Proposed placing
88 Energy (88E ), an Alaska-focused explorer, has committed to raise A$14.9m (£8.6m) to fund development of its Icewine East project where it is targeting an estimated 1.03b barrels of oil. The placing price of A$0.009/share represents an 18% discount to 88E's closing price on Tuesday. Shareholder approval will not be required for the placing per ASX rules.
88 Energy said the proceeds would be used to purchase long lead items required for drilling at Icewine East in 2023, strengthen the company's balance sheet, and provide sufficient capital to finance new ventures. The placing will ensure 88 Energy has sufficient cash to fund its ongoing capital requirements for at least 12 months, the company said.
88 Energy also released results for the 6 months ended 30 June 2022 (H1 2022). During the period, the company continued its principal exploration activities in Alaska, and in February 2022 acquired a 73% interest in production assets located in the Texas Permian Basin (Project Longhorn), through its 75% investment in Bighorn Energy. Bighorn has added A$22.1m to 88 Energy's net assets.
On 30 June 2022, 88 Energy had a cash position of A$10.5m and no debt. Net assets totalled A$119m compared to A$139.8m on 31 Dec 2021. The decline in net assets is due to impairment of exploration and evaluation assets, with cash primarily used to fund Merlin 2 project activities.
Project Icewine
88 Energy also delivered an update on its Icewine East project, located on Alaska's North Slope. The company said a maiden independent resource estimate showed a prospective resource of 1.03 billion barrels of oil on site, recoverable from multiple reservoir zones. The company intends to drill an exploration well in 2023.
"This maiden, independently certified 1.03 Bnbbls of oil resource estimate is a great result for 88E and its shareholders. Resources of this magnitude present our shareholders with significant upside potential and opportunity, which is why we continue to focus on our Alaskan portfolio and believe significant value exists in our Icewine East acreage." said Managing Director Ashley Gilbert.
Gilbert added "Importantly, it is worth noting that the Icewine East acreage has been significantly de-risked by the recent Pantheon drilling and flow tests on their adjacent acreage, as well as data from the Icewine-1 well logs, and more recently the leased Franklin Bluffs 3D data set."
Meanwhile, Icewine West had been previously assessed as having a total unrisked prospective resource of 1.77 billion BOE. The Charlie-1 discovery well, drilled in 2020, recovered hydrocarbons during wireline operations.
Project Peregrine
Also in H1 2022, 88 Energy announced results of the Merlin-2 drilling program located in Project Peregrine:
"The results of Merlin-2 were largely consistent with the Merlin-1 exploration well drilled in 2021. Strong fluorescence, oil sheen, petroliferous odour and cut noted in the drilling cuttings, elevated C2-C5 mud gas readings over the target zones with total gas significantly above background gas readings and also evidence from the reservoir sampling tool of moveable hydrocarbons." the company explained.
Project Longhorn
In February 2022, 88 Energy acquired a 73% working interest in Project Longhorn for US$9.7m, located in the Permian Basin in onshore Texas. The acquisition represented the company's first move into oil and gas production. 88 Energy said it has been pleased with progress at Longhorn so far, as its operator successfully completed the 2nd and 3rd of 7 work-overs in 2022, delivering a significant increase to total oil and gas production.
Production from Longhorn wells exceeded 650 BOE/day gross (over 475 BOE/day net) following completion of the 3rd work-over at the end of May. Daily production rates are anticipated to settle at around ~500 BOE/day gross (over ~365 BOE/day net) in Q3 2022, representing an overall output increase of ~70% since completion of the acquisition.
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