9 April 2020
QUARTERLY REPORT
Report on Activities for the Quarter ended 31 March 2020
The Directors of 88 Energy Limited (88 Energy or the Company, ASX & AIM:88E) provide the
following report for the quarter ended 31 March 2020.
Highlights
Project Icewine
The Permit to Drill for the Charlie-1 exploration well was approved by the Alaska Oil and Gas
Conservation Commission (AOGCC) on the 11 February 2020;
The Charlie-1 exploration well spudded on 2 March 2020, with the well intersecting all the of
the pre-drill targets safely and efficiently;
Total Depth of 11,112 was reached on the 30 March 2020, having drilled through and logged
all of the targets in the well, including the HRZ;
Results from the Logging While Drilling (LWD) program were largely consistent with those
seen in the nearby Malguk-1 well, with shows and elevated log response recorded over
several horizons; and
The wireline logging program commenced shortly after reaching Total Depth, with the
Company announcing subsequent to quarter end a confirmed condensate discovery in the
Torok Formation.
Yukon Acreage
Discussions continue with nearby resource owners to optimise the monetisation strategy of
the acreage; and
Permitting underway ahead of potential drilling in 2021 subject to farm-out.
Western Blocks
Assessment of strategy for future of leases underway.
Corporate
Successful completion of a capital raise of A$5 million (before costs).
www. 88energy.com
Level 2, 5 Ord Street, West Perth WA 6005 PO Box 1674, West Perth WA 6872 Australia Phone +61 8 9485 0990
ABN 80 072 964 179
Project Icewine
Project Icewine Conventional
Charlie-1 Exploration Well
The Permit to Drill which was submitted prior to the end of 2019, as planned, was approved by
the Alaska Oil and Gas Conservation Commission (AOGCC) on the 11 February 2020.
Construction of the ice road which commenced in late December 2019 was fully completed
together with the ice pad at the Charlie-1 drilling location, by mid-February 2020. Mobilisation
of the Nordic Rig#3 to site began shortly after completion of the ice road and the Charlie-1 well
was spudded on 2 March 2020.
The Charlie-1 well reached its Total Depth of 11,112 (TVD) on 30th March 2020, having drilled
through and logged all of the targets in the well, including the HRZ. Results from the Logging
While Drilling program are largely consistent with those seen in the nearby Malguk-1 well, drilled
by BP in 1991, with shows and elevated log response recorded over several horizons. The
significance of the similarities, and differences, to Malguk-1 will not be known until after the more
detailed wireline logging program has been executed and analysis completed.
The wireline logging program commenced shortly after Total Depth was reached, and concluded
on 6 April 2020.
Subsequent to quarter end the Company announced on 7 April 2020 that the Charlie-1 appraisal
well had proved the presence of mobile hydrocarbons, in the form of condensate gas, in the
Torok Formation in both the Middle Stellar and Lower Stellar targets. Hydrocarbons were
successfully recovered to surface from both targets using a state-of-the-art downhole sampling
tool (Ora). Further analysis to confirm the composition and gas to liquid ratio will now be
undertaken. Upper Stellar was not tested due to the sub optimal location that it was intersected
by the well.
Sampling was also successfully completed in the Schrader Bluffs Formation from the Indigo
target, which was found to be water bearing. The Charlie target was found to be poorly
developed and was not sampled. Oil shows in this interval are deemed to be related to residual
oil that is not trapped in the system.
In the Seabee Formation, an attempt was made to take a sample from the Lower Lima target,
being the better of the two Lima targets. This attempt was unsuccessful due to insufficient
reservoir quality; however, given that these targets were not intersected optimally, there still may
be potential for higher quality reservoir at a different location. Excellent Vertical Seismic Profile
(VSP) data was obtained in the well, which will now be used in conjunction with other log data
and the existing 3D seismic, to remap these targets. Sidewall core analysis will also assist with
determining where improved reservoir is likely to exist. Mud gas, observed while drilling, in the
Seabee indicated that the hydrocarbons at this horizon are heavier than those in the Torok and
this is the horizon where live oil was observed across the shakers in the nearby Malguk-1 well.
Premier Oil has informed the Joint Venture that it intends to withdraw from the project, as the
well did not meet its pre-drill expectations. On withdrawal the Companys working interest will
increase to 75% in Area A including the confirmed condensate discovery in the Torok Formation.
www. 88energy.com
Level 2, 5 Ord Street, West Perth WA 6005 PO Box 1674, West Perth WA 6872 Australia Phone +61 8 9485 0990
ABN 80 072 964 179
The cost of the well remains within the expected budget and 88E does not expect to incur any
costs in relation to the drilling, with Premier Oil having been cash called and already paid into
the Joint Venture bank account US$23 million in relation to the drilling costs of the Charlie-1
well.
The well will now be plugged and abandoned (P&A) in line with standard industry practice.
The announcement released by the Company on 7 April 2020 provides further details of the
results from the Charlie-1 well.
Project Icewine Unconventional
Detailed logs and sidewall cores were also acquired in the HRZ formation during drilling of the
Charlie-1 well, which will now be analysed over the coming months
The HRZ remains a viable target and options to commercialise this potentially large resource
continue to be pursued.
The Joint Venture plans to conduct a formal farm-out process to fund further appraisal.
Yukon Leases
Discussions continued during the quarter with nearby lease owners to optimise the monetisation
strategy for existing discovered resources located in the vicinity of the Yukon Leases. The Yukon
Leases contain the 86 million barrel Cascade Prospect*
, which was intersected peripherally by
Yukon Gold-1, drilled in 1994, and classified as an historic oil discovery. 88 Energy recently
acquired 3D seismic (2018) over Cascade and, on final processing and interpretation, high-graded
it from a lead to a drillable prospect. The Yukon Leases are located adjacent to ANWR and in close
proximity to recently commissioned infrastructure.
Permitting underway ahead of possible drilling in 2021 subject to farm-out.
* Refer announcement 7 November 2018
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.
Western Blocks
Assessment of strategy for future of leases continued during the quarter, ahead of lease expiry in
May 2021.
Placement to Raise A$5 million
On the 24 January 2020, the Company announced that it had successfully completed a capital
raise of A$5 million (before costs), with the placement made to domestic and international
institutional and sophisticated investors through the issue of 238 million ordinary shares at A$0.021
(equivalent to £0.011) per New Ordinary Share.
www. 88energy.com
Level 2, 5 Ord Street, West Perth WA 6005 PO Box 1674, West Perth WA 6872 Australia Phone +61 8 9485 0990
ABN 80 072 964 179
Corporate
The ASX Appendix 5B attached to this report contains the Companys cash flow statement for the
quarter. The significant cash flows for the period were:
Proceeds from capital raise before costs of A$5.0m;
Exploration and evaluation expenditure totalled A$15.1m gross (Dec19 Quarter A$4.0m);,
primarily associated with expenditure on the Charlie-1 appraisal well;
Cash call proceeds received from Joint Venture partners in the quarter totalled A$21.9m
(Dec19 Quarter A$12.4m);
Payments in relation to the debt facility interest totalled A$0.6m (US$0.4m); and
Administration and other operating costs A$0.6m (Dec19 Quarter A$0.9m).
At the end of the quarter, the Company had cash reserves of A$28.1m, including cash balances
held in Joint Venture bank accounts relating to Joint Venture Partner contributions totalling
A$19.4m.
In light of the current low oil price environment and uncertainties related to the COVID-19 pandemic,
the Company has implemented prudent cost cutting measures, including salary reductions.
Information required by ASX Listing Rule 5.4.3:
Project Name Location Area (acres) Interest at beginning
of Quarter
Interest at end of
Quarter
Project Icewine Onshore, North Slope Alaska ~482,000 64% 64%
Yukon Gold Onshore, North Slope Alaska 15,235 100% 100%
Western Blocks Onshore, North Slope Alaska 22,711 36% 36%
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, Dr Stephen Staley, who is a Non-Executive Director of the Company.
Dr Staley has more than 35 years' experience in the petroleum industry, is a Fellow of the
Geological Society of London, and a qualified Geologist / Geophysicist 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. Dr Staley 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. |
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