Mako Resource Audit Confirms Significant Upgrade

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Empyrean Energy Plc / Index: AIM / Epic: EME / Sector: Oil & Gas

Empyrean Energy Plc

Mako Resource Audit Confirms Significant Upgrade

26 May 2020

Empyrean Energy Plc ("Empyrean" or the "Company"), the oil and gas exploration and development company with interests in China, Indonesia and the United States, is pleased to announce the results of an independent resource audit by Gaffney Cline and Associates ("GCA") of the Mako gas field, which forms part of Duyung PSC in the West Natuna Basin, offshore Indonesia ("Mako" or "Mako Gas Field"), in which Empyrean holds an 8.5% non-operated interest.

Highlights

·      Independent audit by GCA confirms significant resource upgrade

·      Mako confirmed as one of the largest gas fields ever discovered in West Natuna Basin

·      Mako confirmed as the largest undeveloped gas resource in the immediate region

·      GCA audited 2C contingent resource estimate of 495 Bcf, up 79% from previous GCA estimate

·      GCA audited 3C contingent resource estimate of 817 Bcf, up 108% from previous GCA estimate

Following a highly successful drilling campaign undertaken in Q4 2019, the operator of the Duyung PSC, Conrad Petroleum Ltd (the "Operator"), engaged GCA to complete an independent resource audit for the Mako Gas Field, further to the updated resource estimates prepared by the Operator detailed in the Company's announcement on 14 April 2020.

GCA has now completed its audit (the "2020 GCA Audit"), which confirms a significant resource upgrade for the Mako Gas Field compared to its previous resource assessment released in January 2019 (the "2019 GCA Audit"). 2C (contingent) recoverable resource estimates have been increased to 495 Bcf, an increase of approximately 79% compared with the 2019 GCA Audit and confirming the work completed by the Operator and partners. In the upside case, the 3C (contingent) resources have increased by approximately 108% compared with the 2019 GCA Audit and GCA's assessment is also significantly higher than the 3C estimate made by the Operator and partners in April 2020. With the latest upgrade, Mako has been shown to be one of the largest gas fields ever discovered in the West Natuna Basin, and is currently by far the largest undeveloped resource in the immediate area.

Results of the updated resource audit

The revised estimates of gross (full field) recoverable dry gas audited in the 2020 GCA Audit are:

The full field resources above are classified in the 2020 GCA Audit as contingent. Gas volumes are expected to be upgraded to reserves when certain commercial milestones are achieved, including execution of a gas sales agreement ("GSA") and a final investment decision ("FID").

The Mako Gas Field is located close to the West Natuna pipeline system and gas from the field can be marketed to buyers in both Indonesia and in Singapore. A Heads-of-Agreement with a gas buyer in Singapore is already in place. The conclusion of GSA negotiations will mark a further important step toward the FID to develop and commercialise the field. Further updates will be provided in due course.

The information contained in this announcement has been reviewed by Empyrean's Executive Technical director, Gaz Bisht, who has over 30 years' experience as a hydrocarbon geologist and geoscientist.

Empyrean CEO, Tom Kelly, stated:

"The Gaffney Cline and Associates independent audit results are extremely positive in that they not only endorse the internal assessment of 2C contingent resources by the Operator, but they also provide a significantly higher 3C contingent resource upside case over and above the Operator's own assessment. It is not often that you get an independent expert providing a more optimistic upside case. The results are a credit to the Conrad team and the joint venture. The Mako Gas Field has now become strategically important in that it is approximately 0.5 Tcf of high quality pipeline methane, close to existing infrastructure and well established markets, now confirmed as the largest undeveloped gas resource in the immediate region."

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