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88 Energy raises £5.3m to fund projects in Alaska and Namibia

10:26, 29th November 2023
Victor Parker
Vox Newswire

88 Energy (88EFollow | 88E, an Alaska-focused hydrocarbon explorer, has successfully raised A$9.9m (£5.16m) via an oversubscribed placement of new ordinary shares at A$0.0045 (equivalent to £0.0023). The issue price represents a discount of 18.20% to 88 Energy's closing price on the ASX on 27 November 2023.

In addition, 88 Energy will issue options on a 1 for 3 basis to ASX investors. The options are exercisable at A$0.0075 per share and expire 3 years from the date of issue. UK investors participating in the placement will receive 1 warrant for every 3 shares subscribed for, with an exercise price of £0.0039. The warrants can be exercised at any time before 15 December 2026.

The net proceeds of the placement, together with 88 Energy's existing cash reserves (A$10.2m as of 30 September 2023) should strengthen 88 Energy's balance sheet and provide it with sufficient working capital to fund flow testing of the Hickory-1 well at its flagship Project Phoenix on Alaska's North Slope. Additionally, proceeds will help fund the initial farm-in exploration activities at 88 Energy's recently acquired Owambo Basin acreage in Namibia (including 2D seismic acquisition). Following completion of the placement, 88 Energy should have sufficient cash to fund its ongoing working capital requirements and general and administrative overheads for at least another 12 months.

The placement will enable 88 Energy to undertake the Hickory-1 flow test despite the potential failure of its Project Phoenix JV partner, Burgundy Xploration, to meet ongoing obligations and and cure its payment defaults by a deadline of November 30 2023. While Burgundy continues its fundraising efforts, 88 Energy has made the decision to complete its own placement to secure funding arrangements for the flow test in the absence of certainty of Burgundy's ability to finance its share. 88 Energy maintains the option to require Burgundy to relinquish its working interests in the project and JV.

88 Energy CEO, Ashley Gilbert, commented:

"We are now fully funded to undertake Hickory-1 flow test operations during the upcoming winter operational season in Alaska. Burgundy's failure to rectify its payment default to date is disappointing and has necessitated the raising of additional funds. However, if not cured their default will enable us to exercise remedies under the JOA which may include the potential for 88 Energy to move to a 100% working interest in some or all of the leases within Projects Phoenix and Icewine West covered under the default.

We are also excited about commencing initial exploration activity on our Namibian farm-in acreage. The Owambo Basin delivers large-scale hydrocarbon exploration potential across a highly prospective and underexplored acreage position."

88 Energy is optimistic about Hickory-1's flow test as its northern neighbor on Alaska's North Slope, Pantheon Resources, recently announced a significant, third party estimated 2C contingent resource for the Lower BFF reservoir. The BFF is one of the deepest hydrocarbon-bearing pay zones intersected by Hickory-1. 88 Energy plans to flow test this reservoir, along with its primary, SMD, Upper SFS and SFS targets.

Hickory-1 flow test planning and permitting remains on track for program operations in Q1 2024. The well is currently targeting 647 million barrels of oil across several pay zones.

The company is also advancing its nearby Project Leonis with a view to prepare a maiden resource estimate in Q1 2024 ahead of targeted farm-out next year and potential drilling of a new well during the 2025/26 Alaskan winter operational season.

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