TIDM88E
RNS Number : 0424K
88 Energy Limited
06 April 2018
6(th) April 2018
88 Energy Limited
Operations Update
88 Energy Limited (ASX: 88E) ("88 Energy" or the "Company") is
pleased to announce the following update for its projects located
on the North Slope of Alaska.
Project Icewine - Icewine 3D
The Icewine 3D seismic survey, approximately 450 km(2) in area
and covering several large leads identified on 2D seismic, was
completed on the 28(th) March - on schedule and within budget.
Infield quality control, overseen by head office, has ensured that
the data acquired is as clean as possible to enable fast track
processing. Processing of shipments of data from the initial areas
of the acquisition has commenced and early products, namely post
stack migration, will be available in June 2018. This will allow
confirmatory mapping of the stratigraphic / structural elements of
the leads already identified in the conventional prospectivity
portfolio.
Subsequently, velocity analysis and regularization will occur,
providing the isotropic Kirchoff pre stack time migration product.
This product will be used to further analyse and confirm the highly
encouraging amplitude vs offset (AVO) anomalies identified on the
2D seismic. These AVO responses are often associated with the
presence of hydrocarbons and, significantly, have already been
identified at horizons where both oil shows and good quality
reservoir is observed in regional well data.
As background, the 3D acquisition was designed to mature
conventional prospectivity previously reported, including several
leads with AVO support, in the western portion of the Project
Icewine leases. 88 Energy is extremely encouraged by recent
conventional and historic analog discoveries delineated on 3D
seismic to the north of the Company's acreage within the Brookian
sequence.
A diagram showing Icewine 3D completed: Covering Primary
Conventional Targets in Western Margin can be viewed in the ASX
version of this announcement, which can be accessed via the link
below:
http://www.rns-pdf.londonstockexchange.com/rns/0424K_-2018-4-6.pdf
The Company's preparations for the launch of its planned
farm-out, ahead of 2019 drilling operations, is well underway. The
formal process is expected to commence mid-2018, based on the early
products from the 3D seismic survey. The Company remains confident
of achieving a successful outcome to the farm-out process prior to
year end for the following reasons (based on the assumption that
the 3D seismic is confirmatory of the prospectivity already
identified on our 2D database):
-- High quality database comprising both modern reconnaissance 2D and focused 3D seismic
-- Excellent oil shows, including live oil to surface, in nearby
wells at horizons where good quality reservoir is also evident -
coinciding with large mapped leads within the regionally proven
Brookian play type
-- Multi-year permits are already secured for two well locations
within the 3D acquisition area, allowing for near term (1H CY2019)
drilling
-- Excellent operating capability, as evidenced by two recently
drilled and operated wells, by the Company - both within budget and
on schedule
-- Flexibility to cede operational control, to a suitably operationally experienced partner
-- Large discoveries in Brookian play type in nearby acreage to the north
-- Recent industry transactional activity on neighbouring
acreage, valuing discovered resources at >US$3/bbl (Source: Oil
Search investor presentation Dec 2017)
Project Icewine - Icewine#2 Flow Test
Planning is being finalised for the re-opening of the Icewine#2
well, which remains on schedule for April/May 2018. Exact timing is
dependent on warmer temperature, with further details to be
provided in the coming weeks.
Yukon Gold
In house evaluation is ongoing in relation to the recently
acquired (subject to formal award) Yukon Gold leases, which contain
an historic oil discovery. The Company is pleased to advise it
awarded a seismic contract to SAExploration to acquire 96km(2) of
3D seismic, predominantly over the Yukon Gold leases. The seismic
data will allow for assessment of the volumetric potential of the
discovery as well as to identify any additional prospectivity over
the broader lease position. Acquisition commenced on the 24(th)
March and was completed on the 1(st) April.
The 3D survey was fast tracked to opportunistically benefit from
an available seismic crew in the latter part of the 2018
acquisition season. Final processed products are anticipated in Q4
2018.
A diagram showing the Yukon Gold Leases can be viewed in the ASX
version of this announcememt at the link above.
Managing Director, Dave Wall, commented: "The 88E team have been
extremely busy on multiple fronts over the last few months, with
refinancing of debt, exercise of options, expanding our lease
position, planning for, and acquisition of, two 3D seismic surveys
and, of course, the re-opening of the Icewine#2 well.
The strong support for the recent option exercise has meant we
have been able to accelerate assessment of the Yukon Gold leases,
with the costs of the planned 3D acquisition being less than half
of the monies receipted from the option exercise process.
The remainder of 2018 promises to be pivotal for the Company and
its shareholders, with near-term activity related to the Icewine#2
flow test, expected prior to mid-year, results from two 3D seismic
acquisitions and one or more farm-out transactions targeted for the
second half of the year."
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.
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 Tel: + 44 131 220 6939
Neil McDonald/Derrick Lee
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. The current gross acreage position
is 475,000 contiguous acres (301,000 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
drilling at the follow-up appraisal well, Icewine#2, commencing
early 2Q2017. Production testing is ongoing.
Significant conventional prospectivity has also been identified
on recently acquired 2D seismic across the project acreage.
A diagram showing the Project Icewine Acreage be can be viewed
in the ASX version of this announcememt at the link above.
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.
Exploration incentives provided by the State of Alaska with up
to 35% of net operating loss refundable in cash were concluded for
all expenditure post 31 December 2017.
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 6(th) April 2016.
About 88 Energy: 88 Energy has a 63% working interest and
operatorship in 342,000 acres onshore the prolific North Slope of
Alaska ("Project Icewine"). Gross contiguous acreage position for
the Joint Venture is 475,000 acres (88E 301,000 net acres). 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. Flow testing at Icewine#2 is scheduled to
re-commence in April/May 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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