A stockbroker this week proposed Alaska focussed explorer 88 Energy Ltd (LON:88E) was one of the AIM market’s most exciting shares, and as new drilling gets underway the suggestion is hard to argue against.
88 Energy’s hotly anticipated Icewine-2 well was spudded earlier this week, and it has the potential to unlock a project boast a potential ‘multi-billion barrel’ share project.
It will be a 30 to 45-day drill programme, designed to set up a fracking and production testing which is presently scheduled for late June or early July.
This will be the pivotal moment for 88 Energy and its investors who are all waiting and hoping for confirmation that the 1.4 to 3.6 billion barrels of crude resources can actually be extracted in a commercially viable development.
Icewine-1 set high expectations
Icewine-1 set the bar high, as it exceeded many of the company’s pre-drill expectations, nonetheless, it was very much a technical exercise.
It confirmed and built confidence in the geological model and exploration concept behind the Icewine project, but, at that time there was no attempt to test production.
The well success was a catalyst for 88 Energy shares, and investors will now be hoping this new programme can spark fresh interest.
88 Energy was able to estimate a shale resource between 1.4 and 3.6 billion barrels.
The Icewine-1 success also gave 88 Energy confidence to go get a significant additional land package - an extra 420,000 acres - so the company is very much set up to capitalise on a positive result from the new well, if that is indeed what Icewine-2 delivers.
Is this an all or nothing well for 88 Energy?
If the shale project doesn’t work, there’s a plan B which has an enviable amount of potential.
The Icewine acreage is also host to a catalogue of conventional exploration prospects. There has been a series of high profile discoveries in the neighbourhood, and by the company’s current estimation it could have a shot at nearly 1.5bn barrels.
88 Energy would, of course, need to go back to the drawing board as far as funding new exploration activities – but, perhaps there’s some degree of comfort that if the shale project fails there’ll be significant potential to fall back on.
Well Watch
88 Energy – Drilling underway for the Icewine-2 shale well in Alaska.
Sound Energy PLC (LON:SOU) – Badile (Italy), the exploration well has been underway for a number of weeks towards a target depth of 4,445 metres. It is testing a gas exploration target valued pre-drill at £400mln.
Rockhopper Exploration Plc (LON:RKH) – Al Jahraa SE-2X, the company’s next well in Egypt, partnered with Kuwait Energy, is targeting a potential extension of an existing discovery.
UK Oil & Gas (LON:UKOG): Broadford Bridge-1 to spud between now and the end of June.
Caspian Sunrise (LON:CASP): A5 and A6 well re-entry this quarter. A5 expected to get underway in the coming weeks.