Alaskan energy venture just warming up
23 November 2018
The shift in focus from a shale play to a diversified conventional prospect portfolio on the Alaskan North Slope has given Australian junior oil and gas explorer, 88 Energy, every reason to be looking forward to 2019.
Managing Director David Wall said the recent rights issue which had boosted the company’s cash reserves by $13 million, a drilling update before the end of the year and the strong possibility of a farm-out deal on its Icewine conventional project, had placed the company in a very good position.
“After four years of hard work, we hope that 2019 will be the year we’ll be able to capitalise on that and prove to our investors that we have created value through a discovery or doing a really good farm-out deal,” he told Hot Copper.
“We came into Alaska for the shale play, which is ongoing, but the potential of the conventional play has probably overtaken the shale play. In addition to the original acreage, we’ve picked up new leases, the Yukon leases have a prospective oil resource of 80-100 million barrels of oil (MMBO) as well as a deal we put together earlier this year with Otto Energy and Red Emperor, two Australian oil and gas companies.
“88 Energy will earn 36% by paying 40% of the costs for a commitment well on a 400 million barrel (MMbl) prospect and we’re looking at a 144MMbl net share. Our well, on schedule for spud in early 2019, is only four miles east of one of the biggest discoveries made in the last four years, the billion barrel Pikka/Horseshoe discovery, and we’re hoping to prove an extension of that play.
“On the seismic it looks very good, but we need to drill it.”
The well has been named Winx-1 after the famous Australian racehorse and hopefully this bodes well for its success.
88 Energy plans to drill in February, 2019, and has finalised the contract for a rig and is well advanced with permitting and ice road planning.
The company has spent time testing the HRZ shale formation in its premier project, Icewine, and also acquiring 2D seismic, which told them where they needed to focus their efforts for the conventional plays. It wasn’t until this year that they were able to use 3D seismic, which enabled them to put out a significant upgrade to the conventional resource into the market. Significantly, all of the recent success have been made using 3D seismic.
“We’ve been able to build that resource over time from circa 1BBl from 2D in 2016 to 2.9BBl potential, of which our net position is 2.2 BBl. It was very difficult up until now to confidently map the potential because you really need 3D seismic,” Wall said.
The western portion of the company’s Yukon leases of 14,194 acres was the target of a vintage oil discovery made in 1993/1994, identifying good quality sand saturated with oil.
“We now also have 3D seismic at the Yukon leases and have identified over 80 million barrels of oil potential. Recently commissioned nearby infrastructure also means that the economics for a field this size now look very robust.,” he explained.
The renaissance in exploration success on the Slope has been driven by an influx of smaller independents, attracted by fiscal incentives, and changes in exploration technology. These successes have yielded over 4 billion barrels of discovered oil in the last 4-5 years, with an excellent success rate.
“We’re hoping to emulate those successes although we’re a couple of years behind, but we’ve got several excellent prospects, each with hundreds of millions of barrels in their own right, which add up to more than 2.4 MBBO in just our Western play, where significant new potential is supported by sophisticated modern 3D seismic.
“The next step, because we’ve spent a lot of shareholders’ money while the oil price was low, is to do a deal with an industry player. We’re going out there to see if we can get someone else to pay for the work that needs to be done.
“We believe the Icewine project is a very high quality asset. A farm-out process is under way to progress the exploration and appraisal program. We’ve set up a data room and we’ve got a number of interested parties and we’re confident we can get a compelling offer by the end of the year.”
Wall has every reason to be looking forward to 2019.
88 Energy Limited is in an excellent financial position and has a compelling portfolio of prospective leases located in an outstanding oil and gas province.
Drilling at Winx, which is also supported by 3D seismic, and a farm-out deal will undoubtedly spell out how good their prospects are and if history and the data available are any indication, a glass of bubbly wine could be the order of the day – with ice of course.
