After having been in consolidation mode for some time, the 88 Energy stock has sprung back to life this week and this morning the stock has continued to record strong gains. The oil and gas company has gone up by 30% so far this morning and perhaps it is now time for investors to take a closer look at 88 Energy (OTCMKTS:EEENF).

Yesterday, it emerged that the company had reached an agreement to sell its tax credits in a transaction worth as much as $18.7 million. It may not seem like a large amount for many companies but for 88 Energy it is a substantial amount.

The company is going to use the proceeds from this sale for paying off its debts that amount to $16.1 million at this point in time. The rest of the $2.6 million is going to be retained by the company and help in boosting its cash reserves. Considering the fact that the latest transaction is going to help 88 Energy in strengthening its balance sheet considerably, many investors seem to be quite optimistic about the company’s prospects going forward.

 The strengthening of the cash position is also an important development. In recent times, many investors had started worrying about the financial situation at the company.

In addition to paying off its debts and strengthening its cash position, this move is also going to save the company as much as $1 million in the form of associated finance costs. The figures may not be big but it is necessary for investors to keep in mind that the 88 Energy commands a market cap of only $265 million and hence these amounts are substantial.

Leverage can affect different companies in different ways; however, for 88 Energy the lowering of leverage to such a degree has caused considerable optimism among investors. It remains to be seen if the stock can maintain its momentum or not.