RNS Number:6611J Empyrean Energy PLC 11 December 2007
Empyrean Energy Plc ("Empyrean" or the "Company"; Ticker: (EME))
Interim Results for the six months ended 30 September 2007 ----------------------------------------------------------
Empyrean today announces its interim results for the period ended 30 September 2007. Please find below the Chairman's statement and the interim accounts.
HIGHLIGHTS
* Sugarloaf current drilling programme provides encouragement with five wells having possible gas pay that requires production testing
* Oil & gas production continues from three wells at Project Margarita
CHAIRMAN'S STATEMENT
I am pleased to report that the Company has made significant progress on its projects during the period and in particular on the Sugarloaf Project in the United States.
Overview --------
The past couple of months have been particularly busy in terms of drilling and testing. We successfully concluded our shallow drilling programme at Project Margarita with three wells: Dona Carlota, Agavero and Milagro resulting in commercial gas discoveries. Given that the industry statistics are around one in twelve, the success rate of three commercial discoveries from six wells is a terrific result. The Company holds a 44% working interest in Project Margarita and is receiving its share of production revenues on a monthly basis.
During the period we have focussed primarily on the Sugarloaf prospect in the prolific Gulf Coast Region of Texas in an area very close to the discovery well of the Sugarkane gas-condensate field.
The Sugarloaf-1 well, a vertical well in which Empyrean has a 6% working interest, is currently undergoing longer term production testing on the deepest of three zones to be tested. Early swabbing has recovered hydrocarbons. Testing of the middle and shallowest zones are expected to take place following this longer term production testing.
The Kennedy-1 well, a horizontal well in which Empyrean has an 18% working interest, has reached target depth of 16,530 ft. The well is targeting the shallowest of the three zones to be tested in the Sugarloaf-1 well, and 41/2" liner has been successfully run to total depth. Preparations are now being made for an extensive fracture stimulation and testing programme.
The TCEI JV Block A-1 well, a horizontal well in which Empyrean has a 7.5% working interest has also reached total depth. This well is also targeting the shallowest of the three zones to be tested in the Sugarloaf-1 well. This well had very exciting gas flares whilst drilling and is about to commence an extensive fracture stimulation and testing programme.
The TCEI JV Block A-2 well, a vertical well in which Empyrean has a 7.5% working interest, has also reached total depth. This well has encountered the three zones that show promise in the Sugarloaf -1 well. This well will be used to monitor the fracture stimulation programme in the TCEI JV Block A-1 well before preparation for its own testing programme is finalised.
The TCEI JV Block A-3 well, a horizontal well in which Empyrean has a 7.5% working interest, is targeting the shallowest of the three zones encountered in the Sugarloaf-1 well. Drilling in the target zone has already encountered hydrocarbons.
We look forward to the results of testing from each of these wells during what promises to be an exciting testing phase for the Company.
The Company has also been seeking other opportunities and in September we were very pleased to announce a participation agreement for a new deal with Texon E& P, Inc, the US operating subsidiary of ASX-listed Texon Petroleum Limited. In October, we signed a new agreement to increase our working interest to 20% by funding 26.6667% of the drilling costs, testing and completion of the Bondi prospect in Texas. We now also have an option to drill the Coogee prospect, a 28-62 Bcfe target close to the Bondi prospect, on the same increased terms. Following the drilling of the Bondi and Coogee prospects, the Company will earn the right to participate on the basis of a 15% working interest in any prospects to be drilled by Texon on an area of mutual interest covering approximately 25km2.
At the Bondi prospect, the operator has advised that Raun #1 reached a total depth of 12,500ft. The well found thin non-commercial gas sands in the target Wilcox section between 10,500 ft and the total depth of the well. As a result the well has been plugged back to a depth of 10,919ft in order evaluate two potential gas bearing sands which together amount to a thickness of 50ft between 7,050ft and 7,250 ft.
The drilling rig will now be released and a smaller more cost effective rig will be used to test these zones as soon as a suitable rig can be located.
Elsewhere at the Eagle Oil Pool Development Project located in the San Joaquin Basin in California we have been investigating the alternatives for this project, including the possibility of a new horizontal completion. The timing of further operations at Eagle remains unclear at this stage. Further updates will be provided following developments.
The Company has previously announced that the operator of the Glantal Gas Project in Germany, Pannonian International Limited, a wholly-owned subsidiary of Galaxy Energy Corp. (AMEX: GAX) confirmed that an application to extend the Neues Bergland Permit had been successful. The partners in this project, including Empyrean have been finalising preparations for further new seismic and also further work on the existing seismic data with a view to establishing new locations for drilling in 2008.
Financials ----------
During the six months to 30 September 2007, Project Margarita commenced production, with initial revenue of #198,265 being generated. It is anticipated that Empyrean will continue to receive a steady source of cash flow from the three wells brought on line during the period.
The Company made a loss after tax of #192,826 for the period. Exploration expenditure of #1,066,731 for the six months has been capitalised, which predominately relates to exploration expenditure incurred in relation to the drilling programmes being carried out at both the Sugarloaf prospect and Project Margarita.
Board -----
On 3 July 2007, Malcolm James stepped down as a non-executive Director of the Company. I would like to take this opportunity to thank Mal for his contribution to the Company and we wish him well.
Outlook -------
The Company's operational focus has always been clear and defined: to finance the exploration and development of energy resource projects in geopolitically stable environments.
With this in mind we have focussed our efforts more recently on operations in the United States, where energy prices have been strong and the projects we have chosen have not only been close to excellent existing hydrocarbon infrastructure, but they have all been projects with mature drill prospects. This has meant that we have been drilling targets within a very short time after concluding negotiations to acquire an interest in those projects. Where we have made discoveries, we have been able to put those wells rapidly into production and commence cash flow in a relatively short period of time.
We will continue to seek out appropriate opportunities in countries with a stable geopolitical environment and concentrate our efforts on deals that have mature drill targets close to existing infrastructure and high energy demand markets.
During the period we have extended our portfolio of projects with the acquisition of the Bondi and Coogee prospects and at the same time have seen production commence at Margarita. Drilling at Sugarloaf shows real promise and we eagerly await results on the testing of all these wells.
We look forward to further developments and continued progress with our projects in the months ahead with much confidence.
Patrick Cross Chairman 11 December 2007
ADI Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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