Key Highlights

  • Westlawn Americas Offshore acquires a 40% working interest in South Prudhoe, while 88 Energy keeps 60% and operatorship.
  • Westlawn will fund US$9.2 million (A$13.1 million) of Augusta-1, about 52% of the current well budget of US$17.5 million.
  • The total approved Westlawn contribution is US$10.87 million (A$15.53 million) at an AUD/USD rate of 0.70.
  • Augusta-1 targets 133.7 million barrels of gross unrisked prospective resources and is scheduled to spud in Q1 CY2027.

88 Energy Limited (ASX:88E) has signed a binding Participation Agreement and Joint Operating Agreement with Houston-based Westlawn Americas Offshore LLC (WAO) covering the South Prudhoe Project on Alaska's North Slope. WAO takes a 40% working interest in return for up to US$10.9 million (A$15.5 million) toward the drilling and evaluation of the Augusta-1 exploration well and the project work programme, leaving 88 Energy with a 60% interest and operatorship.

How the Farm-Out Funding Is Structured

Under the agreement, WAO will pay US$9.2 million (A$13.1 million) toward Augusta-1 well operations, made up of the first US$3.6 million (A$5.1 million) of drilling and evaluation spending plus 40% of the remainder, currently expected to be US$5.6 million (A$8.0 million). Against a gross well operations budget of US$17.5 million, that equals roughly 52% of the cost. A further US$1.5 million (A$2.2 million) covers non-well costs such as general and administrative expenses, geology and geophysics and lease rentals for the next 12 months, and US$0.2 million (A$0.3 million) goes to long-lead items for a possible two-zone flow test.

The approved work programme and budget totals US$21.27 million gross, of which WAO funds US$10.67 million, or 50%. Including the flow test long-lead items of US$0.5 million gross, the total approved WAO contribution is US$10.87 million (A$15.53 million) on a gross figure of US$21.77 million. 88 Energy remains responsible for Augusta-1 well costs of US$8.3 million (A$11.9 million), non-well costs of US$2.3 million (A$3.2 million) and flow test long-lead items of US$0.3 million (A$0.4 million). The company is assessing a range of strategic initiatives alongside existing cash to meet that commitment.

The contingent flow test targets the Ivishak and Kuparuk reservoirs and carries an estimated gross cost of US$4.5 million (A$6.4 million), to be shared in line with participating interests. It would proceed only after full evaluation of the Augusta-1 results and a joint venture decision.

South Prudhoe and the Augusta-1 Well

South Prudhoe sits immediately south of the producing Prudhoe Bay Unit and Kuparuk River Unit and covers about 52,269 acres, adjacent to existing transportation and processing facilities, including the Trans-Alaska Pipeline System. Augusta-1 is the company's highest-priority drilling target and is designed to test stacked conventional oil objectives in the Ivishak, Kuparuk and Brookian intervals within a single borehole, with a combined 133.7 million barrels of gross unrisked prospective resources on a 2U basis.

Pre-drill preparation includes a finalised drilling location, progress on permitting, access and logistics planning, and contracts for the Nordic-Calista Rig-3 and a dedicated Arctic camp. The well is scheduled to spud in the first quarter of calendar 2027, within the 2026/27 North Slope winter season. Hannam & Partners acted as sole adviser to 88 Energy on the farm-out.

A Partner With North Slope Ambitions

WAO was founded in Houston in 2022 and is backed by the private firm Westlawn Group. It holds assets in the US Gulf of Mexico, Brazil, Peru and Alaska, and South Prudhoe is its first position on the North Slope. Its leadership team has worked at companies including Murphy Oil, Anadarko Petroleum, ExxonMobil, Repsol, Statoil, Occidental Petroleum and APA Corporation, with experience at the Prudhoe Bay and Alpine fields.

The deal also sets up an Area of Mutual Interest framework under which the two companies will look for further exploration, appraisal and development opportunities across the North Slope. For any new acreage pursued jointly, 88 Energy would hold a 60% interest and operatorship. Completion occurred on execution of the Participation Agreement and payment of the promoted contribution, with government approval of the assignment to be sought afterwards.

Where the Agreement Leaves 88 Energy

After the farm-out, working interest in South Prudhoe moves from 100% held by 88 Energy and its subsidiary Captivate Energy to 60% for 88 Energy and 40% for WAO. The company has secured a counterparty funding about half of the Augusta-1 well budget, retains operatorship and still carries US$8.3 million of well costs alongside its share of other programme expenses.