News Update to Come, page-50

Long Over Short
Sunday, 10 January 2016
here I feel that a summary article is required now the Icewine #1 exploration well has reached TD. This was one of the biggest events on AIM last year with hundreds of retail investors getting in on the action. Arguably it has been a very successful well technically, however the share price is languishing at lows of around 0.38p.


88 Energy Alaskan Acreage (Yellow)
Icewine #1 Results
Lets start by looking at the results of the well as announced on the 29th December 2015 in a RNS from the company. The RNS can be read here.


Stratigraphy at Icewine


Lack of Shareprice Response
Personally I think there was a lack of share price response due to a few factors:

1. Unconventional results are complicated and the vast majority of shareholders don't understand the results. Many expected the company to announce a commercial discovery straight away but this was never going to happen.
2. The general market factors of late have also held the share price down. The oil price is down over $10 pb since the well spud.
3. The placing announced during the well made many investors take a second look at the management and I know for a fact that people sold when that was announced.
4. Many shareholders planned to de-risk before the well reached the primary target. This meant there were sellers in the market that had to sell before TD and flooded the market with shares.

88 Energy Shareprice

What is the expected news flow from here?
Two Stages of Unconventional Analysis:
Stage 1 - Core & Log Evaluation -January Mid-Late
Stage 2 - Core Evaluation & Advanced Petrophysics - March Late
Initial conventional data from log interpretation of Kuparuk sands-Jan/Feb
Purchase 3D and build up prospect and lead inventory - Mid Year
3D Seismic Shoot - H1 2016
Further prospects and leads added to inventory - End 2016
Secure JV/Partner/Funding - H2 2016
Icewine #2 - 2017?

Obviously 88 Energy still remains a high risk play but the upside is still huge. Any encouraging results from analysis in the next month should send the share price higher. I say 'should' because in this market good news only keeps your share price flat! I would like to see the company go after some of the conventional plays in the area as they will be cheaper wells and would have a lower economic threshold and break-even price. In a best case scenario Icewine #2 could target a conventional prospect and the unconventional shale 'sweet-spot' too.

As always if you have any questions or counter arguments than please comment below, any discussion would be good for all to see.

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To see my favourite stocks for 2016 in the exploration and production space then please clickhere. It includes the popular MX Oil and Serica Energy, as well as larger companies such as Lekoil and Faroe Petroleum.