88 Energy shares hold steady after update on North Alaskan progress

88 Energy (LON:88E) shares remained steady today, after yesterday’s update to the market on the progress in its North Alaskan drilling programme.

The results of the prospect are highly anticipated as recent finds by Spanish listed Repsol point to large oil reservoirs beneath the North Alaskan slopes.

In March, Respol announced one of the largest discoveries of US oil in recent years when it revealed a find of 1.2 billion barrels of oil in the Horseshoe-1 field.

Operations on schedule

88 Energy said operations remain on schedule and they had recently completed drilling down to 10,715 feet and where set to test production capabilities in late June.

If 88 Energy are to discover anything near the amount of oil that Repsol did, the share price is likely to see considerable upside pressure.

In the case of a significant find, production is unlikely to start for years to come as further testing is conducted.

“A successful result however would almost certainly attract a farm in partner and this would be the next catalyst for a further re-rating of 88E’s unconventional acreage position,” said Aiden Bradley of Hartleys.

The company is well funded with $27.3 million in cash as of 31^st Dec 2016, which is likely to see them through the rest of the Icewine drilling campaign.

Alaskan oil

Alaska is home to the largest oil field in the US, Prudhoe Bay, covering 214,000 acres and is reported to have produced 15 billion barrels of oil over its 25-year history.

The State of Alaska are highly supportive of oil prospecting and offers generous subsidies in the form of a 35 percent cash refund of any operating costs drilling for oil.

The scheme has proved successful with Alaskan residents receiving a yearly dividend from the Alaskan oil royalty fund but it starting to meet some opposition as recent developments mean the Alaskan administration could be liable for billions of dollars as companies spend big on the projects.