88 Energy Ltd Operations Update

 
TIDM88E 
 
26 June 2017 
 
                               88 Energy Limited 
 
                          Icewine#2 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 
 
  * Flowback continues with 13% of stimulation fluid recovered 
 
Icewine#2 Operations Update 
 
Flowback commenced on the 19th June from stage 2 (upper zone). Approximately 8% 
of total stimulation fluid volume was recovered until it became apparent, due 
to rate and pressure observations, that the upper zone was likely in 
communication with the lower zone. Consequently, a decision was made to drill 
out the plug between the upper and lower zones. No increase in pressure was 
observed, confirming that the two zones are in effective communication. Trace 
hydrocarbons were encountered whilst flowing back the upper zone prior to 
drilling out the plug and, as expected, the flow rate returned to 100% 
stimulation fluid once the two zones were flowed back together. 
 
Flowback, currently comprising 100% stimulation fluid, is continuing. 
Percentage of fluid recovered to date is 13% of the total fluid pumped. It is 
estimated that up to 30% of the stimulation fluid will need to be recovered 
before hydrocarbons will be released from the reservoir. 
 
The forward plan is to monitor pressure and flow rate and continue to draw 
stimulation fluid off the reservoir. Artificial lift, using nitrogen or swab 
cups, may be introduced at some stage to increase the rate of draw down of 
fluid. If pressure becomes too low it is possible that operations will 
necessitate a shut-in to allow fluid to 'soak' and pressure to build up. This 
'soaking' is not uncommon in other shale plays as it allows stimulation fluid 
to be absorbed into the reservoir and can result in lower required fluid 
flowback before onset of hydrocarbon flow. 
 
Further updates will be made as and when appropriate throughout the testing 
program. 
 
Managing Director, Dave Wall, commented:  "We continue to monitor pressure and 
flowback of stimulation fluid whilst we wait for hydrocarbons to be released 
from the reservoir. Given that we are breaking new ground in relation to the 
HRZ formation, we need to establish the conditions under which the hydrocarbon 
cut will return and then increase. 
 
The stimulation was executed precisely as per plan with over one million lbs of 
proppant placed into the formation. A little patience is now required as we 
give the rocks time to show us what they can deliver." 
 
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 30 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. In June 2016, the gross acreage 
position was expanded to 271,119 contiguous acres (210,250 acres net to the 
Company). In December 2016 the Company successfully bid on additional acres. On 
award the Project Icewine gross acreage position will be further expanded to 
690,000 contiguous acres (400,000 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 scheduled to occur in mid-2017. 
 
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. 
 
Generous exploration incentives are provided by the State of Alaska with up to 
35% of net operating loss 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 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 6th 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"). 
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. 
 
 
 
END 
 

(END) Dow Jones Newswires

June 26, 2017 02:00 ET (06:00 GMT)