By Andrew Hobbs

THE STAFF behind Australia-listed 88 Energy is hoping the company’s Project Icewine lives up to its name – a sweet conclusion after a lacklustre Moroccan main course.

Previously known as Tangiers Petroleum, the company had been focused on the development of blocks offshore Morocco, but exited the project in late 2014 after its Tao 1 well failed to encounter hydrocarbons.

Speaking to journalists ahead of 88 Energy’s annual general meeting, 88 Energy managing director Dave Wall said that following the failure of the well, the company was left with about $1 million in the bank and no other assets.

“The ASX were telling us that we were now a cash box because we had no assets, and really, you have six months, they say.”

This timeframe meant that pursuing new options in Africa, as was the company’s original intent, was not an option – as lead times for these projects were typically around nine months, he said.

This led Mr Wall to look further, eventually reaching out to contacts he had made during his days as a broker with Hartleys, focused on American shale plays.

It was through one of these contracts that Mr Wall met Paul Basinski, who he said had helped Burlington Resources and later ConocoPhillips identify and acquire acreages in the Eagle Ford shale play in 2006 – before the official discovery of the shale in 2008.

“What Paul has and what he was able to perfect during his time at ConocoPhillips was manpower, resources, technical expertise as well was this concept of finding … the small part of shale that is going to be productive and economic even at a $50 oil price, which is what this ConocoPhillips acreage is,” Mr Wall said.

These were the skills that led Mr Basinski to identify the Icewine project, along with two others, for ConocoPhillips and later for a private equity backed firm – both of which passed on the proposal.

When the two groups met, Mr Basinski had gone out on his own in tandem with other private investors to lease up 10,000 acres of land on Alaska’s North Slope, along the state’s Dalton Highway, which leads from the city of Fairbanks to Deadhorse, and the state’s Prudhoe oilfields.

After completing due diligence, Mr Wall said 88 Energy had found no gaps in Mr Basinski’s research.

“We bid on another 90,000 acres to combine with Paul’s around 10,000, and did a deal with Paul where we would become the operator with 87.5 per cent,” he said.

“We managed to get a good deal with Paul – he’s happy with his side of it, he’s getting a 4% overriding royalty, and if this is a billion barrels like we think it is, this is worth several billion dollars, no-one needs more money than that.”

The entire Icewine project consists of 99,360 acres onshore North Slope, Alaska with a 10 year lease term and no compulsory work program commitment.

The primary term for the state leases is 10 years with no mandatory relinquishments and loyalty payments of 16.5%, 4% of which goes to Mr Basinski.

In addition to this, any exploration work carried out by the company is set to benefit from a cash rebate of between 75% and 85% of costs given by the Alaskan government, Mr Wall said.

“In terms of bang for your buck, this is the best place in the world to spend money, especially in exploration,” he said.

The asset’s location, next to the Dalton Highway and the accompanying Trans-Alaska pipeline system was another key asset for the project, he added.

“Typically you can only drill between January and May, which is the winter season, because that is when you have ice cover,” he said.

“But if you are on the road, like we are, you can drill all year round.”

As a result, 88 Energy plans to drill its first well, Icewine 1, from a pre-existing gravel pad on its permit area before the end of the calendar year, depending on permit approvals.

The company has already signed a services agreement with Fairweather Science to fast track permitting of the drilling of the well, with 88 Energy having already obtained a cultural resource clearance for the project.

The same drillpad was the site of a shallow coal bed methane test conducted by the Alaskan Government on the permit area in 2005.

However, the test well was abandoned at 1,818 feet, prior to reaching its objective at about 2,500 feet in depth.

Mr Wall said the company had received guidance from local regulatory authorities that the permitting could be done on time, while rigs would also be available because of the fact it would be drilled in summer.

“The only thing that is missing is the money,” he said.

“We’re lining up the funding on the debt site, if we need it, and at the same time we are looking for a farm-in partner,” he said, adding that this was most likely to be a mid-tier company.

“Plan C is just to go and raise the equity,” he said.