TIDMEME
RNS Number : 5262I
Empyrean Energy PLC
26 March 2015
Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil &
Gas
26 March 2015
Empyrean Energy PLC ('Empyrean' or 'the Company')
Q4 2014 Production from Sugarloaf AMI, Texas
Empyrean Energy, the profitable US onshore oil, gas and
condensate exploration, development and production company with
assets in Texas and California, is pleased to provide an update in
respect of production from its flagship Sugarloaf AMI Project
('Sugarloaf' or the 'Project') in the prolific Eagle Ford Shale,
Texas, for the three month period to the end of December 2014 ('Q4
2014' or the 'Quarter').
Empyrean has a 3% working interest in the Project, which is
operated by Marathon Oil Company, a subsidiary of US major Marathon
Oil Corporation (NYSE: MRO) ('Marathon' or the 'Operator').
Highlights
-- Significant increase in total production to Empyrean's interest from Sugarloaf for Q4 2014
o 166,572 boe net to Empyrean's interest before royalties and
costs ("royalties") and 111,921 boe net to Empyrean's interest
after royalties, representing an increase of 39% and 38%
respectively on Q3 2014
-- Average daily production from Sugarloaf for Q4 2014 of 1,811
boe net to Empyrean's interest before royalties and 1,217 boe net
to Empyrean's interest after royalties
-- As at 31 December 2014, there were a total of 187 gross producing wells at Sugarloaf
-- As at 20 March 2015, there were a total of 205 gross
producing wells including 21 in the Austin Chalk
-- Benefited from improvement in single well recoveries /
productivity and from further improvement in drilling and
completion cost efficiencies during 2014
-- Awaiting results of first "frac and stack" pilot programme
-- Sugarloaf remains one of the lowest marginal cost shale plays in the USA
Empyrean CEO, Tom Kelly said, "Despite extremely challenging oil
prices recently, our production from Sugarloaf is continuing to
grow steadily as further development wells are brought on line. We
are fortunate that our project is located in the liquids rich sweet
spot of the Eagle Ford Shale play and therefore enjoys relatively
low marginal costs of production compared with other shale plays
across the USA.
"Marathon continues to optimise well performance and drilling
and completion costs continue to decrease. We are confident that
further data gathered from existing Austin Chalk wells, in
conjunction with additional Austin Chalk wells coming on line at
lower spacing density, has the potential to deliver a significant
increase in contingent resources along with an increase in proven
reserves for existing producing locations in the short to medium
term.
"In response to the continued and significant level of drilling
activity at Sugarloaf, we are taking steps to adjust the basis on
which we report production figures in order to ensure that we are
in a position to update shareholders on a timely and accurate
basis, and in a manner consistent with our revenue reporting."
Further Information
In its production update for the three month period to 30
September 2014 ('Q3 2014'), the Company announced total production
from Sugarloaf net to Empyrean of 96,660 boe and stated that, based
on a comparison with initial wellhead production data received in
respect of that period, it believed that there was further revenue
from production attributable to Q3 2014 that will require to be
accrued for in Empyrean's interim results for the six month period
to 30 September 2014.
The Company is now pleased to report that all revenue
attributable to the Q3 2014 production months has now been received
and that an additional 22,954 boe net to Empyrean's interest before
royalties now brings the Q3 2014 production to 119,614 boe. This
equates to 81,091 boe after royalties.
The Company is pleased to report that total production for Q4
2014 was 166,572 boe net to Empyrean's interest before royalties
and 111,921 boe net to Empyrean's interest after royalties,
representing an increase of 39% and 38% respectively on production
for Q3 2014. In addition, net average daily production for Q4 2014
was 1,811 boe net to Empyrean's interest before royalties and 1,217
boe/d after royalties and net average daily production for the
month of December 2014 reached 1,984 boe/d before royalties and
1,336 boe/d after royalties. Going forward, Empyrean intends to
report all production numbers as net to Empyrean's interest after
royalties, unless otherwise stated, in order to bring the Company's
policy into line with its licence partners and the methodology used
for reporting the Company's annual and interim financial
results.
At the end of the quarter, Empyrean had 187 gross wells that
were producing at Sugarloaf, an increase of 33 wells since the end
of September 2014. Furthermore, as at 20 March 2015, Empyrean had
205 gross wells that were producing at Sugarloaf and, of these,
there are 21 wells in the Austin Chalk formation.
Marathon continues to reduce the costs of the Project with spud
to total depth cycle times dropping from an average 24 days in late
2011 to as low as 10 days, with an average of 12 days, during 2014.
This has assisted in the drilling and completion costs of some
wells drilled in late 2014 falling below US$7 million. Further cost
reductions are expected as contractors and service providers become
more competitive as the USA rig count continues to drop under
present oil price concerns, and further efficiencies are
achieved.
In line with its stated policy, Empyrean has previously used
revenue remittance advice only to report on production in quarterly
updates. However, in an effort to enable the Company to release
future quarterly updates closer to the end of the quarter being
reported on and to ensure these accurately reflect production from
all wells known to be in production, Empyrean intends to report
using a combination of revenue remittance advice and wellhead data
in order to estimate ("accrue") for any production during the
relevant quarter for which revenue has not yet been received. This
approach will enable the Company to include production from
newly-completed wells that are known to be in production but for
which the legal documentation required to distribute revenue from
the operator to the working interest partners is still in the
process of being executed and filed with the authorities and
production from which is not reflected in the revenue remittance
received. As the drilling programme at Sugarloaf has maintained
such high levels of activity, the backlog in the processing of such
documentation and the requirement to accrue for as yet unallocated
production has become more material to Empyrean, and it is viewed
that this change in reporting policy is necessary in order to
provide consistency and transparency.
Corporate
The Company is in active discussions with its current debt
funder, Macquarie Bank Limited, and is evaluating additional
alternatives in order to secure the required additional funding to
support the Company's continued participation in the Project and
the current development programme.
For further information please visit www.empyreanenergy.com or
contact the following:
Empyrean Energy plc
Tom Kelly Tel: +618 9481 0389
Cenkos Securities plc (NOMAD)
Neil McDonald nmcdonald@cenkos.com Tel: +44 (0) 131 220 9771
Nick Tulloch ntulloch@cenkos.com Tel: +44 (0) 131 220 9772
St Brides Partners (Public Relations Adviser)
Hugo de Salis hugo@stbridespartners.co.uk Tel: +44 (0) 20 7236 1177
Elisabeth Cowell elisabeth@stbridespartners.co.uk Tel: +44 (0) 20 7236 1177
Lottie Brocklehurst lottie@stbridespartners.co.uk Tel: +44 (0) 20 7236 1177
The information contained in this announcement was completed and
reviewed by the Technical Director of Empyrean Energy Plc, Mr Frank
Brophy BSc (Hons) who has over 40 years experience as a petroleum
geologist.
Notes to Editors:
Empyrean Energy Plc is an AIM listed (Ticker: EME) profitable US
on-shore oil, gas and condensate exploration, development and
production company with assets in Texas and California. The
Company's portfolio represents a mix of assets at various stages of
development. Its flagship project is the Sugarloaf AMI in the
prolific Eagle Ford Shale, Texas, where it has a 3% working
interest in approximately 24,000 gross acres centrally positioned
in the liquids rich sweet-spot within the field. Empyrean has an
interest in 205 gross producing wells with full development
expected to reach over 770 wells. Further development of the Eagle
Ford Shale anticipated to require in the order of a further 300
wells, with down spacing potential of a further 200 wells. Further
development of the Austin Chalk anticipated to require in the order
of a further 300 wells, with down spacing potential of a further
235 wells. The Company has a term debt facility of up to US$50
million with Macquarie Bank, subject to reserve hurdles and
drawdown approvals, in place in order to develop this acreage which
is operated by US major Marathon Oil Company.
Other assets include a 58.084% interest in the Eagle Oil Pool
Development Project located in the San Joaquin Basin, southern
California, a proven oil and gas province. Empyrean's large working
interest in this project provides the Company with flexibility and
leverage with potential high impact from success. Additionally,
Empyrean has a 7.5% interest in the Sugarloaf Block A operated by
ConocoPhillips in the Eagle Ford Shale, and a 10% working interest
in the Riverbend Project in Texas.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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