From Malcy. Empyrean Energy In the last few weeks I have written a lot about EME after a conference call with Tom Kelly in which I updated myself about the new assets he has brought into the company. It has turned out to be a smart if fortuitous move as the news from their Dempsey well has been coming thick and fast. Today they have announced that the well has reached TD at 9,750′ which is very close to the original thought of it being around 10,000′, accordingly they have completed drilling after intersecting two further zones of ‘high’ gas shows. Wireline logs will now be run to fully evaluate these gas shows and reservoirs, after which a more detailed and accurate picture of the prospectivity of the well will be proven. Yesterday I was fortunate to meet up with Tom Kelly along with fellow directors Gaz Bisht and Frank Brophy, both key to the development of EME. It has become clear that the Dempsey well has encountered enough gas to ‘at least pay for this well’ and if the wireline logging evaluation is as it seems may confirm the pre-well hopes of 1 TCF of gas. Indeed it seems that the deeper zone may alone contain 100-300 BCF and therefore only two zones may be tested, the shallower zones on the way down supported ongoing drilling but will now be left ‘for another time’ and the larger, deeper targets opened up. With the infrastructure almost on the doorstep, the gas metering station is literally 40m away and accordingly payback on this well will be remarkably short, indeed the company expect cash flow ‘within weeks’ of testing. There are a number of Dempsey lookalikes (3) which are also cretaceous plays and I expect the company along with the operator to start drilling these soon. Equally, if not more exciting is the Alvares prospect (EME 25%) which is away from the lookalikes and is a separate and bigger accumulation and has a target of 2 TCF and already has logged gas shows. The operator may put a small workover rig onto Alvares just to test and see that the casing is satisfactory but then will be drilled in this programme. Further good news is that gas prices here are very strong and they will receive a premium of 20% to Henry Hub which further improves the economics of the area of mutual interest. So, what to expect next, depending on the wireline logs and the setting of the cement it shouldnt be long before some more definitive numbers can be attributed to Dempsey and we can put a firmer valuation on the well. If that is as big as recently envisaged then the share price rise in the last few days will be more than justified, indeed I see considerable upside depending on the lookalikes and Alvares.
Ann: Good Oil Conference Presentation 2017, page-12
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