Empyrean Energy PLC Update on Strategic Review; Termination of FSP (9950D)
February 04 2015 - 1:50AM
UK Regulatory
TIDMEME
RNS Number : 9950D
Empyrean Energy PLC
04 February 2015
Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil &
Gas
4 February 2015
Empyrean Energy PLC ("Empyrean" or "the Company")
Update on Strategic Review and Termination of Formal Sale
Process
Empyrean Energy Plc, the profitable US onshore oil, gas and
condensate exploration, development and production company with
assets in Texas and California, announced on 10 July 2014, that it
had launched a review of strategic options and the commencement of
a formal sale process (the "FSP" or the "Process") under the City
Code on Takeovers and Mergers (the "City Code").
The objective of the Process was to consider a number of
strategic options available to the Company and to enable it to
capitalise on recent, increased levels of corporate activity and
industry interest in the region around its flagship project, the
Sugarloaf AMI in the prolific Eagle Ford Shale, Texas ("Sugarloaf"
or the "Project"), which is operated by Marathon Oil Company
("Marathon").
The Company has conducted a thorough and exhaustive review
through its advisers, Macquarie Capital and Cenkos Securities plc,
and has been encouraged by the significant level of interest from,
and engagement with, potential counterparties throughout the
Process, as well as the receipt of a number of indicative proposals
which the Company has sought to clarify and finalise over recent
months. However, the significant uncertainty caused by prevailing
market conditions has resulted in no proposals being received to
date which the Board of Empyrean (the "Board") believes
appropriately value either the Company or its assets or which it
believes might lead to a transaction which could be completed in a
reasonable period of time. Specifically, the benchmark price for
West Texas Intermediate crude oil has fallen by over 50% since the
commencement of the Process and, as widely reported, this has
resulted in companies across the sector reducing capital
expenditure and delaying investment decisions pending an
improvement or stabilisation in underlying commodity pricing.
As a result, the Board has decided to terminate the FSP with
immediate effect and believes its continuation will unnecessarily
prolong shareholder uncertainty with no immediate prospect of a
satisfactory outcome. The Panel on Takeovers and Mergers has
confirmed that the Company is no longer in an offer period under
the City Code and, accordingly, the requirement to make disclosures
under Rule 8 of the City Code has now ceased.
Empyrean's Strategy:
The Board remains focussed on maximising value for its
shareholders and, having particular regard to the current lower oil
price environment, it is confident in the on-going execution of its
strategy as an independent company.
The Board believes that shareholder value is best maintained and
enhanced through its continued participation in the Project and
through growing the Company's asset base and production
profile.
The Company remains well-positioned to benefit from Marathon's
rapid and highly-efficient drilling programme at Sugarloaf and to
capitalise on the significant additional upside available from
initiatives such as the further development of the Austin Chalk
formation, further down-spacing and the recently-commenced 'stac
and frac' pilot targeting the Austin Chalk, Upper Eagle Ford and
Lower Eagle Ford formations.
Furthermore, the Board believes that the economics of the
Project remain robust for Empyrean in the current oil price
environment, and that this will improve through a recovery in the
oil price or a reduction in on-going drilling and operational costs
as the service providers adapt pricing to reflect the lower levels
of activity across the sector.
Whilst the Company fully expects that further funding will be
required to finance the on-going development of its interest in
Sugarloaf, it continues to benefit from the support of its existing
lender, Macquarie Bank Limited ("Macquarie"). In early January, the
Company drew down a further US$6 million under Tranche B of its
loan facility with Macquarie and subsequently completed its
scheduled repayment of an amount totaling US$2 million. This
repayment was made from sales proceeds received from
production.
The Company continues to actively assess its capital structure
and its cost base to ensure that it is as efficient as possible and
that the Company is well placed to seek alternative financing to
lower its cost of capital, thereby mitigating the impact of a lower
price oil environment and increasing the returns for its
shareholders.
** ENDS **
For further information please visit www.empyreanenergy.com or
contact the following:
Empyrean Energy plc
Tom Kelly Tel: +61 8 9481 0389
Cenkos Securities plc
Neil McDonald nmcdonald@cenkos.com Tel: +44 (0) 131
220 9771
Nick Tulloch ntulloch@cenkos.com Tel: +44 (0) 131
220 9772
St Brides Partners Ltd
Hugo de Salis hugo@stbridespartners.co.uk Tel: +44 (0) 20 7236
1177
Elisabeth Cowell elisabeth@stbridespartners.co.uk Tel: +44 (0) 20 7236
1177
Lottie Brocklehurst lottie@stbridespartners.co.uk Tel: +44 (0) 20 7236
1177
This information is provided by RNS
The company news service from the London Stock Exchange
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