Shares in 88 Energy rally as production liner fitting successfully completed
88 Energy (ASX | AIM: 88E) provided a promising update in relation to its Icewine#2 drilling campaign located onshore North Slope of Alaska on Monday morning.
As a backdrop, an operations update released last week contained mixed news in that a positive outcome had been achieved with regard to wireline logging, but there had been a problem encountered in the cementing of the 4.5 inch production liner, as hole conditions in the Pebble Shale Unit prevented successful completion.
Management confirmed at the time that this would not affect progress with the broader campaign, nor would it affect the production testing schedule.
However, on occasions these factors result in negative share price fluctuations, and 88E’s shares came off slightly towards the latter part of the week, although this could also be attributed to a sharp decline in the oil price, which recovered slightly on Friday.
Consequently, it wasn’t surprising to see the 88E’s shares react positively to news released by the company today which indicated that the production liner had been successfully cemented in place and that preparations were on track for execution of main stimulation in the third week of June.
Production testing has the potential to be a substantial share price catalyst, and it wouldn’t be surprising to see the company’s shares rally further ahead of the news, particularly given the current price represents a discount to broker price targets.
It should be noted that share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.