The two companies have executed definitive agreements with Great Bear Petroleum Ventures and Otto Energy to acquire the majority of Great Bear's working interest in the four leases comprising the Western Blocks (ADL 391718; ADL 391719; ADL 391720; ADL 391721) in exchange for drilling a commitment well on the Western Blocks prior to 30 May 2019.
The Western Blocks contain a 3D seismic-defined oil prospect in the successful Nanushuk play fairway with a gross mean unrisked prospective resource of 400mln barrels (Mmbbls), of which 144MMbbls will be net to 88E and 126MMbbls net to Red Emperor,
The geological chance of success has been estimated to be in the range of 25-30%.
88 Energy Ltd (@88EnergyLtd) July 30, 2018
The four consortium partners have funded their share of a US$3,000,000 performance bond to the State of Alaska and a US$500,000 cash payment to Great Bear as part of the consideration for the acquisition of the working interests in the Western Blocks.
The arrangement will see 88 Energy and Red Emperor acquire working interests (after “back-in”) of 32% and 27% respectively; Great Bear’s working interest will reduce from 89.2% to 20% and Otto Energy’s will rise from 10.8% to 20%.
Further details can be gleaned from the article below.
A location to optimally test the prospect has been selected and permitting is underway, ahead of scheduled drilling in the first quarter of 2019.
Meanwhile, 88 Energy said the Project Icewine farm-out data room has formally opened. 88 Energy and its joint venture partner, Burgundy Xploration, are aiming to complete a farm-out prior to the end of the year that will result in significant expenditure over Project Icewine to continue evaluation of the large conventional and unconventional potential identified over the past three years.
Elsewhere at Project Icewine, the evaluation process for the HRZ shale, following the recent suspension of the Icewine#2 well, is ongoing and is expected to take several months. Results from this process will be reported as appropriate during this period.
"The closing of the Western Blocks transaction is a significant milestone for the company and its shareholders,” said Dave Wall, 88’s managing director.
“Encouraging progress continues to be made across the expanded portfolio of assets in Alaska and we look forward to providing additional news on these in the near term,” he added.
On July 24, 88 Energy was informed by the Alaska Department of Revenue that it had issued a Credit Certificate to a wholly-owned subsidiary of 88 Energy for US$5.66mln related to expenditure in 2017.
An amount of US$2.83mln is available to be cashed out at such time that cash payments are made by the State. The total expected cashable credits owed by the State to 88E is US$20.7mln versus debt of US$16.5m. The timing of complete payment by the State remains uncertain but is estimated to be prior to the end of 2019.
In trading on the Australian Stock Exchange, 88 Energy closed 5.3% higher at A$0.02.