Eagle Pool - Vicpet one of our partners who are 20% holders reckon it will increase their market cap 100% ie by £21m on just their 20% share based on appraisal well success. With Empyrean holding 38.5% that should give them £42m or circa £50m from their present £9.2m mkt cap. - A potential 5 fold increase. At that stage EME would need to raise at least a few £million to take us to the next stage. Possibly 15% dilution to gain a further potential 70% upside again.
We are expecting 38.5% from a forecasted bopd output of 5500 barrels oil plus gas - ie 2100 bopd plus gas to Empyrean. The first (300m) horizontal well is expected to have flow rates of circa 1000 bopd plus gas. If successful subsequent (900m) horizontal wells are expected to have flow rates up to 2000 bopd plus gas.
As an example Global Energy Development operating in Colombia on 17 boe reserves and circa 1800 boepd has a market cap of £100m. The Eagle prospect could/should on success take us close to something similar to GED.
This project alone could see 5 - 9 fold upside to share-holders.
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Now Germany - the potentially huge gas project, but more riskier until the intactness of the seal is known (ie drilled).
Empyrean will have up to a maximum 52% share.
Pannonian are our partners on this and Galaxy their parent Co who are keen to get a foothold in Europe for specialist projects of this nature, bought out
Pannonian some time back. Galaxy are an American energy company specialising in these kind of projects operating similar successful ones in the USA.
One might well ask why would specialists like Galaxy be keen to get their hands on European potential like this by buying out Pannonian. They too will have well studied the potential before buying out Pannonian.
"The permit contains the Pfalzer Anticline which is a 515 square kilometre structure containing deep anthracitic coal beds overlaid by shale and sediment. The coal beds are too deep to mine economically but have been estimated by the independent expert to have generated many hundred trillion
cubic feet ("Tcf") of gas, with a recoverable gas potential of up to 6.2 Tcf in the first drilling prospect alone."
As an example VOG found 500bcf (half a trillion c/ft) gas. 74.8% is attibutable to VOG (350bcf).
With Russian gas prices somewhat different, VOG will have to sell most likely to Gazprom and a certain amount domestically which could be in
the order of $35 per 1000 cu metres. (ie 34,500 cu ft). With Gas prices in Gewrmany as in the prospectus given at around $4.60 per 1000 cu feet that
equates to $158 per 1000 cu mts or at the very, very least would be twice the price VOG would achieve. (Im still a long term holder going forward with 75% of my original VOG holding).
With up to 6.2 tcf potentially recoverable in the first prospect alone - it's huge.
If Empyrean only found 10 - 11% of that it would give them similarly a 350bcf share but worth twice the value based on German prices and only 5% royalty
(Max 10%)as what VOG would achieve.
VOGs market cap went from £34m to £105m based on their find. £70m straight away. (£1.25p/share) The Broker estimates the company should be worth £3.06 per share minimum which is £250m and at least £180m of that is for the current find of 500 bcf (350bcf to VOG). Therefore what price would Empyrean be worth if the gas price is worth at least twice as much versus what VOG would achieve and in a much more readily available market to sell into, with no obstactles like Gazprom to have to deal/negotiate with.
A find for Empyrean of only 10% or so of the potential should see £100m minimum on their market cap or 11 times the current share price.
Both projects have the capacity to see a potential 20 fold upside - thats why i also referred to the company in a previous post having explosive short term upside especially with roughly only 7m shares on the open market.
It has a lowly market cap of only £9.2m/ 30p - share (floated at 35p) and compared to others that have no production and some bare licence areas, I feel this is undervalued by at least 100% when you see the likes of non producers Chaco £36.6m, Aminex £24.5m who are still early stage bare acerage - yet Empyreans Partners are drilling both projects anytime. The Eagle oil project has already had a producing standard vertical well with 233 bopd and 800tcf gas flow and now fully 3d seismiced to a much greater extent with a horizontal well to spud.
Imperail Energy was only floated 20 months ago at £10m mkt cap/35p share - Its now worth over £180m. Likewise VOG idling for weeks at £34m mkt cap - in a few days market cap is £105m which proves the point if Gems are spotted early the rewards can be enormous. EME does carry a degree of risk particularly on the German prospect but there is relavant reasons already well posted proving the coal seams already exist and by their nature should as the experts predict, have produced trillions of cubic feet of methane gas.
Nothing as we all know is ever guaranteed. Potential gems are difficult to spot early stage, but I feel Empyrean could well be one and as such that is why i have taken a holding.
As ever this is my own opinion based on risk/reward, DYOR etc.
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