88 Energy contracts rig as it prepares for drilling of Charlie-1

88 Energy updated the market on the upcoming drilling of the Charlie-1 appraisal well at Project Icewine, located on the Central North Slope in Alaska on Tuesday, reporting that through its wholly-owned subsidiary Accumulate Energy Alaska, it has executed a rig contract with Nordic-Callista Services to utilise Rig-3 for the drilling of Charlie-1.

The AIM-traded firm noted that it had utilised Rig-3 for the drilling of the Winx-1 well in March, and was “extremely pleased” with its performance throughout the course of operations.

It said “significant” progress had been made on the permitting front, with only two of the key permits now outstanding - the plan of operations and permit to drill - which were both in the process of being finalised and approved.

Additionally, the company said tendering and finalisation of contracts for equipment and services required for Charlie-1 were advancing as planned.

The conditions precedent related to the recent farm-out with Premier Oil were being completed according to schedule, the firm added, with all conditions expected to be met prior to the end of November.

“The Charlie-1 appraisal well has been designed as a step out appraisal of a well drilled in 1991 by BP Exploration Alaska, called Malguk-1,” the 88 Energy board explained in its statement.

“Malguk-1 encountered oil shows with elevated resistivity and mud gas readings over multiple horizons during drilling but was not tested due to complications towards the end of operations, which resulted in lack of time before the close of the winter drilling season.

“It was also drilled using vintage 2D seismic, which was insufficient to adequately determine the extent of any of the prospective targets encountered.”

88 Energy said it subsequently undertook revised petrophysical analysis, which identified what is interpreted as bypassed pay in the Malguk-1 well.

It also completed the acquisition of modern 3D seismic in 2018, in order to determine the extent of the discovered oil accumulations.

“Charlie-1 will intersect seven stacked prospects, four of which are interpreted as oil bearing in Malguk‑1 and are therefore considered appraisal targets. 88 Energy will operate Charlie-1, via its 100%-owned subsidiary Accumulate Energy Alaska, with cost of the well to be funded by Premier Oil up to $23m under a recent farm-out agreement.

“Drilling is scheduled to commence in February 2020 with flow testing anticipated to conclude in April 2020.

“The total gross mean prospective resource across the seven stacked targets to be intersected by Charlie-1 is 1.6 billion barrels of oil, [with] 480 million barrels net to 88 Energy.”