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- 88 Energy (88E) to acquire the remaining 50 per cent of Project Peregrine from Alaska Peregrine Development Company (APDC)
- The deal comes after 88E announced it was investigating downhole samples from the Merlin-1 well at the project
- APDC was planning to pause activities while investigating the samples, however, under the acquisition, 88E plans to continue exploration next winter
- The consideration for the 50 per cent interest includes US$14 million (approximately A$18 million) in 88E and a further US$10 million (approx A$12.9 million) in cash after tallying gross proven and probable reserves of 100 million barrels within the first 36 months
- 88 Energy shares last traded 4.8 per cent higher at 2.2 cents apiece
88 Energy (88E) is set to acquire the remaining 50 per cent of Project Peregrine from Alaska Peregrine Development Company (APDC).
Project Peregrine is located within the National Petroleum Reserve region of the North Slope of Alaska.
At the end of last month, 88E announced it was investigating evidence of downhole samples from the Merlin-1 well at the project.
Now, the company has struck an agreement with part owner, APDC, to pick up the whole working interest of Project Peregrine.
APDC said although the company is proud of its role in the initial exploration at the project, it’s unlikely to be able to satisfy “anticipated funding requirements” for operations in future seasons.
The company was planning to pause activity at the project to further understand results from Merlin-1, however, under the acquisition 88E plans to continue the exploration program next winter.
Managing Director Ashley Gilbert said the 100 per cent working interest combined with its wholly owned neighbouring Umiat Oil Field project “opens up significant potential for 88E to realise value in the region”.
Consideration for the project includes US$14 million (approximately A$18 million) payable to APDC in 88E shares, which are planned to be issued in several tranches and subject to a final reconciliation mechanism.
Further, APDC is entitled to a 1.5 per cent overriding royalty interest on future production from the project licences and a cash payment of US$10 million (approximately A$12.9 million) on the achievement of gross proven and probable reserves of 100 million barrels within 36 months.
Cash payments of US$2.5 million will also be made per 50 million barrels, on the achievement of gross proven and probable reserves added over 100 million barrels within 36 months, which will be capped at five additional cash payments.
APDC will remain liable for all outstanding cash calls in relation to Merlin-1 and will have contributed a total of US$20 million (approximately A$25.8 million) towards the project at completion.
88 Energy shares last traded 4.8 per cent higher at 2.2 cents apiece.
