Australia's 88 Energy acquires Texas oil, gas assets

Australia’s 88 Energy has acquired a further non-operated working interest (WI) in leases and wells within the Permian Basin of Texas, it announced on July 3.

The average net working interest acquired by 88 Energy is approximately 45% based on its WI in 435 net acres. The newly acquired acreage is located about four miles south of the company’s existing Project Longhorn production assets.

Lonestar I, the operator of the Project Longhorn assets, will also acquire a working interest in the new assets and will operate the new field through an affiliate. The remaining interests in the joint venture will be retained by existing partners.

The purchase price for the acquisition is $1.5mn (net to 88 Energy: $1.1mn), to be paid in cash by 88 Energy and Lonestar I. The acquisition provides an attractive low-cost entry of approximately $1/barrel of oil equivalent (boe) across net 2P reserves of 1.1mn boe, 88 Energy said.

The new acreage has additional upside potential in multiple zones, classified as possible reserves (0.3mn boe), along with contingent and prospective resources that are yet to be quantified.

The operator plans to target the drilling of two new production wells in the second half of 2023, which is expected to increase production to 160-200 boe/day gross, with approximately 75% being oil. Currently, there is limited existing production of around 12 boe/day gross across eight historical and depleted wells on the newly acquired acreage.

The acquisition complements the two work-overs planned for the existing Longhorn acreage in the second half of 2023. Upon successful completion of the new wells and work-overs across all its Texan acreage, along with the existing producing wells, 88 Energy expects Project Longhorn's total gross production to reach approximately 500 boe/day (~75% oil) by the end of 2023.