REG - Empyrean Energy PLC - Interim Results
18/12/2023 11:45
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RNS Number : 1640X Empyrean Energy PLC 18 December 2023
Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil & Gas
18 December 2023
Empyrean Energy PLC ("Empyrean" or the "Company")
Interim Results
Empyrean Energy (EME: AIM), the oil and gas development company with interests
in China, Indonesia and the United States, is pleased to provide its Interim
Report for the six months ended 30 September 2023.
Highlights
Reporting period
Block 29/11, Pearl River Mouth Basin, China (EME 100%)
· Joint regional oil migration study with CNOOC team conducted to map
oil migration from the proven source rock south-west of Block 29/11 that
charges the four CNOOC oil discoveries (immediately west of Block 29/11 and
Topaz) and extends this into Block 29/11 to map these potential migration
pathways to Topaz. Comprehensive study also included potential migration
pathways from a new source/kitchen identified by Empyrean 3D data.
· Simultaneous 3D seismic inversion project being conducted in two
phases to firstly assess whether light oil pay in the target reservoir can be
discriminated from a water bearing reservoir by seismic inversion and secondly
to invert the entire 3D seismic data to generate several datasets for the
elastic properties. These datasets will be analysed for high grading the Topaz
prospect.
· Drill Preparation of the Topaz prospect is ongoing such that should
funding become available, operations can commence within the favourable
weather window.
Duyung PSC Project, Indonesia (EME 8.5%)
· Key Terms agreed for Long-Term Gas Sales Agreement between Conrad
subsidiary, WNEL, operator of the Duyung PSC, and Sembcorp Gas Pte Ltd. The
parties are in the process of finalising a definitive gas sales agreement
· Conrad engaged a global investment bank to lead a farm-down process
for the divestment of a portion of its interest in the Duyung Production
Sharing Contract. Bids are expected to be received by the end of CY 2023.
· Mako is one of the largest gas discoveries in the West Natuna Sea
and the largest undeveloped resource in the area.
Corporate
· Placement to raise US$1.88 million (£1.52 million) completed in
May 2023.
· Convertible Loan Note Debt restructured to reduce face value of the
note and secure extended moratorium on interest.
For further information please visit www.empyreanenergy.com
(http://www.empyreanenergy.com/) or contact the following:
Empyrean Energy plc
Tom Kelly Tel: +61 8 6146 5325
Cavendish Capital Markets Limited (Nominated Advisor and Broker)
Neil McDonald Tel: +44 (0) 20 7397 8900
Pearl Kellie
First Equity Limited (Joint Broker)
Jason Robertson Tel: +44 (0) 20 7330 1883
Chairman's Statement
In China, planning and further de-risking work is currently being finalised
with the aim to ultimately drill the Topaz prospect in 2024. These activities,
largely focused on oil migration into Topaz, are expected to be completed in
the immediate future.
In Indonesia, Empyrean was very pleased to see agreement reached between the
operator of Mako and a major gas utility in September and also that the
agreement was endorsed by the Government of Indonesia's petroleum upstream
regulator. The focus of the parties is now on converting this significant
milestone into a binding gas sales agreement.
The existing terms reached will be welcomed by those parties currently
participating in the sell down process to fund the development of the Mako gas
field and Empyrean expects an update shortly on this process. The macro
environment for gas in South-East Asia, and Singapore in particular, is
expected to continue trending favourably with the region transitioning from
coal to gas as the preferred energy source.
On the corporate front, the Company successfully raised funds in May and was
pleased to renegotiate the Convertible Note at the same time. The Company
continues to assess other financing and strategic alternatives to provide it
with additional working capital as and when required, including through the
sale or partial sale of existing assets, through joint ventures of existing
assets, as well as further equity funding.
I would like to thank the Board, management and staff for their perseverance
during the year and we all now eagerly await good news from Indonesia before
our attention turns to the targeted drilling of the Topaz Prospect in China.
Patrick Cross
Non-Executive Chairman
18 December 2023
Operational Review
China Block 29/11 Project (100% WI)
Background
Block 29/11 is located in the prolific Pearl River Mouth Basin, offshore China
approximately 200km Southeast of Hong Kong. The acquisition of this block
heralded a new phase for Empyrean when it became an operator with 100% of the
exploration rights of the permit during the exploration phase of the project.
In the event of a commercial discovery, CNOOC will have a back in right to 51%
of the permit.
Jade Prospect Drill Program
In April 2022, the Company commenced the drilling of the LH 17-2-1 well to
test the first of the three prospects noted above, the Jade Prospect in Block
29/11, offshore China.
On 10 April 2022 LH 17-2-1 spudded and on 27 April 2022 reached final total
depth of 2,849 metres in Zhuhai Sandstone formation. The interpretation from
LWD and mud logging data indicated no oil pay in the target reservoir which
was confirmed by wireline logs. The Company successfully operated an offshore
exploration and drilling program without any operational or environmental
issues.
Post Jade Well Analysis and Implications for Topaz Prospect
Following the Jade drilling program, comprehensive post well analysis by
Empyrean and CNOOC confirmed the Jade well intersected carbonate reservoir as
prognosed with better parameters than pre-drill estimates with total thickness
of 292m and porosity in the range of 25 to 27%. In addition, the Jade well
penetrated thick and effective regional seal facies and the reservoir top was
encountered within the depth conversion range. These parameters have now been
more confidently mapped across Empyrean's 3D data set.
The Jade well failed due to lack of access to effective migration pathways.
Given oil migration to the Topaz Prospect is now identified as the key risk,
the Company's pre drill exploration efforts are focusing on mitigating this
risk. Reservoir, seal and trap validity of the Topaz prospect have been
enhanced by the Jade well data.
Entering of Second Phase of Exploration
Being able to combine excellent quality 3D seismic data with the confirmed
well data and post well analysis has resulted in the improved validity of the
Topaz prospect as a robust and large drilling target (approximately 891
million barrels in place (P10) per below table). Based on post drill
technical evaluation, and CNOOC-assisted migration pathways assessment,
Empyrean decided to enter the second phase of exploration and drill the larger
Topaz prospect, which is targeted to occur in 2024.
Block 29/11 Oil in place (MMbbl) audited by GCA
Prospect P90 P50 P10 Mean GCoS
Topaz 211 434 891 506 30%
Pearl 38 121 302 153 15%
Current Activities
Empyrean is conducting two further key technical projects that capitalise on
the excellent quality 3D seismic acquired by the Company over the permit,
shared regional 3D seismic that CNOOC has and additional physical well data of
both Empyrean and CNOOC.
These projects are designed to help address and mitigate the remaining primary
geological risk at Topaz - oil migration into the Topaz trap.
Firstly, joint with CNOOC, Empyrean is completing a regional oil migration
study. CNOOC bring excellence in basin modelling expertise along with crucial
regional data that augments the data Empyrean has on Block 29/11. The regional
data includes temperature, pressure, timing of oil maturation, and successful
oil migration pathway mapping. The project will map oil migration from the
proven source rock south west of Block 29/11 that charges the four CNOOC oil
discoveries (immediately west of Block 29/11 and Topaz) and extend this into
Block 29/11 and map these migration pathways to Topaz.
In addition, similar work will be conducted from a new source/kitchen located
entirely within Block 29/11 and oil migration pathways will be mapped to
Topaz. This project is expected to be completed in the immediate future.
Secondly, Empyrean is conducting a 3D simultaneous seismic inversion project
focussing on Topaz. This project is utilising the oil properties, reservoir
temperature, reservoir pressure and water salinity data from CNOOC oil
discovery wells combined with reservoir porosity and mineralogical data from
Empyrean well logs and core to maximise the effectiveness of the inversion
project outcomes.
This project is being conducted in two phases. The aim of Phase I is to assess
whether an oil bearing reservoir case can be distinguished from water bearing
reservoir in the elastic property domain of seismic inversion. Phase 2
involves inverting the entire 3D seismic data and will generate several
datasets for the elastic properties. These datasets will be analysed for high
grading the Topaz prospect.
The 3D seismic inversion project is expected to be completed in the immediate
future.
Cautionary Statement: The volumes presented in this announcement are STOIIP
estimates only. A recovery factor needs to be applied to the undiscovered
STOIIP estimates based on the application of a future development project. The
subsequent estimates, post the application of a recovery factor, will have
both an associated risk of discovery and a risk of development. Further
exploration, appraisal and evaluation is required to determine the existence
of a significant quantity of potentially movable hydrocarbons.
Duyung PSC, Indonesia (8.5% WI)
Background
In April 2017, Empyrean acquired a 10% shareholding in WNEL from Conrad
Petroleum (now Conrad Asia Energy Ltd), which held a 100% Participating
Interest in the Duyung Production Sharing Contract ("Duyung PSC") in offshore
Indonesia and is the operator of the Duyung PSC. The Duyung PSC covers an
offshore permit of approximately 1,100km2 in the prolific West Natuna Basin.
The main asset in the permit is the Mako shallow gas field that was discovered
in 2017, and comprehensively appraised in 2019.
In early 2019, both the operator, Conrad, and Empyrean divested part of their
interest in the Duyung PSC to AIM-listed Coro Energy Plc. Following the
transaction, Empyrean's interest reduced from 10% to 8.5% interest in May
2020, having received cash and shares from Coro.
During October and November 2019, a highly successful appraisal drilling
campaign was conducted in the Duyung PSC. The appraisal wells confirmed the
field-wide presence of excellent quality gas in the intra-Muda reservoir sands
of the Mako Gas Field.
Revised Plan of Development
In September 2022, Empyrean announced that the partners in the Duyung PSC have
approved the revised PoD and have secured alignment with SKK Migas on the
plan. The PoD was then submitted to the Indonesian Ministry of Energy and
Mineral Resources for approval, which was duly received in November 2022,
marking a major milestone on the pathway to developing this significant
pipeline quality methane gas resource. This allowed the operator Conrad to
focus on its stated objective of working with the Government of Indonesia to
complete GSA negotiations at the earliest opportunity.
The revised Mako PoD is based on field Contingent Resources of 297 billion
cubic feet (net attributable to 100% of the Duyung PSC Joint Venture) and a
daily production of 120 MMscf/d, consistent with the GCA competent persons
report dated 26 August 2022, details of which were also announced by the
Company on 9 September 2022. The Mako Gas Project resource is currently the
largest undeveloped gas field in South Natuna Sea.
Current Activities
In September 2023 Empyrean announced that Conrads wholly owned subsidiary,
West Natuna Exploration Ltd ("WNEL") has signed non-binding key terms with
Sembcorp Gas Pte Ltd, a Singapore based major gas buyer, that have been
endorsed by SKK Migas - the petroleum upstream regulator in Indonesia ("SKK
Migas"), for a first long-term gas sales agreement for the Mako gas field. The
Terms Agreement for the supply of gas from the Natuna Sea underpins the
commercial development of the Mako gas field providing secure and reliable gas
that is less carbon intensive than LNG. The key terms relate to approved gas
production from Mako commencing in 2025 until the end of the Duyung PSC in
2037 for a total sales gas volume (100%) of c 293 Bcf with potential to
increase to c 392 Bcf (100%). Gas sales will be priced against Brent oil.
The joint venture is now focused on finalising a gas sales agreement.
Conrad continues to advance the sell down process with a global investment
bank in order to fund the development of Mako. Bids are expected to be
received by the end of calendar year 2023.
The Mako Gas Field is located close to the West Natuna pipeline system and gas
from the field can be marketed to buyers in both Indonesia and in Singapore.
Multi Project Farm-in in Sacramento Basin, California (25%-30% WI)
There were no significant activities conducted during the year however the
Company will continue to work with its joint venture partners in reviewing and
assessing any further technical and commercial opportunities as they relate to
the project.
The information contained in this report was completed and reviewed by the
Company's Executive Director (Technical), Mr Gajendra (Gaz) Bisht, who has
over 34 years' experience as a petroleum geoscientist.
Definitions
2C: Contingent resources are quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations by application of
development projects, but which are not currently considered to be
commercially recoverable. The range of uncertainty is expressed as 1C (low),
2C (best) and 3C (high).
Bcf: Billions of cubic feet
MMbbl: Million Barrels of Oil
*Cautionary Statement: The estimated quantities of oil that may potentially be
recovered by the application of a future development project relates to
undiscovered accumulations. These estimates have both an associated risk of
discovery and a risk of development. Further exploration, appraisal and
evaluation is required to determine the existence of a significant quantity of
potentially movable hydrocarbons.
Gajendra (Gaz) Bisht M.Sc. (Tech) in Applied Geology
Executive Director (Technical)
18 December 2023
Statement of Comprehensive Income
For the Period Ended 30 September 2023
6 Months to 30 September (unaudited) Year Ended 31 March (audited)
2023 2022 2023
Notes US$'000 US$'000 US$'000
Revenue - - -
Administrative expenditure
Administrative expenses (233) (201) (382)
Compliance fees (76) (121) (263)
Directors' remuneration (197) (186) (362)
Foreign exchange differences 52 388 197
Impairment - exploration and evaluation assets 3 (2) (22,097) (17,030)
Total administrative expenditure (456) (22,217) (17,840)
Operating loss (456) (22,217) (17,840)
Finance income/(expense) 20 (1,888) (2,955)
Loss from continuing operations before taxation (436) (24,105) (20,795)
Tax expense in current period (1) (1) (1)
Loss from continuing operations after taxation (437) (24,106) (20,796)
Total comprehensive loss for the year (437) (24,106) (20,796)
Loss per share from continuing operations (expressed in cents)
- Basic 2 (0.06)c (3.22)c (2.71)c
- Diluted 2 (0.06)c (3.22)c (2.71)c
The accompanying accounting policies and notes form an integral part of these
financial statements.
Statement of Financial Position
As at 30 September 2023
6 Months to 30 September (unaudited) Year Ended 31 March (audited)
2023 2022 2023
Notes US$'000 US$'000 US$'000
Assets
Non-Current Assets
Exploration and evaluation assets 3 11,181 4,417 10,635
Total non-current assets 11,181 4,417 10,635
Current Assets
Trade and other receivables 24 50 38
Cash and cash equivalents 636 800 83
Total current assets 660 850 121
Liabilities
Current Liabilities
Trade and other payables 2,203 2,160 4,224
Provisions 159 140 159
Convertible loan notes 4 5,621 3,258 4,076
Derivative financial liabilities - 722 -
Total current liabilities 7,983 6,280 8,459
Net Current Liabilities (7,323) (5,430) (8,338)
Net Assets/(Liabilities) 3,858 (1,013) 2,297
Shareholders' Equity
Share capital 5 2,664 2,170 2,170
Share premium reserve 46,744 45,319 45,319
Warrant and share based payment reserve 79 598 73
Retained losses (45,629) (49,100) (45,265)
Total Equity 3,858 (1,013) 2,297
The accompanying accounting policies and notes form an integral part of these
financial statements.
Statement of Cash Flows
For the Period Ended 30 September 2023
6 Months to 30 September (unaudited) Year Ended 31 March (audited)
2023 2022 2023
Notes US$'000 US$'000 US$'000
Operating Activities
Payments for operating activities (433) (591) (1,126)
Net cash outflow from operating activities (433) (591) (1,126)
Investing Activities
Payments for exploration and evaluation (860) (1,045) (1,227)
Net cash outflow from investing activities (860) (1,045) (1,227)
Financing Activities
Issue of ordinary share capital 1,905 2,268 2,268
Proceeds from exercise of warrants - 233 233
Payment of finance costs (29) (8) (8)
Payment of equity issue costs (30) (76) (76)
Net cash inflow from financing activities 1,846 2,417 2,417
Net increase/(decrease) in cash and cash equivalents 553 781 64
Cash and cash equivalents at the start of the year 83 19 19
Forex loss on cash held - - -
Cash and cash equivalents at the end of the period 636 800 83
The accompanying accounting policies and notes form an integral part of these
financial statements.
Statement of Changes in Equity
For the Period Ended 30 September 2023
Share Capital Share Premium Reserve Warrant and SBP Reserve Retained Loss Total Equity
US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 April 2022 1,809 41,285 576 (24,994) 18,676
Loss after tax for the period - - - (24,106) (24,106)
Total comprehensive loss for the period - - - (24,106) (24,106)
Contributions by and distributions to owners
Shares and warrants issued 307 1,961 - - 2,268
Equity issue costs 49 1,921 - - 1,970
Share-based payment expense 5 228 - - 233
Share-based payment expense - - 22 - 22
Total contributions by and distributions to owners 361 4,034 22 - 4,417
Balance at 30 September 2022 2,170 45,319 598 (49,100) (1,013)
Balance at 1 April 2022 1,809 41,285 576 (24,994) 18,676
Loss after tax for the year - - - (20,796) (20,796)
Total comprehensive loss for the year - - - (20,796) (20,796)
Contributions by and distributions to owners
Shares and warrants issued 307 1,961 - - 2,268
Partial conversion of convertible note 49 1,921 - - 1,970
Exercise/expiry of warrants 5 228 (525) 525 233
Equity issue costs - (76) - - (76)
Issue of placement warrants - - - - -
Share-based payment expense - - 22 - 22
Total contributions by and distributions to owners 361 (503) 525 4,417
4,034
Balance at 1 April 2023 2,170 45,319 73 (45,265) 2,297
Loss after tax for the period - - - (437) (437)
Total comprehensive loss for the period - - - (437) (437)
Contributions by and distributions to owners
Shares and warrants issued 483 1,450 - - 1,934
Exercise/expiry of warrants - - (73) 73 -
Equity issue costs - (58) - - (58)
Share-based payment expense 11 33 79 - 123
Total contributions by and distributions to owners 494 1,425 6 73 1,998
Balance at 30 September 2023 2,664 46,744 79 (45,629) 3,858
The accompanying accounting policies and notes form an integral part of these
financial statements.
Notes to the Financial Statements
For the Period Ended 30 September 2023
Basis of preparation
The Company's condensed interim financial statements for the six months ended
30 September 2023 have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the United Kingdom and
Companies Act 2006. The principal accounting policies are summarised
below. The financial report is presented in the functional currency, US
dollars and all values are shown in thousands of US dollars (US$'000). The
financial statements have been prepared on a historical cost basis and fair
value for certain assets and liabilities. The same accounting policies,
presentation and methods of computation are followed in these financial
statements as were applied in the Company's latest audited financial
statements for the year ended 31 March 2023.
The financial information for the period ended 30 September 2023 does not
constitute the full statutory accounts for that period. They have not been
reviewed by the Company's auditor. The Annual Report and financial statements
for the year ended 31 March 2023 have been filed with the Registrar of
Companies. The independent auditor's report on the Annual Report and financial
statements was unqualified and did not contain a statement under Section
498(2) or 498(3) of the Companies Act 2006, but did draw attention to a
material uncertainty relating to going concern.
Nature of business
The Company is a public limited company incorporated and domiciled in England
and Wales. The address of the registered office is 2(nd) Floor, 38-43
Lincoln's Inn Fields, London, WC2A 3PE. The Company is in the business of
financing the exploration, development and production of energy resource
projects in regions with energy hungry markets close to existing
infrastructure. The Company has typically focused on non-operating working
interest positions in projects that have drill ready targets that
substantially short cut the life-cycle of hydrocarbon projects by entering the
project after exploration concept, initial exploration and drill target
identification work has largely been completed.
Going concern
The Company's principal activity during the period has been the development of
its exploration projects. The Company had a cash balance of US$0.64 million at
30 September 2023 (31 March 2023: US$0.83 million) and made a loss after
income tax of US$0.44 million (31 March 2023 loss of US$20.80 million).
The Directors have prepared cash flow forecasts for the Company covering the
period to 31 December 2024 and these demonstrate that the Company will require
further funding within the next 12 months. In June 2022, the Company entered
into an agreement with CNOOC to drill an exploration well on the Topaz
prospect in China, by 12 June 2024, which includes a payment of US$250,000 to
CNOOC. It is estimated that the cost of drilling this well would be
approximately US$12 million. The Directors note that if the well commitment is
not met in the timeframe advised then either a renegotiation of the commitment
timing will be required or the licence could be relinquished.
In May 2023 US$1.9 million was raised through an equity placement for the
completion of joint regional oil migration and 3D seismic inversion studies at
Topaz, ongoing prospect, licensing fees and permit costs, post Jade well
consultancy, analysis and residual exploration costs, front-end engineering
design ("FEED"), studies and surveys at Mako - including gas processing and
export gas tie in at the Kakap KF Platform and for general working capital
requirements.
The Company has also renegotiated the terms of the Convertible Note as
detailed in the AIM announcement dated 30 May 2023. The Convertible Note is
secured by a senior first ranking charge over the Company, including its 8.5%
interest in the Duyung PSC and Mako Gas Field.
However, in order to meet the well commitment at Topaz and also to meet the
repayment terms of the Convertible Note, the Company is required to raise
further funding either through equity or the sale of assets and as at the date
of this report the necessary funds are not in place. The Directors are
however optimistic that the full funding commitments for the Topaz well and
the repayment of the Convertible Note will be met, having a successful track
record of equity (and debt) and in particular with the prospect of monetising
its interest in Mako through the current sell down process.
It is the belief of the Board that there are likely value catalysts throughout
the next 12 months leading up to the intend drilling of the Topaz Prospect in
2024 - including maximising the value of its interest at the Mako Gas field
through the current sell down process and the completion of the GSA and also
through the conclusion of important de-risking activities currently being
conducted prior to the drilling of the Topaz Prospect.
The Directors have therefore concluded that it is appropriate to prepare the
Company's financial statements on a going concern basis, however, in the
absence of additional funding being in place at the date of this report, these
conditions indicate the existence of a material uncertainty which may cast
significant doubt over the Company's ability to continue as a going concern
and, therefore, that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The financial statements do not include the adjustments that would result if
the Company was unable to continue as a going concern.
Note 1. Segmental Analysis
The Directors consider the Company to have three geographical segments, being
China (Block 29/11 project), Indonesia (Duyung PSC project) and North America
(Sacramento Basin project), which are all currently in the exploration and
evaluation phase. Corporate costs relate to the administration and financing
costs of the Company and are not directly attributable to the individual
projects. The Company's registered office is located in the United Kingdom.
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
30 September 2023
Revenue from continued operations - - - - -
Segment result
Unallocated corporate expenses - - - (454) (454)
Operating loss - - - (454) (454)
Finance income/(expense) - - - 20 20
Impairment of oil and gas properties - - (2) - (2)
Loss before taxation - - (2) (434) (436)
Tax expense in current period - - - (1) (1)
Loss after taxation - (2) (435) (437)
Total comprehensive loss for the financial period - (2) (435) (437)
Segment assets 6,104 5,077 - - 11,181
Unallocated corporate assets - - - 660 660
Total assets 6,104 5,077 - 660 11,841
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 7,983 7,983
Total liabilities - - - 7,983 7,983
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
30 September 2022
Revenue from continued operations - - - - -
Segment result
Unallocated corporate expenses - - - (120) (120)
Operating loss - - - (120) (120)
Finance expense - - - (1,888) (1,888)
Impairment of oil and gas properties (22,069) - (28) - (22,097)
Loss before taxation (22,069) - (28) (1,888) (24,105)
Tax expense in current period - - - (1) (1)
Loss after taxation (22,069) - (28) (2,009) (24,106)
Total comprehensive loss for the financial period (22,069) - (28) (2,009) (24,106)
Segment assets - 4,417 - - 4,417
Unallocated corporate assets - - - 850 850
Total assets - 4,417 - 850 5,267
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 6,280 6,280
Total liabilities - - - 6,280 6,280
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
30 September 2022
Revenue from continued operations - - - - -
Segment result
Unallocated corporate expenses - - - (120) (120)
Operating loss - - - (120) (120)
Finance expense - - - (1,888) (1,888)
Impairment of oil and gas properties (22,069) - (28) - (22,097)
Loss before taxation (22,069) - (28) (1,888) (24,105)
Tax expense in current period - - - (1) (1)
Loss after taxation (22,069) - (28) (2,009) (24,106)
Total comprehensive loss for the financial period (22,069) - (28) (2,009) (24,106)
Segment assets - 4,417 - - 4,417
Unallocated corporate assets - - - 850 850
Total assets - 4,417 - 850 5,267
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 6,280 6,280
Total liabilities - - - 6,280 6,280
Details China Indonesia USA Corporate Total
US$'000 US$'000 US$'000 US$'000 US$'000
31 March 2023
Unallocated corporate expenses - - - (810) (810)
Operating loss - - - (810) (810)
Finance expense - - - (2,955) (2,955)
Impairment of oil and gas properties (16,998) - (32) - (17,795)
Cyber fraud loss - - - - (1,981)
Loss before taxation (16,998) - (32) (3,765) (20,795)
Tax expense in current year - - - (1) (1)
Loss after taxation (16,998) - (32) (3,766) (20,796)
Total comprehensive loss for the financial year (16,998) - (32) (3,766) (20,796)
Segment assets 5,958 4,677 - - 10,635
Unallocated corporate assets - - - 121 121
Total assets 5,958 4,677 - 121 10,756
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 8,459 8,459
Total liabilities - - - 8,459 8,459
Note 2. Loss Per Share
The basic loss per share is derived by dividing the loss after taxation for
the period attributable to ordinary shareholders by the weighted average
number of shares on issue being 904,491,535 (2022: 747,642,305).
6 Months to 30 September (unaudited) Year Ended
31 March (audited)
2023 2022 2023
Loss per share from continuing operations
Loss after taxation from continuing operations US$(437,000) US$(24,106,000) US$(20,796,000)
Loss per share - basic (0.06)c (3.22)c (2,71)c
Loss after taxation from continuing operations adjusted for dilutive effects
US$(437,000) US$(24,106,000) US$(20,796,000)
Loss per share - diluted (0.06)c (3.22)c (2,71)c
For the current and prior financial periods the exercise of the options is
anti-dilutive and as such the diluted loss per share is the same as the basic
loss per share. Details of the potentially issuable shares that could dilute
earnings per share in future periods are set out in Note 5.
Note 3. Oil and Gas Properties: Exploration and Evaluation
6 Months to 30 September (unaudited) Year Ended
31 March
(audited)
2023 2022 2023
US$'000 US$'000 US$'000
Balance brought forward 10,635 24,907 24,907
Additions((a)) 548 1,607 2,758
Impairment((b)(c)(d)) (2) (22,097) (17,030)
Net book value 11,181 4,417 10,635
(a) The Company was awarded its permit in China in December 2016. Block
29/11 is located in the Pearl River Mouth Basin, offshore China. Empyrean is
operator with 100% of the exploration right of the Permit during the
exploration phase of the project. In May 2017, the Company acquired a working
interest in the Sacramento Basin, California. Empyrean entered into a joint
project with ASX-listed Sacgasco Limited, to test a group of projects in the
Sacramento Basin, California, including two mature, multi-TcF gas prospects in
Dempsey (EME 30%) and Alvares (EME 25%) and also further identified follow up
prospects along the Dempsey trend (EME 30%). Please refer to the Operational
Review for further information on exploration and evaluation performed during
the period.
(b) Empyrean and its China Block 29/11 partner CNOOC, along with its
technical service providers CNOOC Enertech and COSL, completed significant
pre-drilling operational, technical and permitting work throughout the 2022
financial year to enable to safe drilling, although ultimately unsuccessful
drilling of the Jade prospect in April 2022. As a result of the unsuccessful
well at Jade, Empyrean provided for impairment against Jade prospect costs and
the dry hole costs associated with the Jade drilling program, together being
US$17.0 million as at 31 March 2023. Post-well analysis at Jade however has
confirmed reservoir quality is better than pre-drill estimates with regional
seal confirmed and the depth conversion approach validated. As a part of
post-well evaluation, CNOOC geochemical and basin modelling experts together
with Empyrean have interpreted the critical elements of effective regional oil
migration pathways-leading to positive implications for the Topaz prospect,
and ultimately the decision to proceed with the second phase of exploration at
Block 29/11, being the drilling of the Topaz Prospect before June 2024.
(c) While the Company will continue to work with its joint venture
partners in reviewing and assessing any further technical and commercial
opportunities as they relate to the Sacramento Basin project, particularly in
light of strong gas prices for gas sales in the region, it has not budgeted
for further substantive exploration expenditure. The Company has continued to
fully impair the carrying value of the asset at 30 September 2023.
(d) In light of current market conditions, little or no work has been
completed on the Riverbend or Eagle Oil projects in the period and no
substantial project work is forecast for either project in 2022/23 whilst the
Company focuses on other projects. Whilst the Company maintains legal title it
has continued to fully impair the carrying value of the asset at 30 September
2023.
Project Operator Working Interest 2023 2022
Carrying Value Carrying Value
US$'000 US$'000
Exploration and evaluation
China Block 29/11 Empyrean Energy 100%* 6,104 -
Sacramento Basin Sacgasco 25-30% - -
Duyung PSC Conrad 8.5% 5,077 4,417
Riverbend Huff Energy 10% - -
Eagle Oil Pool Development Strata-X 58.084% - -
11,181 4,417
*In the event of a commercial discovery, and subject to the Company entering
PSC, CNOOC Limited will have a back in right to 51% of the permit. As at the
date of these financial statements no commercial discovery has been made.
Note 4. Convertible Loan Notes
6 Months to 30 September (unaudited) Year Ended
31 March
(audited)
2023 2022 2023
US$'000 US$'000 US$'000
(a) Convertible Loan Note - Original
Opening balance - 4,125 4,125
Conversions - (1,970) (1,970)
Costs of finance - 121 121
Foreign exchange gain - (133) (133)
Extinguishment on substantial modification - (2,143) (2,143)
Convertible Loan Note - Original - - -
(b) Convertible Loan Note - Modification 1
Opening balance 4,076 - -
Recognition of modified liability 1 - 2,637 2,637
Loss on substantial modification - 1,369 1,369
Costs of finance - (268) 185
Foreign exchange loss/(gain) 12 (480) (115)
Extinguishment on substantial modification (4,088) - -
Total Convertible Loan Note - Modification 1 - 3,258 4,076
(c) Convertible Loan Note - Modification 2
Opening balance - - -
Recognition of modified liability 2 6,544 - -
Gain on substantial modification (845) - -
Costs of finance (29) - -
Foreign exchange gain (49) - -
Total Convertible Loan Note - Modification 2 5,621 - -
(a) In December 2021, the Company announced that it had entered into a
Convertible Loan Note Agreement with a Melbourne-based investment fund (the
"Lender"), pursuant to which the Company issued a convertible loan note to the
Lender and received gross proceeds of £4.0 million (the "Convertible Note").
(b) As announced in May 2022, the Company and the Lender then amended the
key repayment terms of the Convertible Note, which at that time included the
right by the Lender to redeem the Convertible Note within 5 business days of
the announcement of the results of the Jade well at Block 29/11. The face
value of the loan notes was reset to £3.3m with interest to commence and
accrue at £330,000 per calendar month from 1 December 2022.
(c) In May 2023, it was announced that the Company and the Lender have, in
conjunction with and conditional upon the completion of the Subscription, now
reached agreement on amended key terms to the Convertible Note to allow the
sales process for Mako to complete. The key terms of the amendment are as
follows:
1. The parties have agreed a moratorium of accrual interest on the
Convertible Note until 31 December 2023 - interest will accrue thereafter at a
rate of 20% p.a.;
2. The conversion price on the Convertible Note has been reduced from 8p
to 2.5p per Share;
3. The face value of the Convertible Note has been reduced from £5.28m
(accrued to the end of May 2023) to £4.6 million (to be repaid from
Empyrean's share of the proceeds from Mako sell down process); and
4. Empyrean will pay the Lender 15% of the proceeds from its share in
the Mako sell down process.
Note 5. Share Capital
6 Months to 30 September (unaudited) Year Ended
31 March (audited)
2023 2022 2023
US$'000 US$'000 US$'000
985,470,767 (2022: 788,431,892) ordinary shares of 0.2p each 2,664 2,170 2,170
2023 2022 2023
No. No. No.
Fully Paid Ordinary Shares of 0.2p each - Number of Shares
At the beginning of the reporting period 788,431,892 646,070,780 646,070,780
Shares issued during the period:
· Placements 189,753,783 121,750,001 121,750,001
· Salary sacrifice shares 4,397,592 - -
· Advisor shares 2,887,500 - -
· Partial conversion of Convertible Note - 18,750,000 18,750,000
· Exercise of warrants - 1,861,111 1,861,111
Total at the end of the reporting period 985,470,767 788,431,892 788,431,892
2023 2022 2023
US$'000 US$'000 US$'000
Fully Paid Ordinary Shares of 0.2p each - Value of Shares
At the beginning of the reporting period 2,170 1,809 1,809
Shares issued during the period:
· Placements 476 307 307
· Salary sacrifice shares 11 - -
· Advisor shares 7 - -
· Partial conversion of Convertible Note - 49 49
· Exercise of warrants - 5 5
Total at the end of the reporting period 2,664 2,170 2,170
The Companies Act 2006 (as amended) abolishes the requirement for a company to
have an authorised share capital. Therefore, the Company has taken advantage
of these provisions and has an unlimited authorised share capital.
Each of the ordinary shares carries equal rights and entitles the holder to
voting and dividend rights and rights to participate in the profits of the
Company and in the event of a return of capital equal rights to participate in
any sum being returned to the holders of the ordinary shares. There is no
restriction, imposed by the Company, on the ability of the holder of any
ordinary share to transfer the ownership, or any of the benefits of ownership,
to any other party.
Share options and warrants
The number and weighted average exercise prices of share options and warrants
are as follows:
6 Months to 30 September 2023 (unaudited) 6 Months to 30 September 2022 (unaudited)
Weighted Average Exercise Weighted Average Exercise
Price Number Price Number
of Options and Warrants Of Options and Warrants
2023 2023 2022 2022
Outstanding at the beginning of the period £0.137 6,558,333 £0.116 65,890,916
Issued during the period £0.017 12,833,333 - -
Cancelled during the period £0.137 (6,558,333) £0.113 (53,413,139)
Exercised during the period - - £0.096 (1,861,111)
Outstanding at the end of the period £0.017 12,833,333 £0.131 10,616,666
Valuation and assumptions of options and warrants at 30 September 2023
Incentive Warrants Incentive Warrants Advisor Warrants
Number of options remaining 5,000,000 5,000,000 2,833,333
Grant date 29/05/23 29/05/23 29/05/23
Expiry date 30/05/26 30/05/26 30/05/24
Share price £0.010 £0.010 £0.010
Exercise price £0.015 £0.020 £0.015
Volatility 100% 100% 100%
Option life 3.00 3.00 1.00
Expected dividends - - -
Risk-free interest rate (based on national government bonds) 4.45% 4.45% 4.45%
The options and warrants outstanding at 30 September 2023 have an exercise
price in the range of £0.015 to £0.02 (2022: £0.075 to £0.18) and a
weighted average remaining contractual life of 2.22 years (2022: 0.57 years).
None of the outstanding options and warrants at 30 September are exercisable
at period end.
The options and warrants outstanding at 30 September 2023 have an exercise
price in the range of £0.015 to £0.02 (2022: £0.075 to £0.18) and a
weighted average remaining contractual life of 2.22 years (2022: 0.57 years).
None of the outstanding options and warrants at 30 September are exercisable
at period end.
Note 6. Events After the Reporting Date
Significant events post reporting date were as follows:
No matters or circumstances have arisen since the end of the financial period
which significantly affected or could significantly affect the operations of
the Company, the results of those operations, or the state of affairs of the
Company in future financial years.
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