88 Energy Limited (LSE:88E) has entered into a binding farm-out agreement with Westlawn Americas Offshore LLC (WAO), securing up to US$10.9 million (A$15.5 million) in funding for the Augusta-1 exploration well and associated activities at its South Prudhoe Project on Alaska’s North Slope.
Under the agreement, WAO will acquire a 40% working interest in South Prudhoe, while 88 Energy will retain a 60% interest and continue as operator.
The funding arrangement includes US$9.2 million (A$13.1 million) towards drilling and evaluating Augusta-1, representing approximately 52% of the current planned well budget. WAO will contribute a further US$1.7 million (A$2.4 million) towards project-related expenditure.
Augusta-1 is scheduled to begin drilling in the first quarter of 2027 and will target estimated gross unrisked prospective resources of 133.7 million barrels of oil across multiple reservoir intervals.
Farm-Out Agreement Establishes Funding Commitments
The transaction comprises a binding Participation Agreement and Joint Operating Agreement between 88 Energy and WAO.
Under the agreed terms, WAO will acquire a 40% working interest in the South Prudhoe Project in exchange for funding commitments of up to US$10.9 million.
The principal contribution of US$9.2 million will support the drilling and evaluation of Augusta-1.
A further US$1.7 million will be allocated towards general and administrative expenditure, geological and geophysical activities, lease costs and long-lead equipment associated with a potential future flow test.
The combined funding commitment is equivalent to approximately A$15.5 million.
88 Energy will retain operatorship and a majority 60% working interest in the project.
The arrangement reduces the company’s direct funding requirement for the planned exploration programme while introducing another participant to the project.
The announcement does not specify how 88 Energy intends to fund the remaining portion of the Augusta-1 drilling budget.
Augusta-1 Drilling Scheduled for First Quarter of 2027
88 Energy plans to commence drilling the Augusta-1 exploration well during the first quarter of calendar year 2027.
The well will test conventional oil prospects within the South Prudhoe acreage.
The exploration programme targets several stacked reservoir intervals, including the Ivishak, Kuparuk and Brookian formations.
These intervals form the basis of the project’s estimated gross unrisked prospective resources of 133.7 million barrels.
The planned drilling and evaluation programme will provide additional geological and reservoir information to assess the presence and potential recoverability of hydrocarbons.
The company has not announced a precise spud date or the expected duration of drilling.
Further operational details are expected as preparations progress.
Prospective Resources Estimated at 133.7 Million Barrels
The Augusta-1 prospect has estimated gross unrisked prospective resources of 133.7 million barrels of oil on a 2U basis.
The estimate relates to potentially recoverable petroleum from accumulations that have not yet been discovered.
Prospective resources differ from reserves because commercial quantities of hydrocarbons have not been established.
The estimates remain subject to both geological discovery risk and development risk.
Further drilling, appraisal and evaluation will be required to determine whether significant quantities of recoverable hydrocarbons exist.
The 133.7 million-barrel figure represents the gross project estimate before accounting for the respective working interests of 88 Energy and WAO.
It should not be interpreted as confirmed reserves or an indication of future production.
WAO to Fund 40% of Potential Future Flow Testing
In addition to its initial funding commitments, WAO has agreed to contribute 40% of the cost of a potential future flow test programme at Augusta-1, subject to the conditions outlined in the farm-out arrangement.
Flow testing would provide information about reservoir performance and the ability of any discovered hydrocarbons to flow to the surface.
The need for a flow test will depend on the results of the initial exploration and evaluation programme.
WAO’s US$1.7 million additional contribution includes funding for long-lead items that could be required for such testing.
88 Energy has not announced a definitive flow test schedule or budget.
Any subsequent testing programme would depend on the outcome of drilling and further technical assessments.
88 Energy Retains Operatorship and Majority Interest
Following completion of the farm-out arrangements, 88 Energy will hold a 60% working interest in South Prudhoe.
WAO will hold the remaining 40%.
88 Energy will continue to manage the project’s exploration and operational activities as operator.
The company said retaining operatorship will allow it to oversee the Augusta-1 drilling programme and subsequent technical evaluation.
The transaction also introduces WAO’s technical and operational experience into the project.
WAO’s management team has previous experience with North Slope operations, including involvement with the Prudhoe Bay and Alpine fields.
The companies intend to combine their technical capabilities as they prepare for the planned exploration programme.
Potential Collaboration Across Alaska’s North Slope
The farm-out agreement also establishes a framework for potential cooperation between 88 Energy and WAO beyond South Prudhoe.
The arrangement contemplates the formation of an Area of Mutual Interest, or AMI, covering opportunities across Alaska’s North Slope.
An AMI would provide a structure through which the companies could jointly identify and evaluate potential future exploration and development opportunities.
The announcement does not identify specific additional projects or establish financial commitments for future acquisitions.
Any expansion of the partnership would depend on further technical and commercial evaluation and subsequent agreements.
For WAO, the South Prudhoe transaction represents its first investment on Alaska’s North Slope.
WAO Completes Technical and Commercial Due Diligence
88 Energy said WAO entered into the agreement following an extensive review of South Prudhoe’s technical and commercial characteristics.
The assessment included the project’s geological data, identified prospective resources and proximity to existing infrastructure.
WAO also evaluated 88 Energy’s technical work and operational experience in Alaska.
The companies said the review formed the basis of WAO’s decision to participate in the exploration programme.
WAO’s management team includes personnel with experience across international upstream oil and gas operations.
The company has investments in producing, development and exploration assets in the US Gulf of Mexico, Brazil, Peru and Alaska.
Its participation provides an additional source of funding and technical expertise for the Augusta-1 programme.
Managing Director Ashley Gilbert Comments on Agreement
Ashley Gilbert, Managing Director of 88 Energy, commented on the transaction and its implications for the South Prudhoe exploration programme.
“Securing a partner of WAO’s calibre is a tremendous outcome for 88 Energy shareholders and is, without a doubt, a defining milestone in the advancement of the South Prudhoe Project. We have secured a partner that adds genuine value, having extensive Alaskan experience, deep upstream expertise and a long-term investment approach that is highly complementary to our own ambitions on the North Slope.
WAO’s decision to farm-in follows a comprehensive technical and commercial evaluation of the Project and provides strong third-party validation of both the quality of the South Prudhoe opportunity and the substantial technical work undertaken by our team over the past 18 months. We believe this endorsement reinforces our confidence in the potential of Augusta-1 and the broader prospectivity we have identified across the acreage.
More importantly, it establishes a partnership capable of creating value beyond a single well.
This transaction materially reduces our funding exposure to Augusta-1 while allowing 88E to retain a 60% working interest and operatorship in what we believe is one of the most attractive remaining conventional exploration opportunities on the North Slope, with 133.7 million barrels of gross unrisked prospective resource mapped across multiple stacked reservoir intervals. This South Prudhoe-specific agreement delivers up to A$15.5 million towards the drilling and evaluation of the Augusta-1 exploration well and South Prudhoe work-programme and budget.
We are excited to be working with their team as we progress towards unlocking the full potential of South Prudhoe and beyond.”
WAO Management Outlines Alaska Investment Plans
Greg Hebertson, Founder, Co-Head and Chief Operating Officer of WAO, and George Easterly, Co-Head and Chief Financial Officer, also commented on the partnership.
“Alaska has long been an attractive region for investment for WAO and is one we’ve had our eye on for some time. Our technical and commercial review reinforced our belief that South Prudhoe represents a high-quality exploration opportunity which provides a solid foundation for our entry into Alaska’s North Slope.
We were particularly impressed by the quality of the underlying asset data, the scale of the prospectivity identified across the project area, the proximity to existing infrastructure, and the depth of technical and operational capability demonstrated by the 88 Energy team. Their experience on the North Slope and disciplined approach to project advancement give us confidence in both the opportunity and the pathway to execution.
While Augusta-1 is an exciting first step in our new partnership with 88 Energy at South Prudhoe, we view this transaction as the foundation for a broader potential strategic relationship with the 88 Energy team as well as for future growth across the North Slope. We look forward to drilling Augusta-1 together and to WAO building a meaningful long-term portfolio in Alaska.”
Preparations Continue Ahead of Augusta-1 Drilling
88 Energy’s immediate operational focus will be on preparing for the Augusta-1 exploration well, scheduled for the first quarter of 2027.
The farm-out provides funding towards drilling, evaluation and associated South Prudhoe activities.
The company will retain responsibility for operating the project, with WAO participating as a 40% working interest holder.
The planned well will evaluate multiple reservoir intervals associated with the project’s estimated 133.7 million barrels of gross unrisked prospective resources.
The outcome of drilling will determine whether additional appraisal or flow testing is warranted.
Any future development would require further technical evaluation, funding and relevant approvals.
More About 88 Energy
88 Energy Limited is an oil and gas exploration company with interests in Alaska’s North Slope.
The company’s South Prudhoe Project includes conventional oil exploration prospects targeting several geological formations.
88 Energy is progressing the Augusta-1 exploration programme through a farm-out partnership with Westlawn Americas Offshore.
Under the agreement, 88 Energy retains a 60% working interest and operatorship, while WAO will hold a 40% interest and contribute funding towards exploration and evaluation activities.
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