Empyrean Energy, the oil and gas development company with interests in China, Indonesia and the United States, has announced a successful capital raise and debt restructuring as well as an update on future activities at the Mako Gas Field at the Duyung PSC (Empyrean 8.5%) and the Topaz prospect at its Block 29/11 permit (Empyrean 100%), offshore China.
HIGHLIGHTS
- £1.52 million raised at a price of 0.8p
- Placement oversubscribed
- Mako Gas Sales Agreement binding terms expected late Q2 and sell down news expected early Q3
- Joint regional oil migration study with CNOOC team to be completed
- 3D seismic inversion project to discriminate light oil from water to commence at Topaz with a specialist seismic consultancy with expertise in seismic inversion
- Convertible Note debt restructure to reduce face value of the Convertible Note and secure extended moratorium on interest
- Management participation in the capital raising and agreement to sacrifice one-third of salary for new equity to minimise cash burn ahead of key developments
Empyrean is the operator of Block 29/11 in China and has 100% working interest during the exploration phase. In the event of a commercial discovery, its partner, China National Offshore Oil Company ('CNOOC'), may assume a 51% participating interest in the development and production phase.
Capital Raising
Empyrean has entered into binding subscription agreements to issue 189,753,783 new Ordinary Shares of 0.2p each in the Company at a price of 0.8p per New Ordinary Share, raising £1,518,030 (before costs).
The funds raised from the Subscription will be used as follows:
- for the completion of joint regional oil migration studies with CNOOC at Topaz ;
- for the completion of a 3D seismic inversion study aimed to discriminate between oil and water in the reservoir at Topaz;
- for ongoing prospect, licensing fees and permit costs;
- for post Jade well consultancy, analysis and residual exploration costs;
- for front-end engineering design ('FEED'), studies and surveys at Mako - including gas processing and export gas tie in at the Kakap KF Platform; and
- for general working capital requirements
Future Activities
Mako Gas Field
As previously announced, Conrad Asia Energy, the operator and 76.5% partner in Mako has commenced a sell down process with a global investment bank in order to fund the development of Mako. Mako is the largest undeveloped gas accumulation in the immediate region and Conrad have said that industry interest in the project and sell down process is encouraging. Mako has received government approval for a Plan of Development. A Gas Sales Agreement is currently in advanced stages of negotiation and a binding terms sheet is expected between the partners, a Singaporean buyer and SKKMIGAS (the Indonesian regulator) in the near term.
Topaz Prospect
Empyrean intends to conduct two further key projects that capitalise on the excellent quality 3D seismic acquired by the Company over the permit, shared regional 3D seismic that CNOOC has and additional physical well data of both Empyrean and CNOOC. These projects are designed to help address and mitigate the remaining primary geological risk at Topaz - oil migration into the Topaz trap.
Firstly, jointly with CNOOC, Empyrean intends to complete a regional oil migration study. CNOOC bring excellence in local basin modelling expertise along with crucial regional data that augments the data Empyrean has on Block 29/11. The regional data includes temperature, pressure, timing of oil maturation, and successful oil migration pathway mapping. The project will map oil migration from the proven source rock south west of Block 29/11 that charges the four CNOOC oil discoveries (immediately west of Block 29/11 and Topaz) and extend this into Block 29/11 and map these migration pathways to Topaz. In addition, similar work will be conducted from a new kitchen located entirely within Block 29/11 and oil migration pathways will be mapped to Topaz. This project is expected to take approximately 4 months to complete.
Secondly, Empyrean will conduct a 3D seismic inversion project focussing on Topaz. The 3D seismic inversion project will utilise the oil properties, reservoir temperature, reservoir pressure and water salinity data from CNOOC oil discovery wells combined with reservoir porosity and physical data from Empyrean well logs and core to maximise the effectiveness of the inversion project outcomes. The aim of the 3D seismic inversion project is to assess whether Topaz has different elastic properties to that of three water bearing wells in Block 29/11 and whether these properties can discriminate between water and light oil in the high porosity carbonate reservoir rocks on the high quality Topaz 3D seismic. The 3D seismic inversion project is expected to take approximately 3 months to complete.
Empyrean CEO, Tom Kelly, stated:
'Empyrean is very pleased with the outcome of this capital raising and is grateful for the continued support from its shareholders. We now look forward with great interest to the conclusion of Gas Sales Agreement negotiations and to developments on the sell down process of the Mako Gas Field. The macro environment for gas in South East Asia, and Singapore in particular, is expected to continue trending favourably with the region transitioning from coal to gas as the preferred energy source. Energy demand and gas demand are both forecast to continue to grow.
In China, we will use the very latest technology to further de-risk the very large 890 million barrel (P10) target at Topaz. Following success on the regional oil migration study and 3 seismic inversion project, we will continue our preparations for drilling within the November - May 2024 drilling weather window.'
Click here for full announcement
Source: Empyrean Energy
