TIDM88E
RNS Number : 4724S
88 Energy Limited
06 November 2023
This announcement contains inside information
6 November 2023
88 Energy Limited
Hickory-1: Confirmed Discovery
with BFF Maiden Contingent Resource Estimate
Highlights
-- Maiden Independent Contingent Resource estimate completed at
Project Phoenix for the Basin Floor Fan (BFF) reservoir.
-- Gross Best Estimate (2C) Contingent Resource of 250 Million
Barrels of Oil Equivalent (MMBOE) from the deepest reservoir
encountered in Hickory-1, the BFF, comprised of;
o 136 million barrels (MMbbl)* of recoverable hydrocarbon
liquids (Oil and NGL); and
o 628 billion cubic feet (BCF)* of recoverable gas.
-- Independently certified Contingent Resource assessment
prepared by Netherland, Sewell & Associates, Inc. (NSAI), a
leading US based independent consultancy for the petroleum
industry.
-- Contingent Resources defined on the basis of multiple
successful flow tests conducted in the BFF reservoir on adjacent
acreage and clear reservoir continuity demonstrated through high
quality seismic data and correlations across Hickory-1 and
Icewine-1 to the neighbouring successful wells.
-- Assessment carried out by NSAI confirms discovery status for
the BFF reservoir prior to planned testing operations at
Hickory-1.
-- Key step towards the understanding of the hydrocarbon volumes
in of Project Phoenix prior to Hickory-1 testing operations. If
successful, these operations will allow additional contingent
resources to be assigned to the shallower SMD-B and SFS
reservoirs.
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) ( 88 Energy or
the Company ) is pleased to report a maiden, independently
certified Contingent Resource estimate of 136 MMbbl of hydrocarbon
liquids (gross best estimate (2C)) and 628 BCF of gas, for the BFF
reservoir in Project Phoenix (75% net working interest).
* Gross (100%) best estimate contingent resource. Natural Gas
Liquids (NGL's) are converted to oil equivalent volumes on a
constant ratio basis of 1:1. Gas is converted to oil equivalent
volumes on a constant ratio basis of 5.5 BCF per 1 MMBoe.
Managing Director, Ashley Gilbert, commented:
"This maiden Contingent Resource is a great result for 88E and
its shareholders. It represents an important milestone on the path
to the possible development of Project Phoenix, even prior to flow
testing operations at Hickory-1 this upcoming season.
We look forward to the upcoming planned Hickory-1 flow tests
which, if successful, will enable the certification of additional
contingent resources in the shallower reservoirs and move another
step closer to appraising the discovery. We remain on track for Q1
2024 operations for this exciting project."
NSAI's maiden Independent Contingent Resource Report was
completed after its review of an extensive data suite that included
seismic data, well logs from Hickory-1 and Icewine-1 and certain
data from wells in adjacent acreage including flow test data. NSAI
is a leading independent US-based expert petroleum asset evaluation
firm with significant and recent experience in providing resource
estimates globally, as well as more specifically in Alaska.
NSAI confirmed that the following requirements were met by the
Company to achieve a Contingent Resource classification for the BFF
reservoir:
-- Multiple successful flow tests for the same reservoir in adjacent acreage.
-- Clear reservoir continuity was demonstrated through high
quality seismic data and correlations across all four wells,
Talitha-A, Theta West-1, Hickory-1 and Icewine-1.
-- Log data, petrophysical interpretations and reservoir
conditions across all four wells demonstrated sufficient similarity
to confirm producibility in Project Phoenix.
-- All existing data was integrated consistently and coherently
which established the existence of a known petroleum accumulation
in the BFF reservoir in Project Phoenix.
This assessment confirms a discovery status at Hickory-1 and
Icewine-1 for the BFF reservoir in Project Phoenix and further
validates 88 Energy's internal assessments of Project Phoenix.
Further, the certification of a Contingent Resource for the BFF
reservoir allows the Company to focus the Hickory-1 flow testing on
the shallower reservoirs (SMD-B and SFS), with any further testing
of the BFF reservoir optional and contingent on JV funding and
approvals.
The forward work-program to assess the viability of the
commercial development of the BFF reservoir, either in isolation or
together with the shallower reservoirs, as well as addressing each
of the contingencies, will occur subsequent to the flow testing at
Hickory-1 which is scheduled for the upcoming Alaskan winter
operational season.
Contingent Resources Estimate - Basin Floor Fan, Project
Phoenix
The assessed maiden Contingent Resource estimate associated with
the BFF reservoir in Project Phoenix (75% net working interest to
88E and 63% net entitlement) is summarised below.
Project Phoenix: Basin Floor Gross (100%) Contingent Resources
Fan (1,3)
Probabilistic Method Low (1C) Best (2C) High (3C)
-----------
Oil Million Barrels 17 44 104
=========== ============ ===========
NGL Million Barrels 35 91 218
========= ======================== =========== ============ ===========
Oil +
NGL(2) Million Barrels 52 136 322
========= ======================== =========== ============ ===========
Gas Billion Cubic Feet 255 628 1,417
========= ======================== =========== ============ ===========
Total Million Barrels of Oil
(2) Equivalent (4) 98 250 580
--------- ------------------------ ----------- ------------ -----------
Project Phoenix: Basin Floor Net Entitlement (63%) Contingent
Fan Resources (1,3)
Probabilistic Method Low (1C) Best (2C) High (3C)
-----------
Oil Million Barrels 11 28 65
=========== ============ ===========
NGL Million Barrels 22 57 137
========= ======================== =========== ============ ===========
Oil +
NGL(2) Million Barrels 33 85 202
========= ======================== =========== ============ ===========
Gas Billion Cubic Feet 160 394 890
========= ======================== =========== ============ ===========
Total Million Barrels of Oil
(2) Equivalent (4) 62 157 364
--------- ------------------------ ----------- ------------ -----------
1. 88 Energy net resources have been calculated using a 75.227%
working interest and a 16.5% royalty.
2. 88 Energy cautions that the reported totals for Oil+NGL and
Total MMBOE are an arithmetic sum of the individual hydrocarbon
types within the BFF reservoir. The arithmetically summed 1C
estimate may be a conservative estimate and the arithmetically
summed 3C estimate may be optimistic when compared to a statistical
aggregation of probability distributions.
3. The Contingent Resource classification is not required to be
adjusted for the chance of development, as per PRMS 2018 guidance,
and hence has not been carried out in this assessment.
4. Natural Gas Liquids (NGL's) are converted to oil equivalent
volumes via a constant ratio of 1:1. Gas is converted to oil
equivalent volumes via a constant ratio of 5.5 BCF per 1 MMBoe.
Cautionary Statement :
Please refer to the disclaimers attached as Schedule 1 of this
release for more information on the contingent resource report.
About NSAI
Founded in 1961, NSAI is a worldwide leader in petroleum
consulting and advisory services. NSAI specializes in
multi-disciplinary integration and consists of experienced
technical staff across 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.
Updated Prospective Resources Estimate - Project Phoenix
The Prospective Resource estimate below was prepared by Lee
Keeling and Associates ( LKA ) as of 9 August 2022 and is prior to
the drilling of Hickory-1,and is an update from the prospective
resource estimate announced on 23 August 2022 with respect to the
BFF reservoir only. NSAI has not conducted a review in relation to
the prospective resources reported below. The Prospective Resource
estimate associated with 88 Energy's Project Phoenix acreage (75%
net working interest) has been updated to reflect the
reclassification of the BFF from Prospective Resource to Contingent
Resource as of 1 November 2023, with remaining Prospective
Resources summarised below.
Project Phoenix: Alaska Unrisked Gross Prospective Oil Resources
North 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%
============================ =========== ======== ======= ========= ======
Kuparuk (KUP) 39 88 156 89 72%
============================ =========== ======== ======= ========= ======
Prospects Total 146 446 1,019 461 (2)
---------------------------- ----------- -------- ------- --------- ------
Project Phoenix: Alaska Unrisked Net Entitlement to 88E (1)
North 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%
============================ =========== ======== ======= ========= ======
Kuparuk (KUP) 24 56 98 56 72%
============================ =========== ======== ======= ========= ======
Prospects Total 92 280 641 290 (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.
6. Prospective Resource Estimates - determined pre-drilling of
Hickory-1.
7. Updated Prospective Resource Estimates reflect the removal of
the resource estimate for the Basin Floor Fan which as of 1
November 2023 has been redetermined and classified as a Contingent
Resource. No other changes have been made to the original
estimates, please refer to the ASX announcement of 23 August
2023.
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.
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
Fivemark Partners , Investor and Tel: +61 422 602 720
Media Relations
Michael Vaughan
EurozHartleys Ltd Tel: + 61 8 9268 2829
Dale Bryan
Cavendish Securities Plc Tel: + 44 131 220 6939
Derrick Lee / Pearl Kellie
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 Contingent and Prospective
Resource estimates for Project Phoenix presented in this report are
prepared as at 1(st) November 2023 (LR 5.25.1). The Prospective
Resource estimates remain unchanged from the 2022 independent
report by LKA and 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 three prospects and assumes a success case in all
reservoir intervals. 88 Energy 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 Phoenix 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 -Information relating to
contingent resource estimates have been supplied by NSAI, 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. Netherland, Sewell & Associates, Inc.,
the independent resource reviewer engaged to assess the Basin Floor
Fan reservoir, has consented to the inclusion of information
relevant to their review in the form and context in which it
appears.
References to all Prospective Resources in this announcement
relate to the 2022 report compiled by Lee Keeling and Associates,
Inc. These resource estimates remain valid and no adjustments are
required but will be reassessed if and when flow test data is
obtained from any of these reservoirs.
Dr Stephen Staley, who is a Non-Executive Director of the
Company, has more than 40 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 definitions:
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.
Contingent Resource
Contingent Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations, by the application of a development project
not currently considered to be commercial owing to one or more
contingencies. The resources shown in this report are contingent
upon (1) acquisition of additional technical data that demonstrate
producing rates and volumes sufficient to sustain economic
viability across the acreage; (2) approval of a field development
plan and regulatory permits; (3) demonstration of viable gas and
water utilization or disposal methods; (4) demonstration of ability
to market oil and natural gas liquids (NGL); (5) establishment of a
viable North Slope gas market and development of infrastructure
which is currently evolving; and (6) commitment to fund and
complete the development project. If these contingencies are
successfully addressed, some portion of the contingent resources
estimated in the report may be reclassified as reserves; the
estimates have not been risked to account for the possibility that
the contingencies are not successfully addressed. The project
maturity subclass for these contingent resources is development
unclarified.
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
-------------------------------------------------
1C Denotes the low estimate qualifying as
Contingent Resources
-------------------------------------------------
2C Denotes the best estimate qualifying
as Contingent Resources
-------------------------------------------------
3C Denotes the high estimate qualifying
as Contingent Resources
-------------------------------------------------
API American Petroleum Institute's Inverted
scale for denoting the "lightness" or
"heaviness" of crude oils and other liquid
-------------------------------------------------
BOE Barrels of oil equivalent
-------------------------------------------------
BOPD Barrels of oil per day
-------------------------------------------------
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.
-------------------------------------------------
BFF Contingent Resources - Disclosures under ASX Listing Rules
5.25, 5.27, 5.33 and 5.41
LR 5.25.1
The contingent resources are reported as at 1 November 2023.
LR 5.25.3, LR 5.25.4
This announcement does not contain disclosure of total petroleum
initially-in-place, discovered petroleum-initially-in-place, total
resource base, estimated ultimate recovery, remaining recoverable
resources or hydrocarbon endowment.
LR 5.25.5
The resources information in this document is reported according
to the Company's economic interest in each of the resources net of
royalties.
LR 5.25.6
NSAI have used a probabilistic to estimate the contingent
resources. Once all contingencies have been successfully addressed,
the probability that the quantities of contingent resources
actually recovered will equal or exceed the estimated amounts is 90
percent for the low estimate, 50 percent for the best estimate, and
10 percent for the high estimate.
LR 5.25.7
Natural Gas Liquids (NGL's) are converted to oil equivalent
volumes via a constant ratio of 1:1. Gas is converted to oil
equivalent volumes via a constant ratio of 5.5 BCF per 1 MMBoe.
LR 5.27.3
Totals for Oil & NGL and Total MMBOE are arithmetically
summed. The arithmetically summed 1C estimate may be a conservative
estimate and the arithmetically summed 3C estimate may be
optimistic when compared to a statistical aggregation of
probability distributions.
LR 5.27.4
Contingent resources are reported for the BFF reservoir in the
Project Phoenix area only.
LR 5.33.1
The contingent resources are reported for the Project Phoenix
leased area, which includes the Toolik River Unit (refer
announcement 28 February 2023 for specific leases and lease area).
The leases are State leases and have a primary term until February
2028 under the Unit Agreement with the State of Alaska.
LR 5.33.2
The existence of a significant quantity of potentially moveable
hydrocarbons and confirmation of a discovery is confirmed by
regional data, seismic data and well data. In particular this is
supported by the recent Hickory-1 well data, together with the
historical Icewine-1 well data, and also multiple successful flow
tests for the same reservoir in adjacent acreage. As previously
reported, in 2022 successful flow tests were conducted in the BFF
reservoir in the nearby wells Talitha-A and Theta West-1. Talitha-A
'produced high quality c. 35-39 degree API oil and averaged 73 BOPD
over a three day test period'. The Theta West-1 well 'flowed high
quality, light 35.5-38.5 degree API gravity oil at rates that
averaged 57 BOPD'. Further, clear reservoir continuity was
demonstrated through high quality seismic data and correlations
across all four wells, Talitha-A, Theta West-1, Hickory-1 and
Icewine-1. Log data, petrophysical interpretations and reservoir
conditions across all four wells demonstrated sufficient similarity
to confirm producibility in Project Phoenix. All existing data was
integrated consistently and coherently which established the
existence of a known petroleum accumulation in the BFF reservoir in
Project Phoenix.
LR 5.33.3
NSAI conducted an independent evaluation and estimation of the
Basin Floor Fan reservoir contingent resource using the
probabilistic method. The contingent resources estimated are within
the sub-class of Development Unclarified, which is defined as a
discovered accumulation where project activities are under
evaluation and where justification as a commercial development is
unknown based on available information. The Company will actively
assess the commercial viability of the project and contingencies
subsequent to the flow test of multiple reservoirs planned at
Hickory-1.
LR 5.33.4
The estimates of contingent resources are not contingent on any
technology that is currently under development.
LR 5.33.5
The contingent resources do not relate to an unconventional
resource.
LR 5.41
The contingent resources have been prepared in accordance with
the Society of Petroleum Engineers (SPE) 2018 Petroleum Resource
Management System (PRMS) by Zachary R. Long and Alexander V. Karpov
as the qualified petroleum resource evaluators.
LR 5.42
The contingent resources are based on, and fairly represent,
information and supporting documentation prepared by Zachary R.
Long (a member of AAPG) and Alexander V. Karpov (a member of SPE)
who are employees of Netherland, Sewell & Associates. Zachary
R. Long and Alexander V. Karpov have consented to the publication
of these contingent resource estimates in the form and context in
which they appear in this announcement.
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