This
announcement contains inside information
1 October 2024
Empyrean
Energy PLC / Index: AIM / Epic: EME / Sector: Oil &
Gas
Empyrean Energy PLC
('Empyrean' or 'the Company')
Final
Results
Empyrean Energy is pleased to
announce its final results for the year ended 31 March 2024
("Report and Accounts").
The full Report and Accounts is now available on the Company's
website at www.empyreanenergy.com/annual-reports-accounts and will
be posted to Shareholders shortly.
Key
Activities
Block 29/11, Pearl River Mouth Basin, China (EME 100%
reverting to 49% upon commercial discovery)
Reporting period
·
Joint regional oil migration study with China National Offshore Oil Company
("CNOOC") team
conducted to map oil migration from the proven source rock
south-west of Block 29/11 that charges the four CNOOC oil
discoveries (immediately west of Block 29/11 and Topaz) and extends
this into Block 29/11 to map these potential migration pathways to
Topaz. Comprehensive study also included potential migration
pathways from a new source/kitchen identified by Empyrean 3D
data.
·
Simultaneous 3D seismic inversion project conducted in two
phases to firstly assess whether light oil pay in the target
reservoir can be discriminated from a water bearing reservoir by
seismic inversion and secondly to invert the entire 3D seismic data
to generate several datasets for the elastic
properties.
Post-Reporting period
· On 13
June 2024 the Company announced that as it had not commenced the
drilling of the Topaz prospect by 12 June 2024 as required under
the second phase of exploration on Block 29/11 and therefore has
not met the requirements to continue the cooperation on Block 29/11
with CNOOC. The permit therefore formally terminated on 12 June
2024. On 24 August 2024 Empyrean received a letter of demand from
CNOOC alleging that Empyrean has outstanding obligations under the
PSC. The Company disputes the letter and is endeavouring to
settle the matter amicably under the dispute resolution clauses
provided for in the PSC. Separately, Empyrean has put forward a
submission to CNOOC for further cooperation on Block
29/11.
Duyung PSC Project, Indonesia (EME 8.5%)
Reporting period
· Key
Terms agreed for Long-Term export Gas Sales Agreement
("GSA") between Conrad Asia
Energy Ltd ("Conrad")
subsidiary, West Natuna Exploration Ltd ("WNEL"), operator of the Duyung PSC, the
petroleum upstream regulator in Indonesia ("SKK Migas") and Sembcorp Gas Pte Ltd. The
parties are nearing finalisation of a definitive export GSA, which
was signed subsequent to year-end on 31 August 2024.
· Conrad
engaged a global investment bank to lead a sell-down process for
the divestment of a portion of its interest in the Duyung
Production Sharing Contract. This process is well advanced and it
is expected that the completion of the export GSA (signed 31 August
2024) is a necessary precursor to any sell down negotiations being
completed.
Post-Reporting period
· On 24
June 2024 the Company announced that the Mako JV partners had
entered into a binding domestic Gas Sales Agreement for the sale
and purchase of the domestic portion of Mako gas with PT Perusahaan
Gas Negara Tbk ("PGN"), the
gas subsidiary of PT Pertamina (Persero), the national oil company
of Indonesia.
· The
domestic GSA will be subject to the construction of a pipeline
connecting the West Natuna Transportation System ("WNTS") with the domestic gas market in
Batam and it forms part of Mako JV's Domestic Market Obligation
("DMO") as set out in the
Mako's revised Plan of Development ("POD").
· The
Total Contracted Gas volume under the PGN GSA is up to 122.77
trillion British Thermal Units ("TBtu") with estimated plateau
production rates of 35 billion British thermal units ("Bbtud") per day. The remainder of the
Mako sales gas volumes are targeted to be sold to Singapore via the
export GSA signed in August 2024.
· On 2
September 2024 the Company announced that the Mako Joint Venture
partners and Sembcorp signed a binding GSA for the export of gas
produced from the Mako field to Singapore. The contract term is
until the end of the Duyung PSC in January 2037 and allows for the
sale of up is 76 billion Bbtud, which is equivalent to around 76.9
million standard cubic feet per day ("mmscfd").
Sacramento Basin, California USA (EME 25-30%)
·
No work was conducted on the project during the
year.
Corporate
Reporting period
·
Placement to raise US$1.88 million (£1.52 million) completed
in May 2023.
·
Convertible Loan Note Debt restructured to reduce face value
of the note and secure extended moratorium on interest.
·
Placement to raise US$0.90 million (£0.70 million) completed
in February 2024.
Empyrean CEO Tom Kelly said, "Empyrean has conducted systematic
and thorough exploration on Block 29/11 since commencing its
cooperation on the block with CNOOC in late 2016. This included
608km2 of 3D seismic, the drilling of the Jade
exploration well and various post well analyses including regional
oil migration and simultaneous seismic inversion studies. Despite
these works, and due in part to various market challenges,
including COVID, Empyrean has not been able to fund a second
exploration well on Block 29/11. As
announced on 13 June 2024, Empyrean has not commenced the drilling
of the Topaz prospect and therefore has not met the requirements to
continue the cooperation on Block 29/11 with CNOOC and the permit
therefore formally terminated on 12 June 2024. On 24 August 2024
Empyrean received a letter of demand from CNOOC alleging that
Empyrean has outstanding obligations under the PSC. The
Company disputes the letter and is endeavouring to settle the
matter amicably under the dispute resolution clauses provided for
in the PSC. Separately Empyrean has put forward a submission to
CNOOC for further cooperation on Block 29/11.
During 2023, Empyrean engaged LAB
Energy Advisors (London) with respect to broadening the reach for
possible risk sharing alternatives and farm out opportunities for
the Topaz prospect. Despite strong interest in the technical merit
of the Topaz prospect, no farm out deal has been
reached.
Empyrean's immediate focus is to
maximise the value in its 8.5% interest in the Mako gas field
discovery on the Duyung permit in Indonesia. The sell down process
being coordinated by the operator of the Duyung permit through
Jefferies International Bank has taken longer than expected.
Empyrean expects that completion of the export GSA, which was
pleasingly signed on 31 August 2024, was the necessary precursor to
the completion of any sell down transaction.
The signing of the export GSA
between Sembcorp, the Indonesian Government and the Mako Joint
Venture partners marks the next significant milestone in the
pathway from discovery of Mako towards development and production.
This follows the signing of the domestic GSA announced in June 2024
for the Mako gas field development and means that all contingent
resources at Mako are now under binding contracts for sale. The
macro environment for gas in South East Asia, and Singapore in
particular, is expected to continue trending favourably with the
region transitioning from coal to gas as the preferred energy
source. We anticipate that these GSA's will greatly assist parties
interested in the Mako project to assess value and timelines with
more clarity and certainty. Completion of both GSAs is also a
significant milestone on the path to a Final Investment Decision
("FID") for the Mako
project.
From a corporate perspective, the
Company successfully raised funds in May 2023 and at the same time
renegotiated the existing Convertible Note. In February 2024 the
Company raised further working capital as the Company awaited the
signing of the export GSA and conclusion of the Duyung PSC
sell-down process.
The Company continues to assess
other financing and strategic alternatives to provide it with
additional working capital as and when required.
I would like to thank the Board,
management and staff for their patience and perseverance during
another challenging year. In particular I'd like to re-iterate my
gratitude to Dr Patrick Cross for serving as our Chairman over the
past 20 years. We now await a positive conclusion to the sell down
process from Indonesia which we hope will provide the platform for
the Company to pursue its strategic objectives in
earnest.
Chairman's Statement
The Company was restricted in its
progress during the year as it awaited the advancement of the two
key events in Indonesia, being the conclusion of the
GSA negotiations and secondly the completion of
the sell down process of the Mako Gas Field. While progress has
been made subsequent to year end and we are optimistic of a
successful conclusion in the near future, the delayed timing of
these events has inhibited the Company's ability to meet its
obligations in China.
The Company has pleasingly raised
the necessary equity funds during the financial year to support its
activities and provide working capital while we wait on the
completion of the GSA and sell down processes. A successful sell
down of our 8.5% interest in the Duyung PSC will enable the Company
to reset and move forward with its exploration objectives as well
as make repayment of the Convertible Note.
I would like to thank the Board,
management and staff for their efforts during this frustrating
year. As noted in August 2024, I have assumed the Chairmanship of
the Company and I would like to extend my gratitude, on behalf of
the entire Board, to Dr Patrick Cross for serving in this role for
the past 20 years and for the significant contribution he made in
that time. We now eagerly await the conclusion of the sell
down process at which point in time the Company will be able to set
its objectives for the 2024/2025 period and beyond.
For further information please
visit www.empyreanenergy.com or
contact the following:
Empyrean Energy plc
|
Tel: +61 (8) 6146 5325
|
Tom Kelly
|
|
|
|
Cavendish Capital Markets Limited (Nominated Advisor and
Broker)
|
Tel: +44 (0) 207 220 0500
|
Neil McDonald
Pearl Kellie
|
|
|
|
Novum Securities Limited (Joint Broker)
|
Tel: +44 (0) 207 399 9400
|
Colin Rowbury
|
|
Operational Review
The Company's corporate objective
remains to build a significant asset portfolio across the Asian
region. Post well studies of the Jade evaluation work confirmed
excellent reservoir quality and the presence of the regional seal.
Following a CNOOC assisted oil migration pathways assessment, the
Company entered the second phase of exploration in China with the
aim to drill the Topaz prospect.
Comprehensive technical work has
been conducted to this end, consisting of a regional oil migration
study and a 3D simultaneous seismic inversion project, which are
designed to help address and mitigate the remaining primary
geological risk at Topaz, being oil migration into the Topaz
trap.
The Company did not drill the Topaz
well by 12 June 2024 and the permit terminated on that
date.
Empyrean remains optimistic about
the significant value potential of its interest in Indonesia, which
will be reflected in the current sell down process and the very
recent execution of the export GSA between the Mako JV partners and
Sembcorp as announced on 2 September 2024. The project has been
further supported by strong gas prices in
the Asian region.
Empyrean also has a 25-30% working
interest in a package of gas projects in the Sacramento Basin,
onshore California. While no activity occurred during the year
Empyrean will assess the technical and commercial merits of other
prospects or proposals as they are presented.
Empyrean has retained an interest in
the Riverbend Project (10% WI) located in the Tyler and Jasper
counties, onshore Texas and a 58.084% WI in the Eagle Oil Pool
Development Project, located in the prolific San Joaquin Basin
onshore, Southern California. No technical work has been undertaken
on these projects during the year.
China Block 29/11 Project (100% WI)
Background
Block 29/11 is located in the
prolific Pearl River Mouth Basin, offshore China approximately
200km Southeast of Hong Kong. The acquisition of this block
heralded a new phase for Empyrean when it became an operator with
100% of the exploration rights of the permit during the exploration
phase of the project. In the event of a commercial discovery, CNOOC
will have a back in right to 51% of the permit.
Post Jade Well Analysis and
Implications for Topaz Prospect
Following the Jade drilling program,
comprehensive post well analysis by Empyrean and CNOOC confirmed
the Jade well intersected carbonate reservoir as prognosed with
better parameters than pre-drill estimates with total thickness of
292m and porosity in the range of 25 to 27%. In addition, the Jade
well penetrated thick and effective regional seal facies and the
reservoir top was encountered within the depth conversion range.
These parameters have now been more confidently mapped across
Empyrean's 3D data set.
The Jade well failed due to lack of
access to effective migration pathways. Given oil migration to the
Topaz Prospect is now identified as the key risk, the Company's pre
drill exploration efforts are focusing on mitigating this risk.
Reservoir, seal and trap validity of the Topaz prospect have been
enhanced by the Jade well data.
Entering of Second Phase of
Exploration
Being able to combine excellent
quality 3D seismic data with the confirmed well data and post well
analysis has resulted in the improved validity of the Topaz
prospect as a robust and large drilling target (approximately 891
million barrels in place (P10) per below table). Based on
post drill technical evaluation, and CNOOC-assisted migration
pathways assessment, Empyrean decided to enter the second phase of
exploration and drill the larger Topaz prospect.
Block 29/11 Oil in place (MMbbl) audited by
GCA
Prospect
|
P90
|
P50
|
P10
|
Mean
|
GCoS
|
Topaz
|
211
|
434
|
891
|
506
|
30%
|
Pearl
|
38
|
121
|
302
|
153
|
15%
|
Activities during the reporting
period
Empyrean conducted two further key
technical projects that capitalise on the excellent quality 3D
seismic acquired by the Company over the permit, shared regional 3D
seismic that CNOOC has and additional physical well data of both
Empyrean and CNOOC.
These projects were designed to help
address and mitigate the remaining primary geological risk at Topaz
- oil migration into the Topaz trap.
Firstly, joint with CNOOC, Empyrean
is completing a regional oil migration study. CNOOC bring
excellence in basin modelling expertise along with crucial regional
data that augments the data Empyrean has on Block 29/11. The
regional data includes temperature, pressure, timing of oil
maturation, and successful oil migration pathway mapping. The
project maps oil migration from the proven source rock south west
of Block 29/11 that charges the four CNOOC oil discoveries
(immediately west of Block 29/11 and Topaz) and extend this into
Block 29/11 and map these migration pathways to Topaz.
In addition, similar work was
conducted from a new source/kitchen located entirely within Block
29/11 and oil migration pathways will be mapped to
Topaz.
Secondly, Empyrean is conducting a
3D simultaneous seismic inversion project focussing on Topaz. This
project is utilising the oil properties, reservoir temperature,
reservoir pressure and water salinity data from CNOOC oil discovery
wells combined with reservoir porosity and mineralogical data from
Empyrean well logs and core to maximise the effectiveness of the
inversion project outcomes.
This project was conducted in two
phases. The aim of Phase I is to assess whether an oil bearing
reservoir case can be distinguished from water bearing reservoir in
the elastic property domain of seismic inversion. Phase 2 involves
inverting the entire 3D seismic data and will generate several
datasets for the elastic properties.
Block 29/11 PSC
Status
As announced on 4 May 2022, in order
to proceed with the second phase of exploration on Block 29/11
Empyrean's work program included drilling the Topaz project by 12
June 2024. As of that date, Empyrean has not commenced the drilling
of the Topaz prospect and therefore has not met the requirements to
continue the cooperation on Block 29/11 with CNOOC, and the permit
therefore formally terminated on 12 June 2024.
During 2023, Empyrean engaged LAB
Energy Advisors (London) with respect to broadening the reach for
possible risk sharing alternatives and farm out opportunities for
the Topaz prospect. Despite strong interest in the technical merit
of the Topaz prospect, no farm out deal has been reached as of
today's date.
Empyrean has put forward a
submission to CNOOC for further cooperation on Block
29/11.
Cautionary Statement: The volumes presented in this
announcement are STOIIP estimates only. A recovery factor needs to
be applied to the undiscovered STOIIP estimates based on the
application of a future development project. The subsequent
estimates, post the application of a recovery factor, will have
both an associated risk of discovery and a risk of development.
Further exploration, appraisal and evaluation is required to
determine the existence of a significant quantity of potentially
movable hydrocarbons.
Duyung PSC, Indonesia (8.5%
WI)
Background
In April 2017, Empyrean acquired a
10% shareholding in WNEL from Conrad Petroleum (now Conrad Asia
Energy Ltd), which held a 100% Participating Interest in the Duyung
Production Sharing Contract ("Duyung PSC") in offshore Indonesia and
is the operator of the Duyung PSC. The Duyung PSC covers an
offshore permit of approximately 1,100km2 in the prolific West
Natuna Basin. The main asset in the permit is the Mako shallow gas
field that was discovered in 2017, and comprehensively appraised in
2019.
In early 2019, both the operator,
Conrad, and Empyrean divested part of their interest in the Duyung
PSC to AIM-listed Coro Energy Plc. Following the transaction,
Empyrean's interest reduced from 10% to 8.5% interest in May 2020,
having received cash and shares from Coro.
During October and November 2019, a
highly successful appraisal drilling campaign was conducted in the
Duyung PSC. The appraisal wells confirmed the field-wide presence
of excellent quality gas in the intra-Muda reservoir sands of the
Mako Gas Field.
Figure 1: Mako Gas field,
Duyung PSC, Indonesia
Current Activities
Post year end, Empyrean announced
that it, and the Mako JV partners had entered into a binding gas
sales agreement for the sale and purchase of the domestic portion
of Mako gas with PGN, the gas subsidiary of PT Pertamina (Persero),
the national oil company of Indonesia.
The domestic gas sale agreement with
PGN for gas from the Mako gas field is an important step in the
commercialisation of the Mako gas field (the largest undeveloped
gas field in the West Natuna Sea). PGN is Indonesia's largest gas
company. The Total Contracted Gas volume under the PGN GSA is up to
122.77 trillion TBtu with estimated plateau production rates of 35
billion Bbtud per day.
Following this, the Company
announced the signing by the Mako JV partners and Sembcorp of the
export GSA for the remainder of the Mako gas resource, which is
targeted to be exported to Singapore. The contract term is until
the end of the Duyung PSC in January 2037 and allows for the sale
of up to 76 billion Bbtud, which is equivalent to around 76.9
mmscfd.
The export GSA also contains
provisions for the sale of up to an additional 35 Bbtud (around
35.4 mmscfd) should a tie-in pipeline not be built to the
Indonesian domestic market in Batam and DMO sales do not therefore
eventuate. The possible export of these additional volumes is
recognised in the Mako POD.
The West Natuna Sea gas gathering
system is already connected to Singapore. PGN will now proceed with
planning a smaller tie line to the island of Batam across the
Malacca Straight that will connect the Natuna Sea to the Indonesian
market.
Indonesia, the fourth most populated
country on earth has a stated objective of doubling its gas
production by 2030 in order to deliver a cleaner energy source to
fuel its rapidly growing economy. PGN will play a significant role
in this Indonesian energy transition.
The Mako field contains 2C
Contingent Resources (100%) of 376 billion cubic feet
("Bcf"), (of which 21 Bcf
are net attributable to Empyrean ) and is scheduled to begin
production in 2026 subject to completing a formal GSA with a
Singapore buyer (completed in August 2024). The West Natuna Sea has
been supplying Singapore with natural gas for more than two decades
and Mako is expected to continue this supply for at least another
decade.
Production Sharing Contractors in
Indonesia are subject to a DMO requirement for any produced gas as
set out under the terms of each PSC, and Government of Indonesia
Regulation No. 35 of 2004 on Upstream Oil and Gas Activity, as
amended from time to time (GR 35/2004). Contractors are required to
supply c 25% of their share of the oil and gas produced to meet
domestic needs. The Contractor has no obligation to construct
infrastructure (e.g. pipelines) to allow the delivery of any
DMO.
The combination of the executed
domestic and export GSAs means now that all contingent resources at
Mako are under binding contracts for sale.
Conrad continues to advance the sell
down process with a global investment bank in order to fund the
development of Mako. The signing of a
binding export GSA is seen by Empyrean as being a likely
requirement or precursor to the completion of any sell down
transaction.
The Mako Gas Field is located close
to the West Natuna pipeline system and gas from the field can be
marketed to buyers in both Indonesia and in Singapore.
Multi Project Farm-in in Sacramento Basin, California (25%-30%
WI)
Background
In May 2017, Empyrean agreed to
farm-in to a package of opportunities including the Dempsey and
Alvares prospects in the Northern Sacramento Basin, onshore
California. The rationale for participating in this potentially
significant gas opportunity was a chance to discover large
quantities of gas in a relatively 'gas hungry' market. Another
attractive component of the deal was the ability to commercialise a
potential gas discovery using existing gas facilities that are
owned by the operator.
There were no significant activities
conducted during the year however the Company will continue to work
with its joint venture partners in reviewing and assessing any
further technical and commercial opportunities as they relate to
the project.
Riverbend Project (10%)
No work has been completed on the
project in the year and no budget has been prepared for 2024/25
whilst the Company focuses on other projects. The Company
previously fully impaired the carrying value of the asset and any
subsequent expenditure, mainly for license fees, has been expensed
through the profit and loss statement.
Eagle Oil Pool Development Project (58.084%
WI)
No work has been completed on the
project in the year and no budget has been prepared for 2024/25
whilst the Company focuses on other projects. The Company
previously fully impaired the carrying value of the asset and any
subsequent expenditure, mainly for license fees, has been expensed
through the profit and loss statement.
Statement of Comprehensive Income
For
the Year Ended 31 March 2024
|
|
2024
|
2023
|
|
|
Notes
|
US$'000
|
US$'000
|
|
|
|
|
|
|
Revenue
|
|
-
|
-
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
Administrative expenses
|
|
(355)
|
(382)
|
|
Compliance fees
|
|
(326)
|
(263)
|
|
Directors' remuneration
|
4
|
(416)
|
(362)
|
|
Foreign exchange
(loss)/gain
|
3
|
(123)
|
197
|
|
Impairment - exploration and
evaluation assets
|
8
|
(6,595)
|
(17,030)
|
|
Total expenses
|
|
(7,815)
|
(17,840)
|
|
|
|
|
|
|
Operating loss
|
3
|
(7,815)
|
(17,840)
|
|
|
|
|
|
|
Finance expense
|
5
|
(1,770)
|
(2,955)
|
|
|
|
|
|
|
Loss from continuing operations before
taxation
|
|
(9,585)
|
(20,795)
|
|
Tax expense
|
6
|
(1)
|
(1)
|
|
|
|
|
|
|
Loss from continuing operations after
taxation
|
|
(9,586)
|
(20,796)
|
|
|
|
|
|
|
Total comprehensive loss for the year
|
|
(9,586)
|
(20,796)
|
|
|
|
|
|
|
Loss per share from continuing operations (expressed in
cents)
|
|
|
|
- Basic
|
7
|
(0.98)c
|
(2.71)c
|
|
- Diluted
|
|
(0.98)c
|
(2.71)c
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
The accompanying accounting policies and notes form an
integral part of these financial statements.
Statement of Financial Position
As
at 31 March 2024
Company Number: 05387837
|
|
2024
|
2023
|
|
Notes
|
US$'000
|
US$'000
|
Assets
|
|
|
|
Non-Current Assets
|
|
|
|
Exploration and evaluation
assets
|
8
|
5,355
|
10,635
|
Total non-current assets
|
|
5,355
|
10,635
|
|
|
|
|
Current Assets
|
|
|
|
Trade and other
receivables
|
9
|
17
|
38
|
Cash and cash equivalents
|
|
981
|
83
|
Total current assets
|
|
998
|
121
|
|
|
|
|
Liabilities
|
|
|
|
Current Liabilities
|
|
|
|
Trade and other payables
|
10
|
2,929
|
4,224
|
Provisions
|
|
189
|
159
|
Convertible loan notes
|
11
|
7,594
|
4,076
|
Total current liabilities
|
|
10,712
|
8,459
|
|
|
|
|
Net
Current Liabilities
|
|
(9,714)
|
(8,338)
|
Net
(Liabilities)/Assets
|
|
(4,359)
|
2,297
|
|
|
|
|
Shareholders' Equity
|
|
|
|
Share capital
|
13
|
3,405
|
2,170
|
Share premium reserve
|
|
46,891
|
45,319
|
Warrant and share-based payment
reserve
|
|
123
|
73
|
Retained losses
|
|
(54,778)
|
(45,265)
|
Total Equity
|
|
(4,359)
|
2,297
|
|
|
|
|
The accompanying accounting policies and notes form an
integral part of these financial statements.
Statement of Cash Flows
For
the Year Ended 31 March 2024
|
|
2024
|
2023
|
|
Notes
|
US$'000
|
US$'000
|
Operating Activities
|
|
|
|
Payments for operating
activities
|
|
(827)
|
(1,126)
|
Net
cash outflow for operating activities
|
12
|
(827)
|
(1,126)
|
|
|
|
|
Investing Activities
|
|
|
|
Payments for
exploration and evaluation
|
8
|
(964)
|
(1,227)
|
Net
cash outflow for investing activities
|
|
(964)
|
(1,227)
|
|
|
|
|
Financing Activities
|
|
|
|
Issue of ordinary share
capital
|
|
2,790
|
2,268
|
Proceeds from exercise of
warrants
|
|
-
|
233
|
Payment of finance costs
|
|
(29)
|
(8)
|
Payment of equity issue
costs
|
|
(72)
|
(76)
|
Net
cash inflow from financing activities
|
|
2,689
|
2,417
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
898
|
64
|
Cash and cash equivalents at the
start of the year
|
|
83
|
19
|
Forex gain/(loss) on cash
held
|
|
-
|
-
|
|
|
|
|
Cash and Cash Equivalents at the End of the
Year
|
|
981
|
83
|
|
|
|
|
The accompanying accounting policies and notes form an
integral part of these financial statements.
Statement of Changes in Equity
For
the Year Ended 31 March 2024
|
|
Share
Capital
|
Share Premium
Reserve
|
Warrant and Share-Based
Payment Reserve
|
Retained
Losses
|
Total
Equity
|
|
Notes
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
|
|
|
|
|
|
Balance at 1 April 2022
|
|
1,809
|
41,285
|
576
|
(24,994)
|
18,676
|
|
|
|
|
|
|
|
Loss after tax for the
year
|
|
-
|
-
|
-
|
(20,796)
|
(20,796)
|
Total comprehensive loss for the
year
|
|
-
|
-
|
-
|
(20,796)
|
(20,796)
|
Contributions by and
distributions to owners
|
|
|
|
|
|
|
Shares issued in the
period
|
13
|
307
|
1,961
|
-
|
-
|
2,268
|
Partial conversion of convertible
note
|
|
49
|
1,921
|
-
|
-
|
1,970
|
Exercise/expiry of
warrants
|
|
5
|
228
|
(525)
|
525
|
233
|
Equity issue costs
|
|
-
|
(76)
|
-
|
-
|
(76)
|
Share-based payment
expense
|
|
-
|
-
|
22
|
-
|
22
|
Total contributions by and distributions to
owners
|
|
361
|
4,034
|
(503)
|
525
|
4,417
|
|
|
|
|
|
|
|
Balance at 1 April 2023
|
|
2,170
|
45,319
|
73
|
(45,265)
|
2,297
|
|
|
|
|
|
|
|
Loss after tax for the
year
|
|
-
|
-
|
-
|
(9,586)
|
(9,586)
|
Total comprehensive loss for the
year
|
|
-
|
-
|
-
|
(9,586)
|
(9,586)
|
Contributions by and
distributions to owners
|
|
|
|
|
|
|
Shares issued in the
period
|
13
|
1,179
|
1,611
|
-
|
-
|
2,790
|
Expiry of warrants
|
|
-
|
-
|
(73)
|
73
|
-
|
Equity issue costs
|
|
7
|
(123)
|
44
|
-
|
(72)
|
Share-based payment
expense
|
|
49
|
84
|
79
|
-
|
212
|
Total contributions by and distributions to
owners
|
|
1,235
|
1,572
|
50
|
73
|
2,930
|
|
|
|
|
|
|
|
Balance at 31 March 2024
|
|
3,405
|
46,891
|
123
|
(54,778)
|
(4,359)
|
The accompanying accounting policies and notes form an
integral part of these financial statements.
Notes to the Financial Statements
For
the Year Ended 31 March 2024
Note 1.
Statement of Significant Accounting
Policies
Basis of preparation
The Company's financial statements
have been prepared in accordance with United Kingdom adopted
International Accounting Standards ("UK adopted IAS") and Companies
Act 2006. The principal accounting policies are summarised below.
The financial report is presented in the functional currency, US
dollars and all values are shown in thousands of US dollars
(US$'000), unless otherwise stated.
The preparation of financial
statements in compliance with UK adopted IAS requires the use of
certain critical accounting estimates. It also requires
Company management to exercise judgement in applying the Company's
accounting policies. The areas where significant judgements and
estimates have been made in preparing the financial statements and
their effect are disclosed below.
Basis of measurement
The financial statements have been
prepared on a historical cost basis, except for derivative
financial instruments, which are measured at fair
value through profit or loss.
Nature of business
The Company is a public limited
company incorporated and domiciled in England and Wales. The
address of the registered office is 2nd Floor, 38-43
Lincoln's Inn Fields London, WC2A 3PE. The Company is in the
business of financing the exploration, development and production
of energy resource projects in regions with energy hungry markets
close to existing infrastructure. The Company has typically focused
on non-operating working interest positions in projects that have
drill ready targets that substantially short cut the life-cycle of
hydrocarbon projects by entering the project after exploration
concept, initial exploration and drill target identification work
has largely been completed.
Going concern
At the year end the Company had a
cash balance of US$981,000 (2023: US$83,000) and made a loss after
income tax of US$9.59 million (2023: loss of US$20.80
million).
The Directors have prepared cash
flow forecasts for the Company covering the period to 30 September
2025 and these demonstrate that the Company will require further
funding within the next 12 months from the date of approval of the
financial statements. In June 2022, the Company entered into an
agreement with CNOOC to drill an exploration well on the Topaz
prospect in China, by 12 June 2024, which includes a payment of
US$250,000 to CNOOC. It is estimated that the cost of
drilling this well would be approximately US$12 million. The
Company has not met the requirements under the PSC to drill the
Topaz well by 12 June 2024 and therefore the permit terminated on
12 June 2024. Empyrean has put forward a submission to CNOOC for
further cooperation on Block 29/11.
As detailed in Note 19, post year
end on 24 August 2024, the Company received
a letter of demand from CNOOC's lawyers, King Wood &
Mallesons, in relation to Block 29/11. The letter of demand
alleges, inter alia, that Empyrean has outstanding obligations
under the relevant Petroleum Contract entered into with CNOOC and
that Empyrean has failed to pay certain amounts that CNOOC consider
due and payable under the Petroleum Contract relating to the
prospecting fee and exploration work . The Company rejects the
outstanding amounts claimed, which total
$12m, and has responded to the letter of
demand requesting clarification of the basis for the demands made
in the letter. At this time, (and as
disclosed in Note 19), it is too early for
the Company to form any opinion on the merits of any demands made
therein and the Company intends to continue dialogue with CNOOC
and, in line with the provisions of the Petroleum Contract, to
settle amicably through consultation any dispute arising in
connection with the performance or interpretation of any provision
of the Petroleum Contract. However, it is
acknowledged that, in the event that the amounts claimed are
called, further funding would be required, over and above that
required to meet the day to day cash demand of the business for the
foreseeable future.
In May 2023 US$1.88 million was
raised through an equity placement, with a further US$0.90 million
raised in February 2024. Funds raised are being used for the
completion of joint regional oil migration and 3D seismic inversion
studies at Topaz, ongoing prospect, licensing fees and permit
costs, post Jade well consultancy, analysis
and residual exploration costs, front-end engineering design
("FEED"), studies and surveys at Mako - including gas processing
and export gas tie in at the Kakap KF Platform and for general
working capital requirements.
The Company has also renegotiated
the terms of the Convertible Note as detailed in the AIM
announcement dated 30 May 2023. The Convertible Note is secured by
a senior first ranking charge over the Company, including its 8.5%
interest in the Duyung PSC and Mako Gas Field.
However, in order to meet any
potential further costs of cooperation on Block 29/11, any
potential amounts payable to CNOOC that may crystalise as detailed
in Note 19, to meet the repayment terms of the Convertible Note,
any further commitments at the Mako Gas Field and working capital
requirements the Company is required to raise further funding
either through equity or the sale of assets and as at the date of
this report the necessary funds are not in place.
The Directors remain optimistic that
its funding commitments will be met should it be able to monetise
its interest in Mako through the current sell down process. Post
year end the Company announced that the Mako JV partners had
entered into a domestic gas sales agreement for the sale and
purchase of the domestic portion of Mako gas with PGN. The Company
then announced that the Mako Joint Venture partners and Sembcorp
had signed the binding GSA for the export of gas produced from the
Mako field to Singapore.
It is the belief of the Board that
the completion of the export GSA is a significant value catalyst
that is a necessary precursor to maximising the value of its
interest at the Mako Gas field through the current sell down
process. Completion of these has the potential to enhance
Empyrean's chances of negotiating a revised arrangement with CNOOC
for the drilling of the Topaz prospect.
The Company therefore requires
additional funding to fund the ongoing cash needs of the business
for the foreseeable future and may require further funding should
it be required to settle amounts claimed by CNOOC. The Directors
acknowledge that this funding is not guaranteed. These conditions
indicate that there is the existence of a material uncertainty
which may cast significant doubt over the Company's ability to
continue as a going concern and, therefore, the Company may be
unable to realise its assets and discharge its liabilities in the
normal course of business.
Given the above and the Company's
proven track record of raising equity funds and advanced Mako
sell-down process, , which the Directors believe would be
sufficient to meet all possible funding needs as set out above,
the Directors have therefore concluded that it is appropriate
to prepare the Company's financial statements on a going concern
basis and they have therefore prepared the financial statements on
a going concern basis.
The financial statements do not
include the adjustments that would result if the Company was unable
to continue as a going concern.
Adoption of new and revised standards
(a) New and amended standards adopted by the
Company:
There were no new standards
effective for the first time for periods beginning on or after 1
April 2023 that have had a significant effect on the Company's
financial statements.
(b)
Standards, amendments and interpretations that are not yet
effective and have not been early adopted:
Any standards and interpretations
that have been issued but are not yet effective, and that are
available for early application, have not been applied by the
Company in these financial statements. International Financial
Reporting Standards that have recently been issued or amended but
are not yet effective have been assessed by the Company and are not
considered to have a significant effect on the Company's financial
statements.
Tax
The major components of tax on
profit or loss include current and deferred tax.
(a) Current tax
Tax is recognised in the income
statement. The current tax charge is calculated on the basis of the
tax laws enacted at the statement of financial position date in the
countries where the Company operates.
(b) Deferred tax
Deferred tax assets and liabilities
are recognised where the carrying amount of an asset or liability
in the statement of financial position differs to its tax base.
Recognition of deferred tax assets is restricted to those instances
where it is probable that taxable profit will be available, against
which the difference can be utilised. The amount of the asset
or liability is determined using tax rates that have been enacted
or substantively enacted by the reporting date and are expected to
apply when the deferred tax liabilities/(assets) are
settled/(recovered). The Company has considered whether to
recognise a deferred tax asset in relation to carried-forward
losses and has determined that this is not appropriate in line with
IAS 12 as the conditions
for recognition are not satisfied.
Foreign currency translation
Transactions denominated in foreign
currencies are translated into US dollars at contracted rates or,
where no contract exists, at average monthly rates. Monetary assets
and liabilities denominated in foreign currencies which are held at
the year-end are translated into US dollars at year-end exchange
rates. Exchange differences on monetary items are taken to the
Statement of Comprehensive Income. Items included in the financial
statements are measured using the currency of the primary economic
environment in which the Company operates (the functional
currency).
Oil
and gas assets: exploration and evaluation
The Company applies the full cost
method of accounting for Exploration and Evaluation ("E&E") costs, having regard to the
requirements of IFRS 6
Exploration for and Evaluation of Mineral Resources. Under
the full cost method of accounting, costs of exploring for and
evaluating oil and gas properties are accumulated and capitalised
by reference to appropriate cash generating units ("CGUs"). Such CGUs are based on
geographic areas such as a concession and are not larger than a
segment. E&E costs are initially capitalised within oil and gas
properties: exploration and evaluation. Such E&E costs may
include costs of license acquisition, third party technical
services and studies, seismic acquisition, exploration drilling and
testing, but do not include costs incurred prior to having obtained
the legal rights to explore an area, which are expensed directly to
the income statement as they are incurred, or costs incurred after
the technical feasibility and commercial viability of extracting a
mineral resource are demonstrable, which are reclassified as
development and production assets.
Property, Plant and Equipment
("PPE") acquired for use in
E&E activities are classified as property, plant and equipment.
However, to the extent that such PPE is consumed in developing an
intangible E&E asset, the amount reflecting that consumption is
recorded as part of the cost of the intangible E&E asset.
Intangible E&E assets related to exploration licenses are not
depreciated and are carried forward until the existence (or
otherwise) of commercial reserves has been determined. The
Company's definition of commercial reserves for such purpose is
proven and probable reserves on an entitlement basis.
The ultimate recoupment of the value
of exploration and evaluation assets is dependent on the successful
development and commercial exploitation, or alternatively, sale, of
the exploration and evaluation asset.
The carrying amounts of the
Company's non-financial assets are reviewed at each reporting date
to determine whether there is any indication of impairment. E&E
assets are assessed for impairment if (i) sufficient data exists to
determine technical feasibility and commercial viability, or (ii)
facts and circumstances suggest that the carrying amount exceeds
the recoverable amount. If any such indication exists, then the
asset's recoverable amount is estimated.
For the purpose of impairment
testing, assets are grouped together into CGU's. The recoverable
amount of an asset or a CGU is the greater of its value in use and
its fair value less costs of disposal.
In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. Value in use is generally computed by reference to the
present value of the future cash flows expected to be derived from
production of proven and probable reserves.
Fair value less costs of disposal is
the amount obtained from the sale of an asset or CGU in an arm's
length transaction between knowledgeable, willing parties, less the
costs of disposal.
An impairment loss is recognised if
the carrying amount of an asset or its CGU exceeds its estimated
recoverable amount. Impairment losses are recognised in the
consolidated statement of comprehensive loss.
Impairment losses recognised in
respect of CGU's are allocated first to reduce the carrying amount
of any goodwill allocated to the units and then to reduce the
carrying amounts of the other assets in the unit (or group of
units) on a pro rata basis. Impairment losses recognised in prior
years are assessed at each reporting date for any indications that
the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depletion and depreciation or amortization, if no impairment loss
had been recognised. Reversal of impairment losses are recognised
in the consolidated statement of comprehensive loss.
The key areas of judgement and
estimation include:
· Recent
exploration and evaluation results and resource
estimates;
· Environmental issues that may impact on the underlying
tenements; and
· Fundamental economic factors that have an impact on the
planned operations and carrying values of assets and
liabilities.
Financial instruments
Financial assets and liabilities are
recognised in the statement of financial position when the Company
becomes party to the contractual provision of the
instrument.
(a) Financial assets
The Company's financial assets
consist of financial assets at amortised cost (trade and other
receivables, excluding prepayments, and cash and cash equivalents)
and financial assets classified as fair value through profit or
loss. Financial assets at amortised cost are initially measured at
fair value and subsequently at amortised cost and attributable
transaction costs are included in the initial carrying
value. Financial assets designated as fair value through the
profit or loss are measured at fair value through the profit or
loss at the point of initial recognition and subsequently revalued
at each reporting date. Attributable transactions costs are
recognised in profit or loss as incurred. Movements in the
fair value of derivative financial assets are recognised in the
profit or loss in the period in which they occur.
(b) Financial liabilities
All financial liabilities are
classified as fair value through the profit and loss or financial
liabilities at amortised cost. The Company's financial liabilities
at amortised cost include trade and other payables and its
financial liabilities at fair value through the profit or loss
include the derivative financial liabilities. Financial liabilities
at amortised cost, are initially stated at their fair value and
subsequently at amortised cost. Interest and other borrowing costs
are recognised on a time-proportion basis using the effective
interest method and expensed as part of financing costs in the
statement of comprehensive income. Derivative financial
liabilities are initially recognised at fair value of the date a
derivative contract is entered into and subsequently re-measured at
each reporting date. The method of recognising the resulting gain
or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged.
The Company has not designated any derivatives as hedges as at 31
March 2023 or 31 March 2024.
(c) Impairment for financial instruments measured at amortised
cost
Impairment provisions for financial
instruments are recognised based on a forward looking expected
credit loss model in accordance with IFRS 9. The methodology used
to determine the amount of the provision is based on whether there
has been a significant increase in credit risk since initial
recognition of the financial asset. For those where the credit risk
has not increased significantly since initial recognition of the
financial asset, twelve month expected credit losses along with
gross interest income are recognised. For those for which credit
risk has increased significantly, lifetime expected credit losses
along with the gross interest income are recognised. For those that
are determined to be credit impaired, lifetime expected credit
losses along with interest income on a net basis are
recognised.
Convertible loan notes ("CLNs")
The proceeds received on issue of
convertible loan notes are allocated into their liability and
equity components. The amount initially attributed to the debt
component equals the discounted cash flows using a market rate of
interest that would be payable on a similar debt instrument that
does not include an option to convert. Subsequently, the debt
component is accounted for as a financial liability measured at
amortised cost until extinguished on conversion or maturity of the
CLN.
The conversion option is determined
by deducting the amount of the liability component from the fair
value of the compound instrument as a whole. Where material, this
is recognised and included as a financial derivative where the
convertible loan notes are issued in a currency other than the
functional currency of the Company because they fail the fixed for
fixed criteria in IAS 32.
The conversion option is recorded as a financial liability at fair
value through profit or loss and revalued at each reporting
date.
In the case of a substantial
modification, the existing liability is derecognised, the modified
liability is recognised at its fair value and the difference
between the carrying value of the old instrument and the modified
instrument is recognised as a gain or loss in the statement of
comprehensive income.
Share capital
Ordinary shares are classified as
equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Share-based payments
The Company issues equity-settled
share-based payments to certain employees. Equity-settled
share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the
equity-settled share-based payments is expensed over the vesting
period, based on the Company's estimate of shares that will
eventually vest. The fair value of options is ascertained using a
Black-Scholes pricing model which incorporates all market vesting
conditions. Where equity instruments are granted to persons other
than employees, the income statement is charged with the fair value
of goods and services received.
The Company has also issued warrants
on placements which form part of a unit. These warrants do not fall
into the scope of IFRS 2 Share
Based Payments because there is no service being provided
and are assessed as either a financial liability or equity. If they
fail the fixed for fixed criteria in IAS 32 Financial Instruments:
Presentation, they are classified as financial liability and
measured in accordance with IFRS
9 Financial Instruments.
Critical accounting estimates and judgements
The Company makes judgements and
assumptions concerning the future that impact the application of
policies and reported amounts. The resulting accounting estimates
calculated using these judgements and assumptions will, by
definition, seldom equal the related actual results but are based
on historical experience and expectations of future events. The
judgements and key sources of estimation uncertainty that have a
significant effect on the amounts recognised in the financial
statements are discussed below.
Critical estimates and judgements
The following are the critical
estimates and judgements that management has made in the process of
applying the entity's accounting policies and that have the most
significant effect on the amounts recognised in the financial
statements.
(a) Carrying value of exploration and evaluation assets
(judgement)
The Company monitors internal and
external indicators of impairment relating to its exploration and
evaluation assets. Management has considered whether any indicators
of impairment have arisen over certain assets relating to the
Company's exploration licenses. Management consider the exploration
results to date and assess whether, with the information available,
there is any suggestion that a commercial operation is unlikely to
proceed. In addition, management have considered the likely success
of renewing the licences, the impact of any instances of
non-compliance with license terms and are continuing with the
exploration and evaluation of the sites. After considering all
relevant factors, management were of the opinion that no impairment
was required in relation to the costs capitalised to exploration
and evaluation assets except for the below:
i) The Company has not met
the requirements under the PSC to drill the Topaz well by 12 June
2024 and, post year end, the permit formally terminated on 12 June
2024. Empyrean has put forward a submission to CNOOC for further
cooperation on Block 29/11,. As at 31 March 2024 it was clear that
the above requirements would not be able to be met in time
due to lack of funding and the delays to the
completion of the export GSA and sell down processes in
Indonesia. This was deemed to be an
impairment indicator. Given the licence requirements have not been
met and the post year end termination of the PSC, the Company has,
in accordance with IFRS 6, provided for impairment against all
remaining capitalised costs associated with Block 29/11, together
being US$6.6 million as at 31 March 2024.
ii)
While the Company will continue to work with its joint venture
partners in reviewing and assessing any further technical and
commercial opportunities as they relate to the Sacramento Basin
project, particularly in light of strong gas prices for gas sales
in the region, it has not budgeted for further substantive
exploration expenditure. Whilst the Company maintains legal title
it has continued to fully impair the carrying value of the asset as
at 31 March 2024.
iii) In
light of current market conditions, little or no work has been
completed on the Riverbend or Eagle Oil projects in the year and no
substantial project work is forecast for either project in 2024/25
whilst the Company focuses on other projects. Whilst the Company
maintains legal title it has continued to fully impair the carrying
value of the asset as at 31 March 2024.
(b) Share based payments (estimate)
The Company has made awards of
options and warrants over its unissued share capital to certain
employees as part of their remuneration package. Certain warrants
were issued to shareholders as part of their subscription for
shares and suppliers for services received.
The valuation of these options and
warrants involves making a number of critical estimates relating to
price volatility, future dividend yields, expected life of the
options and forfeiture rates. These assumptions have been described
in more detail in Note 13.
(c) Valuation of embedded derivative - Convertible loan notes
(estimate)
The Company has made estimates in
determining the fair value of the embedded conversion feature
portion of the CLN. Fair value inputs are subject to market factors
as well as internal estimates. The Company considers historical
trends together with any new information to determine the best
estimate of fair value at the date of initial recognition and at
each period end. The Company has determined that the fair value of
the embedded conversion feature is not material and therefore has
not been separately recognised, in line with the Company's
accounting policy.
Note 2. Segmental Analysis
The Directors consider the Company
to have three geographical segments, being China (Block 29/11
project), Indonesia (Duyung PSC project) and North America
(Sacramento Basin project), which are all currently in the
exploration and evaluation phase. Corporate costs relate to the
administration and financing costs of the Company and are not
directly attributable to the individual projects. The Company's
registered office is located in the United Kingdom.
|
Details
|
China
|
Indonesia
|
USA
|
Corporate
|
Total
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
31
March 2024
|
|
|
|
|
|
Unallocated corporate
expenses
|
-
|
-
|
-
|
(1,220)
|
(1,220)
|
Operating loss
|
-
|
-
|
-
|
(1,220)
|
(1,220)
|
Finance expense
|
-
|
-
|
-
|
(1,770)
|
(1,770)
|
Impairment of oil and gas
properties
|
(6,562)
|
-
|
(33)
|
-
|
(6,595)
|
Loss before taxation
|
(6,562)
|
-
|
(33)
|
(2,990)
|
(9,585)
|
Tax expense in current
year
|
-
|
-
|
-
|
(1)
|
(1)
|
Loss after taxation
|
(6,562)
|
-
|
(33)
|
(2,991)
|
(9,586)
|
Total comprehensive loss for the financial
year
|
(6,562)
|
-
|
(33)
|
(2,991)
|
(9,586)
|
|
|
|
|
|
|
Segment assets
|
-
|
5,355
|
-
|
-
|
5,355
|
Unallocated corporate
assets
|
-
|
-
|
-
|
998
|
998
|
Total assets
|
-
|
5,355
|
-
|
998
|
6,353
|
|
|
|
|
|
|
Segment liabilities
|
-
|
-
|
-
|
-
|
-
|
Unallocated corporate
liabilities
|
-
|
-
|
-
|
10,712
|
10,712
|
Total liabilities
|
-
|
-
|
-
|
10,712
|
10,712
|
Details
|
China
|
Indonesia
|
USA
|
Corporate
|
Total
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
31
March 2023
|
|
|
|
|
|
Unallocated corporate
expenses
|
-
|
-
|
-
|
(810)
|
(810)
|
Operating loss
|
-
|
-
|
-
|
(810)
|
(810)
|
Finance expense
|
-
|
-
|
-
|
(2,955)
|
(2,955)
|
Impairment of oil and gas
properties
|
(16,998)
|
-
|
(32)
|
-
|
(17,030)
|
Cyber fraud loss
|
-
|
-
|
-
|
-
|
-
|
Loss before taxation
|
(16,998)
|
-
|
(32)
|
(3,765)
|
(20,795)
|
Tax expense in current
year
|
-
|
-
|
-
|
(1)
|
(1)
|
Loss after taxation
|
(16,998)
|
-
|
(32)
|
(3,766)
|
(20,796)
|
Total comprehensive loss for the financial
year
|
(16,998)
|
-
|
(32)
|
(3,766)
|
(20,796)
|
|
|
|
|
|
|
Segment assets
|
5,958
|
4,677
|
-
|
-
|
10,635
|
Unallocated corporate
assets
|
-
|
-
|
-
|
121
|
121
|
Total assets
|
5,958
|
4,677
|
-
|
121
|
10,756
|
|
|
|
|
|
|
Segment liabilities
|
-
|
-
|
-
|
-
|
-
|
Unallocated corporate
liabilities
|
-
|
-
|
-
|
8,459
|
8,459
|
Total liabilities
|
-
|
-
|
-
|
8,459
|
8,459
|
Note 3. Operating Loss
|
2024
|
2023
|
|
US$'000
|
US$'000
|
The
operating loss is stated after charging:
|
|
|
Foreign exchange
(loss)/gain
|
(123)
|
197
|
Impairment - exploration and
evaluation assets
|
(6,595)
|
(17,030)
|
|
|
|
Auditor's Remuneration
|
|
|
Amounts paid to BDO LLP in respect
of both audit and non-audit services:
|
Audit fees payable to the Company's
auditor for the audit of the Company annual accounts
|
(91)
|
(102)
|
Non-audit fees payable to the
Company's auditor in respect of:
|
|
|
- Other services relating to
taxation compliance
|
(15)
|
(13)
|
Total auditor's remuneration
|
(106)
|
(115)
|
|
|
|
Note 4. Directors' Emoluments
|
Fees and
Salary
|
Share Based Payments in lieu
of Fees
|
Social Security
Contributions
|
Short-Term Employment
Benefits (Total)
|
|
2024
|
2023
|
2024
|
2023
|
2024
|
2023
|
2024
|
2023
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
|
|
|
|
|
|
|
|
Non-Executive Directors:
|
|
|
|
|
|
|
|
|
Patrick Cross
|
23
|
22
|
-
|
-
|
2
|
2
|
25
|
24
|
John Laycock
|
14
|
13
|
-
|
-
|
1
|
1
|
15
|
14
|
Executive Directors:
|
|
|
|
|
|
|
|
|
Thomas
Kelly(a)
|
216
|
269
|
64
|
-
|
-
|
-
|
280
|
269
|
Gajendra
Bisht(b)
|
165
|
220
|
55
|
-
|
-
|
-
|
220
|
220
|
Total
|
418
|
524
|
119
|
-
|
3
|
3
|
540
|
527
|
Capitalised to
E&E(b)
|
(124)
|
(165)
|
-
|
-
|
-
|
-
|
(124)
|
(165)
|
Total expensed
|
294
|
359
|
119
|
-
|
3
|
3
|
416
|
362
|
(a) Services provided by Apnea Holdings Pty Ltd, of which Mr Kelly
is a Director. Mr Kelly has not sold any shares during the
reporting period. Mr Kelly was issued 7,312,500 salary sacrifice
shares in lieu of cash remuneration totalling US$64,000.
(b) Services provided by Topaz Energy Pty Ltd, of which Mr Bisht
is a Director. 75% of Mr Bisht's fees are capitalised to
exploration and evaluation expenditure (Note 8). Mr Bisht was
issued 6,324,608 salary sacrifice shares in lieu of cash
remuneration totalling US$55,000.
The average number of Directors was 4
during 2024 and 2023. The highest paid director received US$280,000
(2023: US$269,000).
Note
5. Finance Expense
|
2024
|
2023
|
|
US$'000
|
US$'000
|
|
|
|
Convertible loan notes - interest
and finance costs (Notes 10 and 11)
|
(1,115)
|
(2,308)
|
Convertible loan notes - loss on
substantial modification (Note 11)
|
(655)
|
(1,369)
|
Fair value adjustment - derivative
financial liabilities
|
-
|
722
|
Total finance expense
|
(1,770)
|
(2,955)
|
Note
6. Taxation
|
2024
|
2023
|
|
US$'000
|
US$'000
|
|
|
|
Opening balance
|
-
|
-
|
Total corporation tax
receivable
|
-
|
-
|
|
|
|
Factors Affecting the Tax Charge for the
Year
|
|
|
Loss from continuing
operations
|
(9,585)
|
(20,795)
|
Loss on ordinary activities before
tax
|
(9,585)
|
(20,795)
|
Loss on ordinary activities at US
rate of 21% (2023: 21%)
|
(2,013)
|
(4,367)
|
Non-deductible expenses
|
1,567
|
3,429
|
Movement in provisions
|
6
|
4
|
Carried forward losses on which no
DTA is recognised
|
439
|
933
|
|
(1)
|
(1)
|
Analysed as:
|
|
|
Tax expense on continuing
operations
|
(1)
|
(1)
|
Tax expense in current
year
|
(1)
|
(1)
|
|
|
|
Deferred Tax Liabilities
|
|
|
|
|
|
Temporary differences -
exploration
|
1,691
|
1,679
|
Temporary differences -
other
|
4
|
4
|
|
1,695
|
1,683
|
Offset of deferred tax
assets
|
(1,695)
|
(1,683)
|
Net deferred tax liabilities
recognised
|
-
|
-
|
|
|
|
Unrecognised Deferred Tax Assets
|
2024
|
2023
|
|
US$'000
|
US$'000
|
|
|
|
Tax losses(a)
|
2,601
|
2,622
|
Temporary differences -
exploration
|
4,310
|
4,110
|
Temporary differences -
other
|
943
|
968
|
|
7,854
|
7,700
|
Offset of deferred tax
liabilities
|
(1,695)
|
(1,683)
|
Net deferred tax assets not brought
to account
|
6,159
|
6,017
|
(a) If not utilised,
carried forward tax losses of approximately US$10.43 million (2023:
US$10.53 million) begin to expire in the year 2033. Deferred income
tax assets are only recognised to the extent that it is probable
that future tax profits will be available against which deductible
temporary differences can be utilised.
Deferred tax assets and deferred tax
liabilities are offset only if applicable criteria to set off is
met.
Note
7. Loss Per Share
The basic loss per share is derived
by dividing the loss after taxation for the year attributable to
ordinary shareholders by the weighted average number of shares on
issue being 973,223,181 (2023: 767,981,222).
|
|
|
|
|
|
2024
|
2023
|
|
Loss per share from
continuing operations
|
|
|
|
Loss after taxation from continuing
operations
|
US$(9,586,000)
|
US$(20,796,000)
|
|
Loss per share - basic
|
(0.98)c
|
(2.71)c
|
|
|
|
|
|
Loss after taxation from continuing
operations adjusted for dilutive effects
|
US$(9,586,000)
|
US$(20,796,000)
|
|
Loss per share - diluted
|
(0.98)c
|
(2.71)c
|
|
|
|
|
For the current and prior financial
years, the exercise of the options is anti-dilutive and as such the
diluted loss per share is the same as the basic loss per share.
Details of the potentially issuable shares that could dilute
earnings per share in future periods are set out in Note
14.
|
|
|
|
|
| |
Note
8. Exploration and Evaluation Assets
|
2024
|
2023
|
|
US$'000
|
US$'000
|
|
|
|
Balance brought forward
|
10,635
|
24,907
|
Additions(a)
|
1,315
|
2,758
|
Impairment(b)(c)(d)
|
(6,595)
|
(17,030)
|
Net
book value
|
5,355
|
10,635
|
|
|
|
(a) The Company was awarded its permit in China in December 2016.
Block 29/11 is located in the Pearl River Mouth Basin, offshore
China. Empyrean is operator with 100% of the exploration right of
the Permit during the exploration phase of the project. In May 2017
the Company acquired a working interest in the Sacramento Basin,
California. Empyrean entered into a joint project with ASX-listed
Sacgasco Limited, to test a group of projects in the Sacramento
Basin, California, including two mature, multi-TcF gas prospects in
Dempsey (EME 30%) and Alvares (EME 25%) and also further identified
follow up prospects along the Dempsey trend (EME 30%). Please refer
to the Operational Review for further information on exploration
and evaluation performed during the year.
(b) The Company has not met the requirements under the PSC to
drill the Topaz well by 12 June 2024 and, post year end, the permit
formally terminated on 12 June 2024. Empyrean has put forward a
submission to CNOOC for further cooperation on Block 29/11. As at
31 March 2024 it was clear that the above requirements would not be
able to be met in time due to lack of
funding and the delays to the completion of the export GSA and sell
down processes in Indonesia. This was
deemed to be an impairment indicator. Given the licence
requirements have not been met and the post year end termination of
the PSC, the Company has, in accordance with IFRS 6, provided for
impairment against all remaining
capitalised costs associated with Block 29/11, together being
US$6.6 million as at 31 March 2024. In the prior year, as a result
of the unsuccessful well at the Jade prospect in April 2022,
Empyrean provided for impairment against Jade prospect costs and
the dry hole costs associated with the Jade drilling program,
together being US$17.0 million as at 31 March 2023.
(c) While the Company will continue to work with its joint venture
partners in reviewing and assessing any further technical and
commercial opportunities as they relate to the Sacramento Basin
project, particularly in light of strong gas prices for gas sales
in the region, it has not budgeted for further substantive
exploration expenditure. Whilst the Company maintains legal title
it has continued to fully impair the carrying value of the asset at
31 March 2024.
(d) In light of current market conditions, little or no work has
been completed on the Riverbend or Eagle Oil projects in the year
and no substantial project work is forecast for either project in
2024/25 whilst the Company focuses on other projects. Whilst the
Company maintains legal title it has continued to fully impair the
carrying value of the asset at 31 March 2024.
Project
|
Operator
|
Working
Interest
|
2024
Carrying
Value
US$'000
|
2023
Carrying
Value
US$'000
|
Exploration and evaluation
|
|
|
|
|
China Block 29/11
|
Empyrean Energy
|
100%1
|
-
|
5,958
|
Sacramento Basin
|
Sacgasco
|
25-30%
|
-
|
-
|
Duyung PSC
|
Conrad Asia Energy
|
8.5%
|
5,355
|
4,677
|
Riverbend
|
Huff Energy
|
10%
|
-
|
-
|
Eagle Oil Pool
Development
|
Strata-X
|
58.084%
|
-
|
-
|
|
|
|
5,355
|
10,635
|
|
|
|
|
|
|
|
|
|
|
1. In the
event of a commercial discovery, and subject to the Company
entering PSC, CNOOC Limited will have a back in right to 51% of the
permit. As at the date of these financial statements no commercial
discovery has been made.
|
Note
9. Trade and Other Receivables
|
2024
|
2023
|
|
US$'000
|
US$'000
|
|
|
|
Accrued revenue
|
-
|
30
|
VAT receivable
|
17
|
8
|
Total trade and other receivables
|
17
|
38
|
Note 10.
Trade and Other Payables
|
2024
|
2023
|
|
US$'000
|
US$'000
|
|
|
|
Trade payables
|
2,599
|
2,245
|
Accrued expenses
|
330
|
349
|
Accrued interest
|
-
|
1,630
|
Total trade and other payables
|
2,929
|
4,224
|
Note 11.
Convertible Loan Notes
|
2024
|
2023
|
|
US$'000
|
US$'000
|
(a) Convertible Loan Note -
Original
|
|
|
Opening balance
|
-
|
4,125
|
Drawdowns
|
-
|
-
|
Conversions
|
-
|
(1,970)
|
Costs of finance
|
-
|
121
|
Foreign exchange loss
|
-
|
(133)
|
Extinguishment on substantial
modification(c)
|
-
|
(2,143)
|
Total original convertible loan note -
current
|
-
|
-
|
|
|
|
(b) Convertible Loan Note - Modification
1
|
|
|
Opening balance
|
4,076
|
-
|
Recognition of modified liability
1
|
-
|
2,637
|
Loss on substantial
modification
|
-
|
1,369
|
Costs of finance
|
-
|
185
|
Foreign exchange
gain/(loss)
|
12
|
(115)
|
Extinguishment on substantial
modification
|
(4,088)
|
-
|
Total Convertible Loan Note - Modification 1
|
-
|
4,076
|
|
|
|
(c) Convertible Loan Note - Modification
2
|
|
|
Opening balance
|
-
|
-
|
Recognition of modified liability
2
|
6,544
|
-
|
Loss on substantial
modification
|
655
|
-
|
Costs of finance
|
261
|
-
|
Foreign exchange gain
|
134
|
-
|
Total Convertible Loan Note - Modification 2
|
7,594
|
-
|
(a) In December 2021, the Company announced that it had entered
into a Convertible Loan Note Agreement with a Melbourne-based
investment fund (the "Lender"), pursuant to which the Company
issued a convertible loan note to the Lender and received gross
proceeds of £4.0 million (the "Convertible Note").
(b) As announced in May
2022, the Company and the Lender then amended the key repayment
terms of the Convertible Note, which at that time included the
right by the Lender to redeem the Convertible Note within 5
business days of the announcement of the results of the Jade well
at Block 29/11. The face value of the loan notes was reset to £3.3m
with interest to commence and accrue at £330,000 per calendar month
from 1 December 2022.
(c) In May 2023, it was
announced that the Company and the Lender have, in conjunction with
and conditional upon the completion of the Subscription, now
reached agreement on amended key terms to the Convertible Note to
allow the sales process for Mako to complete. The key terms of the
amendment are as follows:
1. The
parties have agreed a moratorium of accrual interest on the
Convertible Note until 31 December 2023 - interest will accrue
thereafter at a rate of 20% p.a.;
2. The
conversion price on the Convertible Note has been reduced from 8p
to 2.5p per Share;
3. The face
value of the Convertible Note has been reduced from £5.28m (accrued
to the end of May 2023) to £4.6 million (to be repaid from
Empyrean's share of the proceeds from Mako sell down process);
and
4. Empyrean
will pay the Lender the greater of US$1.5 million or 15% of the
proceeds from its share in the Mako sell down process.
Note 12.
Reconciliation of Net Loss
|
2024
|
2023
|
|
US$'000
|
US$'000
|
|
|
|
Loss before taxation
|
(9,585)
|
(20,795)
|
|
|
|
Share-based payments
|
212
|
22
|
Finance expense
(non-cash)
|
1,770
|
2,955
|
Impairment - exploration and
evaluation assets
|
6,595
|
17,030
|
Foreign exchange
loss/(gain)
|
123
|
(197)
|
|
|
|
Decrease/(increase) in trade
receivables relating to operating activities
|
21
|
(2)
|
Increase/(decrease) in trade
payables relating to operating activities
|
8
|
(158)
|
Increase in provisions
|
29
|
19
|
Net
cash outflow from operating activities before
taxation
|
(827)
|
(1,126)
|
Receipt of corporation
tax
|
-
|
-
|
Net
cash outflow from operating activities
|
(827)
|
(1,126)
|
Note 13.
Share Capital
|
2024
|
2023
|
|
US$'000
|
US$'000
|
|
|
|
1,280,801,707 (2023: 788,431,892) ordinary shares of 0.2p each
|
3,405
|
2,170
|
|
|
|
|
2024
|
2023
|
|
No.
|
No.
|
a) Fully Paid Ordinary Shares of 0.2p
each - Number of Shares
|
|
|
At the beginning of the reporting
year
|
788,431,892
|
646,070,780
|
Shares issued during the
year:
|
|
|
· Placements(a)
|
469,753,783
|
121,750,001
|
· Salary
sacrifice shares
|
19,728,532
|
-
|
· Advisor shares (equity issue cost)
|
2,887,500
|
-
|
· Partial conversion of Convertible Note
|
-
|
18,750,000
|
· Exercise of warrants
|
-
|
1,861,111
|
Total at the end of the reporting year
|
1,280,801,707
|
788,431,892
|
|
2024
|
2023
|
|
US$'000
|
US$'000
|
b) Fully Paid Ordinary Shares of 0.2p each -
Value of Shares
|
|
|
At the beginning of the reporting
year
|
2,170
|
1,809
|
Shares issued during the
year:
|
|
|
· Placements(a)
|
1,179
|
307
|
· Salary
sacrifice shares
|
49
|
-
|
· Advisor shares (equity issue cost)
|
7
|
-
|
· Partial conversion of Convertible Note
|
-
|
49
|
· Exercise of warrants
|
-
|
5
|
Total at the end of the reporting year
|
3,405
|
2,170
|
a) In May
2023 US$1.88 million was raised through an equity placement, with a
further US$0.90 million raised in February 2024. Funds raised are
being used for the completion of joint regional oil migration and
3D seismic inversion studies at Topaz, ongoing prospect, licensing
fees and permit costs, post Jade well consultancy, analysis and
residual exploration costs, front-end engineering design ("FEED"),
studies and surveys at Mako - including gas processing and export
gas tie in at the Kakap KF Platform and for general working capital
requirements.
The Companies Act 2006 (as amended)
abolishes the requirement for a company to have an authorised share
capital. Therefore the Company has taken advantage of these
provisions and has an unlimited authorised share
capital.
Each of the ordinary shares carries
equal rights and entitles the holder to voting and dividend rights
and rights to participate in the profits of the Company and in the
event of a return of capital equal rights to participate in any sum
being returned to the holders of the ordinary shares. There is no
restriction, imposed by the Company, on the ability of the holder
of any ordinary share to transfer the ownership, or any of the
benefits of ownership, to any other party.
Share options and warrants
|
|
|
The number and weighted average
exercise prices of share options and warrants are as
follows:
|
|
Weighted Average
Exercise
Price
|
Number
of Options
and
Warrants
|
Weighted Average
Exercise
Price
|
Number
of Options
and
Warrants
|
|
|
2024
|
2024
|
2023
|
2023
|
|
|
|
|
|
|
|
Outstanding at the beginning of the
year
|
£0.137
|
6,558,333
|
£0.116
|
65,890,916
|
|
Issued during the year
|
£0.044
|
164,833,333
|
-
|
-
|
|
Expired during the year
|
£0.137
|
(6,558,333)
|
£0.114
|
(57,471,472)
|
|
Exercised during the year
|
-
|
-
|
£0.096
|
(1,861,111)
|
|
Outstanding at the end of the
year
|
£0.044
|
164,833,333
|
£0.137
|
6,558,333
|
|
|
|
|
|
|
|
|
Incentive
Warrants
|
Incentive
Warrants
|
Advisor
Warrants
|
Advisor
Warrants
|
Placement
Warrants
|
Number of options
remaining
|
5,000,000
|
5,000,000
|
2,833,333
|
12,000,000
|
140,000,000
|
Grant date
|
29/05/23
|
29/05/23
|
29/05/23
|
13/02/24
|
13/02/24
|
Expiry date
|
30/05/26
|
30/05/26
|
30/05/24
|
26/02/26
|
26/02/26
|
Share price
|
£0.010
|
£0.010
|
£0.010
|
£0.0044
|
N/A
|
Exercise price
|
£0.015
|
£0.020
|
£0.015
|
£0.0025
|
£0.005
|
Volatility
|
100%
|
100%
|
100%
|
94%
|
N/A
|
Option life
|
3.00
|
3.00
|
1.00
|
2.00
|
2.50
|
Expected dividends
|
-
|
-
|
-
|
-
|
-
|
Risk-free interest rate
|
4.45%
|
4.45%
|
4.45%
|
4.68%
|
N/A
|
|
|
|
|
|
|
|
|
|
| |
The options outstanding at 31 March
2024 have an exercise price in the range of £0.0025 to £0.02 (2023:
£0.075 to £0.18) and a weighted average remaining contractual life
of 2.32 years (2023: 0.37 years). None of
the outstanding options and warrants at 31 March are exercisable at
period end.
|
Note
14. Reserves
Reserve
|
Description and purpose
|
Warrant and share-based payment
reserve
|
Records items recognised as expenses
on valuation of employee share options and subscriber
warrants.
|
Retained losses
|
All other net gains and losses and
transactions with owners not recognised elsewhere.
|
Note 15.
Related Party Transactions
Directors are considered Key
Management Personnel for the purposes of related party
disclosure.
In the May 2023 equity placement
that raised US$1.88 million, Mr Tom Kelly subscribed for 6,250,000
new ordinary shares for a total consideration of US$64,000. Mr Gaz
Bisht subscribed for 1,850,000 new ordinary shares for a total
consideration of US$19,000.
In the February 2024 equity
placement that raised US$0.90 million, Mr Tom Kelly subscribed for
12,000,000 new ordinary shares for a total consideration of
US$38,000. Mr Gaz Bisht subscribed for 8,800,000 new ordinary
shares for a total consideration of US$28,000.
There were no other related party
transactions during the year ended 31 March 2024 other than those
disclosed in Note 4.
Note 16.
Financial Risk Management
The Company manages its exposure to
credit risk, liquidity risk, foreign exchange risk and a variety of
financial risks in accordance with Company policies. These policies
are developed in accordance with the Company's operational
requirements. The Company uses different methods to measure and
manage different types of risks to which it is exposed. These
include monitoring levels of exposure to interest rate and foreign
exchange risk and assessment of prevailing and forecast interest
rates and foreign exchange rates. Liquidity risk is managed through
the budgeting and forecasting process.
Credit risk
Exposure to credit risk relating to
financial assets arises from the potential non-performance by
counterparties of contract obligations that could lead to a
financial loss to the Company.
Risk is also minimised by investing
surplus funds in financial institutions that maintain a high credit
rating.
Credit risk related to balances with
banks and other financial institutions are managed in accordance
with approved Board policy. The Company's current investment policy
is aimed at maximising the return on surplus cash, with the aim of
outperforming the benchmark within acceptable levels of risk return
exposure and to mitigate the credit and liquidity risks that the
Company is exposed to through investment activities.
The following table provides
information regarding the credit risk relating to cash and money
market securities based on Standard and Poor's counterparty credit
ratings.
|
2024
|
2023
|
|
|
US$'000
|
US$'000
|
|
Cash and cash equivalents
|
|
|
|
AA-rated
|
981
|
83
|
|
Total cash and cash equivalents
|
981
|
83
|
|
|
Price risk
Commodity price risk
The Company is not directly exposed
to commodity price risk. However, there is a risk that the changes
in prevailing market conditions and commodity prices could affect
the viability of the projects and the ability to secure additional
funding from equity capital markets.
Liquidity risk
Liquidity risk arises from the
possibility that the Company might encounter difficulty in settling
its debts or otherwise meeting its obligations related to financial
liabilities. The Company manages liquidity risk by maintaining
sufficient cash or credit facilities to meet the operating
requirements of the business and investing excess funds in highly
liquid short-term investments. The Company's liquidity needs can be
met through a variety of sources, including the issue of equity
instruments and short or long-term borrowings.
Alternative sources of funding in
the future could include project debt financing and equity
raisings, and future operating cash flow. These alternatives will
be evaluated to determine the optimal mix of capital
resources.
The following table details the
Company's non-derivative financial instruments according to their
contractual maturities. The amounts disclosed are based on
contractual undiscounted cash flows. Cash flows realised from
financial assets reflect management's expectation as to the timing
of realisation. Actual timing may therefore differ from that
disclosed. The timing of cash flows presented in the table to
settle financial liabilities reflects the earliest contractual
settlement dates.
|
|
Less than 6
months
|
6 months to 1
year
|
1 to 6
years
|
Total
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
|
|
|
|
Convertible loan note
(2024)
|
7,594
|
-
|
-
|
7,594
|
Convertible loan note
(2023)
|
4,076
|
-
|
-
|
4,076
|
Trade and other payables
(2024)
|
2,929
|
-
|
-
|
2,929
|
Trade and other payables
(2023)
|
4,718
|
-
|
-
|
4,718
|
Capital
In managing its capital, the
Company's primary objective is to maintain a sufficient funding
base to enable the Company to meet its working capital and
strategic investment needs. In making decisions to adjust its
capital structure to achieve these aims, through new share issues,
the Company considers not only its short-term position but also its
long-term operational and strategic objectives. The Company has a
track record of successfully securing additional funding as and
when required from equity capital markets.
|
|
|
Foreign exchange risk
The Company operates internationally
and is exposed to foreign exchange risk arising from various
currency exposures. Foreign exchange risk arises from future
commitments, assets and liabilities that are denominated in a
currency that is not the functional currency of the Company.
Currently there are no foreign exchange hedge programmes in place.
However, the Company treasury function manages the purchase of
foreign currency to meet operational requirements.
|
|
|
As at 31 March 2024, the Company's
gross exposure to foreign exchange risk was as follows:
|
|
|
2024
|
2023
|
|
|
US$'000
|
US$'000
|
|
Gross foreign currency financial assets
|
|
|
|
Cash and cash equivalents -
GBP
|
977
|
81
|
|
Total gross exposure
|
977
|
81
|
|
|
|
The effect of a 10% strengthening of
the USD against the GBP at the reporting date on the
GBP-denominated assets carried within the USD functional currency
entity would, all other variables held constant, have resulted in
an increase in post-tax loss for the year and decrease in net
assets of US$97,700 (2023: US$8,100).
|
|
|
|
|
|
|
| |
Fair value
Fair values are those amounts at
which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm's length transaction. Fair
values may be based on information that is estimated or subject to
judgement, where changes in assumptions may have a material impact
on the amounts estimated. Areas of judgement and the assumptions
have been detailed below.
The following methods and
assumptions are used to determine the net fair values of financial
assets and liabilities:
§ Cash
and short-term investments - the carrying amount approximates fair
value because of their short term to maturity;
§ Trade receivables and trade creditors - the carrying amount
approximates fair value; and
§ Derivative financial assets and liabilities - initially
recognised at fair value through profit and loss at the date the
contract is entered into and subsequently re-measured at each
reporting date, the fair value of the derivative financial
liability warrants is calculated using a Black-Scholes Model.
Measurement inputs include share price on measurement date,
exercise price of the instrument, expected volatility (based on
weighted average historic volatility adjusted for changes expected
due to publicly available information), weighted average expected
life of the instruments (based on historical experience and general
option holder behaviour), expected dividends, and the risk-free
interest rate (based on government bonds).
No financial assets and financial
liabilities are readily traded on organised markets in standardised
form.
Financial instruments by category
are summarised below:
Financial Instruments by Category
|
Fair Value Through Profit or
Loss
|
Amortised
Cost
|
31 March
2024
US$'000
|
31 March
2023
US$'000
|
31 March
2024
US$'000
|
31 March
2023
US$'000
|
Financial assets
|
|
|
|
|
Cash and cash equivalents
|
-
|
-
|
981
|
83
|
Trade and other
receivables
|
-
|
-
|
17
|
38
|
Total financial assets
|
-
|
-
|
998
|
121
|
Financial liabilities
|
|
|
|
|
Trade and other payables
|
-
|
-
|
2,599
|
2,245
|
Convertible loan notes
|
-
|
-
|
7,594
|
4,076
|
Total financial liabilities
|
-
|
-
|
10,193
|
6,321
|
Cash and cash equivalents
Cash and short-term deposits in the
Statement of Financial Position comprise cash at bank and in hand
and short-term deposits with an original maturity of three months
or less. For the purposes of the Cash Flow Statement, cash and cash
equivalents consist of cash and cash equivalents as defined above
and which are readily convertible to a known amount of cash and are
subject to an insignificant risk of change in value.
Note 17.
Events After the Reporting Date
Significant events post reporting
date were as follows:
On 13 June 2024 the Company
announced that as it had not commenced the drilling of the Topaz
prospect by 12 June 2024 as required under the second phase of
exploration on Block 29/11 and therefore has not met the
requirements to continue the cooperation on Block 29/11 with CNOOC.
The permit therefore formally terminated on 12 June 2024.
On 24 August 2024 Empyrean received a letter of
demand from CNOOC alleging that Empyrean has outstanding
obligations under the PSC. The Company disputes the letter and is
endeavouring to settle the matter amicably under the dispute
resolution clauses provided for in the PSC. Empyrean has put forward a submission to CNOOC for further
cooperation on Block 29/11.
On 24 June 2024 the Company
announced that the Mako JV partners had entered into a binding
domestic Gas Sales Agreement for the sale and purchase of the
domestic portion of Mako gas with PGN, the gas subsidiary of PT
Pertamina (Persero), the national oil company of
Indonesia.
On 22 August 2024 the Company
announced that Dr Patrick Cross had stepped down as Non-Executive
Chairman of the Company. Existing Non-Executive Director Mr John
Laycock assumed the position of Non-Executive Chairman. Dr Cross
remains on the Board as a Non-Executive Director.
On 2 September 2024 the Company
announced that the Mako Joint Venture partners and Sembcorp had
signed a binding GSA for the export of gas produced from the Mako
field to Singapore. The contract term is until the end of the
Duyung PSC in January 2037 and allows for the sale of up to 76
billion Bbtud, which is equivalent to around 76.9 mmscfd. The
export GSA also contains provisions for the sale of up to an
additional 35 Bbtud (around 35.4 mmscfd) should a tie-in pipeline
not be built to the Indonesian domestic market in Batam and DMO
sales do not therefore eventuate. The possible export of these
additional volumes is recognised in the Mako POD. Completion of
both GSAs is a significant milestone on the path to a FID for the
Mako project.
No other matters or circumstances
have arisen since the end of the financial year which significantly
affected or could significantly affect the operations of the
Company, the results of those operations, or the state of affairs
of the Company in future financial years.
Note 18.
Committed Expenditure
Block 29/11 offshore China
The Company's committed work program
for the GSA phase for Block 29/11 included acquisition, processing
and interpretation of 500km2 for a 3D seismic survey, and a
financial commitment of US$3.0 million. The Company exceeded the
work program commitments during the 2018 financial year.
Having successfully completed the
committed work program for the first phase GSA, the Company
exercised its option to enter a PSC on the Block, on pre-negotiated
terms, with CNOOC on 30 September 2018, with the date of
commencement of implementation of the PSC being 13 December 2018.
In April 2022, Empyrean announced that the Jade well had reached a
final total depth of 2,849 metres MD and the interpretation from
logging while drilling (LWD) and mud logging equipment indicated no
oil pay in the target reservoir. In June 2022, Empyrean announced
that following the completion of post well analysis at Jade it
would be entering the second phase of exploration and drilling the
Topaz prospect at its 100% owned Block 29/11 permit, offshore
China. The second phase of exploration required the payment to
CNOOC of US$250,000 and the work obligation of drilling of an
exploration well within 2 years. It is estimated that the cost of
drilling this well would be approximately US$12 million. While the
Company entered the second phase of exploration, it has not met the
requirements under the PSC to drill the Topaz well by 12 June 2024
and the permit formally terminated on 12 June 2024. Empyrean has
put forward a submission to CNOOC for further cooperation on Block
29/11.
Duyung PSC offshore Indonesia
As reported the joint venture
partners completed a successful exploration and appraisal well
program at the Duyung PSC during 2020. Empyrean have paid all cash
calls associated with the program with no further amounts due and
payable.
Sacramento Basin assets onshore California
The Company earned a 30% interest in
the Dempsey Prospect by paying US$2,100,000 towards the costs of
drilling the Dempsey 1-15 exploration well. These drilling costs
had a promoted cap of US$3,200,000 and the Company paid its share
of additional costs at Dempsey 1-15, including completion costs. At
the time of this report, the work plan, cost estimates and timing
of further expenditure for both the Borba and Alvares prospects are
unknown. The Company incurs quarterly cash calls of approximately
US$8,000 for overheads, geological and geophysical
costs.
Note 19. Contingent
liabilities
On 24 August 2024, the Company
received a letter of demand from CNOOC's lawyers, King Wood &
Mallesons, in relation to Block 29/11. The letter of demand
alleges, inter alia, that Empyrean has outstanding obligations,
totalling $12m, under the relevant Petroleum Contract entered into
with CNOOC and that Empyrean has failed to pay certain amounts that
CNOOC consider due and payable under the Petroleum Contract
relating to the prospecting fee and exploration work. The Company
rejects the outstanding amounts claimed and has responded to the
letter of demand requesting clarification of the basis for the
demands made in the letter. At this time, it is too early for the
Company to form any opinion on the merits of any demands made
therein and the Company intends to continue dialogue with CNOOC
and, in line with the provisions of the Petroleum Contract, to
settle amicably through consultation any dispute arising in
connection with the performance or interpretation of any provision
of the Petroleum Contract.
Note
20. Ultimate Controlling Party
The Directors consider that there is
no ultimate controlling party of the Company.