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88 Energy shuts down Icewine-2 programme for Alaskan winter

The explorer plans to carry out a new programme on Icewine-2 in the spring, once weather conditions are more favourable
oil operations
Hope hibernates: the well will be shut in until spring

88 Energy Ltd (LON:88E, ASX:88E)  shares were down around 40% on Thursday after it shut-in the Icewine-2 well for the winter, anticipating a new programme starting in April or May 2018.

The company said in a statement that the well had continued to flow at similar level to those reported in its most recent update – around two thousand cubic feet of gas per day – though it said some ‘encouraging trends’ were observed.

READ: 88 Energy investors continue to wrestle with Icewine-2 as the wait for a ‘representative result’ continues

According to the company, the decision to hibernate the programme was based on logistical reasons associated with testing in Arctic conditions – namely the freezing of borehole fluid (predominantly fresh water from the frack) due to the low rate of fluid flow.

On Thursday morning, 88 Energy shares were down 0.8 cents or 40.67% to trade at 1.19p.

88 Energy’s next move will be to use artificial lift with a view to improving flows from the well, though it noted that winterised equipment suitable for executing such a programme isn’t presently available.

Consequently, it plans to carry out this work in the spring once weather conditions are more favourable.

READ: 88 Energy: More patience needed as investors kept waiting for decisive Icewine-2 result

“Whilst it is frustrating to have to wait over the winter season for the continued flow test of the HRZ, there are several encouraging signs observed from this most recent phase of testing,” said Dave Wall, 88 Energy managing director.

“Given the early stage nature of our appraisal program, we need to have patience and remain open minded as there is no benchmark against which to track the progress of this particular unconventional play.”

Encouraging trends

Despite the frustrating lack of better flows, the company highlighted what it described as positive trends in the testing.

The company said there were increasing levels of ‘heavy components’ in the flow, compared to the preceding project update. It noted a decrease in C1 components and an increase in C2 components, which it suggested may potentially represent a trending towards an interpreted phase of hydrocarbon in the reservoir.

Additionally, the company highlighted an increase in the gas-to-water ratio, with the water rate decreasing over time and the gas rate remaining relatively constant. That said, the company still interprets that additional fluid is required to be lifted off the formation before effective connectivity to the reservoir can be achieved with representative flowback.

88 Energy also noted its “strong position” in relation to its debt. It highlighted that the current Bank of America debt balance is US$17.7mln and it anticipates that it will be due US$23mln of cash credits from the State of Alaska.

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88 Energy Ltd Timeline

Newswire
December 07 2017

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