REG - 88 Energy Limited - Merlin-2 Well Spudded

88 EnergyAnnouncement

08/03/2022 14:30

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RNS Number : 0692E  88 Energy Limited  08 March 2022

This announcement contains inside information

8 March 2022

88 Energy Limited

Merlin-2 Well Spudded

Highlights

·   Drilling of the Merlin-2 appraisal well has commenced.

·   Initial surface hole to be drilled to approx. 2,000 feet, cased and BOP
system tested.

·   Drilling then set to deepen through the N18, N19 and N20 target
horizons to the maximum planned Total Depth of approx. 8,000 feet.

 

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to report that the Arctic Fox rig commenced drilling the Merlin-2
appraisal well, located in Project Peregrine in the NPR-A region of the North
Slope of Alaska, at 7:00pm on 7(th) March 2022 (Alaska time).

The Merlin-2 appraisal well is planned for a Total Depth (TD) of approximately
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).

The well is to be initially drilled to approximately 2,000 feet, with the
surface casing then installed and the Blow Out Preventer (BOP) system
tested.  This is anticipated to take approximately one week in total.
Drilling is then set to deepen the well through the N18, N19 and N20 target
horizons in the Nanushuk Formation to the planned TD.  This deeper drilling
is anticipated to take up to approximately four weeks.

Logging while drilling and mudlogging will provide initial indications as to
the prospectivity of the target horizons at the Merlin-2 location.  After
reaching TD, it is planned to run a more sophisticated wireline logging
program, which includes collection of down hole samples and side wall cores.

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.

(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 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.

·   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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