88 Energy (88E) , an Alaska-focused hydrocarbon explorer, has expanded its footprint in Texas with the acquisition of further interest in conventional onshore leases and wells in the Permian Basin.
88 Energy has acquired a 64.4% working interest in 1,262 net acres located 1/2 mile south and 1/4 mile north of its existing Project Longhorn assets, connecting the acreage position. Joint venture partner and operator Lonestar also acquired a 21.5% working interest in the new assets with the remaining interest retained by existing non-operated partners.
Joint venture Bighorn Energy paid US$0.35m in cash (US$0.26m net to 88E) for the acquisition. The JV is comprised of Longhorn Energy Investments, a wholly-owned subsidiary of 88 Energy (75% ownership) and Lonestar (25% ownership). Bighorn recently secured a US$5m line of credit to assist in cashflow management associated with development of the expanded acreage.
View from Vox
88 Energy has announced another expansion of its asset base in Texas a.k.a. Project Longhorn, with the addition of 1,262 acres in the Permian Basin. In July 2023, 88 Energy added 435 acres to its original footprint, which has now grown to 2,625 net acres.
Project Longhorn acreage
The purchase price for the new assets represents an attractive US$0.33/BOE entry based on an independently certified net 2P reserves position of 0.68 MMBOE. The acreage has 9 low-producing existing wells (~26 BOE/day gross) and 10 development opportunities, with potential identified in multiple zones and classified as Gross Undeveloped 2P Reserves (1.2 MMBOE), along with Contingent and Prospective Resources, which are yet to be quantified.
Within the expanded acreage, Bighorn Energy (75%-owned by 88E and 25%-owned by Lonestar) has decided to target lower-cost workovers ahead of new drills. To this end, Bighorn has approved 5 workovers to be completed in 1H 2024, which are expected to increase production to 180-220 BOE/day gross (~75% oil). Once these workovers are completed, Bighorn will consider for approval 2 new production wells as previously announced in 2H 2024, which are expected to increase production by an additional 160-200 BOE/day gross (~75% oil).
In total, Longhorn assets in November produced ~370 BOE/day gross (~61% oil), and upon successful completion of the 2024 work programme, 88 Energy anticipates Longhorn total gross production to reach approximately 600-675 BOE/day (~75% oil) by year-end 2024.
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