[The Trans-Alaska Pipeline System]
88 Energy (88E ), an Alaska-focused explorer, updated markets today on Q3 2022 performance to 30 September 2022.
Project Icewine, Alaska (~75% working interest)
88 Energy completed a maiden independent prospective resource estimate for Project Icewine East in Q3. The estimate returned a prospective resource of 1.03 billion barrels of oil, recoverable from multiple reservoir zones. The total unrisked net mean prospective oil resource to 88 Energy was 647 MMbbls.
The company noted substantial oil volumes across all mapped play fairways, particularly Seabee - Lower Basin Floor (BFF) and Shelf Margin Delta (SMD) reservoirs.
Amplitude Variation with Offset (AVO) analysis was used to define "sweet spots" for each play, to identify the location for the planned 1H 2023 exploration well Hickory-1. A location for Hickory-1 has now been selected with planning and permitting underway. Hickory-1 will test the SMD, SFS, BFF and Kuparuk reservoir units.
Project Peregrine, Alaska (100% working interest)
88 Energy reported "encouraging results" from the completion of an independent basin modelling study for the untested Harrier and Harrier Deep prospects. It found "definitive evidence of hydrocarbons" from High High Resolution Gas Chromatography performed on Merlin-2 side wall cores.
Project Longhorn, Texas (~73% working interest)
88 Energy successfully completed its fourth planned work-over (of 7 scheduled for 2022) at Project Longhorn in the Texas Permian Basin, after production commenced at the end of August 2022. A quarterly cash flow distribution of A$0.9m was received in September 2022.
Corporate highlights
88 Energy completed a share placement on 22 August, raising gross proceeds of A$14.9m (net A$13.9m). The company had cash of A$17.5m (£9.77m) and no debt as of 30 September 2022.
View from Vox
Overall, a solid set of results from 88 Energy in Q3 with a promising 1.03 Bnbbls maiden prospective resource estimate at Icewine in Alaska, a location selected for Hickory-1 with planned commencement in 1H 2023, and a ramp-up of production at Longhorn in Texas.
Hickory-1 is currently being planned and permitted to commence in 1H 2023. It has been designed as a vertical well to be drilled to approximately 12,500 feet to intersect and test all four of the aforementioned key reservoirs.
3D seismic data and related AVO analysis have been used to select an ideal location for Hickory-1, adjacent to the Dalton Highway. This has in turn significantly de-risked Icewine East and given 88 Energy investors confidence in Hickory-1's future profitability. The project has been further de-risked by recent drilling and flow tests performed on adjacent acreage owned by another Alaska explorer, Pantheon Resources.
While 88 Energy's main focus remains in Alaska, the company also acquired in February a 73% interest in production assets located in the Texas Permian Basin (Project Longhorn) through its 75% investment in Bighorn Energy. Bighorn has now added A$22.1m to 88 Energy's net assets.
Production from Longhorn wells was delivering ~450 BOE/day gross (~70% oil) at the end of September 2022, representing an overall output increase of ~60% since completion of the acquisition in February. The investment has resulted in net cash flow returns to 88 Energy of A$2.8m since the acquisition. The company expects production to reach over 500 BOE/day by end of 2022. Past the 7 scheduled workovers for 2022, further are planned in 2023 to increase production levels, with the JV planning to agree a 2023 work programme by year-end.
In August, 88 Energy raised A$14.9m (£8.32m) to finance long lead items required for drilling at Icewine East, as well as strengthen the company's balance sheet and provide capital to finance new ventures. The new capital will ensure the company remains well-funded for the next 12 months.
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