88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) (88 Energy, 88E, or the Company) is pleased to provide an update on Project Phoenix’s joint venture partner Burgundy Xploration, LLC (Burgundy), as well as on progress towards the CY25/26 planned work program which includes a horizontal test well targeting the SMD-B reservoir.
Advancement Highlights
- Positive Joint Venture Partner Progress: Burgundy has paid
US$1 million of the outstanding US$4 million cash call, demonstrating its ongoing commitment to Project Phoenix.
- 88 Energy has agreed to extend the deadline to 15 February 2025 for the payment of the remaining US$3 million, and Burgundy remains committed to settling the outstanding
US$3 million cash call by the revised date.
- Burgundy’s stated intention remains to provide a full carry for the anticipated CY25/26 work program in exchange for an additional working interest from 88E.
- Project Phoenix de-risking: Planning and design for an extended horizontal well flow test of the SMD-B reservoir, utilising the existing Franklin Bluffs gravel pad is progressing in collaboration with Burgundy, with finalisation expected to align with any potential farm-out and associated carry.
- Production Test by Adjacent Operator Underway: Pantheon Resources LLC (Pantheon) (AIM:PANR) has reached Target Depth (TD) at its Megrez-1 well and successfully installed five
1/2-inch production casing in preparation for an extended well test scheduled for early 2025.
- Pantheon is testing the eastern topsets in the Ahpun field. Any success at Megrez-1 will enhance the regional understanding of oil and gas accumulations and the potential for the commercialisation of projects in the area, including Project Pheonix.
- Exploration Activity on the Alaskan North Slope Set to Accelerate: 88 Energy’s recent acquisition of four lease blocks adjacent to the existing Project Leonis leases (refer to Figure 4), coupled with the arrival of a new entrant acquiring a substantial holding near Project Pheonix, further underscores the regions exceptional exploration potential and attractiveness for future development.
Ashley Gilbert, Managing Director of 88 Energy, commented:
"Advancing Project Phoenix towards commercialisation remains an important element of our overall strategy. Having delivered a strong Contingent Resource estimate of net 239 million barrels of oil and natural gas liquids1, we are now focused on rapidly unlocking its full potential. Burgundy’s continued commitment to the project and progress with their North American listing process provides us with confidence in our ongoing partnership and wider support from the investment and the oil and gas community. Our focus remains on further de-risking Project Pheonix, both financially and technically, while simultaneously pursuing opportunities within our expanded Alaskan and Namibian portfolio of exploration activities.”
Joint Venture Partner Progress
As previously announced, 88 Energy remains actively engaged with Burgundy regarding a potential funding transaction. Burgundy, a private Texas-based company supported by sophisticated oil and gas investors, has invested more than US$26 million into Project Phoenix to date.
Burgundy recently contributed US$1 million towards the outstanding US$4 million cash call, with 88 Energy agreeing to a final payment deadline for the remaining balance to be paid on 15 February 2025, accompanied by a US$100,000 fee for extending the payment deadline and interest continues to accrue until full payment has been received the Company.
Burgundy has reaffirmed its commitment to Project Pheonix and expressed strong interest in providing a full carry to 88 Energy for the CY25/26 work program in exchange for an additional working interest in the project. The CY25/26 work program includes drilling and completing a horizontal test well at the Franklin Bluffs pad location, along with an extended testing period for the SMD-B reservoir. 88 Energy
is currently reviewing the terms of the proposal, which will be subject to further negotiations.
Project Phoenix De-risking: Advancement Activities and Key Milestones
The Project Phoenix joint venture is advancing plans for an extended flow test of the SMD-B reservoir at the Franklin Bluffs gravel pad in CY25/26. Utilising the Franklin Bluffs gravel pad, which was previously used to drill the Icewine-1 and 2 wells, offers considerable cost savings compared to a
purpose-built ice pad, without compromising the planned objectives.
The design phase for the proposed horizontal well is progressing on schedule. Leading well modelling and simulation experts, ResFrac, are optimising the completion strategy, with final recommendations expected by end of Q4 CY24.
Production Testing by Adjacent Operator Underway
On 10 December 2024, 88 Energy’s neighbour, Pantheon, announced the Megrez-1 well had reached TD, with production casing installed in preparation for an extended well test scheduled for Q1 CY25. Pantheon is targeting the Ahpun Eastern Topset reservoir. This test is a crucial step towards confirming the commercial viability and development potential of this reservoir. If successful, it would enhance the understanding of this reservoir and its production potential, further supporting the regional development potential and commercialisation pathways, which will positively impact on the commercialisation plans of Project Phoenix.
About the Hickory-1 Discovery Well and Project Phoenix (~74.3% WI)
The Hickory-1 discovery well was drilled in February 2023 and flow tested during the Alaskan winter season in Q1/Q2 CY24. Testing focused on the two shallower primary targets, the Upper SFS (USFS) reservoir, previously untested, and the SMD-B (SMD) reservoir. Each zone was independently isolated, stimulated, and flowed oil to the surface either naturally or using nitrogen lift to facilitate efficient well clean-up. On the 18th of September, a contingent resource for the SMD-B, Upper SFS and Lower SFS reservoirs was issued by ERCE. This contingent resource is now added to the pre-existing contingent resource in the BFF reservoir, issued by NSAI in 2023. The total net 2C contingent resource at Project Pheonix is 239 MMBOE.