88 Energy Limited is pleased to announce the following update for its projects located on the North Slope of Alaska.

Highlights

• Nitrogen lift continues at Icewine#2

Project Icewine – Icewine#2 Production Testing

As at 1730 21st June (AK time), the flowback rate was 50 barrels of water per day on a variable choke setting (currently 36/64”). Wellhead pressure has been managed lower to 75psi to reduce back pressure in the system.

Since the last update on the 18th June, adjustments were made to the flowback system to determine the optimal settings for the nitrogen lift operation. Consequently, flowback rates fluctuated between an average rate of 50 barrels of water per day to 120 barrels of water per day. The percentage of hydrocarbon gas in the flowback dropped to 5% at one stage due to an increased nitrogen injection rate, 300 scf/m, which is deemed to have limited the flowback of both water and gas from the borehole. The reduction in productivity is attributed to an effective downhole choke created between the 4.5” annulus and the 1.75” velocity string, limiting the flowback when the nitrogen rate is too high. The nitrogen injection rate is now being reduced back to 150 scf/m and should result in an increase in flowback of water and gas from the borehole.

During this period there has been no meaningful change to the composition of the returned gas and fluid. Flowback is considered to be 100% stimulation fluid and gas.

Hydrocarbon gas content continues to be predominantly methane (90%) with some heavier elements up to trace C6+. The composition and rate is as expected for this stage of the flowback and results are considered unrepresentative of the hydrocarbon composition in the reservoir, as the well is still in clean-up phase. Salinity measurements of the flowback fluid are also not indicative of connectivity to the reservoir, as expected at this stage of clean-up.

Total clean up fluid returned, (net of diesel for freeze protection and any other fluids introduced as part of the current operation), since commencement of flowback on 12th June 2018 is 1,100 barrels interpreted as 100% stimulation fluid. Total fluid returned for the entire Icewine#2 flowback operation, including last year, is now 6,632 barrels or 24% of the frac fluid injected vs a target percentage return of at least 30%.

Icewine#2 Production Testing – Timeline

The Icewine#2 well is located on the North Slope of Alaska (ADL 392301). 88 Energy Ltd (via its wholly owned subsidiary, Accumulate Energy Alaska, Inc) has a 77.55% working interest in the well. The well was stimulated in two stages over a gross 128-foot vertical interval in the HRZ shale formation, from 10,957-11,085ft TVD, using a slickwater treatment comprising 27,837 barrels of fluid and 1,034,838 pounds of proppant.

Prior to Winter shut-in (2017) 20% of the stimulation fluids had been flowed back versus a projected minimum target of 30% to gain connectivity to the source rock reservoir.

Flowback re-commenced, on schedule, at 22:30 11th June 2018 (AK time) to clean-up stimulation fluids from the Icewine#2 borehole with a well head pressure of 3,000 psi and flowback rate of 253 barrels of water per day on an 8/64” choke.

A production log was run on 12th June and confirmed that all perforations were contributing to flow. As per the flowback design, nitrogen was then introduced gradually to the wellbore from 0845 13th June (AK time), prior to installation of the coiled tube velocity string, to artificially lift stimulation fluids in order to gain connectivity to the reservoir. The flowback rate stabilised at 200 barrels of water per day through an 8/64” choke and then steadily declined to circa 100 barrels of water per day, as per expectation.

Flowback was interrupted, as per the program, on the 15th June 08:00 (AK time) to allow installation of the velocity string. Flow was re-established on 15th June at 20:00 (AK time) with nitrogen introduced into the annulus between the 4.5” casing and the 1.75” velocity string. After displacement of fluid in the annulus, the flowback rate stabilised at 350bpwd through a variable choke to maintain a target wellhead pressure of 200-400psi. This technique decreases the backside pressure in the system and optimises lifting of fluid from the wellbore.

For more information, please visit: http://88energy.com