88 Energy weeks away from drilling one of 2020’s biggest oil wells
Dual listed junior oil explorer 88 Energy Limited (AIM:88E | ASX:88E) is now just weeks away from spudding its Charlie-1 appraisal well at Project Icewine on the North Slope of Alaska.
The drilling event at Charlie-1, which is on track for a late February spud, will see 88 Energy, along with its farm-in partner Premier Oil (LON:PMO), target 1.6 billion barrels of gross mean prospective oil resource, of which 480MMBO is net to 88E, across no less than seven stacked targets to be intersected.
All permits required for drilling are now in hand, with the Permit to Drill approved on 11 February.
The ice road to the Charlie-1 location is now more than 80% complete and is expected to be completed in the next two weeks, while ice pad construction is due to commence shortly. 88 Energy has executed a rig contract, via its 100% owned subsidiary Accumulate Energy Alaska Inc, with Nordic-Callista Services to utilise Rig#3 for the upcoming drilling.
Mobilisation of the Nordic Rig#3 to site is anticipated to begin in approximately 10 days.
Managing Director of 88 Energy, Dave Wall, said “Excellent progress has been made on the ice road construction, despite extremely cold temperatures. All permits are now in hand ahead of the scheduled spud in late February.”
Charlie-1 will intersect seven stacked prospects identified by modern technology, four of which are interpreted as oil bearing in Malguk-1 and are therefore considered appraisal targets.
Each of these targets could be a potential standalone development in its own right and, when combined, the aggregate gross mean prospective resource potential is 1.6 billion barrels of oil, 480 million barrels of which is net to 88E given its retained 30% interest.
Project Icewine is in a new play called the Brookian Sequence, where over the last six years, massive amounts of oil — over 4.0 billion barrels — have been discovered. These new oil discoveries demonstrate the commercial viability of a previously speculative stratigraphic play type with vast unexplored potential.
Here are some of those discoveries along with 88E’s Project Icewine location:
Premier Oil farm-out
The cost of the Charlie-1 appraisal well will be funded by Premier Oil Plc (LON: PMO) up to US$23 million under a farm-out agreement that was executed in August 2019.
Premier Oil is a £850 million (A$1.6B) capped oil company with 80,000 barrels of oil equivalent per day in production. In exchange for funding the well, PMO will gain a 60% working interest in a circa 40% portion of Project Icewine’s conventional acreage in Area A, or the ‘Western Play Fairway’.
To further fund its operations, on 24 January, 88 Energy completed a share placement, raising A$5 million (£2.6M) at a price of A$0.021 (equivalent to £0.011).
88 Energy intends to use the capital raised to fund potential costs of the Charlie-1 well above the Premier Oil carry, as well as to fund lease rental payments, interest payments due on the debt facility, new ventures opportunities, and finance ongoing working capital and general and administrative overheads.
Here’s an overview of the opportunity present in 88E’s Charlie-1 well at Project Icewine: