GCI88 Energy reports strong H1 amid key Alaskan discoveries and Namibia acquisition
() , an Alaska-focused hydrocarbon explorer, issued an activities and trading update for the 6 months ended June 30, 2024. During the period, continued its principal exploration activates in Alaska, complemented by its 75%-owned onshore Texas Permian Basin asset and 20%-owned PEL 93 license in onshore Namibia.
At 's flagship Project Phoenix (75% WI) on Alaska's North Slope, the new Hickory-1 discovery well was flow tested during the Alaskan winter season in Q1/Q2 CY24. Two tests were conducted, one each for the Upper SFS and SMD-B reservoirs (see map below). The USFS reservoir produced at a peak flow rate of 70 bopd of light oil with c. 40-degree API oil gravity under natural flow, while the SMD-B reservoir registered a peak flow rate of 50 bopd of light oil with c. 39-degree API oil gravity under nitrogen lift.
Following the successful tests, pressured oil samples from both reservoirs were sent to a lab in Houston, TX for analysis, with results expected in Q3 CY24. The results will confirm reservoir fluid characteristics. Subsequently, an independent contingent resource assessment for the reservoirs is expected in Q4 CY24.
At adjacent Project Leonis (100% WI), established a maiden prospective resource estimate of 381 million barrels (MMbbls) of oil, recoverable from the Upper Schrader Bluff (USB) formation. Permitting and planning is underway for a new Tiri-1 exploration well, designed to test the Tiri prospect in the USB formation. A farm-out process is also underway to secure a partner ahead of drilling Tiri-1 in 2026.
In Namibia, completed a 2D seismic acquisition programme at PEL 93 (20% WI), successfully acquiring 203-line km of data. Processing is ongoing, both in the field and at Earth Signal Processing in Calgary, with final interpretation expected by Q4 2024. The programme aims to deliver a maiden prospective resource estimate, 10 independent structural closures, and future potential drilling locations targeting the Damara play.
And at Project Longhorn in Texas (65% WI), completed 4 workovers and delivered a production increase from 328 BOE/day in Q1 to 395 BOE/day in Q2, with production in June averaging 456 BOE/day.
finished the half with a cash balance of A$7.9m (£4.03m), with 90% of Hickory-1 flow test payments made. Cash was boosted by a successful share placement in April, raising A$9m (£4.59m) to support ongoing development across the portfolio.
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In H1 2024, continued to advance its flagship Project Phoenix and adjacent Project Leonis on Alaska's North Slope, reporting a number of significant milestones. The group aims to generate cashflow from Phoenix within the next 24 months, and unlock Leonis' value through an appraisal well program. Simultaneously, material progress was reported from 's newly acquired PEL 93 in onshore Namibia, while Project Longhorn in Texas continued to provide robust cashflows.
's successful flow test of Hickory-1 at Project Phoenix 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. These results complement the deeper BFF reservoir's existing 250 mmboe contingent resource. In total, is targeting 647 mmboe of prospective oil resources at the site.
With both flow tests now complete, will seek independent resource assessments for the two reservoirs. At the same time, the company will begin integrating the flow test results into its development models. Hickory-1 is a vertical well, designed for testing only. For production, long horizontal wells are planned, expected to deliver 6-12 times greater flow rates than what was observed during the flow test. 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. acquired Leonis in April 2023 with a 10-year lease, and has a 100% WI in the project with a 16.7% royalty. The asset has been estimated to contain 381 MMbbls, with upside of 671 MMbbls. Like Phoenix, it 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 derisks and confirms Leonis as a significant exploration opportunity, with efforts already underway to drill the Tiri-1 exploration well. To this end, has engaged 3rd parties for funding. Given the USB reservoir's rich resource and 's 100% WI in Leonis, there is significant potential to secure a proportionate carry on any future well.
At the other end of the globe in Namibia, successfully wrapped up the 2D seismic survey of its 20%-owned PEL 93 acreage. Throughout the half, reported good progress from PEL 93, a rich 18,500km2 onshore acreage, comprising blocks 1717 and 1817 in the Owambo Basin. can acquire a total of 45% working interest in PEL 93 under its 3-stage farm-in agreement with Monitor Exploration, with the first 20% secured via payment for the seismic programme.
With the survey complete, interpretation is ongoing and expected to conclude by Q4 2024. The data will then 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.
Namibia represents one of the last frontier oil and gas jurisdictions capable of delivering multi-billion barrel discoveries, as evidenced by recent offshore discoveries. Nearby GALP Energia's Mopane-1X represents the 5th major oil discovery in under 2 years within the Orange Basin and confirms the extension of the petroleum play from TotalEnergies and Shell's acreages.
With a comfortable cash balance of A$7.9m, 88 Energy is well-funded and progressing at pace through its work programmes, expected to yield multiple milestones over the next year.
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