88 Energy has sealed the deal in Alaska, farming-out the company’s wholly owned Project Peregrine on the lucrative North Slope oil field. Under the terms of the farm-out agreement, Alaska Peregrine Development Company can earn a 50 per cent holding in the project by spending US$11.3 million towards the cost of the planned Merlin-1 well.
The Alaska Peregrine Development Company, or “APDC” is a special purpose vehicle which has been put together to develop the Peregrine field. The company is owned by a group of US-based privateers who have extensive experience in the oil and gas industry and operate other businesses within the sector.
88 Energy received strong interest from across the sector to farm into the project with APDC being selected by the company due to the groups depth of industry experience and synergies between the two operators.
The Merlin-1 well has a planned all up cost of US$12.6 million, with 88 Energy set to tip in the US$1.3 million balance and will retain a 50 per cent interest in the field. The partnership will then co-contribute to the development of the field whilst retaining their respective holdings in the project.
88 Energy Managing Director, David Wall said:
"Being able to secure a farmout deal with a high calibre partner on close to two for one deal terms in the current oil and gas environment is a major coup for our shareholders. This is especially true given the short time period in which it has been achieved as we only acquired Project Peregrine in July of this year.”
“APDC is a close cultural fit for our proposed future plans for Project Peregrine and it has been a pleasure to work with them to finalise the farmout deal within a tight timeframe. We look forward to potential success as we approach the imminent spud of Merlin-1 in February 2021.”
The company’s North Slope projects in Alaska are located around 600km north of Fairbanks and adjacent to the oilfield town of Prudhoe Bay. The company’s onshore holdings in the region include the 3,250 square kilometre Icewine project and the 1,950 square kilometre Project Peregrine, which the company acquired in in July of this year via its off-market takeover of XCD Energy.
Project Peregrine shows similar geological characteristics to other producing hydrocarbon fields in the region including ConocoPhillips 750-million-barrel Willow field. An independent assessment of the Peregrine reservoir has estimated a potential resource of 1.6 billion barrels of oil within the Merlin and Harrier prospects.
The company’s development plans at Merlin remain on schedule with planning and permitting for the Merlin-1 well in train and the emplacement of various infrastructure, including ‘ice roads’ for access, well in hand. The Merlin-1 well is scheduled for “spudding” in February 2021.
With over $10 million in the kitty and a farm-in partner on board at Peregrine, 88 Energy looks to be sitting pretty on Alaska’s North Slope. Drilling is scheduled to kick off in the first quarter of 2021, aiming to deliver a billion-barrel reservoir soon after.
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