Just as we recommended our members to Buy before the surge, we also recommended our members to Sell on prior to the long weekend at a price of 76 cents a share. Today, 88 Energy shares tumbled 67% as the 88 Energy announced that they faced operational challenges that prevented them from obtaining hydrocarbon samples.
In case you missed why 88 Energy surged a week ago, you can read our earlier piece by clicking here.
Following on from the drilling that was taking place and the widespread high expectations among investors and traders, 88 Energy was to take samples from the different zones to determine how lucrative the discovery is. Initial observations indicated the presence of an oil signature in the fluid using an optical fingerprint sensor in the downhole sampling tool. However, slugging of hydrocarbon and water then occurred, which is often a precursor to hydrocarbon flow from the reservoir.
More bad news followed, as a power outage due to equipment failure necessitated pulling out of the hole for repairs prior to any sample being obtained. After repairs were completed, the run back in hole encountered several sticky sections, indicating poor hole condition so a clean out run was undertaken. Re-entry with the sampling tool was then executed to move to the lowest zone for testing but good communication was not able to be re-established with the reservoir despite observation of a similar hydrocarbon signature on the optical fingerprint sensor.
The two most prospective zones cannot be sampled at this moment in time and analysis of sidewall cores and potentially further drilling may be required for confirmation. Several samples were taken in zones interpreted to be less prospective on the way out of the hole, all of which contained low saturations of hydrocarbons, which will now be sent to a laboratory for testing.
88E mentioned that It is now too late in the season to initiate flow testing operations and the forward program will consist of plugging the well. The well may be re-entered in the future, if warranted, in order to drill a side track and conduct a flow test. This announcement has resulted in a huge sell-off and the plunge may continue.
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