REG - 88 Energy Limited - Merlin-2 Operations Update

88 EnergyAnnouncement

17/01/2022 07:05

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220117:nRSQ5605Ya&default-theme=true

RNS Number : 5605Y  88 Energy Limited  17 January 2022

17 January 2022

This announcement contains inside information

 

88 Energy Limited

Merlin-2 Operations Update

Highlights

·   Merlin-2 Permit to Drill in the final stages of review by the Bureau of
Land Management (BLM)

·   Snow road construction commenced ahead of Merlin-2 drilling

·   Commissioning of the Arctic Fox rig commenced

·   Spud of Merlin-2 remains on track for February 2022

 

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to provide the following update in relation to the Merlin-2 appraisal
well activities, located in Project Peregrine in the NPR-A region of the North
Slope of Alaska.

 

Commissioning of the Arctic Fox rig has commenced ahead of mobilisation to the
Merlin-2 drilling location. Construction of the single lane snow road to the
Merlin-2 location has also commenced, with good conditions noted in field and
construction of the snow road on schedule.

 

Permitting and planning for the Merlin-2 well is now largely complete, with
the well on track to spud in February 2022.  The Merlin-2 Permit to Drill is
in the final stages of review by the BLM and is on schedule to be issued ahead
of rig mobilisation.

 

88 Energy notes that it is aware of media reports of correspondence to the BLM
from the Center for Biological Diversity (CBD) with respect to the Permit to
Drill for the Merlin-2 well. The CBD is a not-for-profit environmental
activist group in the U.S..

 

With the current status of the review of the Permit to Drill by the BLM, as
well as numerous other related approvals and permits from various government
agencies, 88 Energy is nearing completion of permitting and the well remains
on track to spud in February 2022.

 

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).  Merlin-1 demonstrated the presence
of oil in these multiple stacked sequences within the Brookian Nanushuk
Formation.

 

Further details on the upcoming operations at the highly prospective Merlin-2
appraisal well, 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 prospective 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;

 

·     Map showing location of Merlin-2

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

·     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%).

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDSFLEFMEESEEF