88 Energy set for further growth after a strong Q1
() , an Alaska-focused hydrocarbon explorer, issued an update on key activities across its portfolio in Q1 2024.
As recently reported, conducted a successful flow test of its Hickory-1 discovery well on Alaska's North Slope, part of the company's flagship Project Phoenix.
conducted two tests at Hickory-1, one each for the Upper SFS and SMD-B reservoirs (see map below). The USFS reservoir produced at a peak flow rate of 70 bopd of light oil under natural flow, while the SMD-B reservoir registered 50 bopd of light oil under nitrogen lift.
Both tests achieved flow rates from low-volume stimulations over short 20ft vertical intervals, in line with expectations based on results from Pantheon Resources' adjacent acreage. However, unlike Pantheon's results, achieved oil to surface from the USFS reservoir under natural flow.
Next, will seek independent Contingent Resource declarations for both reservoirs, based on the observed flow of hydrocarbons to surface. These are expected in H2 2024 and will add to the previously declared 2C contingent resource of 250 mmboe for the deeper BFF reservoir.
is also advancing nearby Project Leonis, to the north of Phoenix, with a view to prepare a maiden resource estimate in H1 2024 ahead of targeted farm-out and potential drilling of a new well during the 2025/26 Alaskan winter operational season.
While Project Phoenix made the most headlines during the quarter, 's other assets saw substantial development as well:
In Namibia, acquired 20% WI from Monitor Exploration in PEL 93, located in the Owambo Basin. The transfer represents Stage 1 of a 3-stage farm-in agreement for up to 45% non-operated WI in PEL 93. The acreage comprises an extensive lead portfolio with 10 significant structural closures identified through a range of geophysical and geochemical methods. There is considerable potential for more leads as the dataset is expanded.
's recently expanded Project Longhorn in Texas saw Q1 production steadily average 328 BOE/day gross (62% oil). Two of five planned workovers are underway and scheduled to complete in H1 2024 under budget. Additionally, two new wells are planned for 2H 2024, contingent on successful workovers. reduced its working interest in 9 Longhorn leases by ~7% in net working interest, which realised A$0.3m.
In terms of balance sheet, had A$17.5m in cash and no debt as of March 31, 2024. Approximately 20% of Hickory-1 flow test payments have been made, with the remainder expected to be paid in Q2 2024. Net cash outflows in relation to operating expenses for Q1 2024 totaled A$0.77m vs A$1.44m in Q4 2023. Cost reduction and business streamlining initiatives also commenced during the quarter.
View from Vox
88 Energy hit a number of milestones in Q1, most notably at its flagship Project Phoenix on Alaska's North Slope where the Hickory-1 discovery well successfully flowtested 2 reservoirs. Peak flow rates of 70 bopd of light oil under natural and 50 bopd of light oil under nitrogen lift respectively for the USFS and SMD-B reservoirs complemented the BFF reservoir's existing 250 mmboe contingent resource. In total, is targeting 647 mmboe of prospective oil resources at the acreage.
Positive results from multiple reservoirs means significant upside in future development via multiple commercialisation options. These include a farm-out to a strategic partner or early capital-light production, given the acreage's infrastructure advantage of being next to the Dalton Highway and Trans-Alaskan Pipeline System.
With both flow tests now complete, will seek independent resource assessments for the two reservoirs. At the same time, the company will begin integrating the flow test results into its development models. Hickory-1 is a vertical well, designed for testing only. For production, long horizontal wells are planned, expected to deliver 6-12 times greater flow rates than what was observed during the flow tests.
Additionally, in Namibia gained entry into PEL 93, a rich 18,500km2 onshore acreage comprising blocks 1717 and 1817 in the Owambo Basin. can acquire a total of 45% working interest in PEL 93 under the farm-in agreement with Monitor Exploration, beginning with 20% in Stage 1.
Operator Monitor Exploration has assessed and validated significant potential in the acreage since award of PEL 93 in 2018. The forward work programme will start with a low impact ~200 line-km 2D seismic programme focused on confirming the structural closures of the 10 independent leads identified. The 2D seismic programme will commence in mid-2024, with an initial exploration well targeted for H2 2025.
Namibia represents one of the last frontier oil and gas jurisdictions capable of delivering multi-billion barrel discoveries, as evidenced by recent offshore discoveries. Nearby GALP Energia's Mopane-1X represents the 5th major oil discovery in under 2 years within the Orange Basin and confirms the extension of the petroleum play from TotalEnergies and Shell's acreages.
88 Energy is well-funded and progressing at pace through its work programmes, expected to yield multiple milestones over the next year. Leonis' planned farm-out and Longhorn's sell-down should further accelerate development.
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