TIDM88E
RNS Number : 5515Q
88 Energy Limited
22 October 2019
22(nd) October 2019
88 Energy Limited
Quarterly Report
Report on Activities for the Quarter ended 30 September 2019
The Directors of 88 Energy Limited ("88 Energy" or the
"Company", ASX & AIM:88E) provide the following report for the
quarter ended 30 September 2019.
Highlights
Project Icewine
-- Project Icewine Conventional farm-out executed in the quarter
with Premier Oil Plc ("Premier");
o Under the terms of the Sale and Purchase Agreement ("SPA"),
Premier will farm-in for a 60% interest in Area A and will pay the
full costs of an appraisal well, designated as Charlie-1, (up to a
total of US$23 million) to test the reservoir deliverability of the
Malguk-1 discovery;
o 88 Energy will retain a 30% working interest in Area A with
the remaining 10% working interest held by Burgundy Xploration LLC
("Burgundy");
o Premier has an option to earn 50% working interest in Area B
or C by spending US$15m, if the Charlie-1 (Malguk-1 appraisal) well
in Area A is successful;
o 88 Energy to operate the Charlie-1 (Malguk-1 appraisal) well
via its wholly owned Alaskan subsidiary, Accumulate Energy Alaska
Inc, with the well to be drilled and tested in Q1 2020 using the
already secured Nordic-Callista Rig-3 and with permitting work on
track.
-- Project Icewine Unconventional;
o Charlie-1 well designed to penetrate HRZ and gather additional data;
o Application of FIB-SEM planned on regional well cuttings to firm up prospective fairway;
o Icewine-2 well formally plugged and abandoned in the quarter;
o Soft farm-out underway with continued third party interest.
Yukon Acreage
-- Discussions continue with nearby resource owners to optimise
the monetisation strategy of the acreage;
-- Yukon lease bid on by the Company in the Dec'18 State of
Alaska Licensing Round was formally awarded and taken up.
Western Blocks
-- Additional regional 3D purchased during the quarter, with
reprocessing/reinterpretation of legacy 3D seismic planned to
assess further prospectivity in acreage.
Corporate
-- Successfully completion of a capital raise of A$6.75 million (before costs).
Project Icewine
-- Project Icewine Conventional
88 Energy signed a SPA with Premier in the quarter, whereby
Premier will farm-in for a 60% interest in Area A (also referred to
as the Western Play Fairway) of the conventional Project Icewine
acreage in the proven Alaska North Slope basin (see Fig. 1).
88 Energy will retain a 30% working interest in Area A with the
remaining 10% working interest held by Burgundy Xploration LLC
("Burgundy").
Under the terms of the SPA, Premier will pay the full costs of
an appraisal well, designated as Charlie-1, (up to a total of US$23
million) to test the reservoir deliverability of the Malguk-1
discovery. The well will be drilled and tested in Q1 2020 with
Nordic Rig #3 secured in the quarter. On successful completion of
the work programme, Premier will have the option to assume
operatorship.
About the Charlie-1 Appraisal Well
The Charlie-1 appraisal well has been designed as a step out
appraisal of a well drilled in 1991 by BP Exploration (Alaska) Inc
called Malguk-1. Malguk-1 encountered oil shows with elevated
resistivity and mud gas readings over multiple horizons during
drilling but was not tested due to complications towards the end of
operations, which resulted in lack of time before the close of the
winter drilling season. It was also drilled using vintage 2D
seismic, which was insufficient to adequately determine the extent
of any of the prospective targets encountered.
88 Energy subsequently undertook revised petrophysical analysis,
which identified what is interpreted as bypassed pay in the
Malguk-1 well. 88E also completed acquisition of modern 3D seismic
in 2018, in order to determine the extent of the discovered oil
accumulations. Charlie-1 will intersect seven stacked prospects,
four of which are interpreted as oil bearing in Malguk--1 and are
therefore considered appraisal targets. 88 Energy will operate
Charlie-1, via its 100% owned subsidiary Accumulate Energy Alaska,
Inc, with cost of the well to be funded by Premier up to US$23m
under a recent farm-out agreement. Drilling is scheduled to
commence in February 2020 with flow testing anticipated to conclude
in April 2020. The total Gross Mean Prospective Resource across the
seven stacked targets to be intersected by Charlie-1 is 1.6 billion
barrels of oil (480 million barrels net to 88E). Refer announcement
dated 23(rd) August.
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.
Additional Details
-- Premier has an option to earn a 50% working interest in Area
B or C by spending US$15m, if the Charlie-1 (Malguk-1 appraisal)
well in Area A is successful;
-- 88 Energy to operate the Charlie-1 (Malguk-1 appraisal) well
via its wholly owned Alaskan subsidiary, Accumulate Energy Alaska
Inc;
-- Standard completion documents have been agreed and are in the
process of execution, including the Joint Operating Agreement and
assignment forms;
During the quarter the Nordic-Callista Rig-3 was secured for the
upcoming drilling of the Charlie-1 appraisal well. Rig-3 was used
for the drilling of the Winx-1 well in March 2019 and 88 Energy was
extremely pleased with its safe and efficient performance
throughout the course of operations.
Significant progress has also been made on permitting, with only
two key permits now outstanding; the Plan of Operations and Permit
to Drill, which are both in the process of being finalised and
approved. Additionally, tendering and finalisation of contracts for
equipment and services required for Charlie-1 are advancing as
planned.
The conditions precedent related to the recent farm-out with
Premier are being completed according to schedule, with all
conditions expected to be met prior to the end of November
2019.
-- Project Icewine Unconventional
The forward program consists of accessing material from regional
wells in order to conduct additional FIB-SEM analysis to confirm
improved effective porosity and connectivity. In addition, the
Charlie-1 well is designed to penetrate HRZ and gather additional
data which will complement the ongoing additional analysis being
conducted.
During the quarter the Icewine-2 well was formally plugged and
abandoned.
The Joint Venture continues to field unsolicited third party
interest in the HRZ shale play and an informal farm-out process is
underway.
Yukon Leases
Discussions ongoing with nearby lease owners to optimise the
monetisation strategy for existing discovered resources located in
the vicinity of the Yukon Leases. The Yukon Leases contain the 86
million barrel Cascade Prospect(#) , which was intersected
peripherally by Yukon Gold-1, drilled in 1994, and classified as an
historic oil discovery. 88 Energy recently acquired 3D seismic
(2018) over Cascade and, on final processing and interpretation,
high-graded it from a lead to a drillable prospect. The Yukon
Leases are located adjacent to ANWR and in close proximity to
recently commissioned infrastructure.
88 Energy, via its subsidiary Regenerate Alaska, Inc, has been
formally awarded acreage it successfully bid on in the State of
Alaska North Slope Licensing round December 2018. Lease documents
have been executed and the balance of funds have been transferred
to the State of Alaska Department of Natural Resources.
(#) Refer announcement 7th November 2018
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.
Western Blocks
Additional regional 3D purchased during the quarter that will
aid in the evaluation process for the Western Blocks. The forward
program will be to continue to assess this data and potentially
reprocess and reinterpret the 3D seismic. It is anticipated that
the evaluation work will be completed towards the end of
CY2019.
Placement to Raise A$6.75 million
On the 12(th) September, the Company announced that it had
successfully completed a capital raise of A$6.75 million (before
costs), with the placement made to domestic and international
institutional and sophisticated investors through the issue of 540
million ordinary shares at A$0.0125 (equivalent to GBP0.007) per
New Ordinary Share.
Funds raised pursuant to the Placement, together with the
Company's existing cash reserves, will be used to fund the ongoing
evaluation of the conventional and unconventional prospectivity of
the Company's existing assets, including any potential costs in
respect of the Charlie-1 well, which is due to be drilled in Q1
CY2020, and to enable it to identify and exploit new opportunities
on the North Slope of Alaska.
Corporate
The ASX Appendix 5B attached to this report contains the
Company's cash flow statement for the quarter. The significant cash
flows for the period were:
-- A$6.75m (before costs) was received in the quarter from the capital raise;
-- Exploration and evaluation expenditure totalled A$3.8m
(gross), primarily associated with lease rentals;
-- Payments in relation to the debt facility interest totalled A$0.6m (US$0.4m); and
-- Administration and other operating costs A$1.1m (Jun'19 Quarter A$0.8m).
At the end of the quarter, the Company had cash reserves of
A$10.1m, including cash balances held in Joint Venture bank
accounts relating to Joint Venture Partner contributions totalling
A$1.2m.
Information required by ASX Listing Rule 5.4.3:
Interest at Interest
beginning at end of
Project Name Location Area (acres) of Quarter Quarter
------------ -----------
Onshore, North Slope
Project Icewine Alaska 482,000 66% 66%(1)
Onshore, North Slope
Yukon Gold Alaska 15,235 100% 100%
Onshore, North Slope
Western Blocks Alaska 22,711 36% 36%
(1) Assignment of interest to Premier in Project Icewine Area A
not completed at quarter end.
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.
Media and Investor Relations:
88 Energy Ltd
Dave Wall, Managing Director Tel: +61 8 9485 0990
Email: admin@88energy.com
Finlay Thomson, Investor Relations Tel: +44 7976 248471
Hartleys Ltd
Dale Bryan Tel: + 61 8 9268 2829
Cenkos Securities
Neil McDonald/Derrick Lee Tel: +44 131 220 6939
This announcement contains inside information.
A pdf copy of this Quarterly Report, including the following
figures and graphics, is available at
http://www.rns-pdf.londonstockexchange.com/rns/5515Q_1-2019-10-21.pdf
-- Graphic showing demarcated Project Icewine Acreage with Charlie-1 Location
-- Graphic showing Charlie-1: Seven Stacked Horizons
-- Table showing Prospective Oil Resources attributable to the Charlie-1 Insersected Horizons
Appendix 5B
Mining exploration entity and oil and gas exploration entity
quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97,
01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity
-----------------------------------------------------
88 Energy Limited
ABN Quarter ended ("current quarter")
--------------- ----------------------------------
80 072 964 179 30 September 2019
----------------------------------
Consolidated statement of cash Current quarter Year to date (9
flows $A'000 months)
$A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (3,822) (26,668)
(b) development - -
(c) production - -
(d) staff costs (560) (1,245)
(e) administration and corporate
costs (606) (1,291)
1.3 Dividends received (see note - -
3)
1.4 Interest received 3 22
Interest and other costs of
1.5 finance paid (602) (1,800)
1.6 Income taxes paid - -
1.7 Research and development refunds - -
1.8 Other (JV Partner Contributions) 2,873 11,473
---------------- ----------------
Net cash from / (used in)
1.9 operating activities (2,714) (19,509)
----- ------------------------------------- ---------------- ----------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant and equipment - -
(b) tenements (see item 10) (52) (52)
(c) investments - -
(d) other non-current assets - -
2.2 Proceeds from the disposal
of:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.3 Cash flows from loans to - -
other entities
2.4 Dividends received (see note - -
3)
Other: a) Bond - State of
2.5 Alaska - 4,251
b) JV Partner Contribution
- Bond - (2,549)
---------------- ----------------
Net cash from / (used in)
2.6 investing activities (52) 1,649
------- ----------------------------------- ---------------- ----------------
3. Cash flows from financing
activities
3.1 Proceeds from issues of shares (6,530) (6,530)
3.2 Proceeds from issue of convertible - -
notes
3.3 Proceeds from exercise of - -
share options
Transaction costs related
to issues of shares, convertible
3.4 notes or options (438) (438)
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 (Fees for debt refinancing) - -
---------------- ----------------
Net cash from / (used in)
3.10 financing activities 6,092 6,092
------- ----------------------------------- ---------------- ----------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 19,596 21,723
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (14,691) (19,509)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) 1,702 1,649
Net cash from / (used in)
financing activities (item
4.4 3.10 above) - 6,092
Effect of movement in exchange
4.5 rates on cash held 146 189
---------------- ----------------
Cash and cash equivalents
4.6 at end of period 10,144 10,144
------- ----------------------------------- ---------------- ----------------
5. Reconciliation of cash and Current quarter Previous quarter
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 10,144 6,674
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) 10,144 6,674
---- ----------------------------------- ---------------- -----------------
6. Payments to directors of the entity and Current quarter
their associates $A'000
Aggregate amount of payments to these parties
6.1 included in item 1.2 285
------------------
6.2 Aggregate amount of cash flow from loans -
to these parties included in item 2.3
------------------
6.3 Include below any explanation necessary to understand the transactions
included in items 6.1 and 6.2
------ --------------------------------------------------------------------------
6.1 Payments relate to Director and consulting fees paid to Directors.
All transactions involving directors and associates were on normal
commercial terms.
7. Payments to related entities of the entity Current quarter
and their associates $A'000
Aggregate amount of payments to these parties
7.1 included in item 1.2 13
-----------------
7.2 Aggregate amount of cash flow from loans -
to these parties included in item 2.3
-----------------
7.3 Include below any explanation necessary to understand the transactions
included in items 7.1 and 7.2
------ --------------------------------------------------------------------------
7.1 Payments relate to consulting fees paid to Director related
entities. Consultant fees paid to associated entities were on normal
commercial terms.
8. Financing facilities available Total facility Amount drawn at quarter
Add notes as necessary for amount at quarter end
an understanding of the position end $US'000
$US'000
8.1 Loan facilities 15,764 15,764
------------------- ------------------------
8.2 Credit standby arrangements - -
------------------- ------------------------
8.3 Other (please specify) - -
------------------- ------------------------
8.4 Include below a description of each facility above, including
the lender, interest rate and whether it is secured or unsecured.
If any additional facilities have been entered into or are
proposed to be entered into after quarter end, include details
of those facilities as well.
---- ---------------------------------------------------------------------------------
* On the 23rd of March 2018, 88 Energy Lt's 100%
controlled subsidiary Accumulate Energy Alaska Inc
entered into a US$ 16.5 million debt refinancing
agreement to replace the existing Bank of America
debt facility. The key terms to the facility are
noted in the ASX announcement released on 26th of
March 2018. The facility is secured by available
Production Tax Credits.
9. Estimated cash outflows for next $A'000
quarter
9.1 Exploration and evaluation* (365)
9.2 Development -
9.3 Production -
9.4 Staff costs (350)
9.5 Administration and corporate costs (300)
9.6 Other (provide details if material)** (600)
--------
9.7 Total estimated cash outflows (1,615)
---- -------------------------------------- --------
* Includes amounts relating to lease rentals, G&A, G&G,
which are net of anticipated JV partner contributions.
** Includes amounts relating to costs associated with the Brevet
debt interest costs.
10. Changes in tenements Tenement reference Nature of Interest at Interest at
(items 2.1(b) and location interest beginning end of quarter
and 2.2(b) above) of quarter
10.1 Interests in N/A Yukon leases 482,000 483,000
mining tenements acquired totalling Gross Gross
and petroleum 1041 acres acres acres
tenements lapsed,
relinquished
or reduced
----- --------------------- ------------------- -------------------- ------------ ----------------
10.2 Interests in N/A
mining tenements
and petroleum
tenements acquired
or increased
----- --------------------- ------------------- -------------------- ------------ ----------------
(1) 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.
Sign here: ............................................................ Date: .............................................
(Company Secretary)
Print name: Ashley Gilbert
Notes
1. The quarterly report provides a basis for informing the
market how the entity's activities have been financed for the past
quarter and the effect on its cash position. An entity that wishes
to disclose additional information is encouraged to do so, in a
note or notes included in or attached to this report.
2. If this quarterly 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 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.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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