REG - 88 Energy Limited - Hickory-1 Flow Testing Program Update

88 EnergyAnnouncement

23/06/2023 07:00

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RNS Number : 6633D  88 Energy Limited  23 June 2023

This announcement contains inside information

23 June 2023

88 Energy Limited

Hickory-1 Flow Testing Program and Post Well Analysis Update

Highlights

·   Multiple zones in Hickory-1 scheduled to be tested, all expected to
flow based on reservoir characteristics

·   Permitting and planning commenced, with the flow testing program
scheduled to begin as early as possible during the 2023/2024 Alaskan winter
operational season

·   Rig selection expected to be concluded imminently for Hickory-1 flow
tests

·   Post-well analysis of cores, mud gas isotubes and wireline data is
ongoing; initial results encouraging with good correlation to migration and
thermal maturity models for Project Phoenix

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to provided 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 well is currently cased and suspended ahead of the upcoming flow
testing program, which is scheduled to commence as early as possible in the
2023/2024 winter operational season. The flow test and well stimulation
program is being developed in consultation with flow test design experts, who
are utilising available regional information in combination with a detailed
evaluation of the drilling and wireline logging data from Hickory-1.

One aspect of the flow testing design that is of particular importance is the
choice of fluids used to stimulate the reservoir. The chemical composition of
these fluids can interact with certain clay types in the reservoirs, thus
having significant implications for each reservoir's performance and the
stimulation operation. The Company is working with technical consultants to
determine the optimal fluids to be used to stimulate the reservoir in
conjunction with the overall flow test program design to ensure the best
possible outcomes.

Program planning is on schedule and will include rigorous technical and
economic optimisation prior to finalisation. Rig selection and contract
negotiation is expected to be concluded imminently and key long lead items
required are being ordered.

 

Hickory-1 Drilling and Wireline Program

 

Hickory-1 intersected multiple hydrocarbon-bearing zones across all primary
and secondary pre-drill targets and identified the new Upper Slope Fan System
reservoir. The 2023 Hickory-1 drilling and wireline program delivered the
following key outcomes:

 

·    Confirmed presence of multiple hydrocarbon-bearing pay zones across
all pre-drill targets, in addition to the newly identified Upper SFS
reservoir;

·    Approximately 450 feet of estimated net pay calculated from wireline
data over all pay zones, with gross pay estimated to be over 2,000 feet;

·    Average total porosity of 9-12% across all zones, with key target
zones in the Upper and Lower SFS exhibiting between 11-16% total porosity; and

·    Reservoir quality and thickness met or exceeded pre-drill
expectations, with higher-than-expected porosity in the SFS and BFF, as well
as increased total gross reservoir, total net reservoir, and total net pay.

A summary of the pre-drill assessment and post-drill observations is outlined
in Tables 1 and 2 below.

 

Table 1: Hickory-1 exploration well pre-drilling assessment

 Unrisked Net Entitlement to 88E(2) Prospective Oil Resources (MMstb)(3,4)
 Prospects (Probabilistic Method)  Best (2U)(5)                      COS(1)  AVO anomaly   Oil recovery
 Shelf Margin Delta                140                               81%     Strong        Talitha A

(SMD A, B & C)
 Upper Slope Fan System            New reservoir yet to be assessed  -       Moderate      Not previously intersected

(Upper SFS)
 Upper Slope Fan System            84                                50%     Subtle        Alkaid-1 and Talitha A

(Lower SFS)
 Basin Floor Fan                   341                               50%     Not detected  Theta West

(BFF)
 Kuparuk (7)                       56                                72%     Subtle        Talitha A

(KUP)

 

 

Table 2: Hickory-1 exploration well initial post-drilling observations

 Hickory-1 exploration well
 Prospects (Probabilistic Method)  Shows        Estimated gross/net pay  Porosity range (average/high)  Sample cutting
 Shelf Margin Delta                ✓            ~540ft / ~95ft           ~10.5% / ~12%

(SMD A, B & C)
 Upper Slope Fan System            ✓            ~360ft / ~80ft           ~10.5% / ~16%

(Upper SFS)
 Upper Slope Fan System            ✓            ~380ft / ~120ft          ~10.5% / ~14%

(Lower SFS)
 Basin Floor Fan                   ✓            ~325ft / ~160ft          ~9.5% / ~12%

(BFF)
 Kuparuk                           To be drilled and tested at a future date

(KUP)

 

Preliminary petrophysical comparison of prospective zones in Hickory-1 against
the interval that flowed oil in Pantheon's Alkaid-1, suggests favourable
potential for successful flow of hydrocarbons from multiple zones in the
Hickory-1 well.

 

Pantheon's wells on the adjacent northern acreage (Alkaid-1, Alkaid-2,
Talitha-A and Theta West-1) have all flowed 35 to 40⁰ API oil from similar
sandstones, with testing confirming reservoir deliverability of light, sweet
oil (refer Pantheon public releases 7 February and 21 February 2022).

 

Hickory-1 Post Well Analysis

Post well analysis is ongoing with results from the testing programs
anticipated to be fully completed and received in early Q3 2023. The summary
below provides an overview of the planned program of post well analysis of
results and pre-planning for flow testing:

 

Geological Analysis

·        Including refining the depositional model and thin sections
analysis

Geophysical Analysis

·        Refining current interpretations, update AVO analysis +/-
seismic inversion to integrate Hickory-1 shear data

Routine and Special Core Analysis

·        Including porosity and permeability testing to calibrate
petrophysical models

Geochemical Analysis

·        Including High Resolution Gas Chromatography and mud gas
carbon isotope analysis

Geomechanical Analysis

·        Azimuthal rock property analysis including strength testing
for stimulation modelling

Flow Testing Planning

·        Stimulation modelling and design

·        Tender for services and award

Mudgas isotubes results were analysed from samples collected at 100-foot
intervals and at all significant mud gas peaks throughout the well.  Thermal
maturity data from the isotubes show all Phoenix reservoirs cluster around 1.0
% Ro, coincident with a light oil generative source rock. The Vitrinite
reflectance results are further supported by reservoir pyrolysis tests
conducted on side wall core plugs from a separate lab facility. Figure 4 below
shows that all valid reservoir tests plot in the interpreted "oil window" with
a general trend of increasing maturity with depth. Finally, the interpretive
"wetness" plot of the mud gas isotube data also supports oil-only phase
interpretation across all Hickory-1 reservoirs with an average of 15% (as a
rule of thumb, Oil >10% and condensate <10%).  Results correlate well
with the Company's migration models and understanding of thermal maturity
across Project Phoenix. Finally, the laboratory's staff geochemist remarked
that " Hickory's  mud gas hydrocarbon contents are almost all greater than 10
000 ppm which are indicative of strong shows".

 

 

 

 

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

 Cenkos Securities Plc                            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 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. Hickory-1 results and
independent mapping have demonstrated that these plays extend into the Phoenix
acreage.

 

Project Phoenix holds an estimated unrisked conventional total of 647MMbbl of
prospective oil resources (pre-drilling, 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 was 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 3: 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)

 

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.

 

1.    These pre-drilling resources estimates are net to 88 Energy and 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). The pre-drilling
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.

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

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