LONDON,UK: 88 Energy Limited, an oil and gas exploration and development company with operations in Alaska and Texas, has announced the acquisition of a new non-operated working interest in leases and wells with conventional onshore production and in development assets within the Permian Basin of Texas, U.S.
The deal, which was executed through binding agreements with undisclosed sellers, involves an average net working interest of approximately 45% based on 88 Energy’s interest in 435 net acres. The new acreage is located about four miles south of the company’s existing Project Longhorn production assets.
The operator of the Project Longhorn assets, Lonestar I, LLC, will also acquire a working interest in the new assets and will operate the new field through an affiliate, with the remaining interests retained by existing joint venture partners.
The purchase price of US$1.5 million (net to 88 Energy US$1.1 million) will be paid in cash by 88 Energy and Lonestar I, LLC.
The acquisition is expected to add net proven and probable (2P) reserves of 1.1 million barrels of oil equivalent (MMBOE) to 88 Energy’s portfolio, at an attractive low-cost entry of about US$1.00 per barrel of oil equivalent (BOE). The company also sees additional upside potential in multiple zones classified as possible reserves (0.3 MMBOE), along with contingent and prospective resources which are yet to be quantified.
The operator is targeting two new production wells in the second half of 2023, expected to increase production to 160-200 BOE gross per day (about 75% oil). The new assets have limited existing production of about 12 BOE per day gross (about 75% oil) across eight historical and depleted wells.
The acquisition complements the further two work-overs planned in the second half of 2023 on the existing Longhorn acreage.
Upon successful completion of the new wells and work-overs across all its Texan acreage, together with the existing producing wells, 88 Energy expects Project Longhorn total gross production to reach approximately 500 BOE per day (about 75% oil) by year end 2023.
Dave Wall, Managing Director of 88 Energy, commented: “We are very pleased to announce this acquisition, which expands our footprint in the Permian Basin and adds low-cost reserves and production to our portfolio. The deal is consistent with our strategy of pursuing opportunities that offer near-term cash flow and significant upside potential. We look forward to working with our joint venture partners and the operator to develop these assets and deliver value for our shareholders.”
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