Ann: Permeability Exceeds Pre-Drill Expectations, page-4

ANN - "Permeability Exceeds Pre-Drill Expectations"

Project Icewine Permeability Exceeds Pre-Drill Expectations 88 Energy Limited (“88 Energy”, “the Company”, “Operator”) (ASX, AIM: 88E) is pleased to provide an update on Project Icewine, located onshore North Slope of Alaska.
Highlights
 “Super Highway” Permeability Numbers ~20 Times Better than Pre-Drill Forecast
 2D Seismic Program Underway - ~15% Completed

Overview

Additional analysis of sections of core obtained from the Icewine#1 exploration well has confirmed outstanding permeability in two previously unmeasured core samples. These core samples had readings too high to be measured using the traditional method for estimating permeability in tight rocks and have therefore been measured using pulse decay permeability analysis. The results of this analysis have indicated that permeability in these core sections is approximately 20 times greater than the Company’s pre-drill forecasts for permeability in the HRZ at Project Icewine.

The results boost the already excellent permeability numbers measured from the core at the Icewine#1 well and provide further encouragement for the potential of high flow rates from the planned production test well, Icewine#2H, for which permitting and planning work has begun.

The 2D seismic program at Project Icewine has commenced, as planned, and is on schedule with approximately 15% of the total program having been completed to date. Forward Plan Further work is underway to refine the frac design for the planned Icewine#2H well, including:
 Proppant Embedment – determines the optimal size and type of proppant;
 Fluid Sensitivity – determines the best fluid type for carrying proppant and minimising chemical interaction with the rock; and
 Borehole Stability – determines stress direction for optimisation of orientation of lateral section.

The results from this analysis will be known over the next few weeks.

Progress is being made on the Independent Resource Report, which is on track for release in early – mid April. The report will incorporate both the HRZ evaluation results from the Icewine#1 well and the November 2015 acreage additions.

Managing Director of 88 Energy Limited, Dave Wall commented: “As expected, the permeability results from the ‘super highways’ are excellent and provide further support for a resource play that could yield production rates more akin to those normally experienced in conventional wells. An increasing body of evidence from Icewine#1 supports a case for potentially exceptional flow rates from the HRZ. The next step is to test this theory via the drilling of Icewine#2H, which will be a horizontal well with a multi-stage fracture stimulation.

Our 2D seismic program has also commenced on schedule and we look forward to its successful completion over the coming weeks, which will both de-risk drilling for Icewine#2H but also potentially identify conventional prospects across the Project Icewine acreage.”