88E completes 2D seismic in Namibia
Our oil and gas Investment 88 Energy (ASX: 88E) just finished its 2D seismic data acquisition program for its onshore Namibian asset.
88E is currently farming in a 45% interest into the Namibian assets, as part of the farm-in deal 88E just finished off a 203-line km 2D seismic program.
The whole purpose of the program is to:
- Take the 10 independent leads Monitor & 88E already have and turn them into credible drill targets (the coloured blobs in the image below), and
- To put together a maiden prospective resource for the project.
The final results from the program are expected by Q4-2024.
Objective #4: Firm up drill target at the Namibian asset
Milestones
✅ 2D seismic program starts
✅ 2D seismic program completed
🔄 2D seismic results & interpretation
🔲 Maiden prospective resource estimate
🔲 Primary drill target selected
Source: “What we want to see 88E deliver” section - 88E Investment Memo 20 May 2024
The latest from 88E’s onshore Namibian peer - Recon Africa
While 88E has been busy doing its 2D seismic, we have been following the Recon Africa story pretty closely too.
Recon started drilling their first well (of a program where they plan to drill up to four wells) only a few weeks ago.
We put out a note on 88E a few days before that news here: 88E starts 2D seismic, neighbour $438M ReconAfrica's spud is any day now…
Since then there hasn't been any drilling specific news, but Recon did put out some corporate news relating to their project.
Recon signed a deal with BW Energy to farm-down a 20% interest in their project for US$13M - as part of a CAD$35M financing deal.
The deal is a solid signal to us that corporate interest in onshore Namibian assets is growing.
With 88E capped at just $57M, we think that there is plenty of upside not being priced into 88E’s valuation based on its Namibian assets alone.
For now, we will be keeping a close eye on Recon’s drill program over the next few months.
Background on 88E’s Farm-in deal -
88E’s asset was picked up by the JV partner Monitor Exploration back in 2018 - way before any of the major offshore discoveries were made in Namibia in 2022.
Since then Monitor has run airborne geophysics and used existing 2D seismic data to map out 10 different leads across the project area.
88E is now coming in to fund more seismic and two wells - at the moment 88E owns 20% of the project, after the first two wells are drilled 88E will hold 45%.
So at the moment, 88E has already paid for its share of the seismic program.
Why we like 88E’s Namibian asset:
- Huge ground position - ~70x the size of 88E’s Project Phoenix in the North Slope of Alaska, USA. The project is large enough to host a large resource base.
- Namibia’s fast developing oil and gas industry - recent giant discoveries offshore by TotalEnergies and Shell have put Namibia on the map. Namibia being touted as the next Guyana where US supermajors Exxon and Hess are making discovery after discovery.
- Namibian onshore peer re-rated by over 40x - ReconAfrica drilled its first well at its onshore Namibian project back in 2021. Between 2020 and 2021 Recon’s share price went from CAD$0.30 to CAD$12.50+.
- Project vendors linked to Invictus Energy (ASX: IVZ) - IVZ director Robin Sutherland is a part of the team doing the deal with 88E. Robin was also involved in EnergyAfrica, which sold to Tullow Oil for $500M in 2004 and then again with Tullow Oil as it went onto make discoveries across East Africa.
- Early stage with plenty of upside - 88E is getting in on the project at a very early stage. There is scope for 88E to run the seismic surveys, define a large prospective resource and firm up a drill program over the next 12-24 months.
- Strategically located - Sits next to one of Africa’s largest economies, South Africa, which is looking to replace its retiring coal-fired energy generation fleet.
See our deep dive note on the Namibian asset here: 88E heading to Africa on frontier oil hunt - following Shell and Totals 11 billion barrel lead
What’s next for 88E?
In the short term we want to see 88E achieve two of the key objectives we set for the company as part of our 88E Investment Memo:
Objective #1 of our 88E IM: Contingent resource estimates at Project Phoenix, USA
Milestones
🔲 Contingent resource estimate #1 (SFS Reservoir)
🔲 Contingent resource estimate #2 (SMD Reservoir)
Objective #2: Farm-out/development studies for Project Phoenix, USA
Milestones
🔲 Farm-out/JV MOU
🔲 Binding farm-out/JV deal
🔲 Capital light development studies
Objective #3 of our 88E IM: Farm-out Project Leonis, USA
Milestones
✅ Maiden prospective resource estimate
🔄 Farm-out/JV MOU
🔲 Binding farm-out/JV deal
Objective #4: Firm up drill target at the Namibian asset
Milestones
✅ 2D seismic program starts
✅ 2D seismic program completed
🔄 2D seismic results & interpretation
🔲 Maiden prospective resource estimate
🔲 Primary drill target selected
