Australian listed oiler 88 Energy hits the pay zone after a successful drilling at its Alaskan Hickory-1 oil well reaching a total depth of 3,246 metres.
After drilling through the levels of key reservoirs, the explorer discovered a new oil reservoir as it hunts for a potential billion-barrel resource.
88 Energy’s flagship oil play Project Phoenix sits on the northern most edge of Alaska and continues to surprise the market as the Hickory-1 well reaching total depth and the quality of the reservoir exceeded management’s expectations and sent the share price 33 per cent higher on the back of the news by the close of day’s trading.
The ice rig sank through primary targets SMD A, SMD B and SMD C, secondary targets Slope Fan System, Basin Floor Fan and intersecting with the tertiary Kuparuk reservoir target that lay at depth with ease, revealing details not previously known to 88.
Now the rig has punched through, all primary, secondary and tertiary targets are closer to the surface than first thought and the reservoir is much thicker than initially calculated. To boot, all targets look to be in the net pay zones, meaning the hydrocarbons should be economically recoverable.
The Upper Slope Fan System lies below SMD A and above SFS has not been identified on any well intersections to date.
After first spudding in March, drilling at the Hickory-1 well reached a total depth of 3,246m, falling just short of the permitting depth of 3,810. The company made the decision to preserve the borehole in preparation for the wireline logging program which is set to commence almost immediately.
The program will take about one week to complete, shortly after the well will then be cased for future testing and the Nordic Calista Rig-2 demobilised.
88 Energy in now onto planning the flow test program for the 2023/24 winter season, which is fully funded after the company completed an oversubscribed $17.5 million share placement in February this year.
With a prospective 647 million barrels of oil already on the books, 88 Energy is one of several oil companies looking to be part of the Alaskan North Slope revival.
Once a prolific source of oil, increasing production costs and barriers to entry coupled with hydrocarbons being on the nose for investors meant this giant oil basin fell out of favour.
The Alaska North Slope oil field holds an estimated recoverable 38 billion barrels of oil equivalent, comprising 50 trillion cubic feet of gas and 28 billion barrels of oil.
Ironically the 1970s oil crisis is what propelled the Alaska North Slope into “super-basin status” and increasing OPEC+ dominance may drive investment in this historic oil field further.
Overnight the largest OPEC+ member, Saudi Arabia surprised the market by cutting 1.15 million barrels of oil from production as of May, with a Saudi Energy ministry official emphasising this move was a “precautionary measure aimed at supporting the stability of the oil market” after the Brent Crude contract fell below US$80 (AUD$120) per barrel.
The Saudi’s decisions follow Russia, with the former Soviet nation confirming it will extend the 500,000 barrels per day reduction until the end of the year.
Other major oil producing nations, such as Iraq, Kuwait, the United Arab Emirates, Kazakhstan, Algeria and Oman have also slashed production by a cumulative 438,000 barrel per day from May onwards.
This is the second round of major output reductions from OPEC+ since output was reduced by two million barrels per day in October last year.
With current forms of energy remaining in largely concentrated hands, energy insecurity is encouraging many to reassess oil data. All eyes will be watching to see how many barrels 88 Energy can bring above ground.
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By Shae Russell
