Investors in 88 Energy Ltd (LON:88E) have pinned their hopes heavily on the upcoming Icewine-2 well, but, the latest big discovery on Alaska’s North Slope underlines the fact that the company’s future won’t hinge entirely on one binary event.
Icewine-2 is targeting 88 Energy’s shale oil discovery, estimated to comprise multi-billion barrels, and it is designed to test the project’s production potential and commercial credentials.
It is not aimed at the very substantial conventional oil potential - about 1.5bn barrels - seen by 88 Energy across its acreage.
Conventional oil is presently a secondary issue for 88 Energy, though a look around the neighbourhood suggests that it should be getting plenty of attention.
Repsol, last week, announced the United States’ largest conventional onshore oil discovery for three decades.
The oil major unearthed a discovery of 1.2bn barrels on the North Slope, as its Horseshoe wells extending from prior a discovery 32 kilometres in the Pikka area.
At Pikka, Repsol’s development plans envisage first production in 2021 and output of around 120,000 barrels per day.
The Horseshoe-1 discovery well, drilled down to 6,000 feet, hit more than 150 feet of net oil play across several zones and a side-track off the first well encountered over 100 feet of pay.
It is the latest and largest of a number of new conventional oil discoveries in Alaska.
Conventional oil is more than a ‘plan B’ for 88 Energy
In January, 88 Energy revealed the findings of a new assessment of its conventional oil exploration portfolio.
It now sees almost 1.5bn barrels of resources across its inventory on Alaska’s North Slope.
Completing its review 88 Energy estimated a further 710mln barrels of prospective resources (550mln net to 88 Energy), which when added to the group’s prior estimates takes the tally to 1.47bn barrels (1.14bn net).
The resource assessment is based on 2D seismic data which has established a significant inventory of exploration leads (fifteen have been quantified altogether).
“The results from the 2D seismic interpretation continue to exceed our expectations for the conventional potential across Project Icewine,” 88 Energy managing director Dave Wall said at that time.
More recently, in a Stocktube interview in February, Wall said: “The conventional is the icing on the cake, so to speak.
“Our main focus is the HRZ (shale) which is several billion barrels of potential, the conventional has over a billion barrels of recoverable oil potential based on what we understand today.
“However, it [the conventional portfolio] is not as mature as the HRZ play and also it is not as big, so really it is partly ‘icing on the cake’ or if we don’t have success in the HRZ shale it is a fall-back.
“Icewine-2 is the HRZ test, but concurrently we’re also in the process of permitting wells in the conventional so that we’re in a position to drill them, if our investors want us to do that.”
88 Energy, in March launched a A$17mln funding through an oversubscribed share placing, selling 459mln new shares at 3.7 Australian cents (2.3p).