This morning, the Alaskan-focused explorer 88 Energy (88E ) confirmed to investors that the mobilisation of the Arctic Fox rig to its Merlin-2 appraisal well drilling location is now complete.

In a statement released today, 88 Energy said pre-spud operations are continuing and now entering the final phase ahead of the Merlin-2 spud date which is scheduled for the week commencing 7 March 2022, with the well permitted to a Total Depth (TD) of 8,000 feet.

The Merlin-2 appraisal well located on Alaska's North Slope is planned to be initially drilled to 2,000 feet, with the surface casing then installed and the Blowout Preventer system tested. 

This is anticipated to collectively take around one week and drilling to TD is then expected to take a further four weeks, including wireline logging. A production test program for the well has been designed and equipment placed on standby during initial well site operations. 

Flow testing of Merlin-2 will be contingent upon the wireline results, in particular the MDT outcomes, as well as government approvals and weather window considerations, it noted.

Commenting on this morning’s news, 88 Energy’s Managing Director and Chief Executive Officer, Ashley Gilbert, told investors: "We are now entering the final phase of pre-spud preparations and look forward with excitement to the next few weeks of drilling operations. 

He said success at Merlin-2 “has the clear potential to be transformational for shareholders.”

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.

Despite COVID-19 supply chain issues and global commodity price increases having placed some pressures on budgeted Merlin-2 costs, 88 Energy told investors earlier this month that ‘lessons learned from Merlin-1 had allowed the firm to mitigate many of these cost pressures.’

At the time, the company said it was expecting to drill and appraise Merlin-2 “at substantially lower cost levels relative to other operators on the Alaskan North Slope.” The cost to drill the well plus completion of the wireline program to total around US$28m (around A$39 million).

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 had 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.

88 Energy also announced last month 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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