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  • Operational issues have prevented 88 Energy (88E) from sampling hydrocarbons in the two most prospective zones of the Merlin-1 well
  • The company is the operator and holds a 50 per cent interest in the wildcard well, located within Project Peregrine on the North Slope of Alaska
  • The first run of the wireline program identified several potential pay zones, one of which is considered to be a prospective horizon within the Nanushuk Formation
  • Following the failure to sample the most promising zones, samples were taken from less prospective areas which have been sent for analysis
  • 88 Energy will now plug the wildcard well, which it may re-enter down later on to drill a sidetrack and conduct flow testing
  • Shares last traded at 7.3 cents

Operational issues have prevented 88 Energy (88E) from sampling hydrocarbons in the two most prospective zones of the Merlin-1 well.

The company is the operator and holds a 50 per cent interest in the wildcard well, located within Project Peregrine on the North Slope of Alaska.

The first run of the wireline program identified several potential pay zones, in line with the shows and logs from drilling, and according to the company, the nuclear magnetic resonance indicated good mobility across most of the zones.

One of the zones encountered in Merlin-1 is considered to be a prospective horizon within the Nanushuk Formation, which the company believes could be wholly within Project Peregrine.

The second run of the program, designed to take samples across these zones, however, was more problematic. After initially recording indications of an oil signature, the downhole sampling tool had to be pulled out due to a power failure.

The run back into the hole was thwarted by poor hole conditions, prompting a cleanout, before the tool was moved to the lowest zone for testing but communication could not be re-established.

As such, 88 Energy decided to try to sample the next shallowest zone, but the tool became stuck. Subsequently, the company abandoned testing the zone and sampled less prospective zones, while extracting the tool from the well.

Samples from these areas of low hydrocarbon saturation will be sent to a laboratory for analysis and, the company indicates, are encouraging for regional prospectivity but do not constitute a discovery

Despite the operational issues, Managing Director David Wall remains positive about the information gathered from Merlin-1 in the midst of the Arctic winter.

"We appreciate that these early results may be difficult to interpret. That is because we do not yet have all the data required to allow interpretation. This means some uncertainty remains; however, it is already clear that Merlin-1 has delivered by far the best outcome of any of the 5 wells drilled by 88 Energy in Alaska over the last 6 years."

Particularly encouraging to the company, he noted, is the apparent presence of oil in a zone previously untested in the NPR-A region.

"Whilst the potential volumetric size of this zone is not yet known (as it was not a mapped target in Merlin-1) the formation could be extensive based on initial interpretation. The other most prospective zone with good shows and petrophysical characteristics is shared with the Harrier Prospect and will likely high grade that for drilling in 2022."

With limited time left in the season, 88 Energy will now plug the wildcard well, which it may re-enter down the track to drill a sidetrack and conduct flow testing.

Merlin-1 was spudded in March 2021, after a series of delays pushed back drilling.

Shares last traded at 7.3 cents.

88E by the numbers
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