Quarterly Activity Report

29 July 2015

QUARTERLY REPORT

Report on Activities for the Quarter ended 30 June 2015

The Directors of 88 Energy Limited (“88 Energy” or the “Company”, ASX & AIM:88E) provide the following report for the quarter ended 30 June 2015. 

Highlights

• 88 Energy entered into a conditional agreement and executed a non-binding Letter of Intent with Bank of America to provide a US$50m funding facility pursuant to which Bank of America may approve, in its sole discretion, funding for specific projects. Bank of America’s lending commitment will be subject to a number of conditions including those related to due diligence.

• Payment was finalised on the Project Icewine permits bid on, and won, in November 2014 and all assignments of working interest from Burgundy Xploration LLC to Accumulate Energy Alaska, Inc (an 88 Energy subsidiary) have been submitted to the State of Alaska for processing.

• Operational highlights include the appointment of Mr Erik Opstad as General Manager ofAlaskan Operations, a field trip to site confirming suitability for drilling this October and pre-application meetings with regulatory bodies in Alaska to ensure that permitting remains on schedule for drilling in October.

• Final sign off by the Moroccan Ministers for Energy and Finance was completed, marking the exit of the Company from the Tarfaya Offshore Block in Morocco.

Key Events Subsequent to the Quarter

• On 22 July 2015, the Company announced an oversubscribed placement raising $12 million through the issue of 1,200m shares at $0.01 with 170,000,000 shares to be issued under the Company’s 15% placement capacity on or about 30 July 2015 and the balance of 1,030,000,000 shares to be issued post a General Meeting, scheduled for 21 August 2015

Upcoming Events

The current quarter is expected to deliver additional significant milestones, including:

• Finalisation of the Bank of America funding facility and completion of the $12 million share placement, following which 88 Energy will be fully funded for drilling of its first well.

• Execution of key contracts related to the drilling of the Icewine #1 exploration well, including rig contract.

• Completion of assignment of Title and Operatorship to Accumulate Energy Alaska, Inc.

The ASX Appendix 5B attached to this report contains the Company’s cash flow statement for the quarter.  The significant elements for the period were:

• exploration and evaluation expenditure of A$4.379m, ~US$2.98m for the Project Icewine acreage (December 2014 A$0.576m);

• administration and other operating costs A$0.561m (December 2014 of A$0.493m);

• a net cash outflow of A$4.938m recorded by the Company.

At the end of the quarter, the Company had net cash reserves of A$1.2 million, which will be bolstered in the coming quarter following completion of the $12 million capital raising.

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 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 and was released to the market on 19 January 2015.

Additional Information required under ASX LR 5.4.3

List of petroleum tenements held by 88 Energy at quarter ending 30 June 2015:

Reference	Project Name	Location	Company Interest	Acquired during the Quarter	Disposed of during the Quarter
Onshore Alaska, North Slope	Project Icewine	Alaska	87.5%	Subject to final award by the State of Alaska	-

Unless stated elsewhere in this report, there were no beneficial interests held in farm-in or farm-out agreements at the end of the quarter and no beneficial interest in farm-in or farm-out agreements acquired or disposed of during the quarter, and there have been no activities relating to oil and gas production or development during the quarter.

About 88 Energy: In late 2014, 88 Energy acquired an initial 87.5% working interest (reducing to 78% on spud of the first well on the project) 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 conventional oil pool 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 Project Icewine was 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.

Media and Investor Relations:

Australia
88 Energy Ltd [e-mail] [phone] Hartleys Limited 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]