• Licensing agreement signed with SAExploration (SAE) for use of SAE’s Franklin Bluffs 3D seismic survey data (FB3D), covering a significant area over the Project Icewine East leases.
• Critically, the FB3D covers an area over the SMD, SFS and BFF reservoir units, which are interpreted to extend from Pantheon Resources’ (Pantheon) acreage onto Icewine East.
• Pantheon wells – Alkaid-1, Talitha-A and Theta West-1 – have flowed 35⁰ to 40⁰ API oil from multiple Brookian reservoirs (see Pantheon releases of 7 and 21 February 2022), with independent third-party mapping indicating all of Pantheon’s play fairways extend onto Project Icewine East.
• Upfront license fee includes, as part of the initial payment, US$1.0M in new 88E shares.
• 88E to conduct a full interpretation of the FB3D data, including AVO analysis, to define ‘sweet spots’ for each play and determine optimal future exploration and appraisal drilling locations.
• Drilling of a new exploration well currently being planned to spud in 2023.
• Project Longhorn production has increased over 70% since acquisition, with plans to accelerate the capital development work program and increase production further given elevated oil prices.

88 Energy has signed a licensing agreement with SAE for the use of SAE’s FB3D seismic data.

The FB3D seismic data was acquired in 2015 by SAE and covers approximately 86 square miles, predominantly over the Icewine East acreage. More importantly, the FB3D extends across an area where the Shelf Margin Delta (SMD), Slope Fan Set (SFS) and Basin Floor Fan (BFF) play fairways have been independently mapped (by Jordan & Pay) on the Icewine East acreage.

The FB3D data will assist the Company through subsequent analysis and review, including Amplitude-variation-with-offset analysis (AVO analysis) and simultaneous seismic inversion, in defining ‘sweet spots’ for each play and hence determine optimal drilling locations for future exploration and appraisal wells. In addition, the FB3D will provide key data for potential farm-out partners to assess as part of their due diligence program.

Project Icewine East

The FB3D seismic data is to be used to further mature the conventional prospectivity of the Project Icewine East acreage, where it is anticipated that it can confirm the prospectivity already identified and mapped on 2D seismic data. Importantly, future drilling locations in the Icewine East acreage will be supported by AVO analysis, which is often used as a qualitative exploration tool. AVO responses can be associated with the presence of hydrocarbons in good quality reservoirs; an association which becomes more reliable when calibrated to actual fluid content (hydrocarbons) and log data from nearby wells. It is also worth noting the success that Pantheon has had in utilising its 3D data to locate Alaskan exploration and appraisal wells. 88 Energy is targeting a similar or better outcome from its use of the FB3D data.

88 Energy’s initial license fee includes US$1.0 million in fully paid new ordinary shares in 88 Energy (approximately 181 million shares at an issue price of A$0.008 per share, being the closing price of 88 Energy shares on the ASX on 24 June 2022).

88 Energy is currently in the process of planning its operations in 2023 which is expected to include an exploration well to be drilled in the Icewine East acreage, and at least one flow test from multiple Brookian reservoirs that have been mapped on the Icewine East acreage. These are the same reservoirs that nearby Pantheon wells – Alkaid-1, Talitha-A and Theta West-1 have flowed 35⁰ to 40⁰ API oil.

In addition, the Company is continuing with its planned farm-out of the Icewine East acreage. The Company is hopeful of achieving a positive outcome from the farm-out process given the extensive dataset and track record that significantly de-risks the Icewine East acreage.

Project Longhorn

88 Energy is pleased to provide a further update on operations at its recently acquired Project Longhorn conventional oil and gas production assets in the proven Permian Basin, onshore Texas, U.S. 88 Energy has a circa 73% average net working interest in these established production assets.

In the period from March to May 2022, the operator of the Longhorn production assets successfully completed the first three of seven planned capital-efficient work-overs scheduled after the completion of the Longhorn acquisition. These work-overs were completed on time and on budget and have delivered an significant increase to the total oil and gas production rates of Project Longhorn.

Production from the Longhorn wells exceeded 650 BOE per day gross (over ~475 BOE per day net, approximately 70% oil) following completion of the third work-over at the end of May, at initial production rates. Daily production rates are anticipated to settle at around ~500 BOE per day gross (over ~365 BOE per day net, of which approximately 70% is oil) in July, which represents an overall output increase of ~70% since the completion of the acquisition in mid-February 2022.

The production increase provides additional direct exposure to the higher WTI oil and gas price environment and accelerates payback on both the acquisition of the assets and the capital investment in the work-overs.

Given the success of the initial three work-overs, as well as the continued high oil and gas price environment, the joint venture participants have agreed to accelerate the capital development program and the completion of the remaining four planned work-overs. As part of this agreement, 88 Energy has agreed to part fund its share of the anticipated US$3.5 million (net) in development capital through the issuance of US$3.0 million in 88 Energy shares (approximately 544 million shares at an issue price of A$0.008 per share, being the closing price of 88 Energy shares on the ASX on 24 June 2022) to Lonestar I, LLC (Lonestar), to fund Longhorn’s working capital contributions towards the remaining CY2022 capital development program (Capital Development Shares).

Project Longhorn is now scheduled to complete the targeted seven capital development activities earlier than planned in Q4 2022.