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88 Energy to wrap-up Charlie-1 testing due to “mixed” results

The primary target was not a success and joint venture partner Premier Oil has decided to exit the project – but, multiple secondary targets were still seen to have hydrocarbons

88 Energy Ltd - 88 Energy to wrap-up Charlie-1 testing due to “mixed” results

88 Energy Ltd (LON:88E) (ASX:88E) told investors that it has proved movable hydrocarbons in the Charlie-1 well, with sampling confirming a large condensate discovery in the Torok formation.

In a statement, however, Dave Wall, the explorer’s chief executive, described it as “a mixed result”.

The main Charlie target could not be tested because the formation was found to be “poorly developed” and was therefore not sampled. Oil shows previously noted in Charlie are now deemed to be ‘residual’, the company said.

READ: 88 Energy to host AGM online

Some secondary targets were sampled for analysis, others weren’t successfully sampled.

Joint venture partner Premier Oil PLC (LON:PMO) has decided to withdraw from the project as the drill results did not meet their expectations.

88 Energy noted that the well costs are within the expected budget, and, as a result, the AIM-quoted firm is not expected to incur any costs – they will be covered by the farm-out deal with Premier, which committed to spend up to US$26mln.

The well is now being plugged and abandoned, rather than put in suspension to allow further analysis.

88 Energy said there were a number of operational factors in the decision, including the potential for complications due to coronavirus and it being late in the seasonal weather window.

Torok condensate

Prior to drilling, the Torok formation was of secondary interest to the explorer.

Torok hosts the lower, middle, and upper Stellar targets – hydrocarbons were captured from the middle and lower, whilst the upper could not be sampled as this was a sub-optimal location for the target.

Further analysis will be required to determine whether a discovery of this nature can be commercialised on the North Slope of Alaska, given the likely high gas content.

Another target, Indigo, was found to be water-bearing.

Meanwhile, sampling was attempted but could not be undertaken in the ‘better’ of two Lima targets in this location.

88 Energy noted that a number of the secondary targets were not optimally intersected in the Charlie-1 location and there remains potential for higher quality reservoir elsewhere in the project area.

For example, analysis has indicated that hydrocarbons in the Seabea formation (the Lima targets) appear to be heavier than the Torok condensate, and, in BP’s original Magluk-1 well this horizon ‘live oil’ was observed there.

CEO comments

“On the one hand, we have confirmed the presence of mobile hydrocarbons in the primary targets of the well but, at the same time, there are challenges that need to be more fully understood related to whether these can be commercialised on the North Slope,” said 88 Energy chief executive Wall.

“Samples of the hydrocarbons have been recovered to surface and will now be the subject of further analysis in the coming months. The risks related to the shallower targets have unfortunately been borne out, with one found to be water-bearing and the other to have no sand development.”

He added: “The Lima targets both remain valid and, using the VSP, logs and cores from Charlie-1, we hope to be able to enhance the prospectivity of the Seabee Formation on our acreage.

“We also hope to glean valuable information in regard to the HRZ potential in this area of Project Icewine and analysis will take place over the next few months.”

Quick facts: 88 Energy Ltd


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