88E might have some dazzling blue sky numbers, but Wall says the important thing is to focus on the sweet spots within the company's 276,000 acres under joint venture with Burgundy Xploration.

"The market might be wanting to see a big number, but we don't want a big, arm-waving exercise about billions of barrels. We want numbers that we can justify with the support of our data," Wall said.

The DeGolyer & MacNaughton review has not only increased the resource estimate for the unproven HRZ, but improved both the probability of geologic chance of success from 40% to 60%, and increased the estimated productive acres to 42% of the existing licence.

88E's own internal numbers, based on the experience with the Eagle Ford Shale suggest the HRZ may be productive on over 70% of the leases, giving it potential to host 3.6Bbboe.

In the mean case, the independent review suggests 88E is sitting on a net 763.1MMbbl across both the wet gas/condensate window and volatile oil window, which could increase to as much as 2Bbbl based on the JV numbers.

Support

The numbers are big, and more than support further work, with 88E now looking for the sweet spots where the chance of cracking the commercial code is the best.

Drilling the Icewine-1 well last year went almost exactly as expected: on budget and close to schedule - and in the weeks since the data collected from the well suggests what 88E and Burgundy, hoped to see: the HRZ shale sits in the volatile oil-gas window and has all the hallmarks of a rival to the best plays the Permian Basin or the Eagle Ford Shale in Texas have to offer.

It remains early days, but Wall says it can now rule a line under the first phase of Project Icewine, having proven its assumptions about the HRZ shale, and derisking the play to a point where a fracced horizontal well can be justified.

"During the drilling we saw condensate in the gas and heavy hydrocarbons, which meant we were getting into the thermal maturity zone that we predicted, where the gas and oil-condensate are in the right ratio so they are more viscous and can flow through the rock easier," Wall told Energy news.

"We were also looking for areas where there were more valuable liquids in the rocks. That was the secret to the Eagle Ford shale, and that looks like what we have found here.

"Those were big boxes we thought we could tick while drilling, but it was only when we were able to run pyrolysis and vitrinite reflectance that we could say for certain that it has all been bang on what Paul Basinski predicted, and it is uncanny how close he got."

Basinski was initially one of the early evangelists for drilling the liquids-rich Eagle Ford Shale in Texas, behind some of the earliest wells, and he has identified the North Slope in Alaska as being an area with similar potential.

Drilling the HRZ shale for the first time confirmed the high porosity that had been expected based on previous wells, and but it also derisked the permeability with proof of matrix permeability.

Of 18 core samples tested two were too high to measure and the rest of the samples at least five times better than the company's minimum economic cut-off, suggesting there are porosity "super highway" zones in the area.

Wall said the volatile oil vapour phase has higher liquids content than forecast, and there is both bottom seal and over-pressuring.

With oil-condensate permeability and porosity, all of the proposed play's Achilles heels have been removed, the work now is about finding sweet spots, proving them and then establishing a frac and completion method that works.

Rocks

88E and its partner now understand that the rock properties appear to be similar to the Marcellus and Haynesville shales.

There are clays, and the rocks are at the softer end of the spectrum, but they should be brittle and highly amenable to fracture stimulation operations.

The Marcellus and Haynesville shale plays are successful plays in their own right, achieving flow rates over 30 million cubic feet of gas per day with comparatively low decline rates, largely due to excellent permeability, which is encouraging for the Icewine area, especially in the context of the thermal maturity difference, which indicates 70% liquid hydrocarbon saturation as opposed to the more gas prone Marcellus and Haynesville shale plays.

Wall said the HRZ appears to be a new kind of hybrid resource that appears to have numerous similarities to reservoirs known as low-contrast low-resistivity plays, which are characterised by production metrics and performance more commonly associated with conventional resources.

"At the moment we are integrating the core data with the log data, and trying to calibrate the logs for the actual data from the core," Wall explained.

Next well

In anticipation of yesterday's results, 88E has been starting planning for the Icewine-2H horizontal well which will also target the HRZ shale, ideally early in 2017.

It will probably be drilled from the same all-weather pad as the first well, and will almost certainly require a farm-in partner, which given the independent numbers should be easy to find, even in the current economic environment.

"We are in the early stages of resuming farm-out discussions with people, and that will really pick up (now)," Wall explained.

88E is also shooting some 2D additional seismic, funded by Bank of America, with a security over the credits offered from the state of Alaska's rebates for exploration.

The state has the Trans-Alaska Pipeline that is running about 500,000bopd, and it needs to keep it above 300,000bopd to avoid issues, so it is pumping money into backing exploration.

The data will focus on the Franklin Bluff pad, to ensure there is no localised faulting, and it will also cover the acreage to the west of the river that bisects the leases to help define the HRZ across the acreage and the presence of any large conventional targets.

Icewine-1 intersected "great reservoir, good oil saturations outside of closure", in an area without seismic coverage, suggesting there is also conventional prospectivity.

"All the ingredients are there, and if we can find a trap that will be promising, because Alaska has a lot of oil, and in the past the majors had an oligopoly and they were looking for another Prudhoe Bay or Kuparuk, and you don't need one billion barrel discoveries - even though Repsol has probably made one with their discovery on the North Slope, which is the biggest discovery in 40 years," Wall said.

"We would probably be looking for conventional targets in the 50-200MMbbl range."

The company would prefer to farm out the conventional targets separately, to allow it to keep its unconventional upside, with the HRZ remaining the focus.

"We don't want to give away too much of the unconventional just to drill the conventional, which we haven't even quantified yet, and we are not in a price-making environment, on the other hand we have 10 years on these leases, and we don't to be price-takers," Wall said.

Any farm-outs would probably be phased, starting with an initial unconventional 1-2 wells.

Acreage

Wall said that 88E believes it has sewn up a reasonable acreage package so far.

Lease sales are held each November, which is why the junior pounced on the opportunity to expand its holdings in what Wall called "a reasonably ballsy move".

"We knew we needed to do that, because as a public company the data from our well will be out there and we could be bidding against much bigger companies, even if it keeps secret where it believes the sweet spots are," he said.

"We put down 20% as a non-refundable deposit," he said.

"It was risk assuming we would have success, and fortunately I think we have had enough success to justify the decision."

The company will need to raise money to secure those leases, and it has a funding gap of $US5 million that the company needs to pay mid-year, which is not covered by its existing cash balance.

"In the grand scheme of thing it is a pretty small number based on the potential of what we believe we have and I think there will be a lot of interest," Wall said.