TIDM88E
RNS Number : 4254L
88 Energy Limited
19 July 2017
19 July 2017
QUARTERLY REPORT
Report on Activities for the Quarter ended 30 June 2017
The Directors of 88 Energy Limited ("88 Energy" or the
"Company", ASX & AIM:88E) provide the following report for the
quarter ended 30 June 2017.
Highlights
-- Spud of Icewine#2 Production Test well occurred on 24(th)
April 2017, with the following key project milestones;
o The Arctic Fox drilling rig reached a Total Depth of 11,450'
on 15(th) May 2017, on schedule and without incident;
o Wireline logging successfully completed throughout the
production interval;
o Stage 1 and Stage 2 stimulation operations completed
successfully, with over 98% of the intended proppant volume placed
in the HRZ reservoir;
o Flowback commenced on 19(th) June 2017 with 16% of stimulation
fluid recovered prior to shut in on 10(th) July 2017, with trace
hydrocarbons encountered during flowback; and
o Drilling and production testing expenditure anticipated to be
within budget.
Key Events Subsequent to the Quarter End
The well was shut in on 10th July 2017 for an anticipated period
of 6 weeks to allow for pressure build up and imbibition to
occur.
Icewine#2 Operations
On 6(th) April 2017, approval of the Permit to Drill was granted
by the Alaskan Oil and Gas Conservation Commission ('AOGCC') and
shortly thereafter on 24(th) April the Icewine#2 well was spudded
with the Arctic Fox rig.
The well reached a Total Depth ('TD') of 11,450' on the 15(th)
of May, on schedule and without incident. Wireline logging,
cementing the 4.5" production liner and demobilisation of the Artic
Fox rig was completed by the end of May.
Log interpretation to finalise the stimulation design was
completed in early June, and the two stage artificial stimulation
of the HRZ reservoir was successfully completed on 19(th) June,
with over 98% of the intended proppant volume placed into the HRZ
reservoir.
Flow back from the upper zone commenced on 19(th) June, with
approximately 8% of the total stimulation fluid recovered before it
became apparent that the upper and lower zones were in
communication, which consequently resulted in the drill out of the
plug between the upper and lower zones.
Subsequent to period end the well was shut in on 10(th) July
2017 for an anticipated period of 6 weeks, with 16% of stimulation
fluid recovered prior to shut in.
Corporate
The ASX Appendix 5B attached to this report contains the
Company's cash flow statement for the quarter. The significant cash
flows for the period were:
-- Exploration and evaluation expenditure of A$13.7m primarily
relating to Icewine#2 operations and lease rental payments to the
State of Alaska;
-- Payments to the Bank of America in relation to the debt facility totalled A$0.6m (US$0.5m);
-- Administration and other operating costs A$1.0m (March 2017 of A$0.9m); and
-- Proceeds from issue of shares resulting from the conversion
of options and warrants totalled A$0.5m.
At the end of the quarter, the Company had cash reserves of
A$31.6m, including cash balances held in Joint Venture bank
accounts.
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
This announcement contains inside information.
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.
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, spudded in 2Q 2017 with
operations ongoing at 30 June 2017.
+Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity
quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97,
01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity
-------------------------------------------
88 Energy Limited
-------------------------------------------
ABN Quarter ended ("current
quarter")
--------------- ------------------------
80 072 964 179 30 June 2017
--------------- ------------------------
Consolidated statement Current quarter Year to date
of cash flows $A'000 (6 months)
$A'000
----------------------------------------- ---------------- -------------
1. Cash flows from operating
activities
1.1 Receipts from customers 79 102
1.2 Payments for
(a) exploration & evaluation (13,741) (15,005)
(b) development - -
(c) production - -
(d) staff costs (384) (735)
(e) administration
and corporate costs (632) (1,206)
1.3 Dividends received - -
(see note 3)
1.4 Interest received 4 5
1.5 Interest and other - -
costs of finance paid
1.6 Income taxes paid - -
1.7 Research and development - -
refunds
Other (JV Partner Contributions
1.8 - Burgundy Xploration) 6,626 6,626
---------------- -------------
Net cash from / (used
1.9 in) operating activities (8,048) (10,213)
----- ---------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant
and equipment - -
(b) tenements (see - -
item 10)
(c) investments - -
(d) other non-current - -
assets
2.2 Proceeds from the disposal
of:
(a) property, plant
and equipment - -
(b) tenements (see - -
item 10)
(c) investments - -
(d) other non-current - -
assets
2.3 Cash flows from loans - -
to other entities
2.4 Dividends received - -
(see note 3)
2.5 Other (provide details - -
if material)
---------------- -------------
2.6 Net cash from / (used - -
in) investing activities
------- -------------------------------- ---------------- -------------
3. Cash flows from financing
activities
Proceeds from issues
3.1 of shares - 17,091
3.2 Proceeds from issue - -
of convertible notes
Proceeds from exercise
3.3 of share options 545 545
Transaction costs related
to issues of shares,
convertible notes or
3.4 options - (1,250)
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related - -
to loans and borrowings
3.8 Dividends paid - -
Other (provide details
3.9 if material) (665) (665)
---------------- -------------
Net cash from / (used
3.10 in) financing activities (120) 15,721
------- -------------------------------- ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 39,677 27,303
Net cash from / (used
in) operating activities
4.2 (item 1.9 above) (8,048) (10,213)
4.3 Net cash from / (used - -
in) investing activities
(item 2.6 above)
Net cash from / (used
in) financing activities
4.4 (item 3.10 above) (120) 15,721
Effect of movement
in exchange rates on
4.5 cash held 45 (1,257)
---------------- -------------
Cash and cash equivalents
4.6 at end of period 31,554 31,554
------- -------------------------------- ---------------- -------------
5. Reconciliation of cash Current quarter Previous
and cash equivalents $A'000 quarter
at the end of the quarter $A'000
(as shown in the consolidated
statement of cash flows)
to the related items
in the accounts
---- ------------------------------- ---------------- ---------
5.1 Bank balances 31,554 39,677
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---------------- ---------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 31,554 39,677
---- ------------------------------- ---------------- ---------
6. Payments to directors of the entity Current quarter
and their associates $A'000
----------------
Aggregate amount of payments to
these parties included in item
6.1 1.2 182
----------------
6.2 Aggregate amount of cash flow -
from loans to these parties included
in item 2.3
----------------
6.3 Include below any explanation necessary
to understand the transactions included
in items 6.1 and 6.2
---- --------------------------------------------------------
6.1 All transactions involving directors and
associates were on normal commercial terms.
--------------------------------------------------------------
7. Payments to related entities of Current quarter
the entity and their associates $A'000
----------------
Aggregate amount of payments to
these parties included in item
7.1 1.2 81
----------------
7.2 Aggregate amount of cash flow -
from loans to these parties included
in item 2.3
----------------
7.3 Include below any explanation necessary
to understand the transactions included
in items 7.1 and 7.2
---- --------------------------------------------------------
7.1 Consultant fees paid to associated entities
were on normal commercial terms.
--------------------------------------------------------------
8. Financing facilities Total facility Amount drawn
available amount at at quarter
Add notes as necessary quarter end end
for an understanding $US'000 $US'000
of the position
--------------- -------------
8.1 Loan facilities 17,710 17,710
--------------- -------------
8.2 Credit standby arrangements - -
--------------- -------------
8.3 Other (please specify) - -
--------------- -------------
8.4 Include below a description of each facility
above, including the lender, interest rate
and whether it is secured or unsecured.
If any additional facilities have been entered
into or are proposed to be entered into
after quarter end, include details of those
facilities as well.
---- ------------------------------------------------------------
On 20 August 2015, 88 Energy entered into a
credit agreement with the Bank of America. The
facility is secured by available Production
Tax Credits.
------------------------------------------------------------------
9. Estimated cash outflows $A'000
for next quarter
---- ------------------------------ ---------
9.1 Exploration and evaluation* (17,600)
9.2 Development -
9.3 Production -
9.4 Staff costs (370)
Administration and corporate
9.5 costs (550)
Other (provide details if
9.6 material) (210)
---------
9.7 Total estimated cash outflows (18,730)
---- ------------------------------ ---------
* Includes amounts relating to lease rentals, lease acquisition,
seismic acquisition & interpretation, G&A, G&G,
expenditure on Icewine#2 operations including potential refund to
JV partners for activities achieved under budget.
10. Changes in Tenement Nature of interest Interest Interest
tenements reference at beginning at end
(items 2.1(b) and location of quarter of quarter
and 2.2(b)
above)
----- ---------------------- -------------- ------------------- -------------- ------------
10.1 Interests N/A
in mining
tenements
and petroleum
tenements
lapsed, relinquished
or reduced
----- ---------------------- -------------- ------------------- -------------- ------------
10.2 Interests N/A
in mining
tenements
and petroleum
tenements
acquired
or increased
----- ---------------------- -------------- ------------------- -------------- ------------
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Sign here: ............................................................ Date: .............................................
(Company Secretary)
Print name: Sarah Smith
Notes
1. The quarterly report provides a basis for informing the
market how the entity's activities have been financed for the past
quarter and the effect on its cash position. An entity that wishes
to disclose additional information is encouraged to do so, in a
note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with
Australian Accounting Standards, the definitions in, and provisions
of, AASB 6: Exploration for and Evaluation of Mineral Resources and
AASB 107: Statement of Cash Flows apply to this report. If this
quarterly report has been prepared in accordance with other
accounting standards agreed by ASX pursuant to Listing Rule 19.11A,
the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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