11th Dec 2007 13:15
Empyrean Energy PLC11 December 2007 Empyrean Energy Plc ("Empyrean" or the "Company"; Ticker: (EME)) Interim Results for the six months ended 30 September 2007 ---------------------------------------------------------- Empyrean today announces its interim results for the period ended 30 September2007. Please find below the Chairman's statement and the interim accounts. HIGHLIGHTS * Sugarloaf current drilling programme provides encouragement with five wells having possible gas pay that requires production testing * Oil & gas production continues from three wells at Project Margarita CHAIRMAN'S STATEMENT I am pleased to report that the Company has made significant progress on itsprojects during the period and in particular on the Sugarloaf Project in theUnited States. Overview-------- The past couple of months have been particularly busy in terms of drilling andtesting. We successfully concluded our shallow drilling programme at ProjectMargarita with three wells: Dona Carlota, Agavero and Milagro resulting incommercial gas discoveries. Given that the industry statistics are around one intwelve, the success rate of three commercial discoveries from six wells is aterrific result. The Company holds a 44% working interest in Project Margaritaand is receiving its share of production revenues on a monthly basis. During the period we have focussed primarily on the Sugarloaf prospect in theprolific Gulf Coast Region of Texas in an area very close to the discovery wellof the Sugarkane gas-condensate field. The Sugarloaf-1 well, a vertical well in which Empyrean has a 6% working interest, is currently undergoing longer term production testing on the deepestof three zones to be tested. Early swabbing has recovered hydrocarbons. Testingof the middle and shallowest zones are expected to take place following thislonger term production testing. The Kennedy-1 well, a horizontal well in which Empyrean has an 18% working interest, has reached target depth of 16,530 ft. The well is targeting the shallowest of the three zones to be tested in the Sugarloaf-1 well, and 41/2" liner has been successfully run to total depth. Preparations are now being made for an extensive fracture stimulation and testing programme. The TCEI JV Block A-1 well, a horizontal well in which Empyrean has a 7.5% working interest has also reached total depth. This well is also targeting the shallowest of the three zones to be tested in the Sugarloaf-1 well. This well had very exciting gas flares whilst drilling and is about to commence an extensive fracture stimulation and testing programme. The TCEI JV Block A-2 well, a vertical well in which Empyrean has a 7.5% working interest, has also reached total depth. This well has encountered the three zones that show promise in the Sugarloaf -1 well. This well will be used to monitor the fracture stimulation programme in the TCEI JV Block A-1 well before preparation for its own testing programme is finalised. The TCEI JV Block A-3 well, a horizontal well in which Empyrean has a 7.5% working interest, is targeting the shallowest of the three zones encountered in the Sugarloaf-1 well. Drilling in the target zone has already encountered hydrocarbons. We look forward to the results of testing from each of these wells during whatpromises to be an exciting testing phase for the Company. The Company has also been seeking other opportunities and in September we werevery pleased to announce a participation agreement for a new deal with Texon E&P, Inc, the US operating subsidiary of ASX-listed Texon Petroleum Limited. InOctober, we signed a new agreement to increase our working interest to 20% byfunding 26.6667% of the drilling costs, testing and completion of the Bondiprospect in Texas. We now also have an option to drill the Coogee prospect, a28-62 Bcfe target close to the Bondi prospect, on the same increased terms.Following the drilling of the Bondi and Coogee prospects, the Company will earnthe right to participate on the basis of a 15% working interest in any prospectsto be drilled by Texon on an area of mutual interest covering approximately25km2. At the Bondi prospect, the operator has advised that Raun #1 reached a totaldepth of 12,500ft. The well found thin non-commercial gas sands in the targetWilcox section between 10,500 ft and the total depth of the well. As a resultthe well has been plugged back to a depth of 10,919ft in order evaluate twopotential gas bearing sands which together amount to a thickness of 50ft between7,050ft and 7,250 ft. The drilling rig will now be released and a smaller more cost effective rig willbe used to test these zones as soon as a suitable rig can be located. Elsewhere at the Eagle Oil Pool Development Project located in the San JoaquinBasin in California we have been investigating the alternatives for thisproject, including the possibility of a new horizontal completion. The timing offurther operations at Eagle remains unclear at this stage. Further updates willbe provided following developments. The Company has previously announced that the operator of the Glantal GasProject in Germany, Pannonian International Limited, a wholly-owned subsidiaryof Galaxy Energy Corp. (AMEX: GAX) confirmed that an application to extend theNeues Bergland Permit had been successful. The partners in this project,including Empyrean have been finalising preparations for further new seismic andalso further work on the existing seismic data with a view to establishing newlocations for drilling in 2008. Financials---------- During the six months to 30 September 2007, Project Margarita commencedproduction, with initial revenue of £198,265 being generated. It is anticipatedthat Empyrean will continue to receive a steady source of cash flow from thethree wells brought on line during the period. The Company made a loss after tax of £192,826 for the period. Explorationexpenditure of £1,066,731 for the six months has been capitalised, whichpredominately relates to exploration expenditure incurred in relation to thedrilling programmes being carried out at both the Sugarloaf prospect and ProjectMargarita. Board----- On 3 July 2007, Malcolm James stepped down as a non-executive Director of theCompany. I would like to take this opportunity to thank Mal for his contributionto the Company and we wish him well. Outlook------- The Company's operational focus has always been clear and defined: to financethe exploration and development of energy resource projects in geopoliticallystable environments. With this in mind we have focussed our efforts more recently on operations inthe United States, where energy prices have been strong and the projects we havechosen have not only been close to excellent existing hydrocarboninfrastructure, but they have all been projects with mature drill prospects.This has meant that we have been drilling targets within a very short time afterconcluding negotiations to acquire an interest in those projects. Where we havemade discoveries, we have been able to put those wells rapidly into productionand commence cash flow in a relatively short period of time. We will continue to seek out appropriate opportunities in countries with astable geopolitical environment and concentrate our efforts on deals that havemature drill targets close to existing infrastructure and high energy demandmarkets. During the period we have extended our portfolio of projects with theacquisition of the Bondi and Coogee prospects and at the same time have seenproduction commence at Margarita. Drilling at Sugarloaf shows real promise andwe eagerly await results on the testing of all these wells. We look forward to further developments and continued progress with our projectsin the months ahead with much confidence. Patrick CrossChairman11 December 2007 Independent Review Report to Empyrean Energy Plc Introduction------------ We have been instructed by Empyrean Energy Plc (the company) to review theinterim financial statements comprising the income statement, balance sheet,cash flow statement, statement of changes in equity and notes thereon and wehave read the other information contained in the interim report and consideredwhether it contains any apparent mis-statements or material inconsistencies withthe interim financial statements. This report is made solely to the Company in accordance with guidance containedin Bulletin 1999/4 "Review of interim financial information" issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities--------------------------- The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the Directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange Plc for companies trading securities on the AIM Marketwhich require that the half-yearly report be presented and prepared in a formconsistent with that which will be adopted in the company's annual accountshaving regard to the accounting standards applicable to such annual accounts. Review work performed--------------------- We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom by auditorsof fully listed companies. A review consists principally of making enquiries ofthe Directors and applying analytical procedures to the financial informationand underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly we do not express an auditopinion on the financial information. Review conclusion----------------- On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented in the interimfinancial statements for the period ended 30 September 2007. CHAPMAN DAVIS LLPChartered Accountants2 Chapel CourtLondon SE1 1HH11th December 2007 EMPYREAN ENERGY PLCINCOME STATEMENTFOR THE PERIOD ENDED 30 SEPTEMBER 2007 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Revenue 198 - - Cost of salesProduction costs (46) - - ----------- ----------- -----------Gross profit 152 - - Administrativeexpenses (447) (303) (866) ----------- ----------- -----------Operating loss (295) (303) (866) Interest receivable 102 39 75 ----------- ----------- -----------Loss on ordinaryactivities beforetaxation (193) (264) (791) Taxation credit on ordinary - - -activities ----------- ----------- -----------Loss for the financialperiod (193) (264) (791) Basic loss per shareexpressed in pence (0.39)p (0.75)p (2.1)p(please refer to Note 3) EMPYREAN ENERGY PLCBALANCE SHEETFOR THE PERIOD ENDED 30 SEPTEMBER 2007 6 months to 6 months to Year ended 30 September 2007 30 September 2006 31 March 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000Assets Non-current assetsIntangible assets 7,509 5,520 6,443Tangible assets 2 7 4 ----------- ----------- ----------- 7,511 5,527 6,447Current assetsOther receivables 1,589 326 237Cash 2,987 1,188 4,889 ----------- ----------- ----------- 4,576 1,514 5,126 ----------- ----------- -----------Total Assets 12,087 7,041 11,573Liabilities Current liabilitiesOther payables (128) (20) (27) ----------- ----------- ----------- Net current assets 4,448 1,496 5,099 ----------- ----------- ----------- Net assets 11,959 7,021 11,546 ----------- ----------- ----------- Shareholders' equityCalled up sharecapital 101 71 99Share premium account 12,816 7,756 12,486Other reserves 715 147 441Retained loss (1,673) (953) (1,480) ----------- ----------- -----------Total equity 11,959 7,021 11,546 EMPYREAN ENERGY PLCCASH FLOW STATEMENTFOR THE PERIOD ENDED 30 SEPTEMBER 2007 6 months to 6 months to Year ended 30 September 2007 30 September 2006 31 March 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash outflow fromoperating activities (1,282) (394) (644) Interest received 101 39 75 ----------- ----------- -----------Net cash inflow fromreturns on investments 101 39 75 Purchase of intangibleassets (1,066) (1,738) (2,583)Purchase of tangibleassets - (3) (3)Proceeds from sale ofintangible assets - - 3 ----------- ----------- -----------Net cash outflow fromcapital expenditure (1,066) (1,741) (2,583) ----------- ----------- -----------Net cash outflowbefore financing (2,247) (2,096) (3,152) Issue of ordinaryshare capital 332 94 5,095Share issue costs - (20) (264) ----------- ----------- -----------Net cash inflow fromfinancing 332 74 4,831 ----------- ----------- -----------Increase/(decrease) incash (1,915) (2,022) 1,679 ----------- ----------- ----------- EMPYREAN ENERGY PLCSTATEMENT OF CHANGES IN EQUITYFOR THE PERIOD ENDED 30 SEPTEMBER 2007 Called up Share Other Retained Total share capital premium Reserves Loss Shareholders Equity £'000 £'000 £'000 £'000 £'000 6 months ended 30September 2007As at 1 April2007 99 12,486 441 (1,480) 11,546Shares issuedduring theperiod 2 330 - - 332Share issue - - - -expenseEquity-settledshare-basedpayments - - 274 - 274Loss for theperiod - - - (193) (193) -------- --------- --------- -------- ---------Balance as at30 September2007 101 12,816 715 (1,673) 11,959 6 months ended 30September 2006As at 1 April2006 70 7,665 147 (689) 7,193Shares issuedduring theperiod 1 93 - - 94Share issueexpense - (2) - - (2)Loss for theperiod - - - (264) (264) -------- --------- --------- -------- ---------Balance as at30 September2006 71 7,756 147 (953) (7,021) Year ending 31March 2007As at 1 April2006 70 7,665 147 (689) 7,193Shares issuedduring theperiod 29 5,066 - - 5,095Share issueexpense - (245) - - (245)Equity-settledshare-basedpayments - - 294 - 294Loss for theperiod (791) (791) -------- --------- --------- -------- ---------Balance as at31 March 2007 99 12,486 441 (1,480) 11,546 EMPYREAN ENERGY PLCNOTES TO THE INTERIM FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 SEPTEMBER 2007 1. Basis of preparation The interim financial statements do not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The interim financialstatements have been prepared on a going concern basis in accordance withInternational Financial Reporting Standards (IFRS) and comply with IAS 34. Theaccounting policies applied in preparing the interim financial statements areconsistent with those that have been adopted in the Company's 2007 annualfinancial statements. The interim financial statements for the 6 months ended 30 September 2007 andthe 6 months ended 30 September 2006 have not been audited. Revenue Recognition------------------- Revenues from crude oil and natural gas sales are recognised when the oil andgas has been lifted and the risk of loss transferred to a third-party purchaser.The Company uses the entitlement method to account for its turnover from salesof oil and gas production. 2. Segmental Analysis During the period the Company received revenue from oil and gas sales in theUnited States, after three wells at the Margarita prospect were brought intoproduction. The Company also incurred direct expenditure on generating therevenue which is shown as direct cost of goods sold. The Company's headquarters remains in the United Kingdom where all interestrevenue is generated and corporate expenditure incurred. Capitalised exploration, evaluation and development expenditure can be analysedby the following geographical segments: 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Continental Europe 2,691 2,559 2,644 North America 4,819 2,961 3,799 ----------- ----------- --------- 7,509 5,520 6,443 3. Loss per share The calculation of loss per share is based on the loss after taxation divided bythe weighted average number of shares in issue during the period: 6 months to 6 months to Year ended 30 September 30 September 31 March 2007 2007 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net loss after taxation (£'000) (193) (264) (791) Weighted average number of ordinary shares used in calculating basic earnings per share 49,918,464 35,252,083 37,833,661 Basic loss per share (expressed in pence) (0.39)p (0.75)p (2.1)p Weighted average number of Ordinary shares of £0.002 in issue inclusive of outstanding options 52,436,272 36,594,799 39,006,994 As the inclusion of the potential ordinary shares would result in a decrease inthe loss per share they are considered to be antidilutive and, as such, adiluted loss per share is not included. 4. Called Up Share Capital The authorised share capital of the Company and the called up and fully paidamounts at 30 September 2007 were as follows: £Authorised1,000,000,000 ordinary shares of 0.2p each 2,000,000 Issued and fully paid50,546,291 ordinary shares of 0.2p each 101,093 Share optionsThe following equity instruments have been issued by the Company and have notbeen exercised at 30 September 2007: Number of ordinary shares Exercise Expires PriceIncentive options 1,250,000 35 pence 31 December 2008Incentive options 250,000 40 pence 31 December 2008Incentive options 2,250,000 50 pence 20 October 2009Incentive options 2,450,000 50 pence 28 June 2010 For further information: Jonathan Charles / Ed PortmanConduit PRTel: +44 (0) 207 429 6611 / +44 (0) 7791 892 509 Rod Venables / Cecil JordaanHB CorporateTel: +44(0) 207 510 8600 Empyrean Energy plcTel : +44(0) 207 182 1746 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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