REG - 88 Energy Limited - Merlin-2 Drilling Ahead

88 EnergyAnnouncement

17/03/2022 07:00

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RNS Number : 1102F  88 Energy Limited  17 March 2022

This announcement contains inside information

 

17 March 2022

 

88 Energy Limited

Merlin-2 Drilling Ahead

Highlights

·   Merlin-2 surface hole successfully drilled to 2,005 feet, cased and BOP
system tested.

·   Operations progressing as planned with the Arctic Fox rig scheduled to
commence drilling ahead to the reservoir targets imminently.

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to report that the Merlin-2 surface hole was successfully drilled to
2,005 feet, the surface casing installed and cemented, and the Blow Out
Preventer (BOP) system tested.

Operations are progressing as planned with the Arctic Fox rig scheduled to
commence drilling ahead to the reservoir targets imminently. The Company
anticipates all target zones to be intersected prior to reaching the permitted
Total Depth (TD) of approximately 8,000 feet, with drilling to TD at Merlin-2
expected to take up to two weeks from this point.

The Merlin-2 well is designed to appraise the N18, N19 and N20 primary targets
located in the Nanushuk Formation, which were encountered in Merlin-1 and
returned compelling evidence of hydrocarbons across these three separate
zones. Given the suboptimal placement of the Merlin-1 well, with respect to
reservoir development (a necessary trade-off to maximise the number of stacked
targets), the Merlin-2 well represents a move east from Merlin-1 towards the
shelf edge where thicker and higher porosity/permeability formations are
anticipated.

During the current drilling phase, logging while drilling and mudlogging are
set to provide initial indications as to the prospectivity of the target zones
at the Merlin-2 location.  After reaching TD, a sophisticated wireline
logging program is planned to be run, which includes collection of down hole
samples and side wall cores.  The wireline logging program is expected to
take approximately five to seven days to be completed.

The Company will provide further updates subsequent to Merlin-2 achieving TD.

 

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

·   Figure 1. Wireframe image showing respective Merlin-1 and Merlin-2 well
locations, facing east and overlain with predicted reservoir sands profile.

·   Figure 2: Article Fox drill rig at the Merlin-2 drilling location

·   Map of 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, spudded in early March 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.

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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