REG - 88 Energy Limited - Hickory-1 Operations Update

88 EnergyAnnouncement

06/02/2023 07:16

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RNS Number : 9486O  88 Energy Limited  06 February 2023

This announcement contains inside information

 

88 Energy Limited

Hickory-1 Operations Update

Highlights

 

·    Permit to Drill approved for the Hickory-1 exploration well

·    Ice-pad construction to commence imminently ahead of drilling
Hickory-1 well

·    Mobilisation of Nordic Calista Rig-2 expected to commence
mid-February

·    Spud of Hickory-1 well on track for early March 2023

·    Hickory-1 drilling costs estimated to be US$13.5m gross (88E 75%
working interest)

 

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to confirm that the Permit to Drill (PTD) has been approved by the
Alaska Oil and Gas Conservation Commission (AOGCC) for the Hickory-1 well,
located in Project Phoenix on the North Slope of Alaska.

In addition, construction of the Hickory-1 ice-pad will commence imminently
with mobilisation of the Nordic Calista Rig-2 scheduled to also begin around
mid-February from the Pantheon Resources, Alkaid-2 well location. The
Hickory-1 drilling location is directly adjacent to the Trans-Alaska Pipeline
System (TAPS) and the Dalton Highway.

Planning and Permitting for the Hickory-1 well is now largely complete with
the approval of the AOGCC PTD, ahead of targeted spud in early March 2023.
Hickory-1 Project Manager, Fairweather, LLC, has completed the tendering and
contracting program for the drilling operations with the well cost estimated
to be approximately US$13.5 million gross (88E net ~US$10 million). The modest
drilling cost is a direct result of the proximity of Project Phoenix and the
Hickory-1 well to key infrastructure including the Dalton Highway.

Flow testing of the Hickory-1 well is planned to be undertaken in the 2023/24
winter season, subject to well results, providing sufficient time
post-drilling to optimise the flow test design, permitting and implementation.

The Hickory-1 well is designed to appraise up to six conventional reservoir
targets within the SMD, SFS, BFF and KUP reservoirs and 647 million barrels of
oil(1,2). Hickory-1 is permitted to a total depth of 12,500 feet. An optimal
drilling location has been selected adjacent to the Dalton Highway utilising
an extensive suite of data. This included interpretation of the Icewine-1 well
logs, mapping and AVO analysis of the modern Franklin Bluffs 3D seismic data
(FB3D) and publicly available information from the recent drilling and flow
tests carried out on adjacent acreage by Pantheon Resources.

 

(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 movable hydrocarbons.

(2) Mean unrisked resource - Net Entitlement to 88 Energy. Refer announcement
released to ASX on 23 August 2022

 

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, Neil McDonald / Derrick
Lee                       Tel: + 44 131 220 6939

 

 

 

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 conventional total of 647MMbbl of
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 1: Project Phoenix lease area, including mapped play fairways, Franklin
Bluffs 3D area and planned Hickory-1 well location (subject to permitting, as
well as JV and Government approvals).

 

 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.

 

 

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 recoverable hydrocarbons.

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