88 Energy has sealed a deal with its United States partner Burgundy Xploration, signing a two-phase farmout participation agreement for the company's Pheonix oil and gas project in Alaska.
Burgundy is a Texas-based private oil and gas company backed by a bevy of sophisticated energy investors. It has already spent US$26 million (A$40.6m) for a 25.7 per cent interest in 88 Energy’s Project Phoenix.
Under the latest agreement, the joint venture partner will tip up to US$39m (A$61.3 million) into the kitty to fully fund future works programs in exchange for an additional 50pc interest in the project.
Burgundy has committed to funding US$29m (A$45.6m) for phase one works over the next two years. This will include drilling a horizontal well to flow test its SMD-B reservoir slated for the first half of 2026. Burgundy has already started procuring long lead items for the planned drilling and production test program.
Assuming phase one is successful, Burgundy will tip an additional US$10m (A$15m) into the project, earmarked for another well or other strategic capital expenditure programs.
Burgundy’s total investment will up its stake in the project to 75pc, allowing 88 Energy to hand over the operator’s reins to its partner.
88 Energy managing director Ashley Gilbert said: “Burgundy’s commitment to the project recognises 88 Energy’s accomplishments since 2022, and the value added to the acreage during this time, as well as validation of the broader region and the opportunity presented on the Alaskan North Slope.”
Project Phoenix has already delivered promising results. The 2023 Hickory-1 discovery well flowed light crude oil during winter testing, significantly de-risking the company’s previously untested Upper SFS and SMD-B reservoirs.
Independent auditor ERCE recently upgraded the oilfield to an estimated contingent resource of as much as 378 million barrels of oil equivalent (MMboe), of which 239mMMboe is attributable to the company.
With a clear funding pathway nailed down to advance 88 Energy’s massive oil and gas reservoirs at Project Phoenix toward a final development decision, the company is free to focus on advancing its nearby Project Leonis.
The company recently locked up four new, highly promising leases adjoining its existing 10 blocks that increased 88 Energy's landholding at Leonis by 30pc to 144 square kilometres.
The strategic move follows 88 Energy’s analysis of seismic data that revealed significant oil potential at a new prospect, the Canning Formation. 88 Energy says the prospect contains a sizable target up to 102 metres thick.
As the ink sets on 88 Energy’s farmout agreement with cashed-up partner Burgundy to develop its massive Phoenix oil and gas project, the agile energy company is now keenly eyeing the potential of another impressive discovery at Project Leonis in Alaska’s fertile North Slope.
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