Australia

88 Energys Charlie well may be the explorers best opportunity to date

Of all the challenges 88 Energy Ltd (LON:88E) has faced over the years, coming up with big targets has never been a problem.

That said, the imminent Charlie-1 well represents its best opportunity to date.

Estimated at 1.6bn barrels gross, it has the potential to be a very substantial project, though theres more to Charlie than just scale.

The presence of London-listed mid-tier producer Premier Oil PLC (LON:PMO) adds a rare level of confidence and credibility to what has until this point has essentially been a frontier style story for 88 Energy.

Moreover, Charlie-1 is actually described as an appraisal venture. In theory, this means its lower risk – at least relatively speaking – compared with some of the wells drilled by 88 in the past.

It is a new assessment of systems observed previously in the Malguk-1 discovery well, which was drilled by BP in 1991. That original hole cut some 251 feet of light oil pay which was at the time left untested.

88 Energys involvement is further de-risked, financially, because its share of outlay will mostly be covered by Premier.

The bigger partner earlier this year agreed to fund up to US$23mln of the well as part of its acquisition of a 60% stake in one portion of the Project Icewine acreage.

In addition to the obvious value upside – potentially confirming hundreds of millions of barrels of crude – for 88 Energy investors a success at Charlie would be pivotal as it would lock in a capable operator like Premier for a longer-term project.

After Charlie, Premier has the option to take control of the project as operator.

Premier also has the potential to take-up more of the Icewine acreage. Included in Augusts farm-out deal is the option to build on its position in Area A by acquiring 50% of Area B or Area C by spending another US$15mln on future work.

Drilling is Read More – Source

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