TIDM88E
RNS Number : 1601T
88 Energy Limited
10 October 2017
10 October 2017
QUARTERLY REPORT
Report on Activities for the Quarter ended 30 September 2017
The Directors of 88 Energy Limited ("88 Energy" or the
"Company", ASX & AIM:88E) provide the following report for the
quarter ended 30 September 2017.
Highlights
-- Icewine#2 Production Test operations continued in the
quarter, with the following key project milestones;
o The well was shut in on 10(th) July 2017 (AK time) for a
period of 7 weeks to allow for pressure build up and imbibition to
occur. Prior to shut in, 16% of the stimulation fluid had been
recovered from the reservoir under natural flowback;
o Flow testing recommenced on 31(st) August 2017 (AK time);
o Average flow during the test period was 1.85mcf/d with an
increasing ratio of heavy components measured in the gas;
o The cumulative amount of stimulation fluid produced from both
testing periods was 5,533 barrels, 19.9% of fluids injected, prior
to the winter shut in on 18(th) September 2017 (AK time);
o Since shut in there has been significant pressure build up
which is consistent with interpreted overpressure in the HRZ.
-- Project Icewine Joint Venture acquired and paid for an
additional 76,996 gross acres (48,864 net to 88E);
o A decision was made to accept 76,996 out of the 109,817 gross
acres awarded from the December 2016 Bid Round, based on the where
the coincidence of prospectivity was the greatest for both the
conventional and unconventional opportunities.
Icewine#2 Operations
On 10(th) July 2017 the Icewine#2 well was shut in for a period
of 7 weeks, to allow for pressure build up and imbibition (or
soaking) to occur. Imbibition has proven effective in other plays
by allowing frac fluid to be absorbed and displacing in-situ water
that may be blocking hydrocarbon molecules from being able to flow
through the reserviour.
Prior to the initial shut in on 10(th) July 2017, 16% of the
stimulation fluid had been recovered from the reservoir under
natural flowback, with the fluid composition comprising 100%
water.
Flow testing of Icewine#2 recommenced on 31(st) August, with the
well initially flowed back on a 6/64 inch choke which was
subsequently reduced to 4/64 inch choke to maintain pressure.
Approximately 370 barrels of frac fluid had been recovered as at
17:30 on 3(rd) September at an average rate of 100 barrels/day. The
choke was subsequently stepped up to 8/64 inch on 10 September.
Flow back fluid was run through the test separator due to minor
gas indications being evident. The rate of flow achieved was
unstabilised ranging from 2 to 4mcf of gas/ day, made up of 76%
hydrocarbons, 20% atmospheric gases and 4% inorganics. The produced
hydrocarbons comprised 93% methane with 7% heavier fractions.The
choke was increased to lower the bottom hole pressure below
reservoir pressure to increase drawdown on the formation. The well
head pressure fell below that required to support flow and
Icewine#2 stopped flowing naturally. The well was shut in on 18
September 2017 for a planned extended period over winter.
Average flow during the test period was 1.85mcf/d with an
increasing ratio of heavy components measured in the gas. A total
of 5,533 barrels, 19.9%, of injected stimulation fluids were
recovered during the overall testing period prior to shut-in.
Results are not considered representative of potential flow rate
nor hydrocarbon composition at Icewine#2 due to low recovery of
stimulation fluids to date. To achieve connectivity to the
reservoir a minimum of 30% recovery of stimulation fluids injected
is anticipated to attain representative flowback from the
reservoir.
During the winter shut-in period, further evaluation and
analysis will be conducted to determine the impact, if any, of the
productivity performance of the Icewine#2 well on the probability
of success of the HRZ play at the Franklin Bluffs location and over
the wider acreage position. Flow testing of the HRZ at Icewine#2
will recommence in April/ May 2018 via an optimised completion and
artificial lift.
Lease Position Expanded
The Project Icewine Joint Venture was awarded 109,817 gross
acres on the 7th 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 taken up and paid for. Given the ongoing testing and analysis
of Icewine#2, a decision was made to accept award on acreage where
the coincidence of propspectivity for both the conventional and
unconventional was greatest.
The current lease position for the Joint Venture as at 31
September 2017 is summarised in the attached pdf.
http://www.rns-pdf.londonstockexchange.com/rns/1601T_-2017-10-10.pdf
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$9.1m 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 interest totalled A$0.3m (US$0.25m);
-- Administration and other operating costs A$1.0m (June'17 Quarter A$1.0m); and
-- Payments for the acquisition of further acreage totalled A$2.1m.
At the end of the quarter, the Company had cash reserves of
A$19.2m, including cash balances held in Joint Venture bank
accounts.
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.
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.
About 88 Energy: 88 Energy has a working interest and
operatorship in 259,114 net acreas onshore the prolific North Slope
of Alaska ("Project Icewine"). Gross contiguous acreage position
will further expand on award of additional remaining 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, was
spudded in 2Q 2017. Operations are currently suspended for winter,
with further flow testing scheduled for April / May 2018 with an
optimised completion and artificial lift.
+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 September 2017
--------------- ------------------------
Consolidated statement Current quarter Year to date
of cash flows $A'000 (9 months)
$A'000
----------------------------------------- ---------------- -------------
1. Cash flows from operating
activities
1.1 Receipts from customers - 102
1.2 Payments for
(a) exploration & evaluation (9,121) (24,126)
(b) development - -
(c) production - -
(d) staff costs (395) (1,130)
(e) administration
and corporate costs (556) (1,763)
1.3 Dividends received - -
(see note 3)
1.4 Interest received 7 12
Interest and other
1.5 costs of finance paid (315) (315)
1.6 Income taxes paid - -
1.7 Research and development - -
refunds
Other (JV Partner Contributions
1.8 - Burgundy Xploration) 832 7,458
---------------- -------------
Net cash from / (used
1.9 in) operating activities (9,548) (19,762)
----- ---------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant
and equipment - -
(b) tenements (see
item 10) (2,092) (2,092)
(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)
---------------- -------------
Net cash from / (used
2.6 in) investing activities (2,092) (2,092)
------- -------------------------------- ---------------- -------------
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 (2) 543
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)
---------------- -------------
Net cash from / (used
3.10 in) financing activities (2) 15,719
------- -------------------------------- ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 31,554 27,303
Net cash from / (used
in) operating activities
4.2 (item 1.9 above) (9,548) (19,762)
Net cash from / (used
in) investing activities
4.3 (item 2.6 above) (2,092) (2,092)
Net cash from / (used
in) financing activities
4.4 (item 3.10 above) (2) 15,719
Effect of movement
in exchange rates on
4.5 cash held (698) (1,954)
---------------- -------------
Cash and cash equivalents
4.6 at end of period 19,214 19,214
------- -------------------------------- ---------------- -------------
5. Reconciliation of cash Current quarter Previous
and cash equivalents $A'000 quarter
at the end of the $A'000
quarter (as shown in
the consolidated statement
of cash flows) to the
related items in the
accounts
---- ---------------------------- ---------------- ---------
5.1 Bank balances 19,214 31,554
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) 19,214 31,554
---- ---------------------------- ---------------- ---------
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 30
----------------
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.
* The amount drawn under the facility will reduce by
US$1.19 million to US$16.5 million, as a result of
the State of Alaska making payment for the noted
amount anticipated in Q4 2017.
------------------------------------------------------------------
9. Estimated cash outflows $A'000
for next quarter
---- ------------------------------ --------
9.1 Exploration and evaluation* (900)
9.2 Development -
9.3 Production -
9.4 Staff costs (370)
Administration and corporate
9.5 costs (450)
Other (provide details if
9.6 material) (500)
--------
9.7 Total estimated cash outflows (2,220)
---- ------------------------------ --------
* Includes amounts relating to lease rentals, lease acquisition,
seismic 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
----- ---------------------- -------------- ------------------- -------------- ------------
Interests
in mining
tenements
and petroleum Joint Venture
tenements North - 88 Energy
acquired Slope Net acreage
10.2 or increased Alaska interest* 210,250 259,114
----- ---------------------- -------------- ------------------- -------------- ------------
* Refer to announcement dated 17 August 2017 for further
information.
1.1 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.
10 October 2017
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
MSCFFUSISFWSELS
(END) Dow Jones Newswires
October 10, 2017 02:04 ET (06:04 GMT)
88 Energy (LSE:88E)
Historical Stock Chart
From Apr 2024 to May 2024
88 Energy (LSE:88E)
Historical Stock Chart
From May 2023 to May 2024