Acquisition by Oil Search could have implications for 88 Energy

By Trevor Hoey. Published at Nov 1, 2017, in Energy

A significant development announced on Wednesday by oil and gas explorer and producer Oil Search (ASX:OSH) could spark some interest in junior explorer, 88 Energy (ASX | LSE: 88E), as the group holds Alaska North Slope acreage in areas approximate to those acquired by OSH.

Firstly, it is important to gain an understanding of the assets acquired by Oil Search, as well as management’s rationale for targeting that region. The company signed an agreement to acquire a number of oil assets in the Alaska North Slope from privately-owned companies Armstrong Energy LLC and GMT Exploration Company LLC.

The assets include a 25.5 per cent interest in the Pikka Unit and adjacent exploration acreage and a 37.5 per cent interest in the Horseshoe Block, the locations of which are illustrated below. These leases contain approximately 500 million barrels (gross) in the Nanushuk and satellite oil fields, with Nanushuk being one of the largest conventional oil fields discovered in the US in more than 30 years.

Nanushuk oil reserve

The Nanushuk field, which is located adjacent to several giant producing oil fields, was discovered in 2013. To date, 19 exploration and appraisal wells have been drilled on the field, which, combined with full coverage of 3D seismic data, have delineated a giant oil resource.

The acquisition has been made on the basis of a discovered resource of approximately 500 million barrels, with material prospective resource upside. Repsol S.A., which holds the balance of the interests in the Pikka Unit, exploration acreage and Horseshoe leases, currently estimates the discovered resource to be up to 1.2 billion barrels.

Oil Search expects that the initial development will target 500 million barrels of oil in the Pikka Unit, with first production anticipated in 2023 and plateau production rates in a range between 80,000 barrels and 120,000 barrels per day (gross).

Implications for 88 Energy

As a backdrop, 88 Energy entered into a binding agreement with Burgundy Xploration in November 2014 to acquire a significant working interest in a large acreage position on a multiple objective, liquids rich exploration opportunity onshore Alaska, North America, referred to as Project Icewine.

It was only last week that management announced it had increased its acreage position in that area to circa 458,000 acres (286,000 acres nett to 88E).

It should be noted though that 88E remains a speculative stock and investors should seek professional financial advice if considering this stock for their portfolio.

The location of the acreage relative to that acquired by OSH is illustrated below.

Project icewin map

The emergence of merger and acquisition activity will no doubt be welcomed by 88E’s shareholders as it could come under scrutiny from like-minded suitors at an ideal time in the cycle when oil and gas prices are in the early stages of recovery.


Where to invest $1,000 right now

When the experts at Next Investors have a stock pick, it may pay to listen.

The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.

They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.

Click the link below to see what they are currently investing in.


SEE THE PORTFOLIO

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.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!

X