24 November 2021

This announcement contains inside information

88 Energy Limited

Merlin-2 Appraisal Well Location Selected

Highlights

·     Merlin-2 location selected from the three locations initially permitted for the appraisal program

·     Target drilling location situated east and downdip of Merlin-1

·     Merlin-2 well location expected to display thicker reservoir sections and higher permeability / porosity sands, targeting 652 million barrels of oil1,2 with geological chance of success of 56%

·     Remaining two locations, together with Harrier-1, are permitted and can be drilled at a later stage

·     Production test for the Merlin-2 well planned subject to results of wireline program

·     Permitting and planning of Merlin-2 is at an advanced stage, with the benefit of learnings from Merlin-1

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is pleased to announce that the Merlin-2 well location has now been selected, from three initially permitted locations.  The Merlin-2 well location, scheduled for drilling in February 2022 using the recently contracted Arctic Fox rig, is located east and downdip of the successful Merlin-1 well. This location is expected to encounter thicker reservoir sections and higher permeability / porosity sands.

The Merlin-2 appraisal well is planned for a Total Depth of 8,000 feet, and is targeting 652 million barrels of oil^1,2 in the highly prospective N18, N19 and N20 targets that were encountered in the successful Merlin-1 well (drilled in March 2021 to a depth of 5,267 feet), which demonstrated the presence of oil in these multiple stacked sequences in the Brookian Nanushuk Formation.

The remaining two locations permitted, together with the permitted Harrier-1 location, can be drilled in future years as part of an extended drilling program to assess the full potential of the Project Peregrine acreage.

A production testing program for the Merlin-2 well has been designed and will be on standby during initial wellsite operations. The production test is contingent upon the wireline program results, in particular the MDT results, as well as government approvals. The program and length of the test will be subject to operational, funding and weather window considerations.

Permitting and planning for the Merlin-2 well remains on track for scheduled spud in February 2022.

Further details on the upcoming operations at Merlin-2, and the Company's other activities, are contained in the Company's latest corporate presentation, which is available on 88 Energy's website at www.88energy.com.

¹ Cautionary Statement: The estimated quantities of petroleum that may be potentially recovered by the application of a future development project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation are required to determine the existence of a significant quantity of potentially movable hydrocarbons.

² Mean unrisked resource - Net Entitlement to 88 Energy. Refer announcement released to ASX on 16 August 2021

The below graphics can be viewed in the pdf version of this announcement, which is available on the Company's website www.88energy.com;

·   The Merlin-2 well location

·   Wireframe image showing respective Merlin-1 and Merlin-2 well locations

·   Project Peregrine and Recent Nanushuk Discoveries

Media and Investor Relations:

Pursuant to the requirements of the ASX Listing Rules Chapter 5 and the AIM Rules for Companies, the technical information and resource reporting contained in this announcement was prepared by, or under the supervision of, Dr Stephen Staley, who is a Non-Executive Director of the Company. Dr Staley has more than 35 years' experience in the petroleum industry, is a Fellow of the Geological Society of London, and a qualified Geologist/Geophysicist who has sufficient experience that is relevant to the style and nature of the oil prospects under consideration and to the activities discussed in this document. Dr Staley has reviewed the information and supporting documentation referred to in this announcement and considers the resource and reserve estimates to be fairly represented and consents to its release in the form and context in which it appears. His academic qualifications and industry memberships appear on the Company's website and both comply with the criteria for "Competence" under clause 3.1 of the Valmin Code 2015. Terminology and standards adopted by the Society of Petroleum Engineers "Petroleum Resources Management System" have been applied in producing this document.

About Project Peregrine

Project Peregrine is located in the NPR-A region of the North Slope of Alaska and encompasses approximately 195,000 contiguous acres. It is situated on trend to recent discoveries in a newly successful play type in topset sands in the Nanushuk formation. 88 Energy has a 100% working interest in the project.

The Merlin-1 well was spudded in March 2021 with drilling operations completed in April 2021. Interpretation of results was completed in August 2021 with post well evaluation successfully demonstrating the presence of oil in N20, N19 and N18 targets, with 41 feet of net log pay across the three reservoir intervals noted and geochemical analysis determining the oil to have an estimated API gravity between mid-30 to low-40 API (light oil).

A second well, the Merlin-2 appraisal well, is planned to be drilled in Q1 2022 as a follow-up well to the Merlin-1 exploration well.  Merlin-2 is targeting a net entitlement mean Prospective Resource of 652 million barrels (unrisked)^1,2.

To view the Company's video and animated presentations of Project Peregrine, as well as the Merlin-1 well results and details of the Merlin-2 well, please click on the link to the 88 Energy website www.88energy.com.

Independent oil and gas reservoir evaluation consultancy, ERCE Australia Pty Ltd (ERCE), conducted an updated assessment of the Project Peregrine prospective resources post the Merlin-1 well results.  The updated prospective resource estimates and risking assessments for Project Peregrine are noted below.

Revised Project Peregrine Prospective Resources

1. The Prospective Resources presented here are the result of a risked probabilistic aggregation of the individual stacked prospective layers in each prospect; the success case estimates present the distribution of possible outcomes in the event that at least one prospective layer is successful.

2. Unrisked mean total is not representative of the expected total from the four prospects and assumes a success case in all four wells.

3. COS represents the geological chance of success of at least one of the stacked layers which comprise each prospect. This excludes phase risk which ERCE has estimated to be 70% oil (30% gas). The Prospective Resources have also not been adjusted for the chance of development, which is estimated by 88 Energy to be 60% (including phase risk), ERCE sees this as reasonable based on the data available. Quantifying the chance of development (COD) requires consideration of both economic contingencies and other contingencies, such as legal, regulatory, market access, political, social license, internal and external approvals and commitment to project finance and development timing. As many of these factors are out-with the knowledge of ERCE they must be used with caution.

4. Gross Prospective Resources include off-block volumes over which 88 Energy has no mineral rights. Net working interest Prospective Resources are based on the on-block volumes and 88 Energy's 100% working interest. Net entitlement Prospective Resources are the net working interest Prospective Resources less royalties payable to others. The net entitlement interest to 88 Energy is calculated as 84.7% of net working interest after deduction of state royalty (12.5%) and overriding royalty interests (1.3%and 1.5%).