88E receives US$2.2M - cash balance sitting at ~A$10M now.

Published 02-APR-2025 15:51 P.M.

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88 Energy (ASX: 88E) just received the final US$2.2M in owed funds from its JV partner on it’s US asset - Project Phoenix.

Project Phoenix is where 88E recently signed a ~A$60M deal to farm-out deal.

It’s also where 88E recently drilled the Hickory-1 well and flowed oil to surface right next door to ~$1.6BN capped London listed Pantheon Resources:

After this week's news, 88E is capped at ~$29M with ~$10M in cash.

Why this week's news matters:

The cash received from Burgundy (88E’s existing JV partner) matters because they are the same party that signed the ~A$60M farm-out deal on Project Phoenix.

As part of the Farm-out deal Burgundy is supposed to free cary 88E for it’s 25% interest in the project.

The deal is structured as follows:

Phase 1 (65% ownership) - Burgundy to pay for ~A$33M of 88E’s share in budgeted CY25/26 costs. This includes lease costs, drilling a horizontal well and flow testing on the project.
Phase 2 (75% ownership) - Burgundy to pay for another ~A$11.6M in costs (drilling another well or alternative capital programme) after which they will own 75% of the project and 88E 25%.

The deal was conditional on Burgundy being able to raise enough capital to pay for phase 1 of the farm-out by 31 December 2025.

This weeks announcement confirmed that they had raised enough to pay off outstanding debts to 88E and also fund some of the long lead items for the drilling of a horizontal well on the project.

(Source)

So the farm-out deal looks like it is progressing which is good for 88E especially considering it values 88E’s 25% in the project at ~A$30M.

With 88E’s market cap at ~$29M and ~$10M cash in the bank we think 88E’s valuation is mispricing the value of Project Phoenix AND its other assets…

88E is also working on a farm-out for its other Alaskan asset:

88E is also looking to farm-out its other Alaskan project - Project Leonis.

The Leonis asset sits on ~25,600 acres immediately south of Prudhoe Bay - the USA’s biggest-ever oil discovery.

The project has a total net mean prospective resource to 88E of 664 million barrels of oil (MMbbl).

AND 88E wants to be drilling project Leonis in Q1 of 2026.

88E picked up Project Leonis back in April last year and we already know:

The project is fully covered by 3D seismic data - which 88E has reprocessed, improving the data quality and resolution.
Project has historic exploration data from back in 1985 - which 88E has re-analysed and calculated >200ft of net across one reservoir (USB).

The working theory for 88E is that the reservoir units on it’s ground is similar to the already producing fields to the north (Polaris, West Sak, and Orion fields).

88E’s plan has always been to mature and firm up a drill target on the project and then farm it out to a potential partner.

So we could see 88E sign another farm-out deal which would put in place funding for 88E to have another well drilled in 2026.

What else is 88E up to?

🔄 Maiden prospective resource estimate for Namibian Asset (H1 2025)

88E is also currently farming into an onshore exploration block in Namibia, neighbouring ~$150M capped TSX listed Recon Africa.

We especially like 88E’s Namibian project because the company is a sort of “first mover” in the onshore Namibian exploration space.

Until today, most of the big exploration wins in Namibia have been offshore.

We are hoping that the wave of exploration success offshore eventually leads to market interest in onshore blocks.

88E recently finished 2D seismic on its project and mapped ~10 independent structures with some of them individually covering ~100km^2 of ground.

The next major catalyst for this project is a maiden prospective resource estimate, expected inside the next two quarters ahead of a drill program planned for 2026.