88 Energy Ltd (88E)

Operations Update

88E is an ASX listed Oil and Gas explorer listed on the ASX with a dominant land holding in Alaska and a comprehensive exploration and appraisal program.

Summary Key Points

  • Well has reached TD on schedule: The Icewine#2 well has reached terminal depth (TD) at 11,450’ (3,816m) on schedule. This key milestone has been reached without incident. There has been an minor issue with the installation of the production liner but the replacement is expected to be completed this week with no impact on the forward program.
  • Wireline logs have been run: A comprehensive suite of wireline logs have been run through the production interval. 88E have reported that the data quality is excellent and is consistent with the data and logs from Icewine#1. The data from the logs and coring will be used to finalise the optimal design for the hydraulic stimulation that is planned for late June to early July.
  • Micro-stimulations to be carried out this week: 88E are planning to conduct small trial fracks to optimise the design of the upcoming stimulation program.
  • Main stimulation to start next month: 88E are on track to complete the main fracking program and production testing for late June early July.

Analysis

The successful drilling and completion of the Icewine#2 well is an important milestone in the program. The fact the well has been drilled to TD and is almost completed bar a minor delay but is still on schedule is a positive outcome and bodes well for the program being a technical success. The planned stimulation and flow back will be the next key milestone but it does seem as if 88E is in a favourable position to carry out the next stage of testing post the final completion of the well.

Catalysts

  • The successful Hydraulic Fracturing of ICEWINE#2.
  • Flow back testing from ICEWINE#2.
  • Further positive geological data from ICEWINE#2 to supplement the dataset from ICEWINE#1.
  • Identification of conventional drill targets from the recently completed seismic survey.
  • Farm-in from large oil and gas player.

Recommendation

We value 88E at a $0.085 share and maintain our Speculative Buy Recommendation.


Disclosure and Disclaimer

RCCAN 1402

This Research Report, accurately expresses the personal view of the Author(s). 

At the date of this report, DJ Carmichael Pty Limited, members of the Research Team; including authors of this report, its directors and employees advise that they may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report. DJ Carmichael Pty Limited acts as Corporate Adviser to 88 Energy Limited and is paid a fee for that service. DJ Carmichael Pty Limited arranged a placement in 88 Energy Limited in March 2017 of 21.2 million shares that raised $784,000 and was paid a fee for that service. 

DJ Carmichael Pty Limited is a wholly owned subsidiary of DJ Carmichael Group Pty Limited ACN 114 921 247. 

In accordance with Section 949A of the Corporations Act 2001 DJ Carmichael Pty Limited advises this document contains general financial advice only. In preparing this document, DJ Carmichael Pty Limited did not take into account the investment objectives, financial situation and particular needs (‘particular circumstances’) of any particular person. Accordingly, before acting on any advice contained in this document, you should assess whether the advice is appropriate in light of your own particular circumstances or contact your DJ Carmichael Pty Limited adviser. DJ Carmichael Pty Limited, its Directors employees and advisers may earn brokerage or commission from any transactions undertaken on your behalf as a result of acting upon this information. DJ Carmichael Pty Limited, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly, from client transactions. DJ Carmichael Pty Limited believes that the advice herein is accurate, however no warranty of accuracy or reliability is given in relation to any advice or information contained in this publication and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence), is accepted by DJ Carmichael Pty Limited or any officer, agent or employee of DJ Carmichael Pty Limited. This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient or employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication and its attachments is strictly prohibited. 

The Author(s) of this report made contact with 88 Energy Limited for assistance with verification of facts, admittance to business sites, access to industry/company information. No inducements have been offered or accepted by the company.

Recommendation Definitions

SPECULATIVE BUY – Potential 10% out-performance, but high risk
BUY – Potential 10% or more out-performance
ACCUMULATE – Potential 10% or more out-performance, buy on share price weakness
HOLD – Potential 10% underperformance to 10% over performance
SELL – Potential 10% or more underperformance 

Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months. Stocks included in this report have their expected performance measured relative to the ASX All Ordinaries Index. DJ Carmichael Pty Limited’s recommendation is made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.

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Michael Eidne

Director - Research

Michael has over 14 years experience working in financial markets in South Africa, UK and Australia. Prior to joining DJ Carmichael, Michael held research analyst positions at Bell Potter Securities and Blackswan Equities. He also spent several years working as a consultant for various Perth-based resource companies before moving back to the equity markets. Michael is originally from South Africa where he was a portfolio manager at Edge Capital, which is a large South African alternative investment manager. He also worked for a number of years at Investec Asset Management as an investment analyst.

Michael has a MSc in Mineral and Energy Economics from Curtin University and a MBA in Finance from the University of Cape Town.