ASX-listed 88 Energy has sealed a rig contract agreement with Nordic-Calista to use one of the company’s rigs to launch drilling operations at its Hickory-1 oil exploration well on Alaska’s North Slope next year.
The well is on course to be spudded by March and has been devised to test half a dozen key reservoir targets which could yield 647 million barrels of oil.
Hickory-1 is permitted to a depth of 12,500 feet or 3810m and its planned well site is strategically situated near the Trans Alaskan Oil Pipeline. The asset’s location is also close to one of the region’s primary all-weather roads.
The company says the prospective reservoir units set to be evaluated are interpreted to extend from oil and gas producer Pantheon Resources’ neighbouring acreage which has proved fertile in recent months.
Pantheon recently completed a suite of drilling and flow test work across its tenure and given the successful returns 88 Energy believes its looming exploration has been significantly de-risked.
Further de-risking Hickory-1 is the fact that 88 Energy narrowed down the well’s optimal location. The move comes after a triple-edged data review including an interpretation of its Icewine-1 well log data, a review of its recently acquired Franklin Bluffs 3D seismic dataset, or “FB3D” and an Amplitude Variation with Offset, or “AVO” analysis.
88 Energy picked up the FB3D dataset in June as part of licensing agreement with SAExploration. The transaction saw the company hand over an initial payment of US$1 million in new shares in exchange for an assortment of 3D seismic data obtained over a substantial parcel of oil prospective tenure.
In addition, the company claims its interpretation of the FB3D included a round of AVO analysis – an exploratory instrument used in seismic evaluation to characterise a rock's fluid content, porosity, density and seismic velocity – fundamental markers of hydrocarbon content.
88 Energy says its assimilation of AVO analysis in its appraisal boosts its prospects of geological success, reservoir understanding and target definition.
The $182 million-dollar capped company has also opted to rename its Icewine East area – which hosts Hickory-1’s well position - to “Project Phoenix”. 88 Energy argues the new name better reflects its revitalised exploration strategy for the zone.
The company claims Icewine was previously the focus of unconventional shale gas plays whilst Project Phoenix will now be concentrated around the discovery of proven oil-bearing conventional reservoirs.
According to management, Project Phoenix houses an estimated unrisked conventional resource of 647 million barrels of oil as independently assessed by petroleum consultancy Lee Keeling and Associates earlier this year.
The price of crude oil is currently hovering around US$74 per barrel and is envisioned to trade at roughly US$83 per barrel by the end of the quarter according to information provider Trading Economics.
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