88 Energy has announced the purchase of a 73% average net working interest in Longhorn oil and gas assets in the Permian Basin, onshore Texas, US.

The Longhorn project consists of established conventional oil and gas production assets with a net 2P reserves of 2.1 million barrels of oil equivalent (MMBOE).

With more than 1,300 net acres, the project includes nine leases with 32 producing wells and associated infrastructure.

Lonestar l, a privately held oil and gas production company located in Texas, will hold a 24% net working stake in the assets and continue as a operator through an affiliate. The remaining interests will be held by existing joint venture partners.

The transaction is valued $9.7m, including $7.2m cash and $2.5m in 88 Energy shares

With current gross production of around 300 barrels of oil equivalent per day (boed), the acquired assets are said to provide immediate cash flow to 88 Energy.

The acquisition marks 88 Energy’s first move into producing oil and gas assets.

88 Energy managing director and CEO Ashley Gilbert said: “While our core focus remains exploration of our world-class Alaskan North Slope acreage, the acquisition of Project Longhorn provides 88 Energy with immediate cash flow and direct exposure to any further strengthening in energy prices.

“It also delivers optionality for incremental, low-capital, rapid payback reinvestment in the region.”

According to 88 Energy, Project Longhorn, which contains well understood geology with low technical risk, is expected to offer near-term upside through low-cost field development opportunities.

Miro Capital served as financial advisor to 88 Energy in connection with the transaction, while Freeman Mills PC was its legal advisor.

Last month, the Australian company agreed to acquire the Umiat oil field located in North Slope Borough, Alaska, US, from Malamute Energy, and Renaissance Umiat.