Press

88 Energy Limited Operations Update


88 Energy Limited (ASX: 88E) (“88 Energy” or the “Company”) provides the following update related to the testing of its Icewine#2 well, located on the North Slope of Alaska.

Project Icewine – Icewine#2 Production Testing

As at 0530 26th June (AK time), the flowback rate was averaging 30 barrels of water per day on a variable choke setting (currently 36/64”). Wellhead pressure has been managed lower to 32psi to reduce back pressure in the system.

Since the last update, the reduction in nitrogen injection rate to minimise the impact of a perceived downhole choke has not resulted in an increase in the rate of flowback of stimulation fluid or gas.

During this period there has been no meaningful change to the composition of the returned gas and fluid. Flowback is considered to be gas and 100% low salinity stimulation fluid, which is not considered representative of the content of the reservoir. It is expected that, if contact with the reservoir is achieved, the salinity of the returned fluid will increase by an order of magnitude. This has not occurred to date.

Hydrocarbon gas content continues to be predominantly methane (90%) with some heavier elements up to trace C6+. The percentage of hydrocarbon gas in the flowback gas increased from 5% to between 11 and 13% when the nitrogen injection rate was reduced, suggesting that a positive impact on the downhole choke has been made.

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 12th June 2018 is 1,264 barrels interpreted as 100% stimulation fluid. Total fluid returned during the entire Icewine#2 flowback operation, including last year, is now 6,797 barrels or 24.4% of the frac fluid injected vs a target percentage return of at least 30%.

The early results from the flowback were within the range of expectations; however, given the reduction in rate of returned fluid, despite the optimised lift settings, the timeline and forward plan to achieve the return of 30% of injected fluid is being re-assessed.

88E Managing Director, Dave Wall, commented: “The HRZ play remains in its infancy and shows great promise; however, we do not know all the answers at this stage.

The Joint Venture remain confident that the reservoir quality and geomechanical properties of the HRZ indicate that it has the requisite ingredients to attract a farm-in partner.

We appreciate that investors want clarity and certainty in relation to the results from the Icewine#2 well and the team is working hard to provide these.”

Icewine#2 Production Testing - Timeline

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 re-commenced, on schedule, at 22:30 11th 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.

A production log was run on 12th 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 13th June (AK time), prior to installation of the coiled tube velocity string, to artificially lift stimulation fluids. 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 15th June 08:00 (AK time) to allow installation of the velocity string. Flow was re-established on 15th 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.

From the 18th June to the 22nd June, adjustments were made to the flowback system to determine the optimal settings for the nitrogen lift operation. Consequently, flowback rates fluctuated between an average rate of 50 barrels of water per day to 120 barrels of water per day. The percentage of hydrocarbon gas in the flowback dropped to 5% at one stage due to an increased nitrogen injection rate, 300 scf/m, which is deemed to have limited the flowback of both water and gas from the borehole. The reduction in productivity was attributed to an effective downhole choke created between the 4.5” annulus and the 1.75” velocity string, limiting the flowback when the nitrogen rate is too high. The nitrogen injection rate was reduced back to 150 scf/m in an attempt to increase flowback of water and gas from the borehole.



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88 EnergyASXNorth SlopeAlaskaUnited StatesUSProject IcewineFlowbackProduction

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