It’s been a spectacular few weeks in the life of the 88 Energy (LSE: 88E) share price. Less than a month ago it was trading around the 0.5p per share marker. But on Wednesday the UK oil share continued its strong recent run and hit its most expensive since June 2017 around 3.8p per share.
It has since pared these gains somewhat but was last trading at 3.7p per share at the time of writing. This is up 32% from Tuesday’s close.
Umiat acquisition news turbocharges the 88 Energy share price
The 88 Energy share price has soared again today on news concerning the acquisition of the Umiat oil field. The business declared that the final condition related to the transaction first announced in January had now been completed. 88 Energy said that “cement work associated with plugging and abandoning of two historical wells at the field ” has now been carried out. Remedial work at the site will now commence, it added.
Umiat — which is located in shallow Brookian (Nanushuk) sandstones in Alaska — is covered by two leases, which cover a total of 17,633 acres. The acreage is in a unit that was formed in September 2019 under an initial 10-year term. Unit conditions stipulate that a well commitment (either by exploration or appraisal) be conducted by 31 August, 2022.
Independent estimates by Ryder Scott in December 2015 revealed gross 2P reserves of 123.7m barrels of oil.
A “significant milestone”
Managing director Dave Wall today said that “the acquisition of the proven oil field at Umiat is a significant milestone for the company and its shareholders, particularly in the context of any discovery made at Project Peregrine, where wireline logging is currently underway”. The field was discovered in 1945 and sits adjacent to the Project Peregrine site on Alaska’s North Slope.
88 Energy said that 11 appraisal wells were drilled at the “historic discovery” in 1953. During testing the Umiat-5 well flowed 268 barrels per day on a three-month test, the company said. And Umiat-8 experienced a peak flow rate of 5.9mmcf/d of natural gas over four days.
Little work had taken place at Umiat until 2013 and 2014, 88 Energy said, when Linc Energy drilled the Umiat-18 and Umiat-23H wells. Umiat-23H was tested with a maximum flow rate of 800 barrels per day and sustained flow of 200 barrels a day, it added.
Merlin-1 results expected at the weekend
88 Energy also provided an update on that wireline logging programme at the Merlin-1 well at Project Peregrine today. It said that the programme is currently under way and that preliminary results here are expected over the weekend.
News that the company had located hydrocarbon-bearing zones during drilling at Merlin-1 sent the 88 Energy share price soaring earlier this week. The company is targeting 645m barrels of gross mean prospective resource at the well.
A second well at Project Peregrine — Harrier-1 — is scheduled to be drilled some time next year. 88 Energy says that it is targeting gross mean prospective resource of 417m barrels here.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.