88 Energy Limited Project Icewine Operations Update (2137O)

TIDM88E

RNS Number : 2137O

88 Energy Limited

17 August 2017

88 Energy Limited

Project Icewine Operations Update

88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.

Highlights

   --     Flow testing on Icewine#2 to re-commence week beginning 21(st) August post six week shut-in 
   --     Gross acreage position increased by 76,996 acres (48,864 net to 88E) 

o Total gross acres now 348,116 (259,114 net to 88E)

o Additional 256,000 gross acres subject to award, expected later this year

Icewine#2 Operations Update

The Icewine#2 well was shut-in on 10(th) July for a six week period to allow for imbibition and pressure build up to occur within the HRZ shale. Flow testing is scheduled to re-commence week beginning 21(st) August.

Additional technical analyses are ongoing and will be communicated once complete.

Lease Position Expanded

The Project Icewine Joint Venture was awarded 109,817 gross acres on 7(th) July as part of a broader package of successful bids submitted in the December 2016 North Slope lease sale. Of these 109,817 gross acres, 76,996 gross acres (48,864 net to 88E) were recently taken up and paid for. Given the ongoing testing of Icewine#2, a decision was made to accept award on acreage where the coincidence of prospectivity for both the conventional and unconventional was greatest. An additional 256,000 gross acres is subject to award, expected later this year. The current lease position for the Joint Venture is summarised below and in the attached pdf.

Project Icewine Acreage Position

 
 Colour   Gross Acres    Ownership / Rights    Status 
-------  ------------  ---------------------  ----------- 
 RED        325,304     88E 77.5%, BEX 22.5%   Awarded 
-------  ------------  ---------------------  ----------- 
 BLUE        22,811     88E 30.0%, BEX 70.0%   Awarded 
-------  ------------  ---------------------  ----------- 
 PINK        67,680     88E 77.5%, BEX 22.5%   Subject to 
                                                Award 
-------  ------------  ---------------------  ----------- 
 GREY       188,640     BEX 100%, 88E right    Subject to 
                               to 30%           Award 
-------  ------------  ---------------------  ----------- 
 

Media and Investor Relations:

88 Energy Ltd

   Dave Wall, Managing Director                                                   Tel: [phone] 

Email: [e-mail]

   Finlay Thomson, Investor Relations                                         Tel: [phone] 

Hartleys Ltd

Dale Bryan Tel: + 61 8 9268 2829

Cenkos Securities Tel: + 44 131 220 6939

Neil McDonald/Derrick Lee

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, Mr Brent Villemarette, who is a Non-Executive Director of the Company. Mr Villemarette has more than 35 years' experience in the petroleum industry, is a member of the Society of Petroleum Engineers, and a qualified Reservoir Engineer 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. Mr Villemarette has reviewed the information and supporting documentation referred to in this announcement and considers the prospective resource 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.

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. The current gross acreage position is 348,115 contiguous acres (259,114 acres net to the Company). In December 2016 the Company successfully bid on additional acres, some of which were awarded in July 2017. On award of the remaining acres, the Project Icewine gross acreage position may be further expanded to 604,000 contiguous acres (368,100 acres net to the Company assuming all rights are taken up).

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 drilling at the follow-up appraisal well, Icewine#2, commencing early 2Q2017. Production testing is ongoing.

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

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.

Exploration incentives provided by the State of Alaska with up to 35% of net operating loss refundable in cash were concluded for all expenditure post 30 June 2017.

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 Ivishak 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 325,000 acres onshore the prolific North Slope of Alaska ("Project Icewine"). Gross contiguous acreage position will expand on award of additional leases successfully bid on in the December 2016 State of Alaska North Slope Licensing Round. 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 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 acquired 2D seismic in early 2016 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. Results from the seismic mapping and prospectivity review are encouraging, and form the basis of a conventional prospectivity portfolio for Project Icewine. In late 2015, the Company completed its maiden well at the project, Icewine#1, to evaluate an unconventional source rock reservoir play which yielded excellent results from analysis of core obtained from the HRZ shale. The follow-up well with a multi-stage stimulation and test of the HRZ shale, Icewine#2, spud in early 2Q2017.

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/2137O_-2017-8-16.pdf

This information is provided by RNS

The company news service from the London Stock Exchange

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August 17, 2017 02:00 ET (06:00 GMT)