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88 Energy confirms spudding Merlin-1

10:31, 11th March 2021
Francesca Morgan
Vox Newswire
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88 Energy (88E FOLLOW) has confirmed to investors that Rig 111 has now commenced drilling at the Merlin-1 exploration well on the North Slope of Alaska. The Alaskan-based explorer highlighted that the drill rig began drilling the well at 03:38 on Wednesday 10 March 2021.

The drilling programme at Merlin-1 forms part of the Alaskan-based explorer’s Project Peregrine which holds nearly 200,000 contiguous acres on the North Slope of Alaska.

The Company holds a 100% working interest in the Peregrine project that will reduce to a 50% interest post the completion of funding as part of a recent farm-in, whereby 88E is carried on the first US$10m (of an estimated US$12.6m total cost) for the Merlin-1 well.

Merlin-1 will initially be drilled to 1,500 ft, after which surface casing will be installed and the blow-out preventer system tested. This is expected to take around one week to execute.

Following this, Merlin-1 will then be deepened through the target horizons in the Nanushuk Formation to a maximum total depth of 6,000 ft. This phase of drilling, which will provide initial indications as to the prospectivity of the well, is expected to take three to five days.

If the results from the wireline logging are encouraging, the well will be completed with casing and a flow test conducted. Meanwhile, 88E said given the recent operational delays with Merlin-1, it is now considered unlikely that the Harrier-1 well will be drilled this season.

Due to delays mainly associated with the issuance of a permit to drill, 88E 's share of the cost of Merlin-1 has now been revised to US$4m, increasing from its previous cost of $1.4m.

Despite this revision, the company’s current cash position stands at US$13m which it said more than funds its share of the drilling of Merlin-1 as well as its other planned activities.

Success at Merlin-1 could yield over 300 million barrels net to 88E and open up further prospectivity at Project Peregrine, in addition to unlocking the substantial proven resource at the adjacent Umiat oil field, which is 100% owned by 88 Energy,” Wall told investors.

He added, “Metrics for discovered oil were demonstrated by the late 2017 Oil Search transaction where US$3.10 per barrel was paid, in a low oil price environment, for an interest in the Pikka Field, which is a discovery in the Nanushuk Formation.”

Harrier-1, which is to target gross mean prospective resource of 417 million barrels and will cost c. US$7m, is intended to commence immediately following completion of operations at Merlin-1 and will be subject to results from Merlin-1, schedule and permit approvals. 

Shares in 88 Energy have increased by over 10% in value since the beginning of 2021. Today’s news that 88E has now commenced drilling at the Merlin-1 well marks “an exciting and pivotal time” for the Company and its shareholders, said Managing Director, Dave Wall.

Drilling at the Merlin-1 exploration well follows the Crude Oil WTI Index reaching its highest level since October 2018 last week, with the commodity reaching highs of $67.98 per barrel.

While the cost of Merin-1 has now been revised to $4m from $1.4m, the company told  investors that its current cash position stands strong at US$13 million which it said will more than fund its share of the drilling of Merlin-1 and the group’s other planned activities with stated expectations Merlin-1 could yield over 300m barrels net and open up further prospectivity at the site.

Successful drilling would underpin a company developing a solid project for its shareholders, with the proven resource at the recently acquired Umiat Oil Field “adding substantial value."

88E price chart

Reason to FOLLOW 88E

Project Portfolio Across Alaska’s North Slope

The Alaskan explorer completed its acquisition of XCD Energy, which holds a 100% Working Interest in the highly prospective Alaskan North Slope, back in August 2020. The merged entity has formed a diversified portfolio of exploration projects on Alaska’s North Slope.   

The combined company will have increased scale, market presence along with higher funding capability and trading liquidity across the ASX and London AIM exchanges.     

The three key projects include Project Icewine, Yukon leases and Project Peregrine with the assets at various stages of development, the company previously outlined this summer.    

In late 2020, 88E was also formally re-assigned the "Area A" leases at Project Icewine meaning its working interest in around 40% of the project has increased from 30% to 75%.

For more news and updates on 88 Energy: FOLLOW

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Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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