88 Energy Ltd (AIM:88E, ASX:88E, OTC:EEENF) told investors today that it may be on to a winner with its Icewine East oil project in Alaska, which is estimated to contain over 1bn barrels of oil.
It’s an impressive figure, even more so when you consider the estimated chances of success in the mapped areas are extremely high for an oil drill.
There is an 81% chance of success (CoS) at the Shelf Margin Delta reservoirs and a 72% CoS from the Kuparuka formation.
Chances of success at the Slope Fan Set and Basin Floor Fan are slightly lower, at 50%, but still fairly high when seen in the wider industry context where the CoS for an exploration well tends to be 30-40%.
Of course, all will be revealed next year when drilling is expected to commence, but given the bumper figures and high chances of success, just exactly how did 88 Energy get there?
Pantheon Resources
Seemingly, a lot of 88’s estimates are built on neighbour Pantheon Resources' wells, namely Alkaid-1 and Theta West-1.
In its statement issued today, it explained that "Pantheon’s previous well tests have also confirmed reservoir deliverability of light, sweet oil, which 88 Energy believes is positive for the prospect of the adjacent Icewine East acreage".
Essentially, 88 believes Pantheon's success should translate across to its own acreage as some of the geology is overlapping.
For comparison, in a statement issued by Pantheon at the start of February, technical director Bob Rosenthal said he believed the neighbouring Talitha location had the potential to produce 1.2bn barrels of oil.
In a statement issued a week later, regarding Theta, Pantheon said it had "multi-billion barrel" potential..
LKA consultant
88 Energy, a London-listed, Australian-headquartered exploration company, said its thinking had been guided by an independent prospective resource report produced by Lee Keeling and Associates (LKA).
LKA are an independent US-based expert petroleum geoscience and engineering consulting firm that specialises in Alaska
It was responsible for reviewing and endorsing each of the mapped areas, as well as reviewing, validating and in some cases modifying the data given.
Drilling next year
Of course, estimates are important but the true test will be when the drilling for oil starts.
That is scheduled to be next year at the latest, though 88 also announced separately today it is turning to investors to raise additional A$10mln to ensure it has sufficient capital to do so.