Crude oil prices remain elevated – thanks in no small part to OPEC+ deciding that they really want oil prices above the US$80 per barrel mark and slicing their daily output by 1.16 million barrels in order to make this dream come true.

The benchmark Brent crude was last night trading at US$84.26/bbl despite some concerns that China’s falling iron ore imports could be indicative of lower industrial demand (and accompanying drop in energy demand).

Higher oil prices, which will start filtering down to the pumps before long, are likely to drive corresponding increases to the prices of other energy commodities such as coal and gas.

With this background of higher energy prices, here are three ASX juniors with ongoing oil and gas drilling (or drilling that will begin in the near-term) that have the potential to deliver major payoffs.

Oil and gas results incoming

88 Energy (ASX:88E) has been carrying out oil and gas exploration at Alaska’s North Slope with a number of discoveries under its belt.

However, while the Charlie-1 discovery in 2020 was ranked as a condensate discovery with excellent oil saturations, the reservoir proved to be relatively tight and no flow testing – an essential step to determine how productive an oil or gas reservoir can be – was carried out.

Now while this wasn’t unexpected at this location – nothing that fracture stimulation can’t solve – it did put a damper on any excitement surrounding the find.

The company has recognised this and has identified a location where the reservoir quality of the target Seabee Formation is interpreted to be significantly better.

Interesting for future exploration, but what is really keeping eyes on 88 Energy is the current Hickory-1 exploration well at its Project Phoenix, which has intersected all primary and secondary reservoir targets at slightly higher than prognosed depths and with gross reservoir thicknesses equal or greater than pre-drill interpretation.

Wireline data has indicated that the well has intersected a total of 450 feet of net pay over all pay zones with average porosity ranging from 9% to 12%, well in the range seen in commercial reservoirs.

There’s also an element of nearology in plan here with wells drilled by Pantheon Resources on the adjacent northern acreage all flowing light, sweet oil from similar target sandstones.

No surprise then that 88 Energy is moving to case and suspend the well in preparation for flow testing as early as possible in the 2023-24 winter season.

This will follow a detailed evaluation of all data obtained from the Hickory-1 drilling and wireline logging program to plan the optimal flow test program.

There’s still some time before the company flow tests the well, but there are promising signs that it might be the smoking gun that it has been looking for.

 

Meanwhile, Queensland-focused Omega Oil & Gas (ASX:OMA) is understandably keen to complete and test its Canyon-2 well in the Bowen Basin after intersecting 293m of gas and liquid hydrocarbon shows.

This provides a great deal of confidence that the independently assessed Prospective Resource of 3 trillion cubic feet of gas and 233 million barrels of associated liquids could be assigned to a higher confidence Contingent Resource or even a Reserve of some kind.

Further support for this arises from early indications that Canyon-2 has exceeded the company’s pre-drill expectations with a thicker than forecast gas column intersected.

While the company was always confident about intersecting gas, given that previous exploration by gas major BG managed to flow moderate amounts of gas, the results from drilling to date have served to further de-risk operations and raises the likelihood that Omega could deliver commercial gas flows.

It is now moving to suspend the well for completion before studying data from the well and using existing completion and production data from surrounding wells to inform the design of the Canyon-2 stimulation program and improve chances of success.

 

Looking a little further ahead

While both 88 Energy and Omega are both waiting to complete and flow test their respective wells, Invictus Energy (ASX:IVZ) is a little further behind the curve with its Makuyu-2 appraisal well expected to spud in the third quarter of this year.

The company already has a firm idea of what is present at its 80% owned SG 4571 licence in Zimbabwe’s Cabora Bassa Basin given that the first well – Makuyu-1 – and its sidetrack succeeded in identifying 13 potential hydrocarbon bearing zones.

Of note is the primary target Upper Angwa formation, with 11 identified potential hydrocarbon bearing zones totalling a combined 225m.

However, issues with the primary and backup wireline formation tools prevented the company from obtaining fluid samples.

Makuyu-2 will seek to prove the gas-condensate discovery and appraise the structure in an updip location on the southern flank.

The company will also attempt to obtain high quality open-hole wireline log data to enable characterisation of multiple hydrocarbon bearing intervals, obtain fluid samples to allow fluid characterisation and prove moveable hydrocarbons.

It will then suspend the well for future flow testing, which will determine well deliverability and assess reservoir connectivity.

Success will provide Invictus with a clear idea into how large the structure actually is and how well it will be able to produce.

At Stockhead we tell it like it is. While Omega Oil & Gas is a Stockhead advertiser, it did not sponsor this article.

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