9 August 2023

88 Energy Limited

Posting of Offer Documentation

88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy or the Company) is pleased to confirm that the Offer Document and the accompanying personalized Entitlement and Acceptance Form for the non-renounceable rights issue (Offer) as announced on 31 July 2023 have today been dispatched to eligible shareholders.

In addition, a letter has been posted to Shareholders (or Depository Interest holders) to confirm their eligibility, or otherwise, to participate in the Offer.

On 31 July 2023, 88 Energy confirmed its intention to undertake the Offer, through which eligible Shareholders will be entitled to acquire one (1) fully paid ordinary share in the capital of the Company (Share) for every ten (10) Shares held at an issue price of A$0.006/£0.0031 per Share, to raise up to approximately A$12,000,000/£6,296,400. The Company has also established a share sale facility for holders of less than a marketable parcel of Shares (Facility).

The Company released a document pursuant to the Offer on 31 July 2023 (Offer Document), in which further details of the proposals are set out. Capitalised terms in this announcement have the same meaning as in the Offer Document unless the context requires otherwise.

The Offer is being made to all current holders of ordinary shares and depositary interests of the Company, named on its register of members at 5.00pm (AEST) in respect of ordinary shareholders and 6.00pm (London time) in respect of depository interest holders on 4 August 2023, whose registered address is in Australia, New Zealand or the United Kingdom (respectively, Eligible Shareholders and Eligible Depositary Interest Holders).

Euroz Hartleys Limited (AFSL 230 052) (ACN 104 195 057) (Euroz) has been engaged by the Company as the lead manager to the Offer. The material terms and conditions of Euroz's lead manager engagement is set out in section 3.5 of the Offer Document.

The Company intends to apply the funds raised from the Offer (less expenses) to fund ongoing activity across its portfolio of oil and gas exploration assets, located on the North Slope of Alaska and onshore Texas. For further specifics of the use of funds please refer to section 3.3 of the Offer Document.

Following completion of the Offer, assuming any shortfall is subsequently placed, and the full subscription is raised, the Company will have issued approximately 2,010,786,822 Shares, resulting in total Shares on issue of 22,118,655,047.

The Offer Document and letters to Shareholders can be viewed on the Company's website www.88energy.com.

This announcement has been authorised by the Board.

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 88 Energy. 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.

The data used to compile the independent prospective resource report includes reprocessed 2D seismic data, basin modelling, petrophysical analysis of publicly available wells and historical geological records.  The data was compiled and interpreted by XCD (a 100% owned subsidiary of 88E) and was reviewed, validated and in some cases modified independently by ERCE.

ERCE's methodology for determining Prospective Resources for Project Peregrine

ERCE has determined Prospective Resources by examining the areas of consistent bright amplitude that were mapped by XCD (a 100% owned subsidiary of 88E) using the reprocessed 2D seismic data within the Project Peregrine area.  Parameters including potential pool area and thickness, porosity, hydrocarbon saturation, oil expansion and recovery factor were estimated on a probabilistic low, mid and high basis.   

The Prospective Resources have not been adjusted for phase risk or chance of development. ERCE has considered the chance of discovering oil over gas to be 70%. Chance of development is estimated by 88E to be 60% (including phase risk), ERCE sees this as reasonable based on the data available.

Please refer to the disclaimers attached as Schedule 1 of this ASX release for more information on the prospective resource report.

About ERCE

ERCE is a global independently owned petroleum Reserves and Resources auditor, providing expert consultancy services to the upstream oil and gas industry for over 40 years. With over 50 full-time technical staff, ERCE provides geoscience, reservoir, facilities and cost engineering and economic/commercial expertise in conventional and unconventional projects.  Examples of current public clients include Carnarvon, Jadestone Energy, Tag Oil, Interra Resources, ADX Energy and Elixir Energy.  ERCE has offices in UK, Canada, Kuala Lumpur and Perth, WA.

About Project Peregrine

Project Peregrine is located in the NPR-A region of the North Slope of Alaska and encompasses approximately 126,000 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.

Figure 4 Project Peregrine and Recent Nanushuk Discoveries

The Project Peregrine resources are split across 3 prospects: Merlin (Nanushuk Topset), Harrier (Nanushuk Topsets) and Harrier Deep (Torok Bottomsets). The focus at Project Peregrine moving forward will be on the untested Harrier prospect (N14 and N15 targets, as well as the newly identified N13 and N12 targets) and the N14 south reservoir target. The N14 corresponds with ConocoPhillips' Harpoon prospect 15 miles to the north of the Project Peregrine leases. The N14 south target is the remaining target in the Merlin prospect and may be accessible from the Merlin-1 location. The northern leases are modelled to have better porosity and permeability and are closer to infrastructure.

Merlin-1 Well Results

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).

Post well analysis has also determined that the N14 horizon, one of the targets of the Merlin-1 well, was not intersected, as it is believed to lie below the total depth of the well.  The N14 prospect remains a target of interest and the Merlin-1 well may be re-entered in order to test this prospective target as part of the Company's future drilling activities at Project Peregrine.

Merlin-2 Well Results

The results of Merlin-2 were consistent with the initial Merlin-1 exploration well drilled in Project Peregrine in 2021, with strong fluorescence, oil sheen, petroliferous odour and cut noted in the drilling cuttings, elevated C2-C5 mud gas readings over the target zones with total gas significantly above background gas readings and also evidence from the reservoir sampling tool of movable hydrocarbons. The primary objective of the Merlin-2 well was to collect hydrocarbon samples from the target zones. Unfortunately, this was unable to be achieved using Schlumberger's MDT (Modular-Formation Dynamics Testing) tool due to the tightness of the formation at this location.

SCHEDULE 1

Disclaimers:

Cautionary Statement for Prospective Resources Estimates - With respect to the Prospective Resources estimates contained within this report, it should be noted that the estimated quantities of gas that may potentially be recovered by the future application of a development project relate to undiscovered accumulations. These estimates have an associated risk of discovery and risk of development.  Further exploration and appraisal is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. 

Hydrocarbon Resources Estimates - The Prospective Resource estimates for Project Peregrine presented in this report are prepared as at 28 July 2023.  The Prospective Resource estimates are quoted on an unrisked basis together with the geological chance of success for each prospect.  The unrisked mean total presented in the table is not representative of the expected total from the three prospects and assumes a success case in all three wells.  ERCE has considered the chance of discovering oil over gas to be 70%. Chance of development is estimated by XCD (a 100% owned subsidiary of 88E) 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 outside the knowledge of ERCE they must be used with caution.

Government Royalty and Overriding Royalty Interests - The Project Peregrine leases ("Leases") are situated in the National Petroleum Reserve - Alaska (NPR-A) and are administered by the US Department of the Interior - Bureau of Land Management (BLM).  All leases issued by BLM are subject to a royalty and 88E's Leases are subject to a 12.5% government royalty.  In addition, the Leases are subject to an overriding royalty of 1.5% payable to non-related parties of the Company.  The net economic interest to 88E has therefore been calculated as 86% and the Net Entitlement Prospective Resources have been adjusted to reflect this.

Competent Person Statement Information - In this report information relating to hydrocarbon resource estimates have been supplied by ERCE, and the company has stated in the Report that it has been prepared in accordance with the definitions and guidelines set forth in the Petroleum Resources Management System, 2018, approved by the Society of Petroleum Engineers and have been prepared using probabilistic methods.  ERC Equipoise Pty Ltd, the independent resource reviewer named in this document, has consented to the inclusion of information relevant to their review in the form and context in which it appears.  Dr Stephen Staley, who is a Non-Executive Director of 88 Energy Limited. 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 prospective resource 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.

 Forward looking statements - This document may include forward looking statements. Forward looking statements include, are not necessarily limited to, statements concerning 88E's planned operation program and other statements that are not historic facts. When used in this document, the words such as "could", "plan", "estimate", "expect", "intend", "may", "potential", "should" and similar expressions are forward looking statements. Although 88E believes the expectations reflected in these are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements. The entity confirms that it is not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning this announcement continue to apply and have not materially changed.

SCHEDULE 2

Definitions and Glossary of Key Terms:

SPE definition: Prospective Resources

Prospective Resources are estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled. This class represents a higher risk than contingent resources since the risk of discovery is also added. For prospective resources to become classified as contingent resources, hydrocarbons must be discovered, the accumulations must be further evaluated and an estimate of quantities that would be recoverable under appropriate development project(s) prepared.

Glossary of Key Terms