ASX-listed 88 Energy is cutting more than US$1 million of annual finance costs and adding US$2.6 million to its treasury with the US$18.7 million sale of oil and gas tax credits in Alaska. The balance-sheet reset strengthens the company’s position as it strives to expand oil and gas resources at its 100 per cent-owned Peregrine project in the US state.
The company is targeting more than one billion barrels of oil in gross mean prospective resources at Peregrine.
Management says agreement with the Alaskan Department of Revenue to allow it to realise $18.7 million of value from the tax credits about five years ahead of schedule means it can extinguish its existing US$16.1 million debt and bank the surplus US$2.6m.
88 Energy is selling the Alaska tax credit to a “large oil and gas company in the US with multiple exploration and production assets”.
Managing Director of 88 Energy, Ashley Gilbert, said: "This is a transaction which accelerates the realisation of value of the Alaskan oil and gas tax credits and the early repayment of outstanding debt due to be repaid by the end of 2022. As a result of the transaction the company is now set to be debt free with reduced annual overheads of over US$1 million in associated finance costs.”
88 Energy recently moved to 100 per cent ownership of Peregrine by acquiring partner Alaska Peregrine Development Company’s 50 per cent share.
Located in the NPR-A region of the North Slope of Alaska, Peregrine covers some 195,000 continuous acres of land on trend to recent discoveries in the oil-rich Nanushuk formation.
The recently drilled Merlin-1 well at Peregrine is targeting a gross mean prospective resource of 645 million barrels of oil. Observations of fluorescence on side-wall cores under UV light have reportedly identified multiple horizons showing the presence of oil.
88 Energy plans to drill the Harrier-1 well at Peregrine next year. It has a target of 417 million barrels of oil in gross mean prospect resources at Harrier-1.
The Nanushuk sequence continues to the north of Peregrine where New York-listed energy major ConocoPhillips recently made a discovery at the Willow prospect, reporting between 750 and 800 million barrels of recoverable oil.
Further Nanushuk discoveries have been reported by ASX-listed Oil Search.
It hit oil last year at Mitquq and Stirrup, about 50km north-east of Peregrine, and has reported 3,520 barrels of oil per day in a production test-flow.
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By Matt Birney
