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88 Energy one step closer to drilling at joint well with Premier Oil
  • Oil explorer 88 Energy (88E) has reported mixed results from its Charlie-1 appraisal well on Alaska's North Slope
  • 88 Energy tested drilling down to a depth of almost 3400 metres through seven stacked sandstone targets and one shale target
  • Two targets yielded evidence of mobile hydrocarbons in the form of condensate gas, but all other targets proved either fruitless or problematic
  • Extensive sampling and mapping was undertaken during the drilling will help more accurately locate resource targets
  • The well has been plugged and abandoned while 88E analyses its results and plans for the next phase
  • 88 Energy has slumped in the wake of the bad news. Shares are down 55 per cent to 0.9 cents per share

Oil explorer 88 Energy (88E) has reported mixed results from its Charlie-1 appraisal well on Alaska's North Slope.

The positive

88 Energy tested drilling down to a depth of almost 3400 metres through seven stacked sandstone targets, and one shale target. Two targets showed the presence of mobile hydrocarbons in the form of condensate gas.

Samples were recovered from the Middle and Lower Stellar targets - the two deepest targets in the appraisal, both below 3200 metres - which will be further analysed for composition and gas-to-liquid ratio.

Samples were also taken from the HRZ formation, which will be analysed in coming months. 88E believes the HRZ remains a viable target for commercialisation and is accordingly weighing up its options for further testing.

Previous drilling at the site in the early 90s revealed potential for large reserves, but the resource mapping was primitive and didn't render an accurate picture of what might be in the ground.

With Charlie-1, 88E has had the opportunity to retrieve detailed logs and sidewall cores, as well as vertical seismic data, which will be used in addition to existing 3D seismic data to more accurately map the target areas.

The negative

Multiple targets proved fruitless — either because of poor resource quality, or because the well failed to intersect the resource at a viable point for testing.

The Upper Stellar target was one of the latter, so it was left untested. The other targets, which are all at shallower depths, proved equally frustrating.

Charlie and Indigo were the two shallowest targets, and both were disappointing. Indigo is water-bearing, and Charlie was found to be poorly developed, so it wasn't sampled.

The mid-depth Upper and Lower Lima targets still show some promise, even though Charlie-1 didn't return positive results.

Lower Lima was deemed the most promising of the two for testing, but sampling showed insufficient reservoir quality. 88E believes there is still potential at the targets, however, as they were perhaps not intersected optimally by the appraisal well.

Where to now?

Further testing is required before 88E can think about commercial exploitation, given the likelihood of high gas content in whatever reserves are present, and the differing phases of the hydrocarbons that were present at different depths.

Unfortunately, the winter drilling season is quickly coming to an end, so the company has had to cease testing activities - or risk getting its rig stranded when the ice starts breaking up.

Charlie-1 has now been plugged and abandoned. What had been touted as a 1.5 billion barrel resource has so far proven to be more trouble than previously thought.

Managing Director of 88 Energy Dave Wall, says the results from Charlie-1 were mixed.

"On the one hand, we have confirmed the presence of mobile hydrocarbons in the primary targets of the well but, at the same time, there are challenges that need to be more fully understood related to whether these can be commercialised on the North Slope. Samples of the hydrocarbons have been recovered to surface and will now be the subject of further analysis in the coming months," Dave explained.

Ongoing difficulties related to personnel and supplies due to COVID-19 also rendered it an easy decision for 88E to shut up shop and reassess its options.

88E's joint venture partner, Premier, has informed the company that it intends to withdraw from the project, as the well did not meet its pre-drill expectations. The cost of the well remains within the expected budget and 88E does not expect to incur any costs in relation to the drilling.

88 Energy has slumped in the wake of the bad news. Shares are down 55 per cent to 0.9 cents per share as at 11:05 AEST.


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