REG - 88 Energy Limited - Hickory-1 TD Reached

88 EnergyAnnouncement

03/04/2023 07:15

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RNS Number : 1031V  88 Energy Limited  03 April 2023

This announcement contains inside information

 

88 Energy Limited

Hickory-1 TD Reached - Additional Reservoir Identified

 

Highlights

·    Hickory-1 successfully drilled to a Total Depth (TD) of 10,650 feet
with preliminary net pay calculated across all pre-drill targets;

o based on initial interpretation of real time logging while drilling data
(LWD), together with multiple oil shows, elevated mud gas readings, and high
resistivity signatures observed throughout.

·    SFS reservoir exceeded pre-drill expectations with respect to both
thickness and reservoir quality identifying multiple potential hydrocarbon
bearing zones.

·    New Upper SFS reservoir identified, not previously intersected by
nearby wells with abundant oil shows in cuttings.

·    Mud gas readings in both SFS and Upper SFS reservoirs greater than
15x background gas.

·    BFF reservoir was consistent with pre-drill expectations.

·    Preliminary estimated net pay across all targets to be confirmed by
wireline logging, which is set to commence promptly.

 

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to report that the Hickory-1 exploration well has reached a Total
Depth of 10,650 feet. Operations have progressed as planned since completion
of the surface hole, with the Nordic Calista Rig-2 drilling to TD safely and
currently estimated to cost less than US$13.5 million gross.

The Hickory-1 exploration well intersected all primary SMD reservoir targets
and the secondary SFS and BFF reservoir targets, all at slightly higher than
prognosed depths and with gross reservoir thicknesses equal or greater than
pre-drill interpretation.

A new Upper SFS reservoir was also identified (refer to figure 1 below). This
zone was not previously intersected by any wells on Project Phoenix acreage
and recorded multiple shows and elevated log responses. Whilst drilling
through the Upper SFS gas "pops" or bubbles were noted in rig tanks, an
indication of hydrocarbons evolving from the drilling fluid at the surface.

LWD data collected over all the primary and secondary reservoirs, plus the new
Upper SFS reservoir, have indicated multiple pay zones throughout the
Hickory-1 well. Preliminary net pay calculated from the LWD data will be
confirmed by wire-line logging and side wall coring programme, which is set to
commence promptly.

 

Figure 1: Hickory-1 has intersected all primary and secondary targets, and the
newly identified Upper SFS reservoir, prior to calling TD within the HRZ to
preserve hole conditions.

The presence of hydrocarbons was evidenced by fluorescence under ultraviolet
light in multiple cuttings samples in the primary and secondary targets,
including new Upper SFS reservoir. Elevated C3-C5 mud gas readings were also
observed across all reservoir intervals. In particular, it was noted that mud
gas readings were greater than 15x background gas over both SFS intervals.

The wellsite geologists at Hickory-1 also observed visible porosity in
physical samples over all of the reservoir sections.

 

Figure 2: The presence of hydrocarbons was evidenced by fluorescence under
ultraviolet light in multiple cuttings samples in the primary and secondary
targets, including new Upper SFS reservoir.

Due to the encouraging results to date in the primary and secondary targets,
the Company made the technical decision to TD prior to intersecting the
tertiary Kuparuk reservoir target (KUP) in order to preserve borehole
condition for the wireline logging program. This will ensure the best possible
data acquisition conditions.

The Hickory-1 well will be suspended such that the KUP target can still be
drilled and flow tested from the well bore following the flow testing of the
upper zones and the Company will assess this during the well testing design
phase.

Hickory-1 Remaining Programme and Next Steps

Having reached TD, the mandatory second BOP system test was conducted and
passed.

A sophisticated wireline logging programme is now set to be run which includes
the Triple Combo, CMR/XMR, Dielectric Scanner, Dipole Sonic and CoreVault
tools. The focus of the wireline logging program is to;

-     confirm the initial petrophysical interpretation of multiple pay
zones identified during drilling; and

-     obtain data to optimally design and plan the flow test of Hickory-1.

The wireline logging program is expected to take 5-7 days to be completed. The
well will then be cased and suspended to allow for future well testing and the
Nordic Calista Rig-2 demobilised. All operations and demobilisation are
expected to be completed by mid-April.

Preliminary planning will now commence for the flow test program in the
2023/24 winter season, including the identification of suitable rigs and
commencement of permitting.

The Company expects to provide further updates following completion of the
wireline and coring program at Hickory-1.

 

Hickory-1/ Well: Summary of Initial Results and Observations During Drilling

Shelf Margin Delta (SMD) - Shows and Calculated Net Pay Identified

 Key Observations:

 ·      Presence of hydrocarbons evidenced by fluorescence under
 ultraviolet light in cuttings;

 ·      "immediate and streaming" blue-white "cuts" observed when solvent
 was applied to sample, suggesting there is good sample/reservoir permeability
 for future hydrocarbon extraction;

 ·      Elevated C3-C5 mud gas readings were observed as well as high
 resistivity signatures and crossover of neutron density curves; and

 ·      Calculated hydrocarbon pay noted over zones in SMD reservoirs.

Upper Slope Fan System (Upper SFS) - Shows and Calculated Net Pay Identified

 Key Observations:

 ·      Presence of hydrocarbons was evidenced by fluorescence under

 white light and ultraviolet light in cuttings;
Figure 3: Upper SFS preliminary mapping from RMS amplitude extraction (within

                                                                                lease blocks).
 ·      "Immediate very pale yellow greenish and streaming" diffuse

 "cuts" observed when solvent was applied, indicating good sample permeability
 for hydrocarbon extraction;

 ·      Significant elevated C3-C5 mud gas readings were observed (mud
Figure 4: Upper SFS and SFS Dip line AVO response.
 gas readings were greater than 15x background gas);

 ·      Visual porosity observed in cuttings along with crossover of
 Neutron Density curves throughout the interval indicates porous sands with a
 hydrocarbon (oil) response;

 ·      Whilst drilling through the Upper SFS gas "pops" or bubbles were
 noted in rig tanks, an indication of hydrocarbons evolving from the drilling
 fluid at the surface;

 ·      Calculated hydrocarbon pay noted; and

 ·      The Upper SFS reservoir identified has not been previously
 intersected in Project Phoenix and there was no pre-drill prospective resource
 ascribed to this zone. Work will commence to define this prospect and resource
 estimate.

Slope Fan System (SFS) - Shows and Calculated Net Pay Identified

 Key Observations:

 ·      SFS target 99 gross feet thicker and higher reservoir quality
 than anticipated pre-drill

 ·      Presence of hydrocarbons was evidenced by fluorescence under
 ultraviolet light in cuttings;

 ·      "Cut" was observed when solvent was applied to the sample;

 ·      Elevated C3-C5 mud gas readings were observed as well as high
 resistivity signatures and crossover of neutron density curves; and

 ·      Calculated hydrocarbon pay noted over multiple sand packages
 throughout the zone.

Basin Floor Fan (BFF) - Shows and Calculated Net Pay Identified

 Key Observations:

 ·      Elevated C3-C5 mud gas readings were observed as well as high
 resistivity signatures across all sands within BFF zone and crossover of
 neutron density curves;

 ·      Presence of hydrocarbons was evidenced by fluorescence in
 cuttings;

 ·      Calculated hydrocarbon pay noted over multiple sand packages
 throughout the zone; and

 ·      Cleaner interval (lower Gamma profile) than recorded in
 Icewine-1.

 

 

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

 

 

Finlay Thomson, Investor
Relations
Tel: +44 7976 248471

 

Fivemark Partners, Investor and Media
Relations

Michael
Vaughan
                             Tel: +61 422 602 720

 

EurozHartleys Ltd

Dale
Bryan
Tel: + 61 8 9268 2829

 

Cenkos
Securities
Tel: + 44 131 220 6939

Neil McDonald / Derrick Lee

 

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 35 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.

About Project Phoenix

Project Phoenix (88E 75.2% WI) is located on the central North Slope of Alaska
and encompasses approximately 82,846 gross acres. It is situated on-trend to
recent discoveries by Pantheon Resources Plc (LSE: PANR) in multiple, newly
successful play types across top, slope and bottom-set sands of the Mid
Schrader Bluff, Canning and Seabee formations. Independent mapping has
demonstrated that these plays extend into the Phoenix acreage.

 

Project Phoenix holds an estimated unrisked total of 647MMbbl of conventional
prospective oil resources (mean unrisked, net to 88E), independently assessed
by Lee Keeling and Associates (LKA) in Q3 2022 (see 88E ASX release dated 23
August 2022). The acreage has been significantly de-risked by the recent
Pantheon drilling and flow tests on their adjacent acreage to the North,
coupled with data from Icewine-1 well logs (encountered 380 ft of net oil pay
within SMD sands) and a modern 3D seismic data set (FB3D).

Figure 5: Project Phoenix lease area, including mapped play fairways, Franklin
Bluffs 3D area and planned Hickory-1 well location.

 

 

 Phoenix: Alaska North Slope            Unrisked Net Entitlement to 88E (1,6) 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 System (SFS)                 24                84                217               89                50%
 Basin Floor Fan (BFF)                  75                341               930               358               50%
 Kuparuk (KUP)                          24                56                98                56                72%
 Prospects Total                         167                621              1,570                647 (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.    Please refer to ASX announcement dated 23 August 2022 for further
details in relation to the prospective resources estimate and associated
risking with Phoenix.

7.    It should be noted that the prospective resources were calculated
prior to the drilling of Hickory-1.

 

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

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