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

Empyrean EnergyAnnouncement

19/04/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220419:nRSS5567Ia&default-theme=true

RNS Number : 5567I  Empyrean Energy PLC  19 April 2022

This announcement contains inside information

 

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

 

Empyrean Energy plc

 

Block 29/11, China - Elevated methane (C1) recorded in interpreted "Gas Cloud"
zone

 

19 April 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 drilling at the Jade prospect at its 100%
owned Block 29/11 permit, offshore China:

 

HIGHLIGHTS

 

·      LH 17-2-1 well at the Jade prospect drilled 12-1/4" section to
2150 metres Measured Depth ("MD")

o  Elevated methane (C1) ranging from 227ppm to 15440 ppm was recorded while
drilling 12-1/4" section.

o  Higher values of methane (C1) ranging from 4190 ppm to 15440 ppm were
recorded in the pre-drill interpreted "gas cloud" zone between 1550 metres to
1800 metres MD.

o  CNOOC has confirmed comparable methane ranges in their oil discovery well
LH 23-1-1d that is located 10km Southwest of the Jade prospect which also had
a "gas cloud" feature

·      Drilling results have validated the pre-drill interpretation of
seismic data including the presence of gas clouds over the Jade as well as
Topaz prospects

·      Based on the results thus far, Empyrean has upgraded its internal
Geological Chance of Success ("GCoS") over the Jade prospect from 41% to 65%
and Topaz prospect from 35% to 47%

·      Current operations are the installation of 9-5/8" casing before
drilling 8-1/2" hole to the Total Depth ("TD") of 2860 metres MD

 

 

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.

 

Progress

 

The NH9 Semisubmersible drilling rig made excellent progress at LH 17-2-1 with
the drilling of the 12-1/4" section to 2150 metres MD and current operations
are preparations for running 9-5/8" casing.

 

During drilling of the 12-1/4" section, elevated methane (C1) ranging from 227
parts per million ("ppm") to 15440 ppm was recorded at the gas chromatograph
during mudlogging. Negligible C2 and no C3 components were recorded. Higher
values of methane (C1) ranging from 4190 ppm to 15440 ppm were recorded in the
zone between 1550 metres to 1800 metres MD which was interpreted pre-drill to
be a "gas cloud" zone.

 

During the drilling of this section, EME was in regular communication with
CNOOC to fully understand and cross check the significance of elevated methane
(C1) against CNOOC discovery wells. CNOOC has confirmed comparable methane
ranges in their oil discovery well LH 23-1-1d that is located 10km Southwest
of the Jade prospect. LH 23-1-1d also exhibited a gas cloud on seismic data.
The elevated methane readings to date have validated the Company's pre-drill
interpretation of seismic data, including the presence of a gas cloud in
overburden above the Jade prospect, a feature also present over the Topaz
prospect. It is also the case that two dry wells drilled by AMOCO in the 1990s
on the eastern flank of Empyrean's Block 29/11 permit area did not display any
gas clouds nor did they have elevated methane (C1) whilst drilling the same
geological formation.

 

Based on the latest elevated methane (C1) readings, Empyrean has upgraded its
internal Geological Chance of Success ("GCoS") for the Jade prospect from 41%
to 65%. It has also upgraded the GCoS for its Topaz prospect from 35% to 47%.

 

 Prospect  GCoS Factor (after gas cloud study) - pre drill             GCoS
           Trap/ Seal     Reservoir      Source         Timing
 Jade      0.9            0.95           0.68           0.7            41%
 Topaz     0.9            0.85           0.7            0.65           35%

 Prospect  GCoS Factor (after elevated C1) - during drilling           GCoS
           Trap/ Seal     Reservoir      Source         Timing
 Jade      0.9            0.95           0.95           0.8            65%
 Topaz     0.9            0.85           0.95           0.65           47%

 

 

Forward plan

 

Following the setting of 9-5/8" casing, the 8-1/2" hole will be drilled to the
TD of 2860 metres MD.

 

Well Objective

The 2021 drilling campaign is targeting a world class conventional oil target
in the Jade prospect, to which Gaffney Cline & Associates ("GCA") assigned
a 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%. Following the
elevated methane readings whilst drilling through the "gas cloud" zone, the
internal Company GCoS is now 65%.

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 objective of the Jade well is to test for hydrocarbons down to TD of 2860
metres MD.

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:

"The first technical objective of the Jade well has now been drilled. The
validation of "gas clouds" through the presence of elevated methane levels in
exactly the depth zone we interpreted on the excellent quality seismic data
proves that the gas clouds exist and supports the Company's pre-drill
interpretation that the methane is probably coming from light oil in the
anticipated reservoir section. This is a major box now ticked, if we are to
make a light oil discovery at Jade. The comparisons to nearby CNOOC discovery
wells look very compelling. Drilling operations continue to run smoothly and
safely, with progress to date right on schedule".

 

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) 20 7297 8900
 Pete Lynch
 Pearl Kellie

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

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  DRLILMATMTTBMTT