TIDM88E
RNS Number : 2255T
88 Energy Limited
13 November 2023
This announcement contains inside information
13 November 2023
88 Energy Limited
NAMIBIAN OIL AND GAS FARM-IN AGREEMENT
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) ( 88 Energy or
the Company ) is pleased to announce the execution of a three stage
farm-in agreement ( Farm-In Agreement ) with a wholly-owned
subsidiary of Monitor Exploration Limited ( Monitor ) to earn up to
a 45% non-operated working interest in onshore Petroleum
Exploration Licence 93 ( PEL 93 ), located in the Owambo Basin,
Republic of Namibia ( Namibia ).
Farm-In Agreement Highlights
-- Farm-In Agreement provides a staged entry into PEL 93, a vast
18,500km(2) onshore acreage position comprising blocks 1717 and
1817 in the Owambo Basin, Namibia (the Licence).
-- Namibia represents one of the last frontier oil and gas
jurisdictions capable of delivering multi-billion barrel
discoveries, as evidenced by the recent Venus-1X offshore light oil
discovery .
-- Exposure to a first-class operating jurisdiction, with a highly competitive petroleum regime.
-- Farm-In Agreement provides an opportunity to earn a
significant working interest with future potential to transition to
project operator.
-- Farm-in to PEL 93 and forward work-program complementary to
88E's existing Alaskan exploration and appraisal activities.
-- Partner and operator, Monitor, has deep technical experience
with extensive in-country and regional knowledge.
-- The Licence includes an extensive lead portfolio, with ten
significant independent structural closures identified from a range
of geophysical and geochemical techniques. Considerable potential
for more leads to be identified as dataset is expanded.
-- Pathway to potential commercialisation with logical staged work-program.
-- Forward program to include acquisition of 200 line-kilometres
of low-impact 2D seismic planned for mid-2024 and potential initial
exploration well targeting the Damara play as early as H2
CY2025.
-- Farm-in Agreement remains subject to Namibian government and
other regulatory approvals, which are expected to be received by Q1
2024.
88 Energy Managing Director, Ashley Gilbert, commented:
"The execution of this farm-in agreement with Monitor provides
88 Energy and its shareholders with a fantastic opportunity to earn
a significant working interest in a very large scale, highly
prospective, under-explored acreage position on attractive and
logically staged commercial terms.
We are very pleased to be partnering with Monitor who will
provide a wealth of technical expertise and strong in-country and
regional exploration experience. Monitor has completed a systematic
historical work-program that has identified significant
large-scale, untested prospects.
While 88 Energy is continuing its focus on its existing Alaskan
North Slope assets, PEL 93 provides a logical expansion of 88
Energy's existing portfolio, with similar scale and potential that
our shareholders are accustomed to. The Licence includes an
extensive lead portfolio which will provide an increased level of
activity and value catalysts throughout the year.
We look forward to providing further detail on the project
including an upcoming activity schedule aimed at delivering an
initial program of approximately 200 line-kilometres of low-impact
2D seismic. This will minimise the environmental impact and be used
to better define potential drilling prospects for as early as the
second half of 2025."
Farm-In Agreement detail
The Farm-In Agreement is between Eighty Eight Energy (Namibia)
(Pty) Ltd ( 88EN ), a newly formed, wholly owned subsidiary of 88
Energy and private Namibian company, Monitor Oil and Gas
Exploration (Namibia) Pty Ltd ( MELN ), a wholly owned subsidiary
of Monitor. MELN currently holds a 75% working interest in the
Licence and acts as Operator of the exploration and development of
PEL 93. Private Namibian company, Legend Oil Namibia (Pty) Ltd (
Legend ) holds a 15% working interest and and Namibian government
entity National Petroleum Corporation of Namibia (Pty) Ltd ( NAMCOR
) holds a 10% working interest in the Licence.
Under the terms of the Farm-In Agreement 88 Energy, together
with the current working interest owners, will become party to a
new Joint Operating Agreement ( JoA ) in relation to the Licence
and may earn up to a 45% working interest in PEL 93 by funding its
share of agreed costs under the 2023-2024 approved work program and
budget as defined in the Farm-In Agreement ( 2024 Work Program ),
and any future work program budgets yet to be agreed. The maximum
total investment costs are anticipated to be US$18.7 million.
Three stage Farm-In Agreement schedule :
-- Stage 1: 88 Energy to pay Monitor US$3.7 million over four
instalments, in consideration for past costs of US$0.7 million as
well as a carry of up to the first US$3 million(1) of the 2024 work
program which includes a 250 line-kilometer 2D seismic acquisition
program on behalf of the Joint Venture, for a total of 20% working
interest in PEL 93:
-- 1(st) instalment: US$0.28 million in cash on signing for
partial payment of back costs;
-- 2(nd) instalment: US$1.25 million to be paid in 88 Energy
shares on signing for part payment of the 2D seismic carry(4) ;
-- 3(rd) instalment: US$1.25 million to be paid in 88 Energy
shares upon approval of the Licence working interest transfer by
the Namibian government expected within 30-60 days, as a further
payment in relation to the 2D seismic program carry; and
-- 4(th) Instalment: US$0.9 million in cash to be paid on or
before 1 June 2024 for remaining payment of back costs and 2024
work-program carry.
-- Stage 2: 88 Energy to pay to MELN up to the first US$7.5
million of the first well gross cost, estimated at US$12 million,
to receive a further 17.5% working interest , for a total of
37.5%(2) working interest.
-- Stage 3: 88 Energy has the option to fund the first US$7.5
million of the second well gross cost, estimated at US$12
million(3) , to receive a further 7.5% working interest taking 88
Energy's aggregate working interest to 45% .
-- Following the commencement of commercial production, Monitor
will also be entitled to a Gross Royalty of 2% of the revenues.
Any 88 Energy shares to be issued under the Farm-In Agreement
will be issued under the Company's placement capacity pursuant to
ASX Listing Rule 7.1.
1. Any agreed Joint Venture costs exceeding US$3M to be shared
between MELN and 88E, pro rata to their total Licence interests,
being 55% and 20%, respectively.
2. Conditional on 88E's positive assessment of the work
programme. Any agreed JV costs exceeding US$7.5M from commencement
of drill planning activities to be shared equally between MELN and
88E.
3. Combined MELN and 88E estimated cost of US$10M. Any MELN and
88E JV costs exceeding US$7.5M from commencement of drilling
planning activities to be shared pro-rata to their licence
interests, being 30% and 45% respectively, to receive a final 7.5%
of the JV for a total of 45% of the JV, providing MELUK has decided
not to exercise its right to fund its then 37.5% equity share of
the cost.
4. To be returned in cash or as an equivalent interest in MELN
in proportion to the participating interest that would have been
transferred to 88EN, net of costs, if Government approval is not
received.
Background to the Licence area
PEL 93 covers a vast 18,500 km(2) acreage position in the north
of Namibia, comprising blocks 1717 and 1817 within the Owambo
Basin. The region has been identified as one of the last remaining
under-explored onshore frontier basins and one of the World's most
prospective new exploration zones.
Recent drilling results on nearby acreage has highlighted the
potential of a new and underexplored conventional oil and gas play
in the Damara Fold belt, referred to as the Damara Play.
Historical assessment utilised a combination of techniques and
interpretation of legacy data to identify the Owambo Basin, and
specifically blocks 1717 and 1817, as having significant
exploration potential.
88 Energy has been impressed with the systematic exploration
approach undertaken by Monitor since award of PEL 93 in 2018 and is
extremely encouraged by the correlation and validation of results
to date, which has highlighted the enormous potential of the
acreage.
PEL 93 has entered the first renewal period which requires a
firm commitment to complete a (i) 200+ line-kilometre 2D seismic
program (minimum spend of US$2 million) and (ii) to drill a
contingent exploration well within a two-year period commencing
October 2023.
The current and potential future PEL 93 Joint Venture partners
and working interests are as follows:
Entity Pre Stage 1 Stage 2 Stage 3
Farm-in
(Past costs (1(st) Well) (2(nd) Well)
& 2D)
Monitor* 75.0% 55.0% 37.5% 30.0%
--------- ------------- -------------- --------------
Legend 15.0% 15.0% 15.0% 15.0%
--------- ------------- -------------- --------------
NAMCOR 10.0% 10.0% 10.0% 10.0%
--------- ------------- -------------- --------------
88 Energy - 20.0% 37.5% 45.0%
--------- ------------- -------------- --------------
*Operator
Figure 1: PEL 93 location in the Owambo Basin, Northern Republic
of Namibia.
About Monitor
Monitor is a private UK exploration company, established in
2018, for onshore oil and gas exploration with a focus on Namibia.
Monitor was formed by Geodynamics Worldwide ( Geodynamics ), a
specialist oil service company, and has leveraged this proprietary
relationship to select and survey the most promising acreages
positions. The management and technical team at Monitor have
considerable business experience in the sector on the African
continent, including Namibia, and will be an invaluable partner to
88 Energy in the advancement of PEL 93.
Monitor was established to take advantage of:
-- Direct access to geophysical technologies, managed and
operated by Geodynamics and its partners, that reduce the risk,
time, and cost of identifying hydrocarbons directly.
-- Sedimentary basins in Africa that are relatively
under-explored but prospective geologically and locations where
local experience exists in terms of geological and geophysical
data.
-- Countries that are prepared to offer attractive terms, are
non-restrictive or onerous on work programs, and allow the option,
as opposed to the obligation, to progress on a phased approach.
-- Scope to obtain substantial initial interests in licences,
whilst partnering with local companies to promote national
content.
Forward work plan
Monitor has utilised a range of geophysical and geochemical
techniques to assess and validate the significant potential of the
acreage since award of PEL 93 in 2018. It has identified 10
independent structural closures from airborne geophysical methods
and partly verified these using existing 2D seismic coverage.
Further, ethane concentration measured in soil samples over
interpreted structural leads validates the existence of an active
petroleum system, with passive seismic anomalies also aligning
closely to both interpreted structural leads and measured alkane
molecules (c1-c5) concentrations in soil.
Figure 2: Lead inventory showing proposed 2D seismic program.
(structural leads derived from airborne gravity data)
The forward work-program will start with a low impact 200
line-kilometre 2D seismic program focusing on confirming the
structural closures of the 10 independent leads identified. The 2D
seismic program will be conducted in mid-2024 following a period of
planning, public consultation, updating of environmental compliance
requirements and relevant approvals. Results from the 2D seismic
program will then be incorporated into existing historical
exploration data over the acreage, with results used to identify
possible exploration drilling locations.
An indicative forward work-program is shown below;
The forward work-program is subject to exploration results and
relevant Government and Joint Venture approvals.
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
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 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 resource and
reserve 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.
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