Let's talk about oil stocks! Welcome back
to the channel. There has been a lot of
focus in recent years on solar stocks,
clean energy stocks, and EVs. But if we
have learned anything in the past two
months it is that oil stocks are still
very much leading the world energy
production.
Over the past few weeks we have seen
huge increases in oil prices and
although I don't like to see it, it does
provide stock market opportunities
so today I want to talk about 88 energy.
This oil stock is listed across multiple
stock exchanges
such as on the OTCQB:EEENF
and 88E on both the ASX in Australia
and the AIM in the UK
this stock has seen a sizeable gain in
recent weeks ($EEENF)
and a lot of retail investors
think that this can make huge
multibacker gains.
But, Is this stock really everything that
investors think it is?
Can 88 energy really make big gains or
is 88 energy overhyped and overvalued?
In this video I will analyze 88 and give
you my honest opinion!
As always this is not financial advice
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.
First of all, Who are 88 energy?
88 energy is a junior oil and gas
company engaged in the exploration and
production of oil and gas at the alaska
north slope region.
The north slope region of alaska is home
to some of the largest oil and gas
fields in the world and is north
america's most prolific oil producing
region.
The company's goal is to build a
successful exploration and production
company that delivers material benefits
to shareholders
they have a simple strategy identify
highly prospective world-class assets
add significant value to the assets in
order to realize value for shareholders
and they aim to achieve this by
targeting overlooked or emerging play
types to capitalize on opportunities
prior to larger industry players moving in.
(comment: "Oil to $180" for a chance to win?)
88 energy operates three main projects a
193,000 acre operation at the site of
project icewine.
A 195,000 acre project at the site of
project peregrine,
and as we can see here from the north
slope oil and gas major discoveries map
both project icewine and peregrine are
located in the same region as kuparuck
(like&subscribe)
and prudhoe bay.
which was discovered in 1968 and has
produced 15 billion barrels of oil to
date
88 energy began working on project
icewine in 2015 and significantly
increased acreage up to its current 193,000
acres (Paul Thomas Investing)
Then there is the umiat oil field
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 and provides near-term
upside project longhorn attractive
production growth forecast
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
based on planned work program
giving a five-year operating cash flow
of 40 million dollars based on 80
dollars per barrel, now i'll talk more
about the impact of the price per barrel
of oil later in this video and
predictions for both the 88 energy share
price as well as oil prices in general
so stick around for that.
But 88 energy's focus remains on the
alaskan slope and significant upside
from the icewine and peregrine projects
as for the short-term catalysts
we have the drilling of merlin 2 and q1
and the potential of the icewine acreage
and active consideration of new venture
opportunities for portfolio expansion to
create additional opportunities for
shareholders
first let's look at the latest news
today 88 energy have just announced 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
icewine 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 it of 88
energy's isoline 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
but this is not the only news coming out
of this oil stock this week
on tuesday
88 energy released a project peregrine
update in this statement it says that
the merlin two priests but operations
are on track and that the split of
merlin too well is scheduled for the
week commencing 7th of march 2022
so here are some very interesting
upcoming news to be on the lookout for
this will begin
at some point next week
as it says here the mobilization of the
arctic fox rig to the merlin to a prison
while location is now complete and
pre-spot operations are continuing and
now entering the final phase merlin 2
will initially be drilled down
2 000 foot but then to a target depth of
8 000 feet subject to results this is
anticipated to collectively take
approximately one week for the initial
drilling and drilling to total depth is
expected to take a further four weeks
including wireline logging flow testing
of merlin two will be contingent upon
the wireline results and in the
statement from Ashley Gilbert
"We are now entering the final phase of
pre-spud preparations and look forward
with excitement to the next few weeks of
drilling operations success at merlin 2
has the clear potential to be
transformational for our shareholders"
and we look forward to providing updates
as the drilling of this appraisal well
progresses.
Looking at the charts over the past year
we can see clearly the huge spike up
this energy stock had at this time last
year gaining nearly 400% in march 2021
before dropping again very quickly as 88
energy ran into some issues and caused
delays but we can see a very familiar
formation again this year with gains
being made throughout january and
february
as we have come back into oil season
looking closer we can see that the stock
price
had kind of flatlined through q4 but
once we hit january
EEENF stock took off once more from
just $0.17 on january 3rd
up to $0.04 in early february
before a huge drop here, which I will
talk about in a moment.
But, I think that we are seeing the
beginning of another upward move right
now that should continue over the next
few weeks at least and should see some
very positive price movement
however
what I feel caused or at least played a
part in this oil stocks price dropping
in february
is something that all 88 energy
investors or prospective investors need
to be aware of the share structure here
is not good
on february 9th the company announced
that it had successfully completed a
placement to raise 32 million dollars
through the issuance of 914 million
shares at a price of 3.5 cents
australian 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 is nearly 1 billion shares
being added to the share structure of
this company
which according to the 88 energy website
already has 14.8 billion shares
now to put this into perspective for
anyone who is thinking that 88 energy
can achieve a one dollar share price or
even a 50 cent share price
which is one that I see a lot of
comments saying is a realistic price
target
one dollar would put 88 energy at a near
15 billion dollar market cap which would
put 88 energy into the top 50 list of
biggest oil stocks in the world
even at 50 cents
this would put 88 energy onto the top
100 list at a at about 75th on the list
now I know that a lot of you watching
this don't want to hear that I think
that this is unrealistic for a junior
oil stock like 88 energy but I have to
be honest with you
a lot of investors see the share price
and think wow this is so cheap at less
than four cents but in reality the
market cap is already pretty high and I
will look at the financial statements in
just a moment to see what I mean
but first if you like this type of
honest analysis where I try to give you
a fair look at the company then please
smash the thumbs up button and help me
grow this channel!
and if you want to support my work check
out my patreon where I give honest
opinions on stocks not just rocket
emojis and claims that stocks are going
to the moon.
now back to 88 energy
looking at the recent cash flow
statement from the company up to the
31st of december we can see that they
have used 5.6 million and 17 million
dollars in cash throughout 2021
but boosted their financials
significantly with an equity offering
meaning that at the end of 2021 the
company had total cash of 32 million
dollars to get a better look overall
let's go back to the bi-annual financial
statements
where we can see that prior to this 88
energy had total assets of 117 million
and total liabilities of just 22 million
dollars
giving 88 energy an asset to liability
ratio of 5.5 to 1 so this is a very
healthy balance sheet and total equity
of 94 million dollars
but remember that the current market cap
of 88 energy is 506 million dollars
right now
so how high do you think that 88 energy
can realistically go
an article published today says that oil
prices are climbing and the cost of a
barrel could reach 185
as of today the cost per barrel has
reached 115 dollars the highest price in
nearly a decade but that could mean that
it could go up by a further 50 percent
drop a comment and let me know what you
think of this
remember to show your support for the
channel and hit the like button and if
you're new consider subscribing and i'll
catch you in the next update