88 Energy Limited - Umiat Oil Field Purchase
This announcement contains inside information
88 Energy Limited
88 Energy Limited ("88 Energy" or the "Company", ASX:88E, AIM 88E) is pleased to provide the following update related to the purchase of the Umiat Oil Field, located on the
· Sale and Purchase Agreement executed to acquire the Umiat Oil Field for consideration of:
o 4% overriding royalty interest (ORRI)
o Assumption of liability of abandonment of two historic wells (at an estimated cost of
· Umiat is an historic oil discovery, made in 1945 in shallow Brookian (Nanushuk) sandstones, located immediately adjacent to southern boundary of Project Peregrine
· The Umiat-23H well was flow tested at a sustained rate of 200 barrels per day with no water in 2014 by Linc Energy (max rate 800 barrels of oil per day)
· Gross 2P reserves independently estimated at 123.7 million barrels of oil (94 million barrels attributable to 88E's 76% net revenue interest) by
Reserves Cautionary Statement
Oil and gas reserves and resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when originally calculated may alter significantly when new information or techniques become available. Additionally, by their very nature, reserve and resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional drilling and analysis, the estimates are likely to change. This may result in alterations to development and production plans which may, in turn, adversely impact the Company's operations. Reserves estimates and estimates of future net revenues are, by nature, forward looking statements and subject to the same risks as other forward looking statements.
On 8th January, 88 Energy, via its wholly owned subsidiary Emerald House LLC, entered into a Sale and Purchase Agreement with Malamute Energy, Inc and Renaissance Umiat LLC (Sellers) to acquire the Umiat Oil Field. The consideration for the purchase was a 4% ORRI and assumption of the liability for the abandonment of the Umiat-18 and Umiat-23H wells, drilled by Linc Energy in 2013/2014. The estimated cost to abandon the two wells is approximately
The Umiat Oil Field is covered by two leases comprising 17,633 acres, which are in a unit that was formed in
Umiat was discovered in the mid-1940s with 11 appraisal wells drilled by 1953, several of which were tested. Umiat-5 flowed 268 barrels per day on a 3 month test and Umiat-8 had a peak flow rate of 5.9mmcf/d of natural gas during a 4 day test. Little work was done until 2013/2014 when Linc Energy drilled two wells, Umiat-18 and Umiat-23H. Umiat-23H was tested with a maximum flow rate of 800 barrels per day and sustained flow of 200 barrels per day.
Substantial engineering and environmental work was also done by Linc Energy in support of a potential future development. One of the routes for access to infrastructure runs directly through 88 Energy's Project Icewine leasehold where there are significant independently estimated resources of oil and gas. 88 Energy will now undertake a full field review to determine at what oil price Umiat may be commercial as a stand-alone development and whether optimisation of the previous development plan is possible. In the event of a discovery at Project Peregrine, where drilling is imminent, it is expected that Umiat would contribute significant value to any development.
Managing Director of 88 Energy,
Oil price assumptions used in the independent report were estimated to average
ASX Reserves and Resources Reporting Notes
(i) The reserves and prospective resources information in this document is effective as at
(ii) The reserves information in this document has been estimated and is classified in accordance with SPE‐PRMS (Society of Petroleum Engineers ‐ Petroleum Resources Management System) (LR 5.25.2).
(iii) The reserves information in this document is reported according to the Company's economic interest in each of the reserves and prospective resource net of royalties (LR 5.25.5).
(iv) The reserves resources information in this document has been estimated by the deterministic method based on performance methods, volumetric methods, analogy and reservoir simulation methods, or a combination of methods (LR 5.25.6).
(v) Operating costs assumed to be
(vi) 88 Energy is 100% working interest owner and operator of the project (via its fully owned subsidiary Emerald House LLC), subject to standard regulatory approvals (LR 5.31.2).
(vii) The two leases in the Umiat Unit are designated AKAA-081726 and AKAA-084141 (LR 5.31.3)
(viii) The classification of reserves has been based on data from 14 historical well penetrations in the field and subsequent engineering work. The total plan calls for 35 wells, 24 producers and 11 injectors (LR 5.31.4).
(ix) All of the reserves are classified as undeveloped (LR 5.31.5).
(x) The Umiat Oil Field Unit was recently formed to allow for development of the field to commence within a 10 year window, commencing in
(xi) 1P reserves are currently not estimated as there is no plan of development in place that includes all of the necessary approvals required to enter into production. (LR 5.31.8).
Reserves Table (barrels of oil; '000)
Net Reserves to 88E Revenue Entitlement
A graphic of Fig. 1 Umiat Oil Field Location can be found in the pdf version of this announcement available from the Company's website.
Media and Investor Relations:
88 Energy Ltd
Tel: +61 8 9485 0990
Tel: +44 7976 248471
Tel: + 61 8 9268 2829
Tel: + 44 131 220 6939
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