Summary
- 88 Energy Limited executed a Sale and Purchase Agreement concerning the acquisition of the Umiat Oil Field.
- Umiat was historically discovered in 1945 and lies immediately close to southern border of Project Peregrine.
- 88E looks to conduct a full field review at the area in an anticipation to determine a price which could help to commercialise Umiat as a separate development.
Exploration company 88 Energy Limited (ASX:88E) strives to generate significant gains to its shareholders by looking for emerging play types where the Company’s experienced team can capture the opportunities before big industry players come into the picture.
Given this backdrop, 88E’s latest ASX announcement features an update regarding the acquisition of the Umiat Oil Field, which sent its share price on a rally of 16.666% and quoted at $0.010 on 11 January 2021. This oil field is a historic oil discovery and is located on the North Slope of Alaska close to 88E’s existing projects.
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Umiat Oil Field Location (Source: ASX Announcement 11 January 2021)
88E Inks Agreement to Acquire Umiat
88E inked a Sale and Purchase Agreement with Renaissance Umiat LLC and Malamute Energy, Inc regarding the purchase of the Umiat Oil Field through Emerald House LLC, which is wholly owned subsidiary of 88E.
The purchase consideration comprises of a 4% ORRI and assumption of the liability for the abandonment of the two wells, Umiat-23H and Umiat-18 wells. These wells were drilled by Linc Energy in 2013/2014 and the cost to abandon the two wells is projected around US$1 million.
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There are two leases comprising 17,633 acres that form the Umiat Oil Field. These leases are in a unit that was created in September 2019 with an initial term of 10 years and the present circumstances of the unit require a well commitment by 31 August 2022.
Initially, Umiat was uncovered in the mid-1940s and by 1953, the well had witnessed drilling at 11 appraisal wells, out of which many were tested. The results showed that during a 4-day test, Umiat-8 had the highest flow rate of 5.9mmcf/d of natural gas, and on a 3-month test, Umiat-5 flowed 268 barrels each day.
Two wells, Umiat-18 and Umiat-23H, were drilled by Linc Energy and the area had witnessed little work until 2013/2014. However, testing of the Umiat-23H was undertaken with a sustained flow of 200 barrels each day and a top flow rate of 800 barrels each day.
Full Field Review Planned By 88E
In order to support the prospective future development Linc Energy had implemented significant engineering and environmental work. Notably, 88E’s Project Icewine leasehold has a route for access to infrastructure running directly through it.
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Dave Wall, Managing Director of 88 Energy commented:
Source: ASX Announcement 11 January 2021
The Company now looks to conduct a full field review with a view to determine a certain oil price, where Umiat may be commercial as a separate development. This also aims to identify if it is possible to optimise the earlier development plan.
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88E strongly believes that Umiat well shall significantly contribute to any further development, in case a discovery is made at Project Peregrine, where drilling is pending.
88E ended the trading session at $0.010 per share, an uptick of 5% since yesterday close, on 13 January 2021.
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