88 Energy Limited Quarterly Report

Data : 20/01/2020 @ 08:00
Fonte : UK Regulatory (RNS & others)
Titolo : 88 Energy Limited (88E)
Quotazione : 1.1  0.0 (0.00%) @ 01:00
Quotazione 88 Energy Grafico

88 Energy Limited Quarterly Report

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2 Mesi : Da Dic 2019 a Feb 2020

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TIDM88E

RNS Number : 2152A

88 Energy Limited

20 January 2020

20 January 2020

88 Energy Limited

QUARTERLY REPORT

Report on Activities for the Quarter ended 31 December 2019

The Directors of 88 Energy Limited ("88 Energy" or the "Company", ASX & AIM:88E) provide the following report for the quarter ended 31 December 2019.

Highlights

Project Icewine

-- Farm-out with Premier Oil Plc ("Premier") finalised and completion documents executed in the quarter;

-- The Alaska Department of Natural Resources approved the Plan of Operations for the Charlie-1 appraisal well in November 2019;

   --    Permit to Drill submitted - approval expected in January 2020; and 

-- All other contracting and logistical work is proceeding as planned ahead of the scheduled February 2020 spud date.

Yukon Acreage

-- Discussions continue with nearby resource owners to optimise the monetisation strategy of the acreage; and

   --    Permitting underway ahead of potential drilling in 2021 - subject to farm-out. 

Western Blocks

   --    Assessment of strategy for future of leases underway. 

Project Icewine

   --   Project Icewine Conventional 

Farm-out Update

All conditions precedent to the farm-out agreement between 88 Energy, Premier and Burgundy Xploration, signed in August 2019, have been satisfied. Consequently, execution of the final agreements took place on 26(th) November 2019.

Operations Update

88 Energy, via its 100% owned subsidiary Accumulate Energy Alaska, Inc ("Accumulate"), executed a rig contract with Nordic-Callista Services just prior to the beginning of the quarter, to utilise Rig-3 for the upcoming drilling of the Charlie-1 appraisal well. 88 Energy utilised Rig-3 for the drilling of the Winx-1 well in March 2019 and was extremely pleased with its safe and efficient performance throughout the course of operations.

The Alaska Department of Natural Resources approved the Plan of Operations for the Charlie-1 appraisal well on 22(nd) November. The Plan of Operations is one of the key major permits required for drilling.

The Permit to Drill was submitted prior to the end of 2019, as planned, and approval is expected towards the end of January. This is the last major permit required prior to spud of the Charlie-1 well.

As per the farm-out agreement, initial cash call was receipted into the Joint Venture account in December 2019.

All other contracting and logistical work is proceeding as planned ahead of the scheduled February 2020 spud date.

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 Oil Plc up to US$23m under the 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.

   --   Project Icewine Unconventional 

Assessment of material from regional wells ongoing in order to conduct additional FIB-SEM analysis to confirm improved effective porosity and connectivity.

Additional analysis to be complimented by results from the Charlie-1 well, with the well designed to penetrate HRZ and gather additional data which will complement the ongoing additional analysis being conducted.

The Joint Venture plans to conduct a formal farm-out process to fund further appraisal.

Yukon Leases

Discussions are 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.

Permitting underway ahead of possible drilling in 2021 - subject to farm-out.

(*) 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

Assessment of strategy for future of leases underway, ahead of lease expiry in May 2021.

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:

-- Exploration and evaluation expenditure totalled A$4.0m (gross), primarily associated with lease rentals and expenditure associated with the upcoming Charlie-1 appraisal well;

   --    Cash call proceeds received from Joint Venture partners totalled $12.4m; 
   --    Payments in relation to the debt facility interest totalled A$0.6m (US$0.4m); and 
   --    Administration and other operating costs A$0.9m (Sept'19 Quarter A$1.1m). 

At the end of the quarter, the Company had cash reserves of A$15.9m, including cash balances held in Joint Venture bank accounts relating to Joint Venture Partner contributions totalling A$10.7m.

Information required by ASX Listing Rule 5.4.3:

 
 Project Name       Location                Area (acres) 
                                                          --------------  ---------------- 
                                                           Interest at 
                                                            beginning of   Interest at 
                                                            Quarter         end of Quarter 
-----------------  ----------------------  -------------  --------------  ---------------- 
                    Onshore, North Slope 
 Project Icewine     Alaska                 482,000       64%             64%(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 completed in Q4 2019.

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/2152A_1-2020-1-17.pdf

   --    Graph Showing Charlie-1: Seven Stacked Horizons 
   --    Table Showing Charlie-1 Targets 

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     31 December 2019 
                   ---------------------------------- 
 
 
 Consolidated statement of cash                Current quarter   Year to date 
  flows                                             $A'000        (12 months) 
                                                                     $A'000 
 1.     Cash flows from operating 
         activities 
 1.1    Receipts from customers                              -              - 
 1.2    Payments for 
        (a) exploration & evaluation                   (4,043)       (30,711) 
        (b) development                                      -              - 
        (c) production                                       -              - 
        (d) staff costs                                  (465)        (1,710) 
        (e) administration and corporate 
         costs                                           (466)        (1,757) 
 1.3    Dividends received (see note                         -              - 
         3) 
 1.4    Interest received                                    1             23 
        Interest and other costs of 
 1.5     finance paid                                    (595)        (2,396) 
 1.6    Income taxes paid                                    -              - 
 1.7    Research and development refunds                     -              - 
 1.8    Other (JV Partner Contributions)                12,387         23,860 
                                              ----------------  ------------- 
        Net cash from / (used in) 
 1.9     operating activities                            6,819       (12,691) 
-----  -------------------------------------  ----------------  ------------- 
 
 2.       Cash flows from investing 
           activities 
 2.1      Payments to acquire: 
          (a) property, plant and equipment                  -              - 
          (b) tenements (see item 10)                        -           (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 Returned - 
 2.5       State of Alaska                                   -          4,251 
            b) JV Partner Contribution 
            - Bond                                           -        (2,549) 
            c) Bond Paid - State of 
            Alaska                                       (659)          (659) 
                                              ----------------  ------------- 
          Net cash from / (used in) 
 2.6       investing activities                          (659)            991 
-------  -----------------------------------  ----------------  ------------- 
 
 3.       Cash flows from financing 
           activities 
 3.1      Proceeds from issues of shares                     -          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                               (23)          (461) 
 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                           (23)          6,069 
-------  -----------------------------------  ----------------  ------------- 
 
 4.       Net increase / (decrease) 
           in cash and cash equivalents 
           for the period 
          Cash and cash equivalents 
 4.1       at beginning of period                       10,144         21,723 
          Net cash from / (used in) 
           operating activities (item 
 4.2       1.9 above)                                    6,819       (12,691) 
          Net cash from / (used in) 
           investing activities (item 
 4.3       2.6 above)                                    (659)            991 
          Net cash from / (used in) 
           financing activities (item 
 4.4       3.10 above)                                    (23)          6,069 
          Effect of movement in exchange 
 4.5       rates on cash held                            (378)          (189) 
                                              ----------------  ------------- 
          Cash and cash equivalents 
 4.6       at end of period                             15,903         15,903 
-------  -----------------------------------  ----------------  ------------- 
 
 
 
 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                                 15,903             10,144 
 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)                        15,903             10,144 
----  -----------------------------------  ----------------  ----------------- 
 
 
 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                                        170 
                                                        ---------------- 
 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                                                 24 
                                                               ---------------- 
 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 
        Add notes as necessary for          amount at quarter    at quarter end 
        an understanding of the position           end              $US'000 
                                                 $US'000 
                                          -------------------  ---------------- 
 8.1   Loan facilities                                 15,884            15,884 
                                          -------------------  ---------------- 
 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*               (565) 
 9.2   Development                                   - 
 9.3   Production                                    - 
 9.4   Staff costs                               (385) 
 9.5   Administration and corporate costs        (300) 
 9.6   Other (provide details if material)**     (595) 
                                              -------- 
 9.7   Total estimated cash outflows           (1,845) 
----  --------------------------------------  -------- 
 

* 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        Nature of interest   Interest        Interest 
         (items 2.1(b)          reference                            at beginning    at end 
         and 2.2(b) above)      and location                         of quarter      of quarter 
 10.1   Interests in           N/A                                  482,000        482,000 
         mining tenements                                            Gross           Gross 
         and petroleum                                               acres           acres 
         tenements lapsed, 
         relinquished 
         or reduced 
-----  ---------------------  --------------  -------------------  --------------  ------------ 
 10.2   Interests in           N/A 
         mining tenements 
         and petroleum 
         tenements acquired 
         or increased 
-----  ---------------------  --------------  -------------------  --------------  ------------ 
 

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 London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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