88 Energy’s 2D seismic interpretation exceeds expectations

Published: Jan 13, 2017

88 Energy (ASX: 88E) has provided a positive update in relation to the conventional prospectivity of Project Icewine located in Alaska. In commenting on recent exploration data, Managing Director Dave Wall said, “The results from the 2D seismic interpretation continued to exceed our expectations for the conventional potential across Project Icewine”.

Additional resource potential has been identified for conventional leads across the project, and based on internal estimates the gross mean prospective resource (unrisked) is estimated to be 710 million barrels.

88 Energy is the operator of Project Icewine through its wholly-owned subsidiary Accumulate Energy Alaska Inc with a working interest of 77.5%.

Based on management’s estimates regarding the unrisked prospective resource this equates to 550 million barrels attributable to 88 Energy. The company estimates that the potential total net mean prospective resource attributable to 88 Energy is 1.14 billion barrels.

The fact that management believes there is a much more significant story that will play out in 2017, as the group prepares for the drilling of Icewine#2 which will test the production potential of the unconventional HRZ liquids rich resource play.

On this note, Wall said, ‘Whilst the conventional prospective resource is very large it is eclipsed by the potential of the HRZ, especially given the recently expanded acreage position, and it is also worth bearing in mind that the HRZ has been de-risked via analysis of the results from Icewine#1, and remains the company’s primary objective”.

It appears that 2017 will be a significant year for the company with the potential for a material share price rerating. When Patersons analyst, Jason Chesters ran the ruler across the stock in the latter part of 2016 he said, “In the medium term the successful completion of the Icewine#2 well and the intended flow tests, and the potential sale or farm in of a partner would be key catalysts”.

He has a speculative buy recommendation on the stock, and pointed to potential upside from the outcome of drilling on adjacent acreage to the North (Great Bear) where Otto Energy and its joint venture partners intend to drill between two and four wells on their acreage during the 2016-2017 drill season.

It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

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