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88 Energy Ltd

88 Energy delighted with Alaskan farm-out deal with Premier Oil

Snapshot

The FTSE 250 group will pay the full costs of an appraisal well, dubbed “Charlie-1”, up to a total of US$23mln to test the reservoir deliverability of the Malguk-1 discovery

88 Energy Ltd -

Quick facts: 88 Energy Ltd

Price: £0.01

Market: AIM
Market Cap: £42.74 m
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  • 88 Energy owns a number of conventional and shale prospects in Alaska

  • Premier Oil to farm-in to the conventional assets at Icewine project and fund an appraisal well

  • Icewine contains a potential one billion of net prospective resources just in the conventional assets


What it owns

Project Icewine, Alaska

Operator on majority of 528,000 contiguous acres onshore Alaska in proven oil province, of which 349,000 acres are net to 88 Energy through a 66% working interest, a 10 year leasehold and16.5% royalty

Opportunity comprises unconventional acreage and conventional opportunity on the North Slope

Yukon Gold, Alaska

Recent award of 14,194 acres (100% 88 Energy); Contains historic oil discovery assessing 3D seismic

Western Blocks, Alaska

88 Energy earning 36% by paying 40% of costs for a commitment well on a 400MMbbl prospect; adjacent to recent discoveries

 

How is it doing?

In August, 88 Energy Ltd (LON:88E, ASX:88E) announced a farm-in deal with Premier Oil (LON:PMO) for the conventional acreage at Icewine.

The FTSE 250 group will pay the full costs of an appraisal well, dubbed “Charlie-1”, up to a total of US$23mln to test the reservoir deliverability of the Malguk-1 discovery made by BP in 1991.

Malguk-1 discovered 251 feet of light oil pay in turbidite sands but was never tested.

Premier estimates an accumulation of more than one billion barrels of oil in place, based on the original well data and its evaluation of the existing 3D dataset.

88 will retain a 30% stake in Area A, with Charlie-1 holding an estimated 63mln barrels net.

On successful completion of the work programme, Premier will have the option to assume operatorship.

Should the Charlie-1 appraisal well prove successful, Premier has the option to earn a 50% working interest in Area B or Area C through spending a further US$15mln.

More details

88 Energy also gave more details on the Area A block, confirms that in the ‘western play fairway’ the small cap explorer retains some 720mln barrels of net prospective resources (2.4bn barrels gross).

The ‘central play fairway’ is now deemed to give 88 Energy some 193mln barrels of net prospective resources (373mln gross), while the ‘eastern play fairway’ has 96mln barrels (124mln gross).

In total, the company has just over 1bn barrels of net prospective resources (2.89bn gross).

 

What the boss says: Dave Wall, managing director

"We are delighted to be partnering with a company of the technical calibre of Premier.

"Premier has a strong track record of delivering projects through to production and is an excellent addition to the joint venture.

"The Charlie-1 well has been designed to test all of the prospective horizons identified in the Western Play Fairway, giving benefit usually only derived from a multi-well programme.”

 

Inflection points

  • The plan is to drill the Charlie well, pitched as an appraisal of a 1991 BP discovery, during the first three months of 2020.
  • If the Charlie well impresses, Premier can add 50% stakes in Icewine Area B and Area C for US$15mln
  • Industry interest on the North Slope is high ConocoPhillips, ENI, Repsol and Oil Search are all working on similar ventures in the region.
  • At 0.93p, 88 Energy is valued at £55mln.

 

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