Empyrean Energy PLC (AIM: EME) shares surged around 170% after the company announced it had reached a binding term sheet with Conrad Asia Energy Ltd to amicably resolve a long-running cash call dispute relating to the Duyung PSC and the Mako Gas Field in Indonesia.
Under the agreement, Empyrean will retain economic exposure to the Mako Gas Field while eliminating any future direct cash call obligations. Project financing is now secured through to development, with first gas targeted for the fourth quarter of 2027.
Empyrean’s 8.5% participating interest in the Duyung PSC will be transferred into a special purpose vehicle (SPV). The company will make an upfront payment of US$353,388.50, with a further US$353,388.50 to be paid from dividends generated by the SPV. These payments will settle all historic claims between the parties.
Highlights
· Term Sheet executed between Empyrean and Conrad for Duyung PSC settlement and resolution of the Mako Gas Field cash call dispute;
· Conrad Withdrawal Notice withdrawn;
· Project finance secured to cover Empyrean future funding exposure through to development; and
· Pathway to first gas from Mako targeted for Q4 2027
Outstanding Cash Call Settlement
· On completion of the transactions above, Empyrean will pay US$353,388.50 to Conrad, representing 50% of the disputed outstanding cash call amount;
· A further US$353,388.50 will be paid to Conrad from Empyrean’s share of SPV dividends.
· Settlement of these two payments will represent full and final settlement of all past claims that WNEL and Conrad may have against Empyrean.
WNEL Farm-out Benefits
· On completion of the transactions, Empyrean will be entitled to 8.5% of each instalment of the consideration to be made to WNEL by the Majority Farminee.
In addition, Empyrean will be entitled to receive 8.5% of any consideration arising from a future farm-out by WNEL to a majority farminee, preserving upside exposure to the project.
The agreement also requires a restructuring of Empyrean’s secured convertible note, which the company said will be addressed as part of the wider transaction. Management described the deal as transformational, resolving a key overhang while maintaining exposure to a significant gas development without further funding risk.
Empyrean Interim CEO, Gaz Bisht, commented:
“This is an outstanding outcome for Empyrean and a pivotal step forward for the Company. We have retained our ongoing economic exposure to a high-quality gas development with a clear pathway to first gas targeted for the fourth quarter of 2027, while eliminating future direct cash call obligations associated with field development. It is particularly satisfying that Empyrean has been involved in the full lifecycle of the Mako Gas Field – from the successful exploration well drilled in 2017, through two appraisal wells, to finalising the Plan of Development.
I would like to thank our shareholders for their patience and continued support of the Board and management during what has been a challenging period, as well as the support of our Lender. We also sincerely appreciate Conrad’s constructive and collaborative approach, and in particular the leadership of its CEO, Miltos Xynogalas, whose commercial pragmatism and willingness to engage were instrumental in resolving the dispute.
With this matter now concluded, the Board and management are confident in renewing our focus on building value through the addition of further low-risk, high-quality assets to Empyrean’s portfolio.”
For further information please visit www.empyreanenergy.com
