REG - 88 Energy Limited - Contingent Resource Update for Project Phoenix

88 EnergyAnnouncement

18/09/2024 07:00

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RNS Number : 5350E  88 Energy Limited  18 September 2024

18 September 2024

88 Energy Limited

Significant Contingent Resource Update for Project Phoenix

Highlights

·   Major Milestone Achieved: New Contingent Resources estimates at Project
Phoenix for the SMD-B and SFS reservoirs, independently verified by ERCE
Australia Pty Ltd (ERCE), a globally respected authority in petroleum reserve
and resource auditing.

·   Significant Resources Update: Existing Project Phoenix Gross Best
Estimate (2C) Contingent Resources increases by over 50%, with an additional
gross 128 million barrels of oil equivalent (MMBOE)(2), 81 MMBOE Net
Entitlement to 88E, added from the SMD-B and SFS reservoirs, comprising:

►    115 million barrels (MMbbl) of Gross recoverable hydrocarbon liquids
(oil and natural-gas liquids), 73 MMbbl Net Entitlement to 88 Energy; and

►    68 billion cubic feet (BCF) of Gross recoverable gas, 43 BCF Net
Entitlement to 88 Energy.

·   Multi-Reservoir Discovery: Estimates from ERCE (SMD-B and SFS
reservoirs) and Netherland, Sewell & Associates, Inc (NSAI) (Basin Floor
Fan (BFF) reservoir) confirm Project Phoenix as a robust multi-reservoir
discovery, with a total combined Gross Best Estimate 2C Contingent Resource of
approximately 378 MMBOE (239 MMBOE Net Entitlement to 88E, refer to Tables 1
and 5).

·  Material Upside Potential: Prospective Resources of Net Mean Unrisked
155 MMbbl(1,3) independently verified by Lee Keeling and Associates Inc, in
the Kuparuk (undrilled), SMD-A and C reservoirs (oil interpreted on logs at
Hickory-1), offer compelling additional upside potential. Unrisked net 3U
(high) of 321 MMbbls, 2U (best) of 153 MMbbls, 1U (low) of 53 MMbbls(1,3). The
geological Chance of Success (CoS) of these prospects has been estimated as
71%, 81% and 81% respectively.

·  Strategic Development Opportunity Confirmed: Featuring the critical
characteristics required for future commercialisation and monetisation,
including:

►    A combined Best Estimate (2C) Contingent Resources of approximately
gross 251 MMbbl (159 MMbbl net to 88E) of oil and natural-gas liquids (NGLs)
across four stacked reservoirs, accessible from single surface location.

►    Located on prime Alaskan State lands, directly adjacent to the
Trans-Alaskan Pipeline System (TAPS), and the Dalton Highway, with close
proximity to the critical oil and gas services hub at Deadhorse on Alaska's
North Slope.

►    Premium 37- 40(o) API gravity oil successfully recovered, for a
highly marketable and valuable light oil product.

·   Project Advancement Momentum: An extended period horizontal well flow
test of the SMD reservoir, utilising the existing Franklin Bluffs gravel pad,
is in the planning and design stage with the Joint Venture.

·   Constructive Partner Progress: Ongoing discussions with joint venture
partner Burgundy Xploration, LLC (Burgundy), could see Burgundy carrying all
or part of 88 Energy's share of the 2025/2026 work program in exchange for an
additional working interest in Project Phoenix.

 

(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 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.)

(2. Gross (100%) best estimate contingent resources. NGLs are converted to oil
equivalent volumes on a constant ratio basis of 1:1. Gas is converted to oil
equivalent volumes on a constant ratio basis of 5.5 BCF per 1 MMBOE.)

(3.  Please refer to page 8 and ASX announcement dated 23 August 2022.)

 

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy, 88E, or the
Company) is pleased to report a further, independently certified Contingent
Resource estimate of 73 MMbbl of hydrocarbon liquids and 43 BCF of gas (net,
unrisked best estimate (2C)), for the SMD-B and SFS reservoirs in Project
Phoenix (~74.3% net working interest). The Contingent Resources at SMD-B and
SFS were independently validated by ERCE, a globally recognised authority in
petroleum and resource auditing.

Ashley Gilbert, Managing Director of 88 Energy, commented:

"This additional Contingent Resource estimate reaffirms the substantial
potential of Project Phoenix, with four independent reservoirs now confirmed
as discoveries. The confirmation of a multi-hundred-million-barrel discovered
oil and NGL resource is a major milestone for 88 Energy and its shareholders.

We are now focused on planning an extended period horizontal flow test of the
SMD reservoir, utilising the existing Franklin Bluffs gravel pad
infrastructure. Simultaneously, we are in discussions with our Joint Venture
partner regarding the next stage of advancement of the project. This may
include Burgundy carrying 88 Energy's share of the anticipated 2025/26 work
program in exchange for an additional working interest in Project Phoenix.
Additionally, we will initiate a formal farm-out process in Q4 2024 to ensure
the next phase of Project Phoenix's activities is well-funded.

Shareholders can look forward to more updates on our progress as we continue
to mature and de-risk Project Phoenix towards a future potential
commercialisation event."

Background on Project Phoenix (~74.3% WI)

The Hickory-1 discovery well was drilled in February 2023 and flow tested
during the Alaskan winter season in Q1/Q2 CY24. Testing focused on the two
shallower primary targets, the Upper SFS (USFS) reservoir, previously
untested, and the SMD-B reservoir. Each zone was independently isolated,
stimulated, and flowed to the surface either naturally or using nitrogen lift
to facilitate efficient well clean-up.

 

 

 

Table 1: Summary of Project Phoenix gross Contingent Resources estimates by
NSAI and ERCE

 Project Phoenix               Gross (100%) Contingent Resources (4)
 Reservoir  Auditor    UoM     Low (1C)       Best (2C)      High (3C)
 SMD-B      ERCE(1,3)  MMBOE   11             38             124
 Upper SFS  ERCE(1,3)  MMBOE   9              34             113
 Lower SFS  ERCE(1,3)  MMBOE   13             56             194
 BFF        NSAI(2,5)  MMBOE   99             250            579
 Total                         132            378            1,011

 

 

Table 2: Summary of Project Phoenix net entitlement to 88 Energy (63.3%)
Contingent Resources estimates by NSAI and ERCE

 Project Phoenix               NET (~63.3%) Contingent Resources (4,6)
 Reservoir  Auditor    UoM     Low (1C)        Best (2C)       High (3C)
 SMD-B      ERCE(1,3)  MMBOE   7               24              79
 Upper SFS  ERCE(1,3)  MMBOE   6               21              72
 Lower SFS  ERCE(1,3)  MMBOE   8               35              123
 BFF        NSAI(2,5)  MMBOE   62              158             367
 Total(7)                      83              239             640

 

(Notes to tables 1 and 2:)

(1.         ERCE: ERCE Australia Pty Ltd)

(2.         NSAI: Netherland, Sewell & Associates Inc.)

(3.         Refer to page 6, Appendix 2 and disclaimers for further
details.)

(4.         Million Barrels of Oil Equivalent (MMBOE) of estimate
contingent resource. NGLs are converted to oil equivalent volumes on a
constant ratio basis of 1:1. Gas is converted to oil equivalent volumes on a
constant ratio basis of 5.5 BCF per 1 MMBOE.)

(5.         Please refer to page 7 and ASX announcement dated 6
November 2023 for further details in relation to the BFF Contingent Resource
estimate. Note the Basin Floor Fan (BFF) reservoir was drilled and tested on
adjacent acreage by Pantheon Resources)

(6.         88 Energy net resource entitlement of ~63.3% has been
calculated using an average 74.3% working interest net of a 12.5% government
royalty and a 4% Overriding Royalty on 18 leases.)

(7.         Totals by reservoir rounded and project total may not sum
due to rounding.)

 

Table 3: Summary of Project Phoenix Contingent Resources marketable liquid
estimates

 Project Phoenix                     Contingent ResourceS: Marketable Liquids (2)
 Probabilistic             UoM       Low (1C)         Best (2C)        High (3C)
 Net to 88E (63.3%) (3,4)  MMbbl(1)  52               159              448
 Total gross (100%)        MMbbl(1)  83               251              708

 

(Notes to table 3:)

 

(1.         MMBBLs of hydrocarbon liquids (oil and natural-gas
liquids). NGLs are converted to oil equivalent volumes on a constant ratio
basis of 1:1.)

(2.         Gas is excluded given the limited market currently on the
North Slope of Alaska. Future markets are anticipated to open with potential
development of gas infrastructure under consideration. Refer to page 6 for
further details with regard to hydrocarbon type and estimates)

(3.         88 Energy net resource entitlement of ~63.3% has been
calculated using an average 74.3% working interest net of a 12.5% government
royalty and a 4% Overriding Royalty on 18 leases.)

(4.         Sources are ERCE Australia Pty Ltd (for SMD-B and SFS
reservoirs) and Netherland, Sewell & Associates Inc (for BFF reservoir),
arithmetically summed.)

USFS flow test results

·      Peak flow rate: ~70 bopd

·      Maximum oil cut: 15%

·      Flow type: Natural flow followed by Nitrogen Lift

·      Oil samples: Multiple samples returned gravities ranging from
39.9 to 41.4(o) API (light crude oil).

The natural flow of the USFS zone is noteworthy as it enhances the potential
producibility from this zone (refer to the ASX announcement dated 2 April
2024).

SMD-B flow test results

·      Peak flow rate: ~50 bopd

·      Maximum oil cut: 10%

·      Gas to oil ratio: Low, with little to no measurable gas

·      Oil samples: Multiple samples returned gravities of 38.5 to
39.5(o) API

 

For full details, refer to the ASX announcement dated 15 April 2024.

Advancement activities and key milestones

The Project Phoenix joint venture is currently planning a flow test of the SMD
reservoir over an extended period at the Franklin Bluffs gravel pad in CY
2025/26. The reuse of the Franklin Bluffs gravel pad (previously used to drill
the Icewine-1 and 2 wells) offers considerable cost savings over a
purpose-built ice pad without compromising the objectives. The design phase
for the horizontal well is progressing well, with ongoing assessments by
ResFrac to optimise the completion strategy.

In parallel, 88 Energy is in discussions with Burgundy regarding a potential
funding transaction. Burgundy is a private Texas company, supported by
sophisticated oil and gas investors, that has invested more than US$25 million
into Project Phoenix over the life of the project. 88E understands that
Burgundy is progressing plans for a stock exchange listing, following which,
it is anticipated that Burgundy will enter into an agreement to provide a
carry to 88E for the anticipated 2025/26 work program, in exchange for an
additional working interest in Project Phoenix. The provision of such a carry
to 88 Energy would be subject to Burgundy raising the capital required
alongside its listing process and at this stage there is no guarantee that a
transaction with Burgundy will be completed. Accordingly, the Company intends
to launch a formal farm-out process in Q4 2024 to ensure progress continues,
irrespective of the outcome of Burgundy's listing process.

 

Table 4: Indicative Project Phoenix development timeline. (1)

 Project Phoenix
                                                                     H1-24  H2-24  H1-25  H2-25  H1-26  H2-26
 Successful Hickory-1 flow test flows light crude oil to surface     P
 Post-well analysis and updated Contingent Resource Estimate                P
 Targeted farmout to de-risk and provide pathway to production test         n      n
 Farm-out program to secure funding for forward program                     n      n      n
 Planning/permitting/design for horizontal production test(1)               n      n      n      n
 Extended horizontal production test(1)                                                          n      n

(1.This timeline is indicative and subject to change. The Company reserves the
right to alter this timetable at any time. Horizontal production test subject
to farm-out/funding as well as government and other approvals)

Summary of Project Phoenix Resources estimates

Contingent Resources estimate: Project Phoenix SMD-B and SFS reservoirs

The Contingent Resources estimates associated with the SMD-B and SFS
reservoirs in Project Phoenix (~74.3% net working interest to 88E and ~63.3%
net entitlement) and assessed by ERCE are summarised below as at 31 August
2024.

Table 5: Project Phoenix gross and net Contingent Resources estimates: SMD-B
and SFS reservoirs

 Project Phoenix           Gross (100%) Contingent Resources (1,3)
 Reservoir      UoM        Low (1C)       Best (2C)      High (3C)
 SMD-B          MMbbl      10             35             111
 Upper SFS      MMbbl      8              30             101
 Lower SFS      MMbbl      12             51             174
 Total Oil(2)   MMbbl      30             115            387
 SMD-B          BCF        6              20             73
 Upper SFS      BCF        5              18             65
 Lower SFS      BCF        6              30             111
 Total Gas(2)   BCF        16             68             249
 Total (2)      MMBOE (4)  33             128            432
 Project Phoenix           Net Entitlement (~63.3%) Contingent Resources (1,3)
 Reservoir      UoM        Low (1C)       Best (2C)      High (3C)
 SMD-B          MMbbl      7              22             70
 Upper SFS      MMbbl      5              19             64
 Lower SFS      MMbbl      7              32             110
 Total Oil (2)  MMbbl      19             73             245
 SMD-B          BCF        3              13             46
 Upper SFS      BCF        3              11             41
 Lower SFS      BCF        4              19             70
 Total Gas (2)  BCF        10             43             157
 Total (2)      MMBOE (4)  21             81             273

 

(1. Source: ERCE Australia Pty Ltd)

(2. 88 Energy net resource entitlement of ~63.3% has been calculated using an
average 74.3% working interest net of a 12.5% government royalty and a 4%
Overriding Royalty on 18 leases.)

(3. 88 Energy cautions that the reported totals for Oil and Total MMBOE are an
arithmetic sum of the individual hydrocarbon types within the SMD-B and SFS
reservoirs. 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.)

(4. The Contingent Resources 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.)

(5. Gas is converted to oil equivalent volumes via a constant ratio of 5.5 BCF
per 1 MMBOE.  Totals by reservoir rounded and project total may not sum due
to rounding.)

(6. Please refer to the disclaimers attached at Schedules 1 & 2 of this
release for more information on the contingent resource report.)

About ERCE

ERCE is a globally recognised, independent petroleum Reserves and Resources
auditor with over 40 years of experience. With a team of over 50 full-time
technical staff, ERCE provides expertise in geoscience, reservoir engineering,
facilities and cost engineering, and economic/commercial assessments across
conventional and unconventional projects. ERCE has offices in the UK, Canada,
Kuala Lumpur, and Perth, WA.

Contingent Resources estimate: Project Phoenix BFF reservoir

The maiden Contingent Resources estimate conducted by NSAI and associated with
the BFF reservoir in Project Phoenix (~74.3% net working interest to 88E and
~63.3% net entitlement) is summarised below as at 1 November 2023.

 

Table 6: Project Phoenix gross and net Contingent Resources estimates: BFF
reservoir

 Project Phoenix: Basin Floor Fan      Gross (100%) Contingent Resources (1,3)
 Fluid Type         UoM                Low (1C)       Best (2C)      High (3C)
 Oil                MMbbl              17             44             104
 NGL                MMbbl              35             91             218
 Oil + NGL(2)       MMbbl              52             136            322
 Gas                BCF                255            628            1,417
 Total(2)           MMBOE (4)          99             250            579
 Project Phoenix: Basin Floor Fan      Net Entitlement (~63.3%) Contingent Resources (1,3)
 Fluid Type         UoM                Low (1C)       Best (2C)      High (3C)
 Oil                MMbbl              11             28             66
 NGL                MMbbl              22             58             138
 Oil + NGL(2)       MMbbl              33             86             204
 Gas                BCF                161            398            897
 Total(2)           MMBOE (4)          62             158            367

 

(1. Source - Netherland, Sewell & Associates Inc.)

(2. 88 Energy net resources have been calculated using a 75.227% working
interest and a 16.5% royalty.)

(3. 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.)

(4. The Contingent Resources 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.)

(5. 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. Totals by fluid rounded and reservoir
total may not sum due to rounding.)

 

Please refer to ASX announcement dated 6 November 2023 for further details in
relation to the BFF Contingent Resource estimate.

Updated Prospective Resources estimate: Project Phoenix

The updated Prospective Resources estimates were prepared by Lee Keeling and
Associates (LKA) as of 9 August 2022, prior to the drilling of Hickory-1. This
update reflects the reclassification of the BFF and the SMD-B and SFS from
Prospective Resources to Contingent Resources as of 1 November 2023 and 16
September 2024 respectively and has not been reviewed by NSAI or ERCE. The
remaining Prospective Resources for Project Phoenix (~74.3% net working
interest) are summarised below.

 

Table 7: Project Phoenix gross and net Prospective Resources estimate

 Project Phoenix: Alaska, North Slope  Unrisked Gross Prospective Oil Resources (MMstb)(4,5)
 Prospects                             Low (1U)         Best (2U)        High (3U)        Mean             COS(3)
 Shelf Margin Delta (SMD A and C)      48               153              355              158              81%
 Kuparuk (KUP)                         39               88               156              89               72%
 Prospects Total                       87               241              511              247 (2)
 Project Phoenix: Alaska, North Slope  Unrisked Net Entitlement to 88E (1) Prospective Oil Resources (MMstb)(4,5)
 Prospects                             Low (1U)         Best (2U)        High (3U)        Mean             COS(3)
 Shelf Margin Delta (SMD A and C)      29               97               223              99               81%
 Kuparuk (KUP)                         24               56               98               56               72%
 Prospects Total                       53               153              321              155 (2)

 

(1. 88 Energy net resource entitlement of ~63.3% has been calculated using an
average 74.3% working interest net of a 12.5% government royalty and a 4%
Overriding Royalty on 18 leases.)

(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 as well as the removal of
the SFS and SMD-B reservoirs as of 16 September 2024 which have 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 2022.)

(8. Please refer to the disclaimers attached as Schedules 1 and 2 of this
release for more information on the prospective resources estimate.)

( )

(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.)

 

This announcement has been authorised by the Board.

 

 

Media and Investor Relations:

 

 88 Energy Ltd

 Ashley Gilbert, Managing Director
 Ashley Gilbert, Managing Director
 Tel: +61 (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 (8)9268 2829

 Cavendish Capital Markets Limited                Tel: +44 (0)207 220 0500
 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.

 

SCHEDULE 1

Disclaimers:

Cautionary Statement for Prospective Resource Estimates - With respect to the
Prospective Resource estimates contained within this report, it should be
noted that the estimated quantities of gas that may potentially be recovered
by the future application of a development project relate to undiscovered
accumulations. These estimates have an associated risk of discovery and risk
of development.  Further exploration and appraisal is required to determine
the existence of a significant quantity of potentially moveable
hydrocarbons.

Hydrocarbon Resource Estimates - The Contingent and Prospective Resource
estimates for Project Phoenix presented in this report are prepared as at 31
August 2024 for the SMD-B and SFS reservoirs and 1 November 2023 for the BFF
reservoir (LR 5.25.1).  The Prospective Resource estimates remain unchanged
from the 2022 independent report by LKA and are quoted on an unrisked basis
together with the geological chance of success for each prospect.  The
unrisked mean total presented in the table is not representative of the
expected total from the three prospects and assumes a success case in all
reservoir intervals.  88 Energy have considered the chance of discovering oil
over gas to be 100% for all targets except for the Kuparuk Formation which was
assessed to be 70%. Chance of development has not been estimated. Quantifying
the chance of development (COD) requires consideration of both economic
contingencies 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.

Government Royalty and Overriding Royalty Interests - The Project Phoenix
leases ("Leases") are situated in the State Lands of the North Slope of Alaska
and are administered by the Alaskan Department of Natural Resources - Oil and
Gas Division (DNR).  All leases issued by DNR are subject to a royalty and
88E's Leases are subject to a 12.5% government royalty.  In addition, a total
of 18 leases are subject to an overriding royalty of 4.0% payable to
non-related parties of the Company.  The net economic interest to 88E has
therefore been calculated as 63.3% and the Net Entitlement Prospective
Resources have been adjusted to reflect this.

Competent Person Statement Information - Information relating to contingent
resource estimates for the SMD-B and SFS reservoirs have been supplied by
ERCE, and the company has stated that it has been prepared in accordance with
the definitions and guidelines set forth in the Petroleum Resources Management
System, 2018, approved by the Society of Petroleum Engineers and have been
prepared using probabilistic methods.  ERCE Australia Pty Ltd, the
independent resource reviewer engaged to assess the SMD-B and SFS reservoirs,
has consented to the inclusion of information relevant to their review in the
form and context in which it appears.

 

Information relating to contingent resource estimates for the Basin Floor Fan
reservoir have been supplied by NSAI, and the company has stated in the Report
that it has been prepared in accordance with the definitions and guidelines
set forth in the Petroleum Resources Management System, 2018, approved by the
Society of Petroleum Engineers and have been prepared using probabilistic
methods.  Netherland, Sewell & Associates, Inc., the independent resource
reviewer engaged to assess the Basin Floor Fan reservoir, has consented to the
inclusion of information relevant to their review in the form and context in
which it appears.

 

References to all Prospective Resources in this announcement relate to the
2022 report compiled by Lee Keeling and Associates, Inc. These resource
estimates remain valid and no adjustments are required but will be reassessed
if and when flow test data is obtained from any of these reservoirs.

 

Dr Stephen Staley, who is a Non-Executive Director of the Company, 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.

Forward looking statements - This document may include forward looking
statements. Forward looking statements include, are not necessarily limited
to, statements concerning 88E's planned operation program and other statements
that are not historic facts. When used in this document, the words such as
"could", "plan", "estimate", "expect", "intend", "may", "potential", "should"
and similar expressions are forward looking statements. Although 88E believes
the expectations reflected in these are reasonable, such statements involve
risks and uncertainties, and no assurance can be given that actual results
will be consistent with these forward-looking statements. The entity confirms
that it is not aware of any new information or data that materially affects
the information included in this announcement and that all material
assumptions and technical parameters underpinning this announcement continue
to apply and have not materially changed.

 

SCHEDULE 2

Definitions and Glossary of Key Terms:

 

SPE definitions:

Prospective Resource

Prospective resources are estimated volumes associated with undiscovered
accumulations. These represent quantities of petroleum which are estimated, as
of a given date, to be potentially recoverable from oil and gas deposits
identified on the basis of indirect evidence but which have not yet been
drilled. This class represents a higher risk than contingent resources since
the risk of discovery is also added. For prospective resources to become
classified as contingent resources, hydrocarbons must be discovered, the
accumulations must be further evaluated and an estimate of quantities that
would be recoverable under appropriate development project(s) prepared.

Contingent Resource

Contingent Resources are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from known accumulations, by the
application of a development project not currently considered to be commercial
owing to one or more contingencies. The resources shown in this report are
contingent upon (1) acquisition of additional technical data that demonstrate
producing rates and volumes sufficient to sustain economic viability across
the acreage; (2) approval of a field development plan and regulatory permits;
(3) demonstration of viable gas and water utilization or disposal methods; (4)
demonstration of ability to market oil and natural gas liquids (NGL); (5)
establishment of a viable North Slope gas market and development of
infrastructure which is currently evolving; and (6) commitment to fund and
complete the development project. If these contingencies are successfully
addressed, some portion of the contingent resources estimated in the report
may be reclassified as reserves; the estimates have not been risked to account
for the possibility that the contingencies are not successfully addressed. The
project maturity subclass for these contingent resources is development
unclarified.

Glossary of Key Terms

 1U                     Denotes the unrisked low estimate qualifying as Prospective Resources.
 2U                     Denotes the unrisked best estimate qualifying as Prospective Resources
 3U                     Denotes the unrisked high estimate qualifying as Prospective Resources
 1C                     Denotes the low estimate qualifying as Contingent Resources
 2C                     Denotes the best estimate qualifying as Contingent Resources
 3C                     Denotes the high estimate qualifying as Contingent Resources
 API                    American Petroleum Institute's Inverted scale for denoting the "lightness" or
                        "heaviness" of crude oils and other liquid
 BOE                    Barrels of oil equivalent
 BOPD                   Barrels of oil per day
 Bnbbl                  Billion barrels of oil
 Chance                 Chance equals 1-risk. Generally synonymous with likelihood.
 Chance of Development  The estimated probability that a known accumulation, once discovered, will be
                        commercially developed.
 Entitlement            That portion of future production (and thus resources) legally accruing to an
                        entity under the terms of the development and production contract or license.
 Mean                   The sum of a set of numerical values divided by the number of values in the
                        set.
 MMBOE                  Million barrels of oil equivalent
 MMbbl                  Million barrels of oil
 Prospect               A project associated with a potential accumulation that is sufficiently well
                        defined to represent a viable drilling target.
 Prospective Resources  Those quantities of petroleum that are estimated, as of a given date, to be
                        potentially recoverable from undiscovered accumulations.
 Reservoir              A subsurface rock formation that contains an individual and separate natural
                        accumulation of petroleum that is confined by impermeable barriers, pressure
                        systems, or fluid regimes (conventional reservoirs), or is confined by
                        hydraulic fracture barriers or fluid regimes (unconventional reservoirs).
 Royalty                A type of entitlement interest in a resource that is free and clear of the
                        costs and expenses of development and production to the royalty interest
                        owner. A royalty is commonly retained by a resources owner (lessor/host) when
                        granting rights to a producer (lessee/contractor) to develop and produce that
                        resource. Depending on the specific terms defining the royalty, the payment
                        obligation may be expressed in monetary terms as a portion of the proceeds of
                        production or as a right to take a portion of production in-kind. The royalty
                        terms may also provide the option to switch between forms of payment at
                        discretion of the royalty owner
 Working Interest       An entity's equity interest in a project before reduction for royalties or
                        production share owed to others under the applicable fiscal terms.

 

SFS and SMD-B Contingent Resources - Disclosures under ASX Listing Rules 5.25,
5.27, 5.33 and 5.41

 

LR 5.25.1

The contingent resources are reported as at 31 August 2024.

 

LR 5.25.3, LR 5.25.4

This announcement does not contain disclosure of total petroleum
initially-in-place, discovered petroleum-initially-in-place, total resource
base, estimated ultimate recovery, remaining recoverable resources or
hydrocarbon endowment.

 

LR 5.25.5

The resources information in this document is reported according to the
Company's economic interest in each of the resources net of royalties.

 

LR 5.25.6

ERCE have used a probabilistic methodology to estimate the contingent
resources. Once all contingencies have been successfully addressed, the
probability that the quantities of contingent resources actually recovered
will equal or exceed the estimated amounts is 90 percent for the low estimate,
50 percent for the best estimate, and 10 percent for the high estimate.

 

LR 5.25.7

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.

 

LR 5.27.3

Totals for Oil & NGL and Total MMBOE are arithmetically summed. 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.

 

LR 5.27.4

Contingent resources are reported for the SFS and SMD-B reservoir in the
Project Phoenix area only.

 

LR 5.33.1

The contingent resources are reported for the Project Phoenix leased area,
which includes the Toolik River Unit (refer announcement 28 February 2023 for
specific leases and lease area). The leases are State leases and have a
primary term until February 2028 under the Unit Agreement with the State of
Alaska.

 

LR 5.33.2

The existence of a significant quantity of potentially moveable hydrocarbons
and confirmation of a discovery is confirmed by regional data, seismic data,
well data and flow test data.  In particular this is supported by the recent
Hickory-1 well data, together with the historical Icewine-1 well data. The
Hickory-1 well, together with wells drilled and tested on adjacent acreage,
have recovered light oil, natural-gas liquids and gas during flow tests,
confirming the extensive extent of the reservoirs and producibility of the
reservoirs.

 

LR 5.33.3

ERCE conducted an independent evaluation and estimation of the SMD-B, Upper
SFS and Lower SFS reservoir contingent resource using the probabilistic
method.  The contingent resources estimated are within the sub-class of
Development Unclarified, which is defined as a discovered accumulation where
project activities are under evaluation and where justification as a
commercial development is unknown based on available information. The Company
will actively assess the commercial viability of the project and contingencies
subsequent to the flow test of multiple reservoirs planned at Hickory-1.

 

LR 5.33.4

The estimates of contingent resources are not contingent on any technology
that is currently under development.

 

LR 5.33.5

The contingent resources do not relate to an unconventional resource.

 

LR 5.41

The contingent resources have been prepared in accordance with the Society of
Petroleum Engineers (SPE) 2018 Petroleum Resource Management System (PRMS) by
Rhod Phillips as the qualified petroleum resource evaluator.

 

LR 5.42

The contingent resources are based on, and fairly represent, information and
supporting documentation prepared by Rhod Phillips, a member of the Society of
Petroleum Evaluation Engineers who is an employee of ERCE. Dr Jonathan Hull,
CEO of ERCE has consented to the publication of these contingent resource
estimates in the form and context in which they appear in this announcement.

 

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