88 Energy (LON:88E) has confirmed the presence of what it described as persistent oil shows though the HRZ shale formation, the primary target of the Icewine-1 exploration well onshore Alaska.
The result from the ongoing programme will provide encouragement for investors, though more drilling and further detailed analysis is still to come.
In a somewhat technical statement the company highlighted positive findings, whilst also noting that the HRZ target was encountered deeper in the well than anticipated.
The company said it had observed ‘visible bleeding’ of gas from samples from the top of the HRZ interval, while the persistent oil shows - described as “a range of streaming yellow to orange fluorescence” - were seen both above and within the HRZ too.
“The oil shows and visible bleeding of gas from rock chip samples provides further encouragement to that previously seen during drilling,” said managing director Dave Wall.
‘Bleeding gas’ is indicative of strong hydrocarbon saturation and is considered favourable for certain critical parameters, the company said, and the gas ratios (which were heavy-to-light) were favourable for the well’s thermal maturity model.
It added that the samples would be subject to further analysis.
88 Energy also highlighted that HRZ being in a deeper well location is interpreted to have “little bearing” on the project’s thermal maturity model.
"The present day depth of the HRZ shale at Icewine #1 does not reflect it's burial history through geological time,” Wall explained.
“As burial history is the key driver of thermal maturity, we interpret minimal impact, if any, to the thermal maturity model, which continues to be supported at Icewine #1 by the gas ratios observed.”
The company highlighted that this point was always had a level of uncertainty given the lack of seismic data and the underexplored nature of the area.
It added that the result indicates that Icewine-1 is ‘tracking’ closer to the Bush Federal well, located west-south-west of the well site, rather than the Pipeline States well to the north. The company goes on to explain that the stratigraphic interpretation of Icewine-1 was that it would be a hybrid between the two existing wells in the region.
Currently, the Icewine well has been drilled to a depth of 11,075 feet and the programme was said to be within budget.
A statutory test of the drill rig’s blow out preventer system is due to be completed, and then the drilling operation will resume into the core of the HRZ target.
After that, 88 Energy intends to test possible conventional exploration targets beneath the HRZ though that remains subject to hole conditions.
The planned total depth of the well is 11,600 feet.
88 Energy also told investors that it had raised an additional A$4.4mln via a share purchase plan, which was announced at the same as last month’s equity funding.
The scheme, which was designed to allow existing shareholders to participate, closed on December 11 and it saw applications for 475.5mln new shares (which equates to A$4.75mln), though it was scaled back due to a A$4.4mln maximum.
Wall said: “The outstanding takeup of the share purchase plan is a testament to the support from our shareholders, to whom we extend our thanks.
“The additional funds place the Company in a strong position from which to progress the project on multiple fronts and deliver increased value for investors."