88 Energy strikes $39m farm-out deal with Burgundy Xploration for Project Phoenix in Alaska
() , an Alaska-focused hydrocarbon explorer, announced a farm-out agreement with Burgundy Xploration for Project Phoenix, 's main asset on Alaska's North Slope (see map below). Under the deal, 's wholly-owned subsidiary Accumulate Energy Alaska will receive full funding for all costs associated with Phoenix's upcoming horizontal well programme, including an extended flow test scheduled for H1 2026.
Burgundy will fully fund up to US$39m of Project Phoenix's total gross future work programme costs in exchange for up to an additional 50% working interest from . The farm-out agreement is structured in two phases:
In phase 1, Burgundy will provide a carry of US$22m to 's share of Phoenix's FY25/26 work programme, including drilling a horizontal well and production testing, currently scheduled for H1 2026. In return, Burgundy will earn a c. 39.3% working interest in Phoenix, and 's interest will be reduced to 35% from 75% now.
Contingent on phase 1's success, Burgundy will provide an additional carry to of up to US$7.5m in phase 2, to fund the drilling of a new well or alternative capex. This will earn Burgundy an additional 10% working interest, reducing 's stake to 25%.
Upon completion of the farm-out agreement, Burgundy will assume the role of operator, freeing to focus on adjacent Project Leonis.
Ashley Gilbert, Managing Director of 88 Energy, commenting: "We are delighted to announce that we have reached a mutually beneficial agreement with our long-term joint venture partner, Burgundy, to advance Project Phoenix towards future production. Burgundy's commitment to the project recognises 88 Energy's accomplishments since 2022 and value added to the acreage during this time, as well as validation of the broader region and the opportunity presented on the Alaskan North Slope."
View from Vox
88 Energy announces a major farm-out agreement with Burgundy Xploration, its partner on Project Phoenix on Alaska's North Slope. The deal will see Burgundy gain an extra 50% working interest in the asset and operatorship in exchange for a full financial carry for 's share of FY25-27 development costs or c. US$29.5m. This will allow to fully focus on the advancement and de-risking of adjacent Project Leonis (see map above).
The agreement marks a milestone for , achieving a significant ROI on the asset only 2 years after it began exploration of the SMD, SFS and BFF multi-reservoir opportunities under Phoenix. The agreed terms represent a c. 50% uplift of invested capital on 's share of Project Phoenix since mid-FY22.
The deal provides a clear funding avenue to advance Phoenix towards production via the 2-phase farm-out. It will ensure key production testing at the Hickory-1 multi reservoir discovery, a key step in proving the project's economics. As of September 18, 2024, the total net 2C contingent resource at Phoenix was estimated by ERCE at 239 mmboe of oil and natural-gas liquids across 4 stacked reservoirs, accessible from a single location.
There is further significant upside as a prospective net mean unrisked 155 MMbbl was independently verified by Lee Keeling in the Kuparuk, SMD-A and C reservoirs, with a geological chance of success of 71%, 81% and 81% respectively. 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.
Phoenix's farm-out enables to fully focus on adjacent Project Leonis. In Q2 2024, an encouraging maiden resource estimate was established for Leonis at 381 MMbbls with upside of 671 MMbbls. acquired the asset in April 2023 with a 10-year lease, and has a 100% WI with a 16.7% royalty. Like Project Phoenix, Leonis is advantageously located next to existing infrastructure, with the Trans-Alaska Pipeline System running through it.
Leonis' maiden estimate derisked and confirmed it as a significant exploration opportunity. The USB formation has already been proven by nearby producing Polaris, Orion, and West Sak oil fields to the northwest. With the recent addition of the Canning formation, Leonis is emerging as a highly attractive multi-zone asset of significant scale. Currently, permitting and planning is underway for an exploration well, expected in H1 2026.
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