit facility is scheduled to take place no later than 31 October 2023.
44
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 million demand debenture. There would be no impact to the annualised interest expense if there were a 1% change
in the interest rate under the Credit Facility based the balance outstanding as at 31 December 2022 (31 December 2021 -
$0.2 million).
Under the terms of the facility, a financial covenant must be maintained. The Company must not permit the working capital
ratio, as defined by the bank, to fall below 1:1. The bank defines the working capital ratio as the ratio of (i) current assets
plus any undrawn availability under the facility to (ii) current liabilities less any amount drawn under the facilities. For the
purposes of the covenant calculation, risk management contract assets and liabilities are excluded. At 31 December 2022
and 31 December 2021, the Company was in compliance with its banking covenants.
The following table summarises the change in the Credit Facility during the years ended 31 December 2022 and 31
December 2021:
For the year ended (A$ thousands)
Credit Facility, beginning of year
Credit Facility acquired with the Blackspur Acquisition (Note 5)
Credit Facility repayment
Credit Facility draws (net) subsequent to the Acquisition
Impact of foreign currency translations
Credit Facility, end of year
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 asset (liability), end of year
31 December
2022
(21,739) $
$
-
22,142
-
(403)
$
- $
31 December
2021
-
(17,532)
-
(3,342)
(865)
(21,739)
31 December
2022
(2,941) $
$
-
16,326
(12,822)
(345)
$
218 $
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 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 net unrealized decrease in fair value is determined using
Level 2 prices sourced from observable data or market corroboration. Specific valuation techniques used to value financial
instruments include the use of quoted market prices or dealer quotes for similar instruments. Key inputs used to determine
the fair value of the risk management contracts are commodity prices and the volumes in the derivative contracts.
The Company’s risk management contracts consisted of the following positions as at 31 December 2022:
Contract
Reference
Term
Three-way Collar US NYMEX - WTI Jan. 2023 – Mar. 2023
Three-way Collar US NYMEX - WTI Apr. 2023 – Jun. 2023
Three-way Collar US NYMEX - WTI Jul. 2023 – Sept. 2023
Volumes
(bbl/day)
Sold Put
$US/bbl
Bought Put
$US/bbl
Sold Call
$US/bbls
400
400
250
62.50
60.00
60.00
82.50
80.00
80.00
110.05
110.05
105.25
45
The Company also had the following WCS basis swap contracts in place as at 31 December 2022:
Contract
Reference
Term
Swap
Swap
Swap
US NGX OIL-WCS-BLENDED
Jan. 2023 – Mar. 2023
US NGX OIL-WCS-BLENDED
Apr. 2023 – Jun. 2023
US NGX OIL-WCS-BLENDED
Jul. 2023 – Sept. 2023
Volumes
(bbl/day)
100
200
100
Price per Unit
(US$/Unit)
(27.00)
(23.40)
(21.40)
As at 31 December 2022, the fair value associated with Calima’s risk management contracts was an asset of $0.2 million
($2.9 million liability at 31 December 2021).
Subsequent to 31 December 2022, the Company entered into the following risk management contracts:
Contract
SWAP
SWAP
Reference
US NGX Oil-WCS-Blended
US NGX Oil-WCS-Blended
Remaining term
Apr 2023 - Jun 2023
Jul 2023 - Sep 2023
Volume
(bbl/day)
Average Price per bbl
US$
400
400
($18.30)
($16.04)
Contract
THREE-WAY
CONTRACT
THREE-WAY
CONTRACT
THREE-WAY
CONTRACT
Reference
Remaining term
Volume
(bbl/day)
Sold Put
$US/bbl
Bought Put
$US/bbl
Sold Call
$/bbl
US NYMEX-WTI
Apr 2023 – Jun 2023
US NYMEX-WTI
Jul 2023 – Sep 2023
US NYMEX-WTI
Oct 2023 – Dec 2023
200
250
250
$55.00
$75.00
$102.00
$55.00
$75.00
$99.85
$55.00
$75.00
$97.10
The Calima Group’s risk management contracts are subject to master netting agreements that create the legal right to settle
the instruments on a net basis. The following table summarises the impact of the netting agreements on the Company’s
consolidated statement of financial position presentation as 31 December 2022 and 2021:
(A$ thousands)
Current asset/(liability)
Net position
$
$
31 December 2022
31 December 2021
Asset
Liability
Net
Asset
Liability
653 $
653 $
(435) $
(435) $
218 $
218 $
317 $
317 $
(3,258) $
(3,258) $
Net
(2,941)
(2,941)
The following table illustrates the estimated potential impact to the Calima Group’s profit or (loss) before tax from
outstanding risk management swap contracts in place as at 31 December 2022 and 31 December 2021 following a change
in future commodity prices:
Gain (loss) As at (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. TERM LOAN
31 December
2022
(900) $
3,951
1,619
1,431
n/a
n/a
$
31 December
2021
(2,915)
2,650
590
(530)
(215)
195
$
$
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 Calima Group is
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 fixed monthly payments of approximately C$65,000 to a sum of C$457,206 for the year ended 31
December 2022 based on the cost of the pipeline project of C$3.7 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. At 31 December 2022, the remaining balance on this loan was C$3.5 million. Security for the term loan
is provided by a lien and security interest over the pipeline.
46
13. RESTORATION PROVISIONS
As at (A$ 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:
Current restoration provisions (1)
Restoration provisions
(1) 2021 current restoration provisions presented as accounts payable and accrued liabilities previously
31 December
2022
25,905
-
-
904
593
(3,742)
(237)
-
(112)
23,311
$
$
$
$
242
23,069
31 December
2021
4,676
9,389
9,070
1,400
325
218
(94)
(288)
1,209
25,905
477
25,428
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 2022, the total estimated
undiscounted, uninflated cash flows required to settle the Calima Group’s asset retirement obligations was approximately
$29.5 million (31 December 2021 – $24.9 million). These liabilities are anticipated to be incurred over the next 25 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 2022, the Company valued the restoration provision by utilising a risk-free rate of 3.3% (31 December
2021 – 1.8%) and an inflation rate of 2.0% (31 December 2021 – 2.0%). A 100-basis point (1%) increase in the discount rate
reduces the Company’s restoration provision by $3.1 million (1% decrease: $3.8 million).
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
Shares issued in lieu of cash (pre-consolidation)
Share consolidation (20:1)
Shares issued in lieu of cash (post-consolidation)
Preferred share conversion
Share buyback
Return of capital
Share issuance costs
Balance, end of year
$
31 December 2022
Shares
514,084
100,000
-
788
-
-
-
1,800
(4,921)
-
-
611,751
Amount
350,461
20,000
-
153
-
-
-
180
(818)
(2,508)
(1,413)
366,055
$
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
On 30 April 2021, Calima issued legacy Blackspur shareholders 123 million 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 10). 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 23)
Performance Rights (Note 23)
30 August 2021
(post consolidation)
30 August 2021
(pre-consolidation)
513,703
21,663
8,273
10,274,055
433,250
165,450
47
On 28 April 2021, the Company completed an equity financing for gross proceeds of $38.0 million, issuing 271.4 million
shares at $0.14 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 million. The Company also incurred $2.5 million
of transaction costs associated with the equity financing.
On 17 February 2022, the Company completed a $20 million fundraising through the issuance of 100 million common shares
at $0.20 per share. Funds raised were used to retire borrowings under the credit facility and to fund the Company’s 2022
capital program. The Company incurred $1.4 million of transaction costs associated with the equity financing.
During the 2022 fiscal year, the Company commenced a share buyback program and bought back 4,921,521 shares at an
average price of $0.1688 each.
On 13 October 2022, the Company completed a return of capital dividend payment to shareholders of $2.5 million.
15. PER SHARE AMOUNTS
31 December
2021
382,653
-
382,653
(31,980)
(0.08)
Information presented in this table, including comparative figures, have been adjusted to reflect the impact of the share consolidation on 30 August 2021 at a conversion rate of 20:1 (Note 14).
Equity compensation units were anti-dilutive in 2021..
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 income (loss)
Net income (loss) per share (basic and diluted)
(1)
(2)
31 December
2022
600,260
3,433
603,693
22,807 $
0.04 $
$
$
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 0.2 for the 12 months
ended 31 December 2022 (31 December 2021 – 2.0).
Management believes the Company has sufficient funding to meet near-term liquidity requirements. As at 31 December
2022, the Calima Group had A$26.2 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$20 million
(Note 14). Near-term development activities are anticipated to be funded by the Company's funds flow, cash on hand,
proceeds from the equity financing or draws under the Credit Facility (Note 10). In the near term, the Company plans to
utilise any funds flow in excess of investments in oil and natural gas assets to affect a combination of net debt reduction
and production growth.
The following tables reconciles the Company’s net debt and adjusted funds flow from operations as at 31 December, 2022
and 31 December 2021:
As at (A$ thousands)
Credit facility draws
Long-term portion of lease liability
Long-term portion of term loan
Current assets
Other current liabilities
Exclude: current portion of risk management assets
Net debt
31 December
2022
-
-
(3,369)
14,417
(21,851)
(10,803)
(218)
(11,021)
$
$
31 December
2021
(21,739)
(265)
-
11,315
(20,057)
(30,746)
2,941
(27,805)
$
$
48
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
2022
49,628
-
49,628
31 December
2021
13,554
617
14,171
$
$
$
$
The Company utilises net debt as an important measure to assess the Company's liquidity by incorporating long-term debt,
lease liabilities, the term loan 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)
Accounts payable and accrued
liabilities
Drilling well commitment
Term loan
Total contractual cash outflows
2023
2024
2025
2026
2027
Thereafter
Total
$
$
20,938 $
12,219
418
33,575 $
- $
4,888
469
5,357
-
-
530
530
$
-
-
597
597
$
-
-
673
673
$
- $
-
1,100
1,100 $
20,938
17,107
3,787
41,832
The accounts payable and accrued liabilities and the term loan are recognised on Calima’s consolidated statement of
financial position.
The Company entered into a 3-year Leasing Agreement, renewed annually, with the underlying mineral owner in the Brooks
area of Alberta to drill 21 commitment wells with a minimum royalty before May 31, 2025. In February 2023, the Company
notified the mineral owner of its intent to drill seven commitment wells in 2023.
In the fourth quarter of 2022, the Calima Group sanctioned a Q1 2023 capital budget of C$9.7 million for continued
development of the Brooks area. The program commenced in January 2023.
The Calima Group was involved in a legal claim arising in the normal course of business. Subsequent to 31 December 2022,
the Company reached a settlement related to the only ongoing legal claim and issued a cash payment of C$225,000.
18. OIL & NATURAL GAS REVENUES
For the year ended (A$ thousands)
Oil
Natural gas
Natural gas liquids
Net income from 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
31 December
2022
101,606
18,269
2,590
122,465
(23,567)
98,898
31 December
2022
6,600
3,442
3,989
3,874
3,330
21,235
$
$
$
$
$
$
$
$
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
49
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. FINANCING AND INTEREST
For the year ended (A$ thousands)
Interest on Credit Facility (Note 10)
Interest on Term loan (Note 12)
Accretion on decommissioning obligations
Total financing and interest
23. 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
2022
4,484
588
5,072
31 December
2022
3,352
2,161
603
6,116
(750)
5,366
$
$
$
$
31 December
2021
2,454
246
2,700
31 December
2021
2,449
1,878
372
4,699
(458)
4,241
31 December
2022
268 $
281
621
1,170 $
31 December
2021
454
-
350
804
31 December
2022
952
1,751
2,703
(244)
2,459
31 December
2021
259
759
1,018
(99)
919
$
$
$
$
$
$
$
$
$
$
The following table summarises the changes in equity compensation units during the years ended 31 December 2022 and
2021:
Equity unit continuity (thousands)(1)
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
Issuance of stock options to employees
Issuance of stock options to other service providers
Issuance of performance rights to employees
Conversion of performance rights to common shares
Forfeitures
Expiry
Balance, 31 December 2022
Stock
options
1,038
18,125
2,500
-
(3,875)
(38)
17,750
1,350
3,500
-
-
(2,650)
(2,150)
17,800
Performance
rights
973
-
-
7,300
-
-
8,273
-
-
25,361
(1,800)
-
(2,573)
29,261
Total
2,011
18,125
2,500
7,300
(3,875)
(38)
26,023
1,350
3,500
25,361
(1,800)
(2,650)
(4,723)
47,061
(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 30 August
2021 at a conversion rate of 20:1 (Note 14).
50
Stock options
Grant date (1)
2022 grants
2022 grants
2021 grants
Outstanding
Exercisable
Number of
options
(thousands)
2,000
2,850
12,950
17,800
Weighted
average
remaining
life (years)
2.5
3.7
3.3
3.3
Number of
options
(thousands)
2,000
-
-
2,000
Weighted
average
remaining
life (years)
2.5
-
-
2.5
Exercise price
(A$/share)
$ 0.16
0.20
0.20
$ 0.20
(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 2022, Calima’s board approved 4.85 million stock options for grant to certain Officers,
Directors, employees and service providers of Calima and Blackspur. The primary vesting condition of the stock options is
continuous employment or service and 1/3 of the options vest each year over three years and are exercisable at $0.16 per
unit and $0.20 per unit within five years from the date of grant. During the year, 3.8 million stock options were forfeited
due to staff departure.
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 million stock options granted in August 2017 that were issued and outstanding as at 31 December 2021. The
units were exercisable at $1.80 per share and $2.40 per share and expired in August 2022.
Performance rights
Grant date(1)
2022 grants
February 2021(2)
May 2021(3)
Outstanding
Exercisable
Number of
performance
rights
(thousands)
25,361
1,400
2,500
29,261
Weighted
average
remaining
life (years)
1.4
3.1
3.3
1.6
Number of
performance
options
(thousands)
-
1,400
-
1,400
Weighted
average
remaining
life (years)
-
3.1
-
3.1
Exercise price
(A$/share)
$ -
-
-
$ -
1) All information presented in this table have been adjusted to reflect the impact of the Company’s share consolidation which occurred on 30 August 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.
During the year ended 31 December 2022, Calima approved 25.4 million performance rights for grant to certain Officers
and Directors of Calima. The vesting conditions of the performance rights were as follows:
9.2 million Class D rights will vest following the Calima shares reaching a volume weighted average price of $0.25 per
share over 20 consecutive trading days on which the shares have actually traded. These rights expire on 13 December
2023.
9.2 million Class E rights will vest following the Company achieving average production greater than 4,300 boe/day
for a total of 30 non-consecutive days over a 3-month period up to 30 April 2023. This condition was met subsequent
to the year end, and all performance rights have vested.
7 million Class F rights will vest in tranches of 50% following continuous service of 12 months from issuance and the
remainder following continuous service of 24 months from issuance.
51
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 31 December 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 31 December 2021, all of the units were unvested.
With respect to the 1 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 $50 million (VWAP for Calima shares for any period of 30 consecutive trading days).
These securities expired in August 2022.
There were 1.8 million performance rights converted to common shares during the year ended 31 December 2022.
The following table summarises the weighted average assumptions utilised to value equity compensation grants during the
year ended 31 December 2022:
Weighted average valuation
assumptions
Valuation model
Number of units granted
(thousands)
Share price at grant date ($)
Exercise price ($/share)
Volatility (%)
Risk-free rate (%)
Expected life (years)
Fair value ($/share)
Stock options
Performance rights
Black Scholes
1,350
Black Scholes
3,500
Monte Carlo
9,204
Black Scholes Black Scholes
6,953
9,204
0.20
0.20
90
1.77
4.1
$ 0.14
0.13
0.18
90
3.28
2.2
$ 0.05
0.20
-
90
2.48
1.0
0.17
0.20
-
90
3.03
3.5
$ 0.20 $ 0.20
0.20
-
90
2.48
0.3
$
24. 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 31 December 2022 and 2021 were as follows:
For the year ended
Salaries, benefits and other short-term compensation
Stock-based compensation
Total remuneration paid to directors and officers
31 December
2022
1,323,281 $
896,553
2,219,834 $
31 December
2021
951,951
669,918
1,621,869
$
$
For the year ended 31 December 2022, the Company issued 180 thousand shares ($36 thousand) to the Company’s
Directors in respect of services rendered (included in the table above), A$88 thousand to Havoc Service Pty Ltd. and A$32
thousand to Meccano Consulting Pty Ltd., a related party to Mr. Freeman, for bookkeeping services related to the
Company’s operations (not included in the table above).
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 in 2021, the Company secured firm commitments on an arms-length basis from a number of parties 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$15,690 for surface lease rentals in respect of certain Blackspur assets located in the Thorsby area.
1. These parties are related party to Mr Whiddon as defined in the Corporations Act. However, Mr. Whiddon does not control this entity nor has a relevant interest in Shares
held by this entity.
52
25. OTHER COMPREHENSIVE INCOME
Continuity schedule (A$ thousands)
Foreign currency reserve, opening
Unrealised gain (loss) recognised through other comprehensive income
Foreign currency reserve, ending
31 December
2022
5,688 $
(898)
4,790 $
$
$
31 December
2021
(106)
5,794
5,688
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.
26. AUDITOR REMUNERATION
For the year ended
Audit and assurance related services (1)
Tax and other non-assurance related services
Total remuneration of external auditors
31 December
2022
288,704 $
23,460
312,164 $
$
$
31 December
2021
180,805
-
180,805
(1) Total remuneration for the year ended 31 December 2022 of $312,164 includes A$213,224 payable to PricewaterhouseCoopers Canada and A$75,480 payable to
PricewaterhouseCoopers Australia for audit services and A$23,460 payable to PricewaterhouseCoopers Australia for non-audit fees. 2021 audit and assurance related
services includes A$125,725 payable to PricewaterhouseCoopers Canada and A$55,080 payable to PricewaterhouseCoopers Australia.
27. SUPPLEMENTAL CASH FLOW INFORMATION
For the year ended (A$ thousands)
Non-cash investing and financing activities
Issuance of common shares
Purchase of common shares
Increase in (repayment of) credit facility
Term loan proceeds
Repayment of term loan
Return of capital
Repayment of other indebtedness
Lease payments
Acquisition of Blackspur Oil Corp.
Investments in oil and natural gas assets
Contributions to equity investments
Loss on equity investment
Exploration expense
Net debt
Cash and cash equivalents
Accounts receivable
Deposits and prepaid expenses
Accounts payable and accrued liabilities
Current restoration provisions
Net working capital
Credit facility
Term loan
Lease liabilities
Total indebtedness
Net debt
31 December
2022
31 December
2021
$
$
$
$
18,823
(818)
(22,142)
3,980
(192)
(2,508)
-
(266)
-
(47,816)
-
415
-
(50,524)
3,848
9,677
674
(20,939)
(242)
(6,982)
-
(3,787)
(252)
(4,039)
(11,021)
$
$
$
$
36,178
-
3,342
-
-
-
(874)
(216)
(33,162)
(20,013)
(108)
-
(58)
(14,911)
3,363
7,186
766
(16,639)
(477)
(5,801)
(21,739)
-
(265)
(22,004)
(27,805)
53
Liabilities arising from financing activities
(A$ thousands)
Credit Facility
Term Loan/ Other
Indebtedness
Net debt- 1 January 2021
Financing cash flows
Credit facility acquired on Acquisition
Foreign exchange adjustments
Total indebtedness – 31 December 2021 (1)
Financing cash flows
Foreign exchange adjustments
New leases
Payment on term loan
Total indebtedness – 31 December 2022 (1)
$
$
- $
(3,342)
(17,532)
(865)
(21,739)
22,142
(403)
-
-
- $
(857) $
874
-
(17)
-
(3,540)
(439)
-
192
(3,787) $
Leases
(461)
216
-
(20)
(265)
266
(18)
(235)
-
(252)
$
Total
Indebtedness
$
(1,318)
(2,252)
(17,532)
(902)
(22,004)
18,868
(860)
(235)
192
(4,039)
(1)
Interest expense and payments included in the operating cash flows were equivalent in the year and have not been included in the table above.
28. 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
29. SUBSEQUENT EVENTS
31 December
2022
31 December
2021
$
$
$
$
$
424
100,598
101,022
(375)
-
100,647
366,055
19,121
(118)
(284,411)
100,647
$
1,529
84,599
86,128
(254)
-
85,874
350,461
16,839
(118)
(281,308)
85,874
(3,769) $
(3,769) $
(25,899)
(25,899)
On 14 February 2023, the Calima Group disposed of its investment in H2Sweet Holdings Inc. A loss of $0.4 million had
been previously recognized in the 31 December 2022 financial statements related to this disposal.
On 24 February 2023, the Calima Group entered into a commitment to backstop cost of approximately C$0.3 million to be
incurred in connection with the Tommy Lakes pipeline.
On 13 March 2023, 500,000 Class A and 500,000 Class B performance rights were converted to common shares.
On 22 March 2023, the Company’s borrowing base review was completed and resulted in a decrease to the credit facility
to C$20.0M, as well as the removal of the affirmative covenant which had a mandatory hedging requirement if the Company
were to utilize the credit facility at greater than 50% over any quarter end. The next semi-annual review of the credit facility
is scheduled to occur no later than 31 October 2023.
54
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
16 to 54, are in accordance with the Corporations Act 2001, including:
i.
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 2022 and of its
performance for the financial year ended on that date.
the Australian Accounting
(including
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 2022.
This Directors’ Declaration is made in accordance with a resolution of the Directors.
On behalf of the Board of Directors:
Glenn Whiddon
Executive Chairman
30 March 2023
55
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 2022 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 2022
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 (loss) 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$1,737,000, 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
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.
At 31 December 2022, the Group had a net working
capital deficiency of A$7.7 million and net debt of
A$11.0 million.
As part of managing liquidity risk, the Group has a
demand revolving credit facility with a Canadian
chartered bank (the Credit Facility). At 31 December
2022 there was no amount drawn under the Credit
Facility with a C$24.2 million limit. 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 any indebtedness.
As described in Note 4, the Group expects that it will
have the ability to maintain existing funding.
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).
We considered the appropriateness of the going
concern assumption used in preparing the financial
report by performing the following procedures, amongst
others:
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, historical cash outflows
or market forecasts as relevant,
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
Carrying value of property, plant and equipment
Refer to Note 8
We performed the following procedures, amongst
others:
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 2022 the Group concluded there were
indicators of impairment for its property, plant and
equipment (PP&E), as the carrying value of the
Group’s net assets exceeded its market capitalisation.
Impairment testing was undertaken for the Brooks and
Thorsby cash generating units (PP&E CGUs) as
outlined in Note 8, calculated utilising after-tax
discounted future cash flows derived from the CGUs’
proved plus probable reserves to estimate the
recoverable amount of the PP&E CGUs. The results of
the test indicated the recoverable amount of the PP&E
CGUs exceeded their carrying value, and resultingly no
impairment loss was recognised.
evaluated the Group’s consideration of internal and
external sources of information in assessing
whether indicators of impairment existed.
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 Group’s use
of experts in determination of the recoverable
amount of the PP&E CGUs.
assessed whether the division of the Group’s
property, plant and equipment into cash generating
units (CGUs), which are the smallest identifiable
groups of assets that can generate largely
independent cash inflows, was consistent with our
knowledge of the Group’s operations.
compared significant assumptions used in the
impairment model to historical results, economic
and industry forecasts and externally prepared
reserve reports.
Key assumptions, judgements and estimates used in
the formulation of the Group’s impairment testing of the evaluated the appropriateness of the methods used
PP&E CGUs are disclosed in Note 8.
by the Group in making these estimates by
reference to Australian Accounting Standards.
The Group’s assessment of impairment was a key
audit matter due to the significance of PP&E to the
financial statements and the judgements and estimates
required in determining the recoverable amount of the
Group’s CGUs, as disclosed in Note 8.
assessed whether the discount rate appropriately
reflected the risks of the CGUs by comparing the
discount rate to those indicated by market
observable inputs.
assessed the Group’s consideration of the
sensitivity to a change in key assumptions that
would be required for assets to be impaired and
considered the likelihood of such a movement in
those key assumptions arising.
evaluated the reasonableness of the disclosures
made in Note 8, including those regarding the
significant assumptions used in developing the
underlying estimates, 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 2022, 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 23 to 28 of the directors’ report for the
year ended 31 December 2022.
In our opinion, the remuneration report of Calima Energy Limited for the year ended 31 December
2022 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
Ian Campbell
Partner
Perth
30 March 2023
Auditor’s Independence Declaration
As lead auditor for the audit of Calima Energy Limited for the year ended 31 December 2022, 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.
(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.
Ian Campbell
Partner
PricewaterhouseCoopers
Perth
30 March 2023
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 24 March 2023:
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
793
728
345
993
507
3,366
Number of
shares on issue
319,934
2,049,755
2,726,857
39,811,207
567,843,016
612,750,769
(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.
There were 1,433 holders of less than a marketable parcel of listed shares.
Substantial shareholders
Shareholders who hold greater than 5% issued capital
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES LIMITED - A/C 2
Total
Twenty largest shareholders
Shareholder
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES LIMITED - A/C 2
BNP PARIBAS NOMS PTY LTD
PETERS & CO LIMITED
MR FREDERICK BART
BUTTONWOOD NOMINEES PTY LTD
MR CRAIG IAN BURTON
MR CUNTONG CHENG
ARROCHAR PTY LTD
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MR JOHN PHILIP DANIELS
HSBC CUSTODY NOMINEES LIMITED-GSCO ECA
ARREDO PTY LTD
MRS LAURAINE ELIZABETH WORTHINGTON
4F INVESTMENTS PTY LTD
FLOTECK CONSULTANTS LIMITED
COMPUTERSHARE INVESTOR SERVICES INC
Top 20 holders of common shares
Total remaining holders balance
Total common shares outstanding
Number of
shares held
54,497,962
51,065,293
35,300,145
34,836,621
175,700,021
Number of
shares held
54,497,962
51,065,293
35,300,145
34,836,621
26,388,723
17,174,644
12,000,320
10,599,824
10,127,503
8,005,022
6,241,063
5,918,544
5,685,764
5,052,756
4,965,707
4,278,872
4,245,000
4,191,488
4,148,689
4,129,634
308,853,574
303,897,195
612,750,769
% of
shares held
8.89
8.33
5.76
5.69
28.67
% of
shares held
8.89
8.33
5.76
5.69
4.31
2.80
1.96
1.73
1.65
1.31
1.02
0.97
0.93
0.82
0.81
0.70
0.69
0.68
0.68
0.67
50.40
49.60
100
63
Unlisted securities
Equity compensation arrangement
Stock options – exercisable at $0.20 per share
Stock options – exercisable at $0.20 per share
Stock options – exercisable at $0.16 per share
Stock options – exercisable to $0.20 per share
Class A/B Performance rights – February 2021 grant
Class C Performance rights – May 2021 grant
Class D Performance rights – May 2022 grant
Class E Performance rights – May 2022 grant
Class F Performance rights – May 2022 grant
Unitholders with more than 20% of each equity security class
Equity compensation arrangement holder
Unlisted stock options exercisable at $0.20 on or before 31 Jan 2027
Shawn Lafleur
Cheryl Agnew
Unlisted stock options exercisable at $0.16 on or before 13 October 2025
Euroswiss Capital Partners Inc.
Unlisted stock options exercisable at $0.20 on or before 30 November 2024
RCA Financial Partners Inc.
Unlisted Class A/B performance rights issued in 2021 (fully vested)
Glenn Whiddon
Mark Freeman
Unlisted Class C performance rights issued in 2021 (unvested)
Glenn Whiddon
Mark Freeman
Number of
unit holders
Number of
unlisted units
Year of
expiry
21
3
1
1
2
2
32
32
32
13,450,000
850,000
1,000,000
1,500,000
2,000,000
2,500,000
8,908,750
8,908,750
4,942,500
2026
2027
2025
2024
2026
2026
2023
2023
2026
Number of
shares held
% of
units held
400,000
300,000
1,000,000
1,500,000
1,000,000
1,000,000
1,500,000
1,000,000
47%
35%
100%
100%
50%
50%
60%
40%
64
ADVISORIES & GUIDANCE
Forward Looking Statements
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 2022 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 2022 Reserves Report
and the values contained therein are based on InSite’s 31 December 2022 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 2022 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 30 March 2023 (“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.
65
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, term loan 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
66
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
67
SCHEDULE OF INTEREST IN TENEMENTS AS AT 31 DECEMBER 2022
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 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
FH PET M121623 HERITAGE
Working
interest
25%
100%
100%
50%
50%
50%
50%
50%
50%
50%
50%
100%
50%
50%
50%
50%
50%
100%
50%
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%
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
FH PNG HELM, JEFFREY
FH PNG HELM, CRAIG
CR PNG 0417060139
CR PNG 0496020408
CR PNG 0417070138
CR PNG 0417070142
CR PNG 0417080004
FH PET M118153 HERITAGE
FH PET M117918 HERITAGE
FH PET M118154 HERITAGE
FH PET M118155 HERITAGE
FH PET M117917 HERITAGE
CR PNG 0417090098
CR PNG 0417100067
FH PET M120054 HERITAGE
CR PNG 0417100155
CR PNG 0417100156
CR PNG 0417120003
FH PNG GRITSFELDT, J & J
FH PNG KELSEY, CLIFFORD
FH PNG KELSEY, CLIFFORD
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 M121570 HERITAGE
FH PET M121571 HERITAGE
FH PET M121572 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 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
CR PNG 0420020014
FH PET M122657 HERITAGE
Working
interest
100%
100%
100%
100%
100%
100%
45%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
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%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
68
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 0415070079
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%
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50%
50%
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50%
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100%
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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 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
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 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 0413120218
CR PNG 0413120219
FH PET M118341 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
FH PNG DE NEVE, VIRGINIA
Working
interest
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%
100%
100%
100%
100%
100%
100%
50%
100%
100%
77%
77%
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%
69
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
Lease name & number
FH PNG DE NEVE, VIRGINIA
CR PET M PSK
CR PET M PSK
FH PNG GODKIN ET AL
FH PNG SPROWL ET AL
FH PNG WATKINS ET AL
FH PNG WURBAN, FRANCES
CR PNG 0522010026
CR PNG 0522010027
CR PNG 0522010028
CR PNG 0422020002
CR PNG 0422070097
CR PNG 0422010100
FH PET M236390 PSK
FH PET M236391 PSK
FH PET M125279 HERITAGE
FH PET M125280 HERITAGE
FH PET M125281 HERITAGE
CR PNG 0422110018
CR PNG 0422110019
CR PNG 0422110020
FH PET M125569 HERITAGE
FH NG M125571 HERITAGE
FH NG M125572 HERITAGE
FH PET M125609 HERITAGE
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
Working
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
100%
100%
100%
50%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Lease name & number
Country
CR PNG 0421090068
CANADA
CR PNG 0421090086
CANADA
CR PNG 0421100007
CANADA
CR PNG 0421100016
CANADA
CR PNG 0421100017
CANADA
FH NG M124346 HERITAGE
CANADA
FH NG M124756 HERITAGE
CANADA
FH NG M124757 HERITAGE
CANADA
CR PNG 0417030159
CANADA
FH PET M122323 HERITAGE
CANADA
FH NG M122324 HERITAGE
CANADA
FH PET M236880
CANADA
FH PET M236885
CANADA
FH PET M236888
CANADA
FH PET M236889
CANADA
FH PET M125610 HERITAGE
CANADA
FH PET M125611 HERITAGE
CANADA
FH PET M125612 HERITAGE
CANADA
CR PNG 65101
CANADA
CR PNG 67035
CANADA
CR PNG 67036
CANADA
CR PNG 67042
CANADA
CR PNG 67043
CANADA
CR PNG 67044
CANADA
CR PNG 67045
CANADA
CR PNG 67046
CANADA
CR PNG 67047
CANADA
CR PNG 67048
CANADA
CR PNG 67049
CANADA
CR PNG 67050
CANADA
DAORA
WESTERN SAHARA
WESTERN SAHARA
HAOUSA
WESTERN SAHARA MAHBES
WESTERN SAHARA MIJEK
Working
interest
100%
100%
100%
100%
100%
100%
100%
100%
50%
88%
88%
50%
50%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
50%
50%
70