Empyrean Energy (LON:EME) has revealed a significant increases in production volumes from the Sugarloaf project, in America’s Eagle Ford shale.
The AIM-quoted firm has a 3% stake in the project, in Texas, which benefits from being among the most economic US shale projects.
Empyrean’s share of production in the fourth quarter of 2014 averaged 1,217 barrels oil equivalent per day (boepd) after deducting royalties, and was 1,811 boepd before royalties.
In aggregate, the group’s net production for the quarter amounted to 111,921 boe after royalties, and was 166,572 before.
Drilling continues apace with the number of wells at the property rising from 187 at the end of the three month period to 205 as at March 20 2015.
Marathon Oil, the operator of Sugarloaf, continues to focus on the optimisation of its drilling and completion operations to reduce costs, though Empyrean highlights that Sugarloaf is already one of lowest marginal cost plays in the USA.
“We are fortunate that our project is located in the liquids rich sweet spot of the Eagle Ford Shale play and therefore enjoys relatively low marginal costs of production compared with other shale plays across the USA,” said Tom Kelly, Empyrean’s chief executive.
"Marathon continues to optimise well performance and drilling and completion costs continue to decrease.”
Empyrean is currently engaged in discussions with its current lender, Macquarie Bank, and is also evaluating alternative sources of additional funding to support the continued participation in the Sugarloaf project and the ongoing development programme.
It comes after the company shut down a formal sales process for the whole business earlier this year, amid sector-wide uncertainty due to lower crude prices.