REG - 88 Energy Limited - Project Peregrine Prospective Resources Update
31/07/2023 07:00
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RNS Number : 6456H 88 Energy Limited 31 July 2023
This announcement contains inside information
31 July 2023
88 Energy Limited
Project Peregrine Prospective Resources Update
Highlights
· Updated Independent Prospective Resources Assessment at Project
Peregrine following post well analysis has confirmed significant potential
within the remaining Project Peregrine acreage.
· Further seismic interpretation has identified two new reservoir
targets in the Harrier Prospect, which have been assessed as part of the
prospect resource update.
· The updated Project Peregrine Prospective Resources now sits beneath
a more condensed acreage position, modelled to have improved reservoir quality
in the northern areas of the Project Peregrine acreage.
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to announce that the Project Peregrine Prospective Resource Assessment
has been updated by independent oil and gas reservoir evaluation consultancy,
ERCE Australia Pty Ltd (ERCE). ERCE incorporated the Merlin-2 Appraisal Well
results and assessed 2 new reservoir targets that have been identified by the
company following an assessment of the remaining prospectivity of the Project
Peregrine acreage. Additionally, the Harrier and Harrier Deep prospects were
re-assessed as part of the updated assessment.
Following the reconciliation and integration of the Merlin-2 well results,
further 2D seismic interpretation identified two new reservoir intervals, the
N13 and N12 sequences in the Nanushuk Formation, along the western edge of the
Project Peregrine lease holding. The N13 and N12 sequences underlie the N14
which was the or lowermost reservoir interval targeted by Conoco Phillips's
during their 2020 Harpoon 2 well exploration program to the north of the
Peregrine acreage. Conveniently, both the N12 and N13 targets may be accessed
from the Harrier-1well pad via a sidetrack.
Figure 1: N12 and N13 x-section.
Figure 2 ERCE Low and High Case reservoir polygons of the N13 and N12
reservoirs overlayed on the depth grids.
Integrating the Merlin-2 results into a recent independent basin modelling
initiative revealed that maximum depth of burial (Dmax) has a significant
impact on reservoir quality. Dmax for Brookian reservoirs on the North Slope
is modelled to improve to the north and therefore, reservoir quality for the
remaining Project Peregrine portfolio is also expected to materially improve
in the norther areas of the Peregrine acreage.
Figure 3: Post Merlin 2 Basin modelling work shows a marked increase in both
permeability and porosity in the Northern Project Peregrine lease holding
where a majority of the updated prospective resource now resides.
This updated Prospective Resources assessment, as it pertains to the Merlin
prospect, does not consider potential future stimulation of the reservoirs.
Future planning of drilling and testing activity within Project Peregrine will
incorporate lessons learned from the upcoming Project Phoenix stimulation and
flow test.
The updated Post Merlin-2 ERCE Prospective Resources estimates and risking
assessments for Project Peregrine are noted in Table 1.
The Company is also currently assessing possible forward work-programs,
subject to a potential farm-out of Project Peregrine.
Table 1: Revised Project Peregrine Prospective Resources
Project Peregrine: Alaska North Slope Unrisked Net Entitlement to 88E ( 3) Prospective Oil Resources (MMstb)
Prospects (Probabilistic Calculations) Low (1U) Best (2U) High (3U) Mean COS (2)
Merlin Prospective Area Nanushuk - N20 19.0 76.0 295.5 131.6 10%
Nanushuk - N14S 25.2 84.4 271.7 127.9 17%
Harrier Nanushuk - N15 52.5 257.2 1,267.1 554.7 10%
Nanushuk - N14N 35.3 140.1 531.8 238.2 10%
Nanushuk - N13 40.4 146.3 555.1 245.5 18%
Nanushuk - N12 7.6 33.8 140.6 62.5 18%
Harrier Deep Nanushuk - N06 32.7 204.6 1,107.1 473.7 14%
Torok - T03 61.0 288.9 1,345.3 588.9 7%
Prospects Total 2,423(1)
1. Unrisked mean total is not representative of the expected total from the
three prospects and assumes a success case in all three wells.
2. COS represents the geological chance of success of each 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.
3. 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%).
*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.
Table 2: Reconciliation between Updated and Prior Project Peregrine
Prospective Resources
Project Peregrine: Alaska North Slope Delta (2021-2023) Unrisked Net Entitlement to 88E Prospective Oil Resources
(MMstb)
Prospects (Probabilistic Calculations) Low (1U) Best (2U) High (3U) Mean COS (2)
Merlin Prospective Area 2023-2021 Nanushuk - N20 -23.3 -177.7 -1185.2 -515.5 -14%
2023-2021 Nanushuk - N19 -50.7 -222.6 -960.4 -426.0 -19%
2023-2021 Nanushuk - N18 -62.8 -252.3 -999.0 -449.2 -28%
Post-Drill Merlin-1A 2021 Nanushuk - N14S 0 0 0 0 0%
Harrier 2019 Nanushuk - N15 0 0 0 0 0%
2019 Nanushuk - N14N 0 0 0 0 0%
2023 Nanushuk - N13 40.4 146.3 555.1 245.5 18%
2023 Nanushuk - N12 7.6 33.8 140.6 62.5 18%
Harrier Deep 2019 Nanushuk - N06 0 0 0 0 0%
2019 Torok - T03 0 0 0 0 0%
Prospects Total -1390.8
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 Plc Tel: +44 (0)20 7397 8900
Derrick Lee Tel: +44 (0)131 220 6939
Pearl Kellie Tel: +44 (0)131 220 9775
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 88 Energy. 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.
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 XCD (a 100% owned subsidiary of 88E) and was
reviewed, validated and in some cases modified independently by ERCE.
ERCE's methodology for determining Prospective Resources for Project Peregrine
ERCE has determined Prospective Resources by examining the areas of consistent
bright amplitude that were mapped by XCD (a 100% owned subsidiary of 88E)
using the reprocessed 2D seismic data within the Project Peregrine 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 have not been adjusted for phase risk or chance of
development. ERCE has considered the chance of discovering oil over gas to be
70%. Chance of development is estimated by 88E to be 60% (including phase
risk), ERCE sees this as reasonable based on the data available.
Please refer to the disclaimers attached as Schedule 1 of this ASX release for
more information on the prospective resource report.
About ERCE
ERCE is a global independently owned petroleum Reserves and Resources auditor,
providing expert consultancy services to the upstream oil and gas industry for
over 40 years. With over 50 full-time technical staff, ERCE provides
geoscience, reservoir, facilities and cost engineering and economic/commercial
expertise in conventional and unconventional projects. Examples of current
public clients include Carnarvon, Jadestone Energy, Tag Oil, Interra
Resources, ADX Energy and Elixir Energy. ERCE has offices in UK, Canada,
Kuala Lumpur and Perth, WA.
About Project Peregrine
Project Peregrine is located in the NPR-A region of the North Slope of Alaska
and encompasses approximately 126,000 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.
Figure 4 Project Peregrine and Recent Nanushuk Discoveries
The Project Peregrine resources are split across 3 prospects: Merlin (Nanushuk
Topset), Harrier (Nanushuk Topsets) and Harrier Deep (Torok Bottomsets). The
focus at Project Peregrine moving forward will be on the untested Harrier
prospect (N14 and N15 targets, as well as the newly identified N13 and N12
targets) and the N14 south reservoir target. The N14 corresponds with
ConocoPhillips' Harpoon prospect 15 miles to the north of the Project
Peregrine leases. The N14 south target is the remaining target in the Merlin
prospect and may be accessible from the Merlin-1 location. The northern leases
are modelled to have better porosity and permeability and are closer to
infrastructure.
Merlin-1 Well Results
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).
Post well analysis has also determined that the N14 horizon, one of the
targets of the Merlin-1 well, was not intersected, as it is believed to lie
below the total depth of the well. The N14 prospect remains a target of
interest and the Merlin-1 well may be re-entered in order to test this
prospective target as part of the Company's future drilling activities at
Project Peregrine.
Merlin-2 Well Results
The results of Merlin-2 were consistent with the initial Merlin-1 exploration
well drilled in Project Peregrine in 2021, with strong fluorescence, oil
sheen, petroliferous odour and cut noted in the drilling cuttings, elevated
C2-C5 mud gas readings over the target zones with total gas significantly
above background gas readings and also evidence from the reservoir sampling
tool of movable hydrocarbons. The primary objective of the Merlin-2 well was
to collect hydrocarbon samples from the target zones. Unfortunately, this was
unable to be achieved using Schlumberger's MDT (Modular-Formation Dynamics
Testing) tool due to the tightness of the formation at this location.
SCHEDULE 1
Disclaimers:
Cautionary Statement for Prospective Resources Estimates - With respect to the
Prospective Resources 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 Resources Estimates - The Prospective Resource estimates for
Project Peregrine presented in this report are prepared as at 28 July 2023.
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 three prospects and assumes a success case in all three wells. ERCE has
considered the chance of discovering oil over gas to be 70%. Chance of
development is estimated by XCD (a 100% owned subsidiary of 88E) 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 outside the knowledge of ERCE they must be used with
caution.
Government Royalty and Overriding Royalty Interests - The Project Peregrine
leases ("Leases") are situated in the National Petroleum Reserve - Alaska
(NPR-A) and are administered by the US Department of the Interior - Bureau of
Land Management (BLM). All leases issued by BLM 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 1.5% payable to non-related
parties of the Company. The net economic interest to 88E has therefore been
calculated as 86% 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 ERCE, 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. ERC Equipoise Pty Ltd, 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 88 Energy
Limited. 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 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 Resources
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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