Dear Shareholders
It is a pleasure to present my Chairmans Report for the 2018 financial year.
As I write, Nordic Rig#3 is on location drilling the Winx‐1 well. The well will test a conventional oil prospect, defined by 3D seismic, in the Nanushuk play fairway on the Alaskan north slope with a gross mean unrisked prospective resource of 400 million barrels. It is arguably one of the most significant wells to be drilled by an ASX listed entity in 2019 and offers substantial upside to 88E shareholders in the event of success.
As we approach the drilling of this well, it is worth reminding ourselves of why 88E chose to explore in Alaska. At the outset, 88E cast the net far and wide in search of a project that could make a meaningful difference; one which would capture investor attention with significant upside. The north slope of Alaska offers vast potential remaining to be discovered. 88E was early in recognising potential and now has the advantage of a strategic acreage position and operational capability, giving the company high leverage to success.
Our initiative to target Alaska has been validated by recent exploration successes and the entry of new entrants like Oil Search, one of Australias leading oil companies, who screened over 150 projects before settling on Alaska. Access to existing infrastructure; a very supportive and stable State Government and significant exploration upside were all cited as supporting factors these long being recognised by 88E.
Bill Armstrong, one of north Americas most successful explorers has described the source rocks of Alaska as unbelievably rich and prolific, having generated and expulsed about 1.5 trillion barrels of oil. Yet only a small fraction of that 1.5 trillion barrels has been found, leaving vast potential remaining to be discovered. Almost all the remaining fields in Alaska are stratigraphic traps rather than anticlines and require a subtler exploration approach, which 88E is pursuing as it targets reservoirs adjacent to those same source rocks.
During 2018, 88E continued to leverage its early mover advantage and is now Operator/Manager on 4 active Exploration Projects across 355,000 net acres. Unlike the lower 48 States, Alaskan leases have an attractive 7‐10‐year term with no mandatory relinquishment and a low 16.5% base royalty. Our prospective land holding is now of a size one would normally associate with the big end of town and provides scope to attract drilling partners.
Debt funding of Alaskan exploration rebates has enabled 88E to maintain leverage and reduce, to some extent, the large equity dilution normally associated with frontier exploration. The leverage from our enlarged acreage position is further enhanced due to the proximity of the all‐weather Dalton Highway and the ability to connect into the trans‐Alaska pipeline that can handle up to 2.1 million barrels per day and has considerable spare capacity.
The Alaskan program has been competently executed by our Managing Director, David Wall, with the assistance of a small dedicated team including senior geologist and Exploration Manager, Elizabeth Pattillo; petroleum engineer Hassan Fatahi; our Alaskan based Operations Manager, Erik Opstad and the full support of my fellow Directors. The confidence of the Board in their work and the support staff at 88E has been more than demonstrated in the exercise of options by Directors, which further aligns our risk with that of our shareholders.
88E has prudently raised additional capital in advance of the 2019 program. We all know the process of evaluation is not without risk; however, we look to the future with considerable optimism as we unlock both the conventional and unconventional potential of our Alaskan exploration acreage.
During the year our long‐standing Director Brent Villemarette passed away. He was a champion and was instrumental in reviving the company. I would like to acknowledge his efforts and record that he will be missed by all at 88E.
Quelle:
https://www.asx.com.au/asxpdf/20190226/pdf/442ypfp8563lv0.pdf
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