TIDMEME
RNS Number : 1640X
Empyrean Energy PLC
18 December 2023
Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil &
Gas
18 December 2023
Empyrean Energy PLC ("Empyrean" or the "Company")
Interim Results
Empyrean Energy (EME: AIM), the oil and gas development company
with interests in China, Indonesia and the United States, is
pleased to provide its Interim Report for the six months ended 30
September 2023.
Highlights
Reporting period
Block 29/11, Pearl River Mouth Basin, China (EME 100%)
-- Joint regional oil migration study with CNOOC team conducted
to map oil migration from the proven source rock south-west of
Block 29/11 that charges the four CNOOC oil discoveries
(immediately west of Block 29/11 and Topaz) and extends this into
Block 29/11 to map these potential migration pathways to Topaz.
Comprehensive study also included potential migration pathways from
a new source/kitchen identified by Empyrean 3D data.
-- Simultaneous 3D seismic inversion project being conducted in
two phases to firstly assess whether light oil pay in the target
reservoir can be discriminated from a water bearing reservoir by
seismic inversion and secondly to invert the entire 3D seismic data
to generate several datasets for the elastic properties. These
datasets will be analysed for high grading the Topaz prospect.
-- Drill Preparation of the Topaz prospect is ongoing such that
should funding become available, operations can commence within the
favourable weather window.
Duyung PSC Project, Indonesia (EME 8.5%)
-- Key Terms agreed for Long-Term Gas Sales Agreement between
Conrad subsidiary, WNEL, operator of the Duyung PSC, and Sembcorp
Gas Pte Ltd. The parties are in the process of finalising a
definitive gas sales agreement
-- Conrad engaged a global investment bank to lead a farm-down
process for the divestment of a portion of its interest in the
Duyung Production Sharing Contract. Bids are expected to be
received by the end of CY 2023.
-- Mako is one of the largest gas discoveries in the West Natuna
Sea and the largest undeveloped resource in the area.
Corporate
-- Placement to raise US$1.88 million (GBP1.52 million) completed in May 2023.
-- Convertible Loan Note Debt restructured to reduce face value
of the note and secure extended moratorium on interest.
For further information please visit www.empyreanenergy.com or
contact the following:
Empyrean Energy plc
Tom Kelly Tel: +61 8 6146 5325
Cavendish Capital Markets Limited (Nominated Advisor and
Broker)
Neil McDonald Tel: +44 (0) 20 7397
8900
Pearl Kellie
First Equity Limited (Joint Broker)
Jason Robertson Tel: +44 (0) 20 7330
1883
Chairman's Statement
In China, planning and further de-risking work is currently
being finalised with the aim to ultimately drill the Topaz prospect
in 2024. These activities, largely focused on oil migration into
Topaz, are expected to be completed in the immediate future.
In Indonesia, Empyrean was very pleased to see agreement reached
between the operator of Mako and a major gas utility in September
and also that the agreement was endorsed by the Government of
Indonesia's petroleum upstream regulator. The focus of the parties
is now on converting this significant milestone into a binding gas
sales agreement.
The existing terms reached will be welcomed by those parties
currently participating in the sell down process to fund the
development of the Mako gas field and Empyrean expects an update
shortly on this process. The macro environment for gas in
South-East Asia, and Singapore in particular, is expected to
continue trending favourably with the region transitioning from
coal to gas as the preferred energy source.
On the corporate front, the Company successfully raised funds in
May and was pleased to renegotiate the Convertible Note at the same
time. The Company continues to assess other financing and strategic
alternatives to provide it with additional working capital as and
when required, including through the sale or partial sale of
existing assets, through joint ventures of existing assets, as well
as further equity funding.
I would like to thank the Board, management and staff for their
perseverance during the year and we all now eagerly await good news
from Indonesia before our attention turns to the targeted drilling
of the Topaz Prospect in China.
Patrick Cross
Non-Executive Chairman
18 December 2023
Operational Review
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, CNOOC will have a back in right to 51% of
the permit.
Jade Prospect Drill Program
In April 2022, the Company commenced the drilling of the LH
17-2-1 well to test the first of the three prospects noted above,
the Jade Prospect in Block 29/11, offshore China.
On 10 April 2022 LH 17-2-1 spudded and on 27 April 2022 reached
final total depth of 2,849 metres in Zhuhai Sandstone formation.
The interpretation from LWD and mud logging data indicated no oil
pay in the target reservoir which was confirmed by wireline logs.
The Company successfully operated an offshore exploration and
drilling program without any operational or environmental
issues.
Post Jade Well Analysis and Implications for Topaz Prospect
Following the Jade drilling program, comprehensive post well
analysis by Empyrean and CNOOC confirmed the Jade well intersected
carbonate reservoir as prognosed with better parameters than
pre-drill estimates with total thickness of 292m and porosity in
the range of 25 to 27%. In addition, the Jade well penetrated thick
and effective regional seal facies and the reservoir top was
encountered within the depth conversion range. These parameters
have now been more confidently mapped across Empyrean's 3D data
set.
The Jade well failed due to lack of access to effective
migration pathways. Given oil migration to the Topaz Prospect is
now identified as the key risk, the Company's pre drill exploration
efforts are focusing on mitigating this risk. Reservoir, seal and
trap validity of the Topaz prospect have been enhanced by the Jade
well data.
Entering of Second Phase of Exploration
Being able to combine excellent quality 3D seismic data with the
confirmed well data and post well analysis has resulted in the
improved validity of the Topaz prospect as a robust and large
drilling target (approximately 891 million barrels in place (P10)
per below table). Based on post drill technical evaluation, and
CNOOC-assisted migration pathways assessment, Empyrean decided to
enter the second phase of exploration and drill the larger Topaz
prospect, which is targeted to occur in 2024.
Block 29/11 Oil in place (MMbbl) audited by GCA
Prospect P90 P50 P10 Mean GCoS
Topaz 211 434 891 506 30%
---- ---- ---- ----- -----
Pearl 38 121 302 153 15%
---- ---- ---- ----- -----
Current Activities
Empyrean is conducting two further key technical projects that
capitalise on the excellent quality 3D seismic acquired by the
Company over the permit, shared regional 3D seismic that CNOOC has
and additional physical well data of both Empyrean and CNOOC.
These projects are designed to help address and mitigate the
remaining primary geological risk at Topaz - oil migration into the
Topaz trap.
Firstly, joint with CNOOC, Empyrean is completing a regional oil
migration study. CNOOC bring excellence in basin modelling
expertise along with crucial regional data that augments the data
Empyrean has on Block 29/11. The regional data includes
temperature, pressure, timing of oil maturation, and successful oil
migration pathway mapping. The project will map oil migration from
the proven source rock south west of Block 29/11 that charges the
four CNOOC oil discoveries (immediately west of Block 29/11 and
Topaz) and extend this into Block 29/11 and map these migration
pathways to Topaz.
In addition, similar work will be conducted from a new
source/kitchen located entirely within Block 29/11 and oil
migration pathways will be mapped to Topaz. This project is
expected to be completed in the immediate future.
Secondly, Empyrean is conducting a 3D simultaneous seismic
inversion project focussing on Topaz. This project is utilising the
oil properties, reservoir temperature, reservoir pressure and water
salinity data from CNOOC oil discovery wells combined with
reservoir porosity and mineralogical data from Empyrean well logs
and core to maximise the effectiveness of the inversion project
outcomes.
This project is being conducted in two phases. The aim of Phase
I is to assess whether an oil bearing reservoir case can be
distinguished from water bearing reservoir in the elastic property
domain of seismic inversion. Phase 2 involves inverting the entire
3D seismic data and will generate several datasets for the elastic
properties. These datasets will be analysed for high grading the
Topaz prospect.
The 3D seismic inversion project is expected to be completed in
the immediate future.
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 (8.5% WI)
Background
In April 2017, Empyrean acquired a 10% shareholding in WNEL from
Conrad Petroleum (now Conrad Asia Energy Ltd), 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 field that was
discovered in 2017, and comprehensively appraised in 2019.
In early 2019, both the operator, Conrad, 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.
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 sands of the Mako Gas Field.
Revised Plan of Development
In September 2022, Empyrean announced that the partners in the
Duyung PSC have approved the revised PoD and have secured alignment
with SKK Migas on the plan. The PoD was then submitted to the
Indonesian Ministry of Energy and Mineral Resources for approval,
which was duly received in November 2022, marking a major milestone
on the pathway to developing this significant pipeline quality
methane gas resource. This allowed the operator Conrad to focus on
its stated objective of working with the Government of Indonesia to
complete GSA negotiations at the earliest opportunity.
The revised Mako PoD is based on field Contingent Resources of
297 billion cubic feet (net attributable to 100% of the Duyung PSC
Joint Venture) and a daily production of 120 MMscf/d, consistent
with the GCA competent persons report dated 26 August 2022, details
of which were also announced by the Company on 9 September 2022.
The Mako Gas Project resource is currently the largest undeveloped
gas field in South Natuna Sea.
Current Activities
In September 2023 Empyrean announced that Conrads wholly owned
subsidiary, West Natuna Exploration Ltd ("WNEL") has signed
non-binding key terms with Sembcorp Gas Pte Ltd, a Singapore based
major gas buyer, that have been endorsed by SKK Migas - the
petroleum upstream regulator in Indonesia ("SKK Migas"), for a
first long-term gas sales agreement for the Mako gas field. The
Terms Agreement for the supply of gas from the Natuna Sea underpins
the commercial development of the Mako gas field providing secure
and reliable gas that is less carbon intensive than LNG. The key
terms relate to approved gas production from Mako commencing in
2025 until the end of the Duyung PSC in 2037 for a total sales gas
volume (100%) of c 293 Bcf with potential to increase to c 392 Bcf
(100%). Gas sales will be priced against Brent oil.
The joint venture is now focused on finalising a gas sales
agreement.
Conrad continues to advance the sell down process with a global
investment bank in order to fund the development of Mako. Bids are
expected to be received by the end of calendar year 2023.
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.
Multi Project Farm-in in Sacramento Basin, California (25%-30%
WI)
There were no significant activities conducted during the year
however the Company will continue to work with its joint venture
partners in reviewing and assessing any further technical and
commercial opportunities as they relate to the project.
The information contained in this report was completed and
reviewed by the Company's Executive Director (Technical), Mr
Gajendra (Gaz) Bisht, who has over 34 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 (Gaz) Bisht M.Sc. (Tech) in Applied Geology
Executive Director (Technical)
18 December 2023
Statement of Comprehensive Income
For the Period Ended 30 September 2023
Year
Ended
6 Months to 30 31 March
September (unaudited) (audited)
-----------
2023 2022 2023
Notes US$'000 US$'000 US$'000
Revenue - - -
----------- ------------ -----------
Administrative expenditure
Administrative expenses (233) (201) (382)
Compliance fees (76) (121) (263)
Directors' remuneration (197) (186) (362)
Foreign exchange differences 52 388 197
Impairment - exploration and
evaluation assets 3 (2) (22,097) (17,030)
Total administrative expenditure (456) (22,217) (17,840)
Operating loss (456) (22,217) (17,840)
Finance income/(expense) 20 (1,888) (2,955)
Loss from continuing operations
before taxation (436) (24,105) (20,795)
Tax expense in current period (1) (1) (1)
----------- ------------ -----------
Loss from continuing operations
after taxation (437) (24,106) (20,796)
----------- ------------ -----------
Total comprehensive loss
for the year (437) (24,106) (20,796)
=========== ============ ===========
Loss per share from continuing
operations (expressed in cents)
* Basic 2 (0.06)c (3.22)c (2.71)c
* Diluted 2 (0.06)c (3.22)c (2.71)c
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Financial Position
As at 30 September 2023
Year
Ended
6 Months to 30 31 March
September (unaudited) (audited)
-----------
2023 2022 2023
Notes US$'000 US$'000 US$'000
Assets
Non-Current Assets
Exploration and evaluation
assets 3 11,181 4,417 10,635
Total non-current assets 11,181 4,417 10,635
Current Assets
Trade and other receivables 24 50 38
Cash and cash equivalents 636 800 83
------------ ----------- -----------
Total current assets 660 850 121
Liabilities
Current Liabilities
Trade and other payables 2,203 2,160 4,224
Provisions 159 140 159
Convertible loan notes 4 5,621 3,258 4,076
Derivative financial liabilities - 722 -
Total current liabilities 7,983 6,280 8,459
Net Current Liabilities (7,323) (5,430) (8,338)
------------ ----------- -----------
Net Assets/(Liabilities) 3,858 (1,013) 2,297
============ =========== ===========
Shareholders' Equity
Share capital 5 2,664 2,170 2,170
Share premium reserve 46,744 45,319 45,319
Warrant and share based payment
reserve 79 598 73
Retained losses (45,629) (49,100) (45,265)
------------ ----------- -----------
Total Equity 3,858 (1,013) 2,297
============ =========== ===========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Cash Flows
For the Period Ended 30 September 2023
Year Ended
6 Months to 30 31 March
September (unaudited) (audited)
------------------------- -----------
2023 2022 2023
Notes US$'000 US$'000 US$'000
Operating Activities
Payments for operating activities (433) (591) (1,126)
Net cash outflow from operating
activities (433) (591) (1,126)
Investing Activities
P ayments for exploration and
evaluation (860) (1,045) (1,227)
Net cash outflow from investing
activities (860) (1,045) (1,227)
Financing Activities
Issue of ordinary share capital 1,905 2,268 2,268
Proceeds from exercise of warrants - 233 233
Payment of finance costs (29) (8) (8)
Payment of equity issue costs (30) (76) (76)
------------ ----------- -----------
Net cash inflow from financing
activities 1,846 2,417 2,417
Net increase/(decrease) in cash
and cash equivalents 553 781 64
Cash and cash equivalents at
the start of the year 83 19 19
Forex loss on cash held - - -
------------ ----------- -----------
Cash and cash equivalents at
the end of the period 636 800 83
============ =========== ===========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Changes in Equity
For the Period Ended 30 September 2023
Share Share Warrant Retained Total
Capital Premium and SBP Loss Equity
Reserve Reserve
US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 April
2022 1,809 41,285 576 (24,994) 18,676
========= ========= ========= ========= =========
Loss after tax for
the period - - - (24,106) (24,106)
Total comprehensive
loss for the period - - - (24,106) (24,106)
--------- --------- --------- ---------
Contributions by and
distributions to owners
Shares and warrants
issued 307 1,961 - - 2,268
Equity issue costs 49 1,921 - - 1,970
Share-based payment
expense 5 228 - - 233
Share-based payment
expense - - 22 - 22
--------- --------- --------- --------- ---------
Total contributions
by and distributions
to owners 361 4,034 22 - 4,417
--------- --------- --------- --------- ---------
Balance at 30 September
2022 2,170 45,319 598 (49,100) (1,013)
========= ========= ========= ========= =========
Balance at 1 April
2022 1,809 41,285 576 (24,994) 18,676
========= ========= ========= ========= =========
Loss after tax for
the year - - - (20,796) (20,796)
Total comprehensive
loss for the year - - - (20,796) (20,796)
--------- --------- --------- ---------
Contributions by and
distributions to owners
Shares and warrants
issued 307 1,961 - - 2,268
Partial conversion
of convertible note 49 1,921 - - 1,970
Exercise/expiry of
warrants 5 228 (525) 525 233
Equity issue costs - (76) - - (76)
Issue of placement - - - - -
warrants
Share-based payment
expense - - 22 - 22
Total contributions
by and distributions
to owners 361 4,034 (503) 525 4,417
Balance at 1 April
2023 2,170 45,319 73 (45,265) 2,297
========= ========= ========= ========= =========
Loss after tax for
the period - - - (437) (437)
--------- --------- --------- --------- ---------
Total comprehensive
loss for the period - - - (437) (437)
--------- --------- --------- --------- ---------
Contributions by and
distributions to owners
Shares and warrants
issued 483 1,450 - - 1,934
Exercise/expiry of
warrants - - (73) 73 -
Equity issue costs - (58) - - (58)
Share-based payment
expense 11 33 79 - 123
Total contributions
by and distributions
to owners 494 1,425 6 73 1,998
--------- --------- --------- ---------
Balance at 30 September
2023 2,664 46,744 79 (45,629) 3,858
========= ========= ========= ========= =========
The accompanying accounting policies and notes form an integral
part of these financial statements.
Notes to the Financial Statements
For the Period Ended 30 September 2023
Basis of preparation
The Company's condensed interim financial statements for the six
months ended 30 September 2023 have been prepared in accordance
with International Financial Reporting Standards ("IFRS") as
adopted by the United Kingdom 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 financial
statements have been prepared on a historical cost basis and fair
value for certain assets and liabilities. The same accounting
policies, presentation and methods of computation are followed in
these financial statements as were applied in the Company's latest
audited financial statements for the year ended 31 March 2023.
The financial information for the period ended 30 September 2023
does not constitute the full statutory accounts for that period.
They have not been reviewed by the Company's auditor. The Annual
Report and financial statements for the year ended 31 March 2023
have been filed with the Registrar of Companies. The independent
auditor's report on the Annual Report and financial statements was
unqualified and did not contain a statement under Section 498(2) or
498(3) of the Companies Act 2006, but did draw attention to a
material uncertainty relating to going concern.
Nature of business
The Company is a public limited company incorporated and
domiciled in England and Wales. The address of the registered
office is 2(nd) Floor, 38-43 Lincoln's Inn Fields, London, WC2A
3PE. 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 period has been the
development of its exploration projects. The Company had a cash
balance of US$0.64 million at 30 September 2023 (31 March 2023:
US$0.83 million) and made a loss after income tax of US$0.44
million (31 March 2023 loss of US$20.80 million).
The Directors have prepared cash flow forecasts for the Company
covering the period to 31 December 2024 and these demonstrate that
the Company will require further funding within the next 12 months.
In June 2022, the Company entered into an agreement with CNOOC to
drill an exploration well on the Topaz prospect in China, by 12
June 2024, which includes a payment of US$250,000 to CNOOC. It is
estimated that the cost of drilling this well would be
approximately US$12 million. The Directors note that if the well
commitment is not met in the timeframe advised then either a
renegotiation of the commitment timing will be required or the
licence could be relinquished.
In May 2023 US$1.9 million was raised through an equity
placement for the completion of joint regional oil migration and 3D
seismic inversion studies at Topaz, ongoing prospect, licensing
fees and permit costs, post Jade well consultancy, analysis and
residual exploration costs, front-end engineering design ("FEED"),
studies and surveys at Mako - including gas processing and export
gas tie in at the Kakap KF Platform and for general working capital
requirements.
The Company has also renegotiated the terms of the Convertible
Note as detailed in the AIM announcement dated 30 May 2023. The
Convertible Note is secured by a senior first ranking charge over
the Company, including its 8.5% interest in the Duyung PSC and Mako
Gas Field.
However, in order to meet the well commitment at Topaz and also
to meet the repayment terms of the Convertible Note, the Company is
required to raise further funding either through equity or the sale
of assets and as at the date of this report the necessary funds are
not in place. The Directors are however optimistic that the full
funding commitments for the Topaz well and the repayment of the
Convertible Note will be met, having a successful track record of
equity (and debt) and in particular with the prospect of monetising
its interest in Mako through the current sell down process.
It is the belief of the Board that there are likely value
catalysts throughout the next 12 months leading up to the intend
drilling of the Topaz Prospect in 2024 - including maximising the
value of its interest at the Mako Gas field through the current
sell down process and the completion of the GSA and also through
the conclusion of important de-risking activities currently being
conducted prior to the drilling of the Topaz Prospect.
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.
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
30 September 2023
Revenue from continued operations - - - - -
Segment result
Unallocated corporate expenses - - - (454) (454)
-------- ---------- -------- ---------- --------
Operating loss - - - (454) (454)
Finance income/(expense) - - - 20 20
Impairment of oil and gas
properties - - (2) - (2)
Loss before taxation - - (2) (434) (436)
Tax expense in current period - - - (1) (1)
-------- ---------- -------- ---------- --------
Loss after taxation - (2) (435) (437)
-------- ---------- -------- ---------- --------
Total comprehensive loss for
the financial period - (2) (435) (437)
======== ========== ======== ========== ========
Segment assets 6,104 5,077 - - 11,181
Unallocated corporate assets - - - 660 660
-------- ---------- -------- ---------- --------
Total assets 6,104 5,077 - 660 11,841
======== ========== ======== ========== ========
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 7,983 7,983
-------- ---------- -------- ---------- --------
Total liabilities - - - 7,983 7,983
---------------------------------- -------- ---------- -------- ---------- --------
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
30 September 2022
Revenue from continued - - - - -
operations
Segment result
Unallocated corporate expenses - - - (120) (120)
--------- ---------- -------- ---------- ---------
Operating loss - - - (120) (120)
Finance expense - - - (1,888) (1,888)
Impairment of oil and gas
properties (22,069) - (28) - (22,097)
Loss before taxation (22,069) - (28) (1,888) (24,105)
Tax expense in current period - - - (1) (1)
--------- ---------- -------- ---------- ---------
Loss after taxation (22,069) - (28) (2,009) (24,106)
--------- ---------- -------- ---------- ---------
Total comprehensive loss for
the financial period (22,069) - (28) (2,009) (24,106)
========= ========== ======== ========== =========
Segment assets - 4,417 - - 4,417
Unallocated corporate assets - - - 850 850
--------- ---------- -------- ---------- ---------
Total assets - 4,417 - 850 5,267
========= ========== ======== ========== =========
Segment liabilities - - - - -
Unallocated corporate
liabilities - - - 6,280 6,280
--------- ---------- -------- ---------- ---------
Total liabilities - - - 6,280 6,280
-------------------------------- --------- ---------- -------- ---------- ---------
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
31 March 2023
Unallocated corporate expenses - - - (810) (810)
--------- --------------- --------- -------- ---------
Operating loss - - - (810) (810)
Finance expense - - - (2,955) (2,955)
Impairment of oil and gas properties (16,998) - (32) - (17,795)
Cyber fraud loss - - - - (1,981)
Loss before taxation (16,998) - (32) (3,765) (20,795)
Tax expense in current year - - - (1) (1)
--------- --------------- --------- -------- ---------
Loss after taxation (16,998) - (32) (3,766) (20,796)
--------- --------------- --------- -------- ---------
Total comprehensive loss for
the financial year (16,998) - (32) (3,766) (20,796)
========= =============== ========= ======== =========
Segment assets 5,958 4,677 - - 10,635
Unallocated corporate assets - - - 121 121
--------- --------------- --------- -------- ---------
Total assets 5,958 4,677 - 121 10,756
========= =============== ========= ======== =========
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 8,459 8,459
--------- --------------- --------- -------- ---------
Total liabilities - - - 8,459 8,459
-------------------------------------- --------- --------------- --------- -------- ---------
Note 2. Loss Per Share
The basic loss per share is derived by dividing the loss after
taxation for the period attributable to ordinary shareholders by
the weighted average number of shares on issue being 904,491,535
(2022: 747,642,305).
Year Ended
6 Months to 30 September 31 March
(unaudited) (audited)
=================================== ====================
2023 2022 2023
Loss per share from continuing
operations
Loss after taxation from continuing US$(437,000) US$(24,106,000) US$(20,796,000)
operations
Loss per share - basic (0.06)c (3.22)c (2,71)c
Loss after taxation from continuing
operations adjusted for dilutive US$(437,000) US$(24,106,000) US$(20,796,000)
effects
Loss per share - diluted (0.06)c (3.22)c (2,71)c
For the current and prior financial periods the exercise of the
options is anti-dilutive and as such the diluted loss per share is
the same as the basic loss per share. Details of the potentially
issuable shares that could dilute earnings per share in future
periods are set out in Note 5.
Note 3. Oil and Gas Properties: Exploration and Evaluation
Year Ended
6 Months to 30 September 31 March
(unaudited) (audited)
=========================== ===========
2023 2022 2023
US$'000 US$'000 US$'000
Balance brought forward 10,635 24,907 24,907
Additions(a) 548 1,607 2,758
Impairment(b)(c)(d) (2) (22,097) (17,030)
------------ ------------- -----------
Net book value 11,181 4,417 10,635
============ ============= ===========
(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
period.
(b) Empyrean and its China Block 29/11 partner CNOOC, along with
its technical service providers CNOOC Enertech and COSL, completed
significant pre-drilling operational, technical and permitting work
throughout the 2022 financial year to enable to safe drilling,
although ultimately unsuccessful drilling of the Jade prospect in
April 2022. As a result of the unsuccessful well at Jade, Empyrean
provided for impairment against Jade prospect costs and the dry
hole costs associated with the Jade drilling program, together
being US$17.0 million as at 31 March 2023. Post-well analysis at
Jade however has confirmed reservoir quality is better than
pre-drill estimates with regional seal confirmed and the depth
conversion approach validated. As a part of post-well evaluation,
CNOOC geochemical and basin modelling experts together with
Empyrean have interpreted the critical elements of effective
regional oil migration pathways-leading to positive implications
for the Topaz prospect, and ultimately the decision to proceed with
the second phase of exploration at Block 29/11, being the drilling
of the Topaz Prospect before June 2024.
(c) While the Company will continue to work with its joint
venture partners in reviewing and assessing any further technical
and commercial opportunities as they relate to the Sacramento Basin
project, particularly in light of strong gas prices for gas sales
in the region, it has not budgeted for further substantive
exploration expenditure. The Company has continued to fully impair
the carrying value of the asset at 30 September 2023.
(d) In light of current market conditions, little or no work has
been completed on the Riverbend or Eagle Oil projects in the period
and no substantial project work is forecast for either project in
2022/23 whilst the Company focuses on other projects. Whilst the
Company maintains legal title it has continued to fully impair the
carrying value of the asset at 30 September 2023.
Project Operator Working 2023 2022
Interest Carrying Carrying
Value Value
US$'000 US$'000
Exploration and evaluation
China Block 29/11 Empyrean Energy 100%* 6,104 -
Sacramento Basin Sacgasco 25-30% - -
Duyung PSC Conrad 8.5% 5,077 4,417
Riverbend Huff Energy 10% - -
Eagle Oil Pool Development Strata-X 58.084% - -
---------- ----------
11,181 4,417
========== ==========
*In the event of a commercial discovery, and subject to the Company
entering PSC, CNOOC Limited will have a back in right to 51% of
the permit. As at the date of these financial statements no commercial
discovery has been made.
Note 4. Convertible Loan Notes
Year Ended
6 Months to 30 September 31 March
(unaudited) (audited)
=========================== ===========
2023 2022 2023
US$'000 US$'000 US$'000
(a) Convertible Loan Note -
Original
Opening balance - 4,125 4,125
Conversions - (1,970) (1,970)
Costs of finance - 121 121
Foreign exchange gain - (133) (133)
Extinguishment on substantial
modification - (2,143) (2,143)
Convertible Loan Note - Original - - -
============= ============ ===========
(b) Convertible Loan Note -
Modification 1
Opening balance 4,076 - -
Recognition of modified liability
1 - 2,637 2,637
Loss on substantial modification - 1,369 1,369
Costs of finance - (268) 185
Foreign exchange loss/(gain) 12 (480) (115)
Extinguishment on substantial (4,088) - -
modification
Total Convertible Loan Note
- Modification 1 - 3,258 4,076
============= ============ ===========
(c) Convertible Loan Note -
Modification 2
Opening balance - - -
Recognition of modified liability 6,544 - -
2
Gain on substantial modification (845) - -
Costs of finance (29) - -
Foreign exchange gain (49) - -
Total Convertible Loan Note 5,621 - -
- Modification 2
----------------------------------- ------------- ------------
(a) In December 2021, the Company announced that it had entered
into a Convertible Loan Note Agreement with a Melbourne-based
investment fund (the "Lender"), pursuant to which the Company
issued a convertible loan note to the Lender and received gross
proceeds of GBP4.0 million (the "Convertible Note").
(b) As announced in May 2022, the Company and the Lender then
amended the key repayment terms of the Convertible Note, which at
that time included the right by the Lender to redeem the
Convertible Note within 5 business days of the announcement of the
results of the Jade well at Block 29/11. The face value of the loan
notes was reset to GBP3.3m with interest to commence and accrue at
GBP330,000 per calendar month from 1 December 2022.
(c) In May 2023, it was announced that the Company and the
Lender have, in conjunction with and conditional upon the
completion of the Subscription, now reached agreement on amended
key terms to the Convertible Note to allow the sales process for
Mako to complete. The key terms of the amendment are as
follows:
1. The parties have agreed a moratorium of accrual interest on
the Convertible Note until 31 December 2023 - interest will accrue
thereafter at a rate of 20% p.a.;
2. The conversion price on the Convertible Note has been reduced from 8p to 2.5p per Share;
3. The face value of the Convertible Note has been reduced from
GBP5.28m (accrued to the end of May 2023) to GBP4.6 million (to be
repaid from Empyrean's share of the proceeds from Mako sell down
process); and
4. Empyrean will pay the Lender 15% of the proceeds from its
share in the Mako sell down process.
Note 5. Share Capital
Year Ended
6 Months to 30 September 31 March
(unaudited) (audited)
=========================== ============
2023 2022 2023
US$'000 US$'000 US$'000
985,470,767 (2022: 788,431,892 ) ordinary
shares of 0.2p each 2,664 2,170 2,170
------------- ------------ ------------
2023 2022 2023
No. No. No.
Fully Paid Ordinary Shares of 0.2p
each - Number of Shares
At the beginning of the reporting
period 788,431,892 646,070,780 646,070,780
Shares issued during the period:
* Placements 189,753,783 121,750,001 121,750,001
4,397,592 - -
* Salary sacrifice shares
2,887,500 - -
* Advisor shares
* Partial conversion of Convertible Note - 18,750,000 18,750,000
* Exercise of warrants - 1,861,111 1,861,111
------------- ------------ ------------
Total at the end of the reporting
period 985,470,767 788,431,892 788,431,892
---------------------------------------------------- ------------- ------------ ------------
2023 2022 2023
US$'000 US$'000 US$'000
Fully Paid Ordinary Shares of 0.2p
each - Value of Shares
At the beginning of the reporting
period 2,170 1,809 1,809
Shares issued during the period:
* Placements 476 307 307
11 - -
* Salary sacrifice shares
7 - -
* Advisor shares
* Partial conversion of Convertible Note - 49 49
* Exercise of warrants - 5 5
-------- -------- --------
Total at the end of the reporting
period 2,664 2,170 2,170
---------------------------------------------------- -------- -------- --------
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 and warrants
The number and weighted average exercise prices of share
options and warrants are as follows:
6 Months to 30 6 Months to 30 September
September 2023 (unaudited) 2022 (unaudited)
============================= ================================
Weighted Weighted
Average Number Average Number
Exercise of Options Exercise Of Options
Price and Warrants Price and Warrants
2023 2023 2022 2022
Outstanding at the beginning
of the period GBP0.137 6,558,333 GBP0.116 65,890,916
Issued during the period GBP0.017 12,833,333 - -
Cancelled during the period GBP0.137 (6,558,333) GBP0.113 (53,413,139)
Exercised during the period - - GBP0.096 (1,861,111)
----------- ---------------- -------------- ----------------
Outstanding at the end of
the period GBP0.017 12,833,333 GBP0.131 10,616,666
=========== ================ ============== ================
Valuation and assumptions of options and warrants at 30 September
2023
Incentive Incentive Advisor
Warrants Warrants Warrants
Number of options remaining 5,000,000 5,000,000 2,833,333
Grant date 29/05/23 29/05/23 29/05/23
Expiry date 30/05/26 30/05/26 30/05/24
Share price GBP0.010 GBP0.010 GBP0.010
Exercise price GBP0.015 GBP0.020 GBP0.015
Volatility 100% 100% 100%
Option life 3.00 3.00 1.00
Expected dividends - - -
Risk-free interest rate (based on national
government bonds) 4.45% 4.45% 4.45%
------------------------------------------- ---------- ---------------- -----------
The options and warrants outstanding at 30 September 2023 have
an exercise price in the range of GBP0.015 to GBP0.02 (2022: GBP0.075
to GBP0.18) and a weighted average remaining contractual life
of 2.22 years (2022: 0.57 years). None of the outstanding options
and warrants at 30 September are exercisable at period end.
Note 6. Events After the Reporting Date
Significant events post reporting date were as follows:
No matters or circumstances have arisen since the end of the
financial period 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.
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END
IR FLFVLFLLTLIV
(END) Dow Jones Newswires
December 18, 2023 06:34 ET (11:34 GMT)
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