Red Emperor Resources (LSE:RMP) and 88 Energy (LSE:88E) revealed that they had started drilling the primary oil targets at their well in Alaska on Monday.
The Winx-1 exploration well, operated by 88 Energy, has been drilled to 2,500ft on the North Slope of Alaska. Drilling has now begun in the intermediate section of the well, where the primary Nanushuk targets will be intersected.
88 will use a logging tool on the bottom hole assembly alongside mud gas ratios and cutting analysis to search for any potential hydrocarbon-bearing intervals. Following this, more in-depth data and analysis, including from wireline logging and production testing, will provide more definitive results.
Red Emperor, which owns a 31.5pc stake in Winx, was trading down 2.2pc to 4p on Tuesday morning following the news. Meanwhile, 88 Energy, which holds a 36pc position, had climbed 3.4pc to 1.1p. Elsewhere, Pantheon Resources (LSE:PANR), which owns a 10pc working interest in the asset with a back-in right to increase this to 20pc, was down 0.6pc to 24p.
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.
The prospect 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. Winx has a geological chance of success of 25pc-35pc.