- 88 Energy'S (88E) subsidiary has executed the sales and purchase agreement to acquire the Umiat Oil Field, located in Alaska, from Malamute Energy
- Emerald House will hand over a 4 per cent overriding royalty interest and liability of abandonment of two historic wells worth around US$1 million (roughly A$1.29 million) as consideration
- The Umiat-23H well was flow tested at a sustained rate of 200 barrels per day back in 2014 by Linc energy
- 88 Energy will now consider whether the oil field should be developed as a standalone project or to support its Peregrin or Icewine Projects
- Shares in 88E are trading up 16.7 per cent at 1.1 cents each
88 Energy (88E) has executed the sales and purchase agreement to officially acquire the Umiat Oil Field.
The business carried out the purchase via its wholly-owned subsidiary, Emerald House, buying the property from Malamute Energy.
The field itself is located in the North Slope of Alaska and is immediately adjacent to the southern boundary of 88's existing Project Peregrin.
It's also covered by two leases comprising 17,633 acres, which are in a unit that was formed in September 2019 with an initial 10-year term.
The current conditions of the unit stipulate a well commitment, meaning either exploration or appraisal, by August 31, 2022.
As consideration for the purchase, Emerald House will hand over a 4 per cent overriding royalty interest.
It also has to assume the liability of abandonment of two historic wells, Umiat-18 and Umiat-23H, which have an estimated worth of around US$1 million (roughly A$1.29 million).
Previous testing of the Umiat-23H well by Linc Energy created a maximum flow rate of 800 barrels per day and sustained flow of 200 barrels per day.
That testing occurred back in 2014, with 88 Energy to now review whether the project should be commercialised as a standalone asset or with Project Icewine.
Additionally, if there is a discovery at Project Peregrine, 88 expects Umiat would contribute "significant value" to any development there.
"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," 88E Managing Director Dave Wall said.
"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," he added.
Shares in 88 Energy are trading up 16.7 per cent at 1.1 cents each at 11:58 am AEDT.