88 Energy has secured a heavyweight partner and up to A$15.5 million in funding to drill its pivotal Augusta-1 exploration well on Alaska’s prolific North Slope, after executing a farm-out deal with Houston-based Westlawn Americas Offshore.
The deal provides a massive dose of third-party validation for 88 Energy’s technical work, with the well-capitalised and Westlawn committing to the project after extensive due diligence.
The deal brings not only much-needed funding, but a wealth of North Slope experience from Westlawn's leadership team, including its involvement with the super-giant Prudhoe Bay and Alpine fields.
The well-capitalised Houston-based oil and gas investment heavyweight is backed by private equity firm Westlawn Group and boasts an international portfolio of producing and development assets, with net production approaching 20,000 barrels of oil equivalent per day.
The deal will see Westlawn acquire a 40 per cent working interest in the South Prudhoe project by contributing up to US$10.9 million (A$15.5 million) towards the work program and budget. The contribution significantly reduces 88 Energy’s financial exposure while allowing it to retain a majority 60 per cent stake and crucial operatorship over the project.
The company says the funding will cover a substantial portion of the Augusta-1 well costs, contributing US$9.2 million (A$13.1 million) to drilling and evaluation, representing 52 per cent of the current planned well budget. A further US$1.7 million (A$2.4 million) will be directed towards general and administrative costs, geological work and long-lead items for potential future flow tests.
Should the well prove a success, Westlawn has agreed to fund 40 per cent of any subsequent flow testing programs.
The well, shaping up to be one of the most anticipated exploration programs in the well-established region, is scheduled to spud early in the new year. It is designed to test a gross unrisked prospective resource of 133.7 million barrels of oil across three separate, stacked reservoir intervals in its Ivishak, Kuparuk and Brookian formations.
88 Energy says the presence of multiple targets in a single well provides several shots at goal and enhances the commercial prospects of a discovery. The Ivishak and Kuparuk formations are proven producing reservoirs elsewhere along the North Slope, increasing Augusta-1's probability of success.
88 Energy managing director Ashley Gilbert said: “Securing a partner of Westlawn's calibre is a tremendous outcome for 88 Energy shareholders and is, without a doubt, a defining milestone in the advancement of the South Prudhoe Project. We have secured a partner that adds genuine value, having extensive Alaskan experience, deep upstream expertise and a long-term investment approach that is highly complementary to our own ambitions on the North Slope.”
The partnership is not just a one-shot deal for a single well. The two companies have also agreed to establish an Area of Mutual Interest (AMI) to jointly identify and pursue other exploration and development opportunities across the North Slope, combining 88 Energy’s operational capability with Westlawn's technical experience and balance sheet.
The South Prudhoe project sits immediately south of the producing Prudhoe Bay and Kuparuk River oil fields, two of North America’s most prolific oil accumulations and is connected to the Trans-Alaska pipeline system, a major piece of the region's infrastructure.
88 Energy says it will also continue to advance its frontier exploration project in Namibia’s Owambo Basin, even though the major farm-out deal firmly places the Alaskan North Slope at the centre of the company’s ambitions.
With a well-credentialed partner on board, much of the funding secured and a majority stake retained in a high-potential project, 88 Energy has de-risked its shot at a substantial discovery. Now all eyes turn to the Alaskan winter, where a single well could become a genuine game-changer.
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