Diversified Explorer, 88 Energy Limited (ASX, AME: 88E) is a dual listed firm that operates/manages four active exploration projects, spread across ~250,000 net acres, in the Alaskan North Slope, named as: Project Icewine Unconventional, Project Icewine Conventional, Western Blocks and Yukon Acreage. The company’s aim is to build a successful exploration and production firm that contributes to the development of its areas of operation.
The company has made substantial progress in the development of these high-quality assets so far, especially in the vast ~480,000 acre Project Icewine that targets oil on the North Slope of Alaska.
88 Energy Making Great Strides with Project Icewine
Project Icewine is located in onshore Alaska in the prolific oil-rich province, with access to transportation corridor and TransAlaska pipeline. The transportation corridor, Dalton Highway provides year-round operational access, and the TransAlaskan pipeline runs through the acreage.
Project Icewine has conventional and unconventional oil potential.
Considerable conventional prospectivity has been detected at Project Icewine on modern 2D and 3D seismic data. Seventy-five per cent of prospectivity has been supported by modern 3D on just 25 per cent of acreage in Western Play Fairway (Area A).
Based on modern 3D or 2D seismic and historic well data, the project has unrisked gross mean conventional prospective resource of 2.9 billion barrels, with 1.0 billion barrels net to 88E.
Project Icewine, Source: Company’s Presentation (19th November 2019)
In August this year, the company executed a Sale and Purchase Agreement (SPA) with Premier Oil Plc, under which Premier will farm-in for a 60 per cent interest in Western Play Fairway or “Area A” of the conventional Project Icewine acreage in the proven Alaska North Slope basin, and will pay the full costs (up to USD 23 million) of an appraisal well, designated as Charlie-1 to examine the reservoir deliverability of the Malguk-1 discovery.
88 Energy will retain 30 per cent in Area A, with the remaining 10 per cent to be held by Burgundy Xploration LLC, and operate Charlie-1 appraisal well that will be drilled and tested in Q1 2020 with Nordic-Callista Rig #3, which was recently secured by the company. This comes on the back of Rig-3 delivering efficient and safe performance during the course of drilling of Winx-1 well in March 2019.
Charlie-1 is likely to intersect seven stacked prospects, whose total Gross Mean Prospective Resource is 1.6 billion barrels of oil, of which 480 million barrels is net to 88 Energy.
As per the company, the forward program includes accessing material from regional wells to undertake additional Focussed Ion Beam Scanning Electron Microscopes (FIB-SEM) analysis. This analysis is to confirm improved effective connectivity and porosity. The company also mentioned that the Charlie-1 well is created to penetrate HRZ and collect further data which will add to the currently in process additional analysis.
The company has planned the farm-out process to fund further appraisal that is currently underway. The project is continuing to catch third party interest (unsolicited) in the HRZ shale play.
88 Energy Progresses Development at Yukon Leases
Yukon Leases was acquired in 2018 and located on the eastern border of the Central North Slope of Alaska. 88 Energy holds a 100 per cent working interest, totalling 14,194 acres, in these leases via its subsidiary. Provisional 3D seismic mapping has defined about 90 million barrels of prospective oil resource to the company.
The company, via its subsidiary, Regenerate Alaska, Inc, has been officially awarded acreage for which it bid successfully in December 2018 State of Alaska North Slope Licensing round. The company notified that the lease documents have been executed and the remaining funds have been transferred to the Alaska Department of Natural Resources.
The leases include Yukon Gold #1, a historic discovery well, which is presently being evaluated internally. The company is continuing discussions with adjacent lease owners for currently discovered resources situated in proximity of the Yukon Leases to enhance the monetisation strategy.
Western Blocks – 88 Energy’s Area of Focus for Post Winx-1 Evaluation
The company, along with its consortium partners Otto Energy Ltd (ASX: OEL) and Red Emperor Resources NL (ASX/AIM: RMP), completed the drilling of Winx-1 exploration well within the Western Blocks in 2019. The company is planning to further assess the Nanushuk potential of the Western Blocks, utilising the valuable data collected while drilling Winx-1, along with potentially reprocessing the current 3D seismic data.
In September 2019 quarter, additional regional 3D was purchased that is likely to help in the evaluation process for the Western Blocks. The company expects to complete the evaluation work towards the end of CY2019.
88 Energy is well-positioned to fund the in-progress evaluation of the unconventional and conventional prospectivity of its current assets. The company is on track to identify and develop new opportunities on the North Slope of Alaska.
Stock Performance: 88E closed the trading session at $0.016 on 19th November 2019, with a rise of 6.7 per cent relative to the last closed price. The stock has generated a huge return of 89 per cent in the last five years.
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