Investors continue to wrestle with 88 Energy Plc (LON:88E) and the ongoing programme at the Icewine-2 well in Alaska.
The company is still waiting for the well to start providing it with ‘representative results’ that can be used to judge the commercial feasibility of what is potentially a billion barrel resource.
Tuesday’s update informed investors that the well is still slowly yielding fracking fluid and whilst gas is now starting to come through the targeted hydrocarbons are yet to emerge – specifically, it is flowing 55 barrels of fluid and 2-4 thousand cubic feet of gas per day.
So far around 19% of the fluid injected into the shale has been recovered, and 88 Energy says more must be produced before Icewine-2 can provide a representative result, but, it also noted that a decision will have to be made about the company’s plans for the well over the coming fortnight.
Whilst 88 Energy has emphasised that the programme remains in its early stages, the group’s recent share price movement (it is down some 51% over the past three months) suggests that the market isn’t waiting too long to make its mind up.
Brendan Long, analyst at WH Ireland, in a note, said: “The specific well result is perplexing relative to the behaviour of a typical commercial shale oil well and we presume the focus has shifted from proving a commercial concept with oil flow to better understanding the resource and the optimal completion strategy.
“The presence of gas is promising as gas expansion is what drives oil to the well in most shale oil wells.”
Long noted that the gas flow amounts to less than one barrel of oil equivalent, and said: “. So the question is about whether the resource / completions can produce at rates that are hundreds of times higher bearing oil.”
He added: “Conceptually, we still like 88 Energy and understand the prize for unlocking their resource is huge, nonetheless we are underwhelmed by this specific well result.”
88 Energy shares were down 7.2% on Tuesday, trading at 1.88p.