Sugarloaf - Production and Operational Update

RNS Number : 6902K

Empyrean Energy PLC

01 August 2013

 

1 August 2013

Empyrean Energy PLC

("Empyrean" or the "Company"; Ticker: (EME))

Sugarloaf Project: Onshore Texas, USA

Production and Operational Update

Empyrean Energy Plc (Ticker: EME), the AIM-listed condensate and gas exploration and production company focused on the Eagle Ford Shale, Texas, USA, is pleased to provide the following update on production and operations at its Sugarloaf Project:

Highlights

·     Production on a barrel of oil equivalent basis ("BOE") net to Empyrean increased by approximately 213% in the three months to June 2013 compared to the three months to June 2012

·     Production on a BOE basis net to Empyrean remained strong in the three months to June 2013 compared to the previous three months to March 2013 with a modest increase of 236 BOE or 0.48% for the quarter

·     Empyrean had an interest in 91 gross producing wells at end of June 2013, an increase of 12 wells since the end of March 2013

·     Testing of the Austin Chalk wells has commenced with two wells commencing production during July

·     Well down spacing initiatives and testing are ongoing with encouraging early observations

·     Success on the Austin Chalk and/or well down spacing initiatives could have a significant positive impact on reserves and value

Production

The following is a summary of wellhead production data received from the operator from wells at the Sugarloaf Project from April 2012 through to June 2013. All figures that are stated as "Net to EME" are calculated at the working interest percentage in each well and multiplied by the net revenue interest ("NRI") to give an amount to Empyrean net of royalties but before any taxes.

Month	Gas (Net to EME) (mcf)	Condensate (Net to EME)(bbls)	BOE Total (Net to EME)	BOE/day average (Net to EME)
April 2012	7062	2575	3752	125
May 2012	9157	4009	5535	179
June 2012	14658	3936	6379	213
July 2012	13,163	5,046	7,240	234
August 2012	24,905	7,129	11,280	364
September 2012	30,355	7,814	12,873	429
October 2012	18,011	7,658	10,660	344
November 2012	20,738	10,127	13,583	453
December 2012	30,069	11,248	16,260	525
January 2013	35,386	10,972	16,870	544
February 2013	30,982	9,046	14,210	508
March 2013	38,628	11,306	17,744	572
April 2013	37,925	10,310	16,631	554
May 2013	38,984	10,308	16,805	542
June 2013	37,472	9,379	15,624	504

Notes:

1.   The wells have had the Average Daily Equivalent Oil Rate calculated on a simple 6:1 basis.

2.   Please note that reporting for production at the wellhead does not include Natural Gas Liquids (NGL's) as these are extracted and measured later. The numbers are approximate and are rounded and are subject to change as sales are completed and allocated to each well. The Company has been notified by the operator that there have been some issues with the allocation of gas production numbers for some wells since September 2012, when wells on single separators have been switched over to facilities that have both a high pressure and low pressure separator. The operator has assured the Company that these issues are being corrected and will not affect the ultimate allocation of volumes of hydrocarbons for product sold.

A revised version of this announcement within which the data in the table above is represented graphically is available on the Company's website.

Operations

As at the end of June 2013 Empyrean had 91 gross wells that were producing at the Sugarloaf Project on acreage operated by Marathon Oil Company, a subsidiary of Marathon Oil Corporation (NYSE: MRO), an increase of 12 wells since the end of March 2013. In addition, there were 6 wells drilling ahead and 9 further wells awaiting or in the process of having completion/stimulation operations carried out.

Since the end of June, two Austin Chalk wells have commenced production. Early indications from these wells are encouraging. These wells have been drilled within a batch of three wells, two drilled at approximately 60 acre spacing testing the Austin Chalk with a third well drilled testing the Eagle Ford Shale. Both spacing and the composition of hydrocarbons produced from the Austin Chalk zone will be very important in addition to any interaction between the Austin Chalk and underlying Eagle Ford Shale. Empyrean will be looking to capture as much positive data from these wells to update reserves in the second half of calendar 2013.

The well down spacing initiatives are ongoing. As previously announced, early indications show the wells drilled on tighter spacing are behaving as forecast. Other operators within the field have announced plans to develop their acreage at 40 acre spacing. Down spacing has the potential to improve recoveries, reserves and ultimate value. At the Sugarloaf Project, further production history will be required before the optimum spacing regime for the next phase of development is finalised. The Austin Chalk pilot program will also be considered during this process. Marathon has indicated that further guidance and results will be available during the second half of calendar 2013.

Commenting today, Empyrean CEO, Tom Kelly said "Another strong three months of production during which the oil price had a steady rise is very good for the Company. Early indications from the Austin Chalk wells are encouraging and we hope to learn more from the operator on their interpretation of these results in the near term. The potential for a significant uplift in reserves and value from the development of the Austin Chalk in addition to the Eagle Ford Shale is very real and if successful will further enhance the value of the Sugarloaf Project to Empyrean with early results to be available in a relatively short period of time."

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.

For further information

Empyrean Energy plc 

Tom Kelly

[phone]

Shore Capital

Anita Ghanekar

Edward Mansfield

[phone]

Jonathan Charles

Lionsgate Communications

E: [e-mail]
M: [phone] 

www.lionsgatecomms.com 

Notes to Editors:

Empyrean Energy Plc is an AIM listed (Ticker : EME) condensate and gas exploration and production company focused on the Eagle Ford Shale, Texas, USA. Other assets include a 10% working interest in the Riverbend Project, Texas, just north of the prolific Brookeland Field (Austin Chalk) as well as a 57.2% interest in the Eagle Oil Pool Development Project located in the San Joaquin Basin, southern California.

Empyrean's portfolio includes an interest in over 91 producing wells with scaleable growth potential from further development and exploration upside.

 

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