Highlights

• Acquisition of further non-operated working interest (WI) in leases and wells with conventional onshore production and in development assets within the Permian Basin of Texas, U.S.
• Average net working interest acquired by 88 Energy of approximately 45% based on 88E WI in 435 net acres.
• New acreage is located approximate 4 miles south of existing Project Longhorn production assets.
• 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$1.5M (net to 88E US$1.1M) to be paid in cash by 88 Energy and the JV partner Lonestar I, LLC (the Operator).
• Attractive low-cost entry of ~US$1.00 per BOE across net 2P reserves of 1.1MMBOE.
• Additional upside potential identified in multiple zones and classified as Possible Reserves (0.3 MMBOE1,2), along with Contingent and Prospective Resources which are yet to be quantified.
• Operator targeting 2 new production wells in 2H 2023 expected to increase production to 160-200 BOE gross per day (~75% oil). Limited existing production of approx. 12 BOE per day gross (~75% oil) across 8 historical and depleted wells).
• Complements the further 2 work-overs planned in 2H 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 (~75% oil) by year end 2023.

88 Energy announces the execution of binding agreements for the acquisition of a new non-operated working interest (averaging ~45% net to 88 Energy) in leases and wells with conventional onshore production and in development assets within the Permian Basin of Texas, U.S.

The new oil and gas production and development assets will form an expansion of the existing Project Longhorn acreage and are located approximately 4 miles to the south. The newly acquired acreage is estimated to contain independently certified net 2P reserves of 1.1 MMBOE.

Importantly, all proposed well locations have been classified as low risk, accessing Proven reserves totalling 0.97 MMBOE1,2, given the production histories from existing wells on the newly acquired leases as well as adjacent leases. Additionally, these wells should intersect multiple potentially oil-bearing intervals which have been successfully developed in the vicinity of Project Longhorn. Consequently, upside has been identified and classified as Contingent or Prospective Resources and will be quantified in due course.

The purchase price for the acquisition is US$1.5 million (net to 88E US$1.1 million) to be to be paid in cash by 88 Energy and Lonestar I, LLC.

Project Longhorn: Existing and New Acreage – conventional onshore oil & gas in Texas

The existing and newly acquired Project Longhorn assets are in the attractive Permian Basin; they cover approximately 1,399 net acres (of which 435 acres relates to the newly acquired leases). The combined portfolio of assets consists of 14 leases 5 newly acquired leases) with 40 producing wells (8 within the newly acquired leases) and associated infrastructure. Lonestar I, LLC will have a working interest in the assets, and through an affiliate will continue as Operator for the existing and new leases and wells, with the remaining working interests retained by existing Joint Venture partners.

The existing production wells in the newly acquired acreage have been in operation for several years. Production from the new Project Longhorn leases in FY2022 totalled approximately 5,000 BOE, which had an immaterial estimated attributable net profit/loss before tax for the project (unaudited). Current average production is approximately 12 BOE per day (88 Energy’s net working interest: ~10 BOE per day), of which approximately 75% is oil.

As part of the acquisition, 88 Energy has agreed to a low-cost 2 well work program for 2H CY2023 (on leases in which Longhorn has a ~75% working interest). These initiatives are expected to deliver initial production rates of approximately 160-200 BOE per day gross (~75% oil).

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