REG - 88 Energy Limited - Merlin-2 Appraisal Well Location Selected

88 EnergyAnnouncement

24/11/2021 07:00

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RNS Number : 3389T  88 Energy Limited  24 November 2021

24 November 2021

This announcement contains inside information

88 Energy Limited

Merlin-2 Appraisal Well Location Selected

Highlights

·     Merlin-2 location selected from the three locations initially
permitted for the appraisal program

·     Target drilling location situated east and downdip of Merlin-1

·     Merlin-2 well location expected to display thicker reservoir
sections and higher permeability / porosity sands, targeting 652 million
barrels of oil1,2 with geological chance of success of 56%

·     Remaining two locations, together with Harrier-1, are permitted and
can be drilled at a later stage

·     Production test for the Merlin-2 well planned subject to results of
wireline program

·     Permitting and planning of Merlin-2 is at an advanced stage, with
the benefit of learnings from Merlin-1

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to announce that the Merlin-2 well location has now been selected,
from three initially permitted locations.  The Merlin-2 well location,
scheduled for drilling in February 2022 using the recently contracted Arctic
Fox rig, is located east and downdip of the successful Merlin-1 well. This
location is expected to encounter thicker reservoir sections and higher
permeability / porosity sands.

The Merlin-2 appraisal well is planned for a Total Depth of 8,000 feet, and is
targeting 652 million barrels of oil(1,2) in the highly prospective N18, N19
and N20 targets that were encountered in the successful Merlin-1 well (drilled
in March 2021 to a depth of 5,267 feet), which demonstrated the presence of
oil in these multiple stacked sequences in the Brookian Nanushuk Formation.

The remaining two locations permitted, together with the permitted Harrier-1
location, can be drilled in future years as part of an extended drilling
program to assess the full potential of the Project Peregrine acreage.

A production testing program for the Merlin-2 well has been designed and will
be on standby during initial wellsite operations. The production test is
contingent upon the wireline program results, in particular the MDT results,
as well as government approvals. The program and length of the test will be
subject to operational, funding and weather window considerations.

Permitting and planning for the Merlin-2 well remains on track for scheduled
spud in February 2022.

Further details on the upcoming operations at Merlin-2, and the Company's
other activities, are contained in the Company's latest corporate
presentation, which is available on 88 Energy's website at www.88energy.com.

 

 

(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 16 August 2021

 

The below graphics can be viewed in the pdf version of this announcement,
which is available on the Company's website www.88energy.com;

 

·   The Merlin-2 well location

·   Wireframe image showing respective Merlin-1 and Merlin-2 well locations

·   Project Peregrine and Recent Nanushuk Discoveries

 

 

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  Tel: +61 410 276 744

 Andrew Edge / Michael Vaughan                    Tel: +61 422 602 720

 EurozHartleys Ltd                                Tel: +61 8 9268 2829

 Dale Bryan

 Cenkos Securities                                Tel: +44 131 220 6939

 Neil McDonald / Derrick Lee

 

 

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 Peregrine

 

Project Peregrine is located in the NPR-A region of the North Slope of Alaska
and encompasses approximately 195,000 contiguous acres. It is situated on
trend to recent discoveries in a newly successful play type in topset sands in
the Nanushuk formation. 88 Energy has a 100% working interest in the project.

 

The Merlin-1 well was spudded in March 2021 with drilling operations completed
in April 2021. Interpretation of results was completed in August 2021 with
post well evaluation successfully demonstrating the presence of oil in N20,
N19 and N18 targets, with 41 feet of net log pay across the three reservoir
intervals noted and geochemical analysis determining the oil to have an
estimated API gravity between mid-30 to low-40 API (light oil).

 

A second well, the Merlin-2 appraisal well, is planned to be drilled in Q1
2022 as a follow-up well to the Merlin-1 exploration well.  Merlin-2 is
targeting a net entitlement mean Prospective Resource of 652 million barrels
(unrisked)(1,2).

 

To view the Company's video and animated presentations of Project Peregrine,
as well as the Merlin-1 well results and details of the Merlin-2 well, please
click on the link to the 88 Energy website www.88energy.com
(http://www.88energy.com) .

 

 

 

 

 

 

 

Independent oil and gas reservoir evaluation consultancy, ERCE Australia Pty
Ltd (ERCE), conducted an updated assessment of the Project Peregrine
prospective resources post the Merlin-1 well results.  The updated
prospective resource estimates and risking assessments for Project Peregrine
are noted below.

 

Revised Project Peregrine Prospective Resources

 

 Project Peregrine: Alaska North Slope   Unrisked Net Entitlement to 88E (1, 4) Prospective Oil Resources (MMstb)
 Prospects (Probabilistic Calculations)  Low (1U)         Best (2U)        High (3U)        Mean             COS (3)
 Merlin-2 (Nanushuk - N20, N19 and N18)  64               329              1,467            652              56%
 Merlin-1A (Nanushuk - N14S)             25               87               282              132              17%
 Harrier (Nanushuk)                      41               175              796              353              24%
 Harrier Deep (Torok)                    35               226              1,132            486              20%
 Prospects Total                                                                            1,624(2)

 

1. The Prospective Resources presented here are the result of a risked
probabilistic aggregation of the individual stacked prospective layers in each
prospect; the success case estimates present the distribution of possible
outcomes in the event that at least one prospective layer is successful.

2. Unrisked mean total is not representative of the expected total from the
four prospects and assumes a success case in all four wells.

3. COS represents the geological chance of success of at least one of the
stacked layers which comprise each prospect. This excludes phase risk which
ERCE has estimated to be 70% oil (30% gas). The Prospective Resources have
also not been adjusted for the chance of development, which is estimated by 88
Energy to be 60% (including phase risk), ERCE sees this as reasonable based on
the data available. 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 out-with the knowledge of ERCE they must be used
with caution.

4. Gross Prospective Resources include off-block volumes over which 88 Energy
has no mineral rights. Net working interest Prospective Resources are based on
the on-block volumes and 88 Energy's 100% working interest. Net entitlement
Prospective Resources are the net working interest Prospective Resources less
royalties payable to others. The net entitlement interest to 88 Energy is
calculated as 84.7% of net working interest after deduction of state royalty
(12.5%) and overriding royalty interests (1.3%and 1.5%).

 

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