88 Energy Limited is pleased to
provide an update on the Project Phoenix post flow test program, as well as progress made by its
Joint Venture Partner Burgundy Xploration, LLC (Burgundy) regarding their funding and listing
plans.
Background; Hickory-1 Discovery Well - Project Phoenix (~75% WI)
The Hickory-1 discovery well was drilled in February 2023 and flow tested during the Alaskan winter
season in Q1/Q2 CY24. The testing operations focused on the two shallower primary targets, the
SFS and SMD reservoirs. The Upper SFS (USFS) reservoir, previously untested, and the SMD-B
reservoir were the primary focus. Each zone was independently isolated, stimulated, and flowed to
the surface using nitrogen lift to facilitate efficient well clean-up.
Upper SFS (USFS) flow test results
• Peak flow rate: ~70 bopd
• Maximum oil cut: 15%
• Flow type: Natural flow (no nitrogen lift required)
• Oil samples: Multiple samples with gravities of 39.9 to 41.4 API
(light crude oil)
The USFS zone's natural flow to the surface is noteworthy, as adjacent
wells required nitrogen lift.
For full details, refer to the ASX announcement dated 2 April 2024.
SMD-B flow test results
• Peak flow rate: ~50 bopd
• Maximum oil cut: 10%
• Gas to oil ratio: Low, with little to no measurable gas
• Oil samples: Multiple samples with gravities of 38.5 to 39.5 API
(light crude oil)
For full details, refer to the ASX announcement dated 15 April 2024.
Post-flow testing and next steps
Pressurised oil samples from both USFS and SMD tests are being analysed in Houston, with results
expected in Q3 CY24. These results will confirm reservoir fluid characteristics. An Independent
Contingent Resource assessment for the Upper SFS, Lower SFS, and SMD-B is anticipated in Q4
CY24. This assessment, in combination with the post-flow test analysis, will guide the next phase
of Project Phoenix, including planning for a potential horizontal well production test at the existing
Franklin Bluffs gravel pad location.
ResFrac has been engaged to review the Hickory-1 stimulation and flow design, and to model the
production potential and optimise the completion strategy for a horizontal well. Additionally, 88E
plans to initiate a formal farmout process to attract a strategic partner for future drilling and
development.
Joint Venture Partner Update
Burgundy Xploration, LLC has met its 2023 financial obligations and signed the flow test Authority
For Expenditure (AFE) on 15 February 2024. Under a standstill agreement executed in December
2023 with 88E’s subsidiary, Accumulate Energy Alaska, Inc (88E-Accumulate), Burgundy was due
to pay its share of the AFE cost (approximately US$3 million) by no later than 15 August 2024,
through either a public listing or a private capital raise. If the obligation remained unpaid, Burgundy
was to transfer 50% of its working interest in the Toolik River Unit leases to 88E-Accumulate.
Burgundy Xploration, LLC is a private Texas company historically funded by sophisticated oil and
gas investors that has invested more than US$25 million into Project Phoenix over the life of the
project. 88E understands that Burgundy’s plans for a public listing are progressing well including
the recent recruitment of a board and senior oil and gas executive with significant public company
(AIM, TSX, and US markets) experience and success to facilitate the company’s potential public
listing.
After an extensive internal and third-party review of the latest Project Phoenix data by Burgundy,
advanced discussions are underway in relation to a potential transaction whereby Burgundy would
provide a carry to 88E across an anticipated 2025/26 work program to include (but not be limited
to) the drilling, completion and extended flow testing of a horizontal well on the Dalton Highway in
return for additional working interest in the Project. Any carry would by subject to Burgundy raising
the capital required. Accordingly, at this stage there is no guarantee that a transaction with
Burgundy will be completed.
Given the deadline on the previous standstill agreement, Burgundy has committed to a payment of
US$0.35 million in the near term in return for the Company extending the December 2023 standstill
agreement for outstanding Flow Test AFE costs until December 31, 2024. Given this commitment,
Burgundy’s intentions to proceed with a listing public listing, as well as the ongoing negotiations
with the Company for a horizontal well carry, 88E has agreed to a further extension of the standstill
arrangement.
Should Burgundy fail to meet its obligations by the revised deadline, the Company retains its rights
under the joint operating agreement to enforce its terms if necessary.
This announcement has been authorised by the Board.
