TIDMEME
RNS Number : 9968R
Empyrean Energy PLC
15 December 2016
This announcement contains inside information
Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil &
Gas
Empyrean Energy PLC ('Empyrean' or 'the Company')
AWARD OF PERMIT
Empyrean Energy plc is pleased to announce that it has been
awarded a permit for 100% of the exploration rights for Block 29/11
('Block 29/11' or 'the Permit'), located in the Pearl River Mouth
Basin, offshore China, following a successful application to the
China National Offshore Oil Corporation ('CNOOC'). Empyrean will be
the operator of the Permit during the exploration phase of the
Permit.
Highlights
-- Excellent location - offshore permit located approximately
200km South East from Hong Kong in seabed depths ranging from
340-600m and directly South of a large producing field
-- On trend with additional recent discoveries immediately to the West and South
-- Two existing exploration prospects, Jade and Topaz, mapped with multi-vintage 2D seismic
-- Upside potential - a further ten leads have also been mapped
that require follow up exploration work
-- Extensive permit area - approximately 1,800 km(2)
-- Work programme required for the first 24 months is
anticipated to be funded by existing cash resources
-- Empyrean will acquire and complete processing and technical
evaluation of 500 km(2) of 3D seismic data
Empyrean CEO Tom Kelly said, "To have been granted a permit of
this size and located on trend to existing large discoveries is a
real coup for the Company which follows hot on the heels of our
sale of the Sugarloaf AMI Project and subsequent return of value to
shareholders. The Permit represents a fantastic opportunity for
Empyrean, given its significant resource potential and the presence
of two large and relatively mature drilling prospects, Jade and
Topaz. Therefore, we look forward to advancing these, as well as
additional targets identified, alongside Gaz Bisht, who has a very
thorough understanding of the region via his previous extensive
work in the region."
"We also acknowledge and thank the CNOOC team for the
consideration of our bid proposal and we look forward to working
with CNOOC to unlock potential value within the Permit area."
Further information on the Permit
Block 29/11 is an offshore permit that is located approximately
200km South East from Hong Kong in seabed depths ranging from
340-600m. The Permit is directly South of a large producing field.
The Permit is approximately 1800km(2) in area. Two key exploration
prospects named Jade and Topaz have been mapped within the Permit
area with multi-vintage 2D seismic shot in 1979, 1986 and 1989. The
Company intends to acquire this historical data to allow it to
establish the resources attributable to these prospects. In
addition, a further ten leads have been mapped on the Permit area
that require follow up exploration work in order to mature. Recent
discoveries immediately to the West and South of the Permit are
also on trend and enhance the prospectivity of the Permit.
As previously stated, the Board has continued to look for
suitable opportunities to increase shareholder value following the
sale of its interest in the Sugarloaf AMI Project in January 2016.
The opportunity to evaluate and formally bid for the Permit has
been introduced to Empyrean by Topaz Energy, a company wholly-owned
by Gaz Bisht. Mr. Bisht is a petroleum Geologist/ Geoscientist who
has worked closely with CNOOC over the last 10 years in roles with
other companies including Roc Oil Company Limited ('ROC') and AWE
Limited ('AWE'). Mr. Bisht is now an independent consultant and, in
addition to introducing the opportunity to Empyrean, he will
provide services in relation to the application and implementation
of the work program to Empyrean. In relation to the introduction of
the opportunity and successful award of the Permit to Empyrean, the
Company has agreed, subject only to binding documentation being
entered into and the subsequent approval of shareholders (as
required, and as further set out below), that Topaz Energy Pty Ltd
will receive consideration of either 70,000,000 ordinary shares of
0.2p each in Empyrean (the 'Consideration Shares') or GBP1,391,390
in cash, (the 'Cash Consideration') which is equivalent to the
value of the Consideration Shares at the volume weighted average
price in the 5 days leading up to the date of award of the Permit
(1.9877p). As outlined below, the issue of the Consideration Shares
requires the approval of Empyrean shareholders. Should shareholder
approval be obtained to issue the Consideration Shares, Topaz
Energy may elect to receive either the Consideration Shares or the
Cash Consideration. However, if shareholder approval is not
obtained for the issue of the Consideration Shares then the Cash
Consideration will be paid. It has also been agreed that Topaz
Energy will be entitled to a 3% net profit royalty from Empyrean's
share of any future production.
Empyrean is also in the process of negotiations to secure the
technical services of Mr. Bisht in an ongoing role to oversee the
implementation of the work program and assist Empyrean as operator
of the Permit. Mr. Bisht has been involved in a number of
successful evaluations and successful bid proposals for Chinese
permits, including the Wei 6-12 South discovery for Roc Oil Company
Limited in 2006 when he was Senior Geologist and Project Leader for
ROC. He was also involved in the drilling and discovery of the
largest gas field the onshore Perth Basin, Western Australia, as
Exploration Manager of Onshore Perth for AWE.
The successful bid proposal has been structured in two separate
parts, initially a Geophysical Service Agreement, which requires
the Company to acquire and complete processing and technical
evaluation of 500km(2) of 3D seismic data on the Permit area, and,
subsequently, the Company having an option to enter into a
pre-negotiated Production Sharing Contract. The work programme
required for the first 24 months is anticipated to be funded by the
Company's existing cash resources.
The Permit marks a new era for reshaping Empyrean's strategy
following the successful sale of its Sugarloaf AMI Project and
subsequent return of capital to shareholders. Empyrean anticipates
that the Permit will become the priority focus in order to
re-position the Company for growth. Accordingly, the Company will
seek to farm-out or sell its remaining US assets.
The cost of 3D seismic has been dropping in recent years because
of the downturn in the oil price and the Company anticipates that
it will fund its commitments under the GSA segment of the work
programme from its existing cash resources. Following completion of
this phase of the Permit the Company will then decide on the best
alternative to enter the PSC in order to drill the most attractive
prospects on the Permit. Such options may include farming-out the
drilling of exploration wells to a capable partner or, subject to
market conditions, raising additional financing to allow the
Company itself to undertake this process.
Shareholder Meeting
The Company intends to call an Extraordinary General Meeting in
order to approve the potential issue of shares to Topaz Energy Pty
Ltd, as described above.
The Company also intends to take the opportunity to seek new
authorities that will provide it with the necessary flexibility to
raise capital should the market allow and the Company decides that
it is in its best interest.
A Circular will be issued to shareholders shortly in respect of
these matters and further announcements will be made in due
course.
** 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 Tel: +44 (0) 131 220 9771
Beth McKiernan Tel: +44 (0) 131 220 9778
Nick Tulloch Tel: +44 (0) 131 220 9772
St Brides Partners Ltd
Elisabeth Tel: +44 (0) 20 7236 1177
Cowell
Lottie Brocklehurst Tel: +44 (0) 20 7236 1177
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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