REG - Empyrean Energy PLC - Block 29/11, China – Jade drilling update

Empyrean EnergyAnnouncement

11/03/2022 07:45

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RNS Number : 4831E  Empyrean Energy PLC  11 March 2022

This announcement contains inside information

 

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

 

Empyrean Energy plc

 

Block 29/11, China - Jade drilling update

 

11 March 2022

 

Empyrean Energy plc ("Empyrean" or the "Company"), the oil and gas development
company with interests in China, Indonesia and the United States, is pleased
to provide the following update on preparations to drill the Jade prospect at
its 100% owned Block 29/11 permit, offshore China:

 

HIGHLIGHTS

 

·      Empyrean has secured the China Oilfield Services Limited ("COSL")
owned NH9 drill rig for drilling the Jade well

·      NH9 is currently being used to drill a well for China National
Offshore Oil Company ("CNOOC")

·      COSL will drill the Jade well immediately following completion of
operations at the current CNOOC well

·      Empyrean anticipates that NH9 will become available by the end of
March if the current well does not encounter testable hydrocarbons or
approximately 2 weeks later if a testing program is required

·      Following a safety inspection, there would be approximately 2
days mobilisation to the Jade well location from the current CNOOC well
location

·      At this stage Jade will spud early April or mid April depending
on results of the current CNOOC well

 

Empyrean is the operator of Block 29/11 in China and has 100% working interest
during the exploration phase. In the event of a commercial discovery, its
partner, China National Offshore Oil Company ("CNOOC"), may assume a 51%
participating interest in the development and production phase.

 

Empyrean has been in discussions with COSL and CNOOC to establish rig
availability and a 'rig slot' to drill the Jade well now that the well site
survey is complete over the Jade well location. CNOOC has the NH9 well under
contract with COSL for approximately the next 12 months. CNOOC has created a
slot for Empyrean to drill the Jade well in it's schedule, immediately
following the well currently being drilled using NH9. The rig is anticipated
to become available late March or mid April depending on whether the current
well encounters testable hydrocarbons.

 

CNOOC EnerTech Drilling and Production Co ("CNOOC EnerTech") has been
contracted to provide comprehensive pre-drilling, drilling and testing
services to Empyrean for the Jade well. CNOOC EnerTech has a wealth of global
experience, but more importantly has vast local hands-on experience managing
the drilling of wells within the Pearl River Mouth Basin where the Block 29/11
permit sits. The Empyrean/ CNOOC EnerTech team will be present both onshore,
and offshore on the rig, during the drilling of Jade. Offshore, the team will
consist of a hand picked drilling supervisor, well site geologist, mud logger
and an electric logging expert.

 

Following the recently completed well site survey over the Jade drilling
location, Empyrean is expecting to receive the final survey report within the
next few days. It is then anticipated that the final permit to drill Jade will
be applied for and received within approximately 1 week.

 

Empyrean and the CNOOC EnerTech team are taking every precaution to plan for a
safe drilling campaign at Jade. The COSL owned NH9 rig and its drilling team
are 'drill fit' and at this stage it is envisaged that the NH9 rig will be
mobilised straight to the Jade well location from its current position without
the need to go back to port.

 

From the spud date, now anticipated to be early April to mid-April, the Jade
well is anticipated to take approximately 26 days to drill to Total Depth on a
trouble free basis. There are no overly challenging drilling zones anticipated
with the Jade well design and program. If the Jade well intercepts a
hydrocarbon zone, as anticipated, then testing is planned to take
approximately a further 2 weeks.

 

Further, more accurate, anticipated rig  mobilisation and a spud date will be
announced along with further drilling details in due course.

 

The Jade Prospect

The 2021 drilling campaign is targeting a world class conventional oil target
in the Jade Prospect, to which Gaffney Cline & Associates ("GCA") assigned
a Geological Chance of Success ("GCoS") of 32%. Subsequent to this independent
assessment, the Company completed a gas cloud study and post stack seismic
inversion study that it believes further mitigates risk and increases the GCoS
to 41%.

The Jade Prospect has a GCA audited mean in place potential of 225 MMbbl and a
P10 in place upside of 395 MMbbl. Four recent nearby discoveries by CNOOC
immediately to the West of the Jade Prospect are filled to their P10 potential
or better. All four CNOOC discoveries have gas clouds showing in the
overburden on seismic.

Empyrean's excellent quality 3D seismic indicates that there is a classic
"fill to spill" geological setup in the basin, and a robust regional seal,
that provides the Jade and Topaz Prospects with a very real possibility of
being filled in a similar fashion to nearby discoveries. The Jade and Topaz
prospects both have gas clouds, similar to nearby discoveries, in the
overburden on 3D seismic. Dry wells nearby do not have gas clouds. The Jade
Prospect is the first of the three identified prospects within Block 29/11,
which also contains the Topaz and Pearl prospects. The combined audited mean
in place potential of all three prospects is 884 MMbbl and a P10 in place
upside of 1,588 MMbbl. The post stack seismic inversion study showed Jade and
Topaz both have the potential for excellent carbonate buildup reservoir
quality with excellent porosity and permeability. Any oil discovered is
expected to be light oil in the 38-41 API range, similar to nearby
discoveries. These attributes combined with the potential for exceptional
natural reservoir drive supports the potential for excellent recovery rates.

The information contained in this announcement has been reviewed by Empyrean's
Executive Technical director, Gaz Bisht, who has over 31 years' experience as
a hydrocarbon geologist and geoscientist.

Empyrean CEO, Tom Kelly, stated:

"After nearly 6 years of early stage exploration, including modern 3D seismic
and rigorous geological studies we are finally ready to drill the exciting
Jade well. We are literally weeks away from testing the 225-395 mmbbl light
oil target at Jade. In terms of impact - and by that I mean the potential
impact a discovery, within the 225-395 mmbbl range, would have in the success
case upon our current market capitalisation - Jade is one of the most exciting
wells to be drilled globally in 2022. The challenges that have been overcome
in order to get to this stage and be ready to drill are many and this
achievement is a credit to Empyrean's small team and a great reflection of the
excellent teamwork, expertise, professionalism and cooperation carried out
between the Company, its partner CNOOC, and its technical service providers
CNOOC EnerTech and COSL. We are particularly appreciative of CNOOC
facilitating a rig slot for Empyrean to drill Jade using the NH9 rig. Every
effort and precaution is being taken to drill the Jade well safely. We now
need to let the drill bit do the talking! We look forward to providing our
shareholders with further updates as we get even closer to spudding the
exciting Jade well."

 

For further information please contact the following:

 

   Empyrean Energy plc
   Tom Kelly                                              Tel: +61 6146 5325

   Cenkos Securities plc (Nominated Advisor and Broker)
   Neil McDonald                                          Tel: +44 (0) 131 220 9771
   Pete Lynch                                             Tel: +44 (0) 131 220 9772

  First Equity Limited (Joint Broker)
   Jason Robertson                       Tel: +44 (0) 20 7330 1883

 

   First Equity Limited (Joint Broker)
   Jason Robertson                       Tel: +44 (0) 20 7330 1883

 

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