Statement re New Project
Empyrean Energy PLC
06 October 2005
Empyrean Energy PLC
('Empyrean' or the 'Company'; Ticker: (EME))
Eagle Oil Pool Development JV, San Joaquin Basin, California, USA
Empyrean to earn 38.5% working interest
Drilling of the Eagle North-1 well scheduled for November 2005
Empyrean, the AIM quoted energy developer operating in geopolitically low risk
regions, today announces that it will participate in the Eagle Oil Pool
Development Project in the San Joaquin Basin, California, USA ('the Project')
following a farm-in agreement with Australian Stock Exchange quoted Victoria
Petroleum NL ('Vicpet'). This new project is to be undertaken in addition to the
Company's Glantal natural gas project in Germany.
The San Joaquin Basin in southern California is a proven oil and gas field that
has produced in excess of 12 billion barrels of oil and 11 trillion cubic feet
of gas. Drilling at the Project, scheduled to commence in November 2005, will
start with the Eagle North-1 appraisal well which is to be drilled up dip from a
previous discovery well. An independent expert has estimated that the Eagle Oil
Pool Development Project could contain a P50 (probability 50% unrisked) reserve
of 7.1 million barrels of recoverable oil and 12.3 billion cubic feet of
associated gas, with the P10 assessment estimated at 22.7 million barrels of oil
and 22.7 billion cubic feet of associated gas. The Project is a
structural-stratigraphic trap play targeting the Eocene aged Gatchell Sand
formation.
Vicpet's wholly owned subsidiary Victoria Petroleum USA Inc is the operator for
the Eagle North-1 well. The initial phase will take approximately 14 days to
complete and following initial success the casing and production testing of the
well will commence.
The Eagle Oil Pool Development Project- Previous Development
In 1986 the Mary Bellocchi-1 well flowed at 223 barrels of oil and 0.88 million
cubic feet of gas per day from the target formation. A subsequent re-entry and
horizontal well in 2001, the Eagle-1 well, encountered approximately 90 metres
of gross oil target sands however technical, drill related, problems at the time
resulted in the drill pipe becoming stuck in the well bore preventing production
testing The well bore was lost and operations were suspended. Subsequent
drilling in the area has resolved the drill related issues and a new seismic
line acquired in 2004 has further defined the updip extent of the Eagle Oil Pool
Development Project and the Eagle North-1 appraisal well drilling location.
2005+ Development Programme
The Eagle North-1 appraisal well will be drilled approximately 1 kilometre
northwest of the Eagle-1 surface location and vertically drilled to its target
depth of 4,200 metres. Upon confirmation of the presence of oil in the target
Gatchell Sandstone the well will be cased and production tested for five days. A
300 metre horizontal lateral well will then be drilled and completed for
production in the target Gatchell Sandstone oil reservoir. In the event of a
successful horizontal well completion, the Operator anticipates flow rates of up
to 1000 barrels of oil per day .
Farm-in Agreement
Empyrean can choose to earn a 38.5% interest in the Project by funding
approximately 55% of the costs of drilling, casing and production testing
carried out by the Vicpet drilling USA subsidiary. The farm-in has three stages:
Stage Empyrean's Capped Contribution
1 Vertical Well US$1.060m
2 Casing and Testing US$0.695m
3 Lateral US$0.695m
If the capped contribution is reached during any stage, Empyrean reverts to
contributing at its working interest of 38.5% for that stage. Empyrean will also
pay a prospect and land fee of US$100,000 to Vicpet upon the signing of formal
farm-in agreement documentation. Upon production Empyrean retains a full 55%
interest until all funding has been recouped and then reverts to its 38.5%
working interest.
Empyrean has sufficient cash reserves subsequent to its listing on AIM to
undertake both the Glantal and Eagle Oil Pool Development Project exploration
programs to a point of discovery/confirmation of economically viable reserves.
Success on either project will necessitate further development funding.
After completion of Empyrean's earn in to the Project the participants in the
Eagle Oil Pool Development Project and Eagle North-1 (where appropriate through
the participants' respective US wholly owned subsidiaries) are:
Victoria Petroleum NL 20.00%
First Australian Resources NL 15.00%
Lakes Oil NL 15.00%
Sun Resources NL 10.00%
Private Interests 1.50%
Empyrean Energy plc 38.50%
Vicpet and the Private Interests (above) are farming out a portion of their
existing working interest (previously 56.10% and 3.90% respectively) to allow
Empyrean to earn in and other participants are contributing based on their
existing interest in the Eagle Oil Pool Development.
Commenting on the agreement today Empyrean executive director Chris Lambert
said: 'With the current price of oil around US$60 per barrel and the price of
gas in Southern California in excess of US$10 per thousand cubic feet a
successful appraisal well and follow on development drilling would provide a
significant cash flow for Empyrean. Vicpet and the other participants have laid
the groundwork for a reduced risk entry to the Eagle Oil Pool Development
Project allowing Empyrean to further develop a portfolio of energy assets
operating in geopolitically stable enviroments'.
For further information including full farm-in details for the Eagle Oil Pool
Development Project
Laurence Read/Amanda Harris
Conduit PR
Tel: +44 (0) 207 618 8760
Mob: +44 (0) 7979 955 923
David Newton
HB-Corporate
Tel: +44 (0) 207 510 8600
Chris Lambert
Empyrean Energy plc
Tel : +44(0) 207 932 2442
Glantal natural gas project Germany
The Company's pre-existing project allows the right to earn up to a 52% working
interest in the Glantal project on the Neues Bergland permit, a substantial
fractured reservoir natural gas exploration project in Germany.
The highly prospective area of the Neues Bergland permit is located close to
Frankfurt in Germany. The permit contains the Pfalzer Anticline which is a 515
square kilometre structure containing deep anthracitic coal beds overlaid by
shale and sediment. The coal beds are too deep to mine economically but have
been estimated by the independent expert to have generated many hundred trillion
cubic feet of gas, with a recoverable gas potential of up to 6.2 trillion cubic
feet in the first drilling prospect alone. An independent expert has calculated
the smallest of these potential pay-zones has the potential to hold a
recoverable 1.2 trillion cubic feet of gas. First drilling is due to commence in
Q4 2005. Following a review of the results, a decision will be made by the
Directors as to the commerciality of the Glantal prospect. Seal integrity will
be of the highest importance.
This information is provided by RNS
The company news service from the London Stock Exchange
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