88 Energy prepares for Merlin-1 spud on 8 March
(88E ) told investors that rig mobilisation for the Merlin-1 exploration well on the North Slope of Alaska is ‘progressing well’ with its spud now scheduled for 8th March 2021.
The anticipated drilling of 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.
Despite some minor weather-related delays at the site, Managing Director of the Alaskan-based explorer, 88 Energy, Dave Wall told investors that “pre-spud operations are now entering the final phase as Rig 111 makes it way to the drilling location for Merlin-1”.
Merlin-1 will initially be drilled to 1,500', then surface casing will be installed and the Blow Out Preventer system tested. This is expected take approximately one week to execute.
The well will then be deepened through the target horizons in the Nanushuk Formation to a maximum total depth of 6,000'. Logging while drilling and mudlogging will provide initial indications as to the prospectivity of the well here which is expected take three to five days.
Following this, a sophisticated wireline logging suite will then be run, including sidewall cores and downhole sampling which is is expected to take five to seven days, 88E noted.
If the results from the wireline logging are encouraging, then the well will be completed with casing and a flow test conducted. Meanwhile, the drilling of 88E’s second well in the program, Harrier-1, remains subject to permitting, Merlin-1 results and weather / schedule.
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.
“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.
Success at Merlin-1 would be transformational for our shareholders and we look forward to providing further information on operations over the next 4 to 6 weeks."
Shares in 88 Energy have risen by nearly 5% since the start of 2021. 88E is now less than a week away from the spud of Merlin-1 which is set to occur 8 March 2021. 88E said successful drilling would underpin a company making development project for its shareholders, with the proven resource at the recently acquired at Umiat Oil Field “adding substantial value."
Following completion of operations at Merlin-1 and subject to the results, schedule and permit approvals, the Group intends to commence drilling at its second well, Harrier-1. Meanwhile, 88E continues to keep its eye on the further development of the Talitha-A well where several prospective horizons are interpreted to extend into 88E’s acreage.
Reasons 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%.
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