88 Energy Ltd (AIM:88E, ASX:88E, OTC:EEENF) said production from its Longhorn assets in the Permian Basin in Texas has been higher than anticipated since their acquisition in February.
Output in March averaged over 400 barrels a day at 70% oil, or around 30% higher than anticipated at the time of the acquisition.
88, which has a 73% average net working interest in the project, added it had now received AS$0.6mln (£340,000) net from Longhorn, its first payment.
A workover by Lonestar, the operator, immediately boosted oil and gas production rates, said the statement.
Longhorn has exceptionally low operating/lifting costs, 88 added, which generates high margins, especially now following the recent surge in the price of crude oil and gas.
Further work during the year is expected double production with a break-even target of US$21-US$28 per barrel compared to a West Texas spot price currently of US$98.
Ashley Gilbert, 88’s chief executive, said he was pleased by the performance so far, especially in the high oil price environment.
“We are also highly encouraged by the successful delivery by the operator of the first planned workover, as well as the continued progress of the agreed capital development program for 2022.
"This program is expected to result in strong cash flow outcomes and further direct exposure to the current high energy prices."
The junior is best known for its exploration of Alaska’s North Slope but there was no further update on that development with today’s statement.
Last week, 88 said it was reviewing the results of the disappointing Merlin-2 well with an independent resource update due this quarter.