Ongoing drilling operations at Empyrean Energy’s (LON:EME) 3% owned Sugarloaf project have delivered a major increase in reserves for the AIM quoted oil firm.
At 12.64mln barrels Empyrean’s proved and probable (2P) reserves have increased by 94%.
These reserves have been independently valued at US$121.7mln, Empyrean told investors.
"These are fantastic improvements to our reserves and resources,” said chief executive Tom Kelly.
The Sugarloaf project, operated and majority owned by Marathon Oil, currently has 231 wells in production and a further 54 wells have been drilled and are awaiting completion. Recent activity has focused on the development and appraisal of resources in the Austin Chalk play.
"We anticipated a shift from contingent resources to reserves as further Austin Chalk wells were drilled and appraised,” Kelly added.
“The excellent development rate during 2014 and, in particular, closer well spacing assumptions have resulted in assisting this conversion from contingent resource to reserves and an improvement in the volumes.”
Empyrean also highlights that Sugarloaf still has ‘excellent upside’ from the Upper Eagle Ford zone, which it describes as a ‘relatively new production zone’. A small number of wells at the property are already producing from the Upper Eagle Ford and further pilot wells are planned, it explained.
“Our flagship asset continues to grow and represents a viable and attractive investment proposition even at current lower oil prices," Kelly concluded.
The new reserves assessment was prepared by DeGolyer & MacNaughton.
Breaking down the new reserves in more detail show a 63% increase in Emyprean’s proved reserves (1P) to 5.78%. Probable reserves increased by 130% to 6.86mln barrels, and the combined 2P figure was 12.64mln barrels.
Proven plus probable plus possible (3P) reserves are up 134% to 20.91mln barrels,
1P reserves are estimated to have a US$43.8mln net asset value, while 2P reserves are said to be worth US$121.7mln and 3P reserves are estimated at US$263.5mln.
Shares were up 6.4% at 6.25p in mid-morning trading.