This is one of the popular oil and gas minnows listed on the AIM market today. The capital raised totals AUS $7,428,348 including the placing completed in November 2015 which was oversubscribed with the admission of the Ordinary Shares that is expected to occur on or around 22 December 2015.
Today’s RNS Number : 0660J was received with a mixed reception from retail investors, l can understand why the markets have not reacted and I have done a quick breakdown with my views.
Before I press on, here is small overview for none shareholders of 88E.
88 Energy: 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. The Company plans to progress drilling and seismic acquisition in the near term to take advantage of the globally unique fiscal system in Alaska, which allows for up to 85% of CY2015 exploration expenditure to be rebated in cash.
Here is my take on today’s news.
- HRZ primary target intersected – preparations being made to cut core
This is basically saying they have reached a target depth and are preparing to collect samples that will be sent to a lab to be analyzed (here is the sticking point for the markets, retail investors, Privateer’s). How long will this process take? A lot will depend on the result being released, updates will not be released until geologists collect and have studied all the data.
Potentially this could take several months of data analysis and this is what spooks the markets.
Visible bleeding of gas from rock chip samples in top HRZ interval
This sounds encouraging because this shows they could be in the target zone.
- Persistent oil shows in and above HRZ interval along with Gas ratios continue to support the thermal maturity model
This again supports Icewine #1 Drilling target zone (Gamma Ray Zone) with high gamma ray reading identified on the logging while drilling. The geologists on site would be checking the cuttings in the mud shakers and would identify Oil shows and high HRZ readings.
A big factor is the discoloration in the samples which explains, range of streaming yellow to orange fluorescence oil shows in the cuttings.
This is all looking positive but is very early when you consider this is exploration with the lack of seismic data, and the region being underexplored
Current Operations
Over the weekend, a 90′ core was cut in the Hue Formation with a 99% recovery. This core will undergo processing and laboratory analysis in tandem with core cut from the HRZ formation, once obtained. The rig is currently pulling out of hole to pick up a core barrel and core the primary HRZ shale objective.
The next market update should inform the market this was completed successfully and the core samples will be sent to the laboratory.
Now here is the interesting section of today’s RNS that I picked up on.
Operations will then run into the hole to core the HRZ. Subject to hole conditions, the well will be deepened to test additional conventional zones of interest beneath the HRZ. The primary objective of the well is the HRZ shale formation, targeting a huge unconventional resource prize.
Not taking this out of context but holders who have not sold, or have de-risked their positions must have noticed this paragraph slipped away at the foot of the RNS. As it states “Subject to hole conditions” 88E are within budget on the drill and with the current results they have recovered will target their primary objective.
My take on 88E
As an Oil & Gas industry professional all my career I am not an expert on any particular field. I have been lucky enough to work across the industry in my time and gain a broad base understanding.
These are my opinions and l hold no shares in this company.
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