88 Energy’s (LON:88E) quarterly report, released this morning, highlights a key fact that some investors may have overlooked; that the majority of the current work programme will be supported by the State of Alaska.
Drilling and the initial testing of the Project Icewine well, on Alaska’s North Slope, was the operational highlight of the period.
Initial work has indicated that the well is in the ‘thermal maturity sweet spot’ within the targeted HRZ shale, 88 said; meanwhile, it added that the well has also ‘high graded’ the area’s conventional prospectivity as two separate reservoir intervals were encountered.
The company revealed that it spent some A$15.8mln on exploration and evaluation in the three months to December 31.
Some A$10.84mln of that was financed by a Bank of America credit facility, which in turn is secured against State of Alaska credit rebates which are due to be received in this calendar year.
88 Energy’s own cash outflow for the Project Icewine well was A$4.9mln during the quarter, and it added that it expects to see a small amount of the state refund too.
The company confirmed that it had raised A$7mln through an equity issue, and at the end of December it had cash reserves of A$9.5mln.
Looking ahead, 88 Energy said it is continuing the evaluation and integration of well data from Icewine-1.
It expects to release results containing information on key variables over the coming weeks. This is expected to include details regarding permeability and porosity, the final thermal maturity, and the rock mechanics and stress regime.
A new seismic programme is planned, with a March start, subject to final negotiations with contractors and approval from Bank of America.