88 Energy gets greenlight for Alaskan oil probe

Oil explorer 88 Energy is set to get the drill bit spinning at its Hickory-1 well target on Alaska’s North Slope after the state’s Oil and Gas Conservation Commission handed the company an all-important Permit to Drill. The bore is now on track to be spudded early next month and is tipped by the enterprise to hold 647 million barrels of oil within six key reservoir targets.

The company says exploration at Hickory-1 is permitted to a total depth of 3810m and management believes the well’s strategic position near the zone’s Trans Alaskan Oil Pipeline and primary all-weather road could prove beneficial once activity at the site kicks off. The company says the asset’s proximity to neighbouring infrastructure has also helped restrain gross drilling cost to US$13.5 million.

Following the projected March spud date 88 Energy plans to launch flow testing in the 2023/24 winter season before integrating the program’s results into an optimised regime of tests, permitting and implementation.

The company says the prospective reservoir units set to be evaluated in the drilling of Hickory-1 are interpreted to extend from energy producer Pantheon Resources’ adjacent estate. Late last year Pantheon completed a suite of drilling and flow test work across its nearby tenure and has notched several notable returns of late including hydrocarbon production rates of about 500 barrels per day.

Further de-risking Hickory-1’s looming drill campaign is the fact that the oil explorer narrowed in on well’s optimal location using a three-chambered data review. The program included an interpretation of its well log data, a review of the Franklin Bluffs 3D seismic dataset, or “FB3D” and an Amplitude Variation with Offset, or “AVO” analysis.

88 Energy acquired the FB3D dataset in June last year as part of licensing agreement with SAExploration. The deal saw the explorer fork over an initial payment of US$1 million in new shares in exchange for an array of 3D seismic data acquired across a significant chunk of the potentially oil-rich tenure. In addition, 88 Energy says its use of AVO analysis – a seismic process used to decode an area's fluid content, porosity, density and seismic velocity - boosts its chances of exploratory success, reservoir understanding and target delineation.

88 Energy believes Project Phoenix houses an estimated unrisked conventional resource of 647 million barrels of oil. Notably the resource has been independently assessed by petroleum consultancy Lee Keeling and Associates.

88 Energy also closed out an oversubscribed placement to raise A$17.5 million from a global inventory of institutional and sophisticated investors. On the announcement of the funding package, management says its Hickory-1 exploration well’s drilling costs are now fully funded. The company also intends to pump some of the cash into a wider geological assessment of its neighbouring Project Leonis. The workstream could set up a pipeline of activity for a company that has its foot on a wealth of ground across America’s frozen north.

Alaska’s North Slope has been front and center of America’s energy news of late following the Biden administration’s sign off on a mega oil and gas development by super major ConocoPhillips. The US$8 billion-dollar Willow project is set to become one of the territory’s biggest energy operations with an output of 600 million barrels of oil over three decades, with a peak of 180,000 barrels of crude a day.

Increased focus within the area could draw a pack of new eyes to 88 Energy’s assets on Alaska’s North Slope – now onto the drilling.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au