What's up guys and welcome back to the
channel - I was wrong - and today I want to
talk about 88 energy! So last weekend I
made a video about this stock, all the
preliminary data looked very encouraging
but then this week we got disastrous
merlin-2 well results and now the big
question is: Q: Is it over for 88 energy?
The stock price dropped over 2/3 of
its value after the recent press release.
but my question now is: Q: What to do next?
A: Is it time to sell up and forget about
88 energy or is this drop an
overreaction by the market and is there
now value to be had. In this video I will
give you my honest view of what I see at
this company it's not all bad but there
are some very concerning issues that I
feel everyone should be aware of and
think about as always this is not
financial advice and i'm not a financial
advisor but if you do enjoy this content
or find value in this video can you
kindly show your support for the channel
and smash the like button. Now let's get
into it (OTCQB:EEENF)
So earlier this week 88 energy announced
wireline logging results at merlin-2 and
this was extremely disappointing
provisional analysis of the wireline
logging program indicates reservoir
quality at the location is insufficient
to warrant a production test
mdt2 was unable to obtain fluid samples
from target zones despite encouraging
oil shows
and logging while drilling data
the pre-drill expectation was that
superior thickness and reservoir quality
would be encountered to the east of
merlin one whilst thicker target
intervals were noted at merlin too
whilst the data appeared to be largely
consistent with that observed at merlin-1
(OTC:EEENF)
88 energy will now assess the merits of
a future 3d seismic
acquisition program to better identify
the modern processing of data future
drilling locations to optimally test and
determine the potential commerciality
of the peregrine
acreage forward operations for the
merlin too well will now focus on
plugging and abandoning the well and
commencing
demobilization from the drilling
location so this has come as a huge
disappointment only last weekend I was
making a video about how encouraging the
initial data from 88 energy had been
and this looked certain to have good
results - however I was wrong :(
I took the data at face value from the
company's press releases and it turns
out that the data has been proven to be
incorrect.
88 Energy CEO Ashley Gilbert
has said that whilst the initial results
from the merlin-2 well were encouraging
results from the waterline program have
demonstrated target zones to have lower
than anticipated
porosity and permeability resulting in
difficulty obtaining fluid samples
the initial assessment of results from
the merlin too well are largely
consistent with merlin one exploration
well drilled in project peregrine in
2021
which leads me on to another fact that i
do not like
i thought that this time would be
different but the wait for good results
was coming to an end but I feel like
history is repeating itself and that's
very concerning
almost exactly one year ago to the day
on april 6 2021 88 energy announced an
operations update
that again said pretty much the same
thing
initial observations indicated the
presence of oil
but then they ran into problems
with each of the drilling sites before
eventually concluding
that it was then too late in the season
to initiate flow testing operations and
the forward program would consist of
plugging the well
but what effect did this have at the
time
on april 6th eee nf stock opened at less
than one cent having been trading around
10 since the day
previous and then just two weeks later
on april 19th
a proposed issue of securities a
dilution of 44 million shares
but the stock never really recovered
from that
up until january 2022 88 energy had
traded around two cents for most of 2021
so once again we have seen the same
thing happen
from
0.025 on monday it dropped down to just
0.0065 on tuesday
a drop of over 75 percent
but is this dropped too much as 88
energy dropped lower than it should have
dropped which leads me on to a point of
strength for this company
the merlin 2 well is not endgame 488.
earlier this month
88 energy released a project icewine
update
ispoint has received a boost after light
oil was recovered from two separate
production tests at pantheon resources
talata a well about 2.8 miles from the
ice wine acreage
88 energy says it interprets all the
targets tested by pantheon to spread
into the project icewine tenure
the cb formation is the same formation
that hosts 88 energies lima complex the
lima complex was a secondary target in
the charlie won discovery well drilled a
project icewine in q1 2020
the results of pantheon's well together
with the previously drilled
alcate one well will be taken into
account in the revaluation of 88
energies icewine 1 well data project
icewine covers around 195 000 acres and
is located on the same trend as a number
of recent findings in the schrader bluff
and cb formations the project boasts a
large independent resource of around
1.77 billion barrels of oil equivalent
and following a revaluation of the
acreage
following pantheon's success and they
have said that they will press ahead
with the planned farm out
then there is the umet oilfield
where 88 energy holds 100 working
interest in the acreage located
immediately adjacent to project
peregrine
yukon leases located near point thompson
in january 2021 the company increased
its position and discussions continue
with nearby lease
owners to explore joint development
opportunities plans for future
exploration continue and will be subject
to fair amount and other discussions
and finally we have project longhorn
the oil and gas production assets
collectively known as project longhorn
are located in the permian basin in
texas the acquisition represents 88
energies first move into producing oil
and gas assets and is in line with the
company's strategy to build a successful
exploration and production company
project longhorn contains
well-understood geology with low
technical risk and provides near-term
upside those planned capital development
activities have been certified proven
reserves given their low-risk nature
with forecast growth peak production
rate of 1300 boe per day in 2024 so as i
said a moment ago maybe the 75 drop that
eeenf stock has suffered has been an
over-reaction
the ice wine project alone could still
hold significant value
but the merlin 2 results was a real kick
and I do wonder if the thought of more
dilution could be factoring into the
thinking behind such a drop
but having dropped down to a market cap
of only 171 million maybe there is good
value here now
after all 88 energy is in a much better
financial state than most junior oil
companies
when we look at the latest financials
that were released just two weeks ago
88 energy have total assets of
145.7 million and liabilities of just
5.9 million
meaning that they have total equity of
139 million dollars so there is not a
huge gap here between the market cap and
the total equity value right now
if all bets had been resting on the
success of merlin 2
then those results would have been game over
(eeenf stock news)
but with project longhorn and with
icewine
looking very promising considering the
success that pantheon are having only a
couple of miles away
maybe there is still some value here
for anyone who is long or has been long
on 88 energy for a long time let me know
what you think:
Have you dumped your shares this week
after
the announcement or are you holding an
averaging down?
drop a comment and tell me your thoughts
about the current state of 88 energy
finally my last concern and this has
been a concern for a long time and if
you watch my videos over the past year i
have said this on numerous occasions and
that is that the share structure is
really bad here
back in february the company announced
that it had successfully completed a
placement to raise 32 million dollars to
the issuance of 914 million shares
at a price of 3.5 since australia
and then just a few days later the
awarding of 15.8 million shares as
performance rights
and a total of 57 million shares to be
issued
that's nearly 1 billion shares being
added to the share structure of this
company
which according to the 88 energy website
brings the total shares issued to over
15.8 billion
now i've seen so many comments over the
past year about 88 energy reaching 50
cents or one dollar
or in some cases even more but really
that would make 88 energy one of the
biggest oil companies in the world which
is not realistic
now I know a lot of you watching this
don't want to hear it
but I think it's unrealistic for a
junior oil stock like 88 energy
but I have to be honest about it I see
too many comments throwing around these
price targets that take no consideration
of the market cap of the companies and
that's not just 88 energy I see this
with every stock I look at
but when it comes to 88
maybe there is enough here to suggest
that there is still potential and at
this current price which is the lowest
it's been for a year
there could be significant upside from
this low
but that is just my opinion and I am not
a financial advisor this is not
financial advice in any way I just
wanted to share my thoughts and
hopefully find out what you guys are
thinking right now are you buying
selling or holding
drop a comment down below and remember
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hit the like button and if you're new
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in the next one