REG - 88 Energy Limited - Merlin-2 Well Reaches Total Depth

88 EnergyAnnouncement

23/03/2022 07:00

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RNS Number : 7245F  88 Energy Limited  23 March 2022

This announcement contains inside information

23 March 2022

88 Energy Limited

Merlin-2 Well Reaches Total Depth

Highlights

·   Merlin-2 has successfully reached Total Depth of 7,334 feet and
drilling has now ceased.

·   All three (3) target reservoirs in the Merlin-2 well were penetrated
with elevated gas readings.

·   Observations of cuttings samples have revealed oil shows (under both
white and ultraviolet light) over all target intervals.

·   Wireline logging is set to commence shortly to confirm whether mobile
hydrocarbons are present as well as to evaluate the reservoir quality and flow
potential of target zones.

 

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to report that the Merlin-2 appraisal well has reached Total Depth
(TD) of 7,334 feet on 22 March 2022 (Alaskan time) and drilling has now
ceased. The Arctic Fox rig has exceeded expectations in terms of drilling
performance, with the well reaching TD safely and efficiently.

All three Nanushuk targets (N20, N19 and N18) were penetrated during drilling,
with Logging While Drilling (LWD) data and physical cuttings collected
throughout the Merlin-2 program.

Initial observations of LWD logs and drill cuttings collected throughout the
drilling operations revealed target intervals are thicker than those
encountered in Merlin-1 as anticipated pre-drill, with oil shows noted under
white light in the three target Nanushuk reservoirs. Fluorescence has also
been observed in numerous samples when placed under an ultraviolet light, an
indication of oil presence. Additionally, when solvent was applied to the
fluorescing samples, "moderately fast" to "immediate and blooming" "cuts" were
noted, the speed of which is often a proxy for sample permeability.

Finally, significant mud gas peaks were detected across all target sequences
in the Nanushuk, with marked increases in the heavier carbon compounds (C2-C5)
observed in each. Further and more detailed analysis will be conducted on the
mud gas samples upon the mud gas isotube delivery to 88 Energy's preferred
lab.

A sophisticated wireline logging program will now be run which is designed to
confirm reservoir quality and to establish if mobile hydrocarbons are
present.  The wireline logging program will consist of multiple runs that
will include MDT for fluid sampling and flow potential measurements, side wall
cores and image logs, and is expected to take approximately seven to ten days
to complete.

A further update on the evaluation of the Merlin-2 results will be provided
following completion of the wireline logging program, including with respect
to further evaluation activities planning.

Managing Director, Ashley Gilbert, commented:

"The results to date from the Merlin-2 well are encouraging. Initial
indications are that all three target reservoirs in the Merlin-2 well were
penetrated, demonstrated elevated gas readings, and observation of cuttings
samples have revealed oil shows over the target intervals. We look forward to
results from the pending wireline program, which is set to be conducted over
the next 7 to 10 days. Following completion of this program, we hope to be
able to confirm the presence of mobile hydrocarbons, and a discovery, at
Merlin-2."

 

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. Merlin-2 Oil Shows: Fluorescence and cut observed in N20, N19
and N18

·   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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