88 Energy Regulatory News (88E)

88 Energy Limited

Interim Report

88 Energy Limited (ASX: 88E; AIM: 88E) ("88 Energy" or "the Company") is pleased to announce it interim results for the half year ended 30 June 2015.

A copy of the Company's Interim Report, extracts from which are set out below, has been lodged on the ASX and is also available on the Company's website at www.88energy.com and at the link at the foot of this announcement.

Media and Investor Relations:

During the period, the Group has continued its principal activities in Alaska. A summary of significant activities is below:

Overview of Project Icewine - Alaska

In November 2014, the Company entered into a binding agreement with Burgundy Xploration (BEX) to acquire a significant working interest (87.5%, reducing to 78% on spud of the first well on the project) in a large acreage position on a multiple objective, liquids rich exploration opportunity onshore Alaska, North America, referred to as Project Icewine. In November 2015, the gross acreage position was expanded by 172,937 acres (formal award finalised in June 2016) to 271,119 contiguous acres (210,250 acres net to the Company). The Project is located on an all year operational access road with both conventional and unconventional oil potential. The primary term for the State leases is 10 years with no mandatory relinquishment and a low 16.5% royalty.

The HRZ liquids-rich resource play has been successfully evaluated based on core obtained in the recently completed (December 2015) Icewine #1 exploration well, marking the completion of Phase I of Project Icewine. Phase II has now commenced, with planning for a horizontal multi-stage stimulated well that will be flow tested, Icewine#2H, currently underway.

Generous exploration incentives are provided by the State of Alaska with up to 35% of exploration expenditure refundable in cash for 2H2016 and CY2017 activity on the North Slope.

The primary objective is an untested, unconventional liquids-rich shale play in a prolific source rock, the HRZ shale (Brookian Sequence), that co-sourced the largest oil field in North America; the giant Prudhoe Bay Oil Field Complex. Internal modelling and analysis indicates that Project Icewine is located in a high liquids vapour phase sweetspot analogous to those encountered in other Tier 1 shale plays e.g. the Eagle Ford, Texas.

Conventional play potential can be found at Project Icewine within the same Brookian petroleum system and shallow to the HRZ shale and includes high porosity channel and deep water turbiditic sands. The Brookian conventional play is proven on the North Slope; the USGS (2013) estimate the remaining oil potential to be 2.1 billion barrels just within the Brookian sequence. Additional conventional potential exists in the deeper Kuparuk sands and the Ivashuk Formation.

Drilling in 2012, on the adjacent acreage to the north, confirmed that the HRZ shales, along with the underlying Kingak & Shublik shales, were all within the oil window which is extremely encouraging for the unconventional potential at Project Icewine. In addition, a conventional oil discovery was reported in the Kuparuk sandstones.

A Prospective Resources Report by DeGolyer and MacNaughton, was commissioned by 88 Energy to evaluate the unconventional resource potential of Project Icewine in February 2016 and was released to the market on 6th April 2016.

Recent Developments during the Financial Period

Phase 1: Evaluation of Core and Log Data - Complete

During the half year, the Company announced that analysis of core and log data from the Icewine#1 well had resulted in mitigation of the main "Achilles' Heels" of the project. In summary, the following was demonstrated:

· Brittleness was shown to be analogous to existing successful Marcellus and Haynesville shale plays;

· Thermal maturity in the volatile window;

· Elevated pore pressure materially above hydrostatic gradient;

· Excellent matrix permeability - substantially higher than the Eagle Ford; and

· Outstanding porosity by comparison to other successful shale plays, including Eagle Ford.

Post these highly positive results, the Joint Venture initiated planning and permitting for a follow up well, Icewine#2H, which is scheduled for spud in 1Q2017 and will include a flow test.

Acquisition of Additional 172,000 Acres Finalised

The Award documentation for the 63 tracts of land bid on in the North Slope licensing round (November, 2014) was submitted by 88 Energy's Joint Venture partner Burgundy Xploration LLC ('Burgundy') for processing by the State of Alaska. During processing of the Award survey work undertaken by the State led to an amendment in the acres to be awarded from 90,720 acres (originally bid on) to 89,542 acres.

Icewine#2H Design and Permitting On Track for 1Q2017 Drilling

Design for the follow up well Icewine#2H is nearing its final stages with fine tuning of stimulation parameters and landing zone selection. Permitting of the well, proposed to be drilled from the same location as Icewine#1, is also proceeding as per the planned schedule. The well remains on track for commencement of drilling in 1Q2017, with production testing to occur post drilling and stimulation operations.

Upgrade to Independent and Internal Prospective Resource Assessment

On the 6th April, 2016, the Company announced a 293% increase in the prospective recoverable resource ascribed to the HRZ shale horizon. The independent estimate, compiled by DeGolyer and MacNaughton, attributed 1.4 billion barrels of oil equivalent to the HRZ on a mean recoverable prospective basis, assuming that 42% of the acreage would be productive in a success case scenario. The estimated change of geologic success was increased from 40% to 60%. An internal assessment of the resource potential resulted in an estimate of 2.6 billion barrels of recoverable liquids, on a mean prospective recoverable basis. The variance in resource estimates is based on different assumptions, which are detailed in the announcement.

Internal Modelling Suggests Compelling Success Case Break Even Oil Price

While substantial de-risking of the subsurface has occurred through finalisation of the Phase I Evaluation, the decision to proceed with further exploration and development in the current oil price environment required a more detailed analysis of the economic potential of the project, under various scenarios.

Encouragingly, internal modelling of various well performance and cost scenarios, set against the backdrop of the Alaskan fiscal regime, indicated that the breakeven oil price for the P50 well performance and Mid Case Cost scenario is US$39 per barrel. The range of outcomes from the best to worst case was US$27 to US$68 per barrel break even oil price. It should be noted that this is an internal estimate and there is no guarantee that a successful flow test will occur with the drilling of Icewine#2H. For more detail, refer to the Investor Presentation released to ASX on 17th June 2016.

2D Seismic Acquisition Complete

Acquisition of 662 line kilometres of 2D seismic, using a vibroseis source, was completed on 6th May 2016. This data was complemented by the purchase of a further 108 line kilometres of 2D seismic, extracted from a 3D seismic shoot completed in 2015, using a dynamite source. The objective of the 2D seismic is twofold: to reduce risk associated with presence of localised faults in the vicinity of Icewine#2H; and to quantify conventional potential on the acreage. Results from processing and interpretation of this data are expected to be released in 3Q2016.

Financial

For the period ended 30 June 2016 the Company recorded a loss of $8.06 million (30 June 2015: $2.80 million loss).

No dividends were paid or declared by the Company during the period.

The cash balance as at 30 June 2016 was $20.05 million (31 December 2015: $9.60 million).

In May 2016, the Company completed an oversubscribed placement to raise $25 million (before costs) through the issue of 715 million shares at $0.031 & $0.043 per share (average 3.5c). Funds raised have been used to fund continued exploration of Project Icewine.

During the previous period, the Company entered into a conditional agreement and executed a non-binding Letter of Intent with Bank of America to provide a US$50m funding facility pursuant to which Bank of America could approve, in its sole discretion, funding for specific projects. Bank of America's lending commitment was subject to a number of conditions including those related to due diligence which were completed in the previous financial year. During the current financial period drawdowns of this facility have continued, ensuring the Company is fully funded for the drilling of its Icewine exploration well #1 and recently acquired 2D seismic.

Future Strategy

Project Icewine continues to be the primary exploration focus for the Company and near term endeavours are currently geared towards achieving the following objectives:

· Finalise design of the planned Icewine#2H well, scheduled for spud in 1Q2017;

· Finalise permitting for Icewine#2H;

The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

The consolidated statement of financial position should be read in conjunction with the accompanying notes.