REG - 88 Energy Limited - Project Icewine East Prospective Resource Estimate
23/08/2022 07:00
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RNS Number : 8914W 88 Energy Limited 23 August 2022
23 August 2022
88 Energy Limited
Project Icewine East Prospective Resource Estimate
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) in
compliance with ASX Listing Rules provides the following update in relation to
the Prospective Resource estimate for Project Icewine East, as previously
announced by 88 Energy on 10 August 2022 ("Icewine East Update"). Please refer
to the Icewine East Update for information on Project Icewine East Prospective
Resource estimates.
Following the Icewine East Update, 88 Energy now has two separate independent
Prospective resource estimates for Project Icewine, as follows;
· Project Icewine East: prepared by Lee Keeling and Associates; and
· Project Icewine West: prepared by ERCE Equipoise Pte Ltd which was
announced by the Company on 10 November 2020 ("Icewine West Update"). Please
refer to the Icewine West Update for further details on the resource estimates
for Project Icewine West.
The two independent prospective resource estimates cover separate and
independently mapped resources.
Prospective Resources Estimate - Icewine East
The assessed maiden gross and net Prospective Resource estimates associated
with 88 Energy's Icewine East acreage (~75% net working interest) are
summarised below.
Icewine East: Alaska North Slope Unrisked Gross Prospective Oil Resources (MMstb) (4,5)
Prospects (Probabilistic Method) Low (1U) Best (2U) High (3U) Mean COS (3)
Shelf Margin Delta (SMD A, B & C) 70 224 518 231 81%
Slope Fan Set (SFS) 37 134 345 141 50%
Basin Floor Fan (BFF) 119 543 1,480 569 50%
Kuparuk (KUP) 39 88 156 89 72%
Prospects Total 265 988 2,499 1,030 (2)
Icewine East: Alaska North Slope Unrisked Net Entitlement to 88E (1) Prospective Oil Resources (MMstb) (4,5)
Prospects (Probabilistic Method) Low (1U) Best (2U) High (3U) Mean COS (3)
Shelf Margin Delta (SMD A, B & C) 44 140 326 145 81%
Slope Fan Set (SFS) 24 84 217 89 50%
Basin Floor Fan (BFF) 75 341 930 358 50%
Kuparuk (KUP) 24 56 98 56 72%
Prospects Total 167 621 1,570 647 (2)
1. 88 Energy net resources have been calculated using a 75.227% working
interest and a 16.5% royalty.
2. The unrisked means, which have been arithmetically summed, are not
representative of expected total from the prospects and implies a success case
in all reservoir intervals. 88 Energy cautions that the arithmetically summed
1U estimate may be a conservative estimate and the arithmetically summed 3U
estimate may be optimistic when compared to a statistical aggregation of
probability distributions.
3. COS represents the geological chance of success as assessed by 88 Energy
and reviewed and endorsed by LKA.
4. Prospects are subject to a phase risk (oil vs gas). Chance of oil has been
assessed as 100% for all targets except for the Kuparuk Formation which has
been assessed as 70%. Phase risk has not been applied to the unrisked
numbers.
5. The Prospective Resources have not been adjusted for the chance of
development. Quantifying the chance of development (COD) requires
consideration of both economic 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 outside the knowledge of LKA they must be used with caution.
Cautionary Statement: The estimated quantities of petroleum that may
potentially be recovered by the application of a future development project(s)
relate to undiscovered accumulations. These estimates have both an associated
risk of discovery and a risk of development. Further exploration appraisal and
evaluation is required to determine the existence of a significant quantity of
potentially recoverable hydrocarbons.
The data used to compile the independent prospective resource report includes
reprocessed 2D seismic data, basin modelling, petrophysical analysis of
publicly available wells and historical geological records. The data was
compiled and interpreted by 88E and was reviewed, validated and in some cases
modified independently by LKA.
LKA's methodology for determining Prospective Resources for Project Peregrine
LKA has determined Prospective Resources by examining the areas of consistent
bright amplitude that were mapped by independent consultants to 88E, Jordan
and Pay, using the reprocessed 2D seismic data within the Icewine East area.
Parameters including potential pool area and thickness, porosity, hydrocarbon
saturation, oil expansion and recovery factor were estimated on a
probabilistic low, mid and high basis. The Prospective Resources
distributions were then aggregated into four (4) prospects, on the basis that
one (1) well could effectively test all the mapped prospective intervals.
The unrisked prospective resources estimates (and associated geological chance
of success) were modelled using Monte-Carlo analysis on the assumption there
was no economic minimum and that volumes and risks of each of the prospective
intervals within each prospect were independent.
The Prospective Resources have not been adjusted for phase risk or chance of
development. 88 Energy and LKA have considered the chance of discovering oil
over gas to be 100% for all targets except for the Kuparuk Formation which was
assessed to be 70%. Chance of development has not been estimated.
Please refer to the disclaimers attached as Schedule 1 of this ASX release for
more information on the prospective resource report.
About LKA
LKA is a U.S. based independently owned petroleum Reserves and Resources
auditor and engineering consultants, providing expert consultancy services to
the upstream oil and gas industry since 1957. LKA technical staff include a
wide range of professionally qualified engineers and geologists, who provide
geoscience, reservoir, facilities and cost engineering and economic/commercial
expertise in conventional and unconventional projects. Examples of current
clients are noted on their website (https://www.lkaengineers.com/clients/
(about%3Ablank) ) and include independent oil and gas operators,
international, state and federal government agencies, bank and financial
institutions, as well as legal and accounting firms.
This announcement has been authorised by the Board.
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing Director
Tel: +61 8 9485 0990
Email:investor-relations@88energy.com
Fivemark Partners, Investor and Media
Relations
Michael
Vaughan
Tel: +61 422 602 720
EurozHartleys Ltd
Dale
Bryan
Tel: + 61 8 9268 2829
Cenkos
Securities
Neil McDonald / Derrick
Lee
Tel: + 44 131 220 6939
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.
SCHEDULE 1
Disclaimers:
Cautionary Statement for Prospective Resource Estimates - With respect to the
Prospective Resource estimates contained within this report, it should be
noted that the estimated quantities of gas that may potentially be recovered
by the future application of a development project relate to undiscovered
accumulations. These estimates have an associated risk of discovery and risk
of development. Further exploration and appraisal is required to determine
the existence of a significant quantity of potentially moveable
hydrocarbons.
Hydrocarbon Resource Estimates - The Prospective Resource estimates for
Project Icewine East presented in this report are prepared as at 9 August
2022. The Prospective Resource estimates are quoted on an unrisked basis
together with the geological chance of success for each prospect. The
unrisked mean total presented in the table is not representative of the
expected total from the 4 prospects and assumes a success case in all
reservoir intervals. 88 Energy and LKA have considered the chance of
discovering oil over gas to be 100% for all targets except for the Kuparuk
Formation which was assessed to be 70%. Chance of development has not been
estimated. 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 outside the knowledge of LKA they must be used with
caution.
Government Royalty and Overriding Royalty Interests - The Project Icewine East
leases ("Leases") are situated in the State Lands of the North Slope of Alaska
and are administered by the Alaskan Department of Natural Resources - Oil and
Gas Division (DNR). All leases issued by DNR are subject to a royalty and
88E's Leases are subject to a 12.5% government royalty. In addition, the
Leases are subject to an overriding royalty of 4.0% payable to non-related
parties of the Company. The net economic interest to 88E has therefore been
calculated as 62.81% and the Net Entitlement Prospective Resources have been
adjusted to reflect this.
Competent Person Statement Information - In this report information relating
to hydrocarbon resource estimates have been supplied by LKA, and the company
has stated in the Report that it has been prepared in accordance with the
definitions and guidelines set forth in the Petroleum Resources Management
System, 2018, approved by the Society of Petroleum Engineers and have been
prepared using probabilistic methods. Lee Keeling & Associates, Inc.,
the independent resource reviewer named in this document, has consented to the
inclusion of information relevant to their review in the form and context in
which it appears. Dr Stephen Staley, who is a Non-Executive Director of the
Company, has more than 37 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 prospective resource 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.
Forward looking statements - This document may include forward looking
statements. Forward looking statements include, are not necessarily limited
to, statements concerning 88E's planned operation program and other statements
that are not historic facts. When used in this document, the words such as
"could", "plan", "estimate", "expect", "intend", "may", "potential", "should"
and similar expressions are forward looking statements. Although 88E believes
the expectations reflected in these are reasonable, such statements involve
risks and uncertainties, and no assurance can be given that actual results
will be consistent with these forward-looking statements. The entity confirms
that it is not aware of any new information or data that materially affects
the information included in this announcement and that all material
assumptions and technical parameters underpinning this announcement continue
to apply and have not materially changed.
SCHEDULE 2
Definitions and Glossary of Key Terms:
SPE definition: Prospective Resource
Prospective resources are estimated volumes associated with undiscovered
accumulations. These represent quantities of petroleum which are estimated, as
of a given date, to be potentially recoverable from oil and gas deposits
identified on the basis of indirect evidence but which have not yet been
drilled. This class represents a higher risk than contingent resources since
the risk of discovery is also added. For prospective resources to become
classified as contingent resources, hydrocarbons must be discovered, the
accumulations must be further evaluated and an estimate of quantities that
would be recoverable under appropriate development project(s) prepared.
Glossary of Key Terms
1U Denotes the unrisked low estimate qualifying as Prospective Resources.
2U Denotes the unrisked best estimate qualifying as Prospective Resources
3U Denotes the unrisked high estimate qualifying as Prospective Resources
BOE Barrels of oil equivalent
Bnbbl Billion barrels of oil
Chance Chance equals 1-risk. Generally synonymous with likelihood.
Chance of Development The estimated probability that a known accumulation, once discovered, will be
commercially developed.
Entitlement That portion of future production (and thus resources) legally accruing to an
entity under the terms of the development and production contract or license.
Mean The sum of a set of numerical values divided by the number of values in the
set.
MMbbl Million barrels of oil
Prospect A project associated with a potential accumulation that is sufficiently well
defined to represent a viable drilling target.
Prospective Resources Those quantities of petroleum that are estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations.
Reservoir A subsurface rock formation that contains an individual and separate natural
accumulation of petroleum that is confined by impermeable barriers, pressure
systems, or fluid regimes (conventional reservoirs), or is confined by
hydraulic fracture barriers or fluid regimes (unconventional reservoirs).
Royalty A type of entitlement interest in a resource that is free and clear of the
costs and expenses of development and production to the royalty interest
owner. A royalty is commonly retained by a resources owner (lessor/host) when
granting rights to a producer (lessee/contractor) to develop and produce that
resource. Depending on the specific terms defining the royalty, the payment
obligation may be expressed in monetary terms as a portion of the proceeds of
production or as a right to take a portion of production in-kind. The royalty
terms may also provide the option to switch between forms of payment at
discretion of the royalty owner
Working Interest An entity's equity interest in a project before reduction for royalties or
production share owed to others under the applicable fiscal terms.
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