88 Energy has banked a US$1 million (A$1.56m) payment from its Texas-based joint venture (JV) partner, Burgundy Xploration, as part of an outstanding US$4m (A$6.23m) cash call.
The funds will continue to support the development of 88 Energy’s massive Project Phoenix oil and gas development on Alaska's energy-rich North Slope.
While today’s payment does not appear to relate to either the direction of future funding commitments or current JV partnership discussions, 88 Energy says the part payment does demonstrate Burgundy’s ongoing commitment to Project Phoenix.
It has agreed - with an additional US$100,00 penalty fee and accrued interest - to extend the deadline for the balance of US$3m (A$4.7m) until February 15, 2025.
Burgundy has already spent US$26m (A$40.6m) for its 25.7 per cent interest of Phoenix and has signaled its intention to provide the funds required for the full carry cost of the planned work program in exchange for an additional working interest in the project.
88 Energy has been in ongoing discussions with Burgundy about the next stage of progress for the project, with two options on the table. As the 74.3 per cent owner of the project, it has left the door open for Burgundy to carry its share of the anticipated 2025/26 work program in exchange for an additional working interest in Phoenix. Alternatively, the JV will start a formal farm-out process in the next three months to lock-in funding for the next phase.
While this is being sorted out, 88 Energy continues to push on with plans for a critical horizontal well set to be drilled in the next 12 to 24 months to flow test the SMD-B reservoir at Project Phoenix.
The cornerstone of its strategy involves a horizontal flow test well at the Franklin Bluffs gravel pad, an established site offering cost efficiencies. In collaboration with its engineering consultants, the company aims to finalise designs for the hole early in the new year.
Independent auditor ERCE recently upgraded the oilfield to an estimated contingent resource of as much as 378 million barrels of oil equivalent (MMboe), of which, 239m MMboe is attributable to the company.
88 Energy managing director Ashley Gilbert said: " 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.”
Progress at site has also coincided with heightened exploration activity across Alaska’s North Slope. Adjacent operator Pantheon Resources has reached target depth at its Megrez-1 well and is preparing for production testing early in the new year. The results of that work could potentially redefine the regional oil dynamics and validate the commercial potential of the area, including Project Phoenix.
Project Phoenix has already delivered promising results. The 2023 Hickory-1 discovery well flowed light crude oil during winter testing, significantly de-risking the SMD-B reservoir.
On the back of an updated analysis of seismic data and in anticipation of upcoming work by 88 Energy and its neighbour, the company also recently locked up four new, highly promising leases adjoining the 10 blocks it holds at the nearby Project Leonis.
The new acquisition has subsequently increased the company’s landholding at Leonis by 30 per cent to 144 square kilometres.
With a definitive timeline for production tests starting to take shape, a JV partner reiterating its intention to stay the course and the strategic acquisition of resources, 88 Energy appears to be is setting the stage for a transformative phase.
Success at Project Phoenix could solidify the company’s position in Alaska and contribute to broader global energy security goals.
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By James Pearson
