REG - 88 Energy Limited - Hickory-1 Well Flow Test – Rig Contract Executed

88 EnergyAnnouncement

05/09/2023 07:00

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RNS Number : 2915L  88 Energy Limited  05 September 2023

This announcement contains inside information

5 September 2023

88 Energy Limited

HICKORY-1 WELL FLOW TEST - RIG CONTRACT EXECUTED

Highlights

·   Rig contract executed for Hickory-1 exploration well flow test at
Project Phoenix

·   Multiple hydrocarbon-bearing pay zones to be flow tested, with final
program design underway

·   Hickory-1 well targeting 647 million barrels of oil(1,2)

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

·   Planning and permitting for the flow test on schedule with operations
set to commence as early as possible in the upcoming Alaskan winter
operational season

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to announce that it has executed a rig contract with All American
Oilfield (AAO) for the use of Rig-111 to flow test the Hickory-1 well on the
Alaskan North Slope.

 

Managing Director and CEO, Ashley Gilbert, commented:

"The execution of a rig contract is another important step as we advance
towards the Hickory-1 well flow testing program planned for the 2023/2024
Alaskan winter operational season.

"We continue to be very encouraged by progress by our northern neighbour,
Pantheon Resources, who recently announced a material, independently
estimated, 2C contingent resource for the Lower Basin Floor Fan reservoir.(3)

"The Basin Floor Fan reservoir was the deepest of the multiple
hydrocarbon-bearing pay zones intersected as part of the Hickory-1 exploration
well. This reservoir, along with our primary, high-priority SMD, Upper SFS and
SFS targets, is planned to be flow tested as part of the upcoming program.

"We look forward to updating shareholders as we progress to the completion of
permitting and planning activities before mobilising to the well site as soon
as Alaskan seasonal conditions permit."

 

(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. Resources estimated pre-Hickory-1 drilling.

(3) Refer Pantheon Resources plc (AIM: PANR) press release dated 29 August
2023
(https://polaris.brighterir.com/public/pantheon_resources/news/rns/story/rmvz29r
(https://polaris.brighterir.com/public/pantheon_resources/news/rns/story/rmvz29r)
) which reported 2C estimates (best estimates) of oil and natural gas liquids
("NGLs"), and  total  barrels of estimated marketable liquids. There is no
guarantee that Pantheon's results will be reflected in the results of the
Company's upcoming flow test. The proximity of Pantheon's leases to the
Hickory-1 exploration well is shown at Figure 2 of this announcement.

 

 

 

 

 

 

 

 

Hickory-1 Flow Test Program

The Hickory-1 exploration well is currently cased and suspended ahead of the
planned flow test and well stimulation program scheduled for the 2023/2024
Alaskan winter operational season. Design of the flow test and stimulation
program, which is targeting multiple zones, is being undertaken in
consultation with industry experts, utilising available regional information
in combination with a detailed evaluation of the drilling and wireline logging
data from Hickory-1.

 

Permitting and planning is on track and will include rigorous technical and
economic optimisation with our Alaskan project manager, Fairweather, LLC.
Contract negotiations and ordering of long lead items are also proceeding as
planned.

 

Figure 1: The Hickory-1 flow test is planned to assess up to 4 zones

 

 

 

Hickory-1 Post Well Analysis

Post-well analysis is ongoing with results from the testing programs
anticipated to be fully completed and received in Q3 2023.  The graphic below
provides an overview of the planned program, and status, of post-well
analysis:

 

 

 

 

 

 

 

About All American and Rig-111

ll American Oilfield

AAO has been operating in the Alaskan oil and gas industry since 2010.  From
2015, AAO has been a wholly owned subsidiary of Chugach Alaska Corporation
(Chugach).  Founded in 1971, Chugach is an Alaska Native Corporation with
over 6,000 employees operating in 150 locations.

Rig-111

Rig-111 is a highly mobile and versatile carrier mounted workover and shallow
drilling rig, capable of depths up to 18,000 feet. With its recently updated
mast, the rig's capabilities and mobility are well suited for the workover
requirements of flow testing Hickory-1

 

Rig-111 was previously contracted by 88 Energy to successfully drill Merlin-1
in 2021.

 

 

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).

Project Phoenix is strategically located on the Dalton Highway with the
Trans-Alaska Pipeline system running through the acreage providing an
immediate export route and expediting future development.

 

Figure 2: 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)

 

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.

7.    It should be noted that the prospective resources and COS values were
calculated prior to the drilling of Hickory-1.

 

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.

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