15th Dec 2016 09:28
LONDON (Alliance News) - 88 Energy Ltd on Thursday said it has expanded its acreage on the central North Slope of Alaska, where its flagship Icewine project is being developed, after being declared the highest bidder along with its partner at a recent land auction.
88 Energy has a 77.5% stake in Icewine, with partner Burgundy Xploration LLC owning the remainder, and the pair have jointly and successfully bid for 142,560 acres of new land also located on the Central North Slope. The pair will have the same split of interest in the new land as they hold in the existing project.
In addition, Burgundy alone successfully bid for an additional 279,360 acres of land in the same region. 88 Energy has a back-in right to buy a 30% interest in that land at cost.
Assuming those rights are taken up, 88 Energy said its net land position in the Central North Slope would exceed 400,000 acres, or, on a gross basis, 690,000 acres.
"Our success in this bid round provides us with the ability to significantly increase our acreage position on the North Slope and highlights the confidence that management has in both the HRZ unconventional play as well as the conventional prospectivity at project Icewine," said Managing Director Dave Wall.
"The upcoming drilling of Icewine-2 will test the flow potential of the HRZ in the first half of 2017 and, with the additional acreage, we have now maximised the potential upside exposure for our shareholders in the event of success," he added.
The new land was pursued after the first well, Icewine-1, was analysed and prompted the pair to refine the location of the "HRZ resource play sweetspot".
Like in previous bid rounds, both 88 Energy and Burgundy funded their share of a 20% deposit of the gross bid amount - with 88 Energy paying a net deposit of USD600,000 - with the balance due when the land is officially awarded "in several months' time", the company said.
The 2D seismic interpretation over the project revealed the prospective play fairway on the western margin, where a number of promising leads have been found, extends beyond the currently defined boundary.
88 Energy said the new land will allow it to capture the full potential of these leads, which will be further evaluated in conjunction with the continuing conventional prospectivity review of the Icewine acreage, it said.
"Vintage exploration wells within the newly acquired lease area encountered hydrocarbon shows within the prospective play fairway, which is encouraging, and prospectivity analysis is ongoing," said 88 Energy.
88 Energy shares were trading 3.9% higher on Thursday at 2.39 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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