Correction to Resource Announcement

7 April 2016

 

Clarification and Correction to Resource Announcement

 

88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) would like to clarify several points in relation to the Resource Update released 6^th April 2016, following identification of a typographical error in the DeGolyer & MacNaughton ("D&M") report attached to that release:

 

 

·     The D&M report estimates resource potential over the entire ~272,000 acres at Project Icewine. This is evident from the tables on the last two pages of the report.

·     The report is up to date as at 31^st March 2016 and has considered all relevant information up to that point in time. Detailed flow rate modelling has not been done as part of the preparation of this report.

 

The Company would also like to highlight a correction to the table below. The release on 6^th April 2016 did not include a reference to the Wet Gas window. It should be noted that 90% of the liquids for the Mean scenario are mapped in the Volatile Oil window.

 

 

Fig. 2 Internal Project Icewine Prospective Recoverable Resource from HRZ - Liquids Only

	P90	P50	P10	Mean	Pc#
Gross Volatile Oil / Wet Gas Window (mmbbl)	1,594	2,471	3,830	2,602	50%
Net Attributable to 88 Energy (mmbbl)	1,234	1,913	2,965	2,014	50%

#Estimated Probability of Commercial Success

 

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.

 

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, Mr Brent Villemarette, who is a Non Executive Director of the Company. Mr Villemarette has more than 30 years' experience in the petroleum industry and is a qualified Reservoir Engineer 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. His academic qualifications and industry memberships appear on the Company's website and both comply with the criteria for "Competence" under clauses 18-21 of the Valmin Code 2005. Terminology and standards adopted by the Society of Petroleum Engineers "Petroleum Resources Management System" have been applied in producing this document.

 

Media and Investor Relations:

 

Australia
88 Energy Ltd admin@88energy.com +61 8 9485 0990   Hartleys Limited As Corporate Advisor Mr Dale Bryan +61 8 9268 2829
United Kingdom   Cenkos Securities Plc As Nominated Adviser Mr Neil McDonald     Mr Derrick Lee   Tel: +44 (0)131 220 9771 / +44 (0)207 397 1953 Tel: +44 (0)131 220 9100 / +44 (0)207 397 8900

 

Project Icewine Highlights

 

In November 2014, the Company entered into a binding agreement with Burgundy Xploration (BEX) to acquire a significant working interest (87.5%, reducing to 78% on spud of the first well on the project) in a large acreage position on a multiple objective, liquids rich exploration opportunity onshore Alaska, North America, referred to as Project Icewine. In November 2015, the gross acreage position was expanded by 174,240 acres (to be awarded in due process by the State of Alaska).

 

Subject to final payment on the expanded acreage, 88 Energy will have a 272,422 gross contiguous acre position with 212,489 acres net to the Company. The Project is located on an all year operational access road with both conventional and unconventional oil potential. The primary term for the State leases is 10 years with no mandatory relinquishment and a low 16.5% royalty.

 

The HRZ liquids-rich resource play has been successfully evaluated based on core obtained in the recently completed (December 2015) Icewine #1 exploration well, marking the completion of Phase I of Project Icewine. Phase II has now commenced, with planning for a horizontal multi-stage fracture stimulated well, Icewine#2H, currently underway.

 

Generous exploration incentives are provided by the State of Alaska with up to 85% of exploration expenditure in 2015 cash refundable, dropping to 75% until mid 2016 and thereafter 35%.

 

The  primary objective is an untested, unconventional liquids-rich shale play in a prolific source rock, the HRZ shale (Brookian Sequence), that co-sourced the largest oil field in North America; the giant Prudhoe Bay Oil Field Complex. Internal modelling and analysis indicates that Project Icewine is located in a high liquids vapour phase sweetspot analogous to those encountered in other Tier 1 shale plays e.g. the Eagle Ford, Texas.

 

Conventional play potential can be found at Project Icewine within the same Brookian petroleum system and shallow to the HRZ shale and includes high porosity channel and deep water turbiditic sands. The Brookian conventional play is proven on the North Slope; the USGS (2013) estimate the remaining oil potential to be 2.1 billion barrels just within the Brookian sequence. Additional conventional potential exists in the deeper Kuparuk sands and the Ivashuk Formation.

 

Drilling in (2012), on the adjacent acreage to the north, confirmed that the HRZ shales, along with the underlying Kingak & Shublik shales, were all within the oil window which is extremely encouraging for the unconventional potential at Project Icewine. In addition, a conventional oil discovery was reported in the Kuparuk sandstones.

 

A Prospective Resources Report by DeGolyer and MacNaughton, was commissioned by 88 Energy to evaluate the unconventional resource potential of Project Icewine in February 2016 and was released to the market on 6^th April 2016.

 

About 88 Energy: 88 Energy has a 78% working interest and operatorship in ~272,000 acres (~174,000 acres subject to formal award) onshore the prolific North Slope of Alaska ("Project Icewine"). The North Slope is the host for the 15 billion barrel Prudhoe Bay oilfield complex, the largest conventional oil pool in North America. The Company, with its Joint Venture partner Burgundy Xploration, has identified three highly prospective play types that are likely to exist on the Project Icewine acreage - two conventional and one unconventional. The large resource potential of Project Icewine was independently verified by leading international petroleum resource consultant DeGolyer and MacNaughton. In addition to the interpreted high prospectivity, the project is strategically located on a year-round operational access road and only 35 miles south of Pump Station 1 where Prudhoe Bay feeds into the TransAlaska Pipeline System. The Company is currently acquiring seismic to take advantage of the globally unique fiscal system in Alaska, which allows for up to 75% of 1H2016 exploration expenditure to be rebated in cash. The Company recently completed its maiden well at the project, Icewine#1, with excellent results from analysis of core obtained in the HRZ shale. A followup well with a horizontal section and multi stage frac, Icewine#2H, is planned for 1Q2017.