88 Energy Secures JV Funding and Expands Alaskan Oil Prospects
88 Energy Limited reports solid progress in its Alaskan oil projects with key joint venture partner Burgundy reaffirming commitment, alongside strategic acreage expansion and operational cost reductions.
- Burgundy Xploration settles US$1 million cash call, commits to full carry for 2025/26 work program
- Project Leonis expands with four new lease blocks, unveiling significant Canning Formation prospect
- Project Longhorn production dips to 358 BOE/day due to gas plant incident, still generating positive cash flow
- Corporate costs reduced by 38% year-on-year, cash balance at A$7.2 million
- Namibia PEL 93 seismic data reveals multiple large structural closures with hydrocarbon potential
Joint Venture Momentum at Project Phoenix
88 Energy Limited (ASX:88E) has reported encouraging developments in its flagship Project Phoenix on the North Slope of Alaska. Burgundy Xploration LLC, the joint venture partner, has demonstrated renewed commitment by settling US$1 million of an outstanding US$4 million cash call. Burgundy also reiterated its intention to fully fund the anticipated 2025/26 work program, which includes horizontal well drilling, fracturing, and an extended production test, in exchange for an increased working interest. This backing is pivotal as 88 Energy continues to optimise stimulation and flow designs with ResFrac and advance appraisal well planning.
Strategic Expansion and Multi-Zone Potential at Project Leonis
In a significant acreage expansion, 88 Energy secured four additional lease blocks adjacent to its existing Project Leonis holdings, increasing the project's scale to over 35,600 acres. This expansion introduces the Canning Formation prospect, a thick reservoir succession with an areal extent of approximately 43 square kilometres, promising substantial resource potential. The company is progressing permitting and planning for the Tiri-1 exploration well, targeting a Q1 2026 spud, while actively managing a farm-out process to attract partners and funding.
Operational Challenges and Cash Flow at Project Longhorn
Production at Project Longhorn averaged 358 barrels of oil equivalent per day (BOE/d) in Q4 2024, a slight decline from the previous quarter due to an incident at an independently operated gas plant. Despite this, the project contributed approximately A$0.4 million in cash flow for the quarter, underscoring its ongoing value. The company continues to monitor operations closely to mitigate future disruptions.
Financial Discipline and Cost Reductions
88 Energy has achieved notable reductions in corporate expenditure, with staff costs for FY24 down 46% to A$1.5 million and overall corporate costs reduced by 23% to A$2.0 million compared to the prior year. The company ended the quarter with a healthy cash balance of A$7.2 million, providing a runway of nearly five quarters based on current expenditure levels. These financial controls position 88 Energy well to fund upcoming exploration and appraisal activities.
Exploration Upside in Namibia
Beyond Alaska, 88 Energy’s 20% interest in Namibia’s PEL 93 licence has yielded promising initial seismic interpretations. The recent 2D seismic data acquisition revealed ten significant structural closures, some spanning up to 100 square kilometres, with strong hydrocarbon charge potential. The company anticipates delivering a maiden independently certified prospective resource estimate in the first half of 2025, marking a critical milestone in this underexplored frontier basin.
Looking Ahead
As 88 Energy advances its multi-faceted portfolio, the interplay between securing joint venture funding, executing exploration programs, and maintaining financial discipline will be key. The company’s ability to navigate these elements will shape its trajectory in 2025 and beyond.
Bottom Line?
88 Energy’s strategic partnerships and disciplined cost management set the stage for pivotal exploration milestones in 2025.
Questions in the middle?
- Will Burgundy Xploration complete its full carry funding and increase its working interest as proposed?
- How will the farm-out process for Project Leonis evolve amid the newly identified Canning prospect?
- What impact will the gas plant incident have on Project Longhorn’s production stability going forward?
