88 Energy Ltd (LON:88E) highlighted “encouraging evidence of oil” as it provided an update on its projects in Alaska.
The company’s comments, in a stock market statement, related to down hole samples gathered from the Merlin well that were then sent for more detailed lab analysis.
“It is important to note that whilst the percentages of hydrocarbon in the samples reach up to ~70%, which would be indicative of a discovery, the results are deemed qualitative, and the margin of error is uncertain,” the company said.
“Therefore, further investigation is required to validate the actual percentage of hydrocarbon in the samples. The ratios of hydrocarbon indicate that the liquid present is highly likely to be oil rather than condensate, which also bodes well from a thermal maturity perspective regionally.
“These horizons had previously been deemed to contain mostly water and this remains a possibility.
“Regardless of the final percentages of hydrocarbon vs water in these samples, which will be known in the coming weeks, the presence of oil is highly encouraging particularly given that the two most prospective horizons were not able to be sampled due to operational issues.”
The company also noted that additional fluorescence recorded at previously unidentified depths, possibly indicating additional exploration potential.
88 Energy noted that the final costing of the Merlin well programme has now been largely finalised, with all major invoices now in hand.
The company said its net share of the costs will be around US$9mln, and that a portion of the costs will be repaid in 88 Energy shares (around 345mln shares priced at 2.5 cents each) whilst the remainder will be paid in cash.
“This will ensure the company is left in a strong financial position ahead of next winter's exploration program,” it said.