Empyrean Energy discuss Major Reserves & Resource Upgrade Marathon Oil

PUBLISHED: 21 May 2014 @ 06:10 | Comments (1) |

MAJOR UPGRADE TO SUGARLOAF AMI RESERVES AND RESOURCES

· Proven Reserves (1P) up 54% to 3.54 MMboe
· Probable Reserves up 43% to 2.98 MMboe
· Proven plus Probable Reserves (2P) up 48% to 6.52 MMboe
· Proven plus Probable plus Possible Reserves (3P) of 8.92 MMboe
· New 2C Contingent Resources of 3.87 MMboe – extensive Austin Chalk potential reflected in this category
o Subject to the success of further appraisal (see RNS dated 12.02.14), Marathon plans to co-develop Austin Chalk with potential for approximately 260 wells based on 60 acre spacing and more if 40 acre spacing proves optimal for Austin Chalk wells
· 2P Reserves plus 2C Resources of 10.39 MMboe
· NPV (10) of 1P Reserves valued in report at approximately US$52.9 million
. NPV (10) of 2P Reserves valued in report at approximately US$97.0 million
· NPV (10) of 3P Reserves valued at in report approximately US$139.5 million
· 128 wells in production at the Project with Marathon currently targeting to drill approximately 100 gross wells during 2014 – estimated to require more than 500 wells, based on 40 acre spacing, to fully develop the Eagle Ford Shale
· Greater than 90% of revenue coming from liquids production

Empyrean, the profitable US onshore oil, gas and condensate exploration, development and production company with assets in Texas and California, is pleased to announce a significant increase in its Reserves and Resources at its flagship Sugarloaf AMI asset in the liquids rich core of the Eagle Ford Shale in Texas, USA, following the receipt of an independent appraisal and report prepared by DeGolyer & MacNaughton.

The Project, in which Empyrean has a 3% working interest, is operated by Marathon Oil Company, a subsidiary of US major Marathon Oil Corporation (NYSE:MRO). The figures below represent the Barrels of Oil Equivalent Reserves and Resources attributable to Empyrean’s WI in the Project.

Empyrean CEO Tom Kelly said, “This outstanding reserve upgrade gives further evidence of the current attributable value at our flagship Sugarloaf AMI Project as well as its excellent long term potential. The upgraded Reserves have come on the back of success from optimisation initiatives such as well down spacing, pad drilling, new improved fraccing techniques, reduced drilling and completion cycle times and recovery from recent wells outperforming earlier wells.”

“The Reserves are predominantly comprised of Eagle Ford Shale locations with the bulk of the Austin Chalk potential currently reflected as a 2C Contingent Resource. However, as previously disclosed, Marathon plans to co-develop the Austin Chalk formation with the Eagle Ford Shale, subject to further successful appraisal. Approximately 260 Austin Chalk well locations have been identified based on 60 acre spacing with 40 acre spacing already successful for the Eagle Ford Shale and now being trialled by Marathon for the Austin Chalk. The early Austin Chalk wells are performing very similarly to the Eagle Ford Shale wells and this Contingent Resource provides excellent short term upside to convert directly to Proven and Probable Reserves as further appraisal wells are currently being drilled and scheduled.”

“The Net Present Value calculations further confirm the Board’s observations that the Sugarloaf AMI is an excellent high value asset that is demonstrably in demand given recent transactions both within the greater field and the Sugarloaf AMI acreage itself.”

The independent report by DeGolyer & MacNaughton reflects the future development potential of the Eagle Ford shale play and the Austin Chalk play, based on provisional development plan assumptions. Evaluation of the future development potential of the Eagle Ford is based on the Operator’s advice of 40-acre well spacing, with more than 500 well locations, while the Austin Chalk is based on 60-acre well spacing and over 260 well locations. Empyrean’s Reserves estimate reflects 100% of potential Eagle Ford well locations and 6% of potential Austin Chalk well locations. The remaining 94% of potential Austin Chalk well locations are captured in the Company’s 2C Contingent Resources.

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