Explorers magazine preview: 88 Energy holds 500,000 Alaska acres

Kay Cashman

Petroleum News

Australia independent 88 Energy Ltd., a Perth-based ASX and AIM listed firm (88E), has three Alaska operating subsidiaries - Accumulate Energy Alaska LLC, Regenerate Alaska LLC and Captivate Energy Alaska LLC.

88 Energy has been operating on the North Slope since 2015 having originally entered into an agreement in 2014 with Burgundy Xploration LLC to acquire a working interest in 90,000 acres 30 miles south of Prudhoe Bay. The company has since substantially expanded its exploration lease holding to 500,000 gross, 250,000 net acres

In 2019, 88 Energy signed a sale and purchase agreement with London-based Premier Oil Plc (LON:PMO) under which Premier farms-in for a 60% interest in Area A of the conventional Project Icewine acreage, with 88 Energy retaining a 30% working interest in Area A and the remaining 10% working interest held by Burgundy Xploration LLC.

Under the terms of the agreement, Premier pays the full costs of an appraisal well, Charlie 1, up to a total of $23 million to test the reservoir deliverability of the 1991 Malguk 1 BP oil discovery.

88 Energy diversified its North Slope portfolio by successfully bidding farther east near the border of the ANWR 1002 area on the Yukon leases in 2017 and 2018 which includes an historic BP oil discovery, Yukon Gold 1

In 2018, the company diversified further by entering into an agreement with Great Bear on what it calls the western block, earning 8,175 net acres, by drilling the Winx-1 exploration well. The acreage is on a lease to the east of, and adjacent to, the Horseshoe 1/1A well lease, a 2017 oil discovery by then-operator Armstrong Energy and partner Repsol and now operated by Oil Search.

88 Energy continued to acquire leased acreage in three primary areas of the North Slope: the western block, the central Project Icewine south of Prudhoe Bay (conventional and unconventional) and the Yukon leases on the eastern Slope.

Following are questions answered in mid-March by the company’s top executive for Alaska. David Wall, 88 Energy managing director and president.

The answers will be updated in the Explorers magazine, which will be released at the Alaska Oil and Gas Association’s annual conference in Anchorage in late July. For more information on the magazine contact Petroleum News publisher Kay Cashman at [email protected].

Q. Who is 88 Energy’s top official in Alaska?

A. Erik Opstad, general manager operations

Q. How many full-time employees does your company have?

A. 4

Q. How many employees are involved in your Alaska business?

A. 4, all subcontractors.

Q. What is your company’s website address?

A. WWW.88ENERGY.COM

Q. What brought your company to Alaska?

A. Oil and gas exploration opportunities.

Q. Which producing oil/gas fields/units does your company operate in Alaska?

A. None.

Q. Which exploration prospects in Alaska does your company operate?

A. Project Icewine, Yukon Leases

Q. What exploration and appraisal work have you done on these prospects in the last 5 years?

A. Drilled three wells (currently drilling fourth), acquired one 2D seismic survey, two 3D seismic surveys. Two of the wells were appraising unconventional oil in the HRZ, one of which was flow tested with results below expectations (Winx 1 in the western block). It was offset to the Horseshoe discovery and had oil but not in commercial quantities. The current well, Charlie 1, is appraising Brookian potential, mainly in the Torok, that was discovered in the 1991 Malguk 1 well.

Q. What exploration and appraisal work are you tentatively planning for the coming year through June 1. 2021? Beyond that?

A. See Charlie 1 above - future activity depends on the results and also farm-out of Yukon leases.

Q. Which formations are you targeting in each of your exploration prospects, starting with the primary target?

A. All oil, Schrader, Seabee, Torok and HRZ (unconventional).

Q. What was your exploration and appraisal budget for your Alaska assets in 2018/19?

A. $20 million net.

Q. What is your exploration and appraisal budget for your Alaska assets in 2019/20?

A. Similar

Q. What is your tentative exploration and appraisal budget for your Alaska assets in 2020/21?

A. Dependent on results of Charlie 1 and farm-out of Yukon leases.

Q. What factors could impact your spending plans in 2020/21?

A. Charlie 1 results, farm-out of Yukon leases, payment of state credit certificates (to a lesser extent - we are only owed ~$20 million).

Q. Are you open to or actively searching for a farm-in partner or buyer for any of your Alaska oil and gas assets?

A. We are in discussions related to Yukon leases, HRZ farm-out is dependent on Charlie 1.

Q. Which drilling rig do you have under contract now?

A. Nordic Callista Rig 3.

Q. What is your company’s mission statement?

A. The company’s goal is to build a successful exploration and production company that delivers material benefits to its shareholders and contributes to the development of the regions in which it works. It aims to achieve this by targeting overlooked or emerging play types where its small team of experts can move quickly to capitalize on opportunities prior to larger industry players moving in. The opportunities the company seeks are based on robust technical evaluation together with informed socio-political decisions and cultural sensitivity in business relationships.

Q. What are the greatest challenges your company faces in Alaska exploration and development?

A. Changes to operational regulations that are only thought through for the larger companies (e.g. recent AOGCC bonding increase) and lack of timely payment of exploration credits - this feels like a broken promise.