TIDM88E
RNS Number : 4951V
88 Energy Limited
10 August 2022
This announcement contains inside information
10 August 2022
88 Energy Limited
Project Icewine East: Maiden Independent Prospective Resource
Estimate of 1.03 Billion Barrels*
Highlights
-- Maiden Independent Prospective Resource estimate completed at Project Icewine East.
-- Total estimated Prospective Resource of 1.03 billion barrels
(Bnbbls) of oil* recoverable from multiple reservoir zones.
-- Independently certified prospective resource estimate
prepared by Lee Keeling & Associates, Inc., a US based
independent expert petroleum and engineering firm.
-- Substantial oil volumes noted across all mapped play
fairways, in particular the Seabee - Lower Basin Floor (BFF) and
the Shelf Margin Delta (SMD) reservoirs.
-- 88 Energy Limited is intending to drill an exploration well on the acreage in 2023.
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) ( 88 Energy or
the Company ) is pleased to report a maiden, independently
certified Prospective Resource estimate of 1.03 Bnbbls of oil
(gross mean, unrisked) for Project Icewine East (75% net working
interest).
Significant prospective resources have been estimated across all
the recently mapped Shelf Margin Delta ( SMD ), Slope Fan System (
SFS ), Basin Floor Fan ( BFF ) and Kuparuk ( KUP ) play fairways on
the Icewine East acreage. Importantly, these are mapped as the same
Brookian / Beaufortian reservoirs that nearby Pantheon wells -
Alkaid-1, Talitha-A and Theta West-1 - have flowed 35 to 40 API
oil. Pantheon's previous well tests have also confirmed reservoir
deliverability of light, sweet oil (see Pantheon releases of 7
February, 21 February and 24 March 2022), which 88 Energy believes
is positive for the prospectivity of the adjacent Icewine East
acreage.
The maiden Independent Prospective Resource Report was completed
by Lee Keeling and Associates, Inc. ( LKA ). The initial total
prospective resource follows a period of review of an extensive
data suite that included seismic data, well logs from Icewine-1 and
nearby wells adjacent to the Icewine East acreage, recent
petrophysical analysis and mapping. LKA are an independent US based
expert petroleum geoscience and engineering consulting firm who
have significant and recent experience in providing resource
estimates globally as well as more specifically in Alaska.
* Gross mean unrisked prospective resource
Managing Director, Ashley Gilbert, commented:
"This maiden, independently certified 1.03 Bnbbls of oil
resource estimate is a great result for 88E and its shareholders.
Resources of this magnitude present our shareholders with
significant upside potential and opportunity, which is why we
continue to focus on our Alaskan portfolio and believe significant
value exists in our Icewine East acreage.
Importantly, it is worth noting that the Icewine East acreage
has been significantly de-risked by the recent Pantheon drilling
and flow tests on their adjacent acreage, as well as data from the
Icewine-1 well logs, and more recently the leased Franklin Bluffs
3D data set. This work substantially increases our confidence in
unlocking the potential of the Icewine East acreage and is by far,
the most compelling data suite the Company has analysed ahead of
drilling any well.
Full interpretation of the recently licensed FB3D data is
ongoing, including AVO analysis, to define 'sweet spots' for each
play and determine optimal future exploration and appraisal
drilling locations, the first of which is planned for 2023."
Prospective Resources Estimate - Icewine East
The assessed maiden Prospective Resource estimate associated
with 88 Energy's Icewine East acreage (75% net working interest) is
summarised below.
Icewine East: Alaska North Unrisked Gross Prospective Oil Resources
Slope (MMstb) (4,5)
Prospects (Probabilistic Low (1U) Best High Mean COS
Method) (2U) (3U) (3)
------------
Shelf Margin Delta (SMD A,
B & C) 70 224 518 231 81%
============ ======== ======== ======= ======
Slope Fan Set (SFS) 37 134 345 141 50%
============================ ============ ======== ======== ======= ======
Basin Floor Fan (BFF) 119 543 1,480 569 50%
============================ ============ ======== ======== ======= ======
Kuparuk (KUP) 39 88 156 89 72%
============================ ============ ======== ======== ======= ======
1,030
Prospects Total 265 988 2,499 (2)
---------------------------- ------------ -------- -------- ------- ------
Icewine East: Alaska North Unrisked Net Entitlement to 88E (1)
Slope Prospective Oil Resources (MMstb) (4,5)
Prospects (Probabilistic Low (1U) Best High Mean COS
Method) (2U) (3U) (3)
-----------
Shelf Margin Delta (SMD A,
B & C) 44 140 326 145 81%
=========== ======== ======= ========= ======
Slope Fan Set (SFS) 24 84 217 89 50%
============================ =========== ======== ======= ========= ======
Basin Floor Fan (BFF) 75 341 930 358 50%
============================ =========== ======== ======= ========= ======
Kuparuk (KUP) 24 56 98 56 72%
============================ =========== ======== ======= ========= ======
Prospects Total 167 621 1,570 647 (2)
---------------------------- ----------- -------- ------- --------- ------
1. 88 Energy net resources have been calculated using a 75.227%
working interest and a 16.5% royalty.
2. The unrisked means, which have been arithmetically summed,
are not representative of expected total from the prospects and
implies a success case in all reservoir intervals. 88 Energy
cautions that the arithmetically summed 1U estimate may be a
conservative estimate and the arithmetically summed 3U estimate may
be optimistic when compared to a statistical aggregation of
probability distributions.
3. COS represents the geological chance of success as assessed
by 88 Energy and reviewed and endorsed by LKA.
4. Prospects are subject to a phase risk (oil vs gas). Chance of
oil has been assessed as 100% for all targets except for the
Kuparuk Formation which has been assessed as 70%. Phase risk has
not been applied to the unrisked numbers.
5. The Prospective Resources have not been adjusted for the
chance of development. Quantifying the chance of development (COD)
requires consideration of both economic and other contingencies,
such as legal, regulatory, market access, political, social
license, internal and external approvals and commitment to project
finance and development timing. As many of these factors are
outside the knowledge of LKA they must be used with caution.
Cautionary Statement : The estimated quantities of petroleum
that may be potentially recovered by the application of a future
development project relate to undiscovered accumulations. These
estimates have both an associated risk of discovery and a risk of
development. Further exploration, appraisal and evaluation are
required to determine the existence of a significant quantity of
potentially movable hydrocarbons.
The data used to compile the independent prospective resource
report includes reprocessed 2D seismic data, basin modelling,
petrophysical analysis of publicly available wells and historical
geological records. The data was compiled and interpreted by 88E
and was reviewed, validated and in some cases modified
independently by LKA.
LKA's methodology for determining Prospective Resources for
Project Peregrine
LKA has determined Prospective Resources by examining the areas
of consistent bright amplitude that were mapped by independent
consultants to 88E, Jordan and Pay, using the reprocessed 2D
seismic data within the Icewine East area. Parameters including
potential pool area and thickness, porosity, hydrocarbon
saturation, oil expansion and recovery factor were estimated on a
probabilistic low, mid and high basis. The Prospective Resources
distributions were then aggregated into four (4) prospects, on the
basis that one (1) well could effectively test all the mapped
prospective intervals. The unrisked prospective resources estimates
(and associated geological chance of success) were modelled using
Monte-Carlo analysis on the assumption there was no economic
minimum and that volumes and risks of each of the prospective
intervals within each prospect were independent.
The Prospective Resources have not been adjusted for phase risk
or chance of development. 88 Energy and LKA have considered the
chance of discovering oil over gas to be 100% for all targets
except for the Kuparuk Formation which was assessed to be 70%.
Chance of development has not been estimated.
Please refer to the disclaimers attached as Schedule 1 of this
ASX release for more information on the prospective resource
report.
About LKA
LKA is a U.S. based independently owned petroleum Reserves and
Resources auditor and engineering consultants, providing expert
consultancy services to the upstream oil and gas industry since
1957. LKA technical staff include a wide range of professionally
qualified engineers and geologists, who provide geoscience,
reservoir, facilities and cost engineering and economic/commercial
expertise in conventional and unconventional projects. Examples of
current clients are noted on their website (
https://www.lkaengineers.com/clients/ ) and include independent oil
and gas operators, international, state and federal government
agencies, bank and financial institutions, as well as legal and
accounting firms.
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing Director
Tel: +61 8 9485 0990
Email:investor-relations@88energy.com
Finlay Thomson , Investor Relations Tel: +44 7976 248471
Fivemark Partners , Investor and Tel: +61 410 276 744
Media Relations Tel: +61 422 602 720
Andrew Edge / Michael Vaughan
EurozHartleys Ltd Tel: +61 8 9268 2829
Dale Bryan
Cenkos Securities Tel: +44 131 220 6939
Neil McDonald / Derrick Lee
About Project Icewine
Project Icewine is located on the central North Slope of Alaska
and encompasses approximately 185,320 net acres. It is situated
on-trend to recent discoveries in multiple, newly successful play
types in topset and bottom-set sands of the Schrader Bluff and
Seabee formations. 88 Energy has a 75.227% working interest in the
Project.
Icewine East and West acreage positions hold an estimated
conventional total 2.8 billion BOE* of prospective resource,
independently assessed.
88 Energy has conducted 2D and 3D seismic acquisitions and
drilled three exploration wells in the acreage, including the
Charlie-1 discovery well in Q1 CY2020.
Project Icewine East - Total Prospective Resource of 1.03
Billion Barrels of Oil*
Icewine East resource estimate completed in Q3 2022. Acreage
de-risked by historical exploration wells and near-field
exploration drilling and flow tests recovering light oil, as well
as recently leases Franklin Bluffs 3D ( FB3D ).
The FB3D will assist through subsequent analysis, including AVO
analysis and simultaneous seismic inversion, in defining 'sweet
spots' for each play and hence determine optimal drilling location
for a planned well in 2023.
Project Icewine West - Total Prospective Resource of 1.8 Billion
Barrels of Oil Equivalent*
Project Icewine West has previously been independently assessed
as having a total gross mean unrisked prospective resource of 1.77
billion BOE**. The Charlie-1 discovery well, drilled in 2020,
recovered hydrocarbons during wireline operations.
* Gross mean unrisked prospective resource
** Please refer to the ASX release dated 10 November 2020 for
full details with respect to the Prospective Resource estimate and
associated risking
SCHEDULE 1
Disclaimers:
Cautionary Statement for Prospective Resource Estimates - With
respect to the Prospective Resource estimates contained within this
report, it should be noted that the estimated quantities of gas
that may potentially be recovered by the future application of a
development project relate to undiscovered accumulations. These
estimates have an associated risk of discovery and risk of
development. Further exploration and appraisal is required to
determine the existence of a significant quantity of potentially
moveable hydrocarbons.
Hydrocarbon Resource Estimates - The Prospective Resource
estimates for Project Icewine East presented in this report are
prepared as at 9 August 2022. The Prospective Resource estimates
are quoted on an unrisked basis together with the geological chance
of success for each prospect. The unrisked mean total presented in
the table is not representative of the expected total from the 4
prospects and assumes a success case in all reservoir intervals. 88
Energy and LKA have considered the chance of discovering oil over
gas to be 100% for all targets except for the Kuparuk Formation
which was assessed to be 70% . Chance of development has not been
estimated. Quantifying the chance of development (COD) requires
consideration of both economic contingencies and other
contingencies, such as legal, regulatory, market access, political,
social license, internal and external approvals and commitment to
project finance and development timing. As many of these factors
are outside the knowledge of LKA they must be used with
caution.
Government Royalty and Overriding Royalty Interests - The
Project Icewine East leases ("Leases") are situated in the State
Lands of the North Slope of Alaska and are administered by the
Alaskan Department of Natural Resources - Oil and Gas Division
(DNR). All leases issued by DNR are subject to a royalty and 88E's
Leases are subject to a 12.5% government royalty. In addition, the
Leases are subject to an overriding royalty of 4.0% payable to
non-related parties of the Company. The net economic interest to
88E has therefore been calculated as 62.81% and the Net Entitlement
Prospective Resources have been adjusted to reflect this.
Competent Person Statement Information - In this report
information relating to hydrocarbon resource estimates have been
supplied by LKA, and the company has stated in the Report that it
has been prepared in accordance with the definitions and guidelines
set forth in the Petroleum Resources Management System, 2018,
approved by the Society of Petroleum Engineers and have been
prepared using probabilistic methods. Lee Keeling & Associates,
Inc., the independent resource reviewer named in this document, has
consented to the inclusion of information relevant to their review
in the form and context in which it appears. Dr Stephen Staley, who
is a Non-Executive Director of the Company, has more than 37 years'
experience in the petroleum industry, is a Fellow of the Geological
Society of London, and a qualified Geologist/Geophysicist who has
sufficient experience that is relevant to the style and nature of
the oil prospects under consideration and to the activities
discussed in this document. Dr Staley has reviewed the information
and supporting documentation referred to in this announcement and
considers the prospective resource estimates to be fairly
represented and consents to its release in the form and context in
which it appears. His academic qualifications and industry
memberships appear on the Company's website and both comply with
the criteria for "Competence" under clause 3.1 of the Valmin Code
2015. Terminology and standards adopted by the Society of Petroleum
Engineers "Petroleum Resources Management System" have been applied
in producing this document.
Forward looking statements - This document may include forward
looking statements. Forward looking statements include, are not
necessarily limited to, statements concerning 88E's planned
operation program and other statements that are not historic facts.
When used in this document, the words such as "could", "plan",
"estimate", "expect", "intend", "may", "potential", "should" and
similar expressions are forward looking statements. Although 88E
believes the expectations reflected in these are reasonable, such
statements involve risks and uncertainties, and no assurance can be
given that actual results will be consistent with these
forward-looking statements. The entity confirms that it is not
aware of any new information or data that materially affects the
information included in this announcement and that all material
assumptions and technical parameters underpinning this announcement
continue to apply and have not materially changed.
SCHEDULE 2
Definitions and Glossary of Key Terms:
SPE definition: Prospective Resource
Prospective resources are estimated volumes associated with
undiscovered accumulations. These represent quantities of petroleum
which are estimated, as of a given date, to be potentially
recoverable from oil and gas deposits identified on the basis of
indirect evidence but which have not yet been drilled. This class
represents a higher risk than contingent resources since the risk
of discovery is also added. For prospective resources to become
classified as contingent resources, hydrocarbons must be
discovered, the accumulations must be further evaluated and an
estimate of quantities that would be recoverable under appropriate
development project(s) prepared.
Glossary of Key Terms
1U Denotes the unrisked low estimate qualifying
as Prospective Resources.
2U Denotes the unrisked best estimate qualifying
as Prospective Resources
-------------------------------------------------
3U Denotes the unrisked high estimate qualifying
as Prospective Resources
-------------------------------------------------
BOE Barrels of oil equivalent
-------------------------------------------------
Bnbbl Billion barrels of oil
-------------------------------------------------
Chance Chance equals 1-risk. Generally synonymous
with likelihood.
-------------------------------------------------
Chance of Development The estimated probability that a known
accumulation, once discovered, will be
commercially developed.
-------------------------------------------------
Entitlement That portion of future production (and
thus resources) legally accruing to an
entity under the terms of the development
and production contract or license.
-------------------------------------------------
Mean The sum of a set of numerical values
divided by the number of values in the
set.
-------------------------------------------------
MMbbl Million barrels of oil
-------------------------------------------------
Prospect A project associated with a potential
accumulation that is sufficiently well
defined to represent a viable drilling
target.
-------------------------------------------------
Prospective Resources Those quantities of petroleum that are
estimated, as of a given date, to be
potentially recoverable from undiscovered
accumulations.
-------------------------------------------------
Reservoir A subsurface rock formation that contains
an individual and separate natural accumulation
of petroleum that is confined by impermeable
barriers, pressure systems, or fluid
regimes (conventional reservoirs), or
is confined by hydraulic fracture barriers
or fluid regimes (unconventional reservoirs).
-------------------------------------------------
Royalty A type of entitlement interest in a resource
that is free and clear of the costs and
expenses of development and production
to the royalty interest owner. A royalty
is commonly retained by a resources owner
(lessor/host) when granting rights to
a producer (lessee/contractor) to develop
and produce that resource. Depending
on the specific terms defining the royalty,
the payment obligation may be expressed
in monetary terms as a portion of the
proceeds of production or as a right
to take a portion of production in-kind.
The royalty terms may also provide the
option to switch between forms of payment
at discretion of the royalty owner
-------------------------------------------------
Working Interest An entity's equity interest in a project
before reduction for royalties or production
share owed to others under the applicable
fiscal terms.
-------------------------------------------------
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