REG - 88 Energy Limited - Project Leonis: Prospective Resource Estimate
04/06/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240604:nRSD0097Ra&default-theme=true
RNS Number : 0097R 88 Energy Limited 04 June 2024
This announcement contains inside information
4 June 2024
88 Energy Limited
Project Leonis: Maiden Prospective Resource Estimate Complete
Highlights
· Maiden internal Prospective Resource estimate completed at Project
Leonis.
· Total estimated net mean Prospective Resource of 381 million barrels
(MMbbls) of oil(1,2) recoverable from the Upper Schrader Bluff Formation
(USB).
· Unrisked net 3U (high) of 671 MMbbls, 2U (best) of 338 MMbbls and 1U
(low) of 167 MMbbls(1,2).
· Permitting and planning has commenced for the newly named Tiri-1
exploration well designed to test the Tiri prospect in the USB Formation.
· The Tiri prospect has exceptional estimated porosity, averaging almost
30% over the 175 feet of interpreted pay.
· Concurrent farm-out process ongoing to secure a funding partner ahead
of drilling.
(1) Cautonary 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 recoverable hydrocarbons.
(2) Net Unrisked Prospective Oil Resources (MMbbls). Refer to page 5 for
further details.
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to report a maiden internal Prospective Resource estimate of 381
MMbbls(1,2) of oil (net mean, unrisked) for Project Leonis (100% working
interest and a 16.6667% royalty).
Material Prospective Resources have been estimated in the USB reservoir
interval within the Project Leonis acreage. The initial total Prospective
Resource estimate follows a period of review of an extensive data suite that
included 3D and 2D seismic data, well logs from Hemi Springs Unit-3 and
Hailstorm-1, as well as nearby wells adjacent to the Project Leonis acreage,
along with extensive petrophysical analysis and mapping.
Importantly, the USB formation is the same proven producing zone as nearby
Polaris, Orion and West Sak oil fields to the north-west. These proven USB
producers served as important calibration points for the Leonis petrophysical
model. The Leonis USB prospect has been fully delineated and mapped
following a review of reprocessed 3D seismic data and a 3rd party dedicated
fault mapping study to assist in prospect definition.
Managing Director, Ashley Gilbert, commented:
"Following the recent success at Project Phoenix we are pleased to announce
the completion of a maiden Prospective Resource estimate at Project Leonis.
Being strategically located on the North Slope of Alaska, with TAPS running
through the acreage and Deadhorse just six miles to the North, Project Leonis
represents a significant resource and development opportunity. We have
commenced permitting and planning processes for the Tiri-1 exploration well
ahead of a future potential drilling event, to target the USB zone.
Timing for the drilling of the Tiri-1 exploration well is dependent on
securing a successful farm-out partner, and with our 100% working interest in
Project Leonis, we believe there is significant potential to secure a large
proportionate carry on any future well. However, despite there being multiple
parties assessing the farm-out opportunity, there is much work to be done and
no guarantees a partner will be secured on our desired terms.
In terms of our Alaskan acreage position, we are now fully focused on Project
Leonis and Project Phoenix, where we expect meaningful advancement with key
milestones set to be achieved in the coming 6 to 12 month period."
Project Leonis: Summary of the opportunity
The Project Leonis leases were awarded in April 2023 with a 10-year lease
(refer to Schedule 3 for further information). The project provides an
attractive appraisal drilling opportunity targeting 381 MMbbls of estimated
net mean unrisked Prospective Resources, with upside (net 3U unrisked
prospective resource estimate) of 671 MMbbls (refer to page 5 for further
details of Low, Best and High estimates, and page 1 for the Cautionary
Statement). Project Leonis is advantageously positioned nearby to existing
infrastructure, including export pipeline and major service hubs.
The Tiri prospect within the Leonis acreage is defined by utilising a
high-quality dataset comprising well data and recently reprocessed 3D seismic
data, which underpins the compelling technical and commercial case for further
assessment.
The unlocking of low-resistivity pay by other operators across Alaska's North
Slope has led to the establishment of a multi-billion barrel oil reserve. The
enormous success observed by operators targeting the Cretaceous Nanushuk
Formation (such as the Willow and Pikka fields) as well as the successful
development and production of reservoirs within the Cretaceous Upper Schrader
Bluff Formation (such as the Polaris, Orion and West Sak fields) drove 88
Energy's focussed strategy to identify and target overlooked oil pay from
legacy wells. This is evidenced by the Willow field which was originally
drilled in 2002 but went unrecognised at the time. This same strategy led 88E
to re-evaluate the petrophysics of the Icewine-1 well which was drilled in
2015 targeting the deeper unconventional HRZ reservoirs but also drilled
through the shallower SFS and SMD reservoirs. This re-evaluation identified
the conventional oil pay in these reservoirs and led to the successful
drilling and testing of the Hickory-1 well in 2023-24 which produced oil to
surface from both the USFS and SMD reservoirs.
The Company has now interpreted material oil pay from the legacy Hemi Springs
Unit-3 well drilled on the Leonis acreage in 1985 where re-evaluation of the
petrophysical data shows net oil pay of 175 ft within the Upper Schrader Bluff
Formation with the well's mud logs noting oil over the shakers at multiple
depths. The interpreted oil pay can be mapped over an extensive area,
providing large untapped potential oil resources for appraisal and
development. While modern technologies support the development of such a
reservoir, at the time of drilling the Tiri prospect was overlooked with
low-resistivity pay being poorly understood. Importantly, the Hemi Springs
Unit-3 well targeted deeper reservoirs when drilled in 1985 and pre-drill
interpretation lacked the benefit of the Storms 3D which was shot some 20
years later in 2005; another reason for why this interpreted oil-bearing
reservoir was previously overlooked.
Project Leonis: Forward Program
88 Energy has engaged Fairweather to assist in commencing the planning and
permitting for the Tiri-1 exploration well. The well will be designed to
drill, log and test the USB zone in a single season, and will utilise the
existing gravel pad at the location of the Hemi Springs Unit-3 well to reduce
costs.
Timing for the drilling of the Tiri-1 exploration well is dependent on
securing a successful farm-out partner. The Company has engaged Stellar Energy
Advisors Limited (Stellar) in London to manage the farm-out process, who have
been engaged with multiple parties in advancing the assessment of the farm-out
opportunity and will continue to seek further interest from parties globally.
Focused Alaskan Strategy
88 Energy has a strategic focus on infrastructure led opportunities which
benefit from proximity to Deadhorse, TAPS and other key infrastructure and in
Alaska, the Company is focusing on advancing both Project Phoenix and Project
Leonis. Following Hickory-1 successfully flowing light oil to surface, the
Company is aiming to drill horizontal production wells and generate cash flow
within the next 24 months from Pheonix as well as unlocking Project Leonis'
potential through an appraisal well program.
The Company intends to divest its interest in the Umiat oil field, and also
rationalise the Project Icewine West acreage which is nearing the end of the
initial 8-10 year lease term. Both Umiat and Icewine West will be marketed for
divestment of working interest and/or relinquished over the remainder of 2024.
Project Peregrine remains in suspension until late 2024.
The Company will benefit from a reduction in leases costs as well as from a
focused strategy that unlocks value from key acreage positions that benefit
from their strategic locations.
Prospective Resources Estimate - Project Leonis
The assessed maiden Prospective Resource estimate associated with 88 Energy's
Project Leonis acreage (100% working interest) is summarised below.
1. 88 Energy net resources have been calculated using a 100% working interest
and a 16.6667% royalty.
2. COS represents the geological chance of success as assessed by 88 Energy,
taking into account and risking of such factors as source, timing/migration,
estimated reservoir and quality, mapped closures and seal effectiveness.
3. Prospects are subject to a phase risk (oil vs gas). Chance of oil has been
assessed as 100%. Phase risk has not been applied to the unrisked numbers.
4. 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 not yet known, 88 Energy has qualitatively assessed the
chance of development as "probable" upon geological success given the
strategic location of the acreage position adjacent to TAPS and key
infrastructure.
The data used to compile the prospective resource report includes reprocessed
3D seismic data as well as thorough petrophysical analysis of publicly
available wells and historical geological records. The data was compiled and
interpreted by 88 Energy.
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 recoverable hydrocarbons.
88 Energy's methodology for determining Prospective Resources for Project
Leonis
88 Energy has determined Prospective Resources by interpreting the top and
base pay (calculated In the Hemi Springs Unit 3 petrophysical model), using
the reprocessed 3D seismic data within the Project Leonis area. Parameters
including potential pool area and thickness, porosity, hydrocarbon saturation,
oil expansion and recovery factor were estimated on a probabilistic low, mid
and high basis. The Prospective Resources relate to the Upper Schrader Bluff
mapped prospect which one (1) well could effectively test. The unrisked
prospective resources estimates (and associated geological chance of success)
were modelled using Monte-Carlo analysis on the assumption there was no
economic minimum and that volumes and risks of each of the prospective
intervals within each prospect were independent.
The Prospective Resources have not been adjusted for phase risk or chance of
development. 88 Energy have considered the chance of discovering oil over
gas to be 100% and 88 Energy has qualitatively assessed the chance of
development as "probable" upon geological success given the strategic location
of the acreage position adjacent to TAPS and key infrastructure.
The estimates of Prospective Resources included in the announcement have been
prepared in accordance with the definitions and guidelines set forth in the
Petroleum Resources Management System ("PRMS") as revised in June 2018 by the
Society of Petroleum Engineers. The PRMS defines prospective resources as
those quantities of petroleum which are estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations.
The evaluation date for the Prospective Resources stated within this document
is 3 June 2024.
Please refer to the disclaimers attached as Schedule 1 of this ASX release for
more information on the prospective resource report.
This announcement has been authorised by the Board.
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing Director
Tel: +61 (0)8 9485 0990
Email:investor-relations@88energy.com
Fivemark Partners, Investor and Media Relations
Michael Vaughan Tel: +61 (0)422 602 720
EurozHartleys Ltd
Dale Bryan Tel: +61 (0)8 9268 2829
Cavendish Capital Markets Limited Tel: +44 (0)207 220 0500
Derrick Lee Tel: +44 (0)131 220 6939
Pearl Kellie Tel: +44 (0)131 220 9775
SCHEDULE 1
Disclaimers:
Cautionary Statement for Prospective Resource Estimates - With respect to the
Prospective Resource estimates contained within this report, it should be
noted that the estimated quantities of gas that may potentially be recovered
by the future application of a development project relate to undiscovered
accumulations. These estimates have an associated risk of discovery and risk
of development. Further exploration and appraisal is required to determine
the existence of a significant quantity of potentially recoverable
hydrocarbons.
Hydrocarbon Resource Estimates - The Prospective Resource estimates for
Project Leonis presented in this report are prepared as at 3 June 2024. The
Prospective Resource estimates are quoted on an unrisked basis together with
the geological chance of success for the Upper Schrader Bluff prospect.
88 Energy have considered the chance of discovering oil over gas to be
100%. Chance of development has not been estimated. Quantifying the chance of
development (COD) requires consideration of both economic contingencies 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 88 Energy they must be used with caution.
Government Royalty and Overriding Royalty Interests - The Project Leonis
leases ("Leases") are situated in the State Lands of the North Slope of Alaska
and are administered by the Alaskan Department of Natural Resources - Oil and
Gas Division (DNR). All leases issued by DNR are subject to a royalty and 88
Energy's Leases are subject to a 16.67% government royalty. The net
economic interest to 88 Energy has therefore been calculated as 83.3% and the
Net Entitlement Prospective Resources have been adjusted to reflect this.
Competent Person Statement Information - In this report information relating
to hydrocarbon resource estimates have been prepared by Allister Caird,
Exploration Manager at 88 Energy Limited, and reviewed by Dr Stephen Staley,
who is a Non-Executive Director of the Company. This information is based on,
and fairly represents, information and supporting documentation compiled by
Allister Caird, and the company has stated in the Report that it has been
prepared in accordance with the definitions and guidelines set forth in the
Petroleum Resources Management System, 2018, approved by the Society of
Petroleum Engineers and have been prepared using probabilistic methods.
Dr Stephen Staley, who is a Non-Executive Director of the Company, 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 prospective resource
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.
Forward looking statements - This document may include forward looking
statements. Forward looking statements include, are not necessarily limited
to, statements concerning 88 Energy's planned operation program and other
statements that are not historic facts. When used in this document, the words
such as "could," "plan," "estimate," "expect," "intend," "may," "potential,"
"should" and similar expressions are forward looking statements. Although 88
Energy believes the expectations reflected in these are reasonable, such
statements involve risks and uncertainties, and no assurance can be given that
actual results will be consistent with these forward-looking statements. The
entity confirms that it is not aware of any new information or data that
materially affects the information included in this announcement and that all
material assumptions and technical parameters underpinning this announcement
continue to apply and have not materially changed.
SCHEDULE 2
Definitions and Glossary of Key Terms:
SPE definition: Prospective Resource
Prospective resources are estimated volumes associated with undiscovered
accumulations. These represent quantities of petroleum which are estimated, as
of a given date, to be potentially recoverable from oil and gas deposits
identified on the basis of indirect evidence but which have not yet been
drilled. This class represents a higher risk than contingent resources since
the risk of discovery is also added. For prospective resources to become
classified as contingent resources, hydrocarbons must be discovered, the
accumulations must be further evaluated and an estimate of quantities that
would be recoverable under appropriate development project(s) prepared.
Glossary of Key Terms
1U Denotes the unrisked low estimate qualifying as Prospective Resources.
2U Denotes the unrisked best estimate qualifying as Prospective Resources
3U Denotes the unrisked high estimate qualifying as Prospective Resources
BOE Barrels of oil equivalent
Bnbbl Billion barrels of oil
Chance Chance equals 1-risk. Generally synonymous with likelihood.
Chance of Development The estimated probability that a known accumulation, once discovered, will be
commercially developed.
Entitlement That portion of future production (and thus resources) legally accruing to an
entity under the terms of the development and production contract or license.
Mean The sum of a set of numerical values divided by the number of values in the
set.
MMbbl Million barrels of oil
Prospect A project associated with a potential accumulation that is sufficiently well
defined to represent a viable drilling target.
Prospective Resources Those quantities of petroleum that are estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations.
Reservoir A subsurface rock formation that contains an individual and separate natural
accumulation of petroleum that is confined by impermeable barriers, pressure
systems, or fluid regimes (conventional reservoirs), or is confined by
hydraulic fracture barriers or fluid regimes (unconventional reservoirs).
Royalty A type of entitlement interest in a resource that is free and clear of the
costs and expenses of development and production to the royalty interest
owner. A royalty is commonly retained by a resource's owner (lessor/host) when
granting rights to a producer (lessee/contractor) to develop and produce that
resource. Depending on the specific terms defining the royalty, the payment
obligation may be expressed in monetary terms as a portion of the proceeds of
production or as a right to take a portion of production in-kind. The royalty
terms may also provide the option to switch between forms of payment at
discretion of the royalty owner
Working Interest An entity's equity interest in a project before reduction for royalties or
production share owed to others under the applicable fiscal terms.
SCHEDULE 3
Project Leonis - lease information:
Project Leonis acreage comprises ten leases covering approximately 25,430
contiguous acres;
In late 2022, the Company announced Captivate Energy Alaska, Inc. (a
wholly-owned subsidiary of the Company) had been declared the highest bidder
for select acreage offered as part of the North Slope Areawide 2022 Oil and
Gas lease sale (refer 88 Energy's ASX announcement dated 10 November 2022). On
20 April 2023 the Company announced that the Alaskan Department of Natural
Resources (DNR), Oil and Gas Division, had completed its adjudication process
and formally issued award notices to Captivate Energy Alaska, Inc..
The leases have an annual rental of $10/acre on or around 1 May each year, and
a royalty of 16.6667% payable to the State of Alaska. Project Leonis leases
have a ten-year term and expire on 30 April 2033.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END DRLQKQBBPBKKOAKRecent news on 88 Energy
See all newsREG - 88 Energy Limited - Project Leonis: Prospective Resource Estimate
AnnouncementREG - 88 Energy Limited - Issue of Performance Rights
AnnouncementREG - 88 Energy Limited - Result of AGM
AnnouncementREG - 88 Energy Limited - 2D Seismic Contract Awarded for Namibian PEL 93
AnnouncementREG - 88 Energy Limited - Successful Placement To Raise A$9.9M
Announcement