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REG - 88 Energy Limited - AGM Voting Status and Letter to Shareholders

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RNS Number : 1019Y  88 Energy Limited  02 May 2023

This announcement contains inside information


88 Energy Limited

AGM Voting Status and Letter to Shareholders


88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company)
advises of the current status of proxy voting for its upcoming Annual General
Meeting (AGM) to be held on Thursday 11 May 2023.

As at 2 May 2023, the current tally of proxy votes received is only 795
million shares, which represents less than 4% of the 88 Energy share register.

On the current proxy tally, Resolution 1 (Approval of Remuneration Report) and
Resolution 2 (Re‑election of Ms Joanne Kendrick as a Non-Executive Director)
would both fail and Resolution 6 (Conditional Spill Motion) would succeed. The
consequences if Resolution 1 fails and Resolution 6 succeeds is that the
Company will be required to call a Spill Meeting within 90 days with all
Non-Executive Directors vacating their positions on the 88 Energy Board and,
if they choose to stand again, will be considered for re-election at that
Spill Meeting. The position of the Managing Director will not be directly
impacted by any Spill Meeting.

The existing 88 Energy Board comprises four members, with three having only
been appointed since Q2 2021 (including the Managing Director). Over the past
two years, the new Board has moved to reset the business and embark upon a
markedly different strategy to that under the previous 88 Energy team. This
has delivered significant positive change in the underlying fundamentals of 88
Energy including the capital allocation framework. For further information
please refer to the Letter to Shareholders below.

The conduct of a Spill Meeting, particularly if it results in a significant
change to the Board, has the potential to be highly disruptive and impact on
88 Energy's ability to execute its targeted medium-term work programs,
including the flow testing of Hickory-1. There is no guarantee that planned
and communicated work programs would be executed under a newly comprised
Board. Existing networks and relationships with key stakeholders are also
likely to be diminished as a result.

The Board believes that 88 Energy is poised for significant potential success
over the next 12 months. To not exercise your right to vote as a shareholder
leaves the direction of the Company in the hands of a relatively small group
of shareholders, which may not be representative of the underlying majority
view of all shareholders.

The Board urges all shareholders to exercise their rights as a shareholder and
vote on the resolutions of the AGM. It is the strong recommendation of the
Board that shareholders vote FOR Resolutions 1 to 5, and AGAINST Resolution 6.

Shareholders can access all relevant information and vote online at
www.investorvote.com.au (http://www.investorvote.com.au) using the 6-digit
control number 182503 and provide your SRN/HIN and postcode or country of
residence to log in.

If you require further assistance, please contact Computershare by calling +61
(03) 9415 4000 or 1300 850 505 (within Australia).

Letter to Shareholders from the Non-Executive Chairman and Managing Director

Dear Shareholders,

Approximately two years ago the 88 Energy business commenced a significant
reset, which included a significant overhaul of the Board and senior
management team. This renewal saw the appointment of the two of us, Philip
Byrne and Ashley Gilbert, to the roles of Non-Executive Chairman (August 2021)
and Managing Director/CEO (May 2021), respectively.

Joanne Kendrick was also appointed as a Non-Executive Director in August 2021.
Joanne is a petroleum engineer with over 25 years' experience in the global
oil and gas sector and a successful track record of growing ASX companies to
multiples of their previous value at the executive level. We also strengthened
our technical teams including with the appointment of Robert Benkovic as Chief
Operating Officer (COO), who also brings over 25 years' experience as a
petroleum engineer.

This reset of the business has seen new thinking and a fresh approach. This
has resulted in diversification of the Company's portfolio, including the
acquisition of production assets, as well as a sharper focus on basing
investment decisions on the strongest possible technical data analysis coupled
with long-term commercial achievability as a function of proximity to
infrastructure and services.

Under the stewardship of the refreshed team the key achievements over the past
24 months include:

·     Balance sheet clean-up that saw the sale of Alaskan tax credits
facilitating the repayment of all debt (US$16.0 million) in June 2021.

·     Acquisition of the Company's first ever production asset which
generated A$4.3 million in net cash flow during 2022.

·     Drilling of the Hickory-1 exploration well at Project Phoenix in
2023. This is singularly the Company's most successful exploration well ever,
including over 400 feet in net pay. Up to four zones are planned to be flow
tested during the upcoming Alaskan winter season (Q4 2023) and is a clear
example of enhanced outcomes from our more technically-driven strategy.

·     Reduction in drilling execution costs, with Hickory-1 being our
lowest cost exploration well ever despite broader inflationary and supply

·     Unitisation of the Project Phoenix acreage, extending the life of
the leases by 10 years and enabling the Company to continue to assess its
commercial potential and monetise.

·     Fostered stronger relationships with key stakeholders including the
Alaskan government and regulatory bodies, as well as our Alaskan O&G

·     Diversified the Alaskan exploration portfolio with the securing of
the highly prospective Project Leonis acreage with interpreted missed pay that
is currently under assessment.

·     Reduction in non-operational overheads from A$7.2 million in 2021
to A$5.9 million in 2022 (net of impairments and foreign exchange).

·     Invested in greater technical personnel and expertise, at a
relatively modest increase in salary costs from US$1.8m in 2020 to US$2.3m in

·     Evolution with industry standards including implementation of
dedicated ESG programs, with carbon offsets, gender diversity, implementation
of stronger and externally advised remuneration practices, and tightening of
internal policies and governance procedures.

The table below summarises the current position of the business relative to
that which existed around Q2 2021 when renewal to the current Board
composition commenced.

 Focus area                                            Q2 2021                    Delivered by current Board
 Balance sheet                                         US$16.0m in debt           No debt
 Production - cash inflows                             Nil                        A$4.3m in 2022
 Targeted, impactful & cost-effective exploration      Merlin-1: US$30m+ gross    Hickory-1: US$13.5m
 Reduction in non-operational overheads                A$7.2m in 2021             A$5.9m in 2022
 Focus on technical data delivering results            Merlin-1 net pay of 41 ft  Hickory-1 net pay of over 400 ft
 Planned flow tests                                    None                       Up to 4 zones
 Active project areas                                  3                          6
 ESG programs and policies                             None                       Implemented
 Tax credit value realisation                          Idle                       Sold for US$18.7m
 Alaskan 3D seismic database                           ~ 650 sq km                ~ 1,585 sq km
 Improved technical decision making                    Merlin-1 drilled on 2D     Hickory-1 drilled on 3D
 Technical experience of Board                         1 Board member             3 Board members


We are the first to acknowledge that, even with these achievements, it has not
all been plain sailing. The historical Project Peregrine drilling programs did
not deliver the outcomes hoped and we appreciate many shareholders were
disappointed, as we were.

However, we believe that the advancement and execution of the Hickory-1 well
over the last nine months best represents 88 Energy's strategic approach under
the current team.  We are very excited about flow testing this well planned
for Q4 CY2023 with multiple primary and secondary target zones showing
excellent potential.

Finally, we want to again address the question of why we did not seek to flow
test Hickory-1 during the recently concluded Alaskan field season. This
decision was made, and communicated to shareholders, during the planning phase
of Hickory-1. It was made in order to allow our technical team and advisors
sufficient time to analyse the well data as well as comprehensively design and
optimise the flow test program (both in terms of program cost and objectives).
Lessons learnt from other operators on the North Slope suggest this decision,
and underlying approach, is absolutely the best one.


Our call to action prior to the upcoming AGM is to encourage you to exercise
your rights as a shareholder and vote on the resolutions of the meeting.
Shareholders can access all relevant information and vote online at
www.investorvote.com.au (http://www.investorvote.com.au) using the 6-digit
control number 182503 and provide your SRN/HIN and postcode or country of
residence to log in.

If you require further assistance, please contact Computershare by calling +61
(03) 9415 4000 or 1300 850 505 (within Australia).

The recommendation of the 88 Energy Board is to vote FOR Resolutions 1 to 5,
and AGAINST Resolution 6.

We greatly appreciate your ongoing support and look forward to the journey





Ashley Gilbert

Non-Executive Chairman
Managing Director and CEO

88 Energy
88 Energy Limited



This announcement has been authorised by the Board.



Media and Investor Relations:


88 Energy Ltd

Ashley Gilbert, Managing


Tel: +61 8 9485 0990




Finlay Thomson, Investor
Tel: +44 7976 248471


Fivemark Partners, Investor and Media

Michael Vaughan
Tel: +61 422 602 720


EurozHartleys Ltd

Tel: + 61 8 9268 2829


Tel: + 44 131 220 6939

Neil McDonald / Derrick Lee



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