88 Energy Ltd. said Sept. 2 that it has raised about $17.7 million ($24M Australian) in a share placing to finance its first quarter Merlin 2 appraisal well in the National Petroleum Reserve-Alaska. The company, which is the owner of four Alaska operating subsidiaries - Emerald House, Regenerate Alaska, Accumulate Energy Alaska and Captivate Energy Alaska - also said that after completion of the share placing, it will have enough cash to fund its working capital requirements and general and administrative overheads for at least 12 months.
“Completion of this placing positions 88 Energy strongly as planning and preparations continue for drilling of the Merlin 2 appraisal well,” said chief executive Ashley Gilbert.
While the executive branch of the Biden administration has allowed NPR-A exploration and appraisal drilling by 88 Energy Alaska subsidiary Accumulate and ConocoPhillips, the judicial branch recently shut down development work in ConocoPhillips’ nearby Willow project, a blow to companies looking to develop oil discoveries on federal land in Alaska.
The Merlin prospect in 88 Energy’s 195,000-acre Peregrine project and the company’s adjacent undeveloped Umiat oil field are both in NPR-A. Of course, there could be a new U.S. president in two years whose administration might support oil and gas activities on federal land, but today’s uncertainties and problems with the feds in all branches of the U.S. government have prompted stronger interest in state of Alaska acreage where leasing, exploration, development and production are encouraged.
Alaska Department of Natural Resources Commissioner Corri Feige said DNR’s booth and involvement at Summer NAPE in mid-August garnered a lot of seemingly solid interest in oil and gas investment in the state.
“Alaska’s endowment and the recent discovery success rate in the Brookian play type are extremely exciting, and widely recognized as one of the hottest onshore plays out there,” she told Petroleum News Sept. 7. (See Oil Patch Insider column in this issue for more from Feige.)
Yukon leases on state land88 Energy’s portfolio contains four key project areas - Project Peregrine, Yukon leases, Project Icewine and the Umiat oil field.
88 Energy puts its eastern North Slope Yukon leases at the end of its list of Alaska projects - and very little changes in what the company says about Yukon from release to release.
But the acreage, which is 100% held by 88 Energy subsidiary Regenerate, is leased from the state of Alaska, not the federal government, and it includes the mid-1990s BP Yukon Gold discovery well on ADL 393657 that contains some 90 million recoverable barrels of oil.
88 Energy picked up its eight Yukon leases in the 2017 and 2018 state areawide lease sales. They encompass 15,234.71 contiguous acres on the eastern North Slope along the border of the ANWR 1002 area.
In addition to its Yukon state leases on the eastern North Slope, Regenerate was named high bidder on Tract 29 in the U.S. Bureau of Land Management’s 2021 Coastal Plain (ANWR 1002 area) Lease Sale.
Tract 29 contains 23,446 acres and is adjacent to 88 Energy’s existing Yukon leases.
Talks w. neighbors continueIn its Sept. 2 presentation, 88 Energy again said its Yukon drilling plans are “ongoing and subject to farm-out and other discussions” including continuing talks “with nearby lease owners for joint development” in the area.
The only nearby leaseholders are to the north: the Jade Energy-operated Sourdough prospect lease in the southeastern corner of the ExxonMobil-operated Point Thomson unit, which contains two 1990’s BP oil discovery wells, and two other Point Thomson unit leases directly west of Jade’s lease (see Jade story on page 1 of this issue).
All the rest of the acreage surrounding 88 Energy’s Yukon leases is unleased by the state (see map in pdf and print versions of this story).
3D over Yukon, SourdoughIn early 2018, SAExploration acquired 3D seismic over both the Yukon leases and the Sourdough lease.
For 88 Energy the data allowed an assessment of the volumetric potential of the untapped Yukon Gold oil discovery, as well as Regenerate’s broader lease position.
Processing and mapping were done to assess the resource associated with three sand bodies. The largest of these was the Cascade prospect, which 88 Energy said contained approximately 92% of the “preliminary mapped resource” on the Yukon leases. The up-dip portion of the prospect was clearly identified as a channelized feature and is likely to contain thicker sands of higher quality, the company said.
Cascade was “interpreted to have been intersected in a down-dip distal location by the vintage Yukon Gold 1 oil discovery well.” That well also “discovered two oil saturated sands in the Canning formation with porosities exceeding 18 percent,” 88 Energy said, noting a Brookian turbidite fan play, with additional prospectivity mapped with 3D seismic within the Staines tongue topset play.
“Up until the recent commissioning of infrastructure at the nearby Point Thomson gas/condensate/oil field in 2016, an accumulation of this size and location would have been considered stranded,” 88 Energy said in 2018.
Another Sourdough well, Jade 1, is scheduled to be drilled in early 2023.
Merlin 2 appraisal well88 Energy said it has selected three potential Merlin 2 appraisal well sites to the east of Merlin 1, “closer to the shelf break, where enhanced reservoir thickness and quality are expected.”
Merlin 2 will target a gross mean prospective resource of 652 million barrels of oil in the N20, N19 and N18 Nanushuk horizons.
Permitting and rig selection are underway.
Merlin 1 did not penetrate the targeted deeper N14 horizon which is anticipated to be 600 feet deeper than drilled.
The company said Sept. 2 that it still has an opportunity to drill Merlin 1A to a depth of 6,000-plus feet to intersect N14, but it does not appear to be something that will happen this coming winter. Merlin 1A’s N14 horizon has a gross mean prospective resource of 132 million barrels, 88 Energy said.
The other Peregrine project prospect is Harrier.
Harrier 1, the company said, would be drilled sometime in the future, and would be designed to “intersect two stacked reservoir targets, the N15 and N14 North.” It would target a gross mean prospective resource of 353 million barrels.
Talitha A results for IcewineIcewine is another 88 Energy project (held and operated by Accumulate) on state lands. The company has a 75% interest in Icewine, which encompasses 193,000 net acres.
On Sept. 2, 88 Energy reported that Icewine is being reassessed by an internal geoscience team well ahead of a potential farm-out due to Pantheon Resources’ “encouraging” findings at the neighboring Talitha well.
Talitha A, which Pantheon said had a flow of light oil from the Kuparuk formation, is close to Icewine’s northern border.
Additional insights into the wettability of the Kuparuk formation may have positive ramifications for 88 Energy’s previous interpretation of this horizon, 88 Energy said.
All three wells drilled by Accumulate at Icewine have encountered good quality reservoir in the Kuparuk, with indications of hydrocarbons. These had previously been interpreted as likely gas condensate or residual oil with no mapped targets being identified, as this was not a play pursued by 88 Energy.
- KAY CASHMAN