Both Red Emperor Resources (LSE:RMP) and 88 Energy (LSE:88E) were trading down on Monday despite announcing the spudding of a well at their shared prospect on the North Slope of Alaska.
Operator 88 Energy revealed that the drilling of the Winx-1 exploration well began on Friday. The well was drilled to 600 feet before the Nordic Rig#3 was pulled out of the hole to pick up the smart bottom hole assembly, with logging while drilling tools attached. Drilling has now restarted, with 88 reporting that the rig was drilling ahead at 880 feet by Sunday. The forward plan is to deepen the hole to around 2,500 feet before setting surface casing.
The drilling and testing of Winx-1 are expected to take around 50 days in a success case scenario. Winx is a 3D seismic defined, conventional oil prospect located in Alaska’s successful Nanushuk play fairway. According to Red Emperor, Nanushuk is one of the largest conventional oil fields discovered in the US in more than 30 years.
Winx contains a gross mean unrisked prospective resources of 400MMbbls and is adjacent to the Horseshoe 1/1A discovery well drilled by an Armstrong/Repsol JV in 2017. Of this resource, 126MMbbls will be net to Red Emperor, and 144MMbls will be net to 88 Energy.
The first stage, however, will be ensuring this oil can, in fact, be taken out of the ground. The prospect has a geological chance of success of 25pc-35pc
Red Emperor and 88 Energy respectively own 31.5pc and 36pc stakes in the Western Block, where the Winx-1 exploration well is being drilled. Despite the progress, Red Emperor was down by around 4.6pc to 4.2p on Monday morning, while 88 Energy had fallen 1.4pc to 1.1p.
Meanwhile, Pantheon Resources (LSE:PANR), which owns a 10pc working interest in the asset with a back-in right to increase this to 20pc, was up 4.2pc to 23p.
Chief executive Jay Cheatham said: ‘Following completion of our acquisition of the Great Bear Petroleum Alaskan assets last month, it is fantastic to be able to commence drilling operations so soon. Winx-1 is a very high impact exploration well, and we are very fortunate to have the ability, through a back in right, to double our working interest to 20% within 6 months of the earlier of well completion, temporary abandonment or suspension.
‘I am also very pleased to report to shareholders that there is an immense amount of activity occurring within our company at present. Preparations for the Alkaid well test in Alaska are at an advanced stage and we look forward to updating shareholders on planned operations shortly. Additionally, we are undertaking a detailed technical review of both our East Texas assets as well as our Alaskan assets and I am extremely pleased with how well the geological and operational personnel from both companies are working together as we integrate our businesses.’
Author: Daniel Flynn
Disclaimer: The author does not own shares in either of the companies mentioned in this article