10 February 2016

Icewine #1 Core Evaluation Update - HRZ Play Further De-risked

88 Energy Limited ("88 Energy", "the Company", "Operator") (ASX, AIM: 88E) is pleased to provide the following update on the evaluation of the core over the HRZ interval from the recently drilled Icewine#1 exploration well.

Highlights

·     Matrix permeability within the cored HRZ shale exceeds expectations, several times greater than effective cutoff in all 18 core samples measured

o  2 samples displayed permeability too high to be measured using standard technique (indicating possible presence of "permeability super highways")

·     Porosity confirmed at upper end of expectations as per prognosis

Overview

Matrix permeability and porosity of the HRZ shale were measured using the Gas Research Institute (GRI) method, which involves crushing the core sample to fine grained particles thereby eliminating coring and sampling induced fractures to ensure more accurate results.

Both the permeability and porosity results are at the upper end of expectations and significantly in excess of the cutoff limits required for the HRZ shale play to be successful.

Additional corrections will be made to the porosity data integrating nano-scale porosity within the kerogen and other mineral components. It is anticipated that these corrections will increase the already high porosity values.

As previously reported, light oil and condensate was observed leaching from core material, confirming the presence of liquid hydrocarbons at the Icewine#1 location (see graphic in attached pdf). This further supports the core and geochemical analysis that the thermal maturity window at Icewine#1 is consistent with pre-drill modelling. Final thermal maturity data is expected within 7 days.

Forward Plan

Evaluation of the core is ongoing, with results expected on key variables over the coming weeks, including:

·     Final thermfal maturity

·     Rock mechanics and stress regime

Seismic planning is at and advanced stage with acquisition planned to commence in March 2016, subject to final negotiations with vendors and approval of the proposed program by Bank of America.

Managing Director of 88 Energy Limited, Dave Wall commented: "Two of the three main 'Achilles Heels', being thermal maturity and matrix permeability, have now been substantially de-risked, coming in at, or above, pre-drill expectations. This is an outstanding achievement, given the sparsity of the historical data, and a testament to the years of work done by Paul Basinski who heads up Burgundy Xploration, our JV partner.

Additional work remains, including that associated with fraccability and final thermal maturity; however, at this stage of the evaluation we could not have hoped to be in a better position.

Given our large acreage position and the huge resource potential in the HRZ shale play, additional de-risking could be transformational for 88E and its shareholders in the very near term.

The tender process for the seismic is now in its final stages and talks with Bank of America on funding have progressed such that we plan to be in a position to execute as per schedule."

Media and Investor Relations:

Project Icewine Highlights

In November 2014, the Company entered into a binding agreement with Burgundy Xploration (BEX) to acquire a significant working interest (87.5%, reducing to 78% on spud of the first well on the project) in a large acreage position on a multiple objective, liquids rich exploration opportunity onshore Alaska, North America, referred to as Project Icewine. In November 2015, the gross acreage position was expanded by 174,240 acres (to be awarded in due process by the State of Alaska).

Subject to final payment on the expanded acreage, 88 Energy will have a 272,422 gross contiguous acre position with 212,489 acres net to the Company. The Project is located on an all year operational access road with both conventional and unconventional oil potential. The primary term for the State leases is 10 years with no mandatory relinquishment and a low 16.5% royalty.

The unconventional oil play will be evaluated based on core obtained in the recently completed (December 2015) Icewine #1 exploration well.

Generous exploration incentives are provided by the State of Alaska with up to 85% of exploration expenditure in 2015 cash refundable, dropping to 75% until mid 2016 and thereafter 35%.

The  primary objective is an untested, unconventional liquids-rich shale play in a prolific source rock, the HRZ shale (Brookian Sequence), that co-sourced the largest oil field in North America; the giant Prudhoe Bay Oil Field Complex. Internal modelling and analysis indicates that Project Icewine is located in a high liquids vapour phase sweetspot analogous to those encountered in other Tier 1 shale plays e.g. the Eagle Ford, Texas.

Conventional play potential can be found at Project Icewine within the same Brookian petroleum system and shallow to the HRZ shale and includes high porosity channel and deep water turbiditic sands. The Brookian conventional play is proven on the North Slope; the USGS (2013) estimate the remaining oil potential to be 2.1 billion barrels just within the Brookian sequence. Additional conventional potential exists in the deeper Kuparuk sands and the Ivashuk Formation.

Drilling in (2012), on the adjacent acreage to the north, confirmed that the HRZ shales, along with the underlying Kingak & Shublik shales, were all within the oil window which is extremely encouraging for the unconventional potential at Project Icewine. In addition, a conventional oil discovery was reported in the Kuparuk sandstones.

A Prospective Resources Report by DeGolyer and MacNaughton, was commissioned by 88 Energy to evaluate the unconventional resource potential of Project Icewine in early December 2014 and was released to the market on 19 January 2015.

About 88 Energy: 88 Energy has a 78% working interest and operatorship in ~272,000 acres (~174,000 acres subject to formal award) onshore the prolific North Slope of Alaska ("Project Icewine"). The North Slope is the host for the 15 billion barrel Prudhoe Bay oilfield complex, the largest conventional oil pool in North America. The Company, with its Joint Venture partner Burgundy Xploration, has identified three highly prospective play types that are likely to exist on the Project Icewine acreage - two conventional and one unconventional. The large resource potential of Project Icewine was independently verified by leading international petroleum resource consultant DeGolyer and MacNaughton. In addition to the interpreted high prospectivity, the project is strategically located on a year-round operational access road and only 35 miles south of Pump Station 1 where Prudhoe Bay feeds into the TransAlaska Pipeline System. The Company plans to progress drilling and seismic acquisition in the near term to take advantage of the globally unique fiscal system in Alaska, which allows for up to 85% of CY2015 exploration expenditure to be rebated in cash.

Click on, or paste the following link into your web browser, to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/5859O_-2016-2-9.pdf