Empyrean Energy PLC (AIM:EME) told investors it intends to proceed with plans to drill the Topaz exploration well, offshore China, subject to financing.
It comes after the disappointment of Jade, the company’s maiden well in China, which failed to deliver a successful discovery despite encouraging early reports.
Topaz is described by Empyrean as a “much larger” prospect than the pre-drill estimate of Jade.
Empyrean additionally said that technical data gathered through the Jade programme has helped provide confidence in reservoir, trap and seal for the Topaz prospect.
The company is now approaching the second exploration period for the licence, which starts in June 2022 and requires a drilling commitment by June 2024.
Funding options for Topaz are now being considered, and, Empyrean is preparing a work program that could see the well drilled within the next drilling weather window (which would be in the first half of 2023). In the meantime, analysis of the Jade well continues alongside planning for Topaz.
"Whilst we are extremely disappointed with the results of the Jade well, we have made significant investment of resources and time in systematically maturing the prospectivity of this large block,” chief executive Tom Kelly said.
“Empyrean's early assessment is that the much larger Topaz prospect remains a world-class conventional light oil target that, based on existing understanding of available data, will be drilled.”
The company added that as it looks at funding options it will investigate potential risk share alternatives and farm out possibilities.
Empyrean, meanwhile, noted that China – the world’s largest importer of oil – is seeing momentum gathering for domestic exploration with China National Offshore Oil Company (CNOOC) drilling a large number of new wells.
CNOOC has the right to take up a controlling stake in Topaz in the event that a well is successful and the project advances to the development and production phase.
Empyrean noted that CNOOC has been very cooperative in sharing its regional data.
Tom Kelly added: “Over the past 6 years, Empyrean has built a deep and strong relationship with CNOOC and has found an experienced team in CNOOC EnerTech that, together, has proven to be able to execute a safe drilling campaign in an offshore environment.
“The COSL team has been extremely professional and effective in managing various aspects of the drilling operations including a Covid-safe campaign. I would like to thank our partner and consultant teams for their support and we now look forward to their ongoing assistance with the proposed drilling of the Topaz prospect."