TIDMEME
RNS Number : 4696S
Empyrean Energy PLC
08 July 2015
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Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil &
Gas
8 July 2015
Empyrean Energy PLC ('Empyrean' or 'the Company')
MAJOR UPGRADE TO SUGARLOAF AMI RESERVES AND RESOURCES
-- Proven Reserves (1P) up 63% to 5.78 MMboe
-- Probable Reserves up 130% to 6.86 MMboe
-- Proven plus Probable Reserves (2P) up 94% to 12.64 MMboe
-- Proven plus Probable plus Possible Reserves (3P) up 134% to 20.91 MMboe
-- 2P Reserves plus 2C Resources up 49% to 15.49 MMboe
-- NPV (10) of 1P Reserves valued in report at approximately US$43.8 million
-- NPV (10) of 2P Reserves valued in report at approximately US$121.7 million
-- NPV (10) of 3P Reserves valued in report at approximately US$263.5 million
-- 231 wells in production at the Project with 54 drilled wells undergoing completion operations
-- Increased reserves attributable to successful appraisal of
the Austin Chalk and a shift from contingent resource status into a
reserve status
-- Upper Eagle Ford now represents similar upside potential to
where the Austin Chalk was 18 months ago
Empyrean, the profitable US onshore oil, gas and condensate
exploration, development and production company with assets in
Texas and California, is pleased to announce a significant increase
in its Reserves and Resources at its flagship Sugarloaf AMI asset
('the Project') in the liquids rich core of the Eagle Ford Shale in
Texas, USA, following the receipt of an independent appraisal and
updated report prepared by DeGolyer & MacNaughton.
The Project, in which Empyrean has a 3% working interest, is
operated by Marathon Oil Company, a subsidiary of US major Marathon
Oil Corporation (NYSE: MRO) ('Marathon' or the 'Operator'). The
figures below represent the Barrels of Oil Equivalent Reserves and
Resources attributable to Empyrean's net revenue interest ('NRI')
after royalties in the Project.
Sugarloaf AMI Revised Reported as at Increase
(EME 3%, net 2.25% after 31 Dec 2014 31 Dec 2013 %
royalties) MMboe MMboe
-------------------------- ------------- --------------- ---------
1P Reserves 5.78 3.54 63
-------------------------- ------------- --------------- ---------
2P Reserves 12.64 6.52 94
-------------------------- ------------- --------------- ---------
3P Reserves 20.91 8.92 134
-------------------------- ------------- --------------- ---------
2C Contingent Resources 2.85 3.87 (26)
-------------------------- ------------- --------------- ---------
2P + 2C 15.49 10.39 49
-------------------------- ------------- --------------- ---------
Empyrean CEO Tom Kelly said, "These are fantastic improvements
to our reserves and resources. As anticipated, further appraisal
and drilling of the overlying Austin Chalk wells along with
continued success from optimisation initiatives in the Eagle Ford
Shale and Austin Chalk collectively have resulted in a very
substantial increase in our reserves position at the Sugarloaf
AMI.
"We anticipated a shift from contingent resources to reserves as
further Austin Chalk wells were drilled and appraised. The
excellent development rate during 2014 and, in particular, closer
well spacing assumptions have resulted in assisting this conversion
from contingent resource to reserves and an improvement in the
volumes.
"Excellent upside potential from the relatively new productive
zone, the Upper Eagle Ford formation, has now been identified by
Marathon for further drilling and appraisal. The Upper Eagle Ford
is already producing from a small number of wells and further pilot
wells are already planned to test this productive zone.
"Although the fall in oil prices over the last 12 months has
slightly impacted the Net Present Value at a 10% discount rate of
Proven Reserves (1P), we are pleased to see that there has been a
significant overall increase in both NPV10 of 2P and 3P reserves
reflecting the increased potential of the Project. Our flagship
asset continues to grow and represents a viable and attractive
investment proposition even at current lower oil prices."
Figure 1: Stack and Frac Pilot
A summary of the Reserves and Contingent Resources, calculated
on a NRI basis after royalties, and the Net Present Value using a
10% discount rate ('NPV(10)') as at 31 December 2014 and included
in the DeGolyer & MacNaughton report is contained in the table
below:
NPV(10)US$ NPV(10)US$ % change
million as million as
at 31 Dec at 31 Dec
2014 2013
------------- ------------ ------------ ---------
1P Reserves 44.3 52.9 (16)
------------- ------------ ------------ ---------
2P Reserves 121.6 97.0 25
------------- ------------ ------------ ---------
3P Reserves 260.22 139.5 87
------------- ------------ ------------ ---------
Explanations as to reasons for the above reported revisions to
Reserves and Contingent Resources:
The revisions to the Reserves and Contingent Resources as
reported above result substantially from the following new data and
information:
1. Re-categorisation of Reserves and Contingent Resources as a
result of additional wells being drilled.
2. Updated 1P, 2P and 3P type production curves based on recent
additional performance data and changes to fracture stimulation
design.
3. Revised economic assumptions including:
a. Updated forecast costs based on recent historic costs and trends;
b. Updated product pricing, with oil, condensate and NGL prices
based on the NYMEX strip price for WTI oil as at the Evaluation
Date, with differentials to account for product quality and
regional pricing factors. NGLs are assumed to sell for one third
the price of oil (previously approximately one half) on a per BOE
basis. Natural gas prices are based on the NYMEX strip price as at
the Effective Date for natural gas at Henry Hub, with a
differential to reflect the local delivery point.
4. The Evaluation Date for the current assessment is 31 December 2014.
* Empyrean has collaborated with its ASX listed partner at
Sugarloaf, AWE Limited ('AWE'), to have DeGolyer & MacNaughton
update reserves and resources at Sugarloaf and Empyrean notes that
AWE has internally recognised additional potential in the Eagle
Ford Shale associated with the commencement of pilot production and
allocation of Contingent Resources in the Upper Eagle Ford
sub-zone. All previous Eagle Ford production has been from the
Lower Eagle Ford sub-zone. AWE anticipates that up to 488 wells may
be required to fully develop the Upper Eagle Ford at a 40 acre well
spacing over the same land area as the underlying Lower Eagle Ford
Shale.
The prices used in the Reserve Report were based upon NYMEX
strip prices for oil and gas on 1 January 2015. The following table
shows the basic pricing assumptions used:
Year Oil Price US$/barrel Gas Price US$/MMBTU
--------------------- --------------------- --------------------
2015 57.67 2.59
--------------------- --------------------- --------------------
2016 62.33 2.92
--------------------- --------------------- --------------------
2017 64.41 3.19
--------------------- --------------------- --------------------
2018 65.40 3.31
--------------------- --------------------- --------------------
2019 66.09 3.42
--------------------- --------------------- --------------------
2020 66.47 3.55
--------------------- --------------------- --------------------
2021 66.88 3.70
--------------------- --------------------- --------------------
2022 67.22 3.87
--------------------- --------------------- --------------------
2023 67.00 4.01
--------------------- --------------------- --------------------
2024 67.00 4.14
--------------------- --------------------- --------------------
2025 67.00 4.24
--------------------- --------------------- --------------------
2026 67.00 4.34
--------------------- --------------------- --------------------
2027 67.00 4.49
--------------------- --------------------- --------------------
2028 67.00 5.03
--------------------- --------------------- --------------------
2029 and thereafter 67.00 4.94
--------------------- --------------------- --------------------
Participants in the Sugarloaf AMI include (gross working
interest basis):
Marathon Oil (Operator) 55%
Baytex 28.1%
AWE Limited (via subsidiaries) 10%
Empyrean Energy PLC 3%
Texas Crude Energy 2.9%
Others 1%
Abbreviations
M- thousand
MM- million
MMBBLS - million barrels
Mcf - thousand cubic feet
MMcf - million cubic feet
MMBTU - million British Thermal Units
NYMEX - New York Mercantile Exchange
The information contained in this announcement was completed and
reviewed by the Technical Director of Empyrean Energy Plc, Mr Frank
Brophy BSc (Hons) who has over 40 years experience as a petroleum
geologist.
**ENDS**
For further information please visit www.empyreanenergy.com or
contact the following:
Tom Kelly Empyrean Energy plc Tel: +618 9481 0389
Neil McDonald Cenkos Securities plc Tel: +44 (0) 131 220 9771 / +44
(0) 207 397 1953
Nick Tulloch Cenkos Securities plc Tel: +44 (0)131 220 9772
Hugo De Salis St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Elisabeth Cowell St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Lottie Brocklehurst St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Notes to Editors:
Empyrean Energy Plc is an AIM listed (Ticker: EME) profitable US
on-shore oil and gas development and production company focused
primarily on the advancement of its assets in Texas and California.
The Company's portfolio represents a mix of assets at various
stages of development. Its flagship project is the Sugarloaf AMI in
the prolific Eagle Ford Shale, Texas, where it has a 3% working
interest in approximately 24,000 gross acres (approximately 720 net
acres) centrally positioned in the liquids rich sweet-spot within
the field. Empyrean has an interest in over 231 gross producing
wells with full development having the potential to reach over
1,000 wells and further upside potential from additional formations
and closer well spacing. The Company has a term debt facility of up
to US$50 million with Macquarie Bank in place in order to develop
this acreage which is operated by US major Marathon Oil
Company.
Other assets include a 58% interest in the Eagle Oil Pool
Development Project located in the San Joaquin Basin, southern
California, a proven oil and gas province. Empyrean's large working
interest in this project provides the Company with flexibility and
leverage with potential high impact from success. Additionally,
Empyrean has a 7.5% interest in the Sugarloaf Block A operated by
ConocoPhillips in the Eagle Ford Shale, and a 10% working interest
in the Riverbend Project in Texas currently producing from the
Wilcox formation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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