28 May 2015
Acreage Award
Documents Submitted
Award Documents Submitted
88 Energy is pleased to announce that its Joint Venture Partner,
Burgundy Xploration LLC, has received, signed and returned to the
State of Alaska, the award
documentation for 63 tracts of land totalling approximately 89,542
acres. Burgundy bid on these tracts on behalf of the Joint Venture
and was announced high bidder in November
2014. Once these documents have been processed and the
leases issued, Burgundy will assign to Accumulate Energy Alaska,
Inc (100% owned subsidiary of 88 Energy Ltd) an 87.5% working
interest in these 63 new tracts as well as 6 tracts that Burgundy
had previously been awarded in 2013 and 2014. Burgundy will retain
a 4% Overriding Royalty Interest over all 69 tracts. 88 Energy has
remitted US$2.98m in acreage costs
and first year rentals to the State of
Alaska.
The difference between the 90,720 acres originally bid on and
the 89,542 acres awarded is the result of survey work completed by
the State. Consequently, the gross acreage position leased by the
Joint Venture will now total 98,182 acres vs the previous estimate
of 99,360 acres.
To facilitate timely permitting, transfer of operatorship and
other regulatory requirements associated with the drilling of the
Icewine #1 exploration well, Burgundy has agreed to assign the
87.5% working interest and operatorship over ADL392301, which
contains the site for the well, prior to formal issuance of the
other leases. The documentation for this assignment has been
submitted to the State of Alaska
for approval.
88 Energy anticipates that its subsidiary, Accumulate Energy
Alaska, Inc, will be officially “on title” within weeks (rather
than contractually entitled to the acres as it currently is).
Additional updates in relation to the process will be made as they
occur.
Managing Director of 88 Energy Ltd, Dave
Wall commented: “Whilst the award and assignment process
is largely administrative in nature, it is a crucial piece of the
puzzle and another meaningful step forward for the Company and its
shareholders. 88 Energy would like to thank its JV Partner,
Burgundy, for its timely and flexible approach to the process as
well as the State of Alaska for
the opportunity to operate on the North Slope. We look forward with
great anticipation to the upcoming drilling of the Icewine #1 well
prior to year end.”
Yours faithfully
Dave
Wall
Managing Director
88 Energy Ltd
Project Icewine Highlights
In November 2014, the Company
entered into a binding agreement with Burgundy Xploration
(BEX) to acquire a significant working interest (87.5%,
reducing to 78% on spud of the first well on the project) in a
large acreage position on a multiple objective, liquids rich
exploration opportunity onshore Alaska, North
America, referred to as Project Icewine.
88 Energy, (through BEX their co-venture partner), was announced
highest bidder on 90,720 acres (revised to 89,542 post survey) in
the November State lease sale for the North Slope of Alaska on 20 November
2014. Post award of the acreage in Q2 2015 88 Energy will
secure a 98,182 gross contiguous acre position with 85,900 acres
net to the Company (76,582 net acres post spud). The primary term
for the State leases is 10 years with no mandatory relinquishment
and a low 16.5% royalty.
Figure 1: Project Icewine Location (please refer to the
pdf version of this announcement available from the Company’s
website)
Generous exploration incentives are provided by the State of Alaska with up to 85% of exploration
expenditure in 2015 cash refundable, dropping to 75% mid 2016 and
thereafter 35%.
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 Oil Field Complex. Internal modelling and analysis indicates
that Project Icewine is located in a high liquids vapour phase
sweetspot analogous to those encountered in other Tier 1 shale
plays e.g. the Eagle Ford, Texas.
Conventional play potential can be found at Project Icewine
within the same Brookian petroleum system and shallow to the HRZ
shale and includes high porosity channel and deep water turbiditic
sands. The Brookian conventional play is proven on the North Slope;
the USGS (2013) estimate the remaining oil potential to be 2.1
billion barrels just within the Brookian sequence. Additional
conventional potential exists in the deeper Kuparuk sands and the
Ivashuk Formation.
Drilling, (2012), in the adjacent acreage to the north confirmed
that the HRZ shales, along with the underlying Kingak & Shublik
shales, were all within the oil window which is extremely
encouraging for the unconventional potential at Project Icewine. In
addition a conventional oil discovery was reported in the Kuparuk
sandstones.
A Prospective Resources Report by DeGolyer and MacNaughton, was
commissioned by 88 Energy to evaluate the unconventional resource
potential of Project Icewine in early December 2014 and was released to the market on
19 January 2015.
About 88 Energy:
88 Energy recently acquired an initial 87.5% working interest and
operatorship in 98,182 acres onshore the prolific North Slope of
Alaska (“Project Icewine”). The
North Slope is the host for the 15 billion barrel Prudhoe Bay oilfield complex, the largest in
North America. The Company, with
its Joint Venture partner Burgundy Xploration, has identified two
highly prospective play types that are likely to exist on the
Project Icewine acreage – one conventional and one unconventional.
The large resource potential of the Icewine Project was recently
independently verified by leading international petroleum resource
consultant DeGolyer and MacNaughton. In addition to the interpreted
high prospectivity, the project is strategically located on a
year-round operational access road and only 35 miles south of Pump
Station 1 where Prudhoe Bay feeds
into the TransAlaska Pipeline System. The Company plans to progress
drilling and seismic in the near term to take advantage of the
globally unique fiscal system in Alaska, which allows for up to 85% of CY2015
exploration expenditure to be rebated in cash.
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