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88E ASX Secures Permit to Drill


Published 01-FEB-2021 10:56 A.M.


3 minute read

Over the last week, investors had been on a rollercoaster ride with one of our portfolio companies.

However, this morning they received some great news from the company.

Here is what happened and how this story took an unexpected twist ... a great one:

Nine days ago Joe Biden issued an order to stop new oil exploration leases being issued on federal land.

Our Alaskan oil explorer 88 Energy (ASX:88E) went into a trading halt at that time to get to the bottom of what was going on and how it might have impacted its current projects...

This morning 88E announced it has secured a permit to continue its big drilling event in February\March 2021, testing a 1.6 billion barrel mean unrisked recoverable prospective resource.

This is hugely positive news for 88E investors.

By stopping the issuance of new leases, it means any existing leases and permits instantly become more valuable.

88E’s drill permit is like having a ticket to a football game that has just sold out. That’s when the value of the tickets soar in the hands of those lucky enough to have secured one.

88E has a ticket to a sold out game ... and the game is starting in just a few weeks from now.

88 Energy (ASX:88E) is a junior oil explorer that is determined to hit the next multi-billion barrel oil discovery on the North Slope of Alaska - a famous oil location dotted with huge discoveries and energy super majors.

88E has a major drilling event in February/March 2021, testing a 1.6 billion barrel mean unrisked recoverable prospective resource.

Oil has been out of favour for years and we believe lack of investment combined with a longer than expected shift to electric vehicles will see an oil price spike occur in the near term.

Our plan: We have been long term backers of 88E and its management team, and we currently hold a large position in the stock ahead of a few months of significant newsflow.

Our intention is:

  1. To hold for the near term and sell enough to recoup our initial investment in the lead up to drilling. We are aiming to “free carry” into spudding (this means when drilling starts).
  2. If drilling is successful, it will be transformational for 88E and we would expect to make multiples on our investment.

What happened: President Joe Biden signed two executive orders related to land leases for oil and natural gas drilling.

The first order will see a pause on all new leases specifically in the Arctic National Wildlife Refuge. The second order pauses new leases on all federal land.

However, the orders did not appear to stop work on existing leases.

And this is where 88E have been fortunate - 88E’s permit to drill has been allowed to go ahead.

This is big news for 88E because its existing leases and permits have instantly become more valuable.

Key takeaways:

  1. 88E has a major drilling event in February\March 2021.
  2. 88E is drilling a 1.6 billion barrel mean unrisked recoverable prospective resource.
  3. The Biden Administration has banned all new oil leases... but that has not stopped work on existing leases, which means 88E can forge ahead with its exploration (great news!)
  4. With a recent severe shortage in investment in global oil exploration, plus the banning of new leases in the US, could a near term spike in the oil price be on the cards?

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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