In its annual report, 88 Energy (88E ) has hailed the year to 31 December 2021 as a period of “substantial achievement”, with the explorer pinpointing its most significant exploration activity during 2021 as the drilling of the Merlin-1 exploration well on its Project Peregrine acreage.
Non-Executive Chairman, Philip Byrne, said that despite a backdrop of persistent COVID-19 related challenges, 88 Energy had advanced its plans “efficiently, significantly, and rapidly.”
The Alaskan-focused explorer also highlighted that its progress has been delivered alongside a resurgence in global energy prices, “as the world increasingly recognises the significant role that hydrocarbons must continue to play in servicing transitional energy needs,” Byrne stated.
As at 31 December 2021, cash and cash equivalents stood at £32.3m, up from £14.8m a year prior. Total income for the period came to £2.44m compared to a previous loss of £29.1m.
In July 2021, 88E acquired the residual 50% working interest in Project Peregrine thereby delivering the group with full control of, and upside from, future Project Peregrine activities.
That same month, the company executed a deal to sell its Alaskan Oil and Gas Credits for US$18.7m, the sale of which accelerated the timeframe of the group’s value realisation from the tax credits and enabled the full repayment of our outstanding debt of US$16.1 million.
With its debt free balance sheet, 88E now holds “significant flexibility” with respect to future funding and capital management initiatives. It also raised a further A$24m in September 2021, the funds of which are being directed towards the Merlin-2 well and corporate activities.
88 Energy’s most significant exploration activity in 2021 was drilling of the Merlin-1 exploration well which was spudded in March 2021; drilling operations were completed in April 2021. The well demonstrated the presence of oil in multiple stacked sequences across one formation.
Final interpretation of results was completed in August 2021 with post well evaluation successfully demonstrating the presence of light oil in the N20, N19 and N18 targets.
The company said this highly significant outcome has given it great confidence in pursuing further exploration work at Project Peregrine, including the recent drilling of the Merlin-2 well.
Following the commencement of drilling at the Merlin-2 appraisal well earlier this month, the Merlin-2 surface hole has already been successfully drilled to 2,005 feet, 88E told investors.
On Thursday, 88 Energy noted that operations were progressing as planned and that the Arctic Fox rig is scheduled to commence drilling ahead to the reservoir targets ‘imminently.’
To date, the surface hole has been successfully drilled to 2,005 feet, the surface casing has been installed and cemented, and the Blow Out Preventer (BOP) system has been tested.
88 Energy anticipates all target zones to be intersected prior to reaching the permitted Total Depth (TD) of around 8,000 feet; drilling is expected to take up to two weeks from this point.
Merlin-2 is designed to appraise the primary targets which were encountered in Merlin-1 and which returned compelling evidence of hydrocarbons across these three separate zones.
88E said it has been closely monitoring activity adjacent to the northern border of its Project Icewine acreage, where the Kuparuk was reported from the Talitha-A well drilled last year. It said this may have “positive implications” for the same formation across its Icewine acreage.
“The past year has also seen evolution in the leadership of our business,” Byrne noted. Over the period, 88E’s Ashley Gilbert was appointed as Managing Director and CEO; Joanne Kendrick was appointed as Non-Executive Director; while Rob Benkovic and Oli Mortensen were also appointed as Chief Operating Officer and Chief Financial Officer, respectively.
Byrne, who highlighted that the company is committed to “further unlocking the huge potential value residing in its Alaskan acreage,” concluded his statement with: “The 88E business model has always focussed on targeting large-scale hydrocarbon deposits. The size of the prizes we are pursuing is large, and sometimes the accompanying patience required is also.
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