88 Energy (88E ) has completed its sale and purchase agreement to acquire the Umiat Oil Field on Alaska’s North Slope, issuing a 4% overriding royalty interest and assuming obligations for the abandonment of two historic wells on-site, at an estimated cost of $1m.
The Umiat oil field is an historic oil discovery, made in 1945 in shallow Brookian (Nanushuk) sandstones and is located immediately adjacent to southern boundary of Project Peregrine.
The Umiat-23H was previously flow tested at a sustained rate of 200 barrels per day with no water in 2014 by Linc Energy (max rate 800 barrels of oil per day). According to a 2015 assessment, the asset had 123.7mln barrels of gross proved and probable (2P) reserves.
88 Energy will now undertake a full field review to determine at what oil price Umiat may be commercial as a stand-alone development and whether optimisation of the previous development plan is possible.
In the event of a discovery at Project Peregrine, where drilling is imminent, it is expected that Umiat would contribute significant value to any development, the company noted.
"Our operational activity at Project Peregrine has provided 88E with a unique position from which to acquire the Umiat Oil Field at an opportunistic price point,” said Dave Wall, Managing Director of 88 Energy.
He added, “The asset has potential to add significant value for shareholders, possibly as a standalone development but certainly in the event that there is a material discovery in the imminent Project Peregrine drilling program."
Shares in 88 Energy have increased by over 70% in value since the beginning of November following positive news that its wholly owned subsidiary, Regenerate Alaska Inc, has been named highest bidder on Tract 29 in the 2021 Coastal Plain Lease Sale. Tract 29 comprises 23,446 acres and is adjacent to 88 Energy's existing Yukon Leases as well as the Point Thomson gas condensate field, which is currently in production. This morning the shares have traded up 8.18% at 0.6p.
Reasons to Follow 88E
Project Portfolio Across Alaska’s North Slope
The Alaskan explorer completed its acquisition of XCD Energy, which holds a 100% Working Interest in the highly prospective Alaskan North Slope, back in August 2020. The merged entity has formed a diversified portfolio of exploration projects on Alaska’s North Slope.
The combined company will have increased scale, market presence along with higher funding capability and trading liquidity across the ASX and London AIM exchanges.
The three key projects include Project Icewine, Yukon leases and Project Peregrine with the assets at various stages of development, the company previously outlined this summer.
In late 2020, 88E was also formally re-assigned the "Area A" leases at Project Icewine meaning its working interest in around 40% of the project has increased from 30% to 75%.
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