88 Energy (88E ) has completed an oversubscribed bookbuild to raise A$32m which, together with existing cash reserves of A$32.3m, is expected to fund the planned drilling and appraisal activities at the Merlin-2 well in Alaska which is now scheduled to spud in early March 2022.
The drilling of the Merlin-2 well, located at 88E’s 100% owned Project Peregrine in the NPR-A region of the North Slope of Alaska, follows the successful drilling of the Merlin-1 well in 2021.
The Alaskan-focused explorer has now completed an oversubscribed bookbuild to domestic and international investors to raise A$32m before costs at an issue price of A$0.035 a share.
As at 31 December 2021, the Company’s existing cash reserves stood at A$32.3m. These cash reserves, in addition to the funds raised under today’s placement are expected to be used to fund the planned
Merlin-2 well drilling and appraisal activities including flow test program, contingencies, new ventures portfolio expansion opportunities, and working capital.
88 Energy’s Merlin-2 well is now scheduled to spud in early March 2022. To date, all major permitting and planning has been completed, along with snow road pioneering construction as well as the mobilisation of the Arctic Fox rig which has commenced to the drilling location.
Despite COVID-19 supply chain issues and global commodity price increases having placed some pressures on budgeted Merlin-2 costs, 88 Energy told investors that ‘lessons learned from the Merlin-1 program have allowed the firm to mitigate many of these cost pressures.’
The company highlighted that it is still expected to drill and appraise the Merlin-2 well “at substantially lower cost levels relative to other operators on the Alaskan North Slope.”
The Company said it is expecting the cost to drill the Merlin-2 well plus completion of the wireline program to total approximately US$28 million (approximately A$39 million).
Commenting on today’s placing, 88 Energy’s Managing Director and CEO, Ashley Gilbert, stated that the completion of this placement “ensures 88 Energy is funded to undertake the full suite of targeted appraisal activities at the Merlin-2 well, including flow testing of the well.”
In addition, 88 Energy has also been actively assessing “multiple new venture opportunities” across the asset life cycle to expand the company’s portfolio of assets and opportunity types.
“We are targeting assets that are complementary to the existing portfolio and provide shareholders with exposure to additional value creation potential,” Gilbert explained.
He said 88 Energy has signed an MOU to acquire a conventional producing oil and gas asset in the Permian Basin in Texas with due diligence and documentation now nearing completion.
“Subject to entry into a binding agreement, the Company expects that this opportunity will deliver immediate cash flow and near-term production drilling upside and we look forward to providing shareholders more details when such agreement is entered,” Gilbert added.
Earlier this month, 88 Energy announced that it had gained access to the world’s largest investment market after it began trading its shares on the US-based OTCQB Market. The group’s latest listing marked the third global market listing for the Alaskan-based explorer.
88 Energy’s primary listing will continue to be the Australian Securities Exchange (ASX), with its secondary listing remaining the AIM market of the London Stock Exchange in the UK.
The group reiterated to investors at the time that it had sought a OTCQB quotation to provide North American investors with enhanced accessibility and liquidity in trading of its shares.
Gilbert said 88E is “at an exciting stage with the anticipated spud of the Merlin-2 appraisal well in February 2022, as well as the significant activity planned across our portfolio in 2022, so we are excited to be broadening our exposure in the global investment community.”
He added that by joining the OTCQB Market, the company will be matched with “an active investor engagement program”, to ensure its investment case and growth prospects “are well understood amongst all current and prospective shareholders in 88 Energy.”
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