88 Energy Ltd. said Nov. 19 it has acquired an additional 174,240 gross acres in Alaska's North Slope.

A subsidiary of the Australian company and its joint venture (JV) partner, Burgundy Xploration LLC, won the bid for the acreage at the North Slope Areawide Bid Sale, according to the release.

The JV has paid a non-refundable 20% down payment of US$947,000 to secure the rights to the acreage.

Finalization of the acquisition is subject to formal award and payment of the remainder of the bid plus US$10 per acre rentals. The total value is estimated to be about US$5.5 million, the release said.

The acreage is contiguous to the JV's current position at Project Icewine. The partnership now has a 272,242 gross acre position in Alaska, which is almost triple that prior to the acquisition, the release said.

Highlights:

  • Horizontal shale play potential now internally estimated at more than 2 billion barrels recoverable across the expanded acreage position;
  • Conventional play potential has more than doubled;
  • Scale now more attractive to major oil and gas companies/national oil companies; and
  • Risk is diversified as more acreage increases the chances of one or more play types being successful.

88 Energy plans to launch a small capital raising to fund its portion of the acquisition, the release said.

"After shareholders have contributed A$20 million to Project Icewine, it is strategically imperative to secure the dominant position in the play ahead of the results of the Icewine#1 well," said Dave Wall, managing director of 88 Energy in a statement.

"We do not want to prove up a play and then have someone else acquire a large portion of it," Wall added.

Wall said any success at Icewine#1 will result in "substantial industry interest, which we hope will lead to a highly accretive farm-out in 2016."