8 Energy Limited Proposed placing to raise up to A$9.8 million...

8 Energy Limited

Proposed placing to raise up to A$9.8 million approximately (£5.23 million)

88 Energy Limited ("88 Energy" or the "Company") (ASX, AIM: 88E) today announces that it proposes to raise up to A$9.8 million (approximately £5.23 million) (before expenses), within the Company's existing placement capacity, pursuant to a placing (the "Placing") of new ordinary shares of no par value in the Company (the "Placing Shares") at a price per Placing Share of A$0.003 (equivalent to £0.0016) (the "Placing Price") per share.

The Placing Price is equivalent to a discount of 40% to the closing price of the Company's shares on the Australian Securities Exchange ("ASX") on 22 April 2024, being the latest practicable date prior to this announcement, and a discount of 33.7% to the volume weighted average price on the ASX for the five days prior to 23 April 2024. The Company also announces that its shares have been placed in a trading halt on the ASX pending the release of an announcement in relation to the completion of the Placing.

The Placing is being conducted through a bookbuilding process (the "Bookbuild"), which is being managed by Cavendish Capital Markets Limited ("Cavendish") in the UK (the "UK Placing") and EurozHartleys Ltd ("EurozHartleys") and Inyati Capital Pty Ltd (Inyati) in Australia (the "Australian Placing").

The Bookbuild will open with immediate effect following release of this announcement. The number of Placing Shares to be issued in the UK (the "UK Placing Shares"), will be agreed by Cavendish, EurozHartleys and Inyati and the Company at the close of the Bookbuild. The timing of the closing of the Bookbuild, the amount to be raised and allocations are at the discretion of Cavendish, EurozHartleys, Inyati and the Company. Details of the number of Placing Shares to be issued will be announced as soon as practicable after the close of the Bookbuild. The Company intends to rely on the Company's placement capacity pursuant to ASX Listing Rules 7.1 to issue up to a maximum of 3,291,974,839 new ordinary shares (equivalent to maximum gross proceeds of up toA$9.8 million (approximately £5.23 million), such that shareholder approval will not be required for the Placing.

Current trading and activity

The Company released its financial results for the year ending 31 December 2023 ("HY 2023"), including the events occurring after the period end, on 28 March 2024, and recently the Company released its first quarter report on 18 April 2024, and as at 31 March 2024 had cash resources of A$17.5 million.

Project Phoenix

Project Phoenix is focused on oil-bearing conventional reservoirs identified during the drilling and logging of Icewine-1 and Hickory-1 and adjacent offset drilling and testing. Project Phoenix is strategically located on the Dalton Highway with the Trans-Alaskan Pipeline System running through the acreage.

Hickory -1 Exploration Well

The Hickory-1 discovery well was previously drilled in February 2023. All American Oilfield's upgraded Rig-111 was subsequently secured in September 2023 to conduct the flow test. During the March 2024 quarter, ice road and pad construction works were completed and the rig was subsequently mobilised. Flow test operations commenced in March 2024.

The testing operations focussed on the two primary targets, the SFS and SMD reservoirs. Of the SFS series of reservoirs, the Upper SFS reservoir was targeted to be flow tested as it has not been previously tested, whereas the Lower SFS has previously been flow tested and producibility of that reservoir confirmed on adjacent acreage. The Upper SFS was followed by a targeted testing of the SMD-B reservoir.

Upper SFS flow test results

A 20ft perforated interval in the Upper SFS reservoir was stimulated via a single fracture stage of 241,611 lbs proppant volume. The well was cleaned-up and flowed for 111 hours in total, of which 88 hours was under natural flow back and 23.5 hours utilising nitrogen lift.

The USFS test produced at a peak flow rate of over ~70 bopd. Oil cuts increased throughout the flow back period as the well cleaned up, reaching a maximum of 15% oil cut at the end of the flow test program. The Company expects that oil rates and cut would have likely increased further should the test period have been extended. The well produced at an average oil flow rate of approximately 42 bopd during the natural flow back period, with instantaneous rates ranging from approximately 10 - 77 bopd with average rates increasing through the test period. Importantly, the USFS zone flowed oil to surface under natural flow. A total of 3,960bbls of fluid was injected into the reservoir and 2,882bbls of water was recovered during the flow back period, most of which was injection fluid. Total flow rates (inclusive of recovery of frac fluid) averaged ~600 bbl/d over the duration of the flow back.

SMD-B flow test results

A 20ft perforated interval in the SMD-B reservoir was stimulated via a single fracture stage comprising 226,967 lbs of proppant volume. The well was cleaned-up and flowed for 84 hours in total, utilising nitrogen lift throughout the entire test period. The average fluid flow rate over the duration of the flow back period was approximately 445 bbls/d, with choke sizes ranging from 8/64ths to 33/64ths.

The SMD-B test produced at a peak estimated flow rate of ~50 bopd. Oil cuts varied throughout the flow back period, reaching a maximum of 10% oil cut. The well produced at an average oil cut of 4% following initial oil to surface, with instantaneous rates observed during the 16-hour period varying as the well continued to clean up. Total stimulation load water was not recovered and water salinity measurements indicated we were recovering load water at the conclusion of the test..

Project Icewine West

Icewine West contains the Charlie-1 discovery well drilled in 2020 where hydrocarbons were successfully recovered from the Torok formation during wireline operations.

Mapping activity at Icewine West identified a series of SMD prospects, the majority of which have not yet been drilled. Given the recent success of the SMD at Hickory-1, 88E intends to assess these prospects and add them to the already extensive prospective resource portfolio at Icewine West; this includes the interpreted extension of the Kodiak contingent resources recently certified by Pantheon on their acreage onto the Icewine West acreage. The Basin Floor Fan, mapped across Pantheon's Kodiak field, as well as 88 Energy's Phoenix and Icewine West Projects, is the same play type as (although slightly younger than) 88 Energy's Lima Complex.

Project Leonis

Project Leonis is superbly located adjacent to TAPS and the Dalton Highway, enhancing the future potential for commercialisation. The acreage is covered by an existing data suite including Storms 3D seismic data and the Hemi Springs Unit #3 (HS-3) exploration well drilled by ARCO in 1985, which logged 200 feet of bypassed net pay in the now-producing USB reservoir, with good porosity and oil shows including oil over shakers at multiple depths.

The maiden prospective resource estimate for Upper Schrader Bluff reservoir expected H1 2024.

A farm-out process has commenced with multiple parties engaged and reviewing data room materials, ahead of potential drilling of a new well in 2025/2026 Alaska winter operational season.

Project Peregrine

As announced on 21 December 2023, Project Peregrine received a 12-month suspension until 30 November 2024 from the Bureau of Land Management Alaska.

During the suspension period, 88 Energy will persist with the refinement of internal geological and geophysical models/interpretation, including further optimisation of the Harrier-1 location however, no physical work will occur on the leases other than to perform any necessary maintenance and safety activities. The suspension also relieved 88 Energy of the obligation to pay lease rentals during the suspension period of ~A$0.5 million, which were due in Q1 2024.

Project Longhorn

In December 2023, the Joint Venture (Bighorn JV), Bighorn Energy LLC (Bighorn) which comprises Longhorn Energy Investments LLC (LEI) a 100% wholly owned subsidiary of 88 Energy with 75% ownership and Lonestar I, LLC (Lonestar or Operator) with remaining 25% ownership, finalised its 2024 work program and budget. The Bighorn JV agreed to a development program that included 5 workovers in 1H 2024 and 2 new wells in 2H 2024, contingent on successful workovers.

During the first quarter, the Bighorn JV commenced two of the planned five workovers with assessment of production occurring during April 2024.

Q1 2024 production averaged a fairly steady 328 BOE per day gross (~62% oil) which was slightly below the budgeted volume of 346 BOE per day gross (65% oil) due to January winter storms and the Company received a cash flow distribution of A$0.7M in March 2024.

The Bighorn JV executed a ~10% sell-down (gross, ~7% net to 9Energy) of the 2023 acquired acreage, in order to re-disk and accelerate development opportunities. The transaction realised acquisition payments of ~A$0.3M and the non-operated partners will contribute their share of the capital development costs coupled with a 25% carry of their ownership share on the five 2024 WP&B agreed workovers.

Namibia

In February 2024, the Company announced the successful 20% WI transfer by Monitor Exploration Limited (Monitor) to 88 Energy in relation to PEL 93 located in the Owambo Basin, Namibia following receipt approval from the Ministry of Mines and Energy.

The Company, via its wholly-owned Namibian subsidiary, previously executed a three-stage farm-in agreement in November 2023 for up to a 45% non-operated working interest in onshore Petroleum Exploration Licence (PEL 93), which covers 18,500km2 of underexplored ground within the Owambo Basin in Namibia (refer to ASX announcement dated 13 November 2023).

Under the terms of the agreement, 88 Energy may earn up to a 45% working interest by funding its share of agreed costs under the 2023-2024 approved work program and budget as defined in the Farm-In Agreement (2024 Work Program) and any future work program budgets yet to be agreed. The maximum total investment by the Company is anticipated to be US$18.7 million.

Namibia has been identified as one of the last remaining under-explored onshore frontier basins and one of the World's most prospective new exploration zones. PEL 93 is more than 10 times larger than 88 Energy's Alaskan portfolio and more than 70 times larger than Project Phoenix.

Recent drilling results on nearby acreage has highlighted the potential of a new and underexplored conventional oil and gas play in the Damara Fold belt, referred to as the Damara Play. Historical assessment utilised a combination of techniques and interpretation of legacy data to identify the Owambo Basin, and specifically blocks 1717 and 1817, as having significant exploration potential.

Monitor has utilised a range of geophysical and geochemical techniques to assess and validate the significant potential of the acreage since award of PEL 93 in 2018. It has identified ten (10) independent structural closures from airborne geophysical methods and partly verified these using existing 2D seismic coverage. Further, ethane concentration measured in soil samples over interpreted structural leads validates the existence of an active petroleum system, with passive seismic anomalies also aligning closely to both interpreted structural leads and measured alkane molecules (c1-c5) concentrations in soil.

The forward work-program will start with a low impact ~200 line-kilometre 2D seismic program focusing on confirming the structural closures of the 10 independent leads identified. The 2D seismic program will be conducted in mid-2024 following a period of planning, public consultation, updating of environmental compliance requirements and relevant approvals. Results from the 2D seismic program will then be incorporated into existing historical exploration data over the acreage, with results used to identify possible exploration drilling locations.

Rationale for the Placing and Use of Proceeds

The net proceeds of the Placing, together with the Company's existing cash reserves, will strengthen the Company's balance sheet and will provide the Company with sufficient capital to fund:

· Project Phoenix, Alaska: Following the successful flow testing at the Hickory-1 discovery well, 88 Energy will be focused on:

o Completing post-well testing and analysis at Hickory-1;

o Securing a contingent resource for the SFS and SMD reservoirs;

o Commencing a formal farm-out process to attract a high-quality new partner to fund the next stage of appraisal and development; and

o Advance planning and design of a early stage production system.

· PEL 93, Namibia: Completion of 2D Seismic program, generation of a maiden prospective resource report and other studies associated with the Owambo Basin.

· Project Leonis, Alaska: Securing a farm-out partner to fund a future exploration well to test the proven producing Upper Schrader Bluff (USB) reservoir and continue further studies and analysis.

· Funds will also be applied towards Alaskan lease rental costs, working capital and assessment of further new venture opportunities.

Following completion of the proposed Placing, the Company will have sufficient cash to fund its ongoing working capital requirements and general and administrative overheads for at least 12 months.

88 Energy has made the decision to complete the Placing to secure funding arrangements to fund the transition to post well analysis and to secure further Contingent Resources at Project Phoenix.

The Company intend to commence a formal farm-out process for Project Phoenix following completion of the Hickory-1 post flow test analysis, with the aim of attracting a strategic partner for the next stage of development and commercialisation.

Details of the Placing

The Placing is subject to the terms and conditions set out in the Appendix (which forms part of this announcement, such announcement and the Appendix together, the "Announcement").

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that admission to trading on AIM ("Admission") will become effective and that dealings in the Placing Shares will commence on AIM at 8.00 a.m. on 1 May 2024.

The Placing Shares will be issued and credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after the admission of those Ordinary Shares and will otherwise rank on Admission pari passu in all respects with each other and with the existing ordinary shares in the Company.

The Placing is conditional upon, inter alia, Admission taking place by no later than 8.00 a.m. on 1 May 2024 (or such later date as Cavendish may agree in writing with the Company, being not later than 8.00 a.m. on 15 May 2024) and the Placing Agreement entered into between the Company and Cavendish not being terminated prior to Admission. If any of the conditions of the Placing Agreement are not satisfied the Placing Shares will not be issued and Admission will not take place.

The Company, in conjunction with Cavendish, EurozHartleys and Inyati, reserves the right to accept over-subscriptions for Placing Shares and to determine the maximum number of Placing Shares that will be issued in the Placing. However, the Company intends to rely on the Company's placement capacity pursuant to ASX Listing Rules 7.1 to issue up to a maximum of 3,291,974,839 new Ordinary Shares (equivalent to maximum gross proceeds of up to A$9.8 million (approximately £5.23 million), such that shareholder approval will not be required for the Placing.

Neither the Placing Shares have been made available to the public and have not been offered or sold in any jurisdiction where it would be unlawful to do so.

This Announcement should be read in its entirety. In particular, your attention is drawn to the "Important Notices" section of this Announcement, to the detailed terms and conditions of the Placing and further information relating to the Bookbuild described in the Appendix to this Announcement (which forms part of this Announcement).

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirety (including the Appendix), and to be making such offer on the terms and subject to the conditions of the Placing contained herein, and to be providing the representations, warranties and acknowledgements contained in the Appendix.

In this Announcement, references to "pounds sterling", "£", "pence" and "p" are to the lawful currency of the United Kingdom and references to "Australian dollars", "A$" and "A cents" are to the lawful currency of Australia. Unless otherwise stated, the basis of translation of pounds sterling into Australian dollars is £1.00/A$1.8750.