88 Energy (88E) , an Alaska-focused hydrocarbon explorer, issued an update regarding its JV partner for Project Phoenix, Burgundy Xploration. Phoenix is 88 Energy's flagship asset where the Hickory-1 well is targeting 647 million barrels of oil.
On November 29, 88 Energy announced a £5.3m fundraise to help fund Project Phoenix as Burgundy's ability to meet ongoing obligations on the JV was put into question after the latter had failed to rectify its payment defaults. In the event of Burgundy's default, 88 Energy maintained the option to require Burgundy to relinquish its working interests in the project and JV.
Today, 88 Energy advised that Burgundy has secured US$2m of initial funding that will be paid to 88E immediately in part settlement of US$3.75m in outstanding cash calls. 88 Energy said it has agreed to a standstill on the default until January 31, 2024 for Burgundy to pay the remaining US$1.745m.
Should Burgundy fail to pay by that date, it will transfer to 88E its 50% working interest in Project Phoenix (or a pro rata amount if Burgundy pays some but not all of its outstanding debt).
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A small update from 88 Energy regarding its JV partner on the highly prospective Project Phoenix on Alaska's North Slope. 88 Energy's recent £5.3m fundraise was executed in part to cover Burgundy Xploration's potential failure to meet its obligations on the JV. Today, 88E clarified the terms of a potential default as it maintains an option under the joint agreement to require Burgundy to relinquish its working interests in the project and JV should the latter fail to meet its obligations.
Burgundy appears to be back on track with payments and fully intent on financing its share of Project Phoenix's expenses, including the flow test for the Hickory-1 well, which is targeting 647 million barrels of oil across several pay zones. Burgundy's US$2m fundraise proceeds will be immediately transfered to 88E, with the remaining US$1.745m expected by the January deadline.
Following November's £5.3m fundraise and US$2m from Burgundy, 88 Energy is fully funded and focused on delivering the flow testing of multiple reservoirs at the Hickory-1 well in Q1 2024. Additionally, proceeds will help fund the initial farm-in exploration activities at 88 Energy's recently acquired Owambo Basin acreage in Namibia.
The company is also advancing its nearby Project Leonis with a view to prepare a maiden resource estimate in Q1 2024 ahead of targeted farm-out next year and potential drilling of a new well during the 2025/26 Alaskan winter operational season.
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