Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil & Gas
13 December 2013
Empyrean Energy PLC ('Empyrean' or 'the Company')
Sugarloaf AMI Project Update from Marathon Oil Corporation
Highlights:
· Operator of Sugarloaf AMI Marathon Oil Corporation delivered analyst presentation on 11 December 2013
· Spacing pilot wells at 40 and 60 acre spacing have delivered higher initial production results than spacing at 80 and 160 acres
· Spacing density pilots support infil development down to 40 acres depending on the liquids content
· Piloting 30 acre infil density during 2014 including a future 30 acre pilot on the Sugarloaf AMI
· Aiming to grow 2P reserves though a combination of downspacing, optimization and aggressive pursuit of co-development plays
· First Austin Chalk pilots successful, delivering similar volumes to a typical Eagle Ford Shale production curve over a 90 day period
· Commitment to co-develop Austin Chalk with lower Eagle Ford Shale and leverage off existing infrastructure
· Further delineation of Austin Chalk and upper Eagle Ford Shale in 1H 2014
· Guidance that drilling pace likely to increase
Empyrean Energy Plc, the AIM-listed condensate and gas exploration and production company focused on the Eagle Ford Shale, Texas, USA, notes the release by Marathon Oil Corporation (NYSE:MRO) ('Marathon') of an analyst presentation on 11 December 2013.
A copy of the Marathon presentation and announcement is available on Marathon's website at:
www.marathonoil.com
The presentation contained Marathon's 2014 capital budget. In addition, a valuable update on progress, results and guidance on their Eagle Ford Shale ("EFS") acreage was delivered, which includes Empyrean's flagship Sugarloaf AMI project, which is operated by Marathon and in which the Company currently has a 3% working interest.
Other items relevant to Empyrean's Sugarloaf AMI interest are:
· Marathon to accelerate EFS rig activity across their entire EFS acreage by 20%
· Marathon to increase rig count across entire EFS acreage to 18 rigs
· Marathon has allocated US$2.3 billion for the development of the entire EFS acreage in 2014
· 50% improvement in spud to total depth drilling time delivered across entire operated EFS acreage since Q4 2011, resulting in a decrease from 24 days down to 12 days over the period
· Aggressive acquirer of EFS assets - US$5.574 billion completed since 2011
· Continuously improving well performance
· Improvements in stimulation design outpacing impacts from downspacing
· 2014 completed well cost target of US$6.5-US$7.5m
Empyrean CEO Tom Kelly said, "Marathon's operational performance has been excellent and it continues to deliver greater efficiency and is committed to replacing and growing reserves through downspacing, optimiszation and the co-development of other horizons such as the Austin Chalk. The importance of the downspacing pilot results and the potential impact on recoveries, reserves and value needs to be emphasised. Empyrean believes that the results of the Austin Chalk pilots and the stated objective to aggressively pursue co-development plays, coupled with the ability to leverage off of existing infrastructure, is becoming the most exciting value driver for the Sugarloaf project. The Austin Chalk is not currently reflected in Empyrean's reserves and Marathon's commitment to and planning of further wells in 2014, designed to delineate this play, can have a significant and positive impact on reserves and value in the near term. Empyrean believes that an accelerated drilling pace, in conjunction with the tighter spacing regime, will have a positive impact on reserves and production especially if Marathon is able to achieve their stated completed well cost targets."
"To have a low risk, liquids rich Eagle Ford Shale development play with a high calibre operator such as Marathon delivering operational efficiencies, reserves growth, optimization and value is exceptional and we can also benefit from a low risk bolt on co-development play in the Austin Chalk that can potentially deliver significant reserves and value growth in the near term."
The information contained in this announcement was completed and reviewed by the Technical Director of Empyrean Energy Plc, Mr Frank Brophy BSc (Hons) who has over 40 years experience as a petroleum geologist.
**ENDS**
For further information please visit www.empyreanenergy.com or contact the following:
Tom Kelly |
Empyrean Energy plc |
Tel: +618 9481 0389 |
Neil McDonald |
Cenkos Securities Plc |
Tel: +44 (0) 131 220 9771 Tel: +44 (0) 207 397 1953 |
Hugo De Salis |
St Brides Media & Finance Ltd |
Tel: +44 (0) 20 7236 1177 |
Elisabeth Cowell |
St Brides Media & Finance Ltd |
Tel: +44 (0) 20 7236 1177 |
Lottie Brocklehurst |
St Brides Media & Finance Ltd |
Tel: +44 (0) 20 7236 1177 |
Notes to Editors:
Empyrean Energy Plc is an AIM listed (Ticker: EME) profitable US on-shore oil and gas development and production company focussed primarily on the advancement of its assets in Texas and California. The Company's portfolio represents a mix of assets at various stages of development. Its flagship project is the Sugarloaf AMI in the prolific Eagle Ford Shale, Texas, where it has a 3% working interest in approximately 24,300 gross acres centrally positioned in the liquids rich sweet-spot within the field. Empyrean has an interest in over 109 gross producing wells with full development expected to reach over 280 wells and further upside potential from additional formations and closer well spacing. The Company has term debt facility of up to US$50 million with Macquarie Bank in place in order to develop this acreage which is operated by US major Marathon Oil Company.
Other assets include a 57.2% interest in the Eagle Oil Pool Development Project located in the San Joaquin Basin, southern California, a proven oil and gas province. Empyrean's large working interest in this project provides the Company with flexibility and leverage with potential high impact from success. Additionally, Empyrean has a 7.5% interest in the Sugarloaf Block A operated by ConocoPhillips in the Eagle Ford Shale, and a 10% working interest in the Riverbend Project in Texas currently producing from the Wilcox Formation.
