88 Energy (88E ) has released an update for the March quarter which was largely focused on its Project Peregrine on the North Slope of Alaska where drilling started last month.
Drilling at Merlin-1, which forms part of Project Peregrine, which holds nearly 200,000 contiguous acres on the North Slope of Alaska, initiated in early March. So far, Merlin-1 has been drilled to a depth of 5267ft and has uncovered a potential hydrocarbon-bearing zone.
The Alaskan-focused explorer said recently acquired data from drilling at the Merlin-1 well in Northern Alaska has highlighted the potential of hydrocarbon-bearing zones at the site.
88E said last month that drilling data from the Nanushuk Formation encountered around 600 ft low to prognosis and is interpreted to be around 500 ft thicker than that encountered in the wells drilled into the Willow Oil Field to the north of the Project’s acreage.
Commenting on the hydrocarbon potential at the time, Managing Director, Dave Wall, said, "Whilst there is still work to do to confirm a discovery, the results to date are encouraging and we look forward to providing an additional update on the wireline program in 7 to 10 days."
88E started a wireline program to better determine the presence of hydrocarbons. While the program identified multiple potential pay zones, the second phase of the program which was designed to take samples across these zones experienced a setback. Due to a power failure, a downhole sampling tool had to be pulled out prior to any samples being obtained.
As a result, 88E said the forward program will consist of plugging the well due to it being too late in the season to initiate flow testing operations. It told investors that the well may be re-entered in the future, if warranted, in order to drill a side track and conduct a flow test.
Separately, 88E announced that it had successfully raised a total of $18m through a $12m placement and a share subscription agreement with ELKO International. As a result, at period-end 88E had $20.06m in cash compared to $14.845m in cash in the previous quarter.
In addition, at the end of the March quarter, 88E informed investors that the final condition related to the group’s acquisition of the Umiat Oil Field ("Umiat") had been completed.
The Umiat oil field is an historic oil discovery, made in 1945 in shallow Brookian (Nanushuk) sandstones, located immediately adjacent to the southern boundary of Project Peregrine.
Shares in 88 Energy have seen a near three-fold increase in value since the start of 2021 and the recent news that it had commenced drilling at the Merlin-1 well marks “an exciting and pivotal time”. The stock dipped 5.86% lower to 1.2p today following the announcement.
Drilling at the Merlin-1 well follows the Crude Oil WTI Index reaching its highest level since October 2018 last month, with the commodity reaching highs of $67.98 per barrel.
Reasons to 88E
Project Portfolio Across Alaska’s North Slope
The Alaskan explorer completed its acquisition of XCD Energy, which holds a 100% Working Interest in the highly prospective Alaskan North Slope, back in August 2020. The merged entity has formed a diversified portfolio of exploration projects on Alaska’s North Slope.
The combined company will have increased scale, market presence along with higher funding capability and trading liquidity across the ASX and London AIM exchanges.
The three key projects include Project Icewine, Yukon leases and Project Peregrine with the assets at various stages of development, the company previously outlined this summer.
In late 2020, 88E was also formally re-assigned the "Area A" leases at Project Icewine meaning its working interest in around 40% of the project has increased from 30% to 75%.
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