TIDMEME
RNS Number : 7472W
Empyrean Energy PLC
03 August 2018
This announcement contains inside information
Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil &
Gas
3 August 2018
Empyrean Energy PLC ('Empyrean' or 'the Company')
Operations Update from Mako Gas Discovery, Indonesia
HIGHLIGHTS
-- Plan of Development for the Mako Gas Field ("Mako POD")
submitted to SKKMigas, the Indonesian oil and gas regulator
-- Heads of Agreement ("HOA") signed with a regional gas buyer
for the sale of all Mako gas
-- Indonesian Government owned and accredited consultant,
Lemigas, were contracted to certify initial reserves and assist
with POD work and submission
-- Concurrently, Conrad Petroleum Limited ("Conrad") has
completed a preliminary internal estimate of 2C Contingent
Resources of 373Bcf based on gas sales to be sold within the Duyung
PSC term of the full Mako Gas Field
-- Lemigas certified 2P "Reserves"* of 152.30Bcf gas based on
Mako South-1 gas well only
-- Further appraisal wells are planned to lift the Lemigas
certified Resources to reflect the potential of the full Mako Gas
Field
-- Strong unsolicited third-party interest shown in
participating in the Duyung PSC pre-POD
-- High Impact Exploration 'leads' identified below the Mako Gas
Field ("Mako Deep")
Empyrean Energy plc, the oil and gas development company with
interests in China, Indonesia and the United States, advises that
it has been informed by Conrad, its partner in the Duyung PSC,
offshore Natuna Basin - Indonesia on progress at the Mako Gas
Discovery. The Duyung PSC is 100% held by West Natuna Exploration
Limited ("WNEL"). Empyrean is a 10% shareholder in WNEL with Conrad
owning the remaining 90%.
Conrad has advised Empyrean that WNEL has submitted the Mako POD
to SKKMigas, the Indonesian oil and gas regulator, which will, in
turn recommend the Mako POD to the Indonesian Ministry of Energy
and Mines. The Indonesian Ministry of Energy and Mines is expected
to approve the POD during Q4 2018. WNEL contracted Indonesian
Government owned and accredited consultants, Lemigas, to work on
preparation and submission of the POD and to help ensure that all
SKKMigas and Indonesian Ministry of Energy and Mines requirements
were substantially met.
The Mako POD approval process paves the way for the Duyung PSC
to convert into a Production Permit through to 2037 following
approval of the Mako POD.
As part of the initial Mako POD submission, WNEL has negotiated
and reached a HOA for the sale of all Mako gas to a regional
utility. The final terms and pricing will be contained in a Gas
Sales Agreement ("GSA") to be negotiated between the parties
As part of the POD submission, Lemigas completed a certification
of reserves ("Lemigas Reserves") based primarily on the Mako
South-1 well and an area of circumference spreading out from the
well. In addition, Conrad has completed an internal calculation of
its contingent resources ("Contingent Resources") based on the full
Mako Gas Field. The Conrad preliminary estimate of 2C Contingent
Resources of 373Bcf is expected to be converted into reserves
following a Final Investment Decision ("FID") by WNEL and the
signing of a GSA and agreements to access ("Access Agreements") the
West Natuna Transport System ("WNTS"), the pipeline that carries
gas to mainland Singapore. Conrad also has plans for third party
certification of its Contingent Resources using current Society of
Petroleum Engineers ("SPE") standards in due course. The "Lemigas
Reserves" are shown in the table below:
"Lemigas Reserve" Certification* 1P 2P 3P
Initial Gas In Place (Bcf) 38.03 190.38 620.70
------ ------- -------
Recoverable Gas Reserve (Bcf)
as at April 01, 2018 30.42 152.30 496.56
------ ------- -------
Lemigas Mako POD "Reserves"
* It is important to note that "reserves" in this context does
not equate with the current SPE definitions followed by Conrad but
does signify approval for WNEL to extract the certified volume of
gas.
Work on the FID, GSA and Access Agreements is a priority for
WNEL in the coming 12 months.
Recently completed re-processing of 2009 vintage 2D seismic data
utilising the latest advanced techniques has substantially improved
imaging of the geological features underneath the Mako Gas Field.
Ongoing evaluation of this data has identified a significant
exploration 'lead', named Mako Deep. Whilst Mako Deep is named due
to its proximity below the Mako Gas Field, it is in fact relatively
shallow by industry standards at 2000-6000ft below mean sea level.
Mako Deep is likely to contain well developed thick sand packages
as proven by the Tengirri-1 well (drilled by Conoco in 1975).
Provisional initial estimates show that Mako Deep has the potential
to contain very large quantities of recoverable hydrocarbons, both
oil and natural gas. Seismic interpretation, and analysis of the
cuttings of the old Tengirri well are underway to further delineate
and de-risk this exciting 'lead' for potential future drilling that
could be executed sometime during 2019.
Following a technical presentation by Conrad in London recently
and in the lead up to the submission of the POD to SKKMigas, there
has been several approaches by third parties interested in
participating in the Duyung PSC. Whilst no transactions have been
concluded, the level of interest in the Mako Gas Field is
encouraging.
Empyrean CEO, Tom Kelly commented "The extent and excellence of
work completed by Conrad in conjunction with Lemigas is extremely
pleasing. To reach submission of the POD to SKKMigas within 12
months of making a significant gas discovery is a credit to the
Conrad team and Lemigas. Adding further excitement in the form of a
high impact exploration target in Mako Deep on top of 373Bcf of 2C
Contingent Resources, recoverable from the Mako Gas Field is really
making the Duyung PSC an excellent asset for Empyrean and its
co-shareholder in WNEL, Conrad."
Conrad Managing Director, Justin Pettett also commented "We have
assembled a world class team that set ambitious targets to deliver
upon following the Mako Gas Field discovery in 2017. So far, all
objectives have been met and delivered ahead of time. This has been
an extremely busy year and we are now well placed to achieve
further progress towards development at Mako into 2019. We are
transitioning from explorer status into developer and producer and
with further large and compelling exploration upside at Mako Deep.
We look forward to updating Empyrean shareholders of future
progress."
This report has been reviewed by Empyrean's Executive Technical
director, Gaz Bisht, who has over 29 years experience as a
hydrocarbon geologist and geoscientist.
Further updates will be provided in due course.
**ENDS**
Empyrean Energy plc
Tom Kelly Tel: +61 8 9380 9920
Cenkos Securities plc
Neil McDonald Tel: +44 (0) 131 220 9771
Beth McKiernan Tel: +44 (0) 131 220 9778
St Brides Partners Ltd
Lottie Wadham Tel: +44 (0) 20 7236 1177
Frank Buhagiar Tel: +44 (0) 20 7236 1177
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END
UPDPJMFTMBIMMJP
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