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The natural resource markets is a very tough place to be an investor at the moment. Capital is hard to raise, drilling and development are on hold due to the low oil price and share prices are falling lower and lower. What makes 88 Energy (LSE:88E) different is that they are nearing spud of the first if two high impact exploration wells on Alaska’s North Slope and if successful shares will fly.
88 Energy have secured a 87.5% interest in 98,182 acres of the Central North Slope, Alaska. The acerage is in near proximity many large discoveries and only 35 miles South of the 15billion barrel Prudhoe Bay oil field. As an early mover they have managed to get a large acerage position with favourable fiscal terms. Sounds good doesn’t it?
It gets better…. In this time of low oil price when costs are scrutinised more than ever its great to see that the first vertical Icewine #1 well scheduled for Q4 2015 will only cost between $2.25-3m after the 85% rebate on drilling cost. The 3D seismic shoot and Icewine #2 well scheduled for 1H 2016 will receive 75% of costs back in rebates too.
This is great and why the share is so attractive: low cost drilling at large exploration targets with a decent chance of success (41% for Icewine #1).
In the chance of a commercial discovery there is ample infrastructure to move the liquids to market which again reduces capital costs of possible development. This in my opinion is a great near term catalyst and any discovery will move the share price over 1-2p. Other price catalysts are any newsfrom the Great Bear drilling campaign North of Project Icewine and any more news on the Repsol discovery in the North West.
SEE THE FULL REVIEW HERE.
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