88 Energy’s (LON:88E) Icewine is a ‘compelling’ project despite low oil prices, according to Australian broker Patersons.
Analyst Jason Chesters, in a note, has highlighted that Icewine is well located and near vital infrastructure, and pointed to cost advantages.
The AIM quoted shares advanced more than 300% this week following the release of the latest results from the Icewine well.
Those results indicated the project is so far going to plan. Analysis has confirmed that the HRZ shale formation is permeable, and it believes the shale is sufficiently porous.
And this week’s update indicated that a large part of the acreage is located in a ‘sweet spot’ for thermal maturity. The upshot of this is that the potential hydrocarbon resource is believed to comprise oil (with relatively low viscosity) and ‘wet’ gas. These details are not in themselves conclusive of a commercial success, but are plainly encouraging.
For the lay-person what probably matters most is that the findings conform to pre-drill expectations.
Patersons reckons the remainder of the Icewine 1 well results and analysis will provide further share price catalysts, and also highlights another will be an independent resources report.
“Success in these efforts could act as a catalyst for a farm-in partner or potentially a buy-out,” Chesters added.