(Alliance News) - Premier Oil PLC on Tuesday noted the announcement by 88 Energy Ltd that the Charlie-1 well in Area A on the North Slope of Alaska has confirmed the presence of mobile hydrocarbons in the Torok formation.
Shares in Premier Oil were 10% higher at 27.70 pence on Tuesday in London, while 88 Energy shares plunged by 70% to 0.33p, after closing at 1.10p on Monday.
The hydrocarbons were in the form of condensate gas, which were recovered to surface from both the Middle Stellar and Lower Stellar targets.
However, Premier Oil said that the gas condensate is more challenging to commercialise than the light oil the well was targeting, and as a result it will exit the Area A joint venture once regulatory approvals have been received.
Prior to this decision, Premier Oil had a 60% interest in Area A, while 88 Energy had a 30% operating interest and Burgundy LLC a 10% interest.
88 Energy itself said it will plug and abandon the well instead of moving to suspension or testing.
The reasons given by 88 Energy for its decision were uncertainty over access to required personnel due to the Covid-19 pandemic, further analysis needed on whether the discovery can even be commercialised, and reluctance to create a future liability if analysis comes to the same conclusion of plugging and abandonment.
"Charlie-1 has delivered a mixed result. On the one hand, we have confirmed the presence of mobile hydrocarbons in the primary targets of the well but, at the same time, there are challenges that need to be more fully understood related to whether these can be commercialised on the North Slope," said 88 Energy Managing Director Dave Wall.
"Samples of the hydrocarbons have been recovered to surface and will now be the subject of further analysis in the coming months. The risks related to the shallower targets have unfortunately been borne out, with one found to be water bearing and the other to have no sand development," Wall added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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