88 Energy (ASX: 88E) Secures A$15.5m Augusta-1 Farm-Out

88 Energy has secured up to US$10.9 million (A$15.5 million) from Westlawn Americas Offshore to help fund the Augusta-1 exploration well and related work at its South Prudhoe project in Alaska.

Under the binding farm-out agreement, Westlawn will acquire a 40% working interest in South Prudhoe. 88 Energy will retain a 60% majority interest, along with operatorship of the project.

Westlawn will contribute US$9.2 million (A$13.1 million) towards drilling and evaluating Augusta-1, equivalent to about 52% of the current US$17.5 million well budget. It will provide another US$1.7 million (A$2.4 million) for non-well costs and long-lead items associated with a potential flow test.

The arrangement materially lowers 88 Energy’s near-term exposure to the well, but does not fully fund its share. The company remains responsible for US$8.3 million (A$11.9 million) of Augusta-1 well costs, US$2.3 million (A$3.2 million) of non-well expenditure and US$300,000 (A$400,000) for flow-test long-lead items.

88 Energy said it was assessing strategic initiatives alongside its existing cash resources to meet that commitment.

Augusta-1 drilling targeted for early 2027

Augusta-1 is scheduled to spud in the first quarter of 2027 and is 88 Energy’s highest-priority drilling target. The well is designed to test stacked conventional oil prospects across the Ivishak, Kuparuk and Brookian reservoir intervals.

The company estimates Augusta-1 contains 133.7 million barrels of gross unrisked prospective resources on a 2U basis. Prospective resources relate to undiscovered accumulations and carry both discovery and development risk.

The drilling budget covers logging, formation evaluation, reservoir sampling and casing ahead of a possible later flow test. 88 Energy has finalised the drilling location and secured the Nordic-Calista Rig-3 and a dedicated Arctic camp for the 2026-27 North Slope winter season.

South Prudhoe spans about 52,269 acres immediately south of the producing Prudhoe Bay and Kuparuk River units. The acreage is close to existing transport, processing and export infrastructure, including the Trans-Alaska Pipeline System.

A potential two-zone flow test targeting the Ivishak and Kuparuk reservoirs would only proceed if drilling results justify further evaluation and the joint venture and regulators approve the program. Its current estimated gross cost is US$4.5 million (A$6.4 million), to be funded 60% by 88 Energy and 40% by Westlawn.

Partnership may extend beyond South Prudhoe

South Prudhoe is Westlawn’s first investment on Alaska’s North Slope and follows its technical and commercial review of the project. The Houston-based upstream company has producing, development and exploration assets across the US Gulf of Mexico, Brazil, Peru and Alaska.

The companies have also established a framework to identify and potentially pursue other North Slope opportunities. Under that arrangement, 88 Energy would retain a 60% interest and operatorship in any new acreage or projects pursued jointly.

The transaction was completed following execution of the participation agreement and payment of the promoted contribution. Government approval for the assignment of Westlawn’s interest will be sought after completion.