88 Energy Ltd (AIM:88E, ASX:88E, OTC:EEENF) has failed to obtain fluid samples from the Merlin-2 well in Alaska, and, provisional analysis of wireline logging has indicated that reservoir quality at this location is insufficient to warrant a production test.
The company, in a statement, noted that whilst its tool was unable to obtain a sample it previously encountered encouraging oil shows and logging while drilling data.
It added that there were results consistent with the prior Merlin-1 well - fluorescence and petroliferous odour in cuttings, elevated mud gas readings and evidence of mobile hydrocarbons during MDT sampling.
Managing director Ashley Gilbert told investors that the company remains in a strong financial position, with zero debt and a healthy cash balance that will be further strengthened with projected cash flows from Project Longhorn (recently acquired producing assets in Texas).
Ashley added: "We appreciate that this result will be disappointing news for shareholders, in particular that we were again unable to obtain a fluid sample at surface or perform a flow test.
“However, we will now take the necessary time to fully analyse the data from the Merlin-2 well.
“This will provide a basis upon which the company can provide further updates on the future potential appraisal program for the Project Peregrine acreage."
Ashley noted that the company will continue to review and progress its opportunities in Alaska, whilst highlighting that it is particularly encouraged by third-party successes to the north of Project Icewine.
88 Energy shares fell some 58% in the wake of the announcement, having previously run-up in anticipation of a high impact success.
Alaska exploring AIM-peer Pantheon Resource (which has enjoyed a number of successful wells to the North of 88 Energy’s location) has meanwhile seen its shares rise some 50% over the past six months driven by discoveries and flow test results.
On Tuesday, Pantheon shares dipped more than 8.5%.