TIDMEME
RNS Number : 6929I
Empyrean Energy PLC
21 June 2017
This announcement contains inside information
Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil &
Gas
21 June 2017
Empyrean Energy PLC ("Empyrean" or the "Company")
Increased interest in Multi Project Farm-In in Sacramento Basin,
California
-- Empyrean reaches agreement to increase its interest in the
Sacramento Basin package of projects on the following basis:
o Increase from 25% to 30% of Dempsey Prospect, targeting 1 Tcf
conventional gas, to be drilled Q3 2017
o Increase from 10% to 25% of Alvares Appraisal Prospect,
targeting 2 Tcf gas
o Increase from 25% to 30% of Dempsey Trend AMI, including at
least three large Dempsey style follow up prospects
-- The increased interest being acquired is fully funded through
the drilling of the Dempsey-1 Well
Empyrean is pleased to announce that it has entered into a new
agreement with Sacgasco Limited (ASX: SGC) ("Sacgasco"), to
increase Empyrean's interest in the package of gas projects in the
Sacramento Basin, onshore California (the "Farm-In"), previously
announced on 15 May 2017 and amended on 16 June 2017. Empyrean will
use part of the placing proceeds of GBP660,000 announced on 20 June
2017 and pre-existing cash to pay entirely for the increased
interest through to the drilling of the Dempsey-1 Well which is
anticipated to commence in Q3 2017.
Dempsey
Under the new agreement with Sacgasco, Empyrean is to pay a
further US$90,000 having already paid an amount of US$10,000,
(collectively "the Dempsey Deposit"), within three working days of
signing a definitive Farm-out Agreement (the "Farm-Out Agreement")
and Joint Operating Agreement ("JOA") with Sacgasco in order to
secure Empyrean's right to participate in the Dempsey Prospect.
Empyrean is then required to pay US$2,000,000 upon being cash
called by Sacgasco (the "Dempsey Consideration") towards the dry
hole cost (i.e. up to the point of testing and running production
casing or abandonment) of the Dempsey-1 Well to earn its increased
30% Working Interest ("WI") in the Dempsey Prospect. If the
Dempsey-1 well costs exceed US$3,200,000 then Empyrean will pay 30%
of any further costs under standard JOA terms.
Assuming completion of the Farm-In and the payment of both the
Dempsey Deposit and the Dempsey Consideration, the interests in the
Dempsey Gas Project will be: Sacgasco (Operator): 45%; Bombora
Natural Energy Pty Ltd: 15%; Xstate Resources Limited (ASX: XST):
10%; and Empyrean: 30%.
Alvares
Under the new agreement with Sacgasco, Empyrean has agreed to
pay 33.33% of the dry hole well costs (i.e. to testing and setting
of production casing or abandonment) in the next Alvares appraisal
well to earn a 25% WI in the Alvares prospect. Empyrean's 33.33%
earn-in is capped at a total well cost for Alvares of
US$10,000,000, after which Empyrean will pay 25% of the costs
moving forward (the "Alvares Consideration"). Empyrean has also
agreed to pay US$20,000 upon signing the Farm-out Agreement and JOA
to reimburse Sacgasco for back costs associated with leasing and
permitting the Alvares prospect. The joint venture partners have
decided that drilling a well at the Dempsey Prospect is a first
ranking priority before any proposal or decision to drill a well at
Alvares will be made.
Assuming completion of the Farm-In and the payment of both the
Alvares Deposit and the Alvares Consideration, the interests in the
Alvares Gas Project will be: Sacgasco (Operator): 44%; Bombora
Natural Energy Pty Ltd: 10%; Xstate Resources Limited (ASX: XST):
21%; and Empyrean: 25%.
Dempsey Trend AMI
Under the new agreement with Sacgasco, Empyrean will provide
technical assistance to Sacgasco to further mature prospects within
the Dempsey Trend AMI in order to earn an increased 30% WI. In
addition, Empyrean will have an option to participate in the
already identified prospects on the following increased interest
basis:
-- Prospect #1: EME pays 60% of dry hole cost (i.e.to testing
and setting production casing or abandonment) to earn 30% WI
-- Prospect #2: EME pays 45% of dry hole cost (i.e. to testing
and setting production casing or abandonment) to earn 30% WI
-- Prospect #3: EME pays 45% of dry hole cost (i.e. to testing
and setting production casing or abandonment) to earn 30% WI
Tom Kelly, Empyrean CEO, commented:
"Empyrean continues to work hard to provide its shareholders
with potentially transformational exploration opportunities. The
increased interest in the Sacramento Basin projects reflects our
increasing confidence and understanding of the opportunity to be
part of an exciting package that offers multiple chances to make
very large gas discoveries in a region of the USA with increasing
gas demand and excellent existing surface infrastructure. Any
discovery we make can very quickly be put into production to create
early cash flow. We are excited to be working closely and very
cooperatively with the operator, Sacgasco, to give our companies
the best chance of success."
**ENDS**
For further information:
Empyrean Energy plc
Tom Kelly Tel: +61 8 9481 0389
Cenkos Securities plc
Neil McDonald Tel: +44 (0) 131 220 9771
Beth McKiernan Tel: +44 (0) 131 220 9778
Nick Tulloch Tel: +44 (0) 131 220 9772
St Brides Partners Ltd
Lottie Brocklehurst Tel: +44 (0) 20 7236 1177
Olivia Vita Tel: +44 (0) 20 7236 1177
The information contained in this announcement was completed and
reviewed by the Company's Technical Director, Mr Frank Brophy, who
has over 40 years' experience as a petroleum geologist.
Notes to Editors
About Empyrean Energy Plc (LON: EME)
Empyrean is a London AIM listed oil and gas explorer with three
potentially high impact new projects. Empyrean has a 1800km2
offshore oil permit located in the Pearl River Mouth Basin, China
where it has commenced 3D seismic Q2, 2017 to further mature two
large oil prospects, Jade and Topaz. The permit is directly South
East of the billion barrel+ Liuhua Oil Field operated by CNOOC and
two recent discoveries to the permits West and South further
enhance the merit of Jade and Topaz. Empyrean is operator and holds
100% of the exploration rights through to commercial discovery
where CNOOC have a back-in right to 51%.
Empyrean also has a 10% interest in West Natuna Exploration
Limited that holds 100% of the Duyung PSC in offshore Indonesia and
is targeting the Mako Shallow Gas Discovery that has an
independently verified 2C and 3C gas resource of between 430-650
Bcf recoverable gas. Empyrean is currently participating in
drilling the Mako South-1 well which is planned to take core, run a
full suite of modern logs and conduct a flow test commencing June
2017.
Empyrean also has a joint venture with ASX listed Sacgasco
Limited on a suite of projects in the Sacramento Basin, onshore
California, USA. The package includes two mature, multi-Tcf gas
prospects, 'Dempsey' and 'Alvares', and an Area of Mutual Interest
(the "Dempsey Trend AMI") that includes at least three already
identified, large Dempsey-style follow up prospects. Dempsey is a
large structure mapped with 3D seismic and interpreted by Sacgasco
to have the potential to hold a prospective resource of over 1 Tcf
of gas in up to seven stacked target reservoirs. The Company plans
to commence a 3,200 metre (10,500 feet) combined appraisal and
exploration well, Dempsey-1, in Q3 2017 to evaluate this
prospect.
Aside from compelling technical merit, the Dempsey-1 well
location sits next to existing gas metering and surface
infrastructure that is owned by the joint venture. This will allow
for any gas discovery to be tested and connected into the local
pipeline at relatively low cost and in an accelerated timeframe.
This early potential for short-term cash flow in the event of a
commercial discovery would be significant for the joint venture and
for the state of California where gas demand is high and
approximately 90% of consumption is imported from other states. Gas
produced in the Sacramento Basin currently prices at a 10-15%
premium to Henry Hub Gas Prices. The joint venture will be drilling
and testing the Dempsey Prospect, a 1 Tcf gas target in Q3,
2017.
Alvares is a large structure mapped with 2D seismic and
interpreted by Sacgasco to hold prospective resources of over 2 Tcf
estimated potential recoverable gas. A well drilled by American
Hunter Exploration Limited in 1982 for deeper oil intersected
5,000ft of gas shows. No valid flow test was conducted due to
equipment limitations and the deeper oil target failing. However
minor gas flows to surface were recorded even with these
limitations. The possibility of using the existing well bore to
sidetrack and get a valid flow test, thus reducing costs will be
examined.
The Dempsey Trend AMI is an Area of Mutual Interest extending to
approximately 250,000 acres and containing the Dempsey prospect
(described above) as well as at least three other, Dempsey-style
prospects which have been identified on existing seismic.
www.empyreanenergy.com
About Sacgasco Limited (ASX. SGC)
Sacgasco Limited (ASX: SGC) is an Australian-based energy
company focused on conventional gas exploration in the Sacramento
Basin, onshore California. SGC has an extensive portfolio of gas
prospects at both exploration and appraisal stages, including
multi-Tcf opportunities. The Company is targeting gas supply to the
local Californian gas market and burgeoning LNG market in North
America. SGC is of the view that the size of the prospects in
California have the potential to supply both the domestic
Californian gas market and export LNG markets.
www.sacgasco.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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