There seems to be a lot of incorrect information being posted (e.g., pipelines in place to the Umiat). Some of the misinformation may be deliberate. Some may be driven by... for lack of a more diplomatic term, ignorance.
Fact: WI in Project Peregrine is owned 50% by 88E and 50% by the farm-in partners who paid the bulk of the costs to drill the Merlin #1 well.
Fact: The Umiat Oil Field is covered by two NPR-A leases that are contiguous with and south of Project Peregrine. 88E bought 100% WI in those leases from Malamute Energy, LLC. 88E has performed the well work required to consummate that purchase from Malamute.
Fact: The Umiat Oil Field is reputed to have ~1 billion barrels of oil in place. The recoverable reserves that have been announced from the 1950s forward range from 70 million barrels (USGS around 1953) to 127 million barrels (Linc Energy less than ten years ago). The Umiat Oil Field was drilled by Husky under contract to the Navy in the late 1940s and early 1950s. Husky drilled 12 or 13 shallow wells that barely penetrated the bottom of the permafrost (~1,000+ feet thick). Husky was paid per foot drilled. Discovering or flowing oil had no impact on Husky's bottom line. They were a contract driller who made money irrespective of what flowed from each well. They used water based mud in some of the wells which immediately turned to ice on the well bore. They switched drilling mud later in the program to adjust for the permafrost in the ground. Around the same time the Umiat was being drilled under contract to the US Navy, the Ghawar Oil Field in Saudi Arabia was discovered. The Navy decided to vault the reserves at Umiat. No further drilling occurred at Umiat until the Seebee well was drilled to the basement of the sedimentation directly below the Umiat airstrip. This was a stratigraphic test far south of the crest of the Umiat anticline. The next two wells to be drilled at Umiat were drilled by Linc Energy around 2013-14. Linc ended up in receivership and Malamute acquired the Umiat leases during the bankrupcy proceedings. Malamute was formed by some of Linc's financiers to see if they could salvage anything from their investment. Malamute had no interest in drilling the Umiat. They were looking for a buyer from the beginning and recently found one - 88 Energy. There is a major east-west fault along the crest of Umiat Mountain (the top of the structure at Umiat). Only one shallow well was drilled north of that fault by Husky in the 1950s. Beyond that shallow well located immediately north of the fault on Umiat Mountain, oil targets north of Umiat Mountain remained undrilled, until far to the north Willow, Pikka, and Harpoon were drilled and oil was discovered.
Fact: The Nanushuk and the Granstand Formation are essentially synonymous. Historically, when describing the oil at Umiat, everybody wrote about the Upper and Lower Grandstand Formations. Now everybody talks about the Nanushuk. Basically, these are two labels for the same layer of prospective oil bearing sedimentation in NPR-A. Below the Nanushuk (Grandstand Formation) is the Torok which is also highly prospective for oil. The risk with the Torok is that it is deeper, more compressed, and is at greater risk than the Nanushuk to have limited permeability and porosity. However, the Torok can be both oil saturated and productive in places.
Fact: 88E opted to drill the Merlin #1 well several miles north of Umiat and even more miles south of Willow, on the same Nanushuk cliniform as Willow. Not to split hairs, but it was actually XCD Energy that proposed both the Merlin-1 well and the Harrier-1 well before 88E bought out XCD. In any case, think of each cliniform in NPR-A as if it is a long banana oriented north to south, following the ancient continental shelf along which sedimentation was deposited as it eroded from the massive north-south mountain ranges in the region we now call Siberia. We're talking 100 to 200 million years ago. The ocean shore at that time was north and south in that area. Drapes of Nanushuk sands were deposited along the continental shelf. Then the ocean intermittently receded (probably during ice ages or related phenomenon). The cliniform would become sealed on top of the drape of sand. Then, the oceans rose once again, and the next cliniform began being deposited along the continental shelf to the east of the previous cliniform. I don't know exactly how many cliniforms were created from west to east in NPR-A, but it was more than a few. Some of these cliniforms have oil. Some may not. The cliniform that contains the Willow is oily. That's the same cliniform that Merlin-1 is drilling into. This is the first well to be drilled into that cliniform north of the Umiat Mountain fault and south of Willow. If commercial quantities of oil are found in the Merlin-1 well, the implications could be far beyond "material" for 88E.
Fact: The Umiat Oil Field has never been commercially produced. There is no road to Umiat. There are no pipelines to Umiat. There is a very nice airfield at Umiat and a man camp by the airstrip fondly referred to as "The Umiat Hilton". There have been various studies performed since Linc Energy bought the Umiat Oil Field regarding building a road and a pipeline to Umiat. But it's never gotten beyond the drawing board. If the Merlin-1 turns out to be commercial, then that will certainly make the Umiat Oil Field commercial, significantly increasing its book value. Moreover, there may be a lot more oil on the north side of Umiat Mountain far south of the Merlin-1 well. The single shallow well drilled in the 1950s immediately to the north of the Umiat Mountain fault was not impressive. But there may be a lot of oil somewhat deeper, on the north side of the Umiat Mountian fault. In other words, the Umiat Oil Field may have a lot more than 127 million barrels of recoverable reserves. The oil at Umiat in the permafrost south of the fault may be seepage from a much larger reservoir to the north of the fault.
Fact: The Harrier-1 is along the same cliniform as the Harpoon to the north - also an oily cliniform.
Fact: 88E has projects to the east of NPR-A - close to the Pt. Thompson Unit - containing known oil reserves. The NPR-A wells are potential company makers. But even if these wells are dusters, 88E has other known oil reservoirs to develop far to the east on the North Slope. 88E is not a one or two well company going forward.
Summary: If the Merlin-1 well logs are favorable; and the well is cased, perfed, and flow tested, the economic implications for 88E of a discovery may exceed expectations - even the expectations of so called "rampers". Think about it. If the Merlin-1 taps into a reservoir that eventually is found to contain 2 billion barrels of recoverable oil within the boundaries of Project Peregrine, 1 billion barrels would net to 88E's 50% WI. If a Major paid $3/bbl for recoverable oil in the ground (a very realistic price scenario), that would mean a bookable asset of $3 billion (USD) to the benefit of 88E. I'm not saying they've tapped into a reservoir that will ultimately prove to contain 2 billion barrels. But I'm not saying they haven't either. None of us know... yet. It could be nothing. Or 2 billion could be a low number. We simply do not know at this time.
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