TIDM88E
RNS Number : 6710R
88 Energy Limited
18 June 2018
18(th) June 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.
Highlights
-- Nitrogen lift commenced at Icewine#2
-- Yukon Gold and Western Margin leases formally awarded
Project Icewine - Icewine#2 Production Testing
As at 0530 17(th) June (AK time), wellhead pressure was 370psi
with a flowback rate of 166 barrels of water per day on a variable
choke setting, in order to manage wellhead pressure (currently
28/64").
A production log was run on 12(th) June and confirmed that all
perforations were contributing to flow. As per the flowback design,
nitrogen was then introduced gradually to the wellbore from 0845
13(th) June (AK time), prior to installation of the coiled tube
velocity string, to artificially lift stimulation fluids in order
to gain connectivity to the reservoir. The flowback rate stabilised
at 200 barrels of water per day through an 8/64" choke and then
steadily declined to circa 100 barrels of water per day, as per
expectation.
Flowback was interrupted, as per the program, on the 15(th) June
08:00 (AK time) to allow installation of the velocity string. Flow
was re-established on 15(th) June at 20:00 (AK time) with nitrogen
introduced into the annulus between the 4.5" casing and the 1.75"
velocity string. After displacement of fluid in the annulus, the
flowback rate stabilised at 350bpwd through a variable choke to
maintain a target wellhead pressure of 200-400psi. This technique
decreases the backside pressure in the system and optimises lifting
of fluid from the wellbore.
Flowback is now being run through the separator and gas
chromatograph and is considered to be 100% stimulation fluid and
gas. The gross gas rate is averaging 571mcf/d. Approximately 24.8%,
or 142mcf/d, of this is estimated to be hydrocarbons with the
remainder being returned nitrogen, injected as part of the
artificial lift. Hydrocarbon content is mostly methane (90%) with
some heavier elements up to trace C6. The composition and rate is
as expected for this stage of the flowback and results are
considered unrepresentative of the hydrocarbon composition in the
reservoir, as the well is still in clean-up phase. Salinity
measurements of the flowback fluid indicate that connectivity to
the reservoir remains limited, as expected, at this early
stage.
Total clean up fluid returned (net of diesel for freeze
protection and any other fluids introduced as part of the current
operation) since commencement of flowback on 12(th) June is 820
barrels (interpreted as 100% stimulation fluid). Total fluid
returned for the entire flowback operation, including last year, is
now 6,353 barrels or 23% of the frac fluid injected vs a target
percentage return of at least 30%.
The Icewine#2 well is located on the North Slope of Alaska (ADL
392301). 88 Energy Ltd (via its wholly owned subsidiary, Accumulate
Energy Alaska, Inc) has a 77.55% working interest in the well. The
well was stimulated in two stages over a gross 128-foot vertical
interval in the HRZ shale formation, from 10,957-11,085ft TVD,
using a slickwater treatment comprising 27,837 barrels of fluid and
1,034,838 pounds of proppant.
Prior to Winter shut-in (2017) 20% of the stimulation fluids had
been flowed back versus a projected minimum target of 30% to gain
connectivity to the source rock reservoir.
Flowback commenced, on schedule, at 22:30 11(th) June 2018 (AK
time) to clean-up stimulation fluids from the Icewine#2 borehole
with a well head pressure of 3,000 psi and flowback rate of 253
barrels of water per day on an 8/64" choke.
Lease Award Update
88 Energy, via its subsidiaries Accumulate Energy Alaska, Inc
and Regenerate Alaska, Inc, has been formally awarded acreage it
successfully bid on in the State of Alaska North Slope Licensing
round December 2017. Lease documents have been executed and
returned to the Alaska Department of Natural Resources and balance
of funds have been wired.
A Lease Award Map can be viewed in the pdf version of this
announcement at the link below:
http://www.rns-pdf.londonstockexchange.com/rns/6710R_1-2018-6-18.pdf
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 map of the Project Icewine Acreage can be viewed in the pdf
version of this announcement 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 June 2018.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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