REG - 88 Energy Limited - Merlin-2 Pre-Spud Operations On Track

88 EnergyAnnouncement

01/03/2022 07:00

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RNS Number : 1149D  88 Energy Limited  01 March 2022

 

This announcement contains inside information

1 March 2022

 

 

88 Energy Limited

Merlin-2 Pre-Spud Operations On Track

Highlights

·   Mobilisation of the Arctic Fox rig completed.

·   Spud of Merlin-2 well scheduled for the week commencing 7 March 2022.

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to report that the mobilisation of the Arctic Fox rig to the Merlin-2
appraisal well drilling location is now complete.

Pre-spud operations are continuing and now entering the final phase.  The
Merlin-2 spud date is scheduled for the week commencing 7 March 2022, with the
well permitted to a Total Depth (TD) of 8,000 feet.

The well is planned to be initially drilled to 2,000 feet, with the surface
casing then installed and the Blow Out Preventer system tested.  This is
anticipated to collectively take approximately one week.  Drilling to TD is
then expected to take a further four weeks, including wireline logging.

A production test program for the Merlin-2 well has been designed and
equipment placed on standby during initial well site operations.  Flow
testing of Merlin-2 will be contingent upon the wireline results, in
particular the MDT outcomes, as well as government approvals and weather
window considerations.

88 Energy Managing Director and CEO, Ashley Gilbert, commented:

"We are now entering the final phase of pre-spud preparations and look forward
with excitement to the next few weeks of drilling operations.  Success at
Merlin-2 has the clear potential to be transformational for our shareholders
and we look forward to providing updates as the drilling of this appraisal
well progresses."

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

 

·    Mobilisation of Arctic Fox rig modules to Merlin-2 drilling location

·    Project Peregrine and Recent Nanushuk Discoveries (with approximate
Merlin-2 appraisal well location)

 

 

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 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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