Shares in 88 Energy Limited (LON:88E, ASX:88E) advanced 13% after it said it is ready re-start flow testing its latest well on Alaska’s North Slope.
Work on the Icewine-2 well was suspended for six weeks to allow pressure to build and imbibition (soaking) to occur.
The process has been effective in other plays by allowing frack fluid to be absorbed, displacing water that may be blocking oil and gas molecules from being able to flow through the reservoir.
88 Energy will recommence testing of the HRZ shale on August 21.
In the same announcement, the company said expanding its gross acreage position increased by 76,996 to 348,116 acres, or 259,114 net to the firm.
Connected zones
Prior to the fracking programme at Icewine-2 well, 88 Energy had thought it was addressing two separate shale reservoir zones. However, a slow rate of frack fluid recovery led it to believe the two zones were in fact connected.
Since then, the company has continued the process of recovering fracking fluid. As at the last update only 16% had been recovered, and no hydrocarbons were measured.
It remains to be seen whether the delay is a red-flag against the project, or whether in the passage of time it will be chalked up as part of the learning process in what remains an unchartered shale play.
The project, if it eventually proves successful, remains in its infancy, and plainly the company has much to learn as it tries to unlock an estimated 1bn-plus barrel prize.
Confirmation sought
The Icewine-2 appraisal well was designed to confirm the geological findings of the first hole, which had confirmed the presence of hydrocarbon bearing HRZ shale.
Success with the Icewine-1 well provided the basis of some big and potentially valuable resources.
That first well had laid out a whole new US shale play and, buoyed by this success, 88 Energy moved quickly to significantly expand its footprint in the surrounding area.
With Icewine-2, the idea was to take the important next steps of fracking and flow testing the HRZ shale. The intention was to prove that the potentially vast oil resource could be accessed and extracted at commercially viable rates. It was a litmus test for the HRZ’s future.
The shares were up 0.24p, or 13%, final hour of trading, valuing the business at £94mln.