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88 Energy boss says Icewine ‘couldn’t be going much better’

Here we catch up with 88 Energy boss Dave Wall via a company Q&A.

Several crucial tests will be completed in the coming weeks.

It continues to be a busy time for Alaska focussed oil explorer 88 Energy (LON:88E) which has in recent weeks confirmed a new shale discovery in the Icewine well.

Full results of the potentially breakthrough programme are keenly awaited, though managing director stuck an encouraging tone whilst catching up with Proactive Investors.

Wall also highlighted the pivotal support that explorers receive in Alaska which, in his words, allow smaller companies to explore regardless of the oil price.

Earlier this week, in a quarterly update, the AIM and ASX company told investors that some A$15.8mln had been spent on exploration and evaluation in final three months of 2015 but, A$10.84mln of that was financed by a Bank of America credit facility, which in turn is secured against rebates from the State of Alaska.

In the Q&A, Wall also gives insight into what comes next at Project Icewine.

Proactive: How big a deal is the support of the Alaska incentives given the current situation in the oil market?

DW: The incentives provided by the state make it possible for smaller companies, regardless of the oil price, to explore in alaska, where cost structures are higher than the global average due to the remoteness and harsh climate.

Without the credit system, 88 Energy would not have contemplated an exploration project on the north slope.

Proactive: Reflecting upon what you currently know from the Icewine well results, is the project living up to your expectations?

DW: I can say that we are seeing everything we had hoped to see at this stage of the evaluation so it couldn’t be going much better – albeit several crucial tests remain.

These will be completed over the next 3-4 weeks.

Proactive:  What, in plain English terms, do you hope to find out through the remainder of the evaluation phase following the Icewine well?

DW: Permeability, or cracks in the rocks, through which the hydrocarbons can flow.

Saturation, both oil, gas and water, to determine what the composition of any production might be – too much water or gas would not be ideal.

This ties in to the thermal maturity also: i.e. we want to be on the edge of volatile oil / gas condensate where the viscosity is lowest (because here it flows at higher rates)

Rock mechanics – can the rock be fracture stimulated effectively?

These are the key metrics

Proactive: What will be the company’s next steps, once the Icewine-1 programme is complete?

DW: We are planning on acquiring seismic in march to identify conventional drilling prospects and then hopefully entering into a farm-out deal on the back of the evaluation of icewine-1 and ahead of the seismic results.

Proactive: Based upon what you’ve learnt so far, what are you hopes for the project?

DW: As always with every exploration company, we hope for a commercial discovery that results in value creation for our shareholders.

Proactive: Do you have enough funding to follow up these plans?

DW: We are well placed on funding and can adjust our program / budget to match our a$10m in cash. If we were to do everything we want to do, we would either need a deal or a small cash injection before mid-2016.

Proactive: What potential milestones should investors mark in their diaries?

DW: Ongoing evaluation of core between now and end of February.

Commencement of seismic (subject to contract negotiation) mid-March.

Finalisation of seismic acquisition in mid-June.

Potential joint venture deal by the third quarter of 2016.

Results from seismic, fourth quarter of 2016.

Quick facts: 88 Energy Ltd

Price: 0.27 GBX

Market: AIM
Market Cap: £23.66 m

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