REG-88 Energy Ltd: Operational Update <Origin Href="QuoteRef">88E.AX</Origin>

88 EnergyAnnouncement

02/12/2016 07:05

2 December 2016

88 Energy Limited

Operational Update

88 Energy Limited (“88 Energy”, “the Company”, “Operator”) (ASX,
AIM: 88E) is pleased to announce the following operational update in relation
to Project Icewine, located on the North Slope of Alaska (77.5% Working
Interest, Operator).

Icewine#2 Progress

Permitting

Permitting remains on track for completion well ahead of the scheduled spud
date for Icewine#2 in late Q1 2017. Two of the major permits, the Plan of
Operations and Oil Discharge Prevention and Contingency Plan, have just passed
major milestones in the permitting process with no problems identified.

Vendor Selection

With the design of the well, logging program and stimulation design now
largely finalised, 88 Energy anticipates conclusion of key vendor contracts
over the coming weeks, including rig selection. Availability of equipment for
the planned design and schedule has been ascertained and no issues are
expected on this front.

2D Seismic Update

Processing

Final processing of the Icewine 2D vibroseis data acquired by 88 Energy during
the first half of 2016 across the Project Icewine acreage was successfully
completed in November.  

Conventional Prospectivity Review

The range of preliminary leads identified in the Brookian and Beaufortian
sequences, along with additional mapped leads have been matured and now form
the basis of a diverse conventional Prospect and Lead inventory across the
Project Icewine acreage.

The majority of leads identified are stratigraphic: typically comprising slope
apron, basin floor fan systems and turbidites. These leads are within proven
play fairways with successful analogues on the North Slope.  

A number of leads are associated with enhanced seismic amplitudes which is
considered promising as it can indicate the presence of hydrocarbons. To
further evaluate the enhanced amplitudes, an amplitude versus offset (AVO)
analysis was undertaken -  this work is ongoing and the initial results are
encouraging.

AVO response associated with Leads and Prospects is a useful tool as it can be
used to rank and de-risk exploration targets. An image of AVO support with
mapped lead is available on the pdf version of this announcement which is
available from the Company’s website.

The forward plan is to fully mature the conventional Prospect and Lead
portfolio and highgrade potential candidates for future exploration drilling.
This will include finalisation of the volumetric estimation of the prospective
resource potential, prior to year end.

Managing Director of 88 Energy Limited, Dave Wall commented: “Operational
activity associated with the near term spud of Icewine#2 is ramping up and the
Company is on the cusp of testing the flow potential of the HRZ resource play.
Our large acreage position and the quality of the rock means that the
potential resource prize is enormous and success would be truly
transformational.

Additionally, the conventional portfolio continues to firm up, exceeding our
expectations.

We look forward to providing additional news on both fronts in the near
future.”

Media and Investor Relations:

 88 Energy Ltd Dave Wall, Managing Director   Tel: +61 8 9485 0990 Email: admin@88energy.com  
 Finlay Thomson , Investor Relations          Tel: +44 7976 248471                            
 Hartleys Ltd Dale Bryan                      Tel: + 61 8 9268 2829                           
 Cenkos Securities Neil McDonald/Derrick Lee  Tel: +44 131 220 6939                           

This announcement contains inside information.

Project Icewine Overview

In November 2014, the Company entered into a binding agreement with Burgundy
Xploration (BEX) to acquire a significant working interest (87.5%, reducing to
77.5% on spud of the first well on the project) in a large acreage position on
a multiple objective, liquids rich exploration opportunity onshore Alaska,
North America, referred to as Project Icewine. In June 2016, the gross acreage
position was expanded to 271,119 contiguous acres (210,250 acres net to the
Company).

The Project is located on an all year operational access road with both
conventional and unconventional oil potential. The primary term for the State
leases is 10 years with no mandatory relinquishment and a low 16.5% royalty.

The HRZ liquids-rich resource play has been successfully evaluated based on
core obtained in the recently completed (December 2015) Icewine #1 exploration
well, marking the completion of Phase I of Project Icewine. Phase II has now
commenced, with a followup appraisal well, Icewine#2, scheduled for spud in
1Q2017. Icewine#2 has been designed as a vertical well with a multi-stage
stimulation and flow test, to assess the production potential of the HRZ.

Significant conventional prospectivity has also been identified on recently
acquired 2D seismic across the project acreage.

Project Icewine Location map (please refer to the pdf of this announcement
which is available on the Company’s website.)

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.

Generous exploration incentives are provided by the State of Alaska with up to
35% of exploration expenditure refundable in cash.

The  primary objective is an untested, unconventional liquids-rich shale play
in a prolific source rock, the HRZ shale (Brookian Sequence), that co-sourced
the largest oil field in North America; the giant Prudhoe Bay Oil Field
Complex. Internal modelling and analysis indicates that Project Icewine is
located in a high liquids vapour phase sweetspot analogous to those
encountered in other Tier 1 shale plays e.g. the Eagle Ford, Texas.

Recently acquired 2D seismic has identified large conventional leads at
Project Icewine within the same Brookian petroleum system and shallow to the
HRZ shale, including potential high porosity channel and  turbiditic sands
associated with slope apron and deepwater fan plays. The Brookian conventional
play is proven on the North Slope; the USGS (2013) estimated the remaining oil
potential to be 2.1 billion barrels within the Brookian sequence. Two recent
discoveries in the Brookian have already exceeded these estimates, with
Armstrong/Repsol discovering 1.4 billion barrels in 2015 and Caelus announcing
a 2.5 billion barrel discovery in 2016. Additional conventional potential
exists in the Brookian delta topset play, deeper Kuparuk sands and the Ivishuk
Formation.

A Prospective Resources Report by DeGolyer and MacNaughton, was commissioned
by 88 Energy to evaluate the unconventional resource potential of Project
Icewine in February 2016 and was released to the market on 6(th) April 2016.

About 88 Energy: 88 Energy has a 77.5% working interest and operatorship in
~271,000 acres onshore the prolific North Slope of Alaska (“Project
Icewine”). The North Slope is the host to the 15 billion barrel Prudhoe Bay
oilfield complex, the largest conventional oil pool in North America. The
Company, with its Joint Venture partner Burgundy Xploration, has identified
three highly prospective play types that are likely to exist on the Project
Icewine acreage – two conventional and one unconventional. The large
unconventional resource potential of Project Icewine was independently
verified by leading international petroleum resource consultant DeGolyer and
MacNaughton. In addition to the interpreted high prospectivity, the project is
strategically located on a year-round operational access road and only 35
miles south of Pump Station 1 where Prudhoe Bay feeds into the Trans Alaska
Pipeline System. The Company has recently acquired 2D seismic to take
advantage of the globally unique fiscal system in Alaska, which allowed for up
to 75% of 1H2016 exploration expenditure to be rebated in cash. Interim
results from this seismic are encouraging, having identified several large
leads. In late 2015, the Company completed its maiden well at the project,
Icewine#1, to evaluate an unconventional source rock resource play which
yielded excellent results from analysis of core obtained from the HRZ shale. A
follow-up well with a multi-stage stimulation and test of the HRZ shale,
Icewine#2, is planned for 1Q2017.



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