Empire Energy was up again this week, soaring from $0.29 to $0.39 onrespectable volume with the big gains on better than average daily volumecoming in Tuesday’s trading possibly on an upbeat research note.
The company’s share price hasnow doubled since the beginning of October. Empire is one of the few ASXlisted juniors with extensive exploration tenements in the Beetaloo andMcArthur Basins in the Northern Territory, both prospective for enormousreserves of shale gas. The company’s 100% owned holdings extend over 14.5million acres.
Following the 2018 lifting ofthe NT Government’s moratorium on drilling activity in the state, OriginEnergy and Santos have re-commenced exploration and appraisalactivity on their extensive Beetaloo Basin assets.
On 9 October Origin Energy and partner Falcon Oil& Gas commenced drilling the Kyalla 117N2-1 appraisal well in EP 117, a permit on trend with Empire’s 100% owned EP187. The well is designed to assess hydrocarbon maturity, saturation and reservoir quality and collect data for subsequent horizontal drilling.
Santos will drill and fracture stimulate up to two horizontalwells targeting the Velkerri Shale in EP 161 early in the 2020 drilling season.Empire’s EP 187 lies adjacent to the Santos permit and thecompany believes the Velkerri extends into its acreage. Empire iscurrently undertaking a 2D seismic program on Ep 187.
Drilling/appraisal success by Empire’sneighbours will not only inform the company regarding the execution of itsfuture exploration and development programs. But it will but also make it atarget of potential predators looking to gain access to what has the potentialto become a major source of gas for both an expanded Northern Territory LNG huband the east coast gas market.
During the September quarter Empiresold its Kansas assets in the US for US$19.5 million and used the funds toreduce debt from US$25.4 million to US$7.5 million. Empire also entereda new US$7.5 million five-year debt facility with Macquarie Bank Limited onimproved terms.
Empire still has assets in the US in Appalachia (New York andPennsylvania) and revenue from gas sales will service the debt while thecompany “considers strategic alternatives for the Appalachia assets over thecoming months to maintain its strategic focus on debt reduction and addingvalue to the Northern Territory assets.” Looks like the assets will alsoeventually be sold.
Empire had US$3.9 million in cash at the end of September. Itwill pay for the current seismic program from current cash reserves. But itwill presumably seek a farm in partner to help fund a future drilling program.
Since taking over as CEO in2018 Alex Underwood has not set a foot wrong, renewing the Board, tidying upand strengthening the balance sheet and positioning the company to become amajor player in the coming NT shale gas boom.
This past week he announced theappointment of former Elk Petroleum Chief Operating Officer David Evansas COO ofEmpire.
We see the possibility of therenewed interest in NT shale gas doing for Empire what coal seam gas didfor Queensland Gasand a host of other csg players.
The company has a market cap ofsome $90 million at a share price of $0.39
From Oil & gas Weekly
