Since this time last week, 88 Energy Limited [ASX:88E] shares have fallen in price by a further 12%, after a 36% drop during trading last Wednesday, triggered by poor final report on their winx-1 project.
When we last covered 88E, we alluded to the chance that good news on their potential farm-out arrangements could turn the plummeting share price around.
Today, the company has indeed released an update on the Alaska projects, which has helped the share price remain steady through trading today.
Some progress made in farm-outs
According to the announcement, the farm-out process for ‘Project Icewine — Conventional’ has progressed to the next stage.
After ‘requests were made by potential farminees for more time to evaluate the opportunity which the company granted’, the company have now selected a ‘preferred bidder’ and discussions have begun.
The update also revealed the upcoming selling of an Oil Search option (set to expire in June) which the company acquired in 2017. As per the announcement, this option includes acreage near Winc-1 and Project Icewine.
Other project highlights include a planned farm-out launch for ‘Project Icewine — Unconventional’ in mid-2019, as well as near-completed interpretation and resource evaluation on the Yukon Leases.
What this tells us about 88 Energy’s potential
While ‘Project Icewine — Conventional’ seems to have made the most progress out of the Alaska projects, the success of its bidding discussions are in no way confirmed.
As the company reported in the announcement:
‘There is no guarantee that the parties will agree to terms and close out the transaction. A further announcement will be made in due course on the outcome of the ongoing negotiations.’
And as reiterated by 88 Energy’s Managing Director, David Wall, ‘no deal is done until it is done’.
Also, as for the underperforming Winx-1 project, all that has been said on the drilling is that further evaluation of ‘the remaining resource potential of the acreage’ is underway, with ‘several working theories’ as to its true value.
As such, the stagnant nature in today’s price for 88 Energy’s shares may be a clear reflection of the market’s patience while further concrete details are yet to be announced.
We will keep you updated on any future announcements.
For Money Morning
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