TIDMEME
RNS Number : 8369W
Empyrean Energy PLC
21 August 2020
This announcement contains inside information
Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil &
Gas
21 August 2020
Empyrean Energy PLC ('Empyrean' or 'the Company')
Final Results
Empyrean Energy is pleased to announce its final results for the
year ended 31 March 2020. The full Report and Accounts will be made
available on the Company's website in the coming days.
HIGHLIGHTS
Reporting period
Block 29/11, Pearl River Mouth Basin, China (EME 100%)
-- Presence of Gas Clouds over Jade and Topaz prospects has
further mitigated exploration risk, with all nearby CNOOC Oil
discoveries showing similarly well-defined gas clouds;
-- Seismic inversion project has validated the interpreted
presence of an excellent quality carbonate reservoir at the Jade
and Topaz prospects, with porosities in the highly favourable range
of 20-30%; and
-- 12-month extension for first phase of exploration drilling at
Block 29/11 secured, giving the Company until June 2022 to drill
first well.
Duyung PSC Project, Indonesia (EME 8.5%)
-- Highly successful Mako gas field appraisal drilling completed
at Tambak-1 and Tambak-2 which demonstrated the presence of
well-developed, high quality gas saturated reservoir sandstones
across the field;
-- Following the drilling program an independent resource audit
by Gaffney, Cline and Associates (GCA) confirmed a significant
resource upgrade of the Mako gas field including:
o Mako gas discovery has been confirmed as one of the largest
gas fields ever discovered in West Natuna Basin;
o GCA audited 2C contingent resource estimate of 495 BcF, a 79%
increase from previous GCA estimate; and
o GCA audited 3C contingent resource estimate of 817 BcF, a 108%
increase from previous GCA estimate.
Sacramento Basin, California USA (EME 25-30%)
-- COVID-19 travel restrictions and uncertainty of being able to
execute a drilling campaign safely and without interruption led the
joint venture partners placing the intended drilling at Borba on
hold until the United States situation normalises.
Corporate
-- Placements to raise US$1.0 million (GBP0.786 million)
completed during the reporting period;
-- Placement to raise US$0.509 million (GBP0.411 million) completed in April 2020;
-- Open Offer raised US$0.511 million (GBP0.415 million) in May 2020;
-- GBP10 million Equity Placement Facility Secured; and
-- Consideration of US$295,000 in cash and 6,090,504 Coro Energy
shares received in return for a 1.5% reduction of interest in the
Duyung PSC, with Coro Energy shares subsequently sold during the
reporting period realising net proceeds of US$156,000.
Empyrean CEO Tom Kelly said , "Targeted activity continued at
Empyrean's portfolio of exploration projects during the year, with
further exploration and appraisal success achieved in Indonesia and
critical de-risking work completed in China.
The Company made important progress at Block 29/11 in China
during the year, in preparation for the drilling of an initial
exploration well under the PSC terms. To date the Company has
completed a substantial volume of work on the project, having
independently validated its resource base and decreased exploration
risk through comprehensive 3D seismic data analysis which allowed
for a positive oil migration study and confirmed the presence of
well-defined low reflectivity zones ('gas clouds'). This rigorous
3D seismic analysis has most recently enabled the seismic inversion
work which confirmed the excellent carbonate reservoir quality at
Jade and Topaz. All these activities have added further confidence
to the technical merits of the project and Gaffney, Cline and
Associates estimated close to a 1 in 3 chance of geological success
at Jade and Topaz, which is very encouraging.
Having also secured a 12-month extension from the China National
Offshore Oil Corporation ('CNOOC') for the first phase of
exploration on Block 29/11, the Company looks forward to finalising
preparations to safely drill the first of the large scale prospects
as soon as is practicable.
At the Duyung PSC in Indonesia the operator, Conrad Petroleum
completed a highly-successful appraisal of the Mako gas discovery
(comprising the Tambak-1 and Tambak-2 wells), which confirmed the
presence of well-developed, high quality reservoir sandstones with
a common gas water contact across the Mako structure. Following the
drilling campaign Gaffney, Cline and Associates were commissioned
by the operator on behalf of the Duyung PSC partners to update its
view of the Mako field. The results of this audit were released
post period end and not only confirmed a significant resource
upgrade but also confirmed the Mako field as one of the largest gas
fields ever discovered in West Natuna Basin. The Mako Gas Field has
now become strategically important in that it is approximately 0.5
Tcf of high quality pipeline methane, close to existing
infrastructure and well established markets, now confirmed as the
largest undeveloped gas resource in the immediate region.
In California, COVID-19 travel restrictions and the uncertainty
of being able to execute a drilling campaign safely and without
interruption have caused the joint venture partners to place the
intended drilling of the Borba well on hold until the United States
situation normalises.
The Company successfully conducted a series of placements during
the year to fund its share of the Indonesian drilling campaign and
for working capital purposes. A Placement and Open Offer were also
conducted post year end to provide further funding. In addition,
the Company entered into a GBP10 million equity placement facility
with Long State Investment Limited, a Hong Kong-based energy and
resource focused investment company which provides Empyrean with a
fully flexible funding facility and enables it to access capital to
fund its ongoing working capital, if required.
We are continually assessing other financing and strategic
alternatives to provide the Company 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.
Overall, it has been a successful year in a market that
presented some unique challenges and the Company has, despite these
challenges, positioned itself to realise the significant and
potentially game changing upside potential of its Chinese assets,
as well as to capitalise on the success of the exploration program
in Indonesia this year. We look forward to reporting further
progress on our portfolio of projects in the near term."
Chairman's Statement
It was pleasing to see further progress made by Empyrean on its
portfolio of exploration projects, primarily in China and
Indonesia, during the year.
As all are acutely aware, 2020 has been a challenging year but
Empyrean continues to safely execute its business plan and move
forward. I'd like to extend the Board's thanks to our shareholders
for their support, particularly in these volatile markets.
With the COVID-19 pandemic still running its course, I note that
this year's Annual General Meeting will sensibly be a closed
meeting. However, we will be inviting shareholders to submit
questions in advance and will endeavour to answer all questions at
that time. Again, we thank all stakeholders for their patience in
the unique circumstances in which we find ourselves and look
forward optimistically to a return to normality in markets and the
global economy in the near future.
Finally, I would like to thank the Board and staff for their
contributions during the year, in particular Tom Kelly and Gaz
Bisht who continue to drive the Company towards a series of
successful and value adding outcomes in the future.
______________________________
Patrick Cross
Non-Executive Chairman
21 August 2020
Operational Review
The 2020 financial year has seen substantial progress for
Empyrean on several fronts, as the Company's corporate objective of
building a significant asset portfolio across the Asian region has
begun to take shape. Highlighted by the successful drilling
campaign at the Mako gas field in Indonesia, and resultant
significant independent resource upgrade, and further targeted
technical work and de-risking of the large and potentially Company
transforming prospects at Block 29/11, offshore China.
Empyrean and its partners have continued the methodical
technical evaluation and de-risking activities at its 100% working
interest in Block 29/11, offshore China, with two matured
drill-ready low risk-high reward prospects now awaiting drilling.
In response to COVID-19 pandemic, the Company requested and was
successful in securing a 12 month extension from CNOOC for the
first phase of exploration on Block 29/11. While the extension
secures the block until June 2022, the Company's intentions remain
to finalise preparations to safely drill the first of the large
scale prospects as soon as is practicable.
In Duyung PSC in offshore Indonesia, Empyrean reduced its
interest by 1.5% through the Coro Energy transaction in 2019, which
brought US$10.5m in funding from Coro Energy Plc for the drilling
of two appraisal wells in the Mako gas discovery.
A highly successful appraisal program (comprising the Tambak-1
and Tambak-2 appraisal wells) was conducted in Q4 2019. A
comprehensive dataset was collected in both wells including
electric logs, Repeat Formation Testing (RFT), and a Drill Stem
Test (DST). The detailed interpretation of subsurface data
confirmed the extensive lateral extent of well developed, high
quality reservoir sandstones across the field. In addition,
Tambak-1 interested deeper gas contact in the log data that earlier
estimated from the RFT data of Mako South-1. Upon completion of
appraisal program GCA was engaged to conduct an independent
resource audit for the Mako Gas Field, which confirmed a
significant resource upgrade and also confirmed the Mako field as
one of the largest gas fields ever discovered in West Natuna
Basin.
Empyrean also has a 25-30% working interest in a package of gas
projects in the Sacramento Basin, onshore California. The joint
venture partners are currently waiting for the COVID-19 situation
to normalise before targeting the drilling of a well at the Borba
prospect, which is now fully permitted for drilling.
Empyrean has retained an interest in the Riverbend Project (10%
WI) located in the Tyler and Jasper counties, onshore Texas and a
58.084% WI in the Eagle Oil Pool Development Project, located in
the prolific San Joaquin Basin onshore, Southern California. No
technical work has been undertaken on these projects during the
year.
China Block 29/11 Project (100% WI)
Background
Block 29/11 is located in the prolific Pearl River Mouth Basin,
offshore China approximately 200km Southeast of Hong Kong. The
acquisition of this block heralded a new phase for Empyrean when it
became an operator with 100% of the exploration rights of the
permit during the exploration phase of the project. In the event of
a commercial discovery, China National Offshore Oil Corporation
Limited (' CNOOC') will have a back in right to 51% of the
permit.
Following the completion and interpretation of the 3D seismic
data acquired on Block 29/11, the prospective resources (un-risked)
of all three prospects on the Block (Jade, Topaz and Pearl) were
independently validated, by Gaffney, Cline and Associates, who
completed an audit of the Company's oil in place estimates in
November 2018. Total mean oil in place estimates on the three
prospects are now 884 MMbbl on an un-risked basis.
Oil in place (MMbbl) audited by Gaffney, Cline and
Associates
Prospect P90 P50 P10 Mean GCoS
Jade 93 187 395 225 32%
---- ---- ---- ----- -----
Topaz 211 434 891 506 30%
---- ---- ---- ----- -----
Pearl 38 121 302 153 15%
---- ---- ---- ----- -----
In addition, Gaffney, Cline and Associates estimated close to a
1 in 3 chance of geological success at Jade and Topaz, which is
particularly pleasing. Exploration risk has been further mitigated
by the completion of an oil migration study during June 2018 which
established oil migration pathways into all three prospects. During
the reporting period, in May 2019 as detailed further below, the
Company further solidified the technical merits of the project by
confirming the presence of well-defined gas clouds over the Jade
and Topaz prospects.
Presence of Gas Clouds Mitigating Exploration Risk at Jade and
Topaz Prospects
Empyrean continued systematic, 'issue-based' technical
evaluation at its 100% working interest in Block 29/11, offshore
China during 2020. Block 29/11 sits in the heart of Baiyun sag
area, and is surrounded by several large oil and gas fields. While
the discovery of oil columns in excess of 150m in several well
augurs positively for the prospectivity of Block 29/11,
comprehensive technical evaluation was conducted in Q1 2019 to
further mitigate the exploration risk of key prospects. The scope
of this work included analysis of well and 3D seismic data in the
area currently operated by CNOOC. Access being granted to the CNOOC
owned 3D seismic and well data for this study is an evidence of a
deep and effective relationship that Empyrean have been able to
build with CNOOC.
On good quality 3D seismic, the presence of gas clouds has been
used as an effective exploration tool in prolific basins worldwide
including the North Sea, Gulf of Mexico, and the Malaysian Sabah
basin, resulting in the discovery of significant amounts of
oil.
In May 2019 the Company announced the results of the
comprehensive analysis of the excellent quality 3D seismic data
acquired by Empyrean during 2017 as well as that of CNOOC 3D
seismic data to the immediate west of Block 29/11. This analysis
confirmed the presence of well-defined low reflectivity zones ('gas
clouds') in the overburden strata above the Jade and Topaz traps.
Empyrean's independent analysis of 3D seismic data over 4 large
CNOOC oil discoveries located close to Block 29/11 confirmed the
presence of similar gas clouds in the overburden.
At the same time, three dry wells drilled by CNOOC in proximity
to the discoveries, outside Block 29/11, have been analysed, and
the 3D seismic data over these wells confirms the lack of any gas
clouds. Similar technical work was carried out over two dry wells
in Block 29/11. These wells were drilled prior to Empyrean's
involvement and without any 3D seismic data. Both wells confirm the
lack of any gas clouds in overburden. As a result, it is Empyrean's
interpretation that the presence of well-defined gas clouds in the
overburden on both the Jade and Topaz structures mitigates the
exploration risk on these prospects significantly. The Pearl
prospect does not have 100% coverage with 3D seismic to enable the
same comprehensive analysis and assessment at this point in
time.
Reservoir Quality Assessment - Seismic Inversion Project
Another issue-specific technical evaluation that the Company
completed during 2020 was to address the quality of reservoir.
Geological studies completed earlier provided confirmation of an
excellent quality reservoir at Jade and Topaz prospects, which the
Company decided to address further via seismic inversion. The
Company engaged China Offshore Services Limited ('COSL') to carry
out data processing and technical work for the seismic inversion
project and then carried out detailed analysis and assessment of
the dataset. Analysis of the seismic inversion data validated the
interpreted presence of excellent quality carbonate reservoir
facies at both the Jade and Topaz prospects with porosities
interpreted to be in a highly favourable range of 20-30%.
The main aim of the seismic inversion project was comprehensive
reservoir characterisation, with particular focus on the Jade and
Topaz prospects, by combining existing well log data with 3D
seismic data to generate an acoustic impedance dataset. Analysis of
this nature has been used to successfully interpret the physical
rock properties of reservoirs globally, in particular lithology,
porosity and thickness of reservoir.
In order to achieve the most comprehensive and robust result
from the Seismic Inversion Project, the Company requested access
from CNOOC to the log data of a crucial well, LH-23-1-1d, located
approximately 12 km southwest of the Jade prospect in a permit
operated by CNOOC. CNOOC agreed to provide the data, resulting in
increased technical confidence in the results of the seismic
inversion project. The LH-23-1-1d well intersected both carbonate
and sandstone reservoirs with oil pay.
In order to combine well log data with the 3D seismic data, the
Company worked closely with the COSL team. During this process well
data from the LH-23-1-1d well proved crucial in establishing the
close relationship of impedance data extracted from the seismic
data to the lithology, porosity and thickness of reservoir in
existing wells.
Comprehensive and systematic analysis of the acoustic impedance
dataset resulted in separating Zhujiang carbonate facies from the
underlying Zhuhai sandstones facies. In addition, the lateral
distribution of high-quality carbonate reservoir has been mapped.
This more detailed work validates the earlier interpretation from
seismic thickness analysis and supports the interpreted presence of
a thick carbonate reservoir with porosities in a range of 20-30% at
the Jade and Topaz prospects.
12-Month Extension for First Phase Exploration Drilling
The initial contractual term called Geophysical Service
Agreement ('GSA') was for two years with a work programme
commitment of acquisition, processing and interpretation of
500km(2) of 3D seismic data. Having successfully completed the
committed work program for the GSA, the Company exercised its
option to enter a PSC on the Block, on pre-negotiated terms, with
CNOOC. The PSC was signed on 30 September 2018 with the date of
commencement of implementation of the PSC being 13 December 2018.
The first phase of the contract is for 2.5 years with a commitment
to drill one exploration well to a depth of 2,500m or to the
Basement Formation.
Due to the COVID-19 situation and the resultant global control
policies, the Company proactively engaged with CNOOC and applied
for a 12-month extension to the first phase of the exploration
period for the PSC. In June 2020 Empyrean announced that CNOOC had
granted the 12-month extension as requested. As a result, the first
phase of the exploration period for the PSC has been extended to 12
June 2022. The Company is taking all the necessary steps to ensure
the safe drilling of the well as soon as is practicable.
Under the PSC terms, Empyrean has the option of entering the
second phase of exploration after drilling the first exploration
well and subsequently relinquishing 25% of the current area. The
second phase has a commitment to drill one additional exploration
well to a depth of 2,500m or to the Basement Formation within a
further 2 years.
Cautionary Statement: The volumes presented in this announcement
are STOIIP estimates only. A recovery factor needs to be applied to
the undiscovered STOIIP estimates based on the application of a
future development project. The subsequent estimates, post the
application of a recovery factor, will have both an associated risk
of discovery and a risk of development. Further exploration,
appraisal and evaluation is required to determine the existence of
a significant quantity of potentially movable hydrocarbons.
Duyung PSC, Indonesia (10% WI)
Background
In April 2017, Empyrean acquired from Conrad Petroleum a 10%
shareholding in WNEL, which held a 100% Participating Interest in
the Duyung Production Sharing Contract (' Duyung PSC') in offshore
Indonesia and is the operator of the Duyung PSC.
The Duyung PSC covers an offshore permit of approximately
1,100km2 in the prolific West Natuna Basin. The main asset in the
permit is the Mako shallow gas discovery with 23 feet of gas
bearing excellent reservoir quality rock with high permeability
sands in the multi Darcy range. The gas is of high-quality being
close to 100% methane.
In early 2019, both the operator, Conrad Petroleum, and Empyrean
divested part of their interest in the Duyung PSC to AIM-listed
Coro Energy Plc. Following the transaction, Empyrean's interest
reduced from 10% to 8.5% interest in May 2020, having received cash
and shares from Coro. As part of this transaction Coro funded
US$10.5 million of the costs of the 2019 drilling programme.
Empyrean also received cash consideration of US$295,000 and
consideration shares in Coro with a value of US$185,000 for the
transfer to Coro of 1.5% of its current 10% interest in the Duyung
PSC.
Duyung PSC Drilling Programme - October/November 2019
Following receipt of the approved the Plan of Development
('POD') for the Mako Gas Field in March 2019, which secured tenure
until 2037 and was required ahead of the drilling programme at the
Duyung PSC, Conrad Empyrean and Coro finalised a comprehensive
drilling programme at the Duyung PSC comprising two wells. One
appraisal well was designed to test the potential of the deeper
Gabus reservoir in the Tambak prospect beneath the central area of
the Mako gas field. The other appraisal well was designed to
appraise the intra-Muda sandstone reservoir in the northern area of
the Mako field.
During October and November 2019, a highly successful appraisal
drilling campaign was conducted in the Duyung PSC. The appraisal
wells confirmed the field-wide presence of excellent quality gas in
the intra-Muda reservoir however sands of the Mako gas field
however testing of the deeper Tambak prospect in the Lower Gabus
interval found these sandstones to have low gas saturations and
attempts to collect fluid samples and pressure data demonstrated
low permeabilities.
Tambak-2
The Tambak-2 well successfully reached a total depth of 1,650
feet on 15 October 2019, the top of the targeted intra-Muda
reservoir depth came in as prognosed approximately 10 feet up-dip
to Conrad's Mako South-1 gas discovery well over 13.5 km away.
A full logging suite was acquired, including formation pressure
measurements, confirming a 33 feet gross gas pay zone (30 feet net)
with formation permeabilities calculated to be over 1 Darcy across
the best quality zone. The pressures and gas-water contact depth in
Tambak-2 are the same as those encountered in Mako South-1,
confirming a very large "single-tank" or areal extent of the Mako
gas field.
While preparing for a Drill Stem Test ('DST') across the
intra-Muda reservoir, an inflatable open hole bridge plug
('packer'), used to isolate the gas-bearing reservoir for testing,
failed. During operations to recover the packer, the well started
flowing natural gas to surface. For safety reasons, the well was
immediately shut in. Subsequently, utilising the appropriate well
control practices, the well was killed using heavy mud containing
barite. A significant quantity of the heavy mud was lost in the
highly permeable intra-Muda reservoir.
Following this operation, the well was conditioned, and the DST
equipment set in place into the wellbore. Two separate DST attempts
failed to flow gas in spite of gas bearing zones being confirmed in
the electric log. Subsequent analysis of drilling data established
formation damage due to the heavy mud used to control the well.
Tambak-1
The Tambak-1 well, located approximately 4.5 km north of the
Mako South-1 well, was designed to both appraise the Mako gas field
and test the underlying Tambak exploration prospect.
The Tambak-1 well encountered 82 feet of total intra-Muda
reservoir sandstones with 56 feet of better quality upper
sandstone, confirmed a common gas-water contact across the field
and culminated in the DST demonstrating the potential
deliverability of the Mako reservoir.
Following the DST, which flowed dry gas at 11.4 MMscf/d on a
181/64 inch (2.8 inch) choke with well head tubing pressure being
maintained at 225psi, operations concluded in late November
2019.
The well was deepened beneath the Mako field to a depth of 5,062
feet true vertical depth sub-sea ('TVDSS') to test the Tambak
exploration prospect. The well encountered multiple sandstone
intervals in the Lower Gabus section as predicted, with
corresponding hydrocarbon shows seen while drilling. However,
petrophysical interpretation of wireline log data has concluded
that these sandstones have low gas saturations and attempts to
collect fluid samples and pressure data demonstrate low
permeabilities.
Tambak-1 was plugged and abandoned, as originally planned, prior
to the Asian Endeavour 1 rig being demobilised.
The appraisal of the intra-Muda sandstones of the Mako gas field
was better than expected with better quality sands and a thicker
reservoir encountered and the flow test now from two wells has
confirmed the deliverability of Mako gas. The Tambak-1 and Tambak-2
wells demonstrated the presence of well-developed, high quality
reservoir sandstones with a common gas water contact across the
Mako structure.
Mako Resource Audit Confirms Significant Upgrade
Following on from the highly successful drilling campaign,
Conrad engaged GCA to complete an independent resource audit for
the Mako Gas Field, further to the updated internal resource
estimates prepared by Conrad in May 2020.
GCA's audit ('2020 GCA Audit') confirmed a significant resource
upgrade for the Mako Gas Field compared to its previous resource
assessment released in January 2019 ('2019 GCA Audit'). 2C
(contingent) recoverable resource estimates have been increased to
495 Bcf, an increase of approximately 79% compared with the 2019
GCA Audit and confirming the work completed by the operator and
partners. In the upside case, the 3C (contingent) resources have
increased by approximately 108% compared with the 2019 GCA Audit
and GCA's assessment is also significantly higher than the 3C
estimate made by the Operator and partners in April 2020.
With the latest upgrade, Mako has been confirmed to be one of
the largest gas fields ever discovered in the West Natuna Basin and
is currently by far the largest undeveloped resource in the
immediate area.
Results of the Updated Resource Audit
The revised estimates of gross (full field) recoverable dry gas
audited in the 2020 GCA Audit are:
Contingent 2019 GCA 2020 GCA Increase
Resource Audit Audit
Estimates
Bcf Bcf %
--------- --------- ---------
1C (Low
Case) 184 287 56
--------- --------- ---------
2C (Mid
Case) 276 495 79
--------- --------- ---------
3C (High
Case) 392 817 108
--------- --------- ---------
The full field resources above are classified in the 2020 GCA
Audit as contingent. Gas volumes are expected to be upgraded to
reserves when certain commercial milestones are achieved, including
execution of a GSA and a final investment decision ('FID').
The Mako Gas Field is located close to the West Natuna pipeline
system and gas from the field can be marketed to buyers in both
Indonesia and in Singapore. A Heads-of-Agreement with a gas buyer
in Singapore is already in place. The conclusion of GSA
negotiations will mark a further important step toward the FID to
develop and commercialise the field. Further updates will be
provided in due course.
Multi Project Farm-in in Sacramento Basin, California (25%-30%
WI)
Background
In May 2017, Empyrean agreed to farm-in to a package of
opportunities including the Dempsey and Alvares prospects in the
Northern Sacramento Basin, onshore California. The rationale for
participating in this potentially significant gas opportunity was a
chance to discover large quantities of gas in a relatively 'gas
hungry' market. Another attractive component of the deal was the
ability to commercialise a potential gas discovery using existing
gas facilities that are owned by the operator.
Following on from the Dempsey drilling campaign in 2018, the
joint venture integrated the subsurface data with regional geology
and seismic data to evaluate additional more attractive targets in
thicker reservoir units for future drilling along the "Dempsey
trend", in which Empyrean will earn a 30% interest.
During the reporting period the drilling application for the
Borba Prospect was approved by the County and the final approval
from California Department of Geological and Geothermal Resources
was received. With the outbreak of COVID-19 however, the travel
restrictions and the uncertainty of being able to execute a
drilling campaign safely and without interruption have caused the
commencement of any planned drilling at Borba to be placed on hold
until the United States situation normalises.
Riverbend Project (10%)
Located in Jasper County, Texas, USA, the Cartwright No.1
re-entry well produces gas and condensate from the arenaceous
Wilcox Formation.
The Cartwright No.1 well is currently virtually suspended
producing only nominal amounts of gas condensate.
Little or no work has been completed on the project in the year
and no budget has been prepared for 2020/21 whilst the Company
focuses on other projects. The Company fully impaired the carrying
value of the asset at 31 March 2017 and any subsequent expenditure,
mainly for license fees, has been expensed through the profit and
loss statement.
Eagle Oil Pool Development Project (58.084% WI)
The Eagle Oil Pool Development Projects is located in the
prolific San Joaquin Basin onshore, southern California.
No appraisal operations were carried out during this period. It
is anticipated that, should there be a sustained improvement in the
oil price, a vertical well test of the primary objective, the
Eocene Gatchell Sand, followed by a horizontal appraisal well,
would be the most likely scenario.
Little or no work has been completed on the project in the year
and no budget has been prepared for 2020/21 whilst the Company
focuses on other projects. The Company fully impaired the carrying
value of the asset at 31 March 2017 and any subsequent expenditure,
mainly for license fees, has been expensed through the profit and
loss statement.
The information contained in this report was completed and
reviewed by the Company's Executive Director (Technical), Mr
Gajendra (Gaz) Bisht, who has over 30 years' experience as a
petroleum geoscientist.
Definitions
2C: Contingent resources are quantities of petroleum estimated,
as of a given date, to be potentially recoverable from known
accumulations by application of development projects, but which are
not currently considered to be commercially recoverable. The range
of uncertainty is expressed as 1C (low), 2C (best) and 3C
(high).
Bcf: Billions of cubic feet
MMbbl : Million Barrels of Oil
*Cautionary Statement: The estimated quantities of oil that may
potentially be recovered by the application of a future development
project relates to undiscovered accumulations. These estimates have
both an associated risk of discovery and a risk of development.
Further exploration, appraisal and evaluation is required to
determine the existence of a significant quantity of potentially
movable hydrocarbons.
____________________
Gajendra Bisht M.Sc. (Tech) in Applied Geology
Executive Director (Technical)
21 August 2020
Going Concern
The Company's principal activity during the year has been the
exploration, evaluation, appraisal and development of its
exploration projects. At year end the Company had a cash balance of
US$0.19m (2019: US$0.33m) and made a loss after income tax of
US$0.28m (2019: profit of US$0.15m).
The Directors have prepared cash flow forecasts for the Company
covering the period to 31 August 2021 and show that the Company
will require further funding within the next 12 months. The
Directors have an appropriate plan to raise additional funds as and
when it is required, either through the sale of existing assets,
through joint ventures of existing assets or through further equity
or debt funding. In addition the entering into an Equity Facility
Agreement with Long State Investment Limited provides Empyrean with
a fully flexible funding facility and enables it to access capital
to fund its ongoing working capital, if required and subject to the
administrative conditions of the agreement.
The Directors have therefore concluded that it is appropriate to
prepare the Company's financial statements on a going concern
basis. However, in the absence of additional funding being in
place, at the date of this report, these conditions indicate the
existence of a material uncertainty which may cast significant
doubt over the Company's ability to continue as a going concern
and, therefore, that it may be unable to realise its assets and
discharge its liabilities in the normal course of business. The
financial statements do not include the adjustments that would
result if the Company was unable to continue as a going
concern.
Post Reporting Date Events
Significant events post reporting date were as follows:
In April 2020 the Company completed a placement to raise
US$0.509 million (GBP0.411 million).
In May 2020 the Company completed an Open Offer to raise US$0.511 million (GBP0.415 million).
In May 2020 an independent resource audit by GCA was completed
which confirmed a significant resource upgrade of the Mako gas
field including an audited 2C contingent resource estimate of 495
BcF, a 79% increase from previous GCA estimate and an audited 3C
contingent resource estimate of 817 BcF, a 108% increase from
previous GCA estimate.
In May 2020 the final Indonesian regulatory approvals for the
transfer of title of the 15% direct interest in the Duyung PSC to
Coro were received. As part of this completion process WNEL made a
direct transfer of its interest in the Duyung PSC to Empyrean and
the other owners, who now hold their interest in the Duyung PSC
directly.
In June 2020 the Company received a 12-month extension from
CNOOC for first phase of exploration drilling at Block 29/11
secured, giving the Company until June 2022 to drill the first
well.
No other matters or circumstances have arisen since the end of
the financial year which significantly affected or could
significantly affect the operations of the Company, the results of
those operations, or the state of affairs of the Company in future
financial years.
Strategic Report
The Company has chosen, in accordance with Section 414C of the
Companies Act 2006, to set out the likely future developments in
the business of the Company which would otherwise be required to be
contained in the report of the Directors within the Strategic
Report on pages 7 to 12.
Statement of Comprehensive Income
For the Year Ended 31 March 2020
2020 2019
Notes US$'000 US$'000
Revenue - -
-------- --------
Administrative expenditure
Administrative expenses (326) (375)
Compliance fees (214) (212)
Directors' remuneration (388) (386)
Foreign exchange differences (34) (49)
Total administrative expenditure (962) (1,022)
Operating loss 2 (962) (1,022)
Finance income 3 43 1,114
Impairment of oil and gas properties 7 (47) (47)
Fair value revaluation 8 - 98
Loss on sale of investment 8 (29) -
-------- --------
(Loss)/Profit from continuing operations
before taxation (995) 143
Tax benefit in current year 5 716 2
-------- --------
(Loss)/Profit from continuing operations
after taxation (279) 145
-------- --------
Total comprehensive (loss)/profit for
the year (279) 145
======== ========
(Loss)/Earnings per share from continuing
operations (expressed in cents)
- Basic 6 (0.06)c 0.03c
- Diluted (0.06)c 0.03c
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Financial Position
As at 31 March 2020
Company Number: 05387837 2020 2019
Notes US$'000 US$'000
Assets
Non-Current Assets
Oil and gas properties: exploration and
evaluation 7 9,586 9,075
Investments 8 4,404 3,200
--------- ---------
Total non-current assets 13,990 12,275
Current Assets
Trade and other receivables 9 35 37
Corporation tax receivable 5 358 -
Cash and cash equivalents 189 332
--------- ---------
Total current assets 582 369
Liabilities
Current Liabilities
Trade and other payables 10 1,170 374
Provisions 78 54
Derivative financial liabilities 11 - 1,349
Total current liabilities 1,248 1,777
Net Current Liabilities (666) (1,408)
--------- ---------
Net Assets 13,324 10,867
========= =========
Shareholders' Equity
Share capital 13 1,291 1,232
Share premium reserve 27,811 26,524
Share based payment reserve 153 69
Retained losses (15,931) (16,958)
--------- ---------
Total Equity 13,324 10,867
========= =========
The Financial Statements were approved by the Board of Directors
on 21 August 2020 and were signed on its behalf by:
______________________________
______________________________
Patrick Cross Thomas Kelly
Chairman Chief Executive Officer
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Cash Flows
For the Year Ended 31 March 2020
2020 2019
Notes US$'000 US$'000
Operating Activities
Payments for operating activities (579) (971)
Receipt of corporation tax 358 1,322
-------- --------
Net cash (outflow)/inflow from operating
activities 12 (221) 351
Investing Activities
P ayments for exploration and evaluation (557) (1,424)
Payments for investments (953) (530)
Proceeds from disposal of investments 276 175
Receipt of exploration bonds and bank
guarantees - 150
-------- --------
Net cash outflow for investing activities (1,234) (1,629)
Financing Activities
Issue of ordinary share capital 1,375 1,314
Payment of equity issue costs (29) (43)
-------- --------
Net cash inflow from financing activities 1,346 1,271
Net decrease in cash and cash equivalents (109) (7)
Cash and cash equivalents at the start
of the year 332 388
Forex loss on cash held (34) (49)
-------- --------
Cash And Cash Equivalents At The End Of
The Year 189 332
======== ========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Changes in Equity
For the Year Ended 31 March 2020
Share Share Premium Share Retained Total
Capital Reserve Based Loss Equity
Payment
Reserve
Notes US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 April
2018 1,205 25,280 10 (17,103) 9,392
========= ============== ========= ========= ========
Profit after tax
for the year - - - 145 145
Total comprehensive
profit for the year - - - 145 145
--------- -------------- --------- --------- --------
Contributions by
and distributions
to owners
Shares issued in
the period 13 27 1,287 - - 1,314
Equity issue costs - (43) - - (43)
Share based payment
expense - - 59 - 59
--------- -------------- --------- --------- --------
Total contributions
by and distributions
to owners 27 1,244 59 - 1,330
--------- -------------- --------- --------- --------
Balance at 1 April
2019 1,232 26,524 69 (16,958) 10,867
========= ============== ========= ========= ========
Loss after tax for
the year - - - (279) (279)
Total comprehensive
loss for the year - - - (279) (279)
--------- -------------- --------- --------- --------
Contributions by
and distributions
to owners
Shares issued in
the period 13 59 1,316 - - 1,375
Equity issue costs - (29) - - (29)
Share based payment
expense - - 84 - 84
Derivative settlement - - - 1,306 1,306
Total contributions
by and distributions
to owners 59 1,287 84 1,306 2,736
Balance at 31 March
2020 1,291 27,811 153 (15,931) 13,324
========= ============== ========= ========= ========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Notes to the Financial Statements
For the Year Ended 31 March 2020
Basis of preparation
The Company's financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRS') as adopted by the European Union and Companies Act 2006.
The principal accounting policies are summarised below. The
financial report is presented in the functional currency, US
dollars and all values are shown in thousands of US dollars
(US$'000).
The preparation of financial statements in compliance with
adopted IFRS requires the use of certain critical accounting
estimates. It also requires Company management to exercise judgment
in applying the Company's accounting policies. The areas where
significant judgments and estimates have been made in preparing the
financial statements and their effect are disclosed below.
Basis of measurement
The financial statements have been prepared on a historical cost
basis, except for the following items (refer to individual
accounting policies for details):
- Investments
- Derivative financial liability
Nature of business
The Company is a public limited company incorporated and
domiciled in England and Wales. The address of the registered
office is 200 Strand, London, WC2R 1DJ. The Company is in the
business of financing the exploration, development and production
of energy resource projects in regions with energy hungry markets
close to existing infrastructure. The Company has typically focused
on non-operating working interest positions in projects that have
drill ready targets that substantially short cut the life-cycle of
hydrocarbon projects by entering the project after exploration
concept, initial exploration and drill target identification work
has largely been completed.
Going concern
The Company's principal activity during the year has been the
acquisition and development of its exploration projects. At year
end the Company had a cash balance of US$0.19m (2019: US$0.33m) and
made a loss after income tax of US$0.28m (2019: profit of
US$0.15m).
The Directors have prepared cash flow forecasts for the Company
covering the period to 31 August 2021 and show that the Company
will require further funding within the next 12 months. The
Directors have an appropriate plan to raise additional funds as and
when it is required, either through the sale of existing assets,
through joint ventures of existing assets or through further equity
or debt funding. In addition the entering into an Equity Facility
Agreement with Long State Investment Limited provides Empyrean with
a fully flexible funding facility and enables it to access capital
to fund its ongoing working capital, if required and subject to the
administrative conditions of the agreement.
The Directors have therefore concluded that it is appropriate to
prepare the Company's financial statements on a going concern
basis. However, in the absence of additional funding being in place
at the date of this report, these conditions indicate the existence
of a material uncertainty which may cast significant doubt over the
Company's ability to continue as a going concern and, therefore,
that it may be unable to realise its assets and discharge its
liabilities in the normal course of business. The financial
statements do not include the adjustments that would result if the
Company was unable to continue as a going concern.
Adoption of new and revised standards
(a) New and amended standards adopted by the Company:
There were no new standards effective for the first time for
periods beginning on or after 1 April 2019 that have had a
significant effect on the Company's financial statements.
(b) Standards, amendments and interpretations that are not yet
effective and have not been early adopted:
Any standards and interpretations that have been issued but are
not yet effective, and that are available for early application,
have not been applied by the Company in these financial statements.
International Financial Reporting Standards that have recently been
issued or amended but are not yet effective have not been adopted
for the annual reporting period ended 31 March 2020.
Tax
The major components of tax on profit or loss include current
and deferred tax. Current tax is based on the profit or loss
adjusted for items that are non-assessable or disallowed and is
calculated using tax rates that have been enacted or substantively
enacted by the reporting date. Tax is charged to the income
statement, except when the tax relates to items credited or charged
directly to equity, in which case the tax is also dealt with in
equity.
(a) Deferred tax
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the statement of
financial position differs to its tax base. Recognition of deferred
tax assets is restricted to those instances where it is probable
that taxable profit will be available, against which the difference
can be utilised. The amount of the asset or liability is determined
using tax rates that have been enacted or substantively enacted by
the reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered). The Company has
considered whether to recognise a deferred tax asset in relation to
carried-forward losses and has determined that this is not
appropriate in line with IAS 12 as the conditions for recognition
are not satisfied.
Foreign currency translation
Transactions denominated in foreign currencies are translated
into US dollars at contracted rates or, where no contract exists,
at average monthly rates. Monetary assets and liabilities
denominated in foreign currencies which are held at the year-end
are translated into US dollars at year-end exchange rates. Exchange
differences on monetary items are taken to the Statement of
Comprehensive Income. Items included in the financial statements
are measured using the currency of the primary economic environment
in which the Company operates (the functional currency).
Oil and gas assets: exploration and evaluation
The Company applies the full cost method of accounting for
Exploration and Evaluation ('E&E') costs, having regard to the
requirements of IFRS 6 'Exploration for and Evaluation of Mineral
Resources'. Under the full cost method of accounting, costs of
exploring for and evaluating oil and gas properties are accumulated
and capitalised by reference to appropriate cash generating units
('CGUs'). Such CGUs are based on geographic areas such as a
concession and are not larger than a segment. E&E costs are
initially capitalised within oil and gas properties: exploration
and evaluation. Such E&E costs may include costs of license
acquisition, third party technical services and studies, seismic
acquisition, exploration drilling and testing, but do not include
costs incurred prior to having obtained the legal rights to explore
an area, which are expensed directly to the income statement as
they are incurred, or costs incurred after the technical
feasibility and commercial viability of extracting a mineral
resource are demonstrable, which are reclassified as development
and production assets. Property, Plant and Equipment ('PPE')
acquired for use in E&E activities are classified as property,
plant and equipment. However, to the extent that such PPE is
consumed in developing an intangible E&E asset, the amount
reflecting that consumption is recorded as part of the cost of the
intangible E&E asset. Intangible E&E assets related to
exploration licenses are not depreciated and are carried forward
until the existence (or otherwise) of commercial reserves has been
determined. The Company's definition of commercial reserves for
such purpose is proven and probable reserves on an entitlement
basis.
If commercial reserves have been discovered, the related E&E
assets are assessed for impairment on a CGU basis as set out below
and any impairment loss is recognised in the income statement. The
carrying value, after any impairment loss, of the relevant E&E
assets is then reclassified as development and production assets
within property, plant and equipment and are amortised on a unit of
production basis over the life of the commercial reserves of the
pool to which they relate. Intangible E&E assets that relate to
E&E activities that are not yet determined to have resulted in
the discovery of commercial reserves remain capitalised as
intangible E&E assets at cost, subject to meeting impairment
tests as set out below. E&E assets are assessed for impairment
when facts and circumstances suggest that the carrying amount may
exceed its recoverable amount. Such indicators include the point at
which a determination is made as to whether or not commercial
reserves exist. Where the E&E assets concerned fall within the
scope of an established CGU, the E&E assets are tested for
impairment together with all development and production assets
associated with that CGU, as a single cash generating unit. The
aggregate carrying value is compared against the expected
recoverable amount of the pool. The recoverable amount is the
higher of value in use and the fair value less costs to sell. Value
in use is assessed generally by reference to the present value of
the future net cash flows expected to be derived from production of
commercial reserves. Where the E&E assets to be tested fall
outside the scope of any established CGU, there will generally be
no commercial reserves and the E&E assets concerned will
generally be written off in full. Any impairment loss is recognised
in the income statement.
Investments
Under IFRS 9, all investments in equities are required to be
measured at fair value. The Company's interest in the Duyung PSC is
classified under IFRS 9 as a financial asset at fair value through
profit or loss, due to the Company's 8.5% shareholding and lack of
significant influence over operations. Financial assets designated
as fair value through the profit or loss are measured at fair value
through profit or loss at the point of initial recognition and
subsequently revalued at each reporting date. The purchase
agreement detailed in Note 8(b) has formed the basis for the fair
value assessment at 31 March 2020, including costs capitalised
since the agreement was entered into.
Joint operations
Joint arrangements represent the contractual sharing of control
between parties in a business venture where unanimous decisions
about relevant activities are required. Joint venture operations
represent arrangements whereby joint operators maintain direct
interests in each asset and exposure to each liability of the
arrangement. The Company's interests in the assets, liabilities,
revenue and expenses of joint operations are included in the
respective line items of the financial statements.
Financial instruments
Financial assets and liabilities are recognised in the statement
of financial position when the Company becomes party to the
contractual provision of the instrument.
(a) Financial assets
The Company's financial assets consist of financial assets at
amortised cost (trade and other receivables, excluding prepayments,
and cash and cash equivalents) and financial assets classified as
fair value through profit or loss. Financial assets at amortised
cost are initially measured at fair value and subsequently at
amortised cost and attributable transaction costs are included in
the initial carrying value. Financial assets designated as fair
value through the profit or loss are measured at fair value through
the profit or loss at the point of initial recognition and
subsequently revalued at each reporting date. Attributable
transactions costs are recognised in profit or loss as incurred.
Movements in the fair value of derivative financial assets are
recognised in the profit or loss in the period in which they
occur.
(b) Financial liabilities
All financial liabilities are classified as fair value through
the profit and loss or financial liabilities at amortised cost. The
Company's financial liabilities at amortised cost include trade and
other payables and its financial liabilities at fair value through
the profit or loss include the derivative financial liabilities.
Financial liabilities at amortised cost, are initially stated at
their fair value and subsequently at amortised cost. Interest and
other borrowing costs are recognised on a time-proportion basis
using the effective interest method and expensed as part of
financing costs in the statement of comprehensive income.
Derivative financial liabilities are initially recognised at fair
value of the date a derivative contract is entered into and
subsequently re-measured at each reporting date. The method of
recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged. The Company has not designated any
derivatives as hedges as at 31 March 2019 or 31 March 2020.
(c) Impairment for financial instruments measured at amortised
cost
Impairment provisions for financial instruments are recognised
based on a forward looking expected credit loss model in accordance
with IFRS 9. The methodology used to determine the amount of the
provision is based on whether there has been a significant increase
in credit risk since initial recognition of the financial asset.
For those where the credit risk has not increased significantly
since initial recognition of the financial asset, twelve month
expected credit losses along with gross interest income are
recognised. For those for which credit risk has increased
significantly, lifetime expected credit losses along with the gross
interest income are recognised. For those that are determined to be
credit impaired, lifetime expected credit losses along with
interest income on a net basis are recognised.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Share based payments
The Company issues equity-settled share-based payments to
certain employees. Equity-settled share-based payments are measured
at fair value at the date of grant. The fair value determined at
the grant date of the equity-settled share-based payments is
expensed over the vesting period, based on the Company's estimate
of shares that will eventually vest. The fair value of options is
ascertained using a Black-Scholes pricing model which incorporates
all market vesting conditions. Where equity instruments are granted
to persons other than employees, the income statement is charged
with the fair value of goods and services received.
Critical accounting estimates and judgements
The Company makes judgements and assumptions concerning the
future that impact the application of policies and reported
amounts. The resulting accounting estimates calculated using these
judgements and assumptions will, by definition, seldom equal the
related actual results but are based on historical experience and
expectations of future events. The judgements and key sources of
estimation uncertainty that have a significant effect on the
amounts recognised in the financial statements are discussed
below.
Critical estimates and judgements
The following are the critical estimates and judgements that
management has made in the process of applying the entity's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
(a) Carrying value of exploration and evaluation assets
(judgement)
The Company monitors internal and external indicators of
impairment relating to its exploration and evaluation assets.
Management has considered whether any indicators of impairment have
arisen over certain assets relating to the Company's exploration
licenses. Management consider the exploration results to date and
assess whether, with the information available, there is any
suggestion that a commercial operation is unlikely to proceed. In
addition, management have considered the likely success of renewing
the licences, the impact of any instances of non-compliance with
license terms and are continuing with the exploration and
evaluation of the sites. After considering all relevant factors,
management were of the opinion that no impairment was required in
relation to the costs capitalised to exploration and evaluation
assets except for the below:
In light of current market conditions, little or no work has
been completed on the Riverbend or Eagle Oil projects in the year
and no substantial project work is forecast for either project in
2020/21 whilst the Company focuses on other projects. Whilst the
Company maintains legal title it has continued to fully impair the
carrying value of the asset at 31 March 2020.
(b) Investments (judgement and estimate)
The Company's interest in the Duyung PSC is classified under
IFRS 9 as a financial asset at fair value through profit or loss,
due to the 8.5% shareholding and lack of significant influence over
operations. Financial assets designated as fair value through
profit or loss are measured at fair value through profit or loss at
the point of initial recognition and subsequently revalued at each
reporting date. The purchase agreement detailed in Note 8(b) has
formed the basis for the fair value assessment at 31 March 2020 and
31 March 2019, including costs capitalised since the agreement was
entered into. While the successful appraisal drilling program
conducted during the year has resulted in a substantial increase in
the contingent resources of Mako gas field subsequent to year end,
there are, in the Board's opinion, several milestones required to
be achieved before an updated fair value of the project can be
reliably and objectively assessed. These include steps required for
contingent resources to be converted to reserves at final
investment decision (FID) and also the steps required to finalise a
gas sales agreement, which has been delayed by the current COVID-19
pandemic and resultant disruptions. Given COVID-19 and the current
uncertainty and volatility in the energy markets, attempting to
model fair value at this point in time would be intrinsically
difficult and subject to a number of contingencies. Therefore the
carrying value at 31 March 2020 of $US4.4 million approximates fair
value.
Note 1. Segmental Analysis
The Directors consider the Company to have three geographical
segments, being China (Block 29/11 project), Indonesia (Duyung
PSC project) and North America (Sacramento Basin project),
which are all currently in the exploration and evaluation phase.
Corporate costs relate to the administration and financing
costs of the Company and are not directly attributable to the
individual projects. The Company's registered office is located
in the United Kingdom.
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
31 March 2020
Revenue from continued - - - - -
operations
Segment result - - - - -
Unallocated corporate expenses - - - (962) (962)
-------- ---------- -------- ---------- --------
Operating loss - - - (962) (962)
Finance income - - - 43 43
Impairment of oil and gas
properties - - (47) - (47)
Loss on sale of investment - (29) - - (29)
-------- ---------- -------- ---------- --------
Loss before taxation - (29) (47) (919) (995)
Tax benefit in current
year - - - 716 716
-------- ---------- -------- ---------- --------
Loss after taxation - (29) (47) (203) (279)
-------- ---------- -------- ---------- --------
Total comprehensive loss
for the financial year - (29) (47) (203) (279)
======== ========== ======== ========== ========
Segment assets 5,679 4,404 3,907 - 13,990
Unallocated corporate assets - - - 582 582
-------- ---------- -------- ---------- --------
Total assets 5,679 4,404 3,907 582 14,572
======== ========== ======== ========== ========
Segment liabilities - 480 - - 480
Unallocated corporate liabilities - - - 768 768
-------- ---------- -------- ---------- --------
Total liabilities - 480 - 768 1,248
======== ========== ======== ========== ========
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
31 March 2019
Revenue from continued - - - - -
operations
Segment result - - - -
Unallocated corporate expenses - - - (1,022) (1,022)
-------- ---------- -------- ---------- --------
Operating loss - - - (1,022) (1,022)
Finance income - - - 1,114 1,114
Impairment of oil and gas
properties - - (47) - (47)
Fair value revaluation - 98 - - 98
-------- ---------- -------- ---------- --------
Profit/(loss) before taxation - 98 (47) 92 143
Tax benefit in current
year - - - 2 2
-------- ---------- -------- ---------- --------
Profit/(loss) after taxation - 98 (47) 94 145
-------- ---------- -------- ---------- --------
Total comprehensive profit/(loss)
for the financial year - 98 (47) 94 145
======== ========== ======== ========== ========
Segment assets 5,222 3,200 3,853 - 12,275
Unallocated corporate assets - - - 369 369
-------- ---------- -------- ---------- --------
Total assets 5,222 3,200 3,853 369 12,644
======== ========== ======== ========== ========
Segment liabilities - 175 - - 175
Unallocated corporate liabilities - - - 1,602 1,602
-------- ---------- -------- ---------- --------
Total liabilities - 175 - 1,602 1,777
======== ========== ======== ========== ========
Note 2. Operating Loss
2020 2019
US$'000 US$'000
The operating loss is stated after charging:
Audit and tax fees (84) (90)
Total operating loss (84) (90)
======== ========
Auditor's Remuneration
Amounts paid to BDO LLP and their associates in respect of
both audit and non-audit services:
Fees payable to the Company's auditor
for the audit of the Company annual accounts 42 44
Fees payable to the Company's auditor
and its associates in respect of:
- Other services relating to taxation 12 15
-------- --------
Total auditor's remuneration 54 59
Note 3. Finance Income
2020 2019
US$'000 US$'000
Fair value movement on derivative liability 43 1,114
Total finance income 43 1,114
======== ========
Note 4. Directors' Emoluments
Fees and Salary Bonus Payment Social Security Contributions Short-Term Employment
Benefits (Total)
2020 2019 2020 2019 2020 2019 2020 2019
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Non-Executive
Directors:
Patrick Cross 23 24 - - 2 2 25 26
John Laycock 14 14 - - 1 1 15 15
Executive
Directors:
Thomas
Kelly(a) 283 293 - - - - 283 293
Gajendra
Bisht(b) 220 220 - - - - 220 220
540 551 - - 3 3 543 554
======== ======== ======== ======== ============== ============== ============= ==============
(a) Services provided by Apnea Holdings Pty Ltd, of which Mr
Kelly is a Director. On 9 July 2019 Mr Kelly exercised 15,000,000
options at an exercise price of GBP0.02. The closing share price of
the Company on 9 July 2019 was GBP0.0905. These options were not
granted to Mr Kelly as part of his remuneration but were acquired
by Mr Kelly in an arms-length transaction. Mr Kelly has not sold
any shares during the reporting period.
(b) Services provided by Topaz Energy Pty Ltd, of which Mr Bisht
is a Director. 75% of Mr Bisht's fees are capitalised to
exploration and evaluation expenditure (Note 7).
The average number of Directors was 4 during 2020 and 2019. The
highest paid director received US$283,000 (2019: US$293,000).
Note 5. Taxation
2020 2019
US$'000 US$'000
US corporation tax benefit at 21% (716) -
AMT Federal Credit received during year 358 -
-------- --------
Total corporation tax receivable (358) -
======== ========
Factors Affecting The Tax Charge For
The Year
(Loss)/profit from continuing operations (995) 143
-------- --------
(Loss)/profit on ordinary activities
before tax (995) 143
(Loss)/profit on ordinary activities
at US rate of 21% (2019: 21%) (209) 30
(Non-assessable income)/non-deductible
expenses 19 (232)
Movement in provisions 5 -
Over provision in prior year (716) -
Deferred tax assets not recognised 185 202
(716) (2)
Analysed as:
Tax benefit on continuing operations (716) (2)
-------- --------
Tax benefit in current year (716) (2)
======== ========
Deferred Tax Liabilities
Temporary differences - exploration 1,628 1,594
Temporary differences - other 393 393
-------- --------
2,021 1,987
Offset of deferred tax assets (2,021) (1,987)
-------- --------
Net deferred tax liabilities recognised - -
======== ========
Unrecognised Deferred Tax Assets
Tax losses(a) 3,468 3,384
AMT Federal Credit - 358
Temporary differences - exploration 2,940 2,925
Temporary differences - other 1,075 1,183
-------- --------
7,483 7,850
Offset of deferred tax liabilities (2,021) (1,987)
-------- --------
Net deferred tax assets not brought
to account 5,462 5,863
======== ========
(a) If not utilised, carried forward tax losses of approximately
US$9.32 million (2019: $8.91 million) begin to expire in the year
2033.
Deferred tax assets and deferred tax liabilities are offset only
if applicable criteria to set off is met.
Note 6. (Loss)/Earnings Per Share
The basic (loss)/earnings per share is derived by dividing
the (loss)/profit after taxation for the year attributable
to ordinary shareholders by the weighted average number of
shares on issue being 438,014,668 (2019: 417,825,466).
2020 2019
(Loss)/Earnings per share from continuing
operations
(Loss)/Profit after taxation from continuing US$(279,000) US$145,000
operations
(Loss)/Earnings per share - basic (0.06)c 0.03c
(Loss)/Profit after taxation from continuing
operations adjusted for dilutive effects US$(279,000) US$145,000
(Loss)/Earnings per share - diluted (0.06)c 0.03c
For the current and prior financial years the exercise of
the options is anti-dilutive and as such the diluted (loss)/earnings
per share is the same as the basic (loss)/earnings per share.
Details of the potentially issuable shares that could dilute
earnings per share in future periods are set out in Notes
11 and 13.
Note 7. Oil and Gas Properties: Exploration and Evaluation
2020 2019
US$'000 US$'000
Balance brought forward 9,075 7,820
Additions(a) 558 1,302
Impairment(b) (47) (47)
-------- --------
Net book value 9,586 9,075
======== ========
(a) The Company was awarded its permit in China in December
2016. Block 29/11 is located in the Pearl River Mouth Basin,
offshore China. Empyrean is operator with 100% of the exploration
right of the Permit during the exploration phase of the project. In
May 2017 the Company acquired a working interest in the Sacramento
Basin, California. Empyrean entered into a joint project with
ASX-listed Sacgasco Limited, to test a group of projects in the
Sacramento Basin, California, including two mature, multi-TcF gas
prospects in Dempsey (EME 30%) and Alvares (EME 25%) and also
further identified follow up prospects along the Dempsey trend (EME
30%). Please refer to the Operational Review for further
information on exploration and evaluation performed during the
year.
(b) In light of current market conditions, little or no work has
been completed on the Riverbend or Eagle Oil projects in the year
and no substantial project work is forecast for either project in
2020/21 whilst the Company focuses on other projects. Whilst the
Company maintains legal title it has continued to fully impair the
carrying value of the asset at 31 March 2020.
Project Operator Working 2020 2019
Interest Carrying Carrying Value
Value US$'000
US$'000
Exploration and
evaluation
China Block 29/11 Empyrean Energy 100%* 5,679 5,222
Sacramento Basin Sacgasco 25-30% 3,907 3,853
Riverbend Huff Energy 10% - -
Eagle Oil Pool Strata-X 58.084% - -
Development
---------- ----------------
9,586 9,075
========== ================
*In the event of a commercial discovery, and subject to the
Company entering PSC, CNOOC Limited will have a back in right
to 51% of the permit. As at the date of these financial statements
no commercial discovery has been made.
Note 8. Investments
2020 2019
US$'000 US$'000
Balance brought forward 3,200 2,572
Additions(a) 1,389 530
Disposals(a) (185) -
Fair value revaluation(b)(c) - 98
-------- --------
Total investments 4,404 3,200
======== ========
(a) The Company acquired a 10% working interest in the Duyung
PSC, Indonesia during the 2018 financial year. For further
information on additional work performed on the Duyung PSC during
the year, please refer to the Operational Review. In April 2019 the
Company also acquired shares in AIM-listed Coro valued at
US$185,000 as part of the purchase agreement detailed below, which
were disposed of on 3 December 2019 for US$156,000, resulting in a
loss on sale of US$29,000.
(b) In February 2019 Empyrean announced that it had entered into
a binding, conditional purchase agreement (the Agreement) pursuant
to which AIM listed Coro would acquire a 15% interest in the Duyung
PSC from WNEL for aggregate consideration in cash and Coro shares
of US$4.8 million (of which Empyrean received US$295,000 in cash
and 6,090,504 Coro shares) and the contribution of US$10.5 million
by Coro toward the 2019 drilling campaign at the Mako gas field.
The cash and share component of the consideration was paid pro rata
to the existing owners of WNEL, being Empyrean, which currently had
a 10% effective interest in the Duyung PSC, and Conrad Petroleum
Ltd, which currently had a 90% effective interest in the Duyung
PSC, each through shareholding in WNEL.
The consideration paid comprised US$2.95 million in cash and
US$1.85 million in the form of 60,905,037 new ordinary shares in
Coro. Empyrean received cash consideration of US$295,000 and
Consideration Shares with a value of US$185,000 for the transfer to
Coro of 1.5% of its current 10% interest in the Duyung PSC,
reducing its interest to 8.5% once the transaction is completed
(subject to government and regulatory approval which was received
in May 2020). As at 31 March 2020, Empyrean had received all cash
and share proceeds of US$480,000, recorded as a Prepayment Received
in Trade and Other Payables (Note 10).
(c) The Company's interest in the Duyung PSC is classified under
IFRS 9 as a financial asset at fair value through profit or loss,
due to the 8.5% shareholding and lack of significant influence over
operations. Financial assets designated as fair value through
profit or loss are measured at fair value through profit or loss at
the point of initial recognition and subsequently revalued at each
reporting date. The purchase agreement detailed in Note 8(b) above
has formed the basis for the fair value assessment at 31 March 2020
and 31 March 2019, including costs capitalised since the agreement
was entered into. While the successful appraisal drilling program
conducted during the year has resulted in a substantial increase in
the contingent resources of Mako gas field subsequent to year end,
there are, in the Board's opinion, several milestones required to
be achieved before an updated fair value of the project can be
reliably and objectively assessed. These include steps required for
contingent resources to be converted to reserves at final
investment decision (FID) and also the steps required to finalise a
gas sales agreement, which has been delayed by the current COVID-19
pandemic and resultant disruptions. Given COVID-19 and the current
uncertainty and volatility in the energy markets, attempting to
model fair value at this point in time would be intrinsically
difficult and subject to a number of contingencies. Therefore the
carrying value at 31 March 2020 of $US4.4 million approximates fair
value.
Note 9. Trade and Other Receivables
2020 2019
US$'000 US$'000
Trade and other receivables - 1
Accrued revenue 30 30
VAT receivable 5 6
-------- --------
Total trade and other receivables 35 37
======== ========
Note 10. Trade and Other Payables
2020 2019
US$'000 US$'000
Trade payables 648 157
Accrued expenses 42 42
Prepayments received - proceeds from
disposal of investment 480 175
-------- --------
Total trade and other payables 1,170 374
======== ========
Note 11. Derivative Financial Liabilities
2020 2019
US$'000 US$'000
Opening balance 1,349 2,463
Fair value movement (Note 3) (43) (1,114)
Settlement of derivative (1,306) -
------------------ ---------------------
Closing balance - 1,349
================== =====================
Derivative financial liabilities represented the fair value
of 15,000,000 options granted to Macquarie Bank and linked
to the extension of a now repaid loan facility held with Macquarie
Bank. As announced on 13 March 2017, the options were owned
by Apnea Holdings Pty Ltd, a company which is wholly owned
by Tom Kelly, CEO of Empyrean. Apnea Holdings Pty Ltd exercised
the options on 9 July 2019, thereby extinguishing the derivative
financial liability.
During the 2017 financial year, the Company modified the exercise
price of the options. This was deemed to be a substantial
modification under IAS 32 and IAS 39. The value of the derivative
financial liability was extinguished at that point and the
fair value of the modified options recognised at the date
that they were granted. As a financial liability at fair value
through profit or loss these were revalued at period end.
The fair value was measured using a Black-Scholes Model with
the following inputs:
Fair value of share options and assumptions
31 March 2020 31 March 2019
Grant date - 27 July 2015
Expiry date - 26 July 2019
Share price - GBP0.09
Exercise price - GBP0.02
Volatility - 77%
Option life - 0.33
Expected dividends - -
Risk-free interest rate (based on national government
bonds) - 0.76%
Expected volatility was determined by calculating the historical
volatility of the Company's share price over the expected
remaining life of the options.
Note 12. Reconciliation of Net (Loss)/Profit
2020 2019
US$'000 US$'000
Net (loss)/profit before taxation (995) 143
Finance (income) (43) (1,114)
Fair value revaluation - (98)
Forex loss 34 49
Impairment - oil and gas properties 47 47
Share based payments 84 60
Decrease/(increase) in trade receivables
relating to operating activities 2 (5)
Increase/(decrease) in trade payables
relating to operating activities 268 (53)
Increase in provisions 24 -
-------- --------
Net cash outflow from operating activities
before taxation (579) (971)
-------- --------
Receipt of corporation tax 358 1,322
-------- --------
Net cash (outflow)/inflow from operating
activities (221) 351
======== ========
Note 13. Share Capital
Issued and fully paid 2020 2019
US$'000 US$'000
447,597,777 (2019: 424,275,110) ordinary
shares of 0.2p each 1,291 1,232
-------- --------
Opening balance (2020 number: 424,275,110)
(2019 number: 413,995,110) 1,232 1,205
Exercise of options - 9 July 2019 (number: 38 -
15,000,000)
Placement - 30 Sep 2019 (number: 3,655,800) 9 -
Placement - 16 Jan 2020 (number: 4,666,667) 12 -
Placement - prior year (number: 10,280,000) - 27
Closing balance (2020 number: 447,597,777)
(2019 number: 424,275,110) 1,291 1,232
======== ========
The Companies Act 2006 (as amended) abolishes the requirement
for a company to have an authorised share capital. Therefore the
Company has taken advantage of these provisions and has an
unlimited authorised share capital.
Each of the ordinary shares carries equal rights and entitles
the holder to voting and dividend rights and rights to participate
in the profits of the Company and in the event of a return of
capital equal rights to participate in any sum being returned to
the holders of the ordinary shares. There is no restriction,
imposed by the Company, on the ability of the holder of any
ordinary share to transfer the ownership, or any of the benefits of
ownership, to any other party.
Share options
The number and weighted average exercise prices of share
options are as follows:
Weighted Average Exercise Weighted Average Exercise
Price Price
Number Number
of Options Of Options
2020 2020 2019 2019
Outstanding at the beginning of
the year GBP0.042 17,500,000 GBP0.042 17,500,000
Issued during the year(a) GBP0.125 3,000,000 - -
Exercised during the year GBP0.020 (15,000,000) - -
-------------------------- ------------ ------------------------- --------------
Outstanding at the end of the
year GBP0.145 5,500,000 GBP0.042 17,500,000
========================== ============ ========================= ==============
(a) On 17 September 2019, 2,500,000 unlisted options were issued to the Company Secretary,
Jonathan Whyte. The options have an exercise price of GBP0.125, expire on 30 September 2022
and have a vesting date of 17 September 2020. On 24 December 2019, 500,000 unlisted options
were issued to Long State Investments as part of the GBP10 million equity placement facility
. The options have an exercise price of GBP0.123 and expire on 24 December 2022.
Options are being expensed over the life of the options, resulting in a share-based payment
expense of US$84,000 to 31 March 2020 (US$60,000 to 31 March 2019).
Valuation and assumptions
of options at 31 March 2020
Employee Options Employee Options Equity Facility Options
Number of Options 2,500,000 2,500,000 500,000
Grant date 17 Sep 2019 30 Jan 2018 24 Dec 2019
Expiry date 30 Sep 2022 30 Jan 2021 24 Dec 2022
Share price GBP0.098 GBP0.12 GBP0.084
Exercise price GBP0.125 GBP0.17 GBP0.123
Volatility 79% 79% 79%
Option life 3.00 3.00 3.00
Expected dividends - - -
Risk-free interest rate
(based on national
government bonds) 0.49% 0.73% 0.52%
The options outstanding at 31 March 2020 have an exercise price in the range of GBP0.123 to
GBP0.17 (2019: GBP0.02 to GBP0.017) and a weighted average remaining contractual life of 1.77
years (2019: 0.54 years). None of the outstanding options at 31 March 2020 are exercisable
at year end.
Note 14. Reserves
Reserve Description and purpose
Share premium Amount subscribed for share capital in
excess of nominal value.
------------------------------------------------------
Share based payment Records items recognised as expenses on
reserve valuation of employee share options.
------------------------------------------------------
Retained losses All other net gains and losses and transactions
with owners not recognised elsewhere.
------------------------------------------------------
Note 15. Related Party Transactions
Directors are considered Key Management Personnel for the
purposes of related party disclosure.
Apnea Holdings Pty Ltd, of which Mr Thomas Kelly is a Director,
subscribed to 2,222,222 ordinary shares at GBP0.0131 as part
of the January 2020 Share Placement.
There were no other related party transactions during the
year ended 31 March 2020 other than those disclosed in Note
4.
Note 16. Financial Risk Management
The Company manages its exposure to credit risk, liquidity
risk, foreign exchange risk and a variety of financial risks
in accordance with Company policies. These policies are developed
in accordance with the Company's operational requirements.
The Company uses different methods to measure and manage
different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate and foreign
exchange risk and assessment of prevailing and forecast interest
rates and foreign exchange rates. Liquidity risk is managed
through the budgeting and forecasting process.
Credit Risk
Exposure to credit risk relating to financial assets arises from
the potential non-performance by counterparties of contract
obligations that could lead to a financial loss to the Company.
Credit risk is managed through the maintenance of procedures
(such procedures include the utilisation of systems for approval,
granting and removal of credit limits, regular monitoring of
exposures against such limits and monitoring the financial
stability of significant customers and counterparties), ensuring to
the extent possible, that customers and counterparties to
transactions are of sound credit worthiness. Such monitoring is
used in assessing receivables for impairment. Credit terms are
generally 30 days from invoice date.
Risk is also minimised by investing surplus funds in financial
institutions that maintain a high credit rating.
Credit risk related to balances with banks and other financial
institutions are managed in accordance with approved Board policy.
The Company's current investment policy is aimed at maximising the
return on surplus cash, with the aim of outperforming the benchmark
within acceptable levels of risk return exposure and to mitigate
the credit and liquidity risks that the Company is exposed to
through investment activities.
The following table provides information regarding the credit
risk relating to cash and money market securities based on Standard
and Poor's counterparty credit ratings.
2020 2019
US$'000 US$'000
Cash and cash equivalents
AA-rated 189 332
----------- -----------
Total cash and cash equivalents 189 332
=========== ===========
Liquidity risk
Liquidity risk arises from the possibility that the Company
might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Company manages liquidity risk by maintaining sufficient
cash or credit facilities to meet the operating requirements
of the business and investing excess funds in highly liquid
short-term investments. The Company's liquidity needs can
be met through a variety of sources, including the issue
of equity instruments and short or long-term borrowings.
Alternative sources of funding in the future could include
project debt financing and equity raisings, and future operating
cash flow. These alternatives will be evaluated to determine
the optimal mix of capital resources.
The following table details the Company's non-derivative
financial instruments according to their contractual maturities.
The amounts disclosed are based on contractual undiscounted
cash flows. Cash flows realised from financial assets reflect
management's expectation as to the timing of realisation.
Actual timing may therefore differ from that disclosed. The
timing of cash flows presented in the table to settle financial
liabilities reflects the earliest contractual settlement
dates.
Less than 6 months 1 to Total
6 months to 1 year 6 years
US$'000 US$'000 US$'000 US$'000
Trade and other payables (2020) 690 - - 690
---------- ----------- --------- --------
Trade and other payables (2019) 199 - - 199
---------- ----------- --------- --------
Capital
In managing its capital, the Company's primary objective
is to maintain a sufficient funding base to enable the Company
to meet its working capital and strategic investment needs.
In making decisions to adjust its capital structure to achieve
these aims, through new share issues, the Company considers
not only its short-term position but also its long-term operational
and strategic objectives. The Company has a track record
of successfully securing additional funding as and when required
from equity capital markets.
Foreign exchange risk
The Company operates internationally and is exposed to foreign
exchange risk arising from various currency exposures. Foreign
exchange risk arises from future commitments, assets and
liabilities that are denominated in a currency that is not
the functional currency of the Company. The Company's deposits
are largely denominated in US dollars. Currently there are
no foreign exchange hedge programmes in place. However, the
Company treasury function manages the purchase of foreign
currency to meet operational requirements.
As at 31 March 2020 the Company's gross exposure to foreign
exchange risk was as follows:
2020 2019
US$'000 US$'000
Gross foreign currency financial assets
Cash and cash equivalents - GBP 40 196
---------- ---------
Total gross exposure 40 196
========== =========
The effect of a 10% strengthening of the USD against the
GBP at the reporting date on the GBP-denominated assets carried
within the USD functional currency entity would, all other
variables held constant, have resulted in an increase in
post-tax loss for the year and decrease in net assets of
US$4,000 (2019: US$19,600).
Fair value
Fair values are those amounts at which an asset could be
exchanged, or a liability settled, between knowledgeable, willing
parties in an arm's length transaction. Fair values may be based on
information that is estimated or subject to judgement, where
changes in assumptions may have a material impact on the amounts
estimated. Areas of judgement and the assumptions have been
detailed below.
Where possible, valuation information used to calculate fair
value is extracted from the market, with more reliable information
available from markets that are actively traded. In this regard,
fair values for listed securities are obtained from quoted market
prices. Where securities are unlisted and no market quotes are
available, fair value is obtained using discounted cash flow
analysis and other valuation techniques commonly used by market
participants.
The following methods and assumptions are used to determine the
net fair values of financial assets and liabilities:
-- Cash and short-term investments - the carrying amount
approximates fair value because of their short term to
maturity;
-- Trade receivables and trade creditors - the carrying amount
approximates fair value;
-- Derivative financial assets and liabilities - initially
recognised at fair value through profit and loss at the date the
contract is entered into and subsequently re-measured at each
reporting date the fair value of the derivative financial liability
options is calculated using a Black-Scholes Model. Measurement
inputs include share price on measurement date, exercise price of
the instrument, expected volatility (based on weighted average
historic volatility adjusted for changes expected due to publicly
available information), weighted average expected life of the
instruments (based on historical experience and general option
holder behaviour), expected dividends, and the risk-free interest
rate (based on government bonds); and
-- Investments - The Company's interest in the Duyung PSC is
classified under IFRS 9 as a financial asset at fair value through
profit or loss, due to the Company's 8.5% shareholding and lack of
significant influence over operations. Financial assets designated
as fair value through the profit or loss are measured at fair value
through profit or loss at the point of initial recognition and
subsequently revalued at each reporting date. The purchase
agreement detailed in Note 8(b) has formed the basis for the fair
value assessment at 31 March 2020, including costs capitalised
since the agreement was entered into.
No financial assets and financial liabilities are readily traded
on organised markets in standardised form.
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the
statement of financial position have been analysed and classified
using a fair value hierarchy reflecting the significance of the
inputs used in making the measurements. The fair value hierarchy
consists of the following levels:
-- Quoted prices in active markets for identical assets or
liabilities (Level 1);
-- Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices) (Level 2); and
-- Inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (Level 3).
Financial instruments at fair value and methods used to estimate
the fair value are summarised below:
Financial Instruments at Fair Value 31 March 31 March
2020 2019
Fair Value Fair Value
US$'000 US$'000
Financial assets
Investments (Level 3)(a) 4,404 3,200
------------- ------------
Total financial assets 4,404 3,200
============= ============
Financial liabilities
Derivative financial liability (Level
3) - 1,349
------------- ------------
Total financial liabilities - 1,349
============= ============
(a) The Company's interest in the Duyung PSC is classified
under IFRS 9 as a financial asset at fair value through profit
or loss. The purchase agreement detailed in Note 8(b) has
formed the basis for the fair value assessment at 31 March
2020, including costs capitalised since the agreement was
entered into.
Financial instruments by category are summarised below:
Financial Instruments Fair Value Through Amortised Cost
by Category Profit or Loss
31 March 31 March 31 March 31 March
2020 2019 2020 2019
US$'000 US$'000 US$'000 US$'000
Financial assets
Cash and cash equivalents - - 189 332
Trade and other receivables - - 35 37
Investments 4,404 3,200 - -
---------- --------- --------- ---------
Total financial assets 4,404 3,200 224 369
========== ========= ========= =========
Financial liabilities
Trade and other payables - - 648 157
Derivative financial - 1,349 - -
liability
---------- --------- --------- ---------
Total financial liabilities - 1,349 648 157
========== ========= ========= =========
Cash and cash equivalents
Cash and short-term deposits in the Statement of Financial
Position comprise cash at bank and in hand and short-term deposits
with an original maturity of three months or less. For the purposes
of the Cash Flow Statement, cash and cash equivalents consist of
cash and cash equivalents as defined above and which are readily
convertible to a known amount of cash and are subject to an
insignificant risk of change in value.
Note 17. Events After the Reporting Date
Significant events post reporting date were as follows:
In April 2020 the Company completed a placement to raise
US$0.509 million (GBP0.411 million).
In May 2020 the Company completed an Open Offer to raises US$0.511 million (GBP0.415 million).
In May 2020 an independent resource audit by GCA was completed
which confirmed a significant resource upgrade of the Mako gas
field including an audited 2C contingent resource estimate of 495
BcF, a 79% increase from previous GCA estimate and an audited 3C
contingent resource estimate of 817 BcF, a 108% increase from
previous GCA estimate.
In May 2020 the final Indonesian regulatory approvals for the
transfer of title of the 15% direct interest in the Duyung PSC to
Coro were received. As part of this completion process WNEL made a
direct transfer of its interest in the Duyung PSC to Empyrean and
the other owners, who now hold their interest in the Duyung PSC
directly.
In June 2020 the Company received a 12-month extension from
CNOOC for first phase of exploration drilling at Block 29/11
secured, giving the Company until June 2022 to drill the first
well.
No other matters or circumstances have arisen since the end of
the financial year which significantly affected or could
significantly affect the operations of the Company, the results of
those operations, or the state of affairs of the Company in future
financial years.
Note 18. Committed Expenditure
The Company has met all commitments on all three key projects
during the current financial year.
Block 29/11 offshore China
The Company's committed work program for the GSA phase for Block
29/11 included acquisition, processing and interpretation of 500km2
for a 3D seismic survey, and a financial commitment of US$3.0
million. The Company exceeded the work program commitments during
the 2018 financial year.
Having successfully completed the committed work program for the
first phase GSA, the Company exercised its option to enter a PSC on
the Block, on pre-negotiated terms, with CNOOC on 30 September
2018, with the date of commencement of implementation of the PSC
being 13 December 2018. The first phase of the contract is for 2.5
years with a commitment to drill one exploration well to a depth of
2,500m or to the Basement Formation. In June 2020 Empyrean
announced that CNOOC had granted a 12-month extension for the first
phase of the exploration commitment for the PSC, extending it to 12
June 2022.
Additional commitments for the 2020 financial year consist of an
annual assistance fee to CNOOC of US$60,000, an annual personnel
representative fee to CNOOC of approximately US$234,000 and an
annual prospecting fee of US$128,000.
Duyung PSC offshore Indonesia
As reported the joint venture partners completed a successful
exploration and appraisal well program at the Duyung PSC during the
year. Empyrean have paid all cash calls associated with the program
with no further amounts due and payable.
Sacramento Basin assets onshore California
The Company earned a 30% interest in the Dempsey Prospect by
paying US$2,100,000 towards the costs of drilling the Dempsey 1-15
exploration well. These drilling costs had a promoted cap of
US$3,200,000 and the Company paid its share of additional costs at
Dempsey 1-15, including completion costs. At the time of this
report, the work plan, cost estimates and timing of further
expenditure for both the Borba and Alvares prospects have not been
finalised. The Company incurs quarterly cash calls of approximately
US$10,000 for overheads, geological and geophysical costs and
approximately US$48,000 for its share of associated lease
obligations annually.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKDBKCBKKOFB
(END) Dow Jones Newswires
August 21, 2020 05:11 ET (09:11 GMT)
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