Coming mid-way through a thoroughly communicated hiatus in the Icewine-2 well programme, 88 Energy Ltd’s (LON:88E, ASX:88E) quarterly activity report was largely an obligatory box-ticking exercise – nonetheless, the explorer was able to remind investors of its notable cash buffer.
88 Energy, which has seen its shares slump in recent weeks, had some A$31.6mln of cash at the end of June.
READ: 88 Energy: Analysis underway as Icewine-2 hiatus continues
Some A$13.7mln was spent on Icewine-2 exploration and evaluation activities during the three month period, with a further A$1.4mln covering debt and admin expenses.
Operationally, the report covers the period before the Icewine-2 hiatus occurred – as such it details the successful completion of drilling activities, and subsequent operations.
Six-week hiatus
On July 10, however, the Icewine-2 well was suspended for a period of six weeks for imbibition (or soaking), a process intended to increase pressure in the well and improve the rate of frack fluid flow back.
Previously, the company was only able to recover around 16% of the fluid it injected into the Icewine-2 well and only trace hydrocarbons have been seen at surface. Normally, the flow back of frack fluid precedes the flow of hydrocarbons, and the hiatus in the Icewine-2 well means the intended flow testing programme is, at the very least, delayed.
If imbibition does not produce the desired effect the company intends to carry out an artificial lift (or swabbing) process.
88 Energy shares slumped last week after it announced the imbibition plan, which as well as delaying testing raised uncertainties about the viability of the HRZ shale – albeit the company said imbibition is not an entirely uncommon requirement for new shale projects.
No blueprint or basis for comparison
On Tuesday, the company highlighted to investors that there is no blueprint or benchmark against which it is meaningful to measure the well’s performance to date. It noted that the HRZ has several similar characteristics as other successful shales but it also displays many differences.
Analysis is now underway to determine what impact the performance of the well to date has on the play’s probability of success.
This will involve comparison of the flowback rate against the expected flowback rate based on reservoir parameters and the successful execution of the fracture stimulation, the company explained.
It will also reconcile the petrophysical model, and the apparent in-situ hydrocarbons, with the hydrocarbons recovered to surface to date.
88 Energy told investors that the analysis is ongoing and the findings will be communicated once complete.