TIDM88E
RNS Number : 3955Z
88 Energy Limited
12 January 2024
12 January 2024
88 Energy Limited
Hickory-1 Flow Test Update
Highlights
-- Hickory-1 discovery well flow test and well stimulation
program (Flow Test) set to commence mid-February 2024, following
ice road construction, pad construction and rig mobilisation.
-- Fully funded Flow Test budget of US$11 million (gross).
-- Design, planning and logistics complete, with permitting on track for end of January 2024.
-- The Slope Fan System (SFS) and Shelf Margin Deltaic (SMD) are the two primary test targets.
-- Each zone will be tested separately and are planned to take approximately ten days each.
-- Hickory-1 is a vertical well and not optimal for the
production phase, however, information critical to development
planning will be collected, such as reservoir deliverability, fluid
compositions, pressures and connectivity.
-- Flow rates from horizontally developed wells, such as those
planned for the development of Project Pheonix, have been modelled
to be 6 to 12 times higher than those from vertical wells.
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) ( 88 Energy or
the Company ) is pleased to provide an update in relation to the
Hickory-1 flow testing program at Project Phoenix on the North
Slope, Alaska.
Hickory-1 Flow Testing Program
The Hickory-1 discovery well, which was drilled in February
2023, is currently cased and suspended ahead of the upcoming flow
testing program, with testing scheduled to commence in mid-February
2024. Flow Test planning has been finalised, with all relevant
permits submitted and all final approvals expected to be received
in January 2024.
Testing operations will focus on the two primary targets, the
SFS and the SMD reservoirs (see Figure 1), which will be testing a
mean, unrisked, multi-hundred-million-barrel oil resource (1,2,3)
(Table 1).
Of the SFS series of reservoirs, the Upper SFS reservoir is
targeted to be flow tested as it has not been previously flowed,
whereas the Lower SFS has previously been flowed and producibility
of that reservoir confirmed on adjacent acreage. This will be
followed by a targeted testing of the SMD-B reservoir. Each zone
will be independently isolated, stimulated and flowed to surface
using nitrogen lift to assist in an efficient clean-up of the well.
Perforation, completion-running and stimulation is expected to take
approximately four days, followed by a clean-up and flow period of
up to four days and a pressure build-up of up to two days .
Downhole and surface fluid samples are to be captured to reduce
fluid characterisation uncertainties. Downhole pressure and
temperature data, surface pressure and temperature data, and flow
rates of oil, gas and water will be recorded. Water salinity data
will be acquired to enable distinction between stimulation and
formation water production. This data is essential in maturing
development plans by accurately constraining reservoir models used
to progress the next phases of the Project.
Any future development plan for Project Phoenix will almost
certainly include horizontal wells with unconventional completion
technology to maximise oil rates. As is evidenced in many Lower 48
analogues, horizontal well production rates typically produce at
rates that are 6-12 times higher than vertical wells once lessons
from field development are captured in the appraisal phase. Offset
exploration vertical well tests, similar to the Hickory-1 discovery
well, have all flowed in the 50-100 BOPD range per test. Water to
oil ratios, gas to oil ratios and the evolution of rates and
pressures over time are critical datasets that assist in
development planning and forecasting. It is not uncommon for
formation water to be produced sustainably in conjunction with
hydrocarbons in these types of reservoirs, as is often observed in
producing analogues in the Lower 48. Vertical wells provide cost
effective access to test multiple reservoirs in a single wellbore
and are therefore the crucial first steps on the path to
development of Project Phoenix resources.
1 Cautionary Statement: The estimated quantities of petroleum
that may be potentially recovered by the application of a future
development project relate to undiscovered accumulations. These
estimates have both an associated risk of discovery and a risk of
development. Further exploration, appraisal and evaluation are
required to determine the existence of a significant quantity of
potentially movable hydrocarbons.
2 Mean unrisked resource - Net Entitlement to 88 Energy. Refer
announcement dated 23 August 2022 for pre-Hickory-1 estimates.
3 Refer announcement dated 6 November 2023 for post-Hickory-1
for post Hickory-1 drilling resource estimates.
Figure 1: Flow testing program to target two of the four pay
zones intersected in the Hickory-1 discovery well.
Table 1: Previously announced Prospective Resource assessment
conducted prior to the drilling of Hickory-1
Project Phoenix: Alaska Unrisked Gross Prospective Oil Resources
North Slope (MMstb) (4,5)
Prospects (Probabilistic Low (1U) Best High Mean COS
Method) (2U) (3U) (3)
-----------
Shelf Margin Delta (SMD A,
B & C) 70 224 518 231 81%
=========== ======== ======= ========= ======
Slope Fan Set (SFS) 37 134 345 141 50%
============================ =========== ======== ======= ========= ======
Kuparuk (KUP) 39 88 156 89 72%
============================ =========== ======== ======= ========= ======
Prospects Total 146 446 1,019 461 (2)
---------------------------- ----------- -------- ------- --------- ------
Project Phoenix: Alaska Unrisked Net Entitlement to 88E (1)
North Slope Prospective Oil Resources (MMstb) (4,5)
Prospects (Probabilistic Low (1U) Best High Mean COS
Method) (2U) (3U) (3)
-----------
Shelf Margin Delta (SMD A,
B & C) 44 140 326 145 81%
=========== ======== ======= ========= ======
Slope Fan Set (SFS) 24 84 217 89 50%
============================ =========== ======== ======= ========= ======
Kuparuk (KUP) 24 56 98 56 72%
============================ =========== ======== ======= ========= ======
Prospects Total 92 280 641 290 (2)
---------------------------- ----------- -------- ------- --------- ------
1. 88 Energy net resources have been calculated using a 75.227%
working interest and a 16.5% royalty.
2. The unrisked means, which have been arithmetically summed,
are not representative of expected total from the prospects and
implies a success case in all reservoir intervals. 88 Energy
cautions that the arithmetically summed 1U estimate may be a
conservative estimate and the arithmetically summed 3U estimate may
be optimistic when compared to a statistical aggregation of
probability distributions.
3. COS represents the geological chance of success as assessed
by 88 Energy and reviewed and endorsed by LKA.
4. Prospects are subject to a phase risk (oil vs gas). Chance of
oil has been assessed as 100% for all targets except for the
Kuparuk Formation which has been assessed as 70%. Phase risk has
not been applied to the unrisked numbers.
5. The Prospective Resources have not been adjusted for the
chance of development. Quantifying the chance of development (COD)
requires consideration of both economic and other contingencies,
such as legal, regulatory, market access, political, social
license, internal and external approvals and commitment to project
finance and development timing. As many of these factors are
outside the knowledge of LKA they must be used with caution.
6. Prospective Resource Estimates - determined pre-drilling of
Hickory-1.
7. Updated Prospective Resource Estimates reflect the removal of
the resource estimate for the Basin Floor Fan which as of 1
November 2023 has been redetermined and classified as a Contingent
Resource. No other changes have been made to the original
estimates, please refer to the ASX announcement of 23 August
2023.
Table 2: Previously announced Contingent Resource assessment for
the BFF discovery at Hickory-1
Project Phoenix: Basin Floor Gross (100%) Contingent Resources
Fan (1,3)
Probabilistic Method Low (1C) Best (2C) High (3C)
-----------
Oil Million Barrels 17 44 104
=========== ============ ===========
NGL Million Barrels 35 91 218
========= ======================== =========== ============ ===========
Oil +
NGL(2) Million Barrels 52 136 322
========= ======================== =========== ============ ===========
Gas Billion Cubic Feet 255 628 1,417
========= ======================== =========== ============ ===========
Total Million Barrels of Oil
(2) Equivalent (4) 98 250 580
--------- ------------------------ ----------- ------------ -----------
Project Phoenix: Basin Floor Net Entitlement (63%) Contingent
Fan Resources (1,3)
Probabilistic Method Low (1C) Best (2C) High (3C)
-----------
Oil Million Barrels 11 28 65
=========== ============ ===========
NGL Million Barrels 22 57 137
========= ======================== =========== ============ ===========
Oil +
NGL(2) Million Barrels 33 85 202
========= ======================== =========== ============ ===========
Gas Billion Cubic Feet 160 394 890
========= ======================== =========== ============ ===========
Total Million Barrels of Oil
(2) Equivalent (4) 62 157 364
--------- ------------------------ ----------- ------------ -----------
1. 88 Energy net resources have been calculated using a 75.227%
working interest and a 16.5% royalty.
2. 88 Energy cautions that the reported totals for Oil+NGL and
Total MMBOE are an arithmetic sum of the individual hydrocarbon
types within the BFF reservoir. The arithmetically summed 1C
estimate may be a conservative estimate and the arithmetically
summed 3C estimate may be optimistic when compared to a statistical
aggregation of probability distributions.
3. The Contingent Resource classification is not required to be
adjusted for the chance of development, as per PRMS 2018 guidance,
and hence has not been carried out in this assessment.
4. Natural Gas Liquids (NGL's) are converted to oil equivalent
volumes via a constant ratio of 1:1. Gas is converted to oil
equivalent volumes via a constant ratio of 5.5 BCF per 1 MMBoe.
This announcement has been authorised by the Board.
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing Director
Tel: +61 8 9485 0990
Email:investor-relations@88energy.com
Fivemark Partners, Investor and
Media Relations
Michael Vaughan Tel: +61 422 602 720
EurozHartleys Ltd
Dale Bryan Tel: + 61 8 9268 2829
Cavendish Capital Markets Limited Tel: +44 (0)20 7397 8900
Derrick Lee Tel: +44 (0)131 220 6939
Pearl Kellie Tel: +44 (0)131 220 9775
Pursuant to the requirements of the ASX Listing Rules Chapter 5
and the AIM Rules for Companies, the technical information and
resource reporting contained in this announcement was prepared by,
or under the supervision of, Dr Stephen Staley, who is a
Non-Executive Director of the Company. Dr Staley has more than 40
years' experience in the petroleum industry, is a Fellow of the
Geological Society of London, and a qualified
Geologist/Geophysicist who has sufficient experience that is
relevant to the style and nature of the oil prospects under
consideration and to the activities discussed in this document. Dr
Staley has reviewed the information and supporting documentation
referred to in this announcement and considers the resource and
reserve estimates to be fairly represented and consents to its
release in the form and context in which it appears. His academic
qualifications and industry memberships appear on the Company's
website and both comply with the criteria for "Competence" under
clause 3.1 of the Valmin Code 2015. Terminology and standards
adopted by the Society of Petroleum Engineers "Petroleum Resources
Management System" have been applied in producing this
document.
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