Reinvented 88 Energy encouraged by nearby well results in Alaska

Having reinvented itself as an Alaska-focused explorer, Perth-based 88 Energy has been encouraged in its new venture by the results of a Repsol/Armstrong joint venture on nearby acreage.

The Repsol/Armstrong JV was testing conventional play fairways that may extend into the ASX-listed company’s Project Icewine, a near 90,000 acre tract on the North Slope in which it has an 87.5 per cent stake following a Q4 2014 farm-in deal with Burgundy Xploration.

Dave Wall, managing director of 88 Energy Ltd, which earlier this year shed its interests in Morocco completing its turn-around story, said the results from the near-by operators were “outstanding and well above expectation”.

“They clearly vindicate Repsol’s US$768 million deal with Armstrong in 2011 as well as highlight the success that can be achieved through utilisation of modern 3D seismic on the North Slope,” said Wall.

“The flow rates, large areal extent, reservoir quality and oil gravity all point towards what are likely to be large to very large commercial discoveries, located only 50 miles from the boundary of our project.”

Denver-based Armstrong said it tested two Nanushuk formation wells in the 2014/2015 winter campaign, including the Qugruk 8 (Q-8) vertical well, which tested a small portion of the net pay zone and flowed 30 degree API gravity crude at rates of up to 2,160 bpd while Qugruk 301 (Q-301) tested a 2,000 foot horizontal lateral and flowed at tubing-constrained rates as high as 4,600 bpd with minimal bottom hole pressure drawdown.

The company and Repsol also completed two new penetrations in the East Alpine field. “These new discoveries show the immense potential that still exists on the North Slope of Alaska,” said Bill Armstrong, President of Armstrong Oil & Gas, which is targeting conventional oil projects in the state, where recently passed legislation has improved terms for new drilling and development.

This is good news for 88 Energy, which sees material conventional plays across its acreage, which it hopes to unlock by using 3D seismic. The Australian company’s immediate focus, however, is to target the world class unconventional oil potential it sees at Project Icewine.

This is real frontier territory. The primary objective is an untested, unconventional liquids-rich shale play in a prolific source rock, the HRZ shale (Brookian Sequence), that co-sourced the largest oil field in North America: the giant Prudhoe Bay oilfield complex. Internal modelling and analysis indicates that Project Icewine is located in a high liquids sweetspot analogous to those encountered in other Tier 1 shale plays, such as the prolific Eagle Ford Shale in Texas.

The next key step is the drilling of a first well to put this theory to the test. The company is aiming to drill the Icewine-1 exploration well before the end of the year, and is fast-tracking permitting and seeking farm-in partners to achieve this goal. An interesting year ahead.