TIDM88E
RNS Number : 8958R
88 Energy Limited
14 December 2016
15 December 2016
88 Energy Limited
Acquisition of Rights to Secure
Substantial Increase in Alaska Land Holding
88 Energy Limited ("88 Energy", "the Company") (ASX, AIM: 88E)
is pleased to announce the following update in relation to Project
Icewine (77.5% Working Interest, Operator), located on the Central
North Slope of Alaska.
Highlights
-- Accumulate Energy Alaska, Inc. ("Accumulate", a 100%
subsidiary of 88E) and JV Partner, Burgundy Xploration LLC
("Burgundy") declared high bidder on 142,560 acres on the Central
North Slope (Accumulate 77.5% working interest)
-- Burgundy declared high bidder on additional 279,360 acres on
the Central North Slope (Accumulate retains back in right for 30%
of these additional acres at cost)
-- Net land position for Accumulate (assuming all rights taken
up) now over 400,000 acres on the Central North Slope (Joint
Venture gross position over 690,000 acres)
Managing Director of 88 Energy Limited, Dave Wall commented:
"Our success in this bid round provides us with the ability to
significantly increase our acreage position on the North Slope and
highlights the confidence that management has in both the HRZ
unconventional play as well as the conventional prospectivity at
Project Icewine.
The upcoming drilling of Icewine#2 will test the flow potential
of the HRZ in 1H 2017 and, with the additional acreage, we have now
maximised the potential upside exposure for our shareholders in the
event of success.
We look forward to providing additional news on all fronts in
the near future."
Central North Slope Alaska - Acreage Details
Additional analysis of the results from the Icewine#1 well by
the Company's JV partner, Burgundy, has refined the potential HRZ
resource play sweetspot. This resulted in a joint decision by 88
Energy and Burgundy to seek rights to a substantial increase in
acreage in the December 2016 Central North Slope Alaska bid
round.
Accumulate elected to bid its pro rata entitlement of 77.5%
working interest on 142,560 gross acres, based on the original Area
of Mutual Interest ("AMI"). Given Burgundy's desire to lease a
substantially larger area, being an additional 279,360 acres, the
Joint Venture agreed to modify the AMI, extending its boundary to
include all of the additional leases bid on by Burgundy and to
change the working interest for Accumulate's back in right to
30%.
As per previous bid rounds on the Central North Slope of Alaska,
the Joint Venture participants each funded their share of a 20%
deposit of the gross bid amount (88E net deposit paid US$600k), the
balance of which is paid on official award in several months'
time.
Conventional Update
Finalisation of the 2D seismic interpretation over Project
Icewine identified the extension of a prospective play fairway on
the western margin of the acreage where a number of promising leads
have been mapped, all with stacked pay potential. The acquisition
of the new leases by the Company captures the full potential of
these leads which will be further evaluated in conjunction with the
continuing conventional prospectivity review of the Icewine
acreage.
Vintage exploration wells within the newly acquired lease area
encountered hydrocarbon shows within the prospective play fairway,
which is encouraging, and prospectivity analysis is ongoing.
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.
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). The Joint Venture has recently secured rights,
in December 2016, to additional acres bringing the Project Total to
over 690,000 acres (>400,000 acres net to the Company - assuming
all rights are exercised).
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 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 exploration expenditure 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"). 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 three 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 has recently acquired 2D seismic 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. Interim results from this seismic are encouraging,
having identified several large leads. In late 2015, the Company
completed its maiden well at the project, Icewine#1, to evaluate an
unconventional source rock resource 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.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/8958R_-2016-12-14.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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