88 Energy starts drilling Merlin-1 as oil price hits 29 month high
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88 Energy Limited (ASX:88E; AIM 88E) has just commenced drilling the Merlin-1 well which will initially be drilled to 1,500 feet, then surface casing will be installed and the Blow Out Preventer System tested.
This is expected to take approximately one week to execute after which the well will be deepened through the target horizons in the Nanushuk Formation to a maximum total depth of 6,000 feet.
The Merlin-1 well is targeting 645 million barrels of gross mean prospective resource as outlined below.
Logging while drilling and mudlogging will provide initial indications as to the prospectivity of the well during this part of the operation which is expected to take three to five days.
A sophisticated wireline logging suite will then be run, including sidewall cores and downhole sampling. Wireline logging is expected to take five to seven days.
If the results from the wireline logging are encouraging, then the well will be completed with casing and a flow test conducted.
US$13 million in cash to pursue Harrier-1 next season
88E said that recent delays commencing Merlin-1 could well result in the previously planned Harrier-1 not being drilled until next season.
There has also been a financial impact from delays mainly associated with the issuance of a permit to drill that should see the costs of the well attributed to 88E increasing from US$1.4 million to US$4 million.
Notwithstanding this financial impost, the company’s current cash position is US$13 million which more than funds its share of the drilling of Merlin-1 and the company’s other planned activities.
Consequently, management’s focus is firmly on achieving success with Merlin-1, and on this note managing director Dave Wall said, "Drilling has now commenced at Merlin-1, with results expected within the next 4 weeks.
"This is an exciting and pivotal time for the company and our shareholders.”
The timing of a potential oil strike couldn’t be better with the Crude Oil WTI Index hitting a high of US$67.98 per barrel just last week, a level it hasn’t traded at since 2018.
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