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Friday, December 2, 2022

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) Major Move Brewing as Oil Operator Plans Hickory-1 Exploration Well & Project Longhorn volumes Increase

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) price has stabilized in recent weeks and looks to be on the verge of reversing northbound again. In a recent update the Company detailed its plans for the Hickory-1 exploration well, in Alaska, where drilling is slated next year. The Company plans to drill the Hickory well vertically, down to a depth of around 12,500 feet. It is intended to test four reservoirs on Alaska’s North Slope. In all, it is planned to appraise six stacked reservoir targets, the company noted. 88 Energy also updated investors on its 73% working interest in Project Longhorn which yielded 450 barrels of oil per day (gross) marking a 60% rise in volumes following investments in work-over operations that have boosted productivity. The company said it now expects to see Project Longhorn volumes increased to over 500 barrels of equivalent oil per day by the end of 2022. Further well workovers are planned for 2023. 

Penny stock speculators are accumulating EEENF at a penny and looking forward to a rebound as the drop has been more significant than the news was bad. 88 Energy is the operator of over 440,000 net acres in total across the Alaskan regions over four highly prospective project areas: Project Icewine, Yukon Leases and Project Peregrine and the Umiat oil fields. As oil continues to rise quickly recently surpassing $100 per barrel, it’s easy to see why EEENF is getting noticed by investors; the Company has been making some big moves behind the scenes including increasing their ownership in the Peregrine mine to 100%, Extinguishing all of their debt, and beefing up their management team with a new petroleum engineer and a petroleum Geologist in Philip Byrne and Robert Benkovic. The Company is very well funded moving forward with $32 million in the treasury and total oil prospects for their wells targeting at least 1.638 billion barrels of oil in the Permian Basin. At the end of last quarter, the company had A$17.5mln of cash reserves, following a A$13.9mln capital raise in August. 


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88 Energy Ltd (OTCMKTS: EEENF) is an Alaska-focused oil exploration and appraisal company across ~440,000 net acres targeting the world class North Slope of Alaska estimated by the USGS in 2005 to hold more than 50 billion bbl of oil and natural-gas liquids and 227 trillion cubic feet of gas. 88 Energy owns a diversified portfolio of four highly prospective project areas: Project Icewine, Yukon Leases, Project Peregrine and the Umiat oil field. The company is the Operator across all of its portfolio of world class exploration and appraisal assets. 88 Energy’s drilling programs maintain adherence to the strict environmental regulations that exist in the State of Alaska. It’s drilling programs also provide significant job opportunities to local Alaskans. 88 Energy’s purpose is to build a successful exploration and production company that delivers material returns to its shareholders and contributes to stakeholders and development of the regions in which it operates in. 88 Energy has adopted the World Economic Forum Environment, Social, Governance (ESG) reporting framework to report against key sustainability metrics including governance, ethical behavior, carbon emissions, water consumption, diversity and inclusion. 

EEENF holdings include: Project Icewine; – In-house analysis will continue to assess various commercialization options for the gas condensate discovered in the Torok Formation by 88E’s Charlie-1 well in 2020. The discovered resource comprises over 1 TCF of independently estimated gross mean prospective gas as well as associated condensate. The commercialization options include, but are not limited to, possible local power generation, compressed natural gas as well as potential for conversion to hydrogen using steam methane reforming (SMR) with carbon capture and storage (CCS) processes. It is expected that this work will move to a formal feasibility stage during 2021. Farm-out of Project Icewine is ongoing, with a deal targeted in 3Q 2021. Further evaluation will continue on the Project Icewine HRZ liquids-rich unconventional resource play. 

Yukon Acreage; – The Yukon Gold leases are located on the eastern border of the Central North Slope of Alaska and were acquired in 2018 and 2019. 88 Energy via its subsidiary Regenerate Energy Alaska Inc. has a 100% working interest in these leases, totaling 15,235 acres. The leases contain an historic discovery well, Yukon Gold #1, which will continue to be evaluated internally. Discussions are ongoing with nearby lease owners to optimize the monetization strategy for existing discovered resources located in the vicinity of the Yukon Leases. 

Project Peregrine; – Project area encompasses 195,373 acres, Multiple independent drill-ready targets remain untested. The Merlin-1 and Harrier-1 wells will be drilled and tested in Q1 2022, with Alaska Peregrine Development Company LLC under the terms of the SPA paying the full costs of an appraisal wells up to a total of US$10 million with both wells planned for drilling to a Total Depth of ~6,000’ in order to intersect the prospective Nanushuk topset horizons that are located on trend to existing discoveries to the north of the project area. 

Umiat Oil Field; – Subsequent to year-end on 8th January, 88 Energy, via its wholly owned subsidiary Emerald House LLC, entered into a Sale and Purchase Agreement with Malamute Energy, Inc and Renaissance Umiat LLC (Sellers) to acquire the Umiat Oil Field. The consideration for the purchase was a 4% ORRI and assumption of the liability for the abandonment of the Umiat-18 and Umiat-23H wells, drilled by Linc Energy in 2013/2014. The estimated cost to abandon the two wells is approximately US$1m and planned to occur in the first half of 2021. 

Project Longhorn88Energy also just recently completed the acquisition of stablished conventional oil and gas production assets in the proven Permian Basin, collectively known as Project Longhorn with independently certified net 2P reserves of 2.1 MMBOE. The acquisition delivers immediate cash flows, with current gross production from Project Longhorn of approximately 300 BOE per day (approximately 70% oil).    

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EEENF

Success at the Hickory-1 location unlocks up-dip potential across the remaining Icewine East acreage. The Hickory-1 well, and more generally the Icewine East acreage, has been significantly de-risked by the recent drilling and flow tests carried out on the adjacent acreage by Pantheon Resources, as well as data from the Icewine-1 well logs and the modern FB3D data set. 

Icewine East: Active, INFRASTRUCTURE-LED exploration 

  • 3D seismic informed optimum future drill target – Hickory-1 
  • Franklin Bluffs 3D seismic data (FB3D) licenced in June 2022 
  • FB3D extends across the Icewine East acreage where the Shelf Margin Delta (SMD), Slope Fan Set (SFS) and Basin Floor Fan (BFF) play fairways have been independently mapped 
  • Interpretation of FB3D combined with Amplitude Variation with Offset (AVO) analysis has been used to define ‘sweet spots’ for each play3 
  • Strong AVO anomaly that extends across both Pantheon and 88 Energy’s lease holdings validates Hickory-1 location and design 
  • Location for proposed exploration well, Hickory-1, has been selected to test all of the SMD, SFS, BFF and KUP reservoir units1 
  • Planning and permitting for drilling of the Hickory-1 well have commenced, scheduled to spud in 20231 

INCREASING DIRECT PRODUCTION EXPOSURE 

  • Project Longhorn on target to deliver ~600 BOE per day gross by end 20221,4 
  • Circa 73% average net working interest in onshore established production assets located in the Permian Basin, Texas2 
  • Net 2.1 MMBOE 2P independently certified reserves, 31 December 20211,2,3 
  • Four work-overs successfully executed on time and on-budget delivering a ~60% increase to production since February 2022 acquisition 
  • Further three low cost work-overs planned for H2 2022 (US$2.9M net cost to 88E) taking gross output to ~600 BOE per day (~70% oil)4 
  • Solid net 88E cash flows expected allow for coverage of Alaskan acreage position (US$2.7m/pa lease payments) as well as study costs and technical overheads to advance exploration efforts1,4. 
  • Expected 88E net cash flows1,4 
  • FY22: US$3m 
  • FY23: US$6m (@~US$80/bbl) 

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Currently trading at a $87 million market valuation EEENF has 15.8 billion shares outstanding and is in excellent financial position with zero debt and a healthy cash balance of A$17.5mln of cash reserves, following a A$13.9mln capital raise in August. Things are looking up for 88 Energy which looks significantly oversold at current levels and ready for a major reversal northbound. In a recent update the Company detailed its plans for the Hickory-1 exploration well, in Alaska, where drilling is slated next year. The Company plans to drill the Hickory well vertically, down to a depth of around 12,500 feet. It is intended to test four reservoirs on Alaska’s North Slope. In all, it is planned to appraise six stacked reservoir targets, the company noted. 88 Energy also updated investors on its 73% working interest in Project Longhorn which yielded 450 barrels of oil per day (gross) marking a 60% rise in volumes following investments in work-over operations that have boosted productivity. The company said it now expects to see Project Longhorn volumes increased to over 500 barrels of equivalent oil per day by the end of 2022. Further well workovers are planned for 2023. The Company is very well funded moving forward and has total oil prospects for their wells targeting at least 1.638 billion barrels of oil in the Permian Basin. We will be updating on 88E when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with 88E.

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Disclosure: we hold no position in 88E either long or short and we have not been compensated for this article

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