88 Energy has provided an activities report for the quarter ended 31 December 2023, including an update on its farm-in agreement with a wholly-owned subsidiary of Monitor Exploration to earn up to a 45% non-operated working interest in onshore PEL 93, located in the Owambo Basin of Namibia.
Highlights
Project Phoenix (~75% WI)
- Fully funded Hickory-1 discovery well flow test and stimulation program (Flow Test) set to commence following ice road and pad construction in early February, and rig mobilisation in mid-February
- Design, planning and logistics complete, with permitting on track for operations commencement.
- Maiden, independently certified Contingent Resource estimate declared for the Basin Floor Fan (BFF) which is the deepest reservoir encountered in Hickory-1.
- Gross Best Estimate (2C) Contingent Resource worked up of 250 Million Barrels of Oil Equivalent (MMBOE) in the BFF (net to 88E of 157 MMBOE), comprised of 136 million barrels (MMbbl) of recoverable hydrocarbon liquids, and 628 billion cubic feet (BCF) of recoverable gas(1).
- JV Partner Burgundy Xploration, LLC (Burgundy) paid US$2.0 million in initial funds towards settlement of outstanding cash calls of US$3.5 million and in December 2023 was granted additional time to 31 January 2024 to pay remaining outstanding amount of US$1.75 million.
Onshore Namibian Farm-in Agreement (~20% WI pending approval)
- Executed farm-in agreement with Monitor Exploration to earn up to a 45% non-operated working interest in onshore Petroleum Exploration Licence 93 (PEL 93).
- Farm-in provides a three-stage entry into PEL 93, a vast 18,500km2 onshore acreage position comprising blocks 1717 and 1817 in the Owambo Basin of Namibia. PEL 93 is more than 10 times larger than 88 Energy's Alaskan Portfolio and more than 70 times larger than Project Phoenix.
- Provides exposure to a first-class operating jurisdiction and one of the last frontier oil and gas regions capable of delivering multi-billion barrel discoveries, as evidenced by Venus-1X discovery.
- Licence includes an extensive lead portfolio, with ten significant independent structural closures identified from a range of geophysical and geochemical techniques.
- In Q1 2024, a 20% working interest is anticipated to be transferred to 88 Energy by Monitor following approval by Namibian Ministry of Mines and Energy.
Project Leonis (100% WI)
- Maiden prospective resource estimate for Upper Schrader Bluff (USB) reservoir expected H1 2024.
- Targeting farm-out in CY2024, ahead of the potential drilling of new well in 2025/2026.
Project Peregrine (100% WI)
- Bureau of Land Management Alaska approved a 12-month suspension of Project Peregrine leases from 1 December 2023, following discussions during the quarter regarding proposed new regulations governing the management of surface resources in the National Petroleum Reserve-A (NPR-A).
- 88E remains highly encouraged on the prospectivity at Project Peregrine, and in particular, the Harrier-1 well.
Project Longhorn (~63% WI)
- Further non-operated working interest acquired in leases and wells for US$0.35 million (net to 88 Energy: US$0.26 million), expanding 88 Energy's footprint in the Texas Permian Basin.
- Acquisition included a ~64% net working interest (WI) in 1,262 acres, located ½ mile south and ¼ mile north of existing Project Longhorn assets connecting the acreage position.
- Nine low-producing existing wells (~26 BOE/day gross) and ten development opportunities were identified with potential in multiple zones and classified as Gross Undeveloped 2P Reserves (1.2 MMBOE)(2), along with Contingent and Prospective Resources which are yet to be quantified.
- The Joint Venture (JV) approved five workover wells to be completed in 1H 2024 followed by the potential approval of two new production wells in 2H 2024.
- Upon successful completion of the workovers and new wells across its acreage, together with the existing producing wells, 88 Energy expects Longhorn total gross production to reach approximately 600 - 675 BOE per day (~75% oil) by year end 2024.
- The JV also secured a US$5 million line of credit facility to assist in cash flow management associated with the development opportunities.
- Q4 production performed well, averaging 355 BOE per day gross (~62% oil) which was above the budgeted volume of 294 BOE per day gross (68% oil).
Corporate
- Successful oversubscribed share placement raising US$9.9 million (before costs) to support the imminent Hickory-1 flow test and initial exploration activities at PEL 93 in Namibia.
- Cash balance of A$18.2 million and no debt (as at 31 December 2023) following completion of the equity placement during the quarter.
- Through Q4 CY23 management conducted an internal corporate cost review, with several cost saving initiatives set to be implemented from Q1 CY24. These initiatives include, but are not limited to, a reduction in direct employment costs.
- The Company's primary focus through 1H CY24 is to deliver a successful Hickory-1 flow test. Post the Alaskan operational season a further optimisation of the business will occur aimed at preserving and enhancing value for shareholders and advancement of key projects.
(1) Refer announcement released to ASX on 6 November 2023 for more information on the Contingent Resource estimate report.
(2) Refer announcement released to ASX on 15 December 2023 including initial reserves estimates and assumptions and net revenue entitlement to 88 Energy.
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Source: 88 Energy
