--UPDATE, ADDS SHARE PRICE DETAILS--
88 Energy (LON:88E) shares advanced on Monday after its latest update from the Icewine shale well gave further indications that were better than pre-drill expectations.
Analysis indicates Icewine’s HRZ shale zone has ‘tier 1 liquids-rich hydrocarbon concentration’ and that the project presents ‘world class resource prize potential’, the company said.
It added that the well had encountered 196 feet of gross pay, with just over 180 feet of net hydrocarbon pay, and that reservoir quality is seen as being either ‘in line’ with or above expectations.
Analysis of rock mechanics adds further de-risking information about the project. 88 Energy said that average clay volumes (at 40%) are analogous to major US shales such as the Marcellus and Haynesville shales; it added that the play contained a high percentage of brittle, non-swelling clays.
88 Energy told investors it is now planning for the Icewine 2H horizontal well.
It also confirmed that Icewine 1 was completed on budget, for $16.1mln, and it achieved all of its primary objectives.
The company, meanwhile, also highlighted that seismic acquisition work is now being planned to help reduce risks for exploring for conventional resources in the future. Increasingly, however, 88 Energy expects to focus on the shale rather than the conventional oil potential.
“We have tailored our seismic acquisition to focus on mitigating drilling risk for the next well, Icewine#2H, for which planning has commenced,” said Dave Wall, 88 Energy managing director.
“Given the current oil price, it did not make sense to attempt to delineate the more subtle, and typically smaller, conventional features at this point in time.”
“The revised 2D seismic program will give a broader regional picture across a larger aerial extent on our expanded acreage position and should still identify those larger conventional features that would be economic at today's prices.”
On AIM, 88 Energy shares gained 0.32p, 15%, to trade at 2.5p each.