88 Energy Regulatory News (88E)

21st May 2020

This announcement contains inside information

88 Energy Limited

Operations Update

88 Energy Limited ("88 Energy" or the "Company", ASX:88E, AIM 88E) is pleased to provide the following update related to operations for the recently drilled Charlie-1 appraisal well, located on the North Slope of Alaska.

The attached pdf - http://www.rns-pdf.londonstockexchange.com/rns/5540N_1-2020-5-20.pdf - contains graphics and information referred to in the following commentary

Highlights

· Average API gravity of liquid hydrocarbon in the Torok Fm confirmed as ~50 degrees

· Compelling indications of oil updip from Charlie-1 in Torok and possible intraformational seal identified, supporting geological model for alternate phase

· Oil interpreted in the Seabee at Malguk-1/Charlie-1 as well as updip at Heavenly-1

· Additional results from laboratory testing expected over coming weeks

Detail

Laboratory tests from fluid hydrocarbons retrieved from the Lower Stellar discovery in the Torok Formation have confirmed gravity of 49-52 degrees API, with an average of 50 degrees API. This gravity is near the typical crossover between volatile oil and condensate; however, constant composition expansion confirms that the phase at this location is condensate gas. The gas oil ratio ("GOR") as measured from the most representative sample is 17,000 - 23,500 cf per bbl. This may be higher than the actual GOR in the reservoir due to the sampling procedure and drawdown pressure. The main implication of having high GOR is that gas would need to be re-injected into the reservoir to maintain pressure during production, an already common practice on the North Slope for both oil development and at the Pt Thomson condensate stripping operation.

88 Energy originally preferred drilling location: Regional integration of early Charlie-1 results

The graphic in the attached pdf (Fig.1) depicts the preferred drilling location marketed by 88 Energy during the 2018/19 farm-out process. This location has several advantages over the Charlie-1 location, selected by the farminee, and will continue to form the basis of the ongoing farm-out for drilling on the acreage:

· Greater certainty of data due to the higher quality log suite obtained from the 2002 Heavenly‑1 well vs the 1991 Malguk-1 well, which encountered drilling / logging issues below 10,700' MD

· Located in more optimal thermal maturity window for generation of oil / volatile oil (Fig. 1)

· Evidence of oil in the Torok formation based on shows and oil saturations from side wall cores take from Heavenly-1 (Fig. 2,2a)

· More ideal intersection of targets in the Seabee formation where oil was observed from logs / shows / cores in Heavenly-1 in addition to the oil observed at surface whilst drilling Malguk‑1 (Fig. 3 and Fig. 4)

· Better continuity of reservoir and improved reservoir quality interpreted based on inversion interpretation

· More compelling impedance contrasts / high amplitude events on 3D seismic across Seabee and Torok formation targets

· Seismic inversion indicates that the Torok geobodies in the Heavenly area are likely separate to those in the Malguk/Charlie area, supporting geological model for different hydrocarbon phase (Fig. 5)

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