TIDM88E
RNS Number : 9813I
88 Energy Limited
07 April 2020
7(th) April 2020
This announcement contains inside information
88 Energy Limited
Charlie-1 Confirms Large Condensate Discovery in Torok
Formation
88 Energy Limited ("88 Energy" or the "Company", ASX:88E, AIM
88E) provides the following update related to operations for the
Charlie-1 appraisal well, on the North Slope of Alaska.
Highlights
-- Condensate discovery confirmed in Torok Formation
-- Economic review underway to assess commerciality
Detail
88 Energy confirms that the Charlie-1 appraisal well has proved
the presence of mobile hydrocarbons, in the form of condensate gas,
in the Torok Formation in both the Middle Stellar and Lower Stellar
targets. Hydrocarbons were successfully recovered to surface from
both targets using a state-of-the-art downhole sampling tool (Ora).
Further analysis to confirm the composition and gas to liquid ratio
will now be undertaken. Upper Stellar was not tested due to the sub
optimal location that it was intersected by the well.
Sampling was also successfully completed in the Schrader Bluffs
Formation from the Indigo target, which was found to be water
bearing. The Charlie target was found to be poorly developed and
was not sampled. Oil shows in this interval are deemed to be
related to residual oil that is not trapped in the system.
In the Seabee Formation, an attempt was made to take a sample
from the Lower Lima target, being the better of the two Lima
targets. This attempt was unsuccessful due to insufficient
reservoir quality; however, given that these targets were not
intersected optimally, there still may be potential for higher
quality reservoir at a different location. Excellent Vertical
Seismic Profile ("VSP") data was obtained in the well, which will
now be used in conjunction with other log data and the existing 3D
seismic, to remap these targets. Sidewall core analysis will also
assist with determining where improved reservoir is likely to
exist. Mud gas, observed while drilling, in the Seabee indicated
that the hydrocarbons at this horizon are heavier than those in the
Torok and this is the horizon where "live oil" was observed across
the shakers in the nearby Malguk-1 well.
Detailed logs and sidewall cores were also acquired in the HRZ
formation, which will now be analysed over the coming months. The
HRZ remains a viable target and options to commercialise this
potentially large resource continue to be pursued.
Premier has informed the Joint Venture that it intends to
withdraw from the project, as the well did not meet its pre-drill
expectations.
The cost of the well remains within the expected budget and 88E
does not expect to incur any costs in relation to the drilling.
The well will now be plugged and abandoned ("P&A") in line
with standard industry practice. The decision to P&A the well
instead of moving to suspension or testing was made for a number of
reasons:
-- Further analysis is required to determine whether a discovery
of this nature can be commercialised on the North Slope, given the
likely high gas content
-- An optimum stimulation and test at this juncture is not
possible in the timeframe required due to the different phase of
the hydrocarbons encountered and the length of season remaining
-- Uncertain access to various personnel that may be required in the event of unforeseen circumstances/emergency situations, in light of the COVID-19 pandemic
-- The lateness of the season and exposure to potential early
break-up, which could result in the rig being stranded on the wrong
side of the Kuparuk River at significant cost
-- Reluctance to create a potential future liability if analysis
determines that the well should be P&A'd in a subsequent
season, at substantially higher cost
Managing Director of 88 Energy, Dave Wall, stated: "Charlie-1
has delivered a mixed result. On the one hand, we have confirmed
the presence of mobile hydrocarbons in the primary targets of the
well but, at the same time, there are challenges that need to be
more fully understood related to whether these can be
commercialised on the North Slope. Samples of the hydrocarbons have
been recovered to surface and will now be the subject of further
analysis in the coming months.
The risks related to the shallower targets have unfortunately
been borne out, with one found to be water bearing and the other to
have no sand development.
The Lima targets both remain valid and, using the VSP, logs and
cores from Charlie-1, we hope to be able to enhance the
prospectivity of the Seabee Formation on our acreage.
We also hope to glean valuable information in regard to the HRZ
potential in this area of Project Icewine and analysis will take
place over the next few months.
Further details will be released as the required analyses from
Charlie-1 are completed. "
Reporting requirements under LR 5.30
The Charlie-1 well is located on the North Slope of Alaska, ADL
393380, where 88 Energy has a 30% working interest. The well
penetrated sandstones in seven stacked targets and shale in one
target. No flow tests were undertaken; however, gas condensate
samples were retrieved to surface from the Torok formation at
10,506' and 10,656' using a downhole sampling tool (Ora) run during
the wireline operation.
This announcement has been authorised by the Board.
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 Tel: + 44 131 220 6939
Neil McDonald/Derrick Lee
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END
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