TIDM88E
RNS Number : 8035N
88 Energy Limited
25 January 2023
88 Energy Limited
Quarterly Activities Report
For the quarter ended 31 December 2022
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or
the Company) provides the following report for the quarter ended 31
December 2022.
Highlights
Project Phoenix ( formally Icewine East, 75% WI)
-- Hickory-1 exploration well scheduled to spud on or around 1
March 2023 targeting 647 million barrels of oil(1,2)
-- Well location informed by extensive data suite analysis
Ø Located in the sweet spot of interpreted AVO anomalies
Ø Focused on the oil-bearing conventional reservoirs identified
in adjacent acreage and during the drilling and logging of Icewine
1
Ø Designed to appraise six targets within SMD, SFS, BFF and
Kuparuk reservoirs
Ø Strategically located proximate to significant, established
infrastructure
-- Drilling rig contract executed with Nordic Calista for Rig-2
-- Permitting and planning on schedule to be completed end of
January 2023 or shortly thereafter, with the final well cost
anticipated to be lower than the previous Icewine wells on the
acreage
Project Leonis (100% WI)
-- Project Leonis secured as part of the North Slope Areawide 2022W Oil and Gas lease sale
-- Acreage includes ten leases covering 25,600 contiguous acres
, subject to an adjudication process, regulatory approvals and
formal award expected in 1H 2023
-- Project Leonis is covered by the existing Storms 3D seismic
data suite and contains the historical exploration well Hemi
Springs Unit #3 (drilled by ARCO in 1985)
-- A review of the Hemi Springs Unit #3 well indicated over 200
feet of logged net pay in the Upper Schrader Bluff (USB) reservoir,
with good porosity and oil shows evident over the interval
-- Initial internal interpretation of the Storms 3D indicates a
prospect at the USB reservoir interval that appears to be bound by
faults on three sides
Project Longhorn (73% WI)
-- Successful completion of the final two planned workovers scheduled for 2022
-- Quarterly cash flow distribution of A$1.5M received in December 2022
Corporate
-- Cash of A$14.1M and no debt (as at 31 December 2022)
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 .
1. Net mean total unrisked prospective resource.
2. Refer to the ASX release dated 23 August 2022 for full
details with respect to the Prospective Resource estimate,
associated risking and applicable Cautionary Statement.
Project Phoenix (formally Icewine East, 75% WI)
The former Icewine East area was renamed Project Phoenix to
reflect the Company's refreshed exploration strategy for this
acreage. Since its acquisition in 2014, exploration on the acreage
targeted the unconventional HRZ play. Project Phoenix is focused on
the oil-bearing conventional reservoirs identified during the
drilling and logging of Icewine-1 and recently flow tested by
Pantheon Resources(3) . Project Phoenix is strategically located on
the Dalton Highway with the Trans-Alaska Pipeline System running
through the acreage.
The Company has received notice from the Alaska Department of
Natural Resources (DNR) that a recently submitted unit application
covering the Project Phoenix acreage was open for public comment
until 31 December 2022. The DNR is expected to issue a decision no
later than 1 March 2023. The unit approval will extend the leases
for Project Phoenix beyond their primary term and provide an agreed
program to assess commercialisation of the acreage and a pathway to
development and production.
Hickory-1 Exploration Well
The Hickory-1 well is designed to appraise six conventional
plays within the SMD, SFS, BFF and KUP reservoirs targeting 647
million barrels of oil(1,2) . Spud of Hickory-1 is scheduled to
occur in early March 2023 to a permitted total depth of 12,500
feet. The well has been significantly de-risked by recent Pantheon
Resources(3) drilling and flow tests, interpretation of the
Icewine-1 well logs and modern Franklin Bluffs 3D seismic data
(FB3D) and associated AVO analysis.
The optimised drilling location intersects and will test, the
substantial potential oil volumes noted across all mapped play
fairways, particularly the SMD, SFS and BFF reservoirs.
Significant progress has been made on permitting and planning of
Hickory-1 by project manager, Fairweather, LLC. All long lead items
have been secured with the tendering process nearing completion.
Further details of the drilling program will be announced by the
Company in the lead-up to the scheduled spud on or around 1 March
2023, which remains subject to relevant approvals that are
anticipated to be received by end of January 2023 or shortly
thereafter.
Drilling location for Hickory-1 was informed by analysis of an
extensive data suite and chosen to:
-- Provide optimal appraisal of six stacked reservoir
targets
-- Ensure closest possible position to the Shelf Edge
-- Be of a relative down-dip position
-- Potentially unlock up-dip optionality across the remaining
acreage
-- Within the sweet spot of interpreted AVO anomalies relative
to Icewine-1 which the FB3D data confirms was drilled outside of
interpreted AVO anomalies at the target horizons
-- Maximise the strategic location proximate to existing
infrastructure
1. Refer Cautionary statement
2. Mean unrisked resource - Net Entitlement to 88 Energy. Refer
announcement released to ASX on 23 August 2022
3. Refer to Pantheon Resources AIM releases 7 February, 21
February and 24 March 2022 for details in relation to flow
tests
Project Leonis (100% WI)
On the 9 November 2022, the Company's wholly-owned subsidiary
Captivate Energy Alaska, Inc. was declared the highest bidder for
select acreage offered as part of the North Slope Areawide 2022W
Oil and Gas lease sale. The Company's new acreage will be known as
Project Leonis (the Project ) comprising ten leases covering
approximately 25,600 contiguous acres.
The new Project Leonis leases remain subject to an adjudication
process, regulatory approvals and formal award which is expected in
1H 2023. The Project is superbly located adjacent to TAPS and the
Dalton Highway, enhancing future potential development
commercialisation.
Figure 1: New Acreage awarded, named Project Leonis in relation
to exiting 88E acreage
Project Leonis is covered by the existing, recently purchased,
Storms 3D seismic data suite. The acreage contains the historical
exploration well Hemi Springs Unit #3, drilled by ARCO in 1985 to
target the deep Kuparuk and Ivishak reservoirs. At the time, these
were the main producing intervals in the giant northern fields.
An initial review of the Hemi Springs Unit #3 well indicated
over 200 feet of low resistivity bypassed log pay within the Upper
Schrader Bluff (USB) reservoir, with good porosity and oil shows
evident over the interval. The USB reservoir has been successfully
developed at the nearby Orion, Polaris, West Sak and Milne Point
oil fields.
A preliminary internal review and interpretation of the Storms
3D seismic data reveals a strong seismic-well tie and a clear
seismic amplitude at the USB prospect level. Encouragingly, the
prospect appears to be bound by faults on three sides which
potentially serve as the trapping mechanism. Further analysis will
determine further potential of the acreage and define a possible
exploration program and timeline for the project.
Figure 2: Hemi Springs Unit #3 well and initial interpretation
of regional faulting
Project Peregrine (100% WI)
Similarly, to Merlin-1, the Merlin-2 High Resolution Gas
Chromatography side wall core results show definitive evidence of
hydrocarbons at Project Peregrine.
Results of a recent, independent basin modelling study, coupled
with abundant oil shows across Merlin-1 and Merlin-2, are
encouraging for untested Harrier and Harrier Deep prospects to the
North.
The Company is currently assessing possible forward
work-programs, which will be subject to potential future
farm-out.
Project Longhorn (73% WI)
During the quarter, the operator and 24% net working interest
partner, Lonestar I, LLC ( Lonestar ) , successfully completed the
final two planned workovers scheduled for 2022. The workovers were
completed on time and commenced production, with plans in place to
optimise oil and gas rates from each well.
Production from the Longhorn wells averaged 420 BOE per day
gross (70% oil) during the quarter, peaking at 580 BOE per day
gross.
Since acquisition, the Longhorn investment has resulted in net
cash flow returns to 88E of A$4.3M. Net cash flows from operations
before capital investment, generated A$6.5M in 2022. The Company's
share of capital invested in the six completed work overs for 2022
was A$9.1M of which A$2.2M was paid in cash and the remaining
A$6.9M (US$4.6M) in 88E shares(1,2)
Four workovers and at least six new drill targets remain on the
acreage, with the forward work program and timing for future
capital investments to be determined by the Joint Venture in
2023.
1. Refer ASX announcement 21 February 2022 - working capital share issue of US$1.6 million
2. Refer ASX announcement 27 June 2022 - working capital share issue of US$3.0 million
Finance
The ASX Appendix 5B attached to this quarterly report contains
the Company's cash flow statement for the quarter. The material
cash flows for the period were:
-- Project Longhorn quarterly cash distribution of A$1.5M
-- Exploration and evaluation expenditure of A$3.3M (September
2022 quarter: A$5.7M), primarily associated with planning, securing
long lead items, and permitting for Hickory-1 exploration well
-- Lease rental payments of A$0.3M, including bid deposit for
Project Leonis acreage
-- Fees paid to Directors and consulting fees paid to Directors
of A$0.2M
-- Administration, staff, and other costs of A$1.2M (incl A$0.2M
director related payments)
At quarter end, the Company had cash reserves of A$14.1M and no
debt.
Information required by ASX Listing Rule 5.4.3
Project Name Location Net Interest Interest
Area at beginning at end
(acres) of Quarter of Quarter
--------------
Onshore, North Slope
Project Phoenix Alaska 62,324 75% 75%
------------------- ------------------------ --------- -------------- ------------
Project Icewine Onshore, North Slope
West Alaska 121,996 75% 75%
------------------- ------------------------ --------- -------------- ------------
Onshore, North Slope
Project Peregrine Alaska (NPR-A) 195,373 100% 100%
------------------- ------------------------ --------- -------------- ------------
Onshore, Permian Basin
Project Longhorn Texas 964 73% 73%
------------------- ------------------------ --------- -------------- ------------
Project Leonis Onshore, North Slope
(1) Alaska 25,600 0% 100%
------------------- ------------------------ --------- -------------- ------------
Onshore, North Slope
Umiat Unit Alaska (NPR-A) 17,633 100% 100%
------------------- ------------------------ --------- -------------- ------------
Onshore, North Slope
Yukon Leases Alaska 15,235 100% 100%
------------------- ------------------------ --------- -------------- ------------
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.
1. leases remain subject to an adjudication process, regulatory
approvals and formal award which is expected in 1H 2023.
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
Media Relations
Andrew Edge Tel: +61 410 276 744
Michael Vaughan Tel: +61 422 602 720
EurozHartleys Ltd
Dale Bryan Tel: + 61 8 9268 2829
Cenkos Securities Plc Tel: +44 (0)20 7397 8900
Derrick Lee Tel: +44 (0)131 220 6939
Pearl Kellie Tel: +44 (0)131 220 9775
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
-----------------------------------------------------
88 Energy Limited
ABN Quarter ended ("current quarter")
--------------- ----------------------------------
80 072 964 179 31 December 2022
----------------------------------
Consolidated statement of cash Current quarter Year to date
flows (12 months)
$A'000 $A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation - -
(b) development - -
(c) production - -
(d) staff costs (561) (2,388)
(e) administration and corporate
costs (618) (2,519)
1.3 Dividends received (see - -
note 3)
1.4 Interest received 13 20
1.5 Interest and other costs - -
of finance paid
1.6 Income taxes paid - -
1.7 Government grants and tax - -
incentives
1.8 Other - -
----------------- --------------
Net cash from / (used in)
1.9 operating activities (1,166) (4,887)
----- ------------------------------------ ----------------- --------------
2. Cash flows from investing
activities
2.1 Payments to acquire or for:
(a) entities - (10,694)
(b) tenements (326) (3,369)
(c) property, plant and - -
equipment
(d) exploration & evaluation (3,343) (49,275)
(e) investments - -
(f) other non-current assets - -
2.2 Proceeds from the disposal
of:
(a) entities - -
(b) tenements - -
(c) property, plant and - -
equipment
(d) investments - -
(e) other non-current assets - -
2.3 Cash flows from loans to - -
other entities
2.4 Dividends received (see - -
note 3)
2.5 Other - Joint Venture Contributions 19 1,079
Other - Distribution from
Project Longhorn 1,465 4,282
Other - Return of Bond - 138
----------------- --------------
Net cash from / (used in)
2.6 investing activities (2,185) (57,839)
----- ------------------------------------ ----------------- --------------
3. Cash flows from financing
activities
Proceeds from issues of
equity securities (excluding
3.1 convertible debt securities) - 47,053
3.2 Proceeds from issue of convertible - -
debt securities
3.3 Proceeds from exercise of - -
options
Transaction costs related
to issues of equity securities
3.4 or convertible debt securities - (3,150)
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 (provide details if - -
material)
----------------- --------------
Net cash from / (used in)
3.10 financing activities - 43,903
----- ------------------------------------ ----------------- --------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 17,525 32,317
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (1,166) (4,887)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (2,185) (57,839)
Net cash from / (used in)
financing activities (item
4.4 3.10 above) 0 43,903
Effect of movement in exchange
4.5 rates on cash held (51) 629
----------------- --------------
Cash and cash equivalents
4.6 at end of period 14,123 14,123
----- ------------------------------------ ----------------- --------------
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 14,123 17,525
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) 14,123 17,525
---- ----------------------------------- ---------------- -----------------
6. Payments to related parties of the entity Current quarter
and their associates $A'000
---- ----------------------------------------------------- -----------------
Aggregate amount of payments to related
parties and their associates included in
6.1 item 1 201
-----------------
6.2 Aggregate amount of payments to related -
parties and their associates included in
item 2
-----------------
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly
activity report must include a description of, and an explanation
for, such payments.
6.1 Payments relate to Director and consulting fees paid to
Directors. All transactions involving directors and associates were
on normal commercial terms.
7. Financing facilities Total facility Amount drawn
Note: the term "facility' amount at quarter at quarter end
includes all forms of financing end $US'000
arrangements available to $US'000
the entity.
Add notes as necessary for
an understanding of the sources
of finance available to the
entity.
7.1 Loan facilities - -
------------------- ----------------
7.2 Credit standby arrangements - -
------------------- ----------------
7.3 Other (please specify) - -
------------------- ----------------
7.4 Total financing facilities - -
------------------- ----------------
7.5 Unused financing facilities available at -
quarter end
----------------
7.6 Include in the box below a description of each facility
above, including the lender, interest rate, maturity date
and whether it is secured or unsecured. If any additional
financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing
details of those facilities as well.
---- ------------------------------------------------------------------------
8. Estimated cash available for future operating $A'000
activities
Net cash from / (used in) operating activities
8.1 (item 1.9) (1,166)
8.2 (Payments for exploration & evaluation classified (3,343)
as investing activities) (item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item (4,509)
8.2)
8.4 Cash and cash equivalents at quarter end 14,123
(item 4.6)
8.5 Unused finance facilities available at quarter -
end (item 7.5)
--------
8.6 Total available funding (item 8.4 + item 14,123
8.5)
--------
Estimated quarters of funding available
8.7 (item 8.6 divided by item 8.3) 3.1
--------
Note: if the entity has reported positive relevant outgoings
(ie a net cash inflow) in item 8.3, answer item 8.7 as
"N/A". Otherwise, a figure for the estimated quarters
of funding available must be included in item 8.7.
8.8 If item 8.7 is less than 2 quarters, please provide answers
to the following questions:
8.8.1 Does the entity expect that it will continue to
have the current level of net operating cash flows for
the time being and, if not, why not?
-------------------------------------------------------------------
Answer:
-------------------------------------------------------------------
8.8.2 Has the entity taken any steps, or does it propose
to take any steps, to raise further cash to fund its operations
and, if so, what are those steps and how likely does it
believe that they will be successful?
-------------------------------------------------------------------
Answer:
-------------------------------------------------------------------
8.8.3 Does the entity expect to be able to continue its
operations and to meet its business objectives and, if
so, on what basis?
-------------------------------------------------------------------
Answer:
-------------------------------------------------------------------
Note: where item 8.7 is less than 2 quarters, all of
questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.
---- -------------------------------------------------------------------
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.
Date: 25 January 2023
Authorised by: By the Board
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the accompanying activity
report provide a basis for informing the market about the entity's
activities for the past quarter, how they have been financed and
the effect this has had on its cash position. An entity that wishes
to disclose additional information over and above the minimum
required under the Listing Rules is encouraged to do so.
2. If this quarterly cash flow 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 cash flow 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.
4. If this report has been authorised for release to the market
by your board of directors, you can insert here: "By the board". If
it has been authorised for release to the market by a committee of
your board of directors, you can insert here: "By the [name of
board committee - eg Audit and Risk Committee]". If it has been
authorised for release to the market by a disclosure committee, you
can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the market
by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance
Council's Corporate Governance Principles and Recommendations, the
board should have received a declaration from its CEO and CFO that,
in their opinion, the financial records of the entity have been
properly maintained, that this report complies with the appropriate
accounting standards and gives a true and fair view of the cash
flows of the entity, and that their opinion has been formed on the
basis of a sound system of risk management and internal control
which is operating effectively.
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