Quarterly Report - 31 March 2015

24 April 2015 88 ENERGY LIMITED Quarterly Report for Period Ending 31 March 2015 The Directors of 88 Energy Limited ("88 Energy" or the "Company") provide thefollowing report for the quarter ended 31 March 2015. Highlights * The Company completed an oversubscribed placement raising $6.9m through the issue of 691m shares at $0.01 with a 1 for 2 listed attaching option (ASX Code: 88EO, expiry 2 March 2018, strike $0.02) * The name of the Company was officially changed to 88 Energy Ltd (ASX Code: 88E), punctuating the beginning of a fresh chapter for new and existing shareholders * Permitting commenced for the drilling of an exploration well at Project Icewine, located on the North Slope of Alaska. The Icewine #1 exploration well is scheduled for spud before end CY2015 Overview Key operational activities during the quarter included: * A General Meeting was held on 12 February 2015 to approve both the acquisition of Project Icewine and the placement required to complete the acquisition The key corporate activities for the quarter were: * Finalisation of a placement for $6.9 million at $0.01 per share (with 1 for 2 free attaching listed options exercisable at $0.02 on or before 2 March 2018) * Release of the Annual Report for 2014 on March 30 2015 Key Events Subsequent to the Quarter * A notice of the Annual General Meeting was announced on 26 March 2015 by the Company to be held on 24 April 2015. Full details of the Agenda and Business of the Meeting can be accessed on the Company website http:// 88energy.com/investor-centre/announcements/ * A services agreement was executed with Fairweather Science to fast track permitting of the drilling of the Icewine #1 exploration well prior to year end. This will provide access to the 85% cash rebate offered by the State of Alaska for expenditure related to the drilling of the well. * An existing gravel pad was identified on Icewine acreage, from which the Icewine #1 exploration well is proposed to be drilled. This should provide significant benefits in relation to permitting, cost and timing of drilling for the Joint Venture (see Figure 1 below). * Further cost reductions achieved through restructuring of certain contracts as well as downsizing of the West Perth office Figure1: Existing Gravel Pad (please refer to the pdf version of thisannouncement available from the Company's website) Financial The capital raising announced on 16 February 2015 was approved by shareholderson 12 February 2015. This included the issue of 691 million fully paid ordinaryshares at $0.01 per share with 1 for 2 free attaching listed optionsexercisable at $0.02 on or before 2 March 2018. Funds were raised to finaliseacquisition of Project Icewine and to progress permitting and planning of theIcewine #1 exploration well as well as for working capital purposes. The Prospectus associated with the capital raise was released to the market on16 February 2015. There are now 1,139,306,023 fully paid ordinary shares quotedon ASX and admitted to trading on AIM. Finalisation of the placement resultedin a capital raise of $6.9 million (before costs). The ASX Appendix 5B attached to this report contains the Company's cash flowstatement for the quarter. The significant elements for the period were: * exploration and evaluation expenditure of A$0.576m (December 2014 A$0.138m); * administration and other operating costs A$0.493m (December 2014 of A$0.753m); * capital inflow from equity issue of A$6.223m (after costs); and * a net cash inflow of A$5.158m recorded by the Company. At the end of the quarter, the Company had net cash reserves of A$6.235million. Project Icewine Highlights In November 2014, the Company entered into a binding agreement with BurgundyXploration (BEX) to acquire a significant working interest (87.5%) in a largeacreage position on a multiple objective, liquids rich exploration opportunityonshore Alaska, North America, referred to as Project Icewine. 88 Energy, (through BEX their co-venture partner), was announced highest bidderon 90,720 acres in the November State lease sale for the North Slope of Alaskaon 20 November 2014. Post award of the acreage in Q2 2015 88 Energy will securea 99,360 gross contiguous acre position with 86,940 acres net to the Company.The primary term for the State leases is 10 years with no mandatoryrelinquishment and a low 16.5% royalty. Figure 2: Project Icewine LocationMap(please refer to the pdf version of thisannouncement available from the Company's website) Generous exploration incentives are provided by the State of Alaska with up to85% of exploration expenditure in 2015 cash refundable, dropping to 75% mid2016 and thereafter 40%. The primary objective is an untested, unconventional liquids-rich shale play ina prolific source rock, the HRZ shale,(Brookian Sequence), that co-sourced thelargest oil field in North America; the giant Prudhoe Bay Oil Field Complex.Internal modelling and analysis indicates that Project Icewine is located in ahigh liquids vapour phase sweetspot analogous to those encountered in otherTier 1 shale plays e.g. the Eagle Ford, Texas. Conventional play potential can be found at Project Icewine within the sameBrookian petroleum system and shallow to the HRZ shale and includes highporosity channel and deep water turbiditic sands. The Brookian conventionalplay is proven on the North Slope; the USGS (2013) estimate the remaining oilpotential to be 2.1 billion barrels just within the Brookian sequence.Additional conventional potential exists in the deeper Kuparuk sands and theIvashuk Formation. Drilling, (2012), in the adjacent acreage to the north confirmed that the HRZshales, along with the underlying Kingak & Shublik shales, were all within theoil window which is extremely encouraging for the unconventional potential atProject Icewine. In addition a conventional oil discovery was reported in theKuparuk sandstones. A Prospective Resources Report by DeGolyer and MacNaughton, was commissioned by88 Energy to evaluate the unconventional resource potential of Project Icewinein early December 2014 and was released to the market on 19 January 2015. Capital Management During the quarter the Company completed a placement for A$6.9 million at $0.01per share (with 1 for 2 free attaching listed options with a strike of $0.02)to sophisticated investors in order to finalise the completion of theacquisition of Project Icewine. The placement was managed by Hartleys Ltd withCo-Management by BBY Ltd and DJ Carmichaels. It was approved by shareholders onthe 12th February 2015. Additional Information required under ASX LR 5.4.3 List of petroleum tenements held by 88 Energy at quarter ending 31 March 2015: Reference Project Name Location Company Acquired Disposed of Interest during the during the Quarter Quarter Tarfaya Tarfaya Offshore Morocco 25% - - Block Onshore Project Icewine Alaska 87.5%* Subject to -Alaska, final award by the State ofNorth Slope Alaska * * 88 Energy, through their co-venture partner BEX, were announced high bidderin the November 2014 State of Alaska Bid Round which entitles the co-venture tosecure the leases on award by State of Alaska (anticipated in Q2 2015) Unless stated elsewhere in this report, there were no beneficial interests heldin farm-in or farm-out agreements at the end of the quarter and no beneficialinterest in farm-in or farm-out agreements acquired or disposed of during thequarter, and there have been no activities relating to oil and gas productionor development during the quarter. David WallManaging Director 88 Energy LimitedLevel 2, 5 Ord StreetWest Perth WA 6005, AustraliaPh: + 61 8 9485 0990www.88energy.com Contacts RFC Ambrian LimitedAs Nominated Adviser Mr Oliver Morse+61 8 9480 2500 As Corporate Broker Mr Charlie Cryer+44 20 3440 6800