Big picture - Why invest in Empyrean Energy Plc.
Empyrean Energy Plc. Snapshot
Empyrean Energy PLC is an oil and gas explorer and producer listed on the London Stock Exchange AIM market (Ticker: EME).
Empyrean was established to finance the exploration, development and production of energy resource projects in geopolitically stable environments.
Empyrean's current core asset is a working interest in the Sugarloaf Project in Texas which is an advanced Eagle Ford Shale condensate and gas development operated by the Marathon Oil Company.
Empyrean has a strong management team, with many years experience in both the global investment and energy industries. The company is currently involved in three projects and continues to pursue other exciting energy opportunities.
Within a short period of time, Empyrean has proven its ability to identify, analyse, negotiate and fund excellent projects with an appropriate mix of risk versus reward. Empyrean has typically participated in later-stage exploration and can fast track the process from identification of a suitable project through to funding and drilling.
The Company is currently involved in several projects, being:
- Sugarloaf, Hosston
- Riverbend, Texas
- Eagle Oil, California
PROJECTS: SUGARLOAF PROJECT, TEXAS USA
(EME Working Interest 3%)*
*EME has a greater interest in Kennedy IH Well and Kowalik 228-R Well
* EME has a smaller interest in wells that are drilled horizontally and across border into adjoining acreage that EME does not have an interest in and the percentage interest varies according to their location. As a general rule, the Company has an across the board intered of 3%
Texas Picture Above: Location of Sugarloaf Project
Sugarloaf project is an Eagle Ford Shale development project operated by Marathon Oil Company and is considered to be one of the premier hydrocarbon development plays in the USA. It is also considered to be one of the most important onshore hydrocarbon discoveries in recent times. The Sugarloaf AMI is ideally situated in the liquids rich zone of the greater Eagle Ford Shale regional play.
Empyrean Energy participates in approximately 24,300 gross acres and this acreage is expected to require more than 300 wells to fully develop.
Current production is derived predominantly from the Eagle Ford Shale with further upside potential existing from the overlying Austin Chalk. Marathon has commenced a pilot programme of wells to be completed in the Austin Chalk to test the viability of adding this zone to the existing Eagle Ford Shale development. Marathon_1A successful pilot programme would pave the way for additional recoverable reserves and resources to be added to the project. Additional upside exists from other formations, including the Pearsall Shale which has also been earmarked by Marathon for test work along with the Wilcox Formation.
Empyrean Energy also has an interest in a small number of producing wells on a nearby acreage operated by ConocoPhillips.
The Eagle Ford Shale
The Eagle Ford Shale is probably the biggest and most sought after "play" in the USA onshore today. It may constitute the largest discovery in 40 years and is certainly the most exciting if drilling activity is any measure.
The formation trends from the Mexican border across East Texas, occupying an area approximately 40 miles wide and 400 miles long. It lies at depths of between 2,500ft and 15,000ft and is over 330ft thick in some areas, with average thickness being around 250 ft.
It is the hydrocarbon source rock for other oil and gas fields in South Texas, including fields associated with the Austin Chalk, a well- documented formation which directly overlies the Eagle Ford Shale.
Deposited during a regional, Late Cretaceous marine transgression, the Eagle Ford Shale does not consist, as the name might suggest, of an unchanging, homogeneous lithology . Rather it is more a mixture of at least six identifiable microfacies; each of which differs in source rock potential. The earlier- deposited and thus deeper transgressive shales are the more oil-prone source rocks, while the overlying "regressive" shales of the same formation are the more gas-prone.
Until three years ago, the Eagle Ford Shale was not considered by explorationists to be a viable hydrocarbon objective. Although the source potential was well- known, the negligible porosity and permeability ,so typical of shales, obviated any viable reservoir consideration. It was deemed uneconomic and any attempt to produce from the formation always resulted in early depletion. The two improved technical innovations, fraccing and horizontal drilling, have been responsible for a total change in industry perception of the potential for exploitation of the formation.
The Eagle Ford Shale has a relatively high calcite content, and as such is prone to brittleness at depth where it becomes an ideal target for fraccing with high pressure fluids. The fracc-induced porosity and permeability has enabled a marked increase in both productivity and recovery factor.
The second improved innovation is the advancement in horizontal drilling methodology. The Eagle Ford Shale can now be drilled to horizontal distances of more than 5,000ft and sometimes in opposite directions in the same well. This allows for a far greater exposure of the reservoir to production (compared to a vertical well).
The industry now estimates that the fractured formation should be capable of producing several billion of barrels of oil and trillions of c.ft of gas. The optimism is not misplaced; in 2010 alone the Eagle Ford Shale generated close to $US3 billion gross revenue in East Texas. Major players today include Anadarko Petroleum , Petrohawk Energy and ConocoPhillips; all of which are involved in accelerated drilling programmes to exploit the play.
Empyrean Energy holds interests in Blocks A (operated by ConocoPhillips) and B which are both ideally located geologically in the oil/ wet gas window of the Sugarkane Field. The operator of Block B, Marathon Oil Corp., recently purchased 141,000 net acres (which include Block B) for $US3.5 billion, reflecting how valuable the Eagle Ford Shale play is presently regarded. Production commenced mid-2010 in Block B and it has been estimated that more than 280 development wells will be required to fully exploit this part of the regional Sugarkane gas-condensate Field.
PROJECTS: RIVERBEND PROJECT, TEXAS USA
(EME Working Interest 10%)
Empyrean Energy announced on the 1 June 2009 that it had entered into a Participating Agreement with Krescent Energy Partners II, LP of Houston, Texas ("Krescent") to acquire a 10% working interest in Krescent's Riverbend Project.
The Project Area is located in the Tyler and Jasper Counties. The Area is also ideally located south of the prolific Brookeland Field (Austin Chalk).The project targets primarily the Austin Chalk and Saratoga Formation.
An unsuccessful attempt in 2010 to re-enter the highly-pressured Austin Chalk reservoir of Quinn 3-H was followed by the successful drilling of the Cartwight No1 well in the same year.
Unfortunately production of gas and condensate was permanently impeded by a downhole obstruction in the producing zone.
The Austin Chalk interval was consequently plugged to enable perforation and eventual production from a secondary target zone, the Wilcox Formation, located at a shallower depth in the well.
Gas and condensate production to sales recommenced on the 11 May 2013. Early production of 40 barrels of condensate per day was in line with expectations , although the gas production of 745,000 cubic feet of gas per day exceeded expectations.
During the 8 months of production in 2013 the well produced 4,158 barrels of condensate and 121,156 thousand cubic feet of gas.
PROJECTS: EAGLE OIL POOL DEVELOPMENT, CALIFORNIA USA
(EME Working Interest 57.21%)
Above: Location of Eagle Oil Pool
The Eagle Oil Pool Development Project is located in the San Joaquin Basin, southern California. It is a proven oil and gas province and has produced in excess of 12 billion barrels and 11 trillion cubic feet of gas. The project area covers approximately 4300 acres.
The primary target is the Gatchell Sand Member of the Eocene Lodo Formation. It is estimated that the Eagle Oil pool has mean (P50) recoverable reserves of 7.1 million barrels of oil and 12.3 billion cubic feet of gas.
In addition to the Gatchell Sands, Empyrean Energy believes that the shallower Monterey Shale is also a valid and promising target.
Empyrean Energy Plc increased its interest from 38.5 % to 48.5% when original operator, ASX-listed Victoria Petroleum NL, was replaced by the American company, R&M Oil & Gas in 2009. Subsequently, Strata-X, Inc has become operator of the project. As announced on 25 March 2013, Empyrean Energy Plc further increased its interest to 57.2126% as a result of a previous partner deciding to surrender its interest.
The Eagle North -1 well drilled in 2006 encountered oil but was abandoned due to technical problems. The results of a drilling programme at present underway in adjacent acreage could influence future seismic configuration if the expected geological objectives in addition to the Gatchell Sand Member are encountered.
Dr Patrick Cross - Non Executive Chairman
Dr Cross has international experience in corporate finance, organisation structures, marketing and joint venture operations. His previous positions include 25 years with BP specialising in marketing, strategic planning and business development across different cultures. He also worked for two years as President of Cable & Wireless Japan, and six years as Managing Director of BBC World Ltd. Patrick has operated in South America, Asia, Europe and the United Kingdom establishing relationships at senior levels with major companies, Governments and the European Commission. He is non-executive chairman of Mercom Oil Sands plc and was a non-executive director of Orca Interactive Limited until that company was successfully sold in 2008.
Tom Kelly - CEO/ Director
Mr Kelly has had more than 17 years corporate, finance and investment banking experience. During this period, Tom has had involvement in and been responsible for the financing of numerous listed companies on the Australian Securities Exchange (ASX) and several mergers and acquisitions within the Australian corporate sector. He is a Senior Associate of the Financial Services Institute of Australasia.
Frank Brophy - Technical Director
Mr Brophy has over 44 years experience as a petroleum geologist in the exploration, development and production of many world class projects. His roles have seen him involved in operations around the world, including Australia, Asia, Europe, USA and the Middle East. More recent overseas activities include four years as General Manager of the Hanoi operation in North Vietnam, for France based company Maurel & Prom, and almost two years in Sicily representing the same company in gas appraisal and development. Frank's previous positions also include his former role as Manager of International Business Development for Ampolex Limited, Chief Geologist of Elf Aquitaine Australia and Exploration Manager for five years with Peko Oil Limited. He is currently a non-executive director of ASX listed Golden Gate Petroleum Ltd.
John Laycock - Financial Director
Mr Laycock has over 30 years experience in accounting, finance and risk management. His previous positions include 22 years with BP both in UK and international experience in France and Japan. John has a degree in Mechanical Engineering from Bristol University and is a Chartered Management Accountant. He is based in the UK and currently works for an electricity generating company.
Amanda Wilton-Heald - Company Secretary & Financial Controller
Mrs Wilton-Heald is a Chartered Accountant with over eleven years of experience within Australia and the UK. Mrs Wilton-Heald has six years experience as an auditor, where she was involved in the audit of ASX listed and LSE listed company Financial Statements. Mrs Wilton-Heald has five years accounting experience with a UK AIM listed company specialising in the provision of collaboration technology. Mrs Wilton-Heald has been involved in the listing of junior explorer companies on the ASX and has experience in corporate advisory and company secretarial services. Mrs Wilton-Heald is currently Company Secretary of ASX Listed Cortona Resources Limited, Jacka Resources Limited and Potash West NL.
- 216,282,073 ordinary shares of 0.2p each
- 65,975,000 unlisted options on issue
- Nil shares held in treasury
There are no restrictions on the transfer of the ordinary shares.
The percentage of AIM securities that is not in public hands (as defined in AIM rules): 75.08%*.
* of this figure 15.02% is held by TD Direct Investing Nominees (Europe) Limited and 10.80% is held by Vidacos Nominees.
- 15.02% TD Direct Investing Nominees (Europe)
- 10.80% Vidacos Nominees
- 9.92% Barclayshare Nominees
- 9.59% Thomas Kelly
- 7.12% LR Nominees
- 4.18% HSBC Client Holdings Nominees (UK)
- 3.84% HSDL Nominees
- 3.52% Dartington Portfolio Nominees
Principal Business Office
108 St Georges Terrace
GPO Box 2517
Email: [email protected]
Shore Capital and Corporate Limited
Shore Capital Stockbrokers Limited
Auditors & Reporting Accountants
Chapman Davis Ltd
2 Chapel Court
Solicitors to the Company
Kerman & Co LLP
34 Beckenham Road,
BR3 4 TU
Tel: 0871 664 0300
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Lines are open 8.30am to 5.30pm Mon- Fri
Tel Overseas: +44 208 639 3399