Empyrean Energy is pleased to announce its final results for the year ended 31 March 2022 (” Report and Accounts “). The full Report and Accounts will be made available on the Company’s website in the coming days.
As announced on 2 September 2022, the Company was unable to publish the Company’s 2022 Report and Accounts together with the Notice of Annual General Meeting (” AGM “). Given that the Company is required to hold an AGM each year within six months of its financial year end, the Company’s 2022 AGM will be held on 27 September 2022.
@EmpyreanEnergy Mako Gas Project – Updated Plan of Development. The PoD has now been submitted to the Indonesian Ministry of Energy and Mineral Resources for approval. #EME holds an 8.5% interest in the Duyung PSC.https://t.co/7pf9e7QkOX
— Share_Talk ™ (@Share_Talk) September 9, 2022
An announcement confirming the posting of the Report and Accounts and Notice of General Meeting to approve the Report and Accounts will be made in due course.
Highlights
Block 29/11, Pearl River Mouth Basin, China (EME 100% reverting to 49% upon commercial discovery)
Reporting period
· Empyrean and its partner China National Offshore Oil Corporation (” CNOOC “), along with its technical service providers CNOOC Enertech and China Oilfield Services Limited (” COSL “) completed significant pre-drilling operational, technical and permitting work throughout the year to enable the safe drilling of the Jade prospect post reporting year end.
Post-Reporting period
· LH 17-2-1 Jade well spudded and reached final total depth of 2,849 metres Measured Depth (“MD”) during April 2022. No oil pay was encountered in the target reservoir and demobilisation operations were completed.
· Post-well analysis at Jade confirmed reservoir quality better than pre-drill estimate with regional seal confirmed and depth conversion approach validated. Based on post-drill technical evaluation, and CNOOC-assisted migration pathways assessment, Empyrean decided to enter the second phase of exploration with the aim to drill the larger Topaz prospect.
· Topaz Drill Program targeted to commence in 2023.
Duyung PSC Project, Indonesia (EME 8.5%)
Reporting period
· Prevailing strong gas prices have enabled the operator Conrad Petroleum Ltd (“Conrad”) to advance Gas Sales Agreement (“GSA”) negotiations with multiple interested parties.
· Conrad has also been working with SKK Migas to enable an upgrade to the Plan of Development (“POD”) that was approved following the discovery of Mako. Following the successful appraisal of Mako, Gaffney Cline and Associates (“GCA”) upgraded its resource assessment for Mako and the new POD is expected to be finalised once Ministerial approval is obtained.
· Mako is one of the largest gas discoveries in the West Natuna Sea and the largest undeveloped resource in the area.
Sacramento Basin, California USA (EME 25-30%)
· Evaluation on the project is ongoing and the Company will continue to work with its joint venture partners in reviewing and assessing any further technical and commercial opportunities in Sacramento, particularly in light of strong gas prices.
Corporate
Reporting period
· Placement and Convertible Note funding of US$10.14 million (£7.62 million) secured in December 2021 to partially fund Jade Prospect drilling.
· Placement to raise US$6.92 million (£5.02 million) completed in July 2021.
Post-Reporting period
· Placement to raise US$2.25 million (£1.83 million) completed in May 2022.
Empyrean CEO Tom Kelly said , “Empyrean’s key focus during the year was completing the necessary activities required in preparation for the drilling of the initial exploration well at Jade under the PSC terms.
While the end result was not the one we had hoped for at Jade, the achievement of safely drilling the well on time and on budget was a credit to Empyrean’s team and a great reflection of the excellent teamwork, expertise, professionalism and cooperation between the Company, its partner CNOOC, and its technical service providers CNOOC Enertech and COSL.
Importantly, post the drilling at Jade, Empyrean has been able to combine our excellent quality 3D seismic data with the confirmed well data from Jade resulting in post well analysis that has improved the validity of the Topaz prospect as a robust and large drilling target of approximately 891 million barrels in place (P10). We have therefore made the decision to enter into an agreement for the second phase of exploration on Block 29/11 with the aim to drill Topaz before June 2024.
In Indonesia, Empyrean looks forward to maximising the value from its interest in the Mako Gas Field which would strengthen the Company’s balance sheet and help fund the drilling of Topaz.
In California, while activity and expenditure was limited during the year, the operator Sacgasco continues to evaluate the project and Empyrean will review and assess any further technical and commercial opportunities as they come to hand, particularly in light of strong gas prices for gas sales in the Sacramento Basin.
As always, the Company continually assesses other financing and strategic alternatives to provide it with additional working capital as and when required, including through the sale or partial sale of existing assets, through joint ventures of existing assets or through further equity or debt funding. The Company has also successfully restructured its convertible note.
In addition to its existing projects, Empyrean continues to assess a number of additional oil and gas projects that it believes may enhance a balanced portfolio of opportunity and will update shareholders as required.
While the Board and management share the disappointment of the Jade well result with its shareholders, it moves forward with renewed optimism, with good news due from Indonesia and the learnings from Jade further de-risking Topaz which standalone has the potential to be a Company changer.”
Chairman’s Statement
It was another busy year for Empyrean on its portfolio of exploration projects during the year, primarily in China.
After an enormous amount of hard work preparing for the drilling of the Jade prospect in China, the Company was clearly disappointed that the drilling program post year end did not result in the discovery of commercial hydrocarbons at the Jade Prospect. Unfortunately, this is the nature of exploration and we take the good with the bad.
Nevertheless, post-well evaluation in conjunction with CNOOC has provided invaluable further interpretation of the critical elements of effective regional oil migration pathways, with positive implications for the second target on Block 29/11, the Topaz prospect.
We also expect good news in the near term from Indonesia with GSA negotiations advanced and the prospect of Empyrean realising significant value from its interest there to follow the conclusion of the GSA process.
As always, I would like to thank the Board, management and staff for their efforts during the year. Empyrean retains a positive outlook for the future and is setting its sights on value creation from Indonesia and the further de-risked drill opportunity in China.
Patrick Cross
Non-Executive Chairman
15 September 2022
