88 Energy Ltd (AIM:88E, ASX:88E, OTC:EEENF) shares raced to a near 30% gain in Tuesday’s early dealing, after the explorer reported the first flows of oil from well testing at Project Phoenix, on Alaska’s North Slope.
The ongoing testing of the Hickory-1 well confirms a new light oil discovery, in the previously untested Upper SFS (USFS) reservoir.
Testing measured rates of around 70 barrels of oil per day (bopd) from a vertical well section, with the company suggesting rates from horizontal drilling could be several multiples higher.
Oil samples showing a gravity of approximately 40-degree API, plus natural gas liquids (NGLs) and associated gas.
The test followed a low volume frac over small 20ft vertical interval, the company noted.
Testing operations will now transition to the SMD-B reservoir over the next few days as the company’s multi-reservoir, staged flow test programme continues.
88 Energy noted that it will engage an independent consultant to asses the resource potential of the oil discovery in the USFS zone.
"Outcomes from this test represent a significant milestone for 88 Energy and its shareholders, with the first successful flow of oil to surface achieved at the company's Alaska projects,” managing director Ashley Gilbert said in a statement.
“Significantly, these flow rates were achieved from only a 20ft perforated section in a vertical well with a low volume stimulation over a short period. As previously highlighted, production rates in long horizontal production wells are typically multiples of 6 to 12 times higher than tested in vertical wells.”
He added: “Importantly, the Upper SFS zone had not previously been intersected or tested at either Project Phoenix or on adjacent acreage.
“It is particularly exciting for us to produce oil to surface and demonstrate the producibility of this additionally discovered reservoir.”
Gilbert told investors that future commercial plans for USFS and the broader Project Phoenix will be communicated following analysis of the Hickory-1 testing programme.
In London, 88 Energy shares were up around 27% in early deals changing hands at 0.34p each.