The Directors of 88 Energy Limited (“88 Energy” or the “Company”, ASX & AIM:88E) provide the following report for the quarter ended 30 June 2017.
· Spud of Icewine#2 Production Test well occurred on 24th April 2017, with the following key project milestones;
o The Arctic Fox drilling rig reached a Total Depth of 11,450′ on 15th May 2017, on schedule and without incident;
o Wireline logging successfully completed throughout the production interval;
o Stage 1 and Stage 2 stimulation operations completed successfully, with over 98% of the intended proppant volume placed in the HRZ reservoir;
o Flowback commenced on 19th June 2017 with ~16% of stimulation fluid recovered prior to shut in on 10th July 2017, with trace hydrocarbons encountered during flowback; and
o Drilling and production testing expenditure anticipated to be within budget.
Key Events Subsequent to the Quarter End
The well was shut in on 10th July 2017 for an anticipated period of 6 weeks to allow for pressure build up and imbibition to occur.
On 6th April 2017, approval of the Permit to Drill was granted by the Alaskan Oil and Gas Conservation Commission (‘AOGCC’) and shortly thereafter on 24th April the Icewine#2 well was spudded with the Arctic Fox rig.
The well reached a Total Depth (‘TD’) of 11,450′ on the 15th of May, on schedule and without incident. Wireline logging, cementing the 4.5″ production liner and demobilisation of the Artic Fox rig was completed by the end of May.
Log interpretation to finalise the stimulation design was completed in early June, and the two stage artificial stimulation of the HRZ reservoir was successfully completed on 19th June, with over 98% of the intended proppant volume placed into the HRZ reservoir.
Flow back from the upper zone commenced on 19th June, with approximately 8% of the total stimulation fluid recovered before it became apparent that the upper and lower zones were in communication, which consequently resulted in the drill out of the plug between the upper and lower zones.
Subsequent to period end the well was shut in on 10th July 2017 for an anticipated period of 6 weeks, with ~16% of stimulation fluid recovered prior to shut in.
The ASX Appendix 5B attached to this report contains the Company’s cash flow statement for the quarter. The significant cash flows for the period were:
· Exploration and evaluation expenditure of A$13.7m primarily relating to Icewine#2 operations and lease rental payments to the State of Alaska;
· Payments to the Bank of America in relation to the debt facility totalled A$0.6m (US$0.5m);
· Administration and other operating costs A$1.0m (March 2017 of A$0.9m); and
· Proceeds from issue of shares resulting from the conversion of options and warrants totalled A$0.5m.
At the end of the quarter, the Company had cash reserves of A$31.6m, including cash balances held in Joint Venture bank accounts.
To read full financials click here for original RNS.
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