88 Energy (88E) , an Alaska-focused hydrocarbon explorer, released an interim update for the 6 months ending 30 June 2023.
During the period, 88 Energy continued its principal exploration activities in Alaska, complemented by a 75%-owned non-operated working interest in onshore Texas Permian Basin production assets.
At the 82,846-acre Project Phoenix on Alaska's North Slope, 88 Energy continued to develop its Hickory-1 exploration well, targeting 647 million barrels of oil across several pay zones. A flow test programme is planed for the 2023/24 Alaska winter season. A rig has already been contracted and key long-lead items are being ordered. Post well analysis is ongoing with results from the testing programs anticipated in early Q3 2023.
At adjacent Project Icewine West, 88 Energy drilled the Charlie-1 discovery well in 2020 and is targeting a follow-up appraisal well post any successful flow test in Project Phoenix.
Awarded in April 2023, 88 Energy's Project Leonis is located adjacent to TAPS and the Dalton Highway, enhancing future commercialisation pathways. The acreage is covered by an existing data suite including Storms 3D seismic data and Hemi Springs Unit #3 (HS-3) exploration well drilled by ARCO in 1985.
Activity at Project Leonis will target the producing USB reservoir that has been successfully developed at nearby Orion, Polaris, West Sak, and Milne Point. Independent studies have confirmed that the USB reservoir in HS-3 possesses similar characteristics to the producing fields to the north.
88 Energy's assets on Alaska's North Slope. Note that "New Acreage" refers to Project Leonis, and the eastern segment of Icewine has been renamed to Project Phoenix.
88 Energy's Project Longhorn in Texas averaged ~400 BOE per day gross production (71% oil) in H1 2023, peaking at 620 BOE. In June 2023, Project Longhorn commenced 2 planned workovers scheduled for completion in Q3. Four workovers and at least five new drill targets remain on the existing acreage, with the forward work program and timing for future capital investments to be determined by the joint venture.
In July, 88 Energy bought another 435 acres in Texas estimated to contain 2P reserves of 1.1 MMBoe to boost production.
For the period, 88 Energy recorded a much narrowed loss of US$11.6m from US$67.3m last year. The loss was largely attributable to the impairment of the Yukon Project and leases (Regenerate Energy Alaska) of US$8.8m. 88 Energy released its Yukon leases to the State of Alaska after a strategic review that determined a low resource potential and high development costs.
As of 30 June 2023, 88 Energy had cash eq of $7.3m and no debt, down from US$14.1m due to significant investment in Hickory-1. Net assets totalled A$139.6m.
View from Vox
88 Energy's portfolio continues to show promise, and a recent A$3.3m fundraise should keep exploration activities on schedule. At Project Phoenix on Alaska's North Slope, 88 Energy has identified multiple hydrocarbon bearing zones across all pre-drill targets, including the new Upper SFS. The Hickory-1 well is currently cased ahead of the upcoming flow test program, which is scheduled to commence in the 2023/24 winter operational season. The well is targeting 647 million barrels of oil.
88 Energy is also developing its portfolio of conventional projects on Alaska's North Slope, including geophysical assessment of the newly acquired Project Leonis acreage. The company is working toward a maiden resource estimate for Leonis by the end of 2023, and planning to launch a targeted farm-out process to help fund future drilling in 2024/25. Additionally, at the recently expanded Project Longhorn in Texas, 88 Energy is planning 2 new wells and workovers to grow production. These activities are expected in H2 2023.
Overall, 88 Energy is well-funded for at least another 12 months and progressing at pace through its work programmes, expected to yield multiple milestones over the next 9 months. Namely, these are the planned flow testing of the Hickory-1 well at Project Phoenix in Alaska, planned development wells in Texas, and planned permitting activities associated with exploration drilling at Project Leonis in Alaska.
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