88 Energy (ASX: 88E) abandons Merlin-2 after disappointing tank quality – The Market Herald
- 88 Energy (88E) decides to abandon the Merlin-2 well after the quality of the reservoir was deemed insufficient by the wireline logging program
- The program was designed to assess the potential of the reservoir, after high oil showings and gas readings were noted in target areas during logging during drilling data.
- One of the main objectives was to collect hydrocarbon samples from the target areas, which could not be achieved due to the tightness of the formation.
- The company will now focus on plugging the well and demobilizing
- Shares fell 53% today to 1.6 cents
Shares of 88 Energy (88E) took a hit today after the company announced it had decided to abandon the Merlin-2 well in Alaska.
The company had nearly completed a wireline logging program, but the quality of the reservoir was deemed insufficient to conduct a production test.
The program was designed to assess the potential of the reservoir, after showings of oil and high gas readings were noted in target areas in log-while-drilling (LWD) data.
One of the main objectives was to collect hydrocarbon samples from the target areas, which could not be achieved due to the tightness of the formation.
88 Energy said the results are consistent with the Merlin-1 well, with fluorescence and a petroleum odor in the cuttings, elevated mud gas readings and evidence of mobile hydrocarbons.
The company will now focus on plugging the well and demobilizing it.
It will undertake an evaluation of the drill program data and assess potential future evaluation activities with the Peregrine Project area.
Chief Executive Ashley Gilbert said the company remains in a strong financial position to pursue other opportunities.
“We are aware that this result will be disappointing news for shareholders, particularly that we were again unable to obtain a surface fluid sample or perform a flow test,” said he declared.
“However, we will now take the time necessary to fully analyze the data from the Merlin-2 well. This will provide a basis upon which the Company can provide further updates on the potential future assessment program for the Peregrine Project acreage.
“88 Energy remains in a strong financial position, post-Merlin-2 well, with zero debt and a healthy cash balance that will be further strengthened with projected cash flows from the recently acquired Texas producing asset portfolio, Project Longhorn. .”
The company’s shares fell 53% to 1.6 cents apiece at 11:00 a.m. AEDT.