Burgundy to Fund Up to US$39M for 88 Energy’s Project Phoenix Horizontal Well

Farmout Agreement Unlocks Critical Funding

88 Energy Limited (ASX:88E) has announced a significant milestone in the development of its Project Phoenix asset on Alaska’s North Slope. The company has entered into binding terms for a Farmout Participation Agreement (PA) with Burgundy Xploration LLC, a Texas-based private oil and gas firm. Burgundy will fully fund up to US$39 million (approximately A$60 million) of Project Phoenix’s future work program costs, including the drilling of a horizontal well and an extended flow test planned for the first half of calendar year 2026.

This funding arrangement provides 88 Energy with a full carry on all costs associated with the upcoming horizontal well program, effectively de-risking the project’s near-term development phase and paving a clear path toward a final investment decision.

Two-Phase Farm-In Structure and Working Interest Changes

The farmout is structured in two phases. In Phase 1, Burgundy will fund US$29 million (approx. A$45 million) covering the 2025-26 work program, which includes lease costs, drilling, and production testing. Upon completion, Burgundy’s working interest (WI) in Project Phoenix will increase from 25% to 65%, while 88 Energy’s WI will reduce from 75% to 35%. Phase 2 is contingent on Phase 1 success and involves Burgundy funding up to an additional US$10 million (approx. A$15 million) for further drilling or capital expenditure, potentially increasing Burgundy’s WI to 75% and reducing 88 Energy’s to 25%. Notably, 88 Energy retains an option to limit the Phase 2 carry and maintain a 30% WI.

Strategic Implications and Operational Transition

With Burgundy assuming operatorship upon completion of the PA, 88 Energy can concentrate its resources on advancing and de-risking its Project Leonis asset. Managing Director Ashley Gilbert highlighted the significance of the agreement, emphasizing that the farmout validates the value created by 88 Energy since 2022 and confirms the broader potential of the Alaskan North Slope acreage.

The deal also reflects a roughly 50% uplift on 88 Energy’s invested capital in Project Phoenix since mid-2022, underscoring the asset’s growing economic potential. The upcoming horizontal well, planned for mid-2026, will target the SMD-B reservoir and is expected to undergo an approximately 90-day flow test, critical for proving commercial viability.

Risks and Next Steps

The agreement remains subject to customary conditions precedent, including Burgundy successfully securing the necessary capital by the end of 2025. Burgundy has already invested over US$26 million in Project Phoenix and is expanding its management team to support the project’s advancement.

88 Energy will collaborate closely with Burgundy and service providers such as Fairweather LLC to ensure smooth operational planning, permitting, and execution of the horizontal well and flowback program. The company also plans to integrate recent technical work by ResFrac to optimize stimulation and flowback strategies.

Overall, this farmout deal represents a pivotal step in advancing Project Phoenix from exploration toward production, while allowing 88 Energy to sharpen its focus on other strategic assets.