TIDMEME
RNS Number : 2741I
Empyrean Energy PLC
31 March 2020
This announcement contains inside information
Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil &
Gas
31 March 2020
Empyrean Energy PLC
Operations and COVID-19 Update
Empyrean Energy ('Empyrean' or 'the Company'), the oil and gas
development company with interests in China, Indonesia and the
United States, provides an update on its ongoing operations as
global markets react to the rapidly-evolving circumstances around
the spread of COVID-19.
Indonesia
Following the highly-successful appraisal drilling campaign on
the Mako gas field in Q4 2019, which saw the Tambak-1 and Tambak-2
wells demonstrate the presence of well-developed, high quality
reservoir sandstones with a common gas water contact across the
Mako structure, The operator, Conrad Petroleum, has been working
alongside external consultants to update an internal view of
resources at the Mako gas field. Subsequently, Gaffney Cline and
Associates ('GCA') was commissioned to update its view of the Mako
gas field, which lies in the Duyung PSC in the West Natuna basin,
offshore Indonesia (the 'Duyung PSC').
The work required to arrive at an internal assessment of
resources at the Mako gas field is very close to being completed
and Empyrean anticipates being in a position to release these
numbers shortly.
The operator has advised that despite the movement and travel
restrictions affecting all parties involved, all efforts are being
made to ensure that GCA delivers their report in a timely fashion.
The revised competent persons report by GCA will use new data
acquired from the Q4 2019 appraisal drilling programme, including
the drill stem test at Tambak-1, which flowed at 11.4 MMscf/d.
GCA previously ascribed 2C resources of 276 Bcf and 3C resources
of 396 Bcf to the Mako field and the Duyung PSC partners are now
awaiting the publication of this new independent resource
assessment. The Company is confident of a significant upgrade in
the resource size as a result of the drilling campaign and the
Company looks forward to updating shareholders on the results of
the updated GCA resource assessment in due course.
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, where a heads of agreement with a gas
buyer is already in place. With a Plan of Development approved by
the Indonesian Authorities, the conclusion of a gas sales agreement
will mark an important step toward the final investment decision to
develop and commercialise the field.
China
Empyrean has continued work on its Block 29/11 offshore China
with seismic inversion work being undertaken in conjunction with
COSL to better define the reservoir rocks at the Company's two
primary prospects, Jade and Topaz. This work is currently on track
and has not been delayed as a result of the COVID-19 outbreak. The
Company anticipates that this work will be completed during April
2020. This work is also anticipated to be the final pre-drill
technical work that the Company will complete before making a
decision on whether the Jade or Topaz prospect will be prioritised
for drilling first.
The Company is closely monitoring the impact and response to
COVID-19 in relation to the further planning and permitting work
required in order for the Company to drill its first exploration
well on Block 29/11. Currently, the travel restrictions for
foreigners into and out of China, and out of and back into
Australia represents a significant impediment to the necessary
on-the-ground planning and permitting processes to safely prepare
for and drill a well. This is not a challenge limited to operations
in China, given the spread of COVID-19 and its impact across the
world. Whilst Empyrean is still working towards drilling taking
place between Dec 2020 and May 2021, which is the best weather
window for drilling in the Pearl River Mouth Basin, these dates
will be revised as necessary.
California
COVID-19 travel restrictions and the uncertainty of being able
to execute a drilling campaign safely and without interruption have
caused the Company and its joint venture partners to place drilling
of the Borba well on hold until a sensible level of normalcy
returns.
Corporate
In December 2019, the Company announced that it had entered into
a GBP10 million equity placement facility with Long State
Investment Limited (the 'Long State Facility'), a Hong Kong-based
energy and resource focused investment company. The Long State
Facility provides Empyrean with a fully flexible funding facility
and enables it to access capital, if required.
Subsequently, in January 2020, the Company announced that it had
raised gross proceeds of GBP420,000 through a placing of new
ordinary shares at 9p (a premium of 8.36% to the 20 day volume
weighted average price) to meet the Company's contributions to the
drilling campaign at the Duyung PSC, and for general working
capital purposes. Approximately half of this amount was subscribed
for by Tom Kelly, CEO.
At that time the Company stated that it continued to pursue
various funding alternatives to finance its ongoing activities and
working capital requirements. These options included the potential
divestment of all or part of the Company's interest in the Duyung
PSC or a farm-out of part of the Company's interest in Block 29/11
in China.
Whilst discussions on these transactions with a variety of
counterparties have been highly-encouraging and are continuing,
these processes, and the ability of those counterparties to make
significant investment decisions within the previously-expected
timeframe, may be adversely impacted by the significant volatility
in the financial markets as a result of the COVID-19 outbreak and
the recent oil price war and resulting slump in the oil price.
In response to the prevailing market conditions and the
potential for challenges to concluding either of the processes
referred to above as previously envisaged, the Company has taken a
number of measures to defer discretionary expenditure. The Company
currently has sufficient working capital to the end of April 2020
though will require to secure additional funding to enable it to
satisfy its share of final costs in relation to the drilling of the
Tambak-1 and Tambak-2 wells in Q4 2019, including post drilling
resource updates, and to provide sufficient working capital beyond
that date. To this end, the board is currently reviewing a number
of funding alternatives, including (but not limited to) drawing a
portion of the Longstate Facility, an equity placement or
undertaking an Open Offer to existing shareholders.
The Board is cognisant that the Company's share price is
currently trading at a significant discount to recent levels and to
the price of the January placing owing to wider market conditions,
and will consider the dilutive impact of all funding alternatives
on existing Shareholders in reaching a conclusion as to the most
appropriate path forward, particularly having regard to the
potential near term price catalysts from the Indonesian
project.
** ENDS **
For further information please visit www.empyreanenergy.com or
contact the following:
Empyrean Energy plc
Tom Kelly Tel: +61 8 9380 9920
Cenkos Securities plc
Neil McDonald Tel: +44 (0) 131 220 9771
Pete Lynch Tel: +44 (0) 131 220 9772
St Brides Partners Ltd
Priit Piip Tel: +44 (0) 20 7236 1177
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
UPDJBMITMTMJBFM
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March 31, 2020 10:08 ET (14:08 GMT)
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