- 88 Energy (88E) has released an update for the March quarter, which mainly focussed on Project Peregrine in Alaska
- After being granted a drilling permit, 88 began drilling the Merlin-1 well which was drilled to a total depth of 5267 feet
- While drilling outlined the potential for hydrocarbon zones, a follow-up wireline program experienced technical issues when taking samples from the zones
- The energy stock decided to plug the well but may re-enter it in the future to drill a side track and conduct flow testing
- To cover exploration and evaluation costs, 88 Energy spent around $15.2 million
- But thanks to raising about $18 million through a placement and share subscription agreement, the company still ended the quarter with just over $20 million in cash
- 88’s shares have dropped 2.17 per cent and are trading at 2.3 cents
88 Energy (88E) has released an update for the March quarter, which mainly focussed on the Project Peregrine in Alaska.
In January, the energy stock mobilised snow construction equipment to the Merlin-1 drill site in preparation for drilling. Later that month, the Bureau of Land Management approved a drilling permit which meant exploration could get underway two weeks early.
To cover the exploration and evaluation costs for Project Peregrine, 88 Energy spent $15.2 million, which is a staggering increase from the $2 million it spent in the December quarter.
The Merlin-1 well, located within the Merlin prospect, spudded on March 10 and was drilled to a total depth of 5267 feet.
Excitingly, drilling the well led to 88E discovering the potential for hydrocarbon-bearing zones.
The Nanushuk Formation, which contains the primary targets for the Merlin-1 well, was encountered 600 feet low to prognosis and is believed to be 500 feet thicker than that found in previously drilled wells in the Willow oil field.
Due to these encouraging results, a wireline program was approved to better determine the presence of hydrocarbons.
While the program identified multiple potential pay zones, the second run of the program experienced an operational setback. This phase focused on taking samples from the prospective zones but due to a power failure, a downhole sampling tool had to be pulled out.
Unfortunately, it was too late in the season to initiate flow testing, so the forward program will consist of plugging the well. It may be re-entered in the future if the company wants to drill a side track and conduct flow testing.
Positively, the company raise around $18 million through a $12 million placement and a share subscription agreement with ELKO International — one of the major contractors for the Merlin-1 operation.
At the end of the quarter, 88 Energy had $20.06 million in cash, which is noticeably more than the $14.8 million it started with.
Company shares have dropped 2.17 per cent and are trading at 2.3 cents at 10:48 am AEST.