Australian junior 88 Energy has struck a deal to buy the Umiat oilfield on Alaska's North Slope.

88 Energy confirmed Monday it had executed a sale and purchase agreement with Malamute Energy and Renaissance Umiat to acquire the Umiat oilfield in exchange for a 4% overriding royalty interest and the assumption of liability for the abandonment of two historic wells.

The historical wells are Umiat-18 and Umiat-23H, which were drilled by defunct Australian company Linc Energy in 2013 and 2014.

Umiat-18 confirmed high quality oil saturated reservoir rock with more than 150 feet of net oil pay, while Umiat-23H intersected over 280 metres of net pay in the Lower Grandstand formation and flowed at up 800 barrels per day, while testing at a sustained rate of 200 bpd.

88 Energy said Monday it anticipated the cost to abandon the two wells would be about US$1 million.

The Umiat oilfield covers 17,633 acres, across two leases, which are in a unit that was formed in September 2019 with an initial 10-year term.

Under the conditions of the unit, 88 Energy will be required to drill at least one exploration or appraisal well by 31 August 2022.

The field was first discovered in the 1940s and flowed oil until the 1970s, however former operator Linc Energy believed the field to hold substantial undeveloped light oil reserves that could be tapped with modern techniques.

An independent reserves estimate by consultants Ryder Scott in 2015 placed the gross proven plus probable reserves at Umiat at 123.7 million barrels.

The field also lies adjacent to 88 Energy’s existing Project Peregrine where the company is set to kick off a drilling campaign.

"Our operational activity at Project Peregrine has provided 88E with a unique position from which to acquire the Umiat oilfield at an opportunistic price point,” 88 Energy managing director Dave Wall said.

“The asset has potential to add significant value for shareholders, possibly as a standalone development but certainly in the event that there is a material discovery in the imminent Project Peregrine drilling programme.”

88 Energy now plans to undertake a full field review to determine at what oil price Umiat could be commercial as a standalone development and whether optimisation of the previous development plan by Linc Energy was possible.

Linc’s development plan for Umiat involved the drilling of 35 wells, with 24 producers and 11 injectors, with the project to have the capacity to produce 30,000 barrels of oil per day.

Field Development

Alaskan acreage: Oz junior picks up North Slope field