88 Energy’s (LON:88E) first drilling at Icewine in Alaska has a 'high likelihood' of delivering hydrocarbon shows, according to Hartleys.
The Aussie broker draws that conclusion from the extent of three prolific source rocks across the area’s North Slope (including Project Icewine).
Project Icewine was independently assessed as having an unconventional prospective resource (gross un-risked mean) of 492MM bbl. With a probability of geological success of 41%, the risked mean prospective resource is 200MM bbl (gross).
The entry of Otto Energy into the region should also be viewed as positive for the 88E story, says Hartleys.
Otto has farmed into the Great Bear acreage directly to the north of Project Icewine. Great Bear’s Alkaid #1 well, spud in February this year, was targeting both conventional and unconventional reserves in the Shublik and Kingak formations.
A successful outcome from Alkaid #1 would obviously be positive for 88E, said teh broker, though Great Bear plans to drill a further two wells in early 2016.
As 88E completes its exploration program, the broker believes the share price could appreciate towards 2cps (0.92p) though at US$255/acre that would be still be well below other transaction values on the North Slope since 2011.
Shares were 0.61p in London today.