The 88 Energy Ltd (LON: 88E) share price surged 14.7% despite conducting an oversubscribed share placement to raise A$17.5 million (before costs) from domestic and international sophisticated and institutional investors.
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The lack of an adverse reaction from investors was due to the operations update issued by the company regarding its Hickory-1 well in Alaska. 88 Energy confirmed that the Alaska Oil and Gas Conservation Commission (AOGCC) had issued a permit to drill (PTD) for the Hickory-1 well, which most investors celebrated.
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88 Energy plans to construct the Hickory-1 ice pad after mobilising the Nordic Calista Rig-2 from the Pantheon Resources. The construction is expected to commence in mid-February after the drill rig arrives. In addition, investors were happy to hear that the Hickory-1 well is located next to the Dalton Highway and the Trans-Alaska Pipeline System (TAPS).
Therefore, the Hickory-1 well can be easily connected to the TAPS pipeline once completed.
88 Energy noted that the project manager, Fairweather, LLC, had conducted the tendering process and had issued contracts relating to the drilling operations, which are expected to cost about US$13.5 million, with 88 Energy contributing about US$10 million based on its 75% operating stake in the project.
The company attributed the low drilling costs to the project’s proximity to critical infrastructure such as the Dalton Highway. 88 Energy expects to start flow testing the Hickory-1 well in the 2023/2024 winter season. The well will target six conventional reservoirs.
Looking at 88 Energy’s capital raise, we see that the company issued 1.842 billion new fully paid-up ordinary shares priced at A$0.0095 (£0.0055), representing a 20.8% discount to its closing price on 1 February 2023, yet the company’s shares rose.
The company noted that the funds raised would strengthen its balance sheet by adding to its cash balance of A$14.1 million (approx. £8.1 million) at the end of December. The monies will be used to fund the drilling of the Hickory-1 well, and pay for its other projects and working capital.
*This is not investment advice.
88 Energy share price.
The 88 Energy share price surged 14.7% to trade at 0.78p, from Friday’s closing price of 0.68p.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.