6th Oct 2005 09:33
Empyrean Energy PLC06 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 riskregions, today announces that it will participate in the Eagle Oil PoolDevelopment Project in the San Joaquin Basin, California, USA ("the Project")following a farm-in agreement with Australian Stock Exchange quoted VictoriaPetroleum NL ("Vicpet"). This new project is to be undertaken in addition to theCompany's Glantal natural gas project in Germany. The San Joaquin Basin in southern California is a proven oil and gas field thathas produced in excess of 12 billion barrels of oil and 11 trillion cubic feetof gas. Drilling at the Project, scheduled to commence in November 2005, willstart with the Eagle North-1 appraisal well which is to be drilled up dip from aprevious discovery well. An independent expert has estimated that the Eagle OilPool Development Project could contain a P50 (probability 50% unrisked) reserveof 7.1 million barrels of recoverable oil and 12.3 billion cubic feet ofassociated gas, with the P10 assessment estimated at 22.7 million barrels of oiland 22.7 billion cubic feet of associated gas. The Project is astructural-stratigraphic trap play targeting the Eocene aged Gatchell Sandformation. Vicpet's wholly owned subsidiary Victoria Petroleum USA Inc is the operator forthe Eagle North-1 well. The initial phase will take approximately 14 days tocomplete and following initial success the casing and production testing of thewell 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 millioncubic feet of gas per day from the target formation. A subsequent re-entry andhorizontal well in 2001, the Eagle-1 well, encountered approximately 90 metresof gross oil target sands however technical, drill related, problems at the timeresulted in the drill pipe becoming stuck in the well bore preventing productiontesting The well bore was lost and operations were suspended. Subsequentdrilling in the area has resolved the drill related issues and a new seismicline acquired in 2004 has further defined the updip extent of the Eagle Oil PoolDevelopment Project and the Eagle North-1 appraisal well drilling location. 2005+ Development Programme The Eagle North-1 appraisal well will be drilled approximately 1 kilometrenorthwest of the Eagle-1 surface location and vertically drilled to its targetdepth of 4,200 metres. Upon confirmation of the presence of oil in the targetGatchell Sandstone the well will be cased and production tested for five days. A300 metre horizontal lateral well will then be drilled and completed forproduction in the target Gatchell Sandstone oil reservoir. In the event of asuccessful horizontal well completion, the Operator anticipates flow rates of upto 1000 barrels of oil per day . Farm-in Agreement Empyrean can choose to earn a 38.5% interest in the Project by fundingapproximately 55% of the costs of drilling, casing and production testingcarried 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 tocontributing at its working interest of 38.5% for that stage. Empyrean will alsopay a prospect and land fee of US$100,000 to Vicpet upon the signing of formalfarm-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 toundertake both the Glantal and Eagle Oil Pool Development Project explorationprograms 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 theEagle Oil Pool Development Project and Eagle North-1 (where appropriate throughthe 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 theirexisting working interest (previously 56.10% and 3.90% respectively) to allowEmpyrean to earn in and other participants are contributing based on theirexisting interest in the Eagle Oil Pool Development. Commenting on the agreement today Empyrean executive director Chris Lambertsaid: "With the current price of oil around US$60 per barrel and the price ofgas in Southern California in excess of US$10 per thousand cubic feet asuccessful appraisal well and follow on development drilling would provide asignificant cash flow for Empyrean. Vicpet and the other participants have laidthe groundwork for a reduced risk entry to the Eagle Oil Pool DevelopmentProject allowing Empyrean to further develop a portfolio of energy assetsoperating in geopolitically stable enviroments". For further information including full farm-in details for the Eagle Oil PoolDevelopment Project Laurence Read/Amanda HarrisConduit PRTel: +44 (0) 207 618 8760Mob: +44 (0) 7979 955 923 David NewtonHB-CorporateTel: +44 (0) 207 510 8600 Chris LambertEmpyrean Energy plcTel : +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% workinginterest in the Glantal project on the Neues Bergland permit, a substantialfractured reservoir natural gas exploration project in Germany. The highly prospective area of the Neues Bergland permit is located close toFrankfurt in Germany. The permit contains the Pfalzer Anticline which is a 515square kilometre structure containing deep anthracitic coal beds overlaid byshale and sediment. The coal beds are too deep to mine economically but havebeen estimated by the independent expert to have generated many hundred trillioncubic feet of gas, with a recoverable gas potential of up to 6.2 trillion cubicfeet in the first drilling prospect alone. An independent expert has calculatedthe smallest of these potential pay-zones has the potential to hold arecoverable 1.2 trillion cubic feet of gas. First drilling is due to commence inQ4 2005. Following a review of the results, a decision will be made by theDirectors as to the commerciality of the Glantal prospect. Seal integrity willbe of the highest importance. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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