TIDM88E
RNS Number : 2155P
88 Energy Limited
15 October 2021
QUARTERLY ACTIVITIES REPORT
For the quarter ended 30 September 2021
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or
the Company) provides the following report for the quarter ended 30
September 2021.
Highlights
Project Peregrine (100% WI)
-- Presence of oil exhibited in multiple stacked sequences of the Merlin-1 well.
-- Geochemical analysis demonstrates definitive evidence of
light oil, with an estimated API gravity between mid-30s to
low-40s.
-- Project Peregrine prospective resource estimates updated by independent consultant, ERCE.
-- Merlin-2 appraisal well planned for Q1 2022 with permitting and rig selection underway.
-- Three potential Merlin-2 locations selected to the east of
Merlin-1, where enhanced reservoir thickness and quality are
expected.
-- Merlin-2 targeting net mean aggregate prospective resource of 652 million barrels(1) .
Umiat Oil Field (100% WI)
-- Further studies, including Merlin-1 well analysis, have
identified additional upside at Umiat.
-- Approval from BLM to defer Umiat Year 2 Unit well commitment
by 24 months to 31 August 2023.
-- Deferral facilitates optimisation of full field development
plan, including evaluation of potential synergies with Project
Peregrine.
Project Icewine (75% WI)
-- Internal analysis of Pantheon Resources' nearby Talitha-A
well results continues; initial studies indicate potential for
extension onto Project Icewine acreage.
-- Reassessment of prospective resource potential across Project Icewine acreage is underway.
Yukon Leases (100% WI)
-- Discussions advanced with nearby lease owners seeking to
aggregate resources into a joint development of the area.
-- Planning for future potential exploration drilling is ongoing
- subject to farm-out and joint development negotiations.
Corporate
-- Board and management team strengthened.
-- Strong financial position - cash of A$36.1M and zero debt (as at 30 September 2021).
1. Mean unrisked resource - Net Entitlement to 88 Energy. Please
refer to cautionary statement on page 2.
Project Peregrine (100% WI)
Merlin-1 Exploration Well
The Merlin-1 well was spudded in March 2021, targeting 645
million barrels of net mean aggregate prospective resource. 88
Energy announced on 16 August 2021 that post well evaluation had
successfully demonstrated the presence of oil in multiple stacked
sequences in the Cretaceous Nanushuk Formation (N20 and N18
targets). An additional new, unmapped target, the N19 sand, also
returned a strong hydrocarbon signature following geochemical
analysis.
Wireline analysis and core data correlate to 41 feet of net log
pay across the three reservoir intervals. In addition, results of
the post well formation evaluation, including core and Reservoir
Description Tool (RDT(TM) ) data, determined the presence of
moveable hydrocarbons. Geochemical analysis of the cores has
determined the presence of a light oil with an estimated API
gravity between mid-30s to low-40s.
Given the up-dip location of the Merlin-1 well with respect to
the N20, N19 and N18 reservoirs, hydrocarbon shows and sand quality
at this location was consistent with pre-drill expectations. 88
Energy has identified appraisal drilling locations to the east of
the Merlin-1 well, closer to the shelf break, where enhanced
reservoir thickness and quality are expected.
Post well analysis also determined that a targeted Merlin-1 well
horizon, the N14, was not intersected and is believed to lie below
the total depth of the well. The N14 prospect remains a target of
interest and the Merlin-1 well may be re-entered to test this
prospective target as part of the Company's future drilling
activities at Project Peregrine.
Independent oil and gas reservoir evaluation consultancy, ERCE
Australia Pty Ltd (ERCE), conducted an updated assessment of the
Project Peregrine prospective resources. The updated prospective
resource estimates and risking assessments for Project Peregrine
are contained in the table below.
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.
1. Please refer to the ASX release dated 16 August 2021 for full
details with respect to the Prospective Resource estimate,
associated risking and applicable Cautionary Statement.
Merlin-2 Appraisal Well
The Merlin-2 appraisal well is planned for Q1 2022, targeting a
net mean aggregate prospective resource of 652(1) million barrels
in the N20, N19 and N18 horizons. Permitting and rig selection for
Merlin-2 is currently underway. The Company recently completed a
capital raise for the Merlin-2 well, however, may also consider a
farm-out to a strategic partner if terms are suitably
attractive.
In July 2021, 88 Energy completed the acquisition of the
residual 50% working interest in Project Peregrine from APDC,
moving to its current 100% working interest.
1. Mean unrisked resource - Net Entitlement to 88 Energy. Please
refer to cautionary statement on page 2.
Umiat Oil Field (100% WI)
During Q1 2021, 88 Energy acquired the Umiat Oil Field. As part
of the acquisition, the Company received the Umiat data pack which
includes Umiat 3D seismic data. The Umiat 3D survey abuts the
southern edge of the Project Peregrine lease blocks. Integrating
the Linc/Malamute seismic interpretation has provided a better
understanding of the Peregrine reservoir geometries to the north as
well as enriching our petrophysical database with additional well
control (Umiat-8 and Umiat-23H).
The Merlin-1 well at Project Peregrine penetrated a thick
section of Grandstand sands (Umiat reservoir unit). Wireline data
collected over this interval is being analysed and integrated with
the Umiat dataset. Preliminary pressure analysis suggests there is
potential for bypassed pay in the footwall of the Umiat
structure.
The Umiat footwall has only been penetrated by one well
(Umiat-11), which was drilled in 1952 with a crude logging and
testing program. Seismic attribute analysis suggests there is
potential for additional reservoir sands in the footwall of the
Umiat structure.
Project Icewine (75% WI)
88 Energy has been closely monitoring activity proximate to the
northern border of its Project Icewine acreage, where the Kuparuk
has been reported from the Talitha-A well drilled earlier this year
by Pantheon Resources (see AIM:PANR release dated 19 April
2021).
Additional insight into the wettability of the Kuparuk formation
have also been highlighted from the results of the Talitha-A
program, which may have positive implications for the same
formation in88 Energy's Icewine acreage.
All three wells drilled by 88 Energy at Project Icewine have
encountered good quality reservoir in the Kuparuk formation, with
indications of hydrocarbons. These had previously been interpreted
as likely gas condensate or residual oil, and no mapped targets had
been identified as this was not a play that 88 Energy had been
pursuing.
The results at Talitha-A are highly encouraging regionally for
the Kuparuk, including across Project Icewine. Given the results
from the Talitha-A well, 88 Energy's internal geoscience team is
reassessing the potential across the acreage.
Yukon Leases (100% WI)
The Yukon Leases contain the 86 million barrel(1) Cascade
Prospect, which was intersected peripherally by Yukon Gold-1 and
classified as an historic oil discovery.
In 2018, 88 Energy acquired 3D seismic over Cascade and, post
analysis, high-graded it from a lead to a drillable prospect. The
Yukon Leases are located adjacent to ANWR and in proximity to
recently commissioned infrastructure at Point Thompson.
Discussions advanced with nearby lease owners during the quarter
with respect to a joint development area. Future exploration
drilling planning is ongoing and remains subject to farm-out and
other discussions.
1 Refer to 88 Energy release dated 7th November 2018. Note cautionary statement on page 2.
Corporate
On 2 August 2021, Mr Michael Evans retired from the 88 Energy
Board and Mr Philip Byrne was appointed as Non-Executive Chairman.
Ms Joanne Kendrick was also appointed as a Non-Executive
Director.
Mr Robert Benkovic joined 88 Energy in the role of Chief
Operating Officer (COO) during the quarter.
On 2 September 2021, 88 Energy announced that it has
successfully completed a bookbuild to domestic and international
institutional and sophisticated investors to raise A$23.96 million
(before costs) through the issuance of 855,856,369 shares at a
price of A$0.028 per share, all of which were issued under the
Company's 15% Placement Capacity under ASX Listing Rule 7.1.
Funds raised under the placement, together with the Company's
existing cash reserves, are to be used to fund the planned Merlin-2
appraisal well, broader acreage lease payments and working capital,
and to enable identification and execution of potential new project
opportunities.
Finance
The ASX Appendix 5B attached to this quarterly report contains
the Company's cash flow statement for the quarter. The significant
cash flows for the period were:
-- Exploration and evaluation expenditure totalled A$4.9M gross
(June 2021 quarter: A$11.7M), primarily associated with expenditure
on Project Peregrine Merlin-1 well drilling and post well
testing;
-- Lease rental payments totalled A$2.4M;
-- Cash call proceeds received from Joint Venture partners
totalled A$6.7M (June 2021 quarter A$5.9M); and
-- Administration and other operating costs, net of government
payments, totalled A$0.48M and staff costs totalled A$0.26M. Note,
this included fees paid to Directors in the quarter of $164,456 and
Director consulting fees of $12,955.
At quarter end, the Company had cash reserves of A$36.1M and no
debt.
ESG
On 30 June 2021, 88 Energy announced the adoption of the
Environmental, Social and Governance (ESG) framework developed by
the World Economic Forum (WEF). 88 Energy is committed to building
its ESG credentials and making ESG disclosures against the WEF
stakeholder capitalism framework. These disclosures can be found in
the ESG section of 88 Energy's website
https://www.88energy.com/88-energy-esg-reporting/ .
Since implementing the ESG framework, 88 Energy has made the
following progress:
-- Renewal of 88 Energy's Board with Mr Philip Byrne joining 88
Energy as non-executive Chairman and Ms Joanne Kendrick joining 88
Energy as non-executive director. The addition of both Mr Byrne and
Ms Kendrick brings significant international oil and gas
experience, with a broad range of skillsets, to the Board.
-- Gender diversity in the workforce; the 88 Energy gender mix
has improved from 91% Male / 9% Female in 2020 to 64% Male / 36%
Female as at the end of Q3 2021.
-- Integration of a detailed sustainability framework and
reporting into exploration and corporate activities.
Table 2: Information required by ASX Listing Rule 5.4.3
Project Name Location Area (acres) Interest beginning Interest
Quarter at end
of Quarter
------------------- ------------
Project Icewine Onshore, North Slope Alaska 193,000 75% 75%
------------------- ----------------------------- ------------- ------------------- ------------
Yukon Leases Onshore, North Slope Alaska 15,235 100% 100%
------------------- ----------------------------- ------------- ------------------- ------------
Onshore, North Slope Alaska
Umiat Unit (NPR-A) 17,633 100% 100%
------------------- ----------------------------- ------------- ------------------- ------------
Onshore, North Slope Alaska
Project Peregrine (NPR-A) 195,373 100% 100%
------------------- ----------------------------- ------------- ------------------- ------------
Pursuant to the requirements of the ASX Listing Rules Chapter 5
and the AIM Rules for Companies, the technical information and
resource reporting contained in this announcement was prepared by,
or under the supervision of, Dr Stephen Staley, who is a
Non-Executive Director of the Company. Dr Staley has more than 35
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.
This announcement has been authorised by the Board.
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 Media Relations Tel: +61 410 276 744
Andrew Edge / Michael Vaughan Tel: +61 422 602 720
EurozHartleys Ltd
Dale Bryan Tel: + 61 8 9268 2829
Cenkos Securities Tel: + 44 131 220 6939
Neil McDonald / Derrick Lee
**All figures referred to in this announcement, descriptions of
which are listed below, can be viewed in the pdf version of this
announcement, available on the Company's website www.88energy.com
;
Table 1: Project Peregrine Prospective Resource Estimate (August
2021)
Table 2: Information required by ASX Listing Rule 5.4.3
Figure 1: Project Peregrine long section showing expected
enhanced reservoir thickness to the east
Figure 2: Umiat 3D modelling
Figure 3: Shelf Margin Deltaic Extension into Project
Icewine
1. Appendix 5B
1.1 Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
1.2 Name of entity
---------------------------------------------------
88 Energy Limited
1.3 ABN 1.4 1.5 Quarter ended ("current
quarter")
--------------- ----------------------------
80 072 964 179 30 September 2021
----------------------------
1.6 Consolidated statement of Current quarter Year to date
cash flows (9 months)
$A'000 $A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation - -
(b) development - -
(c) production - -
(d) staff costs (266) (1,276)
(e) administration and corporate
costs (487) (1,841)
1.3 Dividends received (see note - -
3)
1.4 Interest received - -
Interest and other costs of
1.5 finance paid - (1,053)
1.6 Income taxes paid - -
1.7 Government grants and tax - -
incentives
1.8 Other (XCD - redundancy payments) - -
---------------- -------------
Net cash from / (used in)
1.9 operating activities (753) (4,170)
----------------- ----------------------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire or for:
(a) entities - -
(b) tenements (2,499) (6,702)
(c) property, plant and equipment - -
(d) exploration & evaluation (4,911) (31,927)
(e) investments - -
(f) other non-current assets - -
2.2 Proceeds from the disposal
of:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) investments - -
(e) other non-current assets - -
2.3 Cash flows from loans to other - -
entities
2.4 Dividends received (see note - -
3)
2.5 Other - Joint Venture Contributions 6,728 20,404
* Proceeds from sale tax credits - 3,324
- (387)
* Bonds
---------------- -------------
Net cash from / (used in)
2.6 investing activities (682) (15,288)
----------------- ----------------------------------------------- ---------------- -------------
3. Cash flows from financing
activities
Proceeds from issues of equity
securities (excluding convertible
3.1 debt securities) 23,964 42,521
3.2 Proceeds from issue of convertible - -
debt securities
3.3 Proceeds from exercise of - -
options
Transaction costs related
to issues of equity securities
3.4 or convertible debt securities (1,639) (2,523)
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related - -
to loans and borrowings
3.8 Dividends paid - -
3.9 Other (provide details if - -
material)
---------------- -------------
Net cash from / (used in)
3.10 financing activities 22,325 39,998
----------------- ----------------------------------------------- ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 14,762 14,847
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (753) (4,170)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (682) (15,288)
Net cash from / (used in)
financing activities (item
4.4 3.10 above) 22,325 39,998
Effect of movement in exchange
4.5 rates on cash held 431 695
---------------- -------------
Cash and cash equivalents
4.6 at end of period 36,083 36,083
----------------- ----------------------------------------------- ---------------- -------------
5. 1.7 Reconciliation of cash Current quarter Previous quarter
and cash equivalents $A'000 $A'000
at the end of the quarter
(as shown in the consolidated
statement of cash flows) to
the related items in the accounts
5.1 Bank balances 36,083 14,762
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---------------- -----------------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 36,083 14,762
----------------- ----------------------------------- ---------------- -----------------
(a)
6. 1.8 Payments to related parties of the entity Current quarter
and their associates $A'000
Aggregate amount of payments to related
parties and their associates included in
6.1 item 1 177
----------------
6.2 Aggregate amount of payments to related -
parties and their associates included in
item 2
----------------
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly
activity report must include a description of, and an explanation
for, such payments.
6.1 Payments relate to Director and consulting fees paid to
Directors. All transactions involving directors and associates were
on normal commercial terms.
7. 1.9 Financing facilities Total facility Amount drawn
Note: the term "facility' amount at quarter at quarter end
includes all forms of financing end $US'000
arrangements available to $US'000
the entity. 1.10 Add notes
as necessary for an understanding
of the sources of finance
available to the entity.
7.1 Loan facilities - -
------------------- ----------------
7.2 Credit standby arrangements - -
------------------- ----------------
7.3 Other (please specify) - -
------------------- ----------------
7.4 Total financing facilities - -
------------------- ----------------
7.5 Unused financing facilities available at -
quarter end
----------------
7.6 Include in the box below a description of each facility
above, including the lender, interest rate, maturity date
and whether it is secured or unsecured. If any additional
financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing
details of those facilities as well.
----------------- --------------------------------------------------------------------------
8. 1.11 Estimated cash available for future $A'000
operating activities
Net cash from / (used in) operating activities
8.1 (item 1.9) (753)
8.2 (Payments for exploration & evaluation classified (4,911)
as investing activities) (item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item (5,664)
8.2)
8.4 Cash and cash equivalents at quarter end 36,083
(item 4.6)
8.5 Unused finance facilities available at quarter -
end (item 7.5)
--------
8.6 Total available funding (item 8.4 + item 36,083
8.5)
--------
Estimated quarters of funding available
8.7 (item 8.6 divided by item 8.3) 6.4
--------
Note: if the entity has reported positive relevant outgoings
(ie a net cash inflow) in item 8.3, answer item 8.7 as
"N/A". Otherwise, a figure for the estimated quarters
of funding available must be included in item 8.7.
8.8 If item 8.7 is less than 2 quarters, please provide answers
to the following questions:
8.8.1 Does the entity expect that it will continue to
have the current level of net operating cash flows for
the time being and, if not, why not?
-------------------------------------------------------------------
Answer: n/a
-------------------------------------------------------------------
8.8.2 Has the entity taken any steps, or does it propose
to take any steps, to raise further cash to fund its operations
and, if so, what are those steps and how likely does it
believe that they will be successful?
-------------------------------------------------------------------
Answer: n/a
-------------------------------------------------------------------
8.8.3 Does the entity expect to be able to continue its
operations and to meet its business objectives and, if
so, on what basis?
-------------------------------------------------------------------
Answer: n/a
-------------------------------------------------------------------
Note: where item 8.7 is less than 2 quarters, all of questions
8.8.1, 8.8.2 and 8.8.3 above must be answered.
----------------- -------------------------------------------------------------------
1.12 Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Date: 15 October 2021
Authorised by: By the Board
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the accompanying activity
report provide a basis for informing the market about the entity's
activities for the past quarter, how they have been financed and
the effect this has had on its cash position. An entity that wishes
to disclose additional information over and above the minimum
required under the Listing Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in
accordance with Australian Accounting Standards, the definitions
in, and provisions of, AASB 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to
this report. If this quarterly cash flow report has been prepared
in accordance with other accounting standards agreed by ASX
pursuant to Listing Rule 19.11A, the corresponding equivalent
standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
4. If this report has been authorised for release to the market
by your board of directors, you can insert here: "By the board". If
it has been authorised for release to the market by a committee of
your board of directors, you can insert here: "By the [name of
board committee - eg Audit and Risk Committee]". If it has been
authorised for release to the market by a disclosure committee, you
can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the market
by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance
Council's Corporate Governance Principles and Recommendations, the
board should have received a declaration from its CEO and CFO that,
in their opinion, the financial records of the entity have been
properly maintained, that this report complies with the appropriate
accounting standards and gives a true and fair view of the cash
flows of the entity, and that their opinion has been formed on the
basis of a sound system of risk management and internal control
which is operating effectively.
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