Posted by OilVoice Press - OilVoice
88 Energy Limited (ASX: 88E) (“88 Energy” or the “Company”) is pleased to announce the following update in relation to an expansion of its projects located on the North Slope of Alaska.
Agreement to Drill High Impact Well with Consortium
88 Energy Limited (ASX/AIM:88E), along with Otto Energy Ltd (ASX:OEL) and Red Emperor Limited (ASX/AIM:RMP), collectively the “Consortium Partners”, is pleased to advise that it has executed a binding term sheet agreement with Great Bear Petroleum Ventures II LLC (“Great Bear”) to acquire the majority of Great Bear's working interest in the four leases comprising the Western Blocks (ADL 391718; ADL 391719; ADL 391720; ADL 391721). The leases are located immediately adjacent to the Horseshoe#1/1A well, which discovered oil in 2017.
88 Energy Ltd Managing Director, Dave Wall, commented:
“The Western Blocks transaction represents a significant opportunity for 88E shareholders to gain exposure to one of the most prospective oil plays available globally, complementing our existing conventional portfolio on the North Slope.
Preparations for drilling are now underway and commencement of drilling of the exploration well is scheduled in less than 9 months.
We would like to thank Otto's technical team for generating the prospect and Great Bear for moving quickly to reach an agreement. 88E also look forward to working with Red Emperor and welcome them to the Slope.
Our Alaskan Operations team, led by Erik Opstad, will be working closely with Great Bear and the regulatory agencies in Alaska to ensure that the well is permitted and drilled on time in a safe and environmentally conscious manner.”
The relevant interests in the commercial agreements are as follows (subject to regulatory approval by the State of Alaska):
Current Working Interest
Working Interest (before back-in)
Paying Interest (before back-in)
Net Revenue Interest* (before back-in)
Working Interest (after back-in)
Great Bear Petroleum**
State of Alaska
*Government royalty of 16.67%. **Currently Operator of record on leases.
www. 88energy.com ABN 80 072 964 179
Provide a performance bond to the State of Alaska of US$3.0 million by 31 July 2018; and
Drill an exploration well in the Western Block leases by 31 May 2019
The consortium partners will provide the following consideration to Great Bear:
Free carry Great Bear for a 10% working interest in the leases for the initial test well; including
all associated costs such as permitting, ice road access and test production disposition;
Pay US$500,000 upon execution of the definitive agreements;
Pay US$500,000 upon receipt of final permits necessary to drill the initial test well, in any case
by no later than 31 December 2018; and
Western Blocks Prospect, North Slope Alaska
Technical evaluation and 3D seismic interpretation of the Western Blocks by our Consortium Partner, Otto Energy Ltd, has generated an oil prospect in the successful Nanushuk play with a gross mean unrisked prospective recoverable resource volume of 400MMbbls (144MMbbls net to 88E) and a geological chance of success in the range of 25-30%.
Prospective Resources Reporting Notes (Western Blocks prospect reported for the first time)
(i) The prospective resources information in this document is effective as at 30 April 2018 (Listing Rule (LR) 5.25.1). (ii) The prospective resources information in this document has been estimated and is classified in accordance with SPE PRMS (Society of Petroleum Engineers Petroleum Resources Management System) (LR 5.25.2). (iii) The prospective resources information in this document is reported according to the Company's economic interest in each of the resources and net of royalties (LR 5.25.5). (iv) The prospective resources information in this document has been estimated and prepared using the deterministic method (LR 5.25.6). (v) The prospective resources information in this document has been estimated using a 6:1 BOE conversion ratio for gas to oil; 6:1 conversion ratio is based on an energy equivalency conversion method and does not represent value equivalency (LR 5.25.7). (vi) The prospective resources information in this document has been estimated on the basis that products are sold on the spot market with delivery at the sales point on the production facilities (LR 5.26.5.) (vii) Prospective resources are reported on a best estimate basis (LR 5.28.1). (viii) For prospective resources, the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons (LR 5.28.2). (ix) In respect to the prospective resources referred to in this statement, 88E is earning a 36% working interest in four leases (ADL#s 391718, 391,719, 319720 and 391721), totalling 22,711 acres all of which are located on the North Slope, Alaska, USA(LR5.35.1).(x)Theprospectiveresourceshavebeenestimatedonthefollowingbasis(LR5.35.2): thebest estimate prospective recoverable resource calculation was based on a consideration of offset well information and seismic expression; a combination of volumetric assessment and field analogues have been used to estimate the prospective resources; exploration drilling will be required to assess these resources. (xi) The chance of discovery is considered moderate as the prospective resources are near developed and undeveloped reserves and in a proven oil and gas producing province. There is a risk that exploration will not result in sufficient volumes of oil and/or gas for a commercial development (LR 5.35.3). (xii) Prospective resources are un-risked and have not been adjusted for an associated chance of discovery and a chance of development (LR 5.35.4).
The prospect is located approximately 4 miles east of the Horseshoe#1/1A Nanushuk oil discovery well drilled in 2017.
Seismic data, interpreted by Otto Energy Ltd, indicates that the prospect shares many of the positive attributes seen at the Horseshoe#1/1A discovery, which intersected light oil reservoired in more than 150ft and 100ft of net oil sand, respectively, in the Nanushuk delta sequence at just over 5,000ft below the surface.
The oil discovery at Horseshoe extended the Nanushuk play some 20 miles south of existing discoveries within the Pikka Unit such as Qugruk 8 and Qugruk 301, which flowed 30 degree gravity crude at rates of 2,160 and 4,600 bbls/d respectively.
The Horseshoe oil discovery signalled the presence of an extensive previously overlooked hydrocarbon province on the North Slope, which is now attracting major development capital.
88 Energy will fund its share of the performance bond, back costs and well cost (gross well cost estimated at US$15m on a dry hole, trouble free basis) out of its existing cash position. Total net cost to 88E is estimated at US$6.4m and cash at bank is currently US$11.1m (unaudited). Definitive documents are scheduled for completion prior to the payment of the performance bond on 31st July 2018.
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