TIDM88E
RNS Number : 0663U
88 Energy Limited
13 January 2017
This Announcement Contains Inside Information.
13 January 2017
Conventional Prospectivity Review Complete & Icewine#2
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
-- Conventional Prospectivity Review by 88 Energy over Project Icewine complete
-- Additional resource potential identified for conventional
leads across Project Icewine acreage, based on internal estimates
totalling:
o 710 million barrels of gross mean Prospective Resources
(unrisked)
o 550 million barrels of net mean Prospective Resources to 88
Energy (unrisked)
-- Total Resource Potential (conventional only), including previously reported leads:
o 1.47 billion barrels gross mean Prospective Resources
(unrisked)
o 1.14 billion barrels net mean Prospective Resources to 88
Energy (unrisked)
-- Plan of Operations for Icewine#2 Production Test Well approved - Late December 2016
Managing Director of 88 Energy Limited, Dave Wall commented:
"The results from the 2D seismic interpretation continue to exceed
our expectations for the conventional potential across Project
Icewine.
Whilst the conventional Prospective Resource is very large, it
is eclipsed by the potential of the HRZ, especially given the
recently expanded acreage position. Additionally, the HRZ has been
de-risked via analysis of the results from Icewine#1 and remains
the Company's primary objective.
Preparations for the drilling of Icewine#2, which will test the
production potential of the HRZ, remain on track and we look
forward to providing further news on this front over the coming
months, in the lead up to spud."
Permitting Update
On December 23rd, the Lease Plan of Operations for Icewine#2 was
approved by the Alaska Department of Natural Resources, Division of
Oil and Gas. The only remaining permit, the Permit to Drill, is
typically submitted post the approval of all other permits, in the
lead up to final drilling preparations. No issues are expected in
relation to its approval prior to the planned spud date for
Icewine#2. Icewine#2 remains on schedule for late Q1 spud and has
been designed to test the production potential of the HRZ
interval.
Conventional Prospectivity Review - Results
88 Energy has completed the interpretation of the 2D seismic
data acquired/ licensed by the Company early in 2016 across Project
Icewine and is encouraged by the results of the technical
evaluation. Stacking of Leads mapped in the Central region and on
the Western margin of Project Icewine may, on maturation, offer the
opportunity to test multiple objectives with one exploration
well.
The principal objective of the seismic acquisition program,
which was to evaluate the conventional prospectivity across Project
Icewine, has been achieved. A conventional Prospect and Lead
Portfolio has been been developed to complement the unconventional
Prospective Resource potential already recognised in the HRZ
liquids rich resource play.
Table 1: Project Icewine Conventional Prospectivity Summary
Prospective Oil Resources - Unrisked Recoverable - MMBO
PROJECT ICEWINE CONVENTIONAL LEAD SUMMARY
Prospective Oil Resources - Unrisked Recoverable
- MMBO
-----------------------------------------------------------------
Lead Low Best High Gross Mean Net Mean
to 88E (WI:
77.5%)
----------------
Eastern Play Fairway
-----------------------------------------------------------------
Alpha 19 71 263 118 91
---------------- ----- ----- ----- ----------- -------------
Romeo 2.1 3.4 5.3 3.6 2.8
----- ----- ----- ----------- -------------
Sierra 1.1 2.0 3.4 2.2 1.7
----------------
Central Play Fairway
-----------------------------------------------------------------
Golf 60 115 210 128 99
---------------- ----- ----- ----- ----------- -------------
Hotel 10 18 31 19.8 15.3
----- ----- ----- ----------- -------------
India 61 116 212 129 100
---------------- ----- ----- ----- ----------- -------------
Juliet 52 99 181 110 85
---------------- ----- ----- ----- ----------- -------------
Western Play Fairway
-----------------------------------------------------------------
Bravo 129 245 449 273 212
---------------- ----- ----- ----- ----------- -------------
Oscar 14.5 26.6 47 29.2 22.6
----- ----- ----- ----------- -------------
Papa 7.6 13.9 24.6 15.3 11.9
---------------- ----- ----- ----- ----------- -------------
Charlie* 147 257 432 277 215
---------------- ----- ----- ----- ----------- -------------
Delta* 74.7 131 219 141 109
---------------- ----- ----- ----- ----------- -------------
Foxtrot* 40.9 71.5 120 77 60
----- ----- ----- ----------- -------------
Mike* 50 87.5 147 94 73
---------------- ----- ----- ----- ----------- -------------
November* 24.8 45.6 80.4 50.1 39
---------------- ----------- -------------
FINAL TOTAL 1,468 1,137
------------------------------------- ----------- -------------
Prospective resources classified in accordance with SPE-PRMS as
at 13(th) January 2017 using probabilistic and deterministic
methods on an unrisked basis. Leads identified from interpretation
of modern 2D seismic acquired in 2015/2016 across Project Icewine,
which comprises 271,119** gross acres on the Central North Slope of
Alaska. 88 Energy is Operator of record at Project Icewine (through
its wholly owned subsidiary Accumulate Energy Alaska, Inc) with a
77.5% working interest.
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.
*Conceptual leads extend into previously open acreage to the
west of Icewine Project, which was successfully bid on by 88 Energy
in the recent State of Alaska Licensing round, December 2016.
Currently delineated on Icewine 2D seismic data and extending onto
sparse vintage 2D. Further technical work is required to define the
full potential of the Western Play Fairway conceptual leads.
** An additional 420,000 gross acres (190,000 net to 88E) is
subject to formal award, which is expected in 2017
On completion of the conventional prospectivity portfolio
review, the Alpha and Bravo Leads remain the most significant given
their seismic relief and geometries. Of note, the Alpha Lead is
located close to the transportation corridor and mature
infrastructure so could be developed relatively quickly, in the
event of exploration success. The Bravo Lead is the most
significant Lead in the Western Play Fairway, with closure
delineated on the new 2016 seismic database. Additional information
on the Alpha and Bravo Leads is included in the attached
Appendix.
The conventional leads mapped are predominantly stratigraphic
and the majority are considered to be associated with slope apron,
turbidites and basin floor fan development (see the Conventional
Leads Prospectivity Map and Acreage Position in the attached
Appendix). The Tarn Oil Pool, Kuparuk River Unit to the norwest of
Project Icewine is considered a proven and productive analogue. The
Tarn Oil Pool comprises multiple stacked sands within the Seabee
Formation. Depositional systems associated with the Tarn Oil Pool
are also included in the attached Appendix.
Several significant conceptual leads were identified with the
Seabee formation and mapped on the western margin of the Project
Icewine acreage - the Western Play Fairway. These leads are
considered conceptual at this stage as they extend marginally
beyond the existing 2016 2D seismic database onto sparse vintage 2D
and require further technical work to confirm their western
closure. The leads have seismic geometries consistent with the
depositional model at the Tarn Oil Pool to the norwest.
Incised gullies analogous to those in the Tarn Play Fairway have
been identified on the shelf break immediately west of Project
Icewine and represent potential point source to deliver sediments
downslope for slope apron, turbidite & basin floor fan
development in the Western Play fairway and across Project
Icewine.
88 Energy successfully bid on additional acreage in the recent
State of Alaska December 2016 Licensing Round as part of the
strategy to increase the footprint of its HRZ liquids rich resource
play and capture the full western extent of the conceptual leads
identified on the 2D seismic in the Project Icewine Western Play
Fairway.
Media and Investor Relations:
88 Energy Ltd
Dave Wall, Managing Director Tel: +61 8 9485 0990
Email: admin@88energy.com
Finlay Thomson, Investor Relations Tel: +44 7976 248471
Hartleys Ltd
Dale Bryan Tel: + 61 8 9268 2829
Cenkos Securities
Neil McDonald/Derrick Lee Tel: +44 131 220 6939
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 and is 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. His academic
qualifications and industry memberships appear on the Company's
website and both comply with the criteria for "Competence" under
clauses 18-21 of the Valmin Code 2005. 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 a
followup appraisal well, Icewine#2, scheduled for spud in late
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.
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 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 6(th) 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. A follow-up well with a multi-stage stimulation and
test of the HRZ shale, Icewine#2, is planned for 1Q2017.
Please click on the following link to access the Appendix:-
http://www.rns-pdf.londonstockexchange.com/rns/0663U_-2017-1-12.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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