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

88 EnergyAnnouncement

12/01/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240112:nRSL3955Za&default-theme=true

RNS Number : 3955Z  88 Energy Limited  12 January 2024

12 January 2024

88 Energy Limited

Hickory-1 Flow Test Update

Highlights

·   Hickory-1 discovery well flow test and well stimulation program (Flow
Test) set to commence mid-February 2024, following ice road construction, pad
construction and rig mobilisation.

·   Fully funded Flow Test budget of US$11 million (gross).

·   Design, planning and logistics complete, with permitting on track for
end of January 2024.

·   The Slope Fan System (SFS) and Shelf Margin Deltaic (SMD) are the two
primary test targets.

·   Each zone will be tested separately and are planned to take
approximately ten days each.

·   Hickory-1 is a vertical well and not optimal for the production phase,
however, information critical to development planning will be collected, such
as reservoir deliverability, fluid compositions, pressures and connectivity.

·   Flow rates from horizontally developed wells, such as those planned for
the development of Project Pheonix, have been modelled to be 6 to 12 times
higher than those from vertical wells.

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to provide an update in relation to the Hickory-1 flow testing program
at Project Phoenix on the North Slope, Alaska.

Hickory-1 Flow Testing Program

 

The Hickory-1 discovery well, which was drilled in February 2023, is currently
cased and suspended ahead of the upcoming flow testing program, with testing
scheduled to commence in mid-February 2024. Flow Test planning has been
finalised, with all relevant permits submitted and all final approvals
expected to be received in January 2024.

 

Testing operations will focus on the two primary targets, the SFS and the SMD
reservoirs (see Figure 1), which will be testing a mean, unrisked,
multi-hundred-million-barrel oil resource (1,2,3) (Table 1).

Of the SFS series of reservoirs, the Upper SFS reservoir is targeted to be
flow tested as it has not been previously flowed, whereas the Lower SFS has
previously been flowed and producibility of that reservoir confirmed on
adjacent acreage. This will be followed by a targeted testing of 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.

Downhole and surface fluid samples are to be captured to reduce fluid
characterisation uncertainties. Downhole pressure and temperature data,
surface pressure and temperature data, and flow rates of oil, gas and water
will be recorded. Water salinity data will be acquired to enable distinction
between stimulation and formation water production. This data is essential in
maturing development plans by accurately constraining reservoir models used to
progress the next phases of the Project.

 

Any future development plan for Project Phoenix will almost certainly include
horizontal wells with unconventional completion technology to maximise oil
rates. As is evidenced in many Lower 48 analogues, horizontal well production
rates typically produce at rates that are 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 datasets 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.

 

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 88 Energy. Refer announcement
dated 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.

 

 

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

 

 

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 & C)      70           224          518          231          81%
 Slope Fan Set (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 & C)      44                140               326               145               81%
 Slope Fan Set (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.

 

 

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.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDSFASUFELSEEF