88 Energy Reports Half-Year Loss of $32.8M, Focuses on Alaska Exploration
Why we think this is bad
The half-year results paint a challenging picture for 88 Energy. The company reported a substantial loss of $32.8 million, with no revenue to offset this. The negative operating cash flow and significant cash burn are major red flags. While the company is making strategic moves by divesting non-core assets and focusing on high-impact exploration in Alaska, this approach carries high execution and funding risks. The lack of near-term revenue prospects and the speculative nature of oil exploration in frontier areas like Alaska and Namibia add to the overall negative outlook. The company's small market cap and share price near 52-week lows suggest market skepticism about its prospects. Without a clear path to profitability or significant discoveries, it's difficult to see a positive short-term catalyst for the share price.
Key Points
- Half-year loss of $32.8 million
- Negative operating cash flow of $3.4 million
- Cash balance of $7.2 million
- Divestment of Project Longhorn in Texas
- Focus on Alaska exploration with Project Phoenix and Project Leonis
- Farm-out agreement for Project Phoenix with Burgundy Xploration
- Planning underway for Tiri-1 exploration well in Project Leonis
- 20% non-operated interest in PEL 93, Namibia
- Strategic shift to high-impact exploration opportunities
- High execution and funding risks for future operations
Summary
88 Energy's half-year report reveals a loss of $32.8 million and negative operating cash flow of $3.4 million. The company is divesting its Project Longhorn in Texas to focus on high-impact exploration opportunities in Alaska and Namibia. Key projects include Project Phoenix, with a farm-out agreement in place, and Project Leonis, where planning for the Tiri-1 exploration well is underway. The company's cash position stands at $7.2 million, but with significant cash burn, funding for future operations remains a concern. Despite strategic repositioning, the company faces high execution and funding risks in its exploration-focused business model.