88E gets first 20% of its Namibian project

Published 22-FEB-2024 12:43 P.M.

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Our oil & gas Investment 88 Energy (ASX: 88E) just put out an update on its onshore Namibian project.

In November last year 88E announced a farm-in agreement for a 45% interest in a giant onshore oil & gas block in Namibia.

The project sits on ~18,500 km2 of ground - an area ~12x bigger than all of 88E’s Alaskan ground.

88E’s farm in agreement is split into 3 stages -

✅ Stage 1 (US$3.7M for an initial 20%): 88E Pay US$700k for back costs + US$3M split into share and cash payments to fund the ~250km 2D seismic acquisition program.
🔲 Stage 2 (US$7.5M for an additional 17.5%): 88E contributes US$7.5M towards the first well.
🔲 Stage 3 (US$7.5M for an additional 7.5%): 88E contributes US$7.5M towards the second well.

Today 88E completed stage 1 of the farm-in and has now assumed its 20% ownership of the project.

Next, 88E is planning for the seismic acquisition program on the project in mid-2024.

Background on 88E’s Namibian project -

88E’s asset was picked up by its JV partner Monitor Exploration back in 2018.

The significance of the timing is that the project was awarded to Monitor 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 into the project at a stage where all of the pre-drilling seismic work will get done and to firm up drill targets.

The first stage of seismic will be a ~200km 2D seismic acquisition program in mid-2024.

After that it will be all about putting together a maiden drill program on the project.

Why we like 88E’s Namibian asset:

A few months ago we put out our first note on 88E’s Namibian asset where we laid out the context for the deal and why we liked the project.

Here is a quick summary of the key reasons we like the project:

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+.

You can read all about ReconAfrica’s 2021 run in this IVZ article we wrote back in March 2021.

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.

For our detailed take, check out our full note here: 88E heading to Africa on frontier oil hunt - following Shell and Totals 11 billion barrel lead