88 Energy buys another 435 acres in Texas to boost Project Longhorn production
(), a primarily Alaska-focused hydrocarbon explorer, issued an update on its Texas oil and gas portolio, acquiring further non-operated interest in leases and wells with conventional onshore production, and in development assets, within the Permian Basin of Texas.
The average net interest acquired by 88 Energy is approx. 45% based on 435 net acres. The new acreage is located approx. 4 miles south of 88 Energy's existing Project Longhorn production assets:
Project Longhorn existing and new acreage
Operator and joint venture partner Lonestar will also acquire a working interest in the new assets. It will operate the new field through an affiliate, with the remaining interests retained by existing joint venture partners. The purchase price of US$1.5m (net to 88E US$1.1m) is to be paid in cash by 88 Energy and Lonestar.
The purchase price represents an attractive entry of US$1.00 per barrel of oil equivalent (BOE) across net Proved plus Probable (2P) reserves of 1.1 million barrels of oil equivalent (MMboe). There is additional upside potential identified in multiple zones, classified as Possible Reserves of 0.3 MMboe, along with Contingent and Prospective resources which are yet to be identified.
Operator Lonestar is targeting 2 new production wells in 2H 2023, which are expected to increase production to 160-200 BOE gross per day (~75% oil). This upcoming production upside will add to existing limited production of approx. 12 BOE per day gross across 8 historical and depleted wells. The work will complement the further 2 work-overs already planned for 2H 2023 on the existing Longhorn acreage.
The 2 new wells will each cost $1.5m net to 88 Energy, to be funded primarily through forecast cash flow from existing Longhorn assets. All proposed well locations have been classified as low risk, accessing Proven reserves totalling 0.97 MMboe based on existing and historical production from the newly acquired leases as well as adjacent leases.
The existing Project Longhorn assets are currently producing c. 400 BOE (~75% oil) per day gross. Upon successful completion of the new wells and work-overs across all of its Texan acreage, together with existing producing wells, 88 Energy expects Project Longhorn total gross production to reach approximately 500 BOE per day by end of 2023.
Overall, Project Longhorn sits on well understood geology with low technical risk, promising substantial near-term upside via low-cost field development opportunities, boosted by 's newly acquired acreage.
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