88 Energy Ltd (ASX,AIM:88E) Q & A Part 1 – Share Talk blogger Steve Larratt
88 Energy has a 78% working interest and operatorship in ~272,000 acres (~174,000 acres’ subject to formal award) 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 conventional oil pool in North America. The Company, with its Joint Venture partner Burgundy Xploration, has identified three highly prospective play types that are likely to exist on the Project Icewine acreage – two conventional and one unconventional.
Drone Video of Icewine #1 exploration well Drilling Operations
We last covered 88E Energy with Dave Wall (Managing Director) answering Q & A session with Share Talk. Today Steven follows up on Dave’s article with his views and expected updates that may follow.
Oil in Place
Firstly, it is good to be involved with SHARE TALK and having the opportunity to give a review on the Q & A session with David Wall from 88e. The answers were gratefully received and Twitter was awash with people talking about the company’s expectations near to midterm.
With that in mind I was asked to provide some feedback based on the Icewine#1 drill and cores, and then about the potential joint venture going forward.
Firstly, it is a refreshing change to see the manager of a company being very grounded and managing expectations as he understands that this is a long term play and not a one drill wonder.
He comes across as a conservative person but also said ‘we are excited’ at what they are seeing whilst analysing the core samples, by that comment I think both Dave and Paul Basinski are very happy based against their pre-drill expectations. ‘Under promise and over deliver’?
Based on the RNS published on the 20th January 2016 we have hydrocarbons leaching from the cores and the analysis confirmed liquid rich gas throughout the HRZ shales. From the on-site tests we have a very good oil in place of between 25-35api which is excellent for 88E at project Icewine.
They have a good thickness of shales as compared to Paul Basinski’s Eagleford discovery. We are around 40′ thicker, and potentially have a higher porosity of rock in place as well. As we know there are several factors that make this a commercially viable product. The only potential negative is the price of oil. How can we put a price on something that can’t be manufactured below the cost of sale at this time? That being said the general consensus is that the price of oil will rise and Dave Wall says he is looking forward to this too and also releasing ‘good core results’
The ‘Achilles heel’ much talked about and now knowing what it pertains to is reassuring to know, most are easily answered, these are the key points to be analysed…
Effective bottom seal and frackability
According to the RNS we have oil in place in the HRZ section. The HRZ section going into the pebble shales section was cored during the drill. As reported in the RNS we had high kickbacks caused by pockets of pressure whilst drilling deeper, this shows that the higher pressure below wasn’t dispersing and I believe the results will show and confirm that this is an effective trap on that basis. When the kaparuk sands were intersected there is a 58′ section of gas in play, this should be a wet condensate gas, and should be a commercially viable product. Although he has previously stated that water was found in this section this is normal in oily areas so nothing to be concerned with as it is expected.
Wet gas thermal maturity window
Dave Wall has already stated that the initial expectations are that a large proportion of Icewine sits on the sweetspot of thermal maturity. The core results are the only way to confirm this along with the Matrix permeability but the main clues so far are in the c1 to c5 gas finds that were stated whilst drilling, these gas hydrocarbons show a good thermal maturity model, not overly mature or immature, so just right. I am hopeful that the cores results will meet or exceed their pre drill expectations.
We now need the lab results to see if Mr. Basinskis years of research have been worth it and we will have a commercially viable product.
Based on my current knowledge and information my personal estimates are for 170′ feet of HRZ containing 29api oil at a 15% porosity giving project Icewine an excellent resource in place. Compared to the Eagleford discovery I would hope to see nearly double the amount of oil in play per acre.
I am looking forward to the core results in February as I am sure all holders are…
Part 2 will be published ‘exclusively’ through Share Talk very soon and will cover “JV and future prospects”
LSE Share Talk will be following 88E Energy PLC progress over the coming months and if you wish to follow their twitter account @88EnergyLtd or look at the 88 Energy company website . This is a company with a short – midterm business plan that looks very interesting and one Private Investors should have on their watch list.
A special thank you to Steve Larratt for sharing and if you wish to follow his twitter account @slarratt1
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