REG - 88 Energy Limited - Quarterly Report and Appendix 5B
21/01/2025 07:00
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RNS Number : 0058U 88 Energy Limited 21 January 2025
21 January 2025
QUARTERLY ACTIVITIES REPORT & 5B
For the quarter ended 31 December 2024
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy, 88E or the
Company) provides this summary of activities for the quarter ended 31 December
2024.
Highlights
Project Phoenix (~75% WI)
· Positive Joint Venture Partner Progress:
Ø Burgundy Xploration LLC (Burgundy) settled US$1 million of a outstanding
US$4 million cash call, demonstrating its commitment to the project.
Ø Burgundy reiterated its intention to provide a full carry for the
anticipated CY25/26 work program including horizontal well drilling,
fracturing costs and long term production test in exchange for an increased
working interest.
· Near-term Progress:
Ø Ongoing review by ResFrac to optimise future stimulation and flow design
for a potential extended horizontal well test.
Ø Continued planning and design for an appraisal well in CY25/26.
Ø Studies underway into using the existing Franklin Bluffs gravel pad in
order to reduce well costs.
Project Leonis (100% WI)
· Strategic Acreage Expansion:
Ø Successful bidder on four (4) additonal lease blocks, to add to the
existing Project Leonis acreage, signficantly increasing the project's scale
and multi-zone exploration potential.
Ø Newly identified Canning prospect indicates significant resource potential,
with an approximate areal extent of 43km(2) (~10,625 acres) and a thick
reservoir succession of up to 336 feet.
Ø Formal award of the new lease blocks is expected H1 CY25.
· Future Potential Well Test:
Ø Progressing permitting and planning for the Tiri-1 exploration well,
targeting a Q1 CY26 spud.
Ø Farm-out process underway to secure funding for future drilling.
Namibia PEL 93 (20% WI)
· Promising Initial Interpretation of new 2D Seismic Data:
Ø Identification of an initial suite of ten (10) significant independent
structural closures within the PEL 93 licence area.
Ø High-quality seismic acquisition confirmed, with strong signal-to-noise
ratios across all lines.
Ø Leads in the southern area feature substantial interpreted structural
closures (some up to ~100km(2)) with clear hydrocarbon charge potential.
Project Longhorn (~65% WI)
· Production Performance:
Ø Q4 CY24 production averaged 358 BOE per day gross (~74% oil), down from 391
BOE per day in Q3 due to an incident at the independently operated and owned
gas plant.
· Cash flow Contribution:
Ø A$0.4 million received in December 2024 for the Q4 CY24 period.
Corporate
· Cash balance at the end of the quarter of A$7.2 million
· Staff costs for FY24 of A$1.5 million compared to A$2.8 million
in CY23, representing a 46% reduction.
· Corporate costs for FY24 of A$2.0 million compared to A$2.6
million in FY23, representing a 23% reduction.
Project Phoenix (~75% WI)
Project Phoenix is an oil-bearing conventional reservoir play identified
during the drilling and logging of Icewine-1 and Hickory-1 and adjacent to
offset drilling and testing. Project Phoenix is strategically located on the
Dalton Highway with the Trans-Alaskan Pipeline System bisecting the acreage.
Background
The Hickory-1 discovery well was drilled in February 2023 and flow tested in
Q1/Q2 CY24. Testing focused on the two shallower primary targets, the Upper
SFS (USFS) reservoir, previously untested, and the SMD-B (SMD) reservoir. Each
zone was independently isolated, stimulated and flowed oil to the surface
either naturally or using nitrogen lift to facilitate efficient well clean-up.
In September 2024, a contingent resource for the SMD-B, Upper SFS and Lower
SFS reservoirs was issued by ERCE. This contingent resource was added to the
pre-existing contingent resource in the BFF reservoir, issued by NSAI in Q4
CY23.
For full details of the test results please refer to the ASX announcements
dated 2 April 2024 (USFS) and 15 April 2024 (SMD-B); For full details of the
combined 2C Contingent Resource at Project Phoenix, please refer to the ASX
announcement dated 18 September 2024.
Joint Venture Partner Progress
During the quarter, 88 Energy advanced discussions with joint venture partner
Burgundy. Burgundy has reaffirmed its commitment to Project Pheonix and
expressed strong interest in providing a full carry to 88 Energy for the
CY25/26 work program in exchange for an additional working interest in the
project. The CY25/26 work program includes drilling and completing a
horizontal test well at the Franklin Bluffs pad location, along with an
extended well test on the SMD-B reservoir. 88 Energy is currently reviewing
the terms of the proposal, which will be subject to further negotiations. Any
proposed carry is subject to Burgundy raising the capital required through a
near-term public listing. Further, Burgundy must pay its outstanding Hickory-1
cash call on 15 February 2025. There is no guarantee that any transaction with
Burgundy will be completed and as such, 88E has stated its intention to launch
a formal farm-out process to ensure progress continues, irrespective of the
outcome of Burgundy's listing process. Burgundy settled US$1 million of a
outstanding US$4 million cash call, in a strong demonstration of its
commitment to the project.
Near Neighbour Activities
The Company is closely monitoring neighbouring leaseholder, Pantheon Resources
PLC (Pantheon), following the successful spud of its Megrez-1 well in December
2024, ahead of an extended well test scheduled for Q1 CY25. Pantheon is
targeting the Ahpun Eastern Topset reservoir. This test is a crucial step
towards confirming the commercial viability and development potential of this
reservoir. If successful, it would enhance the understanding of its production
potential, further supporting the regional development potential and
commercialisation pathways, which will positively impact on the Company's
plans to commercialise Project Phoenix.
Project Leonis (100% WI)
During December 2024, 88 Energy (via its wholly owned subsidiary, Captivate
Energy Alaska, Inc) was announced as the successful bidder on four (4)
additional leases, covering approximately 10,203 acres immediately adjacent to
the existing Project Leonis leases(3). The lease blocks were specifically
targeted due to additional prospectivity identified and mapped within the
deeper Canning Formation reservoir interval. Upon formal award, expected in H1
CY25, Project Leonis will comprise 14 leases, across 35,634 contiguous acres.
New Blocks create an Expanded Multi-Zone Opportunity of Significant Magnitude
The expansion of Project Leonis' acreage position and the addition of the
Canning Formation reservoir are significant for 88 Energy. The Upper Schrader
Bluff (USB) reservoir provides an attractive appraisal drilling opportunity,
targeting a Prospective Resource of 381 MMbbls of oil (net mean,
unrisked)(1,2). The USB formation is the same proven producing zone as found
in nearby Polaris, Orion and West Sak oil fields to the north-west.
The addition of the Canning Formation as a secondary reservoir further
enhances Project Leonis' multi-zone drilling potential. Volumetric analysis of
the Canning Formation reservoir is underway and is anticipated to rival the
USB Prospective Resources in magnitude. In parallel, AVO analysis for both the
USB and Canning intervals continues, aiming to identify sweet spots and refine
drilling locations for a potential exploration well in H1 CY26.
This multi-zone opportunity presents a compelling case for future exploration
and potential development.
Guided by modern seismic re-evaluation and aided by a strategic location,
Project Leonis is firmly positioned as a key asset in 88 Energy's portfolio.
1. Refer announcement released to ASX on 4 June 2024 for further details
2. Cautionary Statement in relation to Prospective Resources: 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
recoverable hydrocarbons. 88E is not aware of any new information or data that
materially affects the information included in the relevant market
announcement and that all material assumptions and technical parameters
underpinning the estimates continue to apply and have not materially changed.
3. Subject to adjudication and regulatory approvals prior to formal award
expected in 1H 2025
Additional Prospectivity Identified: Canning Formation
Reprocessing and interpretation of the Storms 3D seismic data identified a
significant geological feature attributed to basin-wide erosion during the Mid
Campanian. The erosional event led to canyon-like scours within the Hue shale
providing prominent accommodation space for the subsequent deposition of
high-energy Canning Formation toe-of-slope turbidite sequences. These
turbidites, which form a thick reservoir succession of up to 336 feet thick
and have an aerial extent of 43km(2), represent a prospect of considerable
scale. Notably, this feature is yet to be penetrated by offset wells in the
immediate vicinity. However, oil shows, ("oil over shakers") and calculated
pay was observed at the chronostratigraphic equivalent sequence in the Hemi
Springs Unit 3 well. The corresponding Canning Interval in Hemi Springs Unit 3
has porosities of up to 28%, with the reservoir within the canyon-like feature
anticipated to be greater. Analogous to the USB prospect, high net-to-gross
turbidites are being produced from Hue Shale scours in Conoco Phillips'
Tabasco field, just 23 miles to the north-west. Encouragingly, the Tabasco
field outline bears a remarkable resemblance to the Canning prospect at
Leonis.
Project Leonis: Forward Program
· Fairweather LLC are engaged to plan and permit the Tiri-1
exploration well, which will target the USB and Canning reservoir zones at an
optimal location within Project Leonis;
· A comprehensive Quantitative Interpretation (QI) study commenced
in Q3 CY24 to leverage the reprocessed Storms 3D seismic data. The primary
objective of the study is to identify anomalous responses within the Canning,
while the secondary aim is to pinpoint "sweet spots" within the Upper Schrader
Bluff. Results from the AVO and inversion analysis are expected in early Q1
2025.
· Analysis utilising the Storms 3D seismic data continues, focusing
on refining exploration targets and identifying an optimal drilling location.
The USB reservoir's mapped amplitude anomalies and fault-bound trapping
mechanism highlight its robust technical case. Similarly, ongoing analysis of
the Canning Formation will enhance the overall understanding of the acreage's
potential.
· Llamas and Bannister Energy Advisors Ltd (LAB) has been appointed
to manage a relaunched and expanded farm-out process to attract new potential
partners to the project. With the addition of the Canning prospect, 88 Energy
believes Project Leonis is a compelling farm-in opportunity.
Namibia PEL 93 (20% WI)
Namibia is recognised as one of the world's most prospective, under-explored
onshore frontier basins, offering significant potential for large-scale
hydrocarbon discoveries. Petroleum Exploration Licence 93 (PEL 93) situated in
the Owambo Basin, spans an area more than 10 times the size of 88 Energy's
Alaskan portfolio and over 70 times larger than Project Phoenix.
Historical Exploration Activities:
· Joint Venture (JV) operator Monitor Exploration Limited
(Monitor), which holds a 55% working interest, utilised geological and
geophysical methods to identify the Owambo Basin.
· Awarded in 2018, PEL 93 contains ten (10) independent
structural closures, identified through airborne geophysical techniques and
partially verified by existing 2D seismic data.
Recent Developments:
In July 2024, Polaris Natural Resources Development Ltd (Polaris) acquired
203-line km of 2D seismic data. Data processing completed in Q4 CY24
identified significant structural closures with promising hydrocarbon
potential:
· High-quality seismic data: Strong signal-to-noise ratios
observed across all nine seismic lines.
· Interpretation by Monitor: Confirmed multiple significant leads
in the southern PEL 93 area, with individual closures up to ~100 km² in size,
showing good vertical relief, and clear hydrocarbon charge potential.
Forward Activities:
· Independent validation of Monitor's findings, integrating
available datasets, including well logs, airborne geophysics and soil
geochemistry.
· Delivery of a maiden, independently certified Prospective
Resource estimate in H1 2025.
· Identification of drilling locations targeting the Damara Play.
Regional Context:
· Recon Africa (TSXV: RECO) spudded the Naingopo-1 well in PEL 73
in July 2024, reaching TD of 4,184 metres in November 2024. Results from
extensive evaluations, including wireline logging and coring, are eagerly
anticipated.
· In August 2024, BW Energy Limited farmed into PEL 73 (20%
working interest for US$16 million invested), further demonstrating industry
confidence in the Owambo Basin's potential.
Project Longhorn (~65% WI)
Q4 CY24 production averaged 358 BOE/day gross (~74% oil), down from 391
BOE/day gross in Q3 CY24 due to an incident an independently operated gas
plant in late November, necessitating gas venting. In December 2024, a cash
flow distribution of approximately A$0.4 million was received.
Peregrine & Umiat (100% WI)
88 Energy was successful in securing suspensions from the Bureau of Land
management Alaska (BLM) for Project Peregrine and the Umiat Unit:
· Project Peregrine: Suspension extended until 30 November 2025.
· Umiat Unit: Suspension granted until 30 June 2025.
The suspensions relieve 88 Energy of approximately A$0.6 million in lease
rental obligations for CY25.
Finance
At 31 December 2024, the Company's cash balance was A$7.2 million. The ASX
Appendix 5B attached to this quarterly report contains the Company's cash flow
statement for the quarter.
The material cash flows for the period include:
· Burgundy Cash Call: US$1 million (A$1.8 million) received in Q4
2024, with US$3 million outstanding extended to 15 February 2025 (plus
interest and a US$0.1 million extension fee).
· Exploration and Evaluation Expenditure: A$0.6 million, primarily
related to Hickory-1 post-well activities, offset by the return of an A$0.6
million well bond.
· Staff and Administration Costs: A$0.85 million, reflecting a
significant reduction in annual corporate costs to A$3.5 million in 2024, down
from A$5.4 million in 2023 (-38%).
Information required by ASX Listing Rule 5.4.3
1. Refer announcement released to ASX on 21 December 2023 regarding
Project Peregrine initial suspension, which was extended by the BLM until 30
November 2025
2. Refer announcement released to ASX on 12 December 2024, regarding
highest bidder of 4 additional leases covering ~10,203 net acres. Award
expected in H1 2025.
3. Refer 2024 Half Yearly announcement released to ASX on 2 September
2024, regarding Umiat 12-month suspension until 30 June 2025
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 prospective resource
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 announcement has been authorised by the Board.
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing Director
Tel: +61 (0)8 9485 0990
Email:investor-relations@88energy.com
Fivemark Partners, Investor and Media Relations
Michael Vaughan Tel: +61 (0)422 602 720
EurozHartleys Ltd
Dale Bryan Tel: +61 (0)8 9268 2829
Cavendish Capital Markets Limited
Derrick Lee / Pearl Kellie Tel: +44 (0)131 220 6939
Information required by ASX Listing Rule 5.4.3 - Lease Schedules as at 31
December 2024
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
88 Energy Limited
ABN Quarter ended ("current quarter")
80 072 964 179 31 December 2024
Consolidated statement of cash flows Current quarter Year to date (12 months)
$A'000
$A'000
1. Cash flows from operating activities - -
1.1 Receipts from customers
1.2 Payments for - -
(a) exploration & evaluation
(b) development - -
(c) production - -
(d) staff costs (306) (1,527)
(e) administration and corporate costs (554) (2,019)
1.3 Dividends received (see note 3) - -
1.4 Interest received 26 130
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Government grants and tax incentives - -
1.8 Other - -
1.9 Net cash from / (used in) operating activities (834) (3,416)
2. Cash flows from investing activities - -
2.1 Payments to acquire or for:
(a) entities
(b) tenements (86) (1,484)
(c) property, plant and equipment - -
(d) exploration & evaluation (632) (23,829)
(e) investments - -
(f) other non-current assets - -
2.2 Proceeds from the disposal of: - -
(a) entities
(b) tenements - -
(c) property, plant and equipment - -
(d) investments - -
(e) other non-current assets - -
2.3 Cash flows from loans to other entities - -
2.4 Dividends received (see note 3) - -
2.5 Other - Joint Venture Contributions 1,837 5,042
Other - Distribution from Project Longhorn 388 2,285
Other - Return of Bond 609 609
2.6 Net cash from / (used in) investing activities (2,116) (17,377)
3. Cash flows from financing activities - 9,696
3.1 Proceeds from issues of equity securities (excluding convertible debt
securities)
3.2 Proceeds from issue of convertible debt securities - -
3.3 Proceeds from exercise of options - -
3.4 Transaction costs related to issues of equity securities or convertible debt - (670)
securities
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related to loans and borrowings - -
3.8 Dividends paid - -
3.9 Other (provide details if material) - -
3.10 Net cash from / (used in) financing activities - 9,026
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 5,509 18,183
4.2 Net cash from / (used in) operating activities (item 1.9 above) (834) (3,416)
4.3 Net cash from / (used in) investing activities (item 2.6 above) 2,116 (17,377)
4.4 Net cash from / (used in) financing activities (item 3.10 above) - 9,026
4.5 Effect of movement in exchange rates on cash held 407 782
4.6 Cash and cash equivalents at end of period 7,198 7,198
5. Reconciliation of cash and cash equivalents Current quarter Previous quarter
at the end of the quarter (as shown in the consolidated statement of cash
$A'000
$A'000
flows) to the related items in the accounts
5.1 Bank balances 7,198 5,509
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 7,198 5,509
6. Payments to related parties of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to related parties and their associates included 227
in item 1
6.2 Aggregate amount of payments to related parties and their associates included -
in item 2
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity
report must include a description of, and an explanation for, such payments.
6.1 Payments relate to Director and consulting fees paid to
Directors. All transactions involving directors and associates were on normal
commercial terms.
7. Financing facilities Total facility amount at quarter end Amount drawn at quarter end
Note: the term "facility' includes all forms of financing arrangements
$US'000
$US'000
available to the entity.
Add notes as necessary for an understanding of the sources of finance
available to the entity.
7.1 Loan facilities - -
7.2 Credit standby arrangements - -
7.3 Other (please specify) - -
7.4 Total financing facilities - -
7.5 Unused financing facilities available at quarter end -
7.6 Include in the box below a description of each facility above, including the
lender, interest rate, maturity date and whether it is secured or unsecured.
If any additional financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing details of
those facilities as well.
8. Estimated cash available for future operating activities $A'000
8.1 Net cash from / (used in) operating activities (item 1.9) (834)
8.2 (Payments for exploration & evaluation classified as investing activities) (632)
(item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item 8.2) (1,466)
8.4 Cash and cash equivalents at quarter end (item 4.6) 7,198
8.5 Unused finance facilities available at quarter end (item 7.5) -
8.6 Total available funding (item 8.4 + item 8.5) 7,198
8.7 Estimated quarters of funding available (item 8.6 divided by item 8.3) 4.91
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7.
8.8 If item 8.7 is less than 2 quarters, please provide answers to the following
questions:
8.8.1 Does the entity expect that it will continue to have the current
level of net operating cash flows for the time being and, if not, why not?
Answer:
n/a
8.8.2 Has the entity taken any steps, or does it propose to take any
steps, to raise further cash to fund its operations and, if so, what are those
steps and how likely does it believe that they will be successful?
Answer:
n/a
8.8.3 Does the entity expect to be able to continue its operations and
to meet its business objectives and, if so, on what basis?
Answer:
n/a
Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2
and 8.8.3 above must be answered.
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters
disclosed.
Date: 21 January 2025
Authorised by: By the Board
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the accompanying
activity report provide a basis for informing the market about the entity's
activities for the past quarter, how they have been financed and the effect
this has had on its cash position. An entity that wishes to disclose
additional information over and above the minimum required under the Listing
Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in
accordance with Australian Accounting Standards, the definitions in, and
provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and
AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash
flow report has been prepared in accordance with other accounting standards
agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent
standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities, depending
on the accounting policy of the entity.
4. If this report has been authorised for release to the
market by your board of directors, you can insert here: "By the board". If it
has been authorised for release to the market by a committee of your board of
directors, you can insert here: "By the [name of board committee - eg Audit
and Risk Committee]". If it has been authorised for release to the market by a
disclosure committee, you can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the
market by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations, the board should have
received a declaration from its CEO and CFO that, in their opinion, the
financial records of the entity have been properly maintained, that this
report complies with the appropriate accounting standards and gives a true and
fair view of the cash flows of the entity, and that their opinion has been
formed on the basis of a sound system of risk management and internal control
which is operating effectively.
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