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Q3 2014 Production and Operational Update
Empyrean Energy, the profitable US onshore oil, gas and condensate exploration, development and production company with assets in Texas and California, has provided the following production and operations update on its flagship Sugarloaf AMI in the prolific Eagle Ford Shale, Texas. This update is in respect of the three month period to the end of September 2014 and has been updated with figures taken since the end of the Quarter, where available.
Empyrean has a 3% working interest in the Project, which is operated by Marathon Oil Company, a subsidiary of US major Marathon Oil Corporation (NYSE:MRO)
Highlights:
· 154 gross producing wells at the end of the Quarter, an increase of 26 wells since the end of June 2014
o 175 gross producing wells (8 Austin Chalk) as at 18 November 2014
· 8 wells currently being drilled (4 Austin Chalk) and 22 wells undergoing completion operations (7 Austin Chalk)
· The first ‘stack and frac’ pilot programme has commenced
o Initiative is designed to drive recovery and optimise co-development of multiple horizons
o Stack and frac pilot will target Austin Chalk, Upper Eagle Ford Shale and two Lower Eagle Ford Shale layers
· Production data will be reported on receipt of complete and final Q3 2014 revenue remittance advice from the Operator
Empyrean CEO, Tom Kelly said, “We continue to benefit significantly from Marathon’s rapid and highly-efficient drilling programme. Having previously reported successful results from Marathon’s Austin Chalk initiative, we are pleased to see further wells drilled and being completed from this formation, which we expect will result in the conversion of the reported 2C Contingent Resources for the Austin Chalk formation 3.87 million barrels of oil equivalent into 2P reserves in due course. With the current drilling schedule and completions inventory and the ‘stack and frac’ pilot programme having now commenced, there is plenty of near-term activity and potential reserve upside available at this exciting asset and we look forward to reporting on our progress.”
Operations:
At the end of the Quarter, Empyrean had 154 gross wells that were producing at Sugarloaf, an increase of 26 wells since the end of June 2014. Currently, there are 8 wells being drilled (including 4 Austin Chalk wells) and a further 22 wells undergoing or awaiting completion operations (including 7 Austin Chalk wells).
The Sugarloaf AMI partners have been offered the opportunity to participate in their proportionate share of further leases acquired by the Operator. Marathon has acquired 18.55 net acres and Empyrean has elected to participate in its proportionate share (0.5565 acres) of the acquired leases. No assignment of lease documents have yet been executed or recorded and Empyrean will report further on these lease acquisitions after the assignments have been executed and recorded.
Production:
In line with the Company’s previous guidance, production data and associated revenues will be reported on the basis of the revenue remittance advice received rather than wellhead production data. Complete and final advice in respect of the Quarter has yet to be received from the operator and will be announced to the market in due course and as soon as reasonably practicable.
Corporate:
The Company is also pleased to report that it completed its scheduled repayment of an amount totalling US$1.5 million on its debt facility with Macquarie Bank Limited. After the payment, the resulting balance outstanding on the facility was US$7.67 million. The Company expects that further drawdowns under the facility will be necessary for the further development of the Project.
