Empyrean Energy PLC (AIM:EME) told investors that the partners in the Mako gas project, in Indonesia, have approved an updated development plan which has subsequently been submitted to the government for approval.
Also the partners commissioned a new competent persons report (CPR) which has been prepared by GaffneyCline & Associates (GCA) for Mako.
The consultant described “compelling” project economics including an internal rate of return estimated at 51% and a net present value to Empyrean of US$49mln. GCA’s report highlighted some 23.8bn cubic feet of net entitlement 2C resources, net to Empyrean, covering the life of the project.
The consultant noted an anticipated plateau production rate of 120 MMscf/d for six years, and, GCA estimate the capital expenditure requirement to first gas at US$251mln, US$21.3mln net to the company. The consultant said that a reserve-based lending debt structure would be appropriate to fund the development.
Empyrean chief executive Tom Kelly said: “The independent assessment of the project by Gaffney Cline shows that the project economics are highly robust.
“Empyrean is also encouraged by the significant upside that exists if the current macro environment of higher South East Asian gas prices results in any improvement on pricing assumptions contained in the CPR.
“There also exists significant upside if the reservoir performs better than the 2C Best case. We look forward to the conclusion of GSA negotiations."
Empyrean has an 8.5% interest in Mako, whilst AIM-peer Coro Energy has a 15% stake.