Merlin-2 oil well spudded

88E has commenced the Merlin-2 drilling program, targeting 652 million barrels of oil with a planned Total Depth of ~8,000 feet. With the US and the UK sanctioning Russian oil imports, 88E seems to have perfectly timed the drilling program at its Merlin-2 well in Alaska.

While not suggesting this will be the case, we do note that last time 88E completed a drilling program its share price moved higher by over 1,000%. And since then, amid the Ukraine/Russia conflict, the price of oil has reached ~US$128/barrel.

88E expects it to take approximately four weeks to reach the targeted depth of ~8,000 feet. It then plans to conduct production testing to see if the flow rates from the well can be considered commercial.

88E is targeting a prospective resource of 652 million barrels of oil and assuming a successful drilling program, is aiming to convert the prospective resource into reserves.

A new large-scale discovery in Alaska right now could be viewed as strategically important to the USA and to its allies who need to fill in the gap left by Russian oil bans.

In our last note, which you can read here, we set the scene for the upcoming drilling program, highlighting the regional significance of the Merlin-2 well and what it could mean not only for 88E but the majors on the Alaskan North Slope.

With the drilling of the Merlin-2 appraisal well, 88E will meet our key (and single) objective for the company for the year. To see our full 2022 Investment Memo click here.