10th Aug 2022 12:20
(Alliance News) - 88 Energy Ltd on Wednesday posted a large swing to an interim pretax loss as the multi-million dollar drilling of two wells proved costly.
88 Energy shares fell 10% to 0.56 pence each in London on Wednesday afternoon.
For the half-year ended June 30, the firm reported an exploration & evaluation impairment cost of USD67.7 million, compared to none a year ago.
Due to this, 88 Energy turned to a pretax loss of USD67.3 million from a profit of USD445,446 a year ago. Revenue plummeted to USD3,921 from USD4.3 million. Two years ago, the firm reported half-year revenue of USD75,860.
"The loss was largely attributable to the impairment of the Merlin 1 and Merlin 2 wells of USD67.62 million," the Australia-based oil explorer focused on the US state of Alaska explained. The wells are part of Project Peregrine.
Further, "both Merlin wells were drilled on sparse, vintage 2D seismic data, which provides a narrow field of view of the reservoir and limited optionality on drilling locations."
88 Energy expects a Project Peregrine study on the quality of the Alaskan Nanushuk reservoir and Merlin side-wall cores to complete in the third quarter of 2022.
Meanwhile, the firm said it is proposing a placing to raise up to AUD10.0 million. It added it has the ability to over-accept subscriptions of up to AUD5.0 million. The placing price of AUD0.009 per share is a discount of 18% to its closing price of AUD0.011 on Tuesday, 88 Energy added.
Regarding Project Icewine East, the company added that it will drill an exploration well on acreage in 2023 and that full interpretation of recent data is ongoing.
It estimates a resource of up to 1.03 billion barrels of oil from multiple reservoir zones in the project.
88 Energy holds a net working interest of about 75% in Project Icewine East.
"This maiden, independently certified 1.03 billion barrels of oil resource estimate is a great result for 88 Energy and its shareholders. Resources of this magnitude present our shareholders with significant upside potential and opportunity, which is why we continue to focus on our Alaskan portfolio and believe significant value exists in our Icewine East acreage," commented Managing Director Ashley Gilbert.
By Tom Budszus; [email protected]
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