TIDMEME
RNS Number : 0786S
Empyrean Energy PLC
11 November 2021
This announcement contains inside information
Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil &
Gas
Empyrean Energy plc
Block 29/11, China -Empyrean and COSL Execute Final Drilling
Contract for Jade Prospect
11 November 2021
Empyrean Energy plc ("Empyrean" or the "Company"), the oil and
gas development company with interests in China, Indonesia and the
United States, is pleased to advise that the Integrated Drilling
Contract ("IDC") for the drilling of the Jade prospect exploration
well on Block 29/11, offshore China, (the "Jade Prospect") has been
executed by Empyrean and China Oilfield Services Limited
("COSL").
HIGHLIGHTS
-- IDC Signed by Empyrean and COSL with targeted well spud date late December 2021
-- Drilling rig availability confirmed and all technical,
commercial and contractual terms agreed
-- IDC confirms the significantly reduced drilling cost estimate
of US$12.3m (previous estimate US$18.5m), plus a success-based
testing cost estimate of US$7.4m
-- Empyrean will now pay the 10% deposit ($US1.23m) under the terms of the IDC
-- Drilling rig availability has been confirmed, the Geological
Programs agreed and the Well Site Survey contract awarded
-- Progression of the various permits required to drill are progressing on schedule with CNOOC EnerTech-Drilling & Production Co ("CNOOC EnerTech") engaged to manage a number of critical pre-drilling permitting and logistical requirements
Empyrean is the operator of Block 29/11 in China and has 100%
working interest during the exploration phase. In the event of a
commercial discovery, its partner, China National Offshore Oil
Company ("CNOOC"), may assume a 51% participating interest in the
development and production phase.
As previously announced in September 2021, the Company and COSL
agreed all technical, commercial and contractual terms and COSL
confirmed rig availability and a target spud date of 15 December to
30 December 2021 for the Jade Prospect. The Geological Program has
now been incorporated into the IDC and both parties have executed
the final contract. CNOOC approval was sought and provided ahead of
the award of the IDC and again prior to signing of the IDC and all
parties are aligned in the targeted timing to drill the Jade
Prospect in December.
The signed IDC confirms the substantially reduced turnkey quote
for the drilling of the Jade Prospect of US$12.3 million on a dry
hole basis, an approximate 34% saving on the initial quote. On a
success basis, testing of any oil column has been quoted at US$7.4
million.
The Company awarded the Well Site Survey contract in October
2021 and is making good progress on other drill preparation
activities. The Well Site Survey will commence as soon as there is
a good weather window with low enough swell to safely and
effectively complete the survey, as recent sea conditions at the
well site have been poor. The Drilling and Geological Programs have
been finalised and are incorporated in the IDC. The Company will
now pay the 10% deposit (US$1.23 million) within 15 days under the
terms of the IDC.
As announced last week, CNOOC EnerTech have been engaged to
manage a number of these critical pre drilling permitting and
logistical requirements as well as performing a major managerial
role over all aspects of the drilling operations
The drilling of the Jade Prospect remains subject to further
funding being secured by the Company. The Company is currently in
negotiations with potential counterparties and is aiming to
finalise the necessary arrangements in the coming weeks. Further
updates in this regard and in relation to the Jade well drilling
preparation and permitting activities will be made in due
course.
The Jade Prospect
The 2021 drilling campaign is targeting a world class
conventional oil target in the Jade Prospect, to which Gaffney
Cline & Associates ("GCA") assigned a Geological Chance of
Success ("GCoS") of 32%. Subsequent to this independent assessment,
the Company completed a gas cloud study and post stack seismic
inversion study that it believes further mitigates risk and
increases the GCoS to 41%.
The Jade Prospect has a GCA audited mean in place potential of
225 MMbbl and a P10 in place upside of 395 MMbbl. Four recent
nearby discoveries by CNOOC immediately to the West of the Jade
Prospect are filled to their P10 potential or better. All four
CNOOC discoveries have gas clouds showing in the overburden on
seismic.
Empyrean's excellent quality 3D seismic indicates that there is
a classic "fill to spill" geological setup in the basin, and a
robust regional seal, that provides the Jade and Topaz Prospects
with a very real possibility of being filled in a similar fashion
to nearby discoveries. The Jade and Topaz prospects have gas
clouds, similar to nearby discoveries, in the overburden on 3D
seismic. Dry wells nearby do not have gas clouds. The Jade Prospect
is the first of the three identified prospects within Block 29/11,
which also contains the Topaz and Pearl prospects. The combined
audited mean in place potential of all three prospects is 884 MMbbl
and a P10 in place upside of 1,588 MMbbl. The post stack seismic
inversion study showed Jade and Topaz both have the potential for
excellent carbonate buildup reservoir quality with excellent
porosity and permeability. Any oil discovered is expected to be
light oil in the 38-41 API range, similar to nearby discoveries.
These attributes combined with the potential for exceptional
natural reservoir drive supports the potential for excellent
recovery rates.
China is the largest importer of oil in the world.
The information contained in this announcement has been reviewed
by Empyrean's Executive Technical director, Gaz Bisht, who has over
31 years' experience as a hydrocarbon geologist and
geoscientist.
Empyrean CEO, Tom Kelly, stated:
"The signing of the integrated drilling contract with COSL,
marks another important milestone for Empyrean as we gather
momentum on the downhill run to drilling the Jade prospect next
month. We thank COSL for their diligent and collaborative approach
to date. We have already locked in the drill rig and awarded the
well site survey and are making very good progress with other
drilling preparation activities, acquiring long lead items and
securing the necessary drill permits. As announced last week we
have engaged CNOOC EnerTech to manage a number of these critical
workstreams. Finally, we would like to again thank CNOOC for their
continued support and cooperation throughout this process."
For further information please contact the following:
Empyrean Energy plc
Tom Kelly Tel: +61 6146 5325
Cenkos Securities plc (Nominated
Advisor and Broker)
Neil McDonald Tel: +44 (0) 131 220 9771
Pete Lynch Tel: +44 (0) 131 220 9772
First Equity Limited (Joint
Broker)
Jason Robertson Tel: +44 (0) 20 7330 1883
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END
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