88 Energy (ASX:88E | OTC: EEENF) has today updated the market with regard to operations on the North Slope of Alaska.

88E has alerted the market to:

1. Encouraging evidence of oil in downhole samples being investigated in laboratory.
2. Additional fluorescence recorded at previously unidentified depths.
3. Final payment of vendors in stock to be made.

Focusing on the first two points, 88E recently received and finalised its review of a report related to its downhole sampling program, undertaken during the logging of the Merlin-1 well.

Merlin-1 is part of 88E’s Project Peregrine, located in the NPR-A region of the North Slope of Alaska. It encompasses ~195,000 contiguous acres and is situated on trend to recent discoveries in a newly successful play type in topset sands in the Nanushuk formation.

The Merlin-1 well was spudded in March 2021 and targeted 645 million barrels of gross mean prospective resource.

Drilling is now complete, and interpretation of results is underway. Note, that a second well, Harrier-1, is planned to be drilled in 2022 and is targeting gross mean prospective resource of 417 million barrels.

Encouraging results

Logging of Merlin-1 was conducted using Halliburton’s Reservoir Description Tool (RDT).

Observations from an optical fluid analysis sensor had previously indicated the likely presence of oil in the formation fluid across several of the depths that were sampled.

During recent drilling, the initial on-site results seemed promising, however due to technical issues testing of the two most prospective zones – which might have confirmed a large oil discovery – was hindered.

Over the last few weeks 88E has tested the samples they managed to procure, in order to record as much data as possible and interpret what was found.

Looking at the raw data that has been processed and presented in a final report from the RDT logging run, results for two of the samples where the pressure was taken to below 100psi (atmospheric pressure is ~15psi), show the pressure in the third sample was only decreased to 403psi.

The key takeaway is that up to 70% hydrocarbon has been observed in downhole samples, when pressure was normalised close to that at the surface.

This kind of ratio is “indicative of a discovery”... however further investigation is required.

Oil on the horizon?

It should also be noted that if oil is present, then fluorescence will be evident under UV light. 88E undertook white and UV light photography, whilst preparing the side wall cores for further testing.

Multiple horizons were identified as having oil present during drilling via observation of fluorescence under UV light and also using solvent (or cut) to determine whether oil would leach out from the samples.

Several horizons have shown evidence of oil, which were not previously identified. These horizons, in addition to those already known to contain oil, will be the focus of further work.

It should also be noted that 18 of the most prospective samples were not included in those sent for analyses, as they have been set aside for special analysis related to any oil extracted.

Below you can compare samples with no fluorescence to those with good fluorescence.

What’s to come ahead of the Alaskan winter

88E has finalised the costs associated with drilling, with its net share coming in at US$9M and vendors agreeing to accept payment via 345M shares at $0.025, wrapping up the final invoices for Merlin-1.

This leaves 88E with a strong cash position ahead of another drilling event next Alaskan winter.

There are a few more lab results still to come through from Merlin-1 as well and we should see:

1. Nuclear magnetic resonance imagery: to determine the ratios of free oil and water present, as well as porosity.
2. Dean Stark tests: extracts the oil and the water from the sample to determine saturations.
3. Final petrophysical interpretation: The results of all tests to date will then be integrated into a final petrophysical interpretation.
4. Mapping of prospective pay zones: During Merlin-1 several prospective zones were encountered that had previously been unmapped.