Asset A&D

88 Energy Farms Out 50% Interest in Project Peregrine in Alaska

By Mahati K L
December 07, 2020
2 minutes read
Project Peregrine, Alaska

ASX-listed 88 Energy Ltd. has executed an agreement with Alaska Peregrine Development Company LLC (APDC) to farm out a 50% interest in Project Peregrine, located in the NPR-A region of the Alaskan North Slope. Upon completion, 88 Energy will hold a reduced 50% interest in the project.

Under the terms of the deal, APDC will earn a 50% interest in the project by contributing US$11.3 million towards the cost of drilling the Merlin-1 well (estimated gross cost US$12.6 million). 88 Energy will contribute the remaining US$1.3 million, representing its 50% share over and above the carry amount. All additional costs associated with the project will be borne equally.

Project Peregrine covers an area of 195,373 acres in the Alaskan North Slope, and targets the Nanushuk and Torok oil plays. The project contains the Merlin, Harrier, and Harrier Deep prospects, and is located between major oil discoveries at Willow to the north and Umiat to the south. The Merlin and Harrier prospects will be tested by drilling in 2021, with Merlin-1 scheduled to be spudded and drilled in February 2021. Mean unrisked prospective resources attributable to the project are approximately 1.6 billion barrels of oil (Bbbls), as of December 31st, 2019.

88 Energy acquired the project in July 2020, pursuant to a Bid Implementation Agreement (BIA) to acquire 100% of the outstanding share capital and listed options of West Perth-based XCD Energy Ltd. via an off-market takeover offer. The all-stock corporate transaction was valued at approximately A$6.2 million, including working capital adjustments. The transaction closed in August. The company has been seeking a farm-out partner to assist in the planning and permitting of the Merlin-1 well ever since.

“Being able to secure a farm-out deal with a high calibre partner on close to two for one deal terms in the current oil and gas environment is a major coup for our shareholders,” said Dave Wall, Managing Director of 88 Energy. “We look forward to potential success as we approach the imminent spud of Merlin-1 in February 2021,” he added.

APDC is a special-purpose investment vehicle organized for Project Peregrine by a consortium of private U.S. entities managed by individuals with extensive experience in oil & gas, including owning businesses that directly operate in the sector.

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