REG - 88 Energy Limited - Hickory-1 Flow Test Operations Update

88 EnergyAnnouncement

28/02/2024 07:00

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RNS Number : 7568E  88 Energy Limited  28 February 2024

28 February 2024

88 Energy Limited

Hickory-1 Flow Test Operations Update

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to report final preparations for the commencement of flow testing
operations are advancing at the Hickory-1 well, located within 88 Energy's
Project Phoenix acreage directly adjacent to the Trans-Alaska Pipeline System
and the Dalton Highway.

Highlights

·   Mobilisation operations are complete and pre-flow testing operations
have advanced at the fully funded Hickory-1 discovery well, with current
operations involving the testing of the blow-out preventers (BOP) installed on
the wellhead.

·   Two flow tests are scheduled, one each in the Upper SFS and SMD-B
reservoirs, with each expected to take approximately ten days.

·   Prior to perforating the first zone, wellbore preparations are required
which include removing the existing string in the well, drilling out of the
plugs and cleaning out of the wellbore.

·   Flow testing operations are set to deliver information critical to
development planning, such as reservoir deliverability, fluid compositions,
pressures and connectivity.

 

 

Flow test operations update

Current operations involve testing of the BOP followed by retrieval of the
kill string from within the well, drill out of plugs, clean-up of the wellbore
and change-out to completion fluid. This process is expected to span
approximately five days.

Testing operations will focus on the two primary targets, the Upper SFS and
the SMD reservoirs (refer Figure 1), which together represent a mean,
unrisked, multi-hundred-million-barrel oil resource(1,2,3) (refer Table 1).
 The Upper SFS reservoir will be tested first followed by the SMD-B
reservoir. Each zone will be independently isolated, stimulated and flowed to
surface using nitrogen lift to assist in an efficient clean-up of the well.
Perforation, completion-running and stimulation is expected to take
approximately four days, followed by a clean-up and flow period of up to four
days and a pressure build-up of up to two days for a total of ten days to
complete each of the two flow tests.

Image 1: All American Oilfield Rig-111

(1) Cautionary Statement: The estimated quantities of petroleum that may be
potentially recovered by the application of a future development project
relate to undiscovered accumulations. These estimates have both an associated
risk of discovery and a risk of development. Further exploration, appraisal
and evaluation are required to determine the existence of a significant
quantity of potentially movable hydrocarbons.

(2) Mean unrisked resource - Net Entitlement to 88E. Refer announcement 23
August 2022 for pre-Hickory-1 estimates.

(3) Refer announcement dated 6 November 2023 for post-Hickory-1 for post
Hickory-1 drilling resource estimates.

 

An extensive suite of data is planned to be captured including, but not
limited to, downhole and surface fluid samples, downhole pressure and
temperature data, surface pressure and temperature data, as well as flow rates
of oil, gas and water. This data is essential in maturing development plans by
accurately constraining reservoir models used to progress the next phases of
Project Phoenix.

Any future development plan for Project Phoenix would be expected to include
horizontal wells to maximise oil rates. As is evidenced in many Lower 48
analogues, horizontal wells typically produce at rates 6-12 times higher than
vertical wells, once lessons from field development are captured in the
appraisal phase.

Offset exploration vertical well tests, similar to the Hickory-1 discovery
well, have all flowed in the 50-100 BOPD range per test. Water to oil ratios,
gas to oil ratios and the evolution of rates and pressures over time are
critical data sets that assist in development planning and forecasting. It is
not uncommon for formation water to be produced sustainably in conjunction
with hydrocarbons in these types of reservoirs, as is often observed in
producing analogues in the Lower 48. Vertical wells provide cost effective
access to test multiple reservoirs in a single wellbore and are therefore the
crucial first steps on the path to development of Project Phoenix resources.

 

Figure 1: Flow testing program to target two of the four pay zones intersected
in the Hickory-1 discovery well.

 

The Company looks forward to providing an update on commencement of the Upper
SFS flow test (refer Figure 2).

 

 Figure 2: Flow testing program timeline (scheduled days)

 

This announcement has been authorised by the Board.

 

Media and Investor Relations:

 88 Energy Ltd

 Ashley Gilbert, Managing Director

 Tel: +61 8 9485 0990

 Email:investor-relations@88energy.com

 Fivemark Partners, Investor and Media Relations

 Michael Vaughan                                  Tel: +61 422 602 720

 EurozHartleys Ltd
 Dale Bryan                                       Tel: + 61 8 9268 2829

 Cavendish Capital Markets Limited                Tel: +44 (0)20 7397 8900
 Derrick Lee                                      Tel: +44 (0)131 220 6939
 Pearl Kellie                                     Tel: +44 (0)131 220 9775

 

Pursuant to the requirements of the ASX Listing Rules Chapter 5 and the AIM
Rules for Companies, the technical information and resource reporting
contained in this announcement was prepared by, or under the supervision of,
Dr Stephen Staley, who is a Non-Executive Director of the Company. Dr Staley
has more than 40 years' experience in the petroleum industry, is a Fellow of
the Geological Society of London, and a qualified Geologist/Geophysicist who
has sufficient experience that is relevant to the style and nature of the oil
prospects under consideration and to the activities discussed in this
document. Dr Staley has reviewed the information and supporting documentation
referred to in this announcement and considers the resource and reserve
estimates to be fairly represented and consents to its release in the form and
context in which it appears. His academic qualifications and industry
memberships appear on the Company's website and both comply with the criteria
for "Competence" under clause 3.1 of the Valmin Code 2015. Terminology and
standards adopted by the Society of Petroleum Engineers "Petroleum Resources
Management System" have been applied in producing this document.

 

Table 1: Previously announced Prospective Resource assessment conducted prior
to the drilling of Hickory-1

 

 Project Phoenix: Alaska North Slope  Unrisked Gross Prospective Oil Resources (MMstb) (4,5)
 Prospects (Probabilistic Method)     Low (1U)     Best (2U)    High (3U)    Mean         COS (3)
 Shelf Margin Delta (SMD A, B and C)  70           224          518          231          81%
 Slope Fan System (SFS)               37           134          345          141          50%
 Kuparuk (KUP)                        39           88           156          89           72%
 Prospects Total                      146          446          1,019        461 (2)

 

 Project Phoenix: Alaska North Slope  Unrisked Net Entitlement to 88E (1) Prospective Oil Resources (MMstb) (4,5)
 Prospects (Probabilistic Method)     Low (1U)          Best (2U)         High (3U)         Mean              COS (3)
 Shelf Margin Delta (SMD A, B and C)  44                140               326               145               81%
 Slope Fan System (SFS)               24                84                217               89                50%
 Kuparuk (KUP)                        24                56                98                56                72%
 Prospects Total                      92                280               641               290 (2)

 

1. 88 Energy net resources have been calculated using a 75.227% working
interest and a 16.5% royalty.

2. The unrisked means, which have been arithmetically summed, are not
representative of expected total from the prospects and implies a success case
in all reservoir intervals. 88 Energy cautions that the arithmetically summed
1U estimate may be a conservative estimate and the arithmetically summed 3U
estimate may be optimistic when compared to a statistical aggregation of
probability distributions.

3. COS represents the geological chance of success as assessed by 88 Energy
and reviewed and endorsed by LKA.

4. Prospects are subject to a phase risk (oil vs gas). Chance of oil has been
assessed as 100% for all targets except for the Kuparuk Formation which has
been assessed as 70%.  Phase risk has not been applied to the unrisked
numbers.

5. The Prospective Resources have not been adjusted for the chance of
development. Quantifying the chance of development (COD) requires
consideration of both economic and other contingencies, such as legal,
regulatory, market access, political, social license, internal and external
approvals and commitment to project finance and development timing. As many of
these factors are outside the knowledge of LKA they must be used with caution.

6. Prospective Resource Estimates - determined pre-drilling of Hickory-1.

7. Updated Prospective Resource Estimates reflect the removal of the resource
estimate for the Basin Floor Fan which as of 1 November 2023 has been
redetermined and classified as a Contingent Resource. No other changes have
been made to the original estimates, please refer to the ASX announcement of
23 August 2023.

 

 

Table 2: Previously announced Contingent Resource assessment for the BFF
discovery at Hickory-1

 

 Project Phoenix: Basin Floor Fan                          Gross (100%) Contingent Resources (1,3)
 Probabilistic Method                                      Low (1C)        Best (2C)       High (3C)
 Oil                Million Barrels                        17              44              104
 NGL                Million Barrels                        35              91              218
 Oil + NGL(2)       Million Barrels                        52              136             322
 Gas                Billion Cubic Feet                     255             628             1,417
 Total (2)          Million Barrels of Oil Equivalent (4)  98              250             580

 

 Project Phoenix: Basin Floor Fan                          Net Entitlement (~63%) Contingent Resources (1,3)
 Probabilistic Method                                      Low (1C)           Best (2C)          High (3C)
 Oil                Million Barrels                        11                 28                 65
 NGL                Million Barrels                        22                 57                 137
 Oil + NGL(2)       Million Barrels                        33                 85                 202
 Gas                Billion Cubic Feet                     160                394                890
 Total (2)          Million Barrels of Oil Equivalent (4)  62                 157                364

 

1. 88 Energy net resources have been calculated using a 75.227% working
interest and a 16.5% royalty.

2. 88 Energy cautions that the reported totals for Oil+NGL and Total MMBOE are
an arithmetic sum of the individual hydrocarbon types within the BFF
reservoir. The arithmetically summed 1C estimate may be a conservative
estimate and the arithmetically summed 3C estimate may be optimistic when
compared to a statistical aggregation of probability distributions.

3. The Contingent Resource classification is not required to be adjusted for
the chance of development, as per PRMS 2018 guidance, and hence has not been
carried out in this assessment.

4. Natural Gas Liquids (NGL's) are converted to oil equivalent volumes via a
constant ratio of 1:1. Gas is converted to oil equivalent volumes via a
constant ratio of 5.5 BCF per 1 MMBoe.

 

 

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