UK stockbroker Cavendish has reacted with continuing bullishness in the direction of 88 Energy Ltd (AIM:88E, ASX:88E, OTCQB:EEENF, FRA:POQ) after the Alaska-focused explorer releases a new resource upgrade, which analysts see as sharpening the investment case for the South Prudhoe project.
Cavendish repeated its ‘Buy’ rating, which comes with a 19.8p target price (compared with a current share price of 1.4p), whilst pointing to a “material update” to the prospective resources at South Prudhoe, where gross unrisked 2U prospective resources have increased by 35% to 768.9mln barrels, or 640.7mln barrels net to 88 Energy.
The broker described South Prudhoe as a “significant multi-reservoir, infrastructure-led opportunity”, and highlighted that it lies immediately adjacent to some of North America’s largest oil fields.
The Augusta prospect is said to be the company’s highest-priority drilling target, and it is now defined across multiple stacked reservoir intervals.
The planned Augusta-1 well is designed to test 133.7mln barrels of gross prospective resources, or 111.4mln barrels net to 88 Energy, across the Ivishak, Kuparuk and Brookian reservoirs. A rig has been secured, long-lead services are advancing and permitting and planning is underway. Drilling is planned for the first quarter of 2027, subject to 88 Energy securing an appropriate funding structure.
Cavendish believes success at Augusta-1 would “substantially de-risk a large, stacked oil opportunity”, and it added that the proximity to existing Prudhoe Bay and Kuparuk River infrastructure could reduce capital intensity, shorten development timelines and improve project economics.
Moreover, the broker also pointed to renewed industry appetite for Alaska’s North Slope, noting that the latest National Petroleum Reserve lease sale attracted winning bids from ExxonMobil, ConocoPhillips, Repsol and Shell.