Rig Contract Executed for Imminent Spud of Icewine

RNS Number : 6415Y

88 Energy Limited

10 September 2015

 



10 September 2015

Rig Contract Executed for Imminent Spud of Icewine #1

88 Energy Limited ("88 Energy" "the Company") (ASX, AIM: 88E) is pleased to announce that its wholly owned subsidiary, Accumulate Energy Alaska Inc ("AEA"), has executed a rig contract with Kuukpik Drilling LLC ("Kuukpik").

Kuukpik Rig 5 will be utilised for the upcoming Icewine #1 exploration well, which is on schedule for spud in October 2015. The rig is a winterized rig with a telescopic mast rated for 400,000 pounds that is well suited for the drilling of Icewine #1.

Kuukpik Rig 5 has drilled remote exploration wells in all areas of the Alaskan Arctic, including the Barrow Gas Fields, Umiat, NPRA and an offshore ice island in the Beaufort Sea.

The Company is delighted to be working with Kuukpik, one of the most experienced rig operators on the Slope.

Figure 1: Kuukpik Rig 5 (please refer to the pdf version of this announcement available from the Company's website)

Managing Director of 88 Energy Limited, Dave Wall commented: "With the spud date for Icewine #1 fast approaching, it is great to have finalised a rig contract with Kuukpik. We are now fully funded, with a rig. The last of the permits required are also falling into place such that spud of the well remains on track for mid October.

The same crew on the Kuukpik rig have been drilling wells on the Slope in a safe and efficient manner for over a decade. This experience, combined with that of Erik's team on the ground in Alaska, is a significant bonus for 88E and its shareholders.

With Icewine #1 located on a gravel pad adjacent to the Dalton Highway it is a short, 39 mile, mobilisation for the Kuukpik rig from Deadhorse (Prudhoe Bay) and logistically simpler than most of the wells drilled in recent times by both Erik's and Kuukpik's teams. We anticipate making an announcement upon rig mobilisation in the near future."

About Kuukpik:

Kuukpik Drilling operates with an unyielding commitment to the personal safety of each employee and the safety of the environment. Our goal is to nurture a zero incident culture and achieve zero incidents. Everyone goes home safely.

Kuukpik Drilling has operated on the North Slope of Alaska, Cook Inlet, and Hawaii with a commitment to the safety of our employees and the environment. It is our goal to make sure that every employee makes it home to their families while enjoying a prosperous relationship with our operators. Kuukpik Drilling brings substantial North Slope and Cook Inlet experience dating back to the early 1970's and four campaigns of work from 2005-2009 on the Big Island of Hawaii with a proven record of successful partnerships with multiple operators.

Kuukpik Drilling, LLC. is a wholly owned subsidiary of Kuukpik Corporation 

Kuukpik Corporation is an Alaska Native Village Corporation established in 1973 under the provisions of the Alaska Native Claims Settlement Act. Kuukpik's business interests and activities consist primarily of oil and gas support services including drilling, catering, security, ice road and civil construction, infrastructure maintenance, seismic acquisition and engineering services. Nuiqsut, home of the Kuukpik Corporation, is located approximately eight miles from the Alpine oil field on the North Slope of Alaska. The corporation has significant land holdings in and around the Greater Colville River Delta and the National Petroleum Reserve - Alaska. Kuukpik Corporation maintains offices in both Nuiqsut, Alaska, and Anchorage, Alaska.

For further information:

Australia
88 Energy Ltd  [e-mail]  [phone]  Hartleys Ltd  As Corporate Advisor  Mr Dale Bryan  [phone]
United Kingdom Cenkos Securities Plc As Nominated Adviser Mr Neil McDonald Mr Derrick Lee Tel: [phone] Tel: [phone]

Project Icewine Highlights

In November 2014, the Company entered into a binding agreement with Burgundy Xploration (BEX) to acquire a significant working interest (87.5%, reducing to 78% on spud of the first well on the project) in a large acreage position on a multiple objective, liquids rich exploration opportunity onshore Alaska, North America, referred to as Project Icewine.

88 Energy, (through BEX their co-venture partner), was announced highest bidder on 90,720 acres (revised to 89,542 post survey) in the November State lease sale for the North Slope of Alaska on 20 November 2014. Post award of the acreage in Q2 2015 88 Energy will secure a 98,182 gross contiguous acre position with 85,900 acres net to the Company (76,582 net acres post spud). The primary term for the State leases is 10 years with no mandatory relinquishment and a low 16.5% royalty.

Figure 1: Project Icewine Location (please refer to the pdf version of this announcement available from the Company's website)

Generous exploration incentives are provided by the State of Alaska with up to 85% of exploration expenditure in 2015 cash refundable, dropping to 75% mid 2016 and thereafter 35%.

The  primary objective is an untested, unconventional liquids-rich shale play in a prolific source rock, the HRZ shale,(Brookian Sequence), that co-sourced the largest oil field in North America; the giant Prudhoe Bay Oil Field Complex. Internal modelling and analysis indicates that Project Icewine is located in a high liquids vapour phase sweetspot analogous to those encountered in other Tier 1 shale plays e.g. the Eagle Ford, Texas.

Conventional play potential can be found at Project Icewine within the same Brookian petroleum system and shallow to the HRZ shale and includes high porosity channel and deep water turbiditic sands. The Brookian conventional play is proven on the North Slope; the USGS (2013) estimate the remaining oil potential to be 2.1 billion barrels just within the Brookian sequence. Additional conventional potential exists in the deeper Kuparuk sands and the Ivashuk Formation.

Drilling, (2012), in the adjacent acreage to the north confirmed that the HRZ shales, along with the underlying Kingak & Shublik shales, were all within the oil window which is extremely encouraging for the unconventional potential at Project Icewine. In addition a conventional oil discovery was reported in the Kuparuk sandstones.

A Prospective Resources Report by DeGolyer and MacNaughton, was commissioned by 88 Energy to evaluate the unconventional resource potential of Project Icewine in early December 2014 and was released to the market on 19 January 2015.

About 88 Energy: 88 Energy recently acquired an initial 87.5% working interest and operatorship in 98,182 acres 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 in North America. The Company, with its Joint Venture partner Burgundy Xploration, has identified two highly prospective play types that are likely to exist on the Project Icewine acreage - one conventional and one unconventional. The large resource potential of the Icewine Project was recently independently verified by leading international petroleum resource consultant DeGolyer and MacNaughton. In addition to the interpreted high prospectivity, the project is strategically located on a year-round operational access road and only 35 miles south of Pump Station 1 where Prudhoe Bay feeds into the TransAlaska Pipeline System. The Company plans to progress drilling and seismic 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.

 

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