As per ASX announcement dated 7 January 2019, oil & gas player, 88 Energy Limited (ASX: 88E) announced a key update for its oil and gas exploration activities on the Western Blocks, Northern slope of Alaska. The company commenced the construction of approximately 11-mile Ice road to the Winx 1 exploration well, on 2 January 2019 as per project schedule. The ice road will assist in mobilizing the drill rig to the well site. It is anticipated that the road building will take around three weeks post which the company will begin construction of the ice pad.
88E’s mining projects include Project Icewine, Yukon Gold and Western Blocks in Alaska. For the Winx 1 exploration well on Western Blocks, the company would be earning 36% by paying 40% of costs. The Winx well is situated on a 400 million barrels oil prospect, adjacent to recent Nanushuk Play discovery, Horseshoe#1 and #1A. The principal motive of Winx 1 well is the Nanushuk Topset Play, targeting the Nanushuk 4 and five sites. Technical testing on the site has reflected on a geological success rate of 25-35%.
On 25 June 2018, 88 Energy along with Otto Energy Limited (ASX: OEL) and Red Emperor Limited (ASX: RMP) entered into a binding agreement to acquire most of the Great Bear’s ownership in western blocks of Northern Alaska. The Consortium Partners were expected to provide a performance bond of USD 3 million to the State of Alaska, by 31 July 2018. The partners planned to begin the well drilling by 31 May 2019.
On 29 August 2018, Captivate Energy Alaska, Inc (a wholly owned subsidiary of 88 Energy) executed a rig contract for the drilling of Winx 1 exploration well.
As announced on 17 December 2018, the company received all the major permits (except Drilling Permit) for well drilling. The company was successful in submitting the permit application for the well drilling to the Alaska Oil and Gas Conservation Commission (AOGCC) before 2018 end, as per the project timelines. All logistics and permitting are expected by mid-late February 2019. The company will release further details related to the exploration and testing program soon.
As stated by Red Emperor’s Chief Operating Officer, Gracjan Lambert, the consortium partners are excited to achieve the significant milestone of ice road construction.
Financial performance: As per the company’s annual financial results, Net Loss of $8.4 million was reported as compared to the previous year’s $9.4 million. The company posted a 49% decrease in cash and cash equivalents from $27.3 million in FY17 to $14 .01 million in FY18. As on balance sheet front, Net Assets stood at $55.53 million and Current Liabilities at $26.03 million. During FY18, the company raised $16.4 million net of costs via the issue of new shares.
Stock performance: The price of the scrip is trending downside from last six months falling by almost 21.22%. However, the price soared by 5.88% over the previous one month and is currently trading at 1.9 cents, up by 5.6% (as at 2:28 PM, 7 January 2019) as compared to the previous close of 1.8 cents. The company has a market capitalization of 113.97 million.
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