88 Energy joint venture requires further acreage in Alaska

By Trevor Hoey. Published at Oct 25, 2017, in Energy

88 Energy (ASX:88E) announced on Wednesday that the company along with its joint venture partner had been awarded additional leases in a successful bidding round for acreage on the North Slope of Alaska.

The joint venture was recently awarded certain leases successfully bid on in the 2016 North Slope licensing round. After negotiation and consideration, it was determined to take up 43 per cent of these acres with 88 Energy (via its subsidiary Accumulate Energy Alaska Inc) having a 25 per cent working interest and the remainder with Joint Venture Partner, Burgundy Xploration LLC (“BEX”), who will have the right to operate.

The following illustrates the joint venture’s updated lease position.

88e projects

88E has a 77.5 per cent working interest and operatorship in circa 325,000 acres onshore the prolific North Slope of Alaska (Project Icewine). Gross contiguous acreage position for the Joint Venture is 458,097 acres (88E: 286,589 net acres).

The North Slope is host to the 15 billion barrel Prudhoe Bay oilfield complex, the largest conventional oil pool in North America. 88E, along with its joint venture partner, has identified highly prospective play types that are likely to exist on the Project Icewine acreage, two being conventional and one unconventional.

This remains, however, a speculative stock and investors should seek professional financial advice if considering this stock for their portfolio.

Examining the impact on 88E in isolation, the company has increased its net acreage position from 260,000 acres to 286,000 acres. The primary target remains an untested, unconventional liquids-rich shale play in a prolific source rock, the HRZ shale (Brookian Sequence).

This co-sourced the largest oil field in North America in the giant Prudhoe Bay Oil Field Complex, and internal modelling and analysis indicates that Project Icewine is located in a high liquids vapour phase sweet spot analogous to those encountered in other Tier 1 shale plays such as the Eagle Ford, Texas.

Recently acquired 2D seismic has identified large conventional leads at Project Icewine within the same Brookian petroleum system and shallow to the HRZ shale, including potential high porosity channel and turbiditic sands associated with slope apron and deepwater fan plays.

The Brookian conventional play is proven on the North Slope. The USGS (2013) estimated the remaining oil potential to be 2.1 billion barrels within the Brookian sequence. Two recent discoveries in the Brookian have already exceeded these estimates, with Armstrong/Repsol discovering 1.4 billion barrels in 2015 and Caelus announcing a 2.5 billion barrel discovery in 2016.

Project icewine

Additional conventional potential exists in the Brookian delta topset play, deeper Kuparuk sands and the Ivishak Formation.

88E’s Managing Director, Dave Wall, reflected on this background when explaining the company’s 2018 strategy in saying, “The Joint Venture remains committed and confident in
the HRZ shale play, and the leasing strategy has been designed to strike a balance between this confidence and available capital whilst we build towards completion of the flowback and production testing of the Icewine#2 well in 1H 2018.”

Wall said additional details on the upcoming program as well as the planned 3D seismic acquisition will be released in the coming weeks.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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