88 Energy has today reported a significant increase in the oil and gas resources in two of the six key reservoirs at its Phoenix project in northern Alaska following an independent assessment of the operation.
The company says respected energy consultant ERCE Australia has verified the 50 per cent resource jump to 378 million barrels of oil equivalent (MMboe) at the project. The news saw investors flock around 88 Energy shares, with more than 128 million units changing hands during intraday trading.
The new ERCE-backed figures show a best estimate for gross contingent resources (2C) at Phoenix has shot up by an extra 128 million MMboe, 81 of which go directly to 88 Energy. Specifically, the company’s net entitlement has increased by 73 million barrels of oil and natural gas liquids, alongside 43 billion cubic feet (Bcf) of recoverable gas.
With ERCE’s verification seen by management as significant support, Phoenix’s multi-reservoir structure is proving to be a robust discovery. With the addition of the Basin Floor Fan reservoir, previously audited by Netherland, Sewell & Associates, the total gross best estimate contingent resource now stands at 378MMboe, with a net 239MMboe attributable to the company.
88 Energy managing director Ashley Gilbert said: “This additional Contingent Resource estimate reaffirms the substantial potential of Project Phoenix, with four independent reservoirs now confirmed as discoveries. We are now focused on planning an extended period horizontal flow test of the SMD reservoir, utilising the existing Franklin Bluffs gravel pad infrastructure.”
Currently, 88 Energy is in discussions with its joint venture (JV) partner, Burgandy Xploration, regarding the next stage of progress for the project, with two options on the table. As the 74.3 per cent owner of the project, the company can either invite Burgundy to carry its share of the anticipated 2025/26 work program in exchange for an additional working interest in Phoenix, or the JV will start a formal farm-out process in the next three months to lock in funding for the next phase.
The decision as to which route the JV takes will depend largely on the results of a horizontal well flow test that is currently in its planning stage.
The Phoenix acreage, positioned on Alaska’s Central North slope and close to infrastructure, has been held by 88 Energy since 2015 and is a conventional oil-and-gas play in the shallower reservoirs.
Two wells – Icewine-1 and Icewine-2 – were drilled in 2016 and 2107 to test a deep unconventional play. It instead successfully penetrated the shallower Brookian reservoirs, however, the targets were overlooked due to a different focus of the drilling program.
After acquiring and researching an extensive 2D seismic database, the company determined to commission a further 3D survey to cover the Franklin Bluffs area to the north, which ultimately led to the decision to drill Hickory-1. And it was that wildcat well, drilled last year to a depth of 10,650 feet, that successfully intersected six wide pay zones of oil, condensates and gas, leading to the current 378MMboe 2C contingent resource estimate.
There appears to be little doubt that Phoenix holds massive potential and there are still additional prospects in the mix, including the lower Kuparuk formation and shallower SMD-A and C reservoirs. Depending on the outcome of flow tests, those zones could add yet more resources to the company’s tally.
It is often cited that patience is a virtue in the oil-and-gas game … and it also requires deep pockets. If 88 Energy is successful in organising its working interest funding for the next phase of the project, then the next 24 months may well attract renewed investor interest to the company.
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By James Pearson
