GCI88 Energy Q3 update: 50% resource surge at Project Phoenix, development progress across portfolio
() , an Alaska-focused hydrocarbon explorer, issued an update on key activities across its portfolio for the quarter ended September 30, 2024 (Q3 2024).
Project Phoenix, 's 75%-owned flagship asset on Alaska's North Slope, saw a significant resource upgrade in Q3, with the existing gross 2C contingent resource increased by 50%, including an additional gross 128 mmboe (81 mmboe net to 88E) added from the SMD-B and SFS reservoirs (see map below).
The upgrade comprised of 115 MMbbl of gross recoverable hydrocarbons (73 MMbbl net to 88E) and 68 bcf of gross recoverable gas (43 bcf net to ). In total, estimates from ERCE and Netherland, Sewell & Associates confirmed Phoenix as a large multi-reservoir discovery, with a combined gross 2C contingent resource of c. 386 mmboe.
The project's development and commercial characteristics include a marketable 2C resource of c. gross 251 MMbbls (159 MMbbl net to ) of oil and natural-gas liquids across 4 stacked reservoirs, accessible from a single location. Phoenix is located on Alaskan state land, directly adjacent to the Trans-Alaskan Pipeline System and Dalton Highway, close to the oil and gas services hub at Deadhorse.
At adjacent Project Leonis where has a 100% working interest, permitting and planning is underway for the new Tiri-1 exploration well, designed to test the Tiri prospect in the USB formation. Additional deeper resource potential was identified on the acreage during the quarter, and is currently being assessed, including mapping, AVO studies, and resource estimation. A farm-out process is underway to secure a partner ahead of drilling Tiri-1 in 2026.
At the other end of the globe in Namibia, is processing data from its recently acquired 203-line km 2D seismic at PEL 93 (20% WI), both in the field and at Earth Signal Processing in Calgary, with final interpretation expected in Q4 2024. The programme aims to deliver a maiden prospective resource estimate by H1 2025, 10 independent structural closures, and future potential drilling locations targeting the Damara play.
At 's 65%-owned Project Longhorn in Texas, production marginally increasd from 391 BOE/day gross (~63% oil) in Q2 to 395 BOE/day gross (~69% oil) in Q3. Production was expected to be higher in Q3 at c. 450-460 BOE/day gross, but operations were impacted by unplanned downtime. Prior to the downtime, production in June was averaging 456 BOE/day. In June 2024, received a cashflow distribution of ~A$0.7m, post final workover expenditure.
finished the quarter with a cash balance of A$5.5m (£2.78m). 's JV partner on Project Phoenix, Burgundy Xploration, has a cash call of US$4m due in Q4, which should significantly boost 's balance sheet.
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concludes another eventful quarter, with the main highlight being ongoing development at Project Phoenix on Alaska's North Slope, including a major resource upgrade delivered during the period.
's successful flow test of Hickory-1 at Phoenix in H1 was a major value inflection point for the asset, further bolstering its economics and delivery schedule. The discovery well successfully flowtested 2 reservoirs - the USFS and SMD-B, producing peak flow rates of 70 bopd and 50 bopd respectively of light oil to surface. Impressively, USFS achieved oil to surface under natural flow. The results complemented the deeper BFF reservoir's existing 250 mmboe contingent resource. In total, is targeting 647 mmboe of prospective oil resources at the site.
In Q3, Phoenix's contingent resource was significantly boosted, bringing it closer to its max targeted oil resource of 647 mmboe. The existing gross 2C contingent resource was increased by 50% with an additional gross 128 mmboe, resulting in a new combined gross 2C contingent resource of c. 386 mmboe. The upgrade comprised 115 MMbbl of gross recoverable hydrocarbons and 68 bcf of gross recoverable gas.
Overall, Phoenix is now a confirmed multi-reservoir discovery with robust economics and material upside potential. The estimated upside is a prospective net mean unrisked 155 MMbbl, independently verified by Lee Keeling in the Kuparuk (undrilled), SMD-A and SMD-C reservoirs. The estimate spread is 321 MMbbls (high), 153 MMbbls (best), and 53 MMbbls (low), with geological chance of success at 71%, 81% and 81% respectively.
Regarding development at Phoenix, long horizontal wells are planned, expected to deliver 6-12 times greater flow rates than what was observed during the flow tests. A horizontal flow test and early production system are currently in planning stages.
Positive results from multiple reservoirs at Phoenix means significant upside in future development via multiple commercialisation options. These include a farm-out to a strategic partner or early capital-light production, given the acreage's infrastructure advantage of being next to the Dalton Highway and Trans-Alaskan Pipeline System. The project benefits from the ability to produce concurrently from multiple reservoirs in a single development scenario.
At nearby Project Leonis, delivered an encouraging maiden resource estimate in the previous quarter of 381 MMbbls with upside of 671 MMbbls. acquired Leonis in April 2023 with a 10-year lease, and has a 100% WI in the project with a 16.7% royalty. Like Phoenix, Leonis is advantageously located next to existing infrastructure, with the Trans-Alaska Pipeline System running through it. The USB formation within Leonis has already been proven by nearby producing Polaris, Orion, and West Sak oil fields to the northwest.
The maiden estimate derisked and confirmed Leonis as a significant exploration opportunity, with efforts underway to fund and drill the Tiri-1 exploration well by 2026. Additional resource potential was identified in Q3 and is currently being assessed, expected to complete by Q4. This should further aid in securing a farm-out partner.
15,000 km away in Namibia, successfully acquired 203-line km of 2D seismic at its 20%-owned PEL 93 acreage, with final results expected in Q4 2024. The data will be used to validate 10 previously identified targets and establish a maiden resource for the asset, with an initial exploration well expected in 2025. Additionally, as the dataset is expanded, further leads will be identified. Recon Africa is already actively exploring the area, which should further accelerate 's work programme. Overall, based on previous and adjacent exploration of the area, the Owambo Basin has already proven to be highly prospective with a ready path to market.
PEL 93 is a rich 18,500km2 onshore acreage, comprising blocks 1717 and 1817 in the Owambo Basin. It is more than 10 times larger than 's Alaskan portfolio, and more than 70 times larger than Project Phoenix. can acquire a total of 45% working interest in PEL 93 under its 3-stage farm-in agreement with Monitor Exploration. Namibia represents one of the last frontier oil and gas jurisdictions capable of delivering multi-billion barrel discoveries as evidenced by recent offshore discoveries.
With a comfortable cash balance of A$5.5m, 88 Energy is well-funded and progressing at pace through its work programmes, expected to yield multiple milestones over the next year. is due a US$4m payment in Q4 from Phoenix JV partner Burgundy Xploration, which should significantly bolster its balance sheet.
's budget for its forward 12-month activity schedule is fully funded for delivery, including Phoenix horizontal well development, Leonis Tiri-1 planning, the PEL93 work programme, and Longhorn operations. achieved 30% lower costs in Q1-Q3 2024 of US$2.7m, compared to US$4m in the equivalent period last year.
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