88 Energy (AIM:88E) has inked an agreement to farm-out a stake in its South Prudhoe Project, Alaska's North Slope, signing up Houston-based new partner Westlawn Americas Offshore (WAO), and securing up to US$10.9 million (A$15.5 million) toward drilling and evaluating the Augusta-1 exploration well.
The small-cap oil and gas explorer will retain a 60% working interest and operatorship in South Prudhoe, with WAO taking the remaining 40% stake.
WAO will fund US$9.2 million (A$13.1 million) of the Augusta-1 well budget, comprising the first US$3.6 million of expenditure plus 40% of costs thereafter, equivalent to roughly 52% of the current planned well budget.
A further US$1.7 million (A$2.4 million) from WAO will cover general and administrative costs, geology and geophysics work, lease costs and long-lead items tied to a potential future flow test.
88 Energy remains responsible for its proportionate share: US$8.3 million (A$11.9 million) of well costs, US$2.3 million (A$3.2 million) of non-well costs, and US$0.3 million (A$0.4 million) for flow test long-lead items, which the company said it is assessing alongside existing cash resources and other strategic initiatives to fund.
South Prudhoe sits immediately south of the producing Prudhoe Bay Unit and Kuparuk River Unit, two of North America's most prolific oil accumulations, and covers approximately 52,269 acres adjacent to the Trans-Alaska Pipeline System.
The company lifted its South Prudhoe 2U Prospective Resource estimate by around 35% to 768.9 million barrels gross in May, and Augusta-1 is now designed to test up to 133.7 million barrels of gross unrisked prospective resources across the Ivishak, Kuparuk and Brookian reservoir intervals.
"Securing a partner of WAO's calibre is a tremendous outcome for 88 Energy shareholders and is, without a doubt, a defining milestone in the advancement of the South Prudhoe Project," said Ashley Gilbert, Managing Director of 88 Energy.
The deal also establishes a framework for a broader North Slope partnership between the two companies, under which 88 Energy would hold a 60% working interest and operatorship in any new acreage or projects pursued jointly, extending potential collaboration beyond Augusta-1 and South Prudhoe.
Read more about 88 Energy
- 07/10/2688 Energy nears farm-out deal for Augusta-1 well
- 01/09/2688 Energy advances PEL 93 towards drilling as regional flow test de-risks basin
- 18/05/2688 Energy upgrades South Prudhoe 2U prospective resources to 768.9m barrels
Greg Hebertson, Founder, Co-Head and COO of WAO, and George Easterly, Co-Head and CFO, said the company views the transaction "as the foundation for a broader potential strategic relationship with the 88 Energy team as well as for future growth across the North Slope."
A contingent two-zone flow test targeting the Ivishak and Kuparuk reservoirs, estimated to cost approximately US$4.5 million (A$6.4 million) gross, would proceed only if Augusta-1 results support further evaluation, funded by both parties according to their participating interests.
Significant pre-drill work has already been completed, including finalisation of the drilling location, permitting progress, and the securing of the Nordic-Calista Rig-3 drilling rig and a dedicated Arctic camp, with Augusta-1 remaining on track to spud during the 2026/27 North Slope winter season.