88 Energy soars as it satisfies final condition for Umiat acquisition
The Alaskan-focused explorer said all conditions have now been satisfied with cement work associated with plugging and abandoning of two historical wells at the field now executed. The company stated that remedial site work at the field will be finalised ‘in the near term.’
The Umiat oil field is an historic oil discovery, made in 1945 in shallow Brookian (Nanushuk) sandstones, located immediately adjacent to the southern boundary of Project Peregrine.
Umiat is covered by two leases comprising 17,633 acres, which are in a unit that was formed in September 2019 with an initial 10 year term. The current conditions of the unit stipulate a well commitment (exploration or appraisal) by 31st August 2022, 88E highlighted.
Umiat was discovered in the mid-1940s with 11 appraisal wells drilled by 1953, several of which were tested. Umiat-5 flowed 268 barrels per day on a 3 month test and Umiat-8 had a peak flow rate of 5.9mmcf/d of natural gas during a 4 day test.
The company highlighted that little work at the field was done until 2013/2014 when Linc Energy drilled two wells, namely Umiat-18 and Umiat-23H. Umiat-23H was tested with a maximum flow rate of 800 barrels per day and sustained flow of 200 barrels per day.
Separately, the group told investors that wireline logging operations at the Merlin-1 well at Project Peregrine are now underway, with preliminary results expected over the weekend.
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.
88E, which initiated drilling at Merlin-1 earlier this month, told investors on Tuesday that acquired data from the well has highlighted the potential of hydrocarbon-bearing zones.
Commenting on the hydrocarbon potential, Managing Director, Dave Wall, said, "Whilst there is still work to do to confirm a discovery, the results to date are encouraging and we look forward to providing an additional update on the wireline program in 7 to 10 days."
The company said these results are considered ‘encouraging’ and 88E’s wireline program will now be run over the next week to determine the presence of mobile hydrocarbons.
The Merlin-1 well which is located on the North Slope of Alaska is targeting 645 million barrels of gross mean prospective resource. Meanwhile, a second well, Harrier-1, is planned to be drilled in 2022 and is targeting gross mean prospective resource of 417 million barrels.
Commenting on today’s news Wall said, "The acquisition of the proven oil field at Umiat is a significant milestone for the Company and its shareholders, particularly in the context of any discovery made at Project Peregrine, where wireline logging is currently underway."
Shares in 88 Energy have seen an over eight-fold increase in value since the start of 2021 and the recent news that it had commenced drilling at the Merlin-1 well marks “an exciting and pivotal time”. The stock jumped 18.75% higher at 3.35p today following the announcement.
Drilling at the Merlin-1 well follows the Crude Oil WTI Index reaching its highest level since October 2018 this month, with the commodity reaching highs of $67.98 per barrel.
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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