REG - 88 Energy Limited - Receipt of Outstanding Project Phoenix Funds

88 EnergyAnnouncement

31/03/2025 07:15

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RNS Number : 8721C  88 Energy Limited  31 March 2025

 

 

 

31 March 2025

 

This announcement contains inside information

 

 

88 Energy Limited

 

Receipt of Outstanding Project Phoenix Funds

Strengthens Balance Sheet

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is
pleased to advise that Burgundy Xploration LLC (Burgundy) has settled the
residual balance, including interest and fees owed as part of the Hickory-1
flow test expenditure.

Highlights

·   Final payment of US$2.2 million is in addition to the US$1 million
received in February.

·   Provides further balance sheet strength, with current cash position of
over A$10 million(2).

·   Payment follows the Company's execution of a Farmout Participation
Agreement (PA) with Burgundy in relation to Project Phoenix in February 2025.

·   PA provides for a full carry for costs associated with the upcoming
horizontal well programme, including an extended flow test currently scheduled
for mid-CY26.

·   Contributes to the procurement of long-lead items for the planned CY26
horizontal drilling and production test programme.

Background and Detail

The final payment of US$2.2 million (A$3.4 million) is in addition to the US$1
million received in February 2025, further strengthening the Company's
treasury position to over A$10 million(2). Settlement of these balances
follows the Company's 17 February 2025 announcement outlining binding terms
for a Farmout Participation Agreement (PA) with Burgundy in relation to
Project Phoenix. Under the agreement, 88 Energy's wholly owned subsidiary,
Accumulate Energy Alaska, Inc. (Accumulate), will be fully carried for all
costs associated with the upcoming horizontal well programme, including an
extended flow test currently scheduled for mid-CY26. 1  (#_ftn1)

Burgundy Xploration LLC is a Texas-based private oil and gas company backed by
sophisticated energy investors, which has invested over US$26 million in
Project Phoenix to date. Burgundy has secured initial funding to settle the
residual balance owed to 88 Energy and to initiate procurement of long-lead
items for the planned CY26 horizontal drilling and production test programme.

The recently announced PA marks a key milestone for 88 Energy, serving to
financially de-risk Project Phoenix while delivering significant value for
shareholders. Importantly, the PA implies a transaction value approximately
50% higher than 88 Energy's invested capital in Project Phoenix since
mid-CY22, while enabling investors to continue to participate in future
success.  Following completion of the PA, Burgundy will become the operator
of Project Phoenix, enabling 88 Energy to focus on advancing and de-risking
Project Leonis.

 

(1): Note: Burgundy's ability to provide a full carry to 88 Energy and its
farm-in to this acreage is contingent on Burgundy successfully completing a
fund-raising program in CY25.

 

(2): Unaudited cash at bank balance as at date of announcement.

 

Project Phoenix: Forward Work-Program:

88 Energy has commenced work with Burgundy to progress planning and permitting
for the horizontal test well and flow back operation scheduled for mid-CY26.
Upon completion of the Farm-out transaction, transition of operatorship to
Burgundy will occur.

Experienced Alaskan service provider, Fairweather LLC has been retained to
manage project planning, permitting and operational support to ensure that
well objectives are met. Additionally, recent work completed by ResFrac will
be incorporated into the planning for the stimulation and flowback programme
of the planned horizontal well.

Key Details of the Planned Horizontal Well and Flowback Operation:

·   Location: Franklin Bluffs gravel pad

·   Planned Zone for Flow Test: SMD-B.

·   Lateral Length: ~ 3,500 ft

·   Operational Test Duration: ~ 90 days

·   Planned Spud Date: Mid-2026

Table 1: Indicative Project Phoenix Timeline

 Project Phoenix
 Indicative Project Phoenix timeline(1)                                  H1-24     H2-24     H1-25     H2-25     H1-26     H2-26
 Successful Hickory-1 flow test flows light crude oil to surface         P
 Post-well analysis and updated Contingent Resource Estimate                       P
 Targeted farmout to de-risk and provide pathway to production test                P
 Planning/permitting/design for horizontal production test(2)                      n         n         n         n
 Extended horizontal production test(2)                                                                          n         n

 

1 This timeline is indicative and subject to change. The Company reserves the
right to alter this timetable at any time.

2 Horizontal production test subject to farm-out/funding as well as government
and other approvals.

 

 

 

Figure 2:Project Phoenix oil flowed to surface during Hickory-1 flow testing
operations Q1 2024.

 

 

About Project Phoenix (~74.3% WI) and the Hickory-1 Discovery Well

The Hickory-1 discovery well was drilled in February 2023 and flow tested
during the Alaskan winter season in Q1/Q2 CY24. Testing focused on the two
shallower primary targets, the Upper SFS (USFS) reservoir, previously
untested, and the SMD-B (SMD) reservoir. Each zone was independently isolated,
stimulated, and flowed oil to the surface either naturally or using nitrogen
lift to facilitate efficient well clean-up. On the 18th of September 2024, a
contingent resource for the SMD-B, Upper SFS and Lower SFS reservoirs was
issued by ERCE. This contingent resource is now added to the pre-existing
contingent resource in the BFF reservoir, issued by NSAI in November 2023. The
total net 2C contingent resource at Project Phoenix is 239 MMBOE (refer to
page 4 for further details).

 

Figure 3: Alaska, North Slope, highlighting Project Phoenix and the location
of the Hickory-1 discovery well.

 

 

Figure 4: Project Phoenix 88 Energy Net Entitlement 2U Contingent Resources
with untested 2U Prospective Resource upside. (Project Phoenix total unrisked
net entitlement prospective resources (MMBBL) 1U: 53, 2U: 153, 3U: 321 and
Mean 155. Refer to announcement dated 18 September 2024 and Cautionary
Statement below).

 

 

Table 2: Project Phoenix net entitlement to 88 Energy (63.3%) Contingent
Resources estimates by NSAI and ERCE

 Project Phoenix               NET (~63.3%) Contingent Resources (4,6)
 Reservoir  Auditor    UoM     Low (1C)        Best (2C)       High (3C)
 SMD-B      ERCE(1,3)  MMBOE   7               24              79
 Upper SFS  ERCE(1,3)  MMBOE   6               21              72
 Lower SFS  ERCE(1,3)  MMBOE   8               35              123
 BFF        NSAI(2,5)  MMBOE   62              158             367
 Total(7)                      83              239             640

 

 

Notes to table 2:

1.   ERCE: ERCE Australia Pty Ltd

2.   NSAI: Netherland, Sewell & Associates Inc.

3.   Refer to ASX announcement dated 18 September 2024; page 6, Appendix 2
and disclaimers for further details.

4.   Million Barrels of Oil Equivalent (MMBOE) of estimate contingent
resource. NGLs are converted to oil equivalent volumes on a constant ratio
basis of 1:1. Gas is converted to oil equivalent volumes on a constant ratio
basis of 5.5 BCF per 1 MMBOE.

5.   Please refer to ASX announcement dated 18 September 2024 page 7 and ASX
announcement dated 6 November 2023 for further details in relation to the BFF
Contingent Resource estimate. Note the Basin Floor Fan (BFF) reservoir was
drilled and tested on adjacent acreage by Pantheon Resources

6.   88 Energy net resource entitlement of ~63.3% has been calculated using
an average 74.3% working interest net of a 12.5% government royalty and a 4%
Overriding Royalty on 18 leases.

7.   Totals by reservoir rounded and project total may not sum due to
rounding.

 

 

 

Cautionary Statement: The estimated quantities of petroleum that may be
potentially recovered by the application of a future development project
relates 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 movable hydrocarbons.

88E confirms that it is not aware of any new information or data that
materially affects the information included in the referenced market
announcement and that all material assumptions and technical parameters
underpinning the estimates in the referenced market announcement continue to
apply and have not materially changed.

 

 

 

Figure 5: Project Phoenix multi-reservoir discoveries with significant light
oil resource confirmed.

 

This announcement has been authorised by the Board.

Media and Investor Relations:

 

88 Energy Ltd

Ashley Gilbert, Managing Director

Tel: +61 8 9485 0990

Email:investor-relations@88energy.com

 

Fivemark Partners, Investor and Media
Relations

Michael
Vaughan
Tel: +61 422 602 720

 

EurozHartleys Ltd

Dale
Bryan
Tel: + 61 8 9268 2829

 

Cavendish Capital Markets
Plc

Derrick Lee / Pearl
Kellie
Tel: + 44 131 220 6939

 

Pursuant to the requirements of the ASX Listing Rules Chapter 5 and the AIM
Rules for Companies, the technical information and resource reporting
contained in this announcement was prepared by, or under the supervision of,
Dr Stephen Staley, who is a Non-Executive Director of the Company. Dr 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 resource and reserve
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.

(#_ftnref1)

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