88 Energy Ltd Operational Update
02 December 2016 - 6:00PM
UK Regulatory
TIDM88E
2 December 2016
88 Energy Limited
Operational Update
88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is
pleased to announce the following operational update in relation to Project
Icewine, located on the North Slope of Alaska (77.5% Working Interest,
Operator).
Icewine#2 Progress
Permitting
Permitting remains on track for completion well ahead of the scheduled spud
date for Icewine#2 in late Q1 2017. Two of the major permits, the Plan of
Operations and Oil Discharge Prevention and Contingency Plan, have just passed
major milestones in the permitting process with no problems identified.
Vendor Selection
With the design of the well, logging program and stimulation design now largely
finalised, 88 Energy anticipates conclusion of key vendor contracts over the
coming weeks, including rig selection. Availability of equipment for the
planned design and schedule has been ascertained and no issues are expected on
this front.
2D Seismic Update
Processing
Final processing of the Icewine 2D vibroseis data acquired by 88 Energy during
the first half of 2016 across the Project Icewine acreage was successfully
completed in November.
Conventional Prospectivity Review
The range of preliminary leads identified in the Brookian and Beaufortian
sequences, along with additional mapped leads have been matured and now form
the basis of a diverse conventional Prospect and Lead inventory across the
Project Icewine acreage.
The majority of leads identified are stratigraphic: typically comprising slope
apron, basin floor fan systems and turbidites. These leads are within proven
play fairways with successful analogues on the North Slope.
A number of leads are associated with enhanced seismic amplitudes which is
considered promising as it can indicate the presence of hydrocarbons. To
further evaluate the enhanced amplitudes, an amplitude versus offset (AVO)
analysis was undertaken - this work is ongoing and the initial results are
encouraging.
AVO response associated with Leads and Prospects is a useful tool as it can be
used to rank and de-risk exploration targets. An image of AVO support with
mapped lead is available on the pdf version of this announcement which is
available from the Company's website.
The forward plan is to fully mature the conventional Prospect and Lead
portfolio and highgrade potential candidates for future exploration drilling.
This will include finalisation of the volumetric estimation of the prospective
resource potential, prior to year end.
Managing Director of 88 Energy Limited, Dave Wall commented: "Operational
activity associated with the near term spud of Icewine#2 is ramping up and the
Company is on the cusp of testing the flow potential of the HRZ resource play.
Our large acreage position and the quality of the rock means that the potential
resource prize is enormous and success would be truly transformational.
Additionally, the conventional portfolio continues to firm up, exceeding our
expectations.
We look forward to providing additional news on both fronts in the near
future."
Media and Investor Relations:
88 Energy Ltd Tel: +61 8 9485 0990
Dave Wall, Managing Director Email: admin@88energy.com
Finlay Thomson, Investor Relations Tel: +44 7976 248471
Hartleys Ltd Tel: + 61 8 9268 2829
Dale Bryan
Cenkos Securities Tel: +44 131 220 6939
Neil McDonald/Derrick Lee
This announcement contains inside information.
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).
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 a followup appraisal well, Icewine#2, scheduled for spud in
1Q2017. Icewine#2 has been designed as a vertical well with a multi-stage
stimulation and flow test, to assess the production potential of the HRZ.
Significant conventional prospectivity has also been identified on recently
acquired 2D seismic across the project acreage.
Project Icewine Location map (please refer to the pdf of this announcement
which is available on the Company's website.)
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 exploration expenditure 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 Ivishuk 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").
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 three 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 has recently acquired 2D seismic 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. Interim results from this
seismic are encouraging, having identified several large leads. In late 2015,
the Company completed its maiden well at the project, Icewine#1, to evaluate an
unconventional source rock resource play which yielded excellent results from
analysis of core obtained from the HRZ shale. A follow-up well with a
multi-stage stimulation and test of the HRZ shale, Icewine#2, is planned for
1Q2017.
END
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