TIDM88E
RNS Number : 4234X
88 Energy Limited
26 April 2023
QUARTERLY ACTIVITIES REPORT
For the quarter ended 31 March 2023
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or
the Company) provides the following report for the quarter ended 31
March 2023.
Highlights
Project Phoenix (75% WI)
-- Hickory-1 exploration well spudded on 9 March 2023 and was
drilled to Total Depth (TD) of 10,650 feet with completion of a
succesful wireline and coring program. Initial summary of results
include:
Ø Initial petrophysical interpretation confirmed presence of
multiple hydrocarbon-bearing pay zones across all pre-drill
targets
Ø New Upper SFS reservoir identified, not previously intersected
by nearby wells and with abundant oil shows in cuttings
Ø Estimated net pay calculated from wireline data of
approximately 450 feet over all pay zones
Ø Total porosity across all pay zones averaged 9-12%, including
key zones identified for potential testing in the Upper and Lower
SFS with 11-16% total porosity
Ø Pre-drill expectations met or exceeded:
ü Reservoir quality (higher porosity in SFS and BFF)
ü Thickness (higher total gross and net reservoir, higher total
net pay)
-- Formation of the Toolik River Unit over the western and
central zones of Project Phoenix lease area was approved by the the
Alaskan Department of Natural Resources
-- Subsequent to quarter end, activities in relation to Hickory-1:
Ø Hickory-1 was cased and suspended with planning for 2023/2024
winter season flow testing commencing as well as post-well analysis
of cores and wireline data
Ø All samples have been transported to labs for further
investigation and analysis.
Ø Nordic Calista Rig-2 has been demobilised with operations
completed on budget.
Project Leonis (100% WI)
-- Subsequent to quarter end, the adjudication process was
completed and formal award notices issued to 88 Energy by the
Alaskan Department of Natural Resources (DNR) covering the entire
Project Leonis lease area
-- Integrated petrophysical and seismic study underway including
reprocessing of Storms 3D data
Project Longhorn (73% WI)
-- Production over the quarter averaged 425 BOE per day gross (72% oil)
-- Quarterly cash flow distribution of A$0.3M received in March
2023 which was net of final CAPEX payments for the two workovers
completed in Q4 2022
Corporate
-- Share placement completed on 6 February 2023, raising gross proceeds of A$17.5M
-- Cash balance of A$26.3M and zero debt (as at 31 March 2023)
Project Phoenix (75% WI)
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. Project Phoenix is
strategically located on the Dalton Highway as seen on the image
adjacent, with the Trans-Alaskan Pipeline System running through
the acreage.
Figure 1: Project Phoenix' Hickory-1 well adjacent to Dalton
Highway
Hickory-1 Exploration Well
The Hickory-1 well was designed to appraise up to six
conventional reservoirs within the SMD, SFS, BFF and KUP plays,
targeting pre-well estimated 647 million barrels of oil(1) .
Hickory-1 spud on 9 March 2023, was drilled to a Total Depth
(TD) of 10,650 feet and, after quarter end, successfully completed
the wireline and coring program to achieve all primary and
secondary target pre-drill objectives:
ü Validated the presence of multiple hydrocarbon-bearing zones
accross all pre-drill targets;
ü Obtained data to optimally design and plan a targeted flow
test of Hickory-1 next season; and
ü In addtion, new Upper SFS Reservoir was identified with oil
shows in cuttings and core.
Wireline program results:
Ø Pre-drill expectations were met or exceeded:
-- Reservoir quality (higher porosity in SFS and BFF); and
-- Thickness (higher total gross and net reservoir and higher total net pay);
Ø Estimated gross pay of over 2,000 feet;
Ø Calculated net pay of approximately 450 feet over all zones;
and
Ø Average total porosity across all pay zones of 9-12%,
including key zones identified for potential testing in the SFS and
Upper SFS with porosity of 11-16%.
Figure 2: SWC sample retrieved from Hickory-1 showing
fluorescence
Subsequent to quarter end, Hickory-1 exploration well operations
concluded for the current winter season. Hickory-1 was cased and
suspended in mid-April 2023 in preparation for undertaking the
planned flow test program in the 2023/2024 winter season and Nordic
Calista Rig-2 was demobilised after a successful drilling campaign.
The first phase of Hickory-1, the drilling and wireline program has
met or exceeded the Company's targeted pre-drill outcomes and was
completed on budget.
The Company will undertake a detailed evaluation of all data
obtained from the Hickory-1 drilling and wireline program to
optimally plan and design Phase 2, the flow test of up to 4
reservoirs. Initial planning suggests a 'work-over' rig will be
required to complete these operations with discussions underway to
secure a rig for the 2023/24 season. The Company will provide
further analysis and updates, as well as details of the flow
testing program, when this information is available over the coming
months.
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. Mean unrisked resource - Net Entitlement to 88 Energy. Refer
announcement released to ASX on 23 August 2022
Toolik River Unit Approval
On 7 December 2022, 88 Energy announced that the Project Phoenix
Joint Venture ("JV") had put forward a Unit application covering
leases within the Project Phoenix acreage area. Following
consideration of the Unit application, the DNR confirmed its
decision to approve the formation of the Toolik River Unit covering
leases in the western and central areas of Project Phoenix (refer
to 88E ASX announcement dated 28 February 2023). The Unit approval
has extended those leases beyond their primary term, with the Unit
Plan of Exploration through to February 2028. Unitisation provides
an efficient, integrated approach to exploration, delineation, and
development of the numerous identified and potential
reservoirs.
Project Leonis (100% WI)
On 9 November 2022, 88 Energy's wholly-owned subsidiary,
Captivate Energy Alaska, Inc. ( Captivate ), was declared the
highest bidder for select acreage offered as part of the North
Slope Areawide 2022 Oil and Gas lease sale. The Company's new
acreage will be known as Project Leonis (the Project ) comprising
ten leases covering approximately 25,430 contiguous acres.
Figure 3: New Acreage awarded, named Project Leonis in relation
to exiting 88E acreage
After quarter end, the DNR, Oil and Gas Division, completed its
adjudication process and formally issued award notices to Captivate
covering the entire Project Leonis lease area. The Project is
superbly located adjacent to TAPS, the Dalton Highway, and close to
services at Deadhorse and Prudhoe Bay, enhancing future potential
development and commercialisation.
The Project Leonis lease area is fully covered by the Storms 3D
seismic data suite and contains the exploration well, Hemi Springs
Unit #3 (drilled by ARCO in 1985). Historical drilling targeted the
deep Kuparuk and Ivishak reservoirs, the main producing intervals
in the giant northern fields at that time. Review of the Hemi
Springs Unit #3 well indicated over 200 feet (net) of low
resistivity bypassed log pay within the USB reservoir, with good
porosity and oil shows observed across the zone. Nearby oil fields
- Orion, Polaris, West Sak and Milne Point - readily demonstrate
successful development of the USB reservoir.
Integrated petrophysical and seismic study has commenced
including reprocessing of Storms 3D data.
Project Peregrine (100% WI)
In March 2023, 88 Energy completed a strategic review of the
Project Peregrine acreage and made the decision to relinquish six
blocks that were considered to have limited prospectivity,
providing an annual saving of approximately A$320,000.
The Project Peregrine resources are split across 3 prospects:
Merlin (Nanushuk Topset), Harrier (Nanushuk Topsets) and Harrier
Deep (Torok Bottomsets). The focus at Project Peregrine moving
forward will be on the untested Harrier prospect (N14 and N15
targets) and the N14 south reservoir target. The N14 corresponds
with ConocoPhillips' Harpoon prospect 15 miles to the north of the
Project Peregrine leases. The N14 south target is the remaining
target in the Merlin prospect and may be accessible from the
Merlin-1 location. The northern leases are modelled to have better
porosity and permeability and are closer to infrastructure.
An update to the Peregrine prospective resources is ongoing and
expected to be completed around mid-2023.
The Company is also currently assessing possible forward
work-programs, subject to potential farm-out.
Figure 4: Project Peregrine Acreage and proximity to Umiat
leases
Yukon (100% WI)
88 Energy is currently conducting a strategic review of the
prospectivity and commerciality of the Yukon acreage that sits on
the boundary of Federal and State lands, below Point Thomson. The
Yukon acreage is considered non-core within 88 Energy's Alaskan
portfolio, given the lower potential size of the resources,
relatively high cost to explore, and anticipated cost to develop.
The review will include an assessment of near-acreage opportunities
that are currently being considered by adjacent leaseholders.
Project Longhorn (73% WI)
Production from the Longhorn wells averaged 425 BOE per day
gross (72% oil) during the quarter, peaking at 620 BOE per day
gross.
Received a quarterly cash distribution from Project Longhorn in
March of A$0.3M, which was net of CAPEX payments for the two
workovers completed in Q4 2022.
Four workovers and at least five new drilling targets remain on
the acreage, with the forward work programme and timing for future
capital investments to be determined by the Joint Venture in Q2
2023.
Corporate
On 6 February 2023, 88 Energy successfully raised A$17.5M
(c.GBP10.1M) before costs from domestic and international
institutional and sophisticated investors (the Placement). This was
achieved through the issue of 1,842,105,263 fully paid ordinary
shares in the Company at an issue price of A$0.0095 (GBP0.0055) per
new ordinary share.
Funds raised under the Placement, coupled with existing cash
reserves, are for use towards Project Phoenix Hickory-1 exploration
well costs, Project Leonis acreage payment, portfolio expansion
opportunities and ongoing working capital and general and
administration overheads.
Euroz Hartleys Limited acted as Sole Lead Manager and Sole
Bookrunner to the Placement. Cenkos Securities Plc acted as 88
Energy's Nominated Adviser and Sole Broker to the Placement in the
United Kingdom. Inyati Capital Pty Ltd (Inyati) acted as Co-Manager
to the Placement. Commission for the Placement was 6% (plus GST) of
total funds raised across Euroz Hartleys Limited, Inyati Capital
Pty Ltd and Cenkos Securities Plc. In addition, the Company issued
75,000,000 Unlisted Options in total to the Placement managers
(exercisable at A$0.02 on or before the date which is 3 years from
the date of issue)
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:
-- Exploration and evaluation expenditure of A$4.8M (December
2022 quarter: A$3.3M), primarily associated with the Hickory-1
exploration well.
o JV partners provided contributions of A$1.5M towards
Hickory-1.
-- Lease rental payments of A$0.6M, primarily related to renewal
of Project Peregrine leases.
-- Administration, staff, and other costs of A$1.5M.
o Including fees paid to Directors and consulting fees paid to
Directors of A$0.3M.
-- Project Longhorn quarterly cash distribution receipt of
A$0.3M, which included final CAPEX payments for the two workovers
completed in Q4 2022.
-- Refund of the Alaska State bond related to Merlin-2 of
A$0.6M.
At quarter end, the Company had cash reserves of A$26.3M and
zero debt (excluding typical trade creditors).
Information required by ASX Listing Rule 5.4.3
Project Name Location Interest Interest
Net at beginning at end
Area of Quarter of Quarter
(acres)
--------------
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) 125,735 100% 100%
------------------- ------------------------ ---------- -------------- ------------
Onshore, Permian Basin
Project Longhorn Texas 964 73% 73%
------------------- ------------------------ ---------- -------------- ------------
Onshore, North Slope
Project Leonis Alaska 25,431 100% 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.
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
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 March 2023
----------------------------------
Consolidated statement of cash Current quarter Year to date
flows (3 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 (884) (884)
(e) administration and corporate
costs (573) (573)
1.3 Dividends received (see - -
note 3)
1.4 Interest received 17 17
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 (1,440) (1,440)
----------------- ------------------------------------ ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire or for:
(a) entities - -
(b) tenements (602) (602)
(c) property, plant and - -
equipment
(d) exploration & evaluation (4,775) (4,775)
(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 1,462 1,462
Other - Distribution from
Project Longhorn 329 329
Other - Return of Bond 585 585
---------------- -------------
Net cash from / (used in)
2.6 investing activities (3,001) (3,001)
----------------- ------------------------------------ ---------------- -------------
3. Cash flows from financing
activities
Proceeds from issues of
equity securities (excluding
3.1 convertible debt securities) 17,500 17,500
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 (1,160) (1,160)
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 16,340 16,340
----------------- ------------------------------------ ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 14,123 14,123
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (1,440) (1,440)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (3,001) (3,001)
Net cash from / (used in)
financing activities (item
4.4 3.10 above) 16,340 16,340
Effect of movement in exchange
4.5 rates on cash held 288 288
---------------- -------------
Cash and cash equivalents
4.6 at end of period 26,310 26,310
----------------- ------------------------------------ ---------------- -------------
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 26,310 26,310
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) 26,310 26,310
----------------- ----------------------------------- ---------------- -----------------
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 1 310
----------------
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) (1,440)
8.2 (Payments for exploration & evaluation classified (4,775)
as investing activities) (item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item (6,215)
8.2)
8.4 Cash and cash equivalents at quarter end 26,310
(item 4.6)
8.5 Unused finance facilities available at quarter -
end (item 7.5)
--------
8.6 Total available funding (item 8.4 + item 26,310
8.5)
--------
Estimated quarters of funding available
8.7 (item 8.6 divided by item 8.3) 4.2
--------
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: 26 April 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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END
DRLUVASROSUSUAR
(END) Dow Jones Newswires
April 26, 2023 02:00 ET (06:00 GMT)
88 Energy (LSE:88E)
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