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(Alliance News) - 88 Energy Ltd on Thursday updated the market on the farmout process at project Icewine, Alaska.
Premier Oil PLC has signed a sale & purchase agreement with 88 Energy and Burgundy Xploration LLC to farm-in for a 60% interest in area A of project Icewine acreage in Alaska North Slope basin.
The transaction provides Premier with a cost effective entry point into an emerging play, following recent advances in drilling and completion techniques, within a proven oil province and one which has the potential to deliver significant organic growth opportunities for the company, it said.
Under the terms of the deal, Premier will pay the full costs of an appraisal well, up to a total of USD23 million, to test the reservoir deliverability of the Malguk-1 discovery. The well will be drilled and tested in the first quarter of 2020, 88 Energy said, with rig options having already been identified and contracting negotiations underway.
On successful completion of the work programme, Premier will have the option to assume operatorship. 88 Energy will retain 30% working interest in area A, it said.
In addition, 88 Energy said Premier has an option to earn 50% working interest in area B or C by spending USD15 million, if the Malguk-1 appraisal well in area A is successful.
"Premier has a strong track record of delivering projects through to production and is an excellent addition to the joint venture," said 88 Energy Managing Director Dave Wall.
88 Energy shares were trading 9.6% lower in London on Thursday at 0.93 pence each, while Premier Oil stock was up 4.4% at 75.46p a share.
