News & Analysis

Empyrean Energy Plc (EME: AIM) review and analysis

By PSQ Analytics

Empyrean Energy Plc (Empyrean) was established with the aim to identify, analyse and finance rewarding projects in the fields of exploration, development and production of energy resources around the world. It primarily focuses on traditional Oil & Gas sector exploration and production activities in geopolitically stable environments like the US and Germany. Empyrean currently generates revenues from oil and gas sales from two of its three prospects in Texas, US. The company was incorporated in the UK in March 2005 and was listed on the AIM in July 2005. The company’s main assets are as follows:

– Sugarloaf Hosston Project (Texas, US): Wells are located in Blocks A and B. Empyrean has a 6% pre-farm-out working interest across the entire Block B and a 7.5% working interest in Block A wells. Farm-out of half the company's holdings in Block B has freed Empyrean to focus on other projects. A total of 5 wells have been drilled on Block A of the Sugarloaf Hosston prospect.

– Riverbend Project (Texas, US): Empyrean will earn a 10% working interest in this project from Krescent Energy by participating in the re-entry, drilling and testing activities in the Quinn 3-H well. The Riverbend project located in the Tyler and Jasper counties has an estimated recoverable reserve potential of 800 bcf of gas equivalent.

– Eagle Oil Pool Development Project (California, US): Empyrean has a 48.5% working interest in this project. Following suspension of the Eagle North-1 well, which had reported a successful drilling attempt, no new wells have been drilled. However, the company intends to have a new well drilled as soon as possible on the Eagle prospect.

– Hercules and Aquarius Prospects (Texas, US): In Dec 2009, Empyrean acquired a 10% working interest under a participation agreement with Krescent Energy, in each of the Hercules and Aquarius Prospects in Tyler County, Texas. The company’s other assets are as follows:

– Margarita Project (Gulf Coast, Texas, US): Empyrean has a 44% working interest. Of the 6 wells drilled here, 3 have been commercially successful. Currently 1 well is producing gas while the other 2 have been suspended indefinitely.

– Glantal Gas Project (Germany): Empyrean holds a 40% working interest in this prospect. Following the unsuccessful drilling and consequent plugging and abandonment of the Glantal-1 well, no new drilling activity will be undertaken on the prospect until the risk of volcanic activity is minimized.

Key recent news

03 March 2010: Empyrean announced spudding of a 2nd farm-in well in the Sugarloaf prospect on 26 February 2010.

23 February 2010: Empyrean announced commencement of spudding at the Hercules Prospect on 20 February 2010, which has a mean gross un-risked resource potential of 21.4 bcf of gas equivalent.

04 December 2009: Empyrean released half yearly results for the period ending 30 September 2009. Revenues reported a 68% y-o-y decline to GBP182,000, while operating loss increased 8.6% y-o-y to GBP518,000. Cash and cash equivalents of GBP906,000, although reduced y-o-y, improved significantly from GBP291,000 as of 31 March 2009.