REG - 88 Energy Limited - Project Phoenix Update

88 EnergyAnnouncement

31/12/2024 07:30

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RNS Number : 7293R  88 Energy Limited  31 December 2024

This announcement contains inside information

 

31 December 2024

 

 

88 Energy Limited

Project Phoenix Update

 

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy, 88E, or the
Company) is pleased to provide an update on Project Phoenix's joint venture
partner Burgundy Xploration, LLC (Burgundy), as well as on progress towards
the CY25/26 planned work program which includes a horizontal test well
targeting the SMD-B reservoir.

Advancement Highlights

·    Positive Joint Venture Partner Progress: Burgundy has paid US$1
million of the outstanding US$4 million cash call, demonstrating its ongoing
commitment to Project Phoenix.

►    88 Energy has agreed to extend the deadline to 15 February 2025 for
the payment of the remaining US$3 million, and Burgundy remains committed to
settling the outstanding US$3 million cash call by the revised date.

►    Burgundy's stated intention remains to provide a full carry for the
anticipated CY25/26 work program in exchange for an additional working
interest from 88E.

►   Project Phoenix de-risking: Planning and design for an extended
horizontal well flow test of the SMD-B reservoir, utilising the existing
Franklin Bluffs gravel pad is progressing in collaboration with Burgundy, with
finalisation expected to align with any potential farm-out and associated
carry.

► Production Test by Adjacent Operator Underway: Pantheon Resources LLC
(Pantheon) (AIM:PANR)  has reached Target Depth (TD) at its Megrez-1 well and
successfully installed five 1/2-inch production casing in preparation for an
extended well test scheduled for early 2025.

►    Pantheon is testing the eastern topsets in the Ahpun field. Any
success at Megrez-1 will enhance the regional understanding of oil and gas
accumulations and the potential for the commercialisation of projects in the
area, including Project Pheonix.

►   Exploration Activity on the Alaskan North Slope Set to Accelerate: 88
Energy's recent acquisition of four lease blocks adjacent to the existing
Project Leonis leases (refer to Figure 4), coupled with the arrival of a new
entrant acquiring a substantial holding near Project Pheonix, further
underscores the regions exceptional exploration potential and attractiveness
for future development.

 

Ashley Gilbert, Managing Director of 88 Energy, commented:

"Advancing Project Phoenix towards commercialisation remains an important
element of our overall strategy. Having delivered a strong Contingent Resource
estimate of net 239 million barrels of oil and natural gas liquids(1), we are
now focused on rapidly unlocking its full potential. Burgundy's continued
commitment to the project and progress with their North American listing
process provides us with confidence in our ongoing partnership and wider
support from the investment and the oil and gas community. Our focus remains
on further de-risking Project Pheonix, both financially and technically, while
simultaneously pursuing opportunities within our expanded Alaskan and Namibian
portfolio of exploration activities."

 

1. Refer announcement released to ASX on 18 September 2024 for full details.

 

88E is not aware of any new information or data that materially affects the
information included in the relevant market announcement and that all material
assumptions and technical parameters underpinning the estimates continue to
apply and have not materially changed.

 

 

Joint Venture Partner Progress

As previously announced, 88 Energy remains actively engaged with Burgundy
regarding a potential funding transaction. Burgundy, a private Texas-based
company supported by sophisticated oil and gas investors, has invested more
than US$26 million into Project Phoenix to date.

Burgundy recently contributed US$1 million towards the outstanding US$4
million cash call, with 88 Energy agreeing to a final payment deadline for the
remaining balance to be paid on 15 February 2025, accompanied by a US$100,000
fee for extending the payment deadline and interest continues to accrue until
full payment has been received the Company.

Burgundy has reaffirmed its commitment to Project Pheonix and expressed strong
interest in providing a full carry to 88 Energy for the CY25/26 work program
in exchange for an additional working interest in the project. The CY25/26
work program includes drilling and completing a horizontal test well at the
Franklin Bluffs pad location, along with an extended testing period for the
SMD-B reservoir. 88 Energy is currently reviewing the terms of the proposal,
which will be subject to further negotiations.

Project Phoenix De-risking: Advancement Activities and Key Milestones

The Project Phoenix joint venture is advancing plans for an extended flow test
of the SMD-B reservoir at the Franklin Bluffs gravel pad in CY25/26. Utilising
the Franklin Bluffs gravel pad, which was previously used to drill the
Icewine-1 and 2 wells, offers considerable cost savings compared to a
purpose-built ice pad, without compromising the planned objectives.

The design phase for the proposed horizontal well is progressing on schedule.
 Leading well modelling and simulation experts, ResFrac, are optimising the
completion strategy, with final recommendations expected by end of Q4 CY24.

 

 Project Phoenix
 Indicative Project Phoenix timeline(1)                                  H1-24     H2-24     H1-25     H2-25     H1-26     H2-26
 Successful Hickory-1 flow test flows light crude oil to surface         P
 Post-well analysis and updated Contingent Resource Estimate                       P
 Targeted farmout to de-risk and provide pathway to production test                n         n         n
 Planning/permitting/design for horizontal production test 1                       n         n         n         n
 Extended horizontal production test(1)                                                                          n         n

 

Production Testing by Adjacent Operator Underway

On 10 December 2024, 88 Energy's neighbour, Pantheon, announced the Megrez-1
well had reached TD, with production casing installed in preparation for an
extended well test scheduled for Q1 CY25. Pantheon is targeting the Ahpun
Eastern Topset reservoir. This test is a crucial step towards confirming the
commercial viability and development potential of this reservoir. If
successful, it would enhance the understanding of this reservoir and its
production potential, further supporting the regional development potential
and commercialisation pathways, which will positively impact on the
commercialisation plans of Project Phoenix.

About the Hickory-1 Discovery Well and Project Phoenix (~74.3% WI)

The Hickory-1 discovery well was drilled in February 2023 and flow tested
during the Alaskan winter season in Q1/Q2 CY24. Testing focused on the two
shallower primary targets, the Upper SFS (USFS) reservoir, previously
untested, and the SMD-B (SMD) reservoir. Each zone was independently isolated,
stimulated, and flowed oil to the surface either naturally or using nitrogen
lift to facilitate efficient well clean-up. On the 18(th) of September, a
contingent resource for the SMD-B, Upper SFS and Lower SFS reservoirs was
issued by ERCE. This contingent resource is now added to the pre-existing
contingent resource in the BFF reservoir, issued by NSAI in 2023. The total
net 2C contingent resource at Project Pheonix is 239 MMBOE.

 

 

Figure 1: Alaska, North Slope, highlighting Project Phoenix and the location
of the Hickory-1 discovery well.

 

 

 

Figure 2: Project Phoenix multi-reservoir discoveries with significant light
oil resource confirmed.

 

 

Figure 3: Project Phoenix 88 Energy Net Entitlement 2U Contingent Resources
with untested 2U Prospective Resource upside.

 

 

 

 

Table 1: Project Phoenix net entitlement to 88 Energy (63.3%) Contingent
Resources estimates by NSAI and ERCE

 

 Project Phoenix               NET (~63.3%) Contingent Resources (4,6)
 Reservoir  Auditor    UoM     Low (1C)        Best (2C)       High (3C)
 SMD-B      ERCE(1,3)  MMBOE   7               24              79
 Upper SFS  ERCE(1,3)  MMBOE   6               21              72
 Lower SFS  ERCE(1,3)  MMBOE   8               35              123
 BFF        NSAI(2,5)  MMBOE   62              158             367
 Total(7)                      83              239             640

 

 

Notes to table 1:

1.   ERCE: ERCE Australia Pty Ltd

2.   NSAI: Netherland, Sewell & Associates Inc.

3.   Refer to page 6, Appendix 2 and disclaimers for further details.

4.   Million Barrels of Oil Equivalent (MMBOE) of estimate contingent
resource. NGLs are converted to oil equivalent volumes on a constant ratio
basis of 1:1. Gas is converted to oil equivalent volumes on a constant ratio
basis of 5.5 BCF per 1 MMBOE.

5.   Please refer to page 7 and ASX announcement dated 6 November 2023 for
further details in relation to the BFF Contingent Resource estimate. Note the
Basin Floor Fan (BFF) reservoir was drilled and tested on adjacent acreage by
Pantheon Resources

6.   88 Energy net resource entitlement of ~63.3% has been calculated using
an average 74.3% working interest net of a 12.5% government royalty and a 4%
Overriding Royalty on 18 leases.

7.   Totals by reservoir rounded and project total may not sum due to
rounding.

 

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.

 

 

Figure 4: 88 Energy's recent acquisition of four lease blocks immediately
adjacent to Project Leonis (shown in red)

 

This announcement has been authorised by the Board.

Media and Investor Relations:

 

 88 Energy Ltd

 Ashley Gilbert, Managing Director
 Ashley Gilbert, Managing Director
 Tel: +61 (8)9485 0990

 Email:investor-relations@88energy.com

 Fivemark Partners, Investor and Media Relations
 Michael Vaughan                                          Tel: +61 (0)422 602 720

 EurozHartleys Ltd
 Dale Bryan                                               Tel: +61 (8)9268 2829

 Cavendish Capital Markets Limited                        Tel: +44 (0)207 220 0500
 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 the Company. Dr Staley
has more than 40 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.

 1  This timeline is indicative and subject to change. The Company reserves
the right to alter this timetable at any time. Horizontal production test
subject to farm-out/funding as well as government and other approvals.

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