REG - 88 Energy Limited - Maiden Prospective Resource for Canning Prospect

88 EnergyAnnouncement

30/01/2025 07:00

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RNS Number : 2053V  88 Energy Limited  30 January 2025

30 January 2025

 

88 Energy Limited

 

Maiden Prospective Resource Estimate FOR THE Canning Formation, Project Leonis

 

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to announce a maiden internal Prospective Resource estimate for the
Canning Prospect (Canning) of 283 million barrels of oil (MMbbls) 1 , 2  (net
mean, unrisked) for Project Leonis in Alaska (100% working interest and a
16.67% State Royalty).

Highlights

·   Maiden Internal Prospective Resource Estimate for the Canning Prospect:

§ Material new Prospective Resource declared for the Canning Prospect at
Project Leonis.

§ Total estimated net mean Prospective Resource of 283 MMbbls(1,2)
recoverable from the Canning Formation.

§ Unrisked net 3U (high) 469 MMbbls, 2U (best) 259 MMbbls, and 1U (low) 136
MMbbls estimated(1,2).

·   Now a Multi-Reservoir Opportunity of Scale: Combined internal gross
mean Prospective Resource estimate across the Canning and USB Prospects of 798
MMbbls, with (664 MMbbls net mean prospective resource to 88E (refer Tables 1
and 2 on page 8).

·   Planning underway for Tiri-1 Exploration Well: Currently scheduled for
H1 CY26, targeting both the Canning and USB Prospects.

·   Well Location Selection Underway: Leveraging results from the
quantitative interpretation study, targeting completion in Q1 CY25, followed
by permitting and operational planning.

·   Targeting Shared Well Cost: 88 Energy's 100% working interest provides
strong potential to secure a large proportionate carry-on completion of the
active farm-out process, ahead of any future drilling event.

·   Project Leonis Represents a Highly Attractive Exploration Opportunity:
Strategically located adjacent to the major pipeline system (TAPS) and the
Dalton Highway, significantly enhancing any future development and
commercialisation potential.

Managing Director, Ashley Gilbert, commented:

"We are extremely pleased to announce the maiden, internally estimated
Prospective Resource estimate for the Canning Prospect, which closely follows
the successful bid for four new leases at Project Leonis in December 2024 with
award expected in the 1(st) half of 2025.

The identification of the Canning Prospect comes after an extensive review of
data, including newly reprocessed and interpreted Storms 3D seismic data, and
the outcome of the recently completed quantitative interpretation study (rock
physics, AVO and seismic inversion). This work has confirmed significant
prospectivity at both reservoir intervals.

Importantly, advanced seismic techniques, such as the use of geophysical AVO
technology, have played a critical role in recent drilling successes across
the North Slope of Alaska.  This technology has been employed successfully
worldwide; and in Alaska has delivered major discoveries by Oil Search (now
Santos), Repsol, Armstrong and ConocoPhillips when targeting the Nanushuk
Formation. Similarly, 88 Energy utilised these techniques to great effect with
the Hickory-1 discovery at Project Phoenix.

The Tiri-1 well will be optimally located to test both the Canning and USB
Prospects, providing shareholders with a multi-zone exploration opportunity of
considerable scale. The timing of the Tiri-1 exploration well is contingent on
securing a 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.

Looking ahead, our focus is firmly on advancing the Tiri-1 well at Project
Leonis scheduled to drill in Q1 2026 as well as finalising funding to deliver
a horizontal well test at Project Phoenix".

 

Project Leonis: A Strategically Located Multi-Reservoir Opportunity of Scale

Material Prospective Resources have now been estimated within the Canning
Formation (Canning Prospect) and Upper Schrader Bluff (USB Prospect)
reservoirs in the Project Leonis acreage.

The new Canning Prospect Prospective Resource estimate follows a detailed
review of an extensive data suite, including the reprocessed and interpreted
Storms 3D seismic data. This review identified a significant geological
feature attributed to basin-wide erosion during the Mid Campanian, which
created canyon-like scours in the Hue shale, providing considerable
accommodation space for high-energy, toe-of-slope turbidite sequences.

These turbidites form a thick reservoir succession of up to 336 feet thick,
covering an area of approximately 43km(2), highlighting the substantial scale
of the prospect.

 

 

Notably, the Canning Prospect remains untested by offset wells in the
immediate vicinity. However, oil shows, ("oil over shakers") and calculated
pay have been observed at stratigraphic intervals in the Hemi Springs Unit 3
well (see Figure 3). The Canning interval at this well exhibited porosities of
up to 28%, with reservoir quality within the canyon-like feature anticipated
to be even higher. Similar high net-to-gross turbidites are being produced
from Hue Shale scours in Conoco Phillips' Tabasco field, located just 23 miles
to the northwest (see Figure 2).

 

 

Prospectivity Supported by Historical and Modern Data Interpretation

Historical data reinforce the compelling technical and commercial potential of
Project Leonis. The Hemi Springs Unit 3 well, drilled in 1985, targeted deeper
reservoirs than the Canning and USB Formations and without the benefit of
modern seismic data, leading to overlooked low-resistivity oil pay.
Re-evaluation of petrophysical data has since identified oil saturations
within both the USB and Canning Formation, oil shows observed in the Hemi
Springs Unit 3 mud log correlate with extensive areal mapped potential.

Modern advances in understanding low-resistivity pay have unlocked substantial
reserves across Alaska's North Slope, as demonstrated by the Willow and Pikka
fields. Similarly, 88 Energy's re-evaluation of legacy wells led to the
successful drilling and testing of Hickory-1 in CY23-24. This approach has
guided the evaluation of Project Leonis, leveraging both historical and modern
data to identify and target untapped resources.

A comprehensive Quantitative Interpretation (QI) study, including rock
physics, AVO and seismic inversion, commenced in Q3 24 and has now been
completed. The primary objective was to identify anomalous responses within
the Canning feature, while the secondary aim was to pinpoint "sweet spots"
within the USB reservoir. Results from the AVO and inversion analysis
confirmed significant prospectivity at both intervals, providing actionable
insights for future well planning. See Figures 4,5 and 6.

 

 

Forward Program and Farm-Out Strategy

Project Leonis's strategic location, with proximity to existing infrastructure
such as export pipelines and the Deadhorse services hub, enhances its
commercial appeal. The project's multi-reservoir appraisal drilling
opportunity targets 664 MMbbls of estimated net mean, unrisked Prospective
Resources, (refer to page 8 for further details of Low, Best and High
estimates, and page 1 for the Cautionary Statement).

88 Energy has engaged Fairweather to initiate planning and permitting for the
Tiri-1 exploration well, which will target the USB and Canning reservoir
zones. Drilling is contingent on securing a farm-out partner, with Llamas and
Bannister Energy Advisors Ltd (LAB) recently appointed to manage an active,
relaunched and expanded farm-out process. The expansion of Project Leonis's
acreage and the addition of the Canning Formation reservoir opportunity
underpins its status as a cornerstone asset in 88 Energy's portfolio.

 

Prospective Resources Estimate and Estimation Methodology

88 Energy has determined Prospective Resources using probabilistic methods,
which involved interpreting top and base pay from the Hemi Springs Unit 3
petrophysical model and integrating reprocessed 3D seismic data. Key
parameters, such as potential pool area, thickness, porosity, hydrocarbon
saturation, oil expansion and recovery factors were modelled on a
probabilistic low, mid and high basis using Monte Carlo analysis.

The Prospective Resources have not been adjusted for phase risk or chance of
development, with a "probable" qualitative assessment of development upon
geological success, given the project's proximity to key infrastructure.

All Prospective Resource estimates included in this announcement adhere to 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 29 January 2025. Further details are available
in the disclaimers attached as Schedule 1 of this ASX release.

 

 Project Leonis: Alaska North Slope    Unrisked Gross Prospective Oil Resources (MMbbls)(3,4)
 Prospect (Probabilistic Method)       Low (1U)     Best (2U)    High (3U)    Mean         COS(2)
 USB Prospect* (Upper Schrader Bluff)  200          406          806          458          32%
 Canning Prospect (Canning Formation)  163          311          563          340          33%
 Total Prospective Resources           363          717          1369         798

 

 

 

 Project Leonis: Alaska North Slope    Unrisked Net Entitlement to 88E(1) Prospective Oil Resources (MMbbls)(3,4)
 Prospect (Probabilistic Method)       Low (1U)         Best (2U)        High (3U)        Mean             COS(2)
 USB Prospect* (Upper Schrader Bluff)  167              338              671              381              32%
 Canning Prospect (Canning Formation)  136              259              469              283              33%
 Total Prospective Resources           303              597              1140             664

* Formerly referred to as the Tiri Prospect. Refer to announcement dated 4
June 2024.

 

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.

 

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.

 

This announcement has been authorised by the Board.

 

 

 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 29 January 2025.
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 83.33% 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, 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 (in blue in the map below)
covering approximately 25,430 contiguous acres and a further four leases (in
red in the map below) ;

 

 

In late 2022, the Company announced Captivate Energy Alaska, Inc. (a
wholly-owned subsidiary of the Company) had been declared the successful
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.

On 11 December 2024 (Alaska time) Captivate Energy Alaska, Inc. was declared
the successful bidder on four additional (in red) lease blocks immediately
adjacent to the existing Project Leonis leases (refer announcement 12 December
2024). The new lease blocks cover approximately 10,203 acres, expanding
Project Leonis' footprint to a total of fourteen (14) leases covering
approximately 35,634 contiguous acres. The leases are subject to adjudication
and regulatory approvals in advance of formal award, expected in 1H 2025.

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.  The Project Leonis
leases have a ten-year term and  the original 10 leases expire on 30 April
2033. The four new leases will expire 10 years form the award date, in 2035.

 

 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 recoverable hydrocarbons.

 2  Net Unrisked Prospective Oil Resources (MMbbls). Refer to page 8 for
further details.

 

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