Source: Proactive
88 Energy Ltd (AIM:88E, ASX:88E, OTC:EEENF) has agreed to sell its 75% non-operated working interest in Project Longhorn, a package of producing oil and gas assets in the Permian Basin, in Texas.
It is selling the package of assets to operator Lonestar I for US$3.25 million (with final consideration subject to customary working capital and completion adjustments, effective 1 July).
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Proceeds from the sale will be redeployed into core exploration programs in Alaska, including Projects Leonis and Phoenix, as well as 88 Energy’s early-stage work onshore Namibia.
88 Energy said it had opted not to participate in a new multi-well drilling program at Longhorn, and it will no longer be exposed to associated future costs (about US$2 million per well).
The decision to exit Longonhorn follows a portfolio review and reflects a strategic shift to higher-impact, exploration-led activity, the firm added.
Since acquiring its stake in 2022, 88 Energy received around US$6.1 million in cash distributions from Longhorn, which have helped fund exploration and corporate overheads.
But the next phase of development would comprise higher-cost, lower-margin new drilling designed to maintain cash flows, which does not align with the company’s capital allocation priorities.
In the deal-making itself, 88 Energy noted that it had agreed initial terms with a third party, before Lonestar exercised matching rights and has taken up its option to seize the deal. As a result, Lonestar will own 100% of the project outright.
“The divestment of our interest in Project Longhorn is consistent with our disciplined approach to capital management and focus on assets with the potential to deliver outsized returns,” said managing director Ashley Gilbert.
“This transaction further supports our efforts to accelerate progress across our exploration portfolio in Alaska and Namibia, jurisdictions that we believe offer an exceptional opportunity to generate meaningful value for our shareholders.
“We thank our Project Longhorn partners and extend our best wishes for their future drilling campaigns in the Permian Basin.”
In its 2025 half-year report, 88 Energy will recognise an impairment of around US$10 million, including undeveloped resources at Longhorn previously valued in the books (to unlock these barrels, it would in practicality have required some $18 million of future capex investment).
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Author: admin
Managing the Namibia Oil and Gas Platform