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88 Energy delivers Alaskan operations update
3 minute read
88 Energy Limited (ASX:88E) has provided an update on its operations on the North Slope of Alaska.
88E, via its 100% owned subsidiary Captivate Energy Alaska, Inc., has executed definitive agreements with Great Bear Petroleum Ventures II LLC, along with Otto Energy Ltd (Borealis) and Red Emperor Resources NL (together with 88 Energy, the “Consortium Partners”), to acquire the majority of Great Bear’s working interest in the four leases comprising the Western Blocks (ADL 391718; ADL 391719; ADL 391720; ADL 391721).
In exchange, 88E will drill a commitment well on the Western Blocks prior to 30 May 2019.
The Western Blocks contain a 3D seismic defined oil prospect in the successful Nanushuk play fairway with a gross mean unrisked prospective resource of 400MMbbls (144MMbbls net to 88E) and a geological chance of success in the range of 25-30%.
The company added a cautionary note that estimated quantities of petroleum that may be potentially recovered by the application of a future development project relate to “undiscovered accumulations” and that “further exploration, appraisal and evaluation are required to determine the existence of a significant quantity of potentially moveable hydrocarbons”.
As part of the terms of the agreement, the Consortium Partners have funded their share of a US$3,000,000 performance bond to the State of Alaska and a US$500,000 cash payment to Great Bear as part of the consideration for the acquisition of the working interests in the Western Blocks.
The details of the working interests are described in the below table:
Internal interpretation by 88E of 3D seismic data over the Western Blocks has confirmed the original interpretation by Otto’s technical team, who identified the 400 million barrel prospect (144 million barrels net to 88E).
A location to best test the prospect has been selected and permitting is underway, ahead of scheduled drilling in Q1 2019.
At the same time, it’s worth noting that this remains a speculative play and investors should seek professional financial advice if considering this company for their portfolio.
Project Icewine: farm-out dataroom formally opened
The company also announced that the dataroom related to farm-out of both the conventional and unconventional prospectivity at Project Icewine has now been formally opened.
88E and its JV Partner, Burgundy Xploration LLC, are aiming to complete a farm-out prior to years-end that will result in significant expenditure over Project Icewine to continue evaluation of the large conventional and unconventional potential that has been identified to date.
A conventional portfolio update based on interpretation and mapping of the preliminary Icewine 3D dataset is being finalised and will be released to the market in due course.
Yukon Gold — 3D seismic processing
Seismic processing of the Yukon 3D is progressing well, and the company remains on schedule to deliver an evaluation of the acreage following mapping and interpretation of the 3D dataset in Q4 2018.
Project Icewine — HRZ evaluation process
The evaluation process for the HRZ shale, following the recent suspension of the Icewine#2 well, is ongoing and is expected to take several months. Results from this process will be reported as appropriate.
Additional credit certificates granted
On the July 24, 88E was informed by the Alaska Department of Revenue that it had issued a Credit Certificate to Accumulate Energy Alaska Inc, (100% owned subsidiary of 88 Energy Ltd), for US$5.66 million related to CY2017 expenditure.
An amount of US$2.83 million is available to be cashed out at such time that cash payments are made by the State. The total expected cashable credits owed by the State to 88E is US$20.7 million versus debt of US$16.5 million. While the timing of payment by the State remains uncertain, it is estimated to be prior to 2019 calendar end.
88E Managing Director, Dave Wall commented on today’s update: “The closing of the Western Blocks transaction is a significant milestone for the Company and its shareholders.
“Encouraging progress continues to be made across the expanded portfolio of assets in Alaska and we look forward to providing additional news on these in the near term.”