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Thursday, August 11, 2022

88 Energy Ltd (OTCMKTS: EEENF) Heats Up as Oil Operator Sets March 7 for Merlin-2 spud date & Executes Binding SPA for the Acquisition of Producing Permian Basin Oil and Gas Production Assets

88 Energy Ltd (OTCMKTS: EEENF) is moving steadily higher in recent trading in the midst of a powerful volume surge and move northbound the biggest since the stock hit $0.095 in April of 2021 after the Company announced results on the Charlie-1 well. EEENF is among the top traded stocks in small caps with a huge international following of shareholders who are heavily accumulating at current levels. As we previously reported 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 field. Merlin-2 is shaping up to be one of the high-impact wells the oil and gas investment community will be watching this year and a positive outcome will mean it is game on for the ASX-listed company. As oil continues to rise quickly with recently eclipsing $110 a barrel crude could not be hotter. EEENF 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 ex-CEO of the Company David Wall recently doubled his position in EEENF from 120 million shares to 254 million shares.  According to their latest filing 88 Energy is well funded moving forward with $32 million in the treasury with total prospects for their wells targeting at least 1.638 billion barrels of oil.  

Alot has happened on EEENF since we last reported on it in January shortly before the Company became fully reporting OTCQB on January 24l; the Company’s Permit to Drill (PTD) has been approved by the Bureau of Land Management (BLM) for the Merlin-2 appraisal well was completed, with mobilization to the Merlin-2 drilling location commencing. The Merlin-2 spud date is scheduled for the week commencing 7 March 2022, with the well permitted to a Total Depth (TD) of 8,000 feet. The well is planned to be initially drilled to 2,000 feet, with the surface casing then installed and the Blow Out Preventer system tested. This is anticipated to collectively take approximately one week. Drilling to TD is then expected to take a further four weeks, including wireline logging. EEENF also executed a binding Securities Purchase Agreement (SPA) for the acquisition of a circa 73% average net working interest in established conventional oil and gas production assets in the proven Permian Basin, onshore Texas, U.S. The oil and gas production assets, collectively known as Project Longhorn, are located in the Permian Basin and contain independently certified net 2P reserves of 2.1 MMBOE.  The purchase price for the acquisition is US$9.7 million, comprising US$7.2 million cash and US$2.5 million in 88 Energy shares (approximately 98.1 million shares at an issue price of A$0.035 per share) . 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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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; – 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. 

On February 14 EEENF reported the execution of a binding Securities Purchase Agreement (SPA) for the acquisition of a circa 73% average net working interest in established conventional oil and gas production assets in the proven Permian Basin, onshore Texas, U.S. The oil and gas production assets, collectively known as Project Longhorn, are located in the Permian Basin and contain independently certified net 2P reserves of 2.1 MMBOE.  The purchase price for the acquisition is US$9.7 million, comprising US$7.2 million cash and US$2.5 million in 88 Energy shares (approximately 98.1 million shares at an issue price of A$0.035 per share). 

The acquisition delivers immediate cash flows, with current gross production from Project Longhorn of approximately 300 BOE per day (approximately 70% oil).  Near-term capital-efficient production upside exists from seven planned work-overs, which are scheduled to commence in March 2022.  These initiatives are targeted to approximately double current output rates by late 2022. 

The acquisition represents 88 Energy’s first move into producing oil and gas assets and is in line with the Company’s strategy to build a successful exploration and production company.  This step has been undertaken in a measured fashion via the purchase of a non-operated working interest with a single basin focus.  Project Longhorn contains well understood geology with low technical risk and provides near-term upside via low-cost field development opportunities. 

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EEENF

Alot has happened on EEENF since we last reported on it in January shortly before the Company became fully reporting OTCQB on January 24. The Company reported that the Permit to Drill (PTD) has been approved by the Bureau of Land Management (BLM) for the Merlin-2 appraisal well, located in Project Peregrine in the NPR-A region of the North Slope of Alaska. Commissioning of the Arctic Fox rig has been completed, with mobilization to the Merlin-2 drilling location commencing. Pioneering of the single lane snow road to the Merlin-2 location has also been completed. The Merlin-2 well is now scheduled to spud in early March 2022. 

On February 28 EEENF announced the mobilization of the Arctic Fox rig to the Merlin-2 appraisal well drilling location is now complete. Pre-spud operations are continuing and now entering the final phase. The Merlin-2 spud date is scheduled for the week commencing 7 March 2022, with the well permitted to a Total Depth (TD) of 8,000 feet. The well is planned to be initially drilled to 2,000 feet, with the surface casing then installed and the Blow Out Preventer system tested. This is anticipated to collectively take approximately one week. Drilling to TD is then expected to take a further four weeks, including wireline logging. 

A production test program for the Merlin-2 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. 

88 Energy Managing Director and CEO, Ashley Gilbert, commented: “We are now entering the final phase of pre-spud preparations and look forward with excitement to the next few weeks of drilling operations. Success at Merlin-2 has the clear potential to be transformational for our shareholders and we look forward to providing updates as the drilling of this appraisal well progresses.” 

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EEENF is moving steadily higher in recent trading in the midst of a powerful volume surge and move northbound the biggest since the stock hit $0.095 in April of 2021 after the Company announced results on the Charlie-1 well. EEENF is among the top traded stocks in small caps with a huge international following of shareholders who are heavily accumulating at current levels. As we previously reported 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 field. Merlin-2 is shaping up to be one of the high-impact wells the oil and gas investment community will be watching this year and a positive outcome will mean it is game on for the ASX-listed company. As oil continues to rise quickly with recently eclipsing $110 a barrel crude could not be hotter. EEENF 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 ex-CEO of the Company David Wall recently doubled his position in EEENF from 120 million shares to 254 million shares.  According to their latest filing 88 Energy is well funded moving forward with $32 million in the treasury with total prospects for their wells targeting at least 1.638 billion barrels of oil. Alot has happened on EEENF since we last reported on it in January shortly before the Company became fully reporting OTCQB on January 24l; the Company’s Permit to Drill (PTD) has been approved by the Bureau of Land Management (BLM) for the Merlin-2 appraisal well was completed, with mobilization to the Merlin-2 drilling location commencing. The Merlin-2 spud date is scheduled for the week commencing 7 March 2022, with the well permitted to a Total Depth (TD) of 8,000 feet. The well is planned to be initially drilled to 2,000 feet, with the surface casing then installed and the Blow Out Preventer system tested. This is anticipated to collectively take approximately one week. Drilling to TD is then expected to take a further four weeks, including wireline logging. EEENF also executed a binding Securities Purchase Agreement (SPA) for the acquisition of a circa 73% average net working interest in established conventional oil and gas production assets in the proven Permian Basin, onshore Texas, U.S. The oil and gas production assets, collectively known as Project Longhorn, are located in the Permian Basin and contain independently certified net 2P reserves of 2.1 MMBOE.  The purchase price for the acquisition is US$9.7 million, comprising US$7.2 million cash and US$2.5 million in 88 Energy shares (approximately 98.1 million shares at an issue price of A$0.035 per share) . The acquisition delivers immediate cash flows, with current gross production from Project Longhorn of approximately 300 BOE per day (approximately 70% oil). EEENF speculators are looking for a break of the $0.095 for confirmation of the next big leg up. 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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