Most ASX-listed energy shares are having a rough trot today after oil prices slumped overnight. However, 88 Energy Ltd (ASX: 88E) is one energy company that is firmly in the green.
The oil and gas exploration company is currently fetching 1.6 cents per share, up 6.67% from its previous close.
The notable move upward follows a production update from 88 Energy regarding Project Longhorn.
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From ASX exploration energy share to producer
After a relatively disastrous start to the year, 88 Energy shares are experiencing a bounceback on Tuesday. The latest production update appears to have given investors something to get excited about once again.
In its update, the company has provided the first glimpse into the acquisition of Texas oil and gas assets in the Permian Basin — Project Longhorn. Notably, the deal struck in February for US$9.7 million has officially turned 88 Energy into a producer.
Specifically, Longhorn has surpassed 400 barrels of oil equivalent (BOE) per day gross at the end of March. Moreover, this milestone production metric represents more than a 30% increase in production since the small-cap ASX energy share took over the oil and gas assets.
Highlighting the impact of this, the company stated:
The production increase provides additional direct exposure to the higher WTI oil price environment and accelerates payback on both the acquisition of the assets and the capital investment in the work-overs.
Project Longhorn has exceptionally low operating costs (lifting costs), which provides high margins from production.
Lastly, investors are likely salivating at the proposition of 88 Energy deriving revenue from operations. Today, the company stated it received its first payout from Project Longhorn, which came to $0.6 million. This was net of operational and capital expenditure, as well as splitting with co-owner Lonestar I LLC.
How has 88 Energy performed lately?
Prior to March, shares in this ASX-listed energy company were performing remarkably well. In fact, 88 Energy had returned around 400% in a one-year timeframe. However, news of an oil no-show in its target zone of the Merlin-2 well sent shares spiralling downwards on 30 March.
Now, ASX-listed 88 Energy is down 36% compared to this time a year ago.
