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88 Energy welcomes Premier Oil to Project Icewine joint venture

88 Energy will operate the Charlie-1 (i.e. Malguk-1) discovery well

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88 Energy Limited (LON:88E) will retain a 30% working interest in Area A of the conventional Project Icewine acreage after clinching a farm-out agreement.

Premier Oil PLC (LON:PMO) has signed a sale and purchase agreement with 88 Energy and Burgundy Xploration LLC to farm-in for a 60% interest in Area A, which is in the proven Alaska North Slope basin.

Area A contains the Malguk-1 discovery drilled by BP in 1991, which discovered but never tested 251 feet of light oil pay in turbidite sands in the Torok formation, within the recently emerging Brookian play. Premier estimates an accumulation of more than 1 billion barrels of oil in place, based on the original well data and its evaluation of the existing 3D dataset.

Premier will pay the full costs of an appraisal well, dubbed “Charlie-1”, up to a total of US$23mln to test the reservoir deliverability of the Malguk-1 discovery. The well will be drilled and tested in the first quarter of next year.

On successful completion of the work programme, Premier will have the option to assume operatorship.

Should the Charlie-1 appraisal well prove successful, Premier has the option to earn a 50% working interest in Area B or Area C through spending US$15mln.

"We are delighted to be partnering with a company of the technical calibre of Premier. Premier has a strong track record of delivering projects through to production and is an excellent addition to the joint venture,” said Dave Wall, the managing director of 88 Energy.

“The deal itself strikes a good balance between cultural fit, value and the meaningful working interest retained by 88E for its shareholders. The Charlie-1 well has been designed to test all of the prospective horizons identified in the Western Play Fairway, giving benefit usually only derived from a multi-well programme," Wall added.

Shares in 88 Energy were down 4.9% at 0.97p in early deals.

Quick facts: 88 Energy Ltd

Price: 0.802 GBX

AIM:88E
Market: AIM
Market Cap: £55.11 m
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