REG - Empyrean Energy PLC - Interim Results
18/12/2024 07:00
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RNS Number : 4338Q Empyrean Energy PLC 18 December 2024
18 December 2024
Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil & Gas
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 2024.
Highlights
Reporting period
Duyung PSC Project, Indonesia (EME 8.5%)
· On 24 June 2024, the Company announced that the Mako JV partners had entered into a binding domestic Gas Sales Agreement for the sale and purchase of the domestic portion of Mako gas with PT Perusahaan Gas Negara Tbk ("PGN"), the gas subsidiary of PT Pertamina (Persero), the national oil company of Indonesia.
· The domestic GSA will be subject to the construction of a pipeline connecting the West Natuna Transportation System ("WNTS") with the domestic gas market in Batam and it forms part of Mako JV's Domestic Market Obligation ("DMO") as set out in the Mako's revised Plan of Development ("POD").
· The Total Contracted Gas volume under the PGN GSA is up to 122.77 trillion British Thermal Units ("TBtu"), with estimated plateau production rates of 35 billion British thermal units ("Bbtud") per day. The remainder of the Mako sales gas volumes are targeted to be sold to Singapore via the export GSA signed in August 2024.
· On 2 September 2024, the Company announced that the Mako Joint Venture partners and Sembcorp Gas Pte Ltd ("Sembcorp"), a wholly-owned subsidiary of Sembcorp Industries Ltd, a leading energy and urban solutions provider headquartered in Singapore, signed a binding GSA for the export of gas produced from the Mako field to Singapore. The contract term is until the end of the Duyung PSC in January 2037 and allows for the sale of up to 76 billion Bbtud, which is equivalent to around 76.9 million standard cubic feet per day ("mmscfd").
Block 29/11, Pearl River Mouth Basin, China
· On 13 June 2024, the Company announced that, as it had not commenced the drilling of the Topaz prospect by 12 June 2024 as required under the second phase of exploration on Block 29/11, the permit formally expired on 12 June 2024.
· In August 2024, Empyrean has received a letter of demand from CNOOC alleging that Empyrean has outstanding obligations under the PSC. The Company disputes the letter and is endeavouring to settle the matter amicably under the dispute resolution clauses provided for in the PSC. Separately, Empyrean has put forward a submission to CNOOC for further cooperation on Block 29/11.
Corporate and New Project Opportunities
· On 11 November 2024, the Company announced that it had conditionally raised gross proceeds of approximately £1.255m from an aggregated Placing and Subscription. This fundraising was conditional upon the passing of the resolutions which were subsequently approved by shareholders at a General Meeting held on 2 December 2024. The fundraising required a capital reorganisation of the ordinary share capital of the Company which was also approved at the General Meeting.
· Empyrean is in advanced discussions to acquire an option to participate in a conventional oil exploration project (the "Wilson prospect") which is situated close to existing infrastructure in the prolific Cooper Basin in South West Queensland, Australia, adjacent to several producing oil fields operated by Santos-Beach (Cooper Basin JV) and Bridgeport Energy.
For further information please visit www.empyreanenergy.com
(http://www.empyreanenergy.com/) or contact the following:
Empyrean Energy plc Tel: +61 (8) 6146 5325
Tom Kelly
Cavendish Capital Markets Limited (Nominated Advisor and Broker) Tel: +44 (0) 207 220 0500
Neil McDonald
Pearl Kellie
Novum Securities Limited (Joint Broker) Tel: +44 (0) 207 399 9400
Colin Rowbury
Chairman's Statement
As we have previously reported, progress in China was inhibited during the calendar year and Empyrean ultimately did not continue the cooperation on Block 29/11 with CNOOC.
On a more positive note, in June we reported the pleasing news that the Mako JV partners had entered into a binding domestic Gas Sales Agreement for the sale and purchase of the domestic portion of Mako gas with PT Perusahaan Gas Negara Tbk ("PGN"), the gas subsidiary of PT Pertamina (Persero), the national oil company of Indonesia.
This was followed in September with the announcement that the Mako Joint
Venture partners and Sembcorp signed a binding GSA for the export of gas
produced from the Mako field to Singapore. The Company also raised £1.255m
from an aggregated Placing and Subscription and Retail Offer. This fundraising
was approved by shareholders in early December.
The operator, Conrad, continues to be engaged with a global investment bank in
a sell-down process for the divestment of a portion of its interest in the
Duyung Production Sharing Contract.
In November 2024, Empyrean announced that it is in advanced discussions to
acquire an option to participate in a conventional oil exploration project
(the "Wilson prospect") which is situated close to existing infrastructure in
the prolific Cooper Basin in South-West Queensland. We look forward to
providing an update on progress with regard to this opportunity in the near
future.
I would like to thank the Board, management and staff for their perseverance
during the year and we look forward to positive developments in the near term.
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.
Current Activities
In June 2024 Empyrean announced that it, and the Mako JV partners had entered
into a binding gas sales agreement for the sale and purchase of the domestic
portion of Mako gas with PGN, the gas subsidiary of PT Pertamina (Persero),
the national oil company of Indonesia.
The domestic gas sale agreement with PGN for gas from the Mako gas field is an
important step in the commercialisation of the Mako gas field (the largest
undeveloped gas field in the West Natuna Sea). PGN is Indonesia's largest gas
company. The Total Contracted Gas volume under the PGN GSA is up to 122.77
trillion TBtu with estimated plateau production rates of 35 billion Bbtud per
day.
In September 2024 the Company announced the signing by the Mako JV partners
and Sembcorp of the export GSA for the remainder of the Mako gas resource,
which is targeted to be exported to Singapore. The contract term is until the
end of the Duyung PSC in January 2037 and allows for the sale of up to 76
billion Bbtud, which is equivalent to around 76.9 mmscfd.
The export GSA also contains provisions for the sale of up to an additional 35
Bbtud (around 35.4 mmscfd) should a tie-in pipeline not be built to the
Indonesian domestic market in Batam and DMO sales do not therefore eventuate.
The possible export of these additional volumes is recognised in the Mako POD.
The West Natuna Sea gas gathering system is already connected to Singapore.
PGN will now proceed with planning a smaller tie line to the island of Batam
across the Malacca Straight that will connect the Natuna Sea to the Indonesian
market.
Indonesia, the fourth most populated country on earth has a stated objective
of doubling its gas production by 2030 in order to deliver a cleaner energy
source to fuel its rapidly growing economy. PGN will play a significant role
in this Indonesian energy transition.
The Mako field contains 2C Contingent Resources (100%) of 376 billion cubic
feet ("Bcf"), (of which 21 Bcf are net attributable to Empyrean) and is
scheduled to begin production in 2026 subject to completing a formal GSA with
a Singapore buyer (completed in August 2024). The West Natuna Sea has been
supplying Singapore with natural gas for more than two decades and Mako is
expected to continue this supply for at least another decade.
Production Sharing Contractors in Indonesia are subject to a DMO requirement
for any produced gas as set out under the terms of each PSC, and Government of
Indonesia Regulation No. 35 of 2004 on Upstream Oil and Gas Activity, as
amended from time to time (GR 35/2004). Contractors are required to supply c
25% of their share of the oil and gas produced to meet domestic needs. The
Contractor has no obligation to construct infrastructure (e.g. pipelines) to
allow the delivery of any DMO.
The combination of the executed domestic and export GSAs means now that all
contingent resources at Mako are under binding contracts for sale.
Conrad continues to advance the sell down process with a global investment
bank in order to fund the development of Mako. The signing of a binding export
GSA is seen by Empyrean as being a likely requirement or precursor to the
completion of any sell down transaction.
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.
China Block 29/11 Project
Post Jade well evaluation work confirmed reservoir quality and the regional
seal and following a CNOOC assisted oil migration pathways assessment, the
Company committed to enter this second phase of exploration with the aim to
drill Topaz. As advised to the market, Empyrean did not commence the drilling
of the Topaz prospect by June 2024 and the permit therefore formally expired
on 12 June 2024.
On August 2024 Empyrean has received a letter of demand from CNOOC alleging
that Empyrean has outstanding obligations under the PSC. The Company
disputes the letter and is endeavouring to settle the matter amicably under
the dispute resolution clauses provided for in the PSC.
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.
Statement of Comprehensive Income
For the Period Ended 30 September 2024
6 Months to 30 September (unaudited) Year Ended 31 March (audited)
2024 2023 2024
Notes US$'000 US$'000 US$'000
Revenue - - -
Administrative expenditure
Administrative expenses (151) (233) (355)
Compliance fees (160) (76) (326)
Directors' remuneration (216) (197) (416)
Foreign exchange differences (349) 52 (123)
Impairment - exploration and evaluation assets 3 (66) (2) (6,595)
Total administrative expenditure (942) (456) (7,815)
Operating loss (942) (456) (7,815)
Finance (expense)/income (615) 20 (1,770)
Loss from continuing operations before taxation (1,557) (436) (9,585)
Tax expense in current period (1) (1) (1)
Loss from continuing operations after taxation (1,558) (437) (9,586)
Total comprehensive loss for the year (1,558) (437) (9,586)
Loss per share from continuing operations (expressed in cents)
- Basic 2 (0.12)c (0.06)c (0.98)c
- Diluted 2 (0.12)c (0.06)c (0.98)c
The accompanying accounting policies and notes form an integral part of these
financial statements.
Statement of Financial Position
As at 30 September 2024
6 Months to 30 September (unaudited) Year Ended 31 March (audited)
2024 2023 2024
Notes US$'000 US$'000 US$'000
Assets
Non-Current Assets
Exploration and evaluation assets 3 5,510 11,181 5,355
Total non-current assets 5,510 11,181 5,355
Current Assets
Trade and other receivables 36 24 17
Cash and cash equivalents 626 636 981
Total current assets 662 660 998
Liabilities
Current Liabilities
Trade and other payables 3,266 2,203 2,929
Provisions 189 159 189
Convertible loan notes 4 8,574 5,621 7,594
Total current liabilities 12,029 7,983 10,712
Net Current Liabilities (11,367) (7,323) (9,714)
Net Assets/(Liabilities) (5,857) 3,858 (4,359)
Shareholders' Equity
Share capital 5 3,441 2,664 3,405
Share premium reserve 46,915 46,744 46,891
Warrant and share based payment reserve 123 79 123
Retained losses (56,336) (45,629) (54,778)
Total Equity (5,857) 3,858 (4,359)
The accompanying accounting policies and notes form an integral part of these
financial statements.
Statement of Cash Flows
For the Period Ended 30 September 2024
6 Months to 30 September (unaudited) Year Ended 31 March (audited)
2024 2023 2024
Notes US$'000 US$'000 US$'000
Operating Activities
Payments for operating activities (305) (433) (827)
Net cash outflow from operating activities (305) (433) (827)
Investing Activities
Payments for exploration and evaluation (50) (860) (964)
Net cash outflow from investing activities (50) (860) (964)
Financing Activities
Issue of ordinary share capital - 1,905 2,790
Payment of finance costs - (29) (29)
Payment of equity issue costs - (30) (72)
Net cash inflow from financing activities - 1,846 2,689
Net (decrease)/increase in cash and cash equivalents (355) 553 898
Cash and cash equivalents at the start of the year 981 83 83
Forex loss on cash held - - -
Cash and cash equivalents at the end of the period 626 636 981
The accompanying accounting policies and notes form an integral part of these
financial statements.
Statement of Changes in Equity
For the Period Ended 30 September 2024
Share Capital Share Premium Reserve Warrant and SBP Reserve Retained Losses Total Equity
US$'000 US$'000 US$'000 US$'000 US$'000
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
Balance at 1 April 2023 2,170 45,319 73 (45,265) 2,297
Loss after tax for the year - - - (9,586) (9,586)
Total comprehensive loss for the year - - - (9,586) (9,586)
Contributions by and distributions to owners
Shares and warrants issued 1,179 1,611 - - 2,790
Exercise/expiry of warrants - - (73) 73 -
Equity issue costs 7 (123) 44 - (72)
Share-based payment expense 49 84 79 - 212
Total contributions by and distributions to owners 1,235 50 73 2,930
1,572
Balance at 1 April 2024 3,405 46,891 123 (54,778) (4,359)
Loss after tax for the period - - - (1,558) (1,558)
Total comprehensive loss for the period - - - (1,558) (1,558)
Contributions by and distributions to owners
Share-based payment expense 36 24 - - 60
Total contributions by and distributions to owners 36 24 - - 60
Balance at 30 September 2024 3,441 46,915 123 (56,336) (5,857)
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 2024
Basis of preparation
The Company's condensed interim financial statements for the six months ended
30 September 2024 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 2024.
The financial information for the period ended 30 September 2024 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 2024 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 1st Floor, Yarnwicke,
119-121 Cannon Street, London, England, EC4N 5AT. 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
At the year end the Company had a cash balance of US$626,000 (31 March 2024:
US$981,000) and made a loss after income tax of US$1.56 million (31 March
2024: loss of US$9.59 million).
The Directors have prepared cash flow forecasts for the Company covering the
period to 31 December 2025 and these demonstrate that the Company will require
further funding within the next 12 months from the date of approval of the
financial statements. 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
Company did not commence the drilling of the Topaz well by 12 June 2024 and
therefore the permit expired on 12 June 2024.
On 24 August 2024, the Company received a letter of demand from CNOOC's
lawyers, King Wood & Mallesons, in relation to Block 29/11. The letter of
demand alleges, inter alia, that Empyrean has outstanding obligations under
the relevant Petroleum Contract entered into with CNOOC and that Empyrean has
failed to pay certain amounts that CNOOC consider due and payable under the
Petroleum Contract relating to the prospecting fee and exploration work. The
Company rejects the outstanding amounts claimed, which total $12m, and has
responded to the letter of demand requesting clarification of the basis for
the demands made in the letter. At this time, it is too early for the Company
to form any opinion on the merits of any demands made therein and the Company
intends to continue dialogue with CNOOC and, in line with the provisions of
the Petroleum Contract, to settle amicably through consultation any dispute
arising in connection with the performance or interpretation of any provision
of the Petroleum Contract. However, it is acknowledged that, in the event that
the amounts claimed are called, further funding would be required, over and
above that required to meet the day to day cash demand of the business for the
foreseeable future.
To this end, in November 2024 the Company announced that it had conditionally
raised gross proceeds of approximately £1.255m from an aggregated Placing and
Subscription, as announced on 6 November 2024 and a Retail Offer. This
fundraising was conditional upon the passing of the resolutions which were
subsequently approved by shareholders at a General Meeting held on 2 December
2024.
However, in order to meet the repayment terms of the Convertible Note (which
was renegotiated in 2023), any further commitments at the Mako Gas Field, any
potential further costs of cooperation on Block 29/11, any potential amounts
payable to CNOOC that may crystalise and working capital requirements 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 remain optimistic that its funding commitments will be met
should it be able to monetise its interest in Mako through the current sell
down process. In June 2024, the Company announced that the Mako JV partners
had entered into a domestic gas sales agreement for the sale and purchase of
the domestic portion of Mako gas with PGN. The Company then announced that the
Mako Joint Venture partners and Sembcorp had signed the binding GSA for the
export of gas produced from the Mako field to Singapore.
It is the belief of the Board that the completion of the export GSA is a
significant value catalyst that is a necessary precursor to maximising the
value of its interest at the Mako Gas field through the current sell down
process.
The Company therefore requires additional funding to fund the ongoing cash
needs of the business for the foreseeable future and may require further
funding should it be required to settle amounts claimed by CNOOC. The
Directors acknowledge that this funding is not guaranteed. These conditions
indicate that there is a material uncertainty which may cast significant doubt
over the Company's ability to continue as a going concern and, therefore, the
Company may be unable to realise its assets and discharge its liabilities in
the normal course of business.
Given the above and the Company's proven track record of raising equity funds
and advanced Mako sell-down process, which the Directors believe would be
sufficient to meet all possible funding needs as set out above, the Directors
have therefore concluded that it is appropriate to prepare the Company's
financial statements on a going concern basis and they have therefore prepared
the financial statements on a going concern basis.
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 2024
Revenue from continued operations - - - - -
Segment result
Unallocated corporate expenses - - - (876) (876)
Operating loss - - - (876) (876)
Finance income/(expense) - - - (615) (615)
Impairment of oil and gas properties (64) - (2) - (66)
Loss before taxation (64) - (2) (1,491) (1,557)
Tax expense in current period - - - (1) (1)
Loss after taxation (64) - (2) (1,492) (1,558)
Total comprehensive loss for the financial period (64) - (2) (1,492) (1,558)
Segment assets - 5,510 - - 5,510
Unallocated corporate assets - - - 662 662
Total assets - 5,510 - 662 6,172
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 12,029 12,029
Total liabilities - - - 12,029 12,029
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 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$'000
31 March 2024
Unallocated corporate expenses - - - (1,220) (1,220)
Operating loss - - - (1,220) (1,220)
Finance expense - - - (1,770) (1,770)
Impairment of oil and gas properties (6,562) - (33) - (6,595)
Loss before taxation (6,562) - (33) (2,990) (9,585)
Tax expense in current year - - - (1) (1)
Loss after taxation (6,562) - (33) (2,991) (9,586)
Total comprehensive loss for the financial year (6,562) - (33) (2,991) (9,586)
Segment assets - 5,355 - - 5,355
Unallocated corporate assets - - - 998 998
Total assets - 5,355 - 998 6,353
Segment liabilities - - - - -
Unallocated corporate liabilities - - - 10,712 10,712
Total liabilities - - - 10,712 10,712
Note 2. Loss Per Share
The basic loss per share is derived by dividing the loss after taxation for
the period attributable to ordinary shareholders by the weighted average
number of shares on issue being 1,285,972,570 (2023: 904,491,535).
6 Months to 30 September (unaudited) Year Ended
31 March (audited)
2024 2023 2024
Loss per share from continuing operations
Loss after taxation from continuing operations US$(1,558,000) US$(437,000) US$(9,586,000)
Loss per share - basic (0.12)c (0.06)c (0.98)c
Loss after taxation from continuing operations adjusted for dilutive effects
US$(1,558,000) US$(437,000) US$(9,586,000)
Loss per share - diluted (0.12)c (0.06)c (0.98)c
For the current and prior financial periods the exercise of the options is
anti-dilutive and as such the diluted loss per share is the same as the basic
loss per share. Details of the potentially issuable shares that could dilute
earnings per share in future periods are set out in Note 5.
Note 3. Oil and Gas Properties: Exploration and Evaluation
6 Months to 30 September (unaudited) Year Ended
31 March
(audited)
2024 2023 2024
US$'000 US$'000 US$'000
Balance brought forward 5,355 10,635 10,635
Exploration expenditure 220 548 1,315
Impairment((a)(b)(c)) (65) (2) (6,595)
Net book value 5,510 11,181 5,355
(a) The Company did not commence the drilling of the Topaz well by 12 June
2024 and, post year end, the permit formally expired on 12 June 2024. As at 31
March 2024 it was clear that the above requirements would not be able to be
met in time due to lack of funding and the delays to the completion of the
export GSA and sell down processes in Indonesia. This was deemed to be an
impairment indicator. Given the licence requirements have not been met and the
expiration of the PSC, the Company provided for impairment against all
remaining capitalised costs associated with Block 29/11, together being US$6.6
million as at 31 March 2024. The Company has continued to fully impair the
carrying value of the asset, at 30 September 2024.
(b) While the Company will continue to work with its joint venture
partners in reviewing and assessing any further technical and commercial
opportunities as they relate to the Sacramento Basin project, particularly in
light of strong gas prices for gas sales in the region, it has not budgeted
for further substantive exploration expenditure. Whilst the Company maintains
legal title it has continued to fully impair the carrying value of the asset
at 30 September 2024.
(c) In light of current market conditions, little or no work has been
completed on the Riverbend or Eagle Oil projects in the period and no
substantial project work is forecast for either project in 2024/25 whilst the
Company focuses on other projects. Whilst the Company maintains legal title it
has continued to fully impair the carrying value of the asset at 30 September
2024.
Project Operator Working Interest 2024 2023
Carrying Value Carrying Value
US$'000 US$'000
Exploration and evaluation
Duyung PSC Conrad 8.5% 5,510 5,077
China Block 29/11 Empyrean Energy - - 6,104
Sacramento Basin Sacgasco 25-30% - -
Riverbend Huff Energy 10% - -
Eagle Oil Pool Development Strata-X 58.084% - -
5,510 11,181
Note 4. Convertible Loan Notes
6 Months to 30 September (unaudited) Year Ended
31 March
(audited)
2024 2023 2024
US$'000 US$'000 US$'000
(a) Convertible Loan Note Modification 1
Opening balance - 4,076 4,076
Recognition of modified liability 1 - - -
Loss on substantial modification - - -
Costs of finance - - -
Foreign exchange loss/(gain) - 12 12
Extinguishment on substantial modification - (4,088) (4,088)
Total Convertible Loan Note Modification 1 - - -
(b) Convertible Loan Note Modification 2
Opening balance 7,594 - -
Recognition of modified liability 2 - 6,544 6,544
Gain on substantial modification - (845) 655
Costs of finance 615 (29) 261
Foreign exchange gain 365 (49) 134
Total Convertible Loan Note Modification 2 8,574 5,621 7,594
(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").
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.
(b) 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 the greater of US$1.5 million or 15%
of the proceeds from its share in the Mako sell down process.
Note 5. Share Capital
6 Months to 30 September (unaudited) Year Ended
31 March (audited)
2024 2023 2024
US$'000 US$'000 US$'000
1,294,925,109 (2023: 985,470,767) ordinary shares of 0.2p each 3,441 2,664 3,405
2024 2023 2024
No. No. No.
Fully Paid Ordinary Shares of 0.2p each - Number of Shares
At the beginning of the reporting period 1,280,801,707 788,431,892 788,431,892
Shares issued during the period:
· Placements - 189,753,783 469,753,783
· Salary sacrifice shares 14,123,402 4,397,592 19,728,532
· Advisor shares - 2,887,500 2,887,500
Total at the end of the reporting period 1,294,925,109 985,470,767 1,280,801,707
2024 2023 2024
US$'000 US$'000 US$'000
Fully Paid Ordinary Shares of 0.2p each - Value of Shares
At the beginning of the reporting period 3,405 2,170 2,170
Shares issued during the period:
· Placements - 476 1,179
· Salary sacrifice shares 36 11 49
· Advisor shares - 7 7
Total at the end of the reporting period 3,441 2,664 3,405
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 2024 (unaudited) 6 Months to 30 September 2023 (unaudited)
Weighted Average Exercise Weighted Average Exercise
Price Number Price Number
of Options and Warrants Of Options and Warrants
2024 2024 2023 2023
Outstanding at the beginning of the period £0.0057 164,833,333 £0.137 6,558,333
Issued during the period - - £0.017 12,833,333
Cancelled during the period £0.0150 (2,833,333) £0.137 (6,558,333)
Exercised during the period - - - -
Outstanding at the end of the period £0.0056 162,000,000 £0.017 12,833,333
Valuation and assumptions of options and warrants at 30 September 2024
Incentive Warrants Incentive Warrants Advisor Warrants Placement Warrants
Number of options remaining 5,000,000 5,000,000 12,000,000 140,000,000
Grant date 29/05/23 29/05/23 13/02/24 13/02/24
Expiry date 30/05/26 30/05/26 26/02/26 26/02/26
Share price £0.010 £0.010 £0.0044 N/A
Exercise price £0.015 £0.020 £0.0025 £0.005
Volatility 100% 100% 94% N/A
Option life 3.00 3.00 2.00 2.50
Expected dividends - - - -
Risk-free interest rate 4.45% 4.45% 4.68% N/A
The options and warrants outstanding at 30 September 2024 have an exercise
price in the range of £0.0025 to £0.02 (2023: £0.015 to £0.02) and a
weighted average remaining contractual life of 1.85 years (2023: 2.22 years).
None of the outstanding options and warrants at 30 September are exercisable
at period end.
The options and warrants outstanding at 30 September 2024 have an exercise
price in the range of £0.0025 to £0.02 (2023: £0.015 to £0.02) and a
weighted average remaining contractual life of 1.85 years (2023: 2.22 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:
On 11 November 2024 the Company announced that it had conditionally raised
gross proceeds of approximately £1.255m from an aggregated Placing and
Subscription, as announced on 6 November 2024 and a Retail Offer. This
fundraising was conditional upon the passing of the resolutions which were
subsequently approved by shareholders at a General Meeting held on 2 December
2024. The fundraising required a capital reorganisation of the ordinary share
capital of the Company which was also approved at the General Meeting.
No other 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.
Note 7. Contingent Liabilities
On 24 August 2024, the Company received a letter of demand from CNOOC's
lawyers, King Wood & Mallesons, in relation to Block 29/11. The letter of
demand alleges, inter alia, that Empyrean has outstanding obligations,
totalling $12m, under the relevant Petroleum Contract entered into with CNOOC
and that Empyrean has failed to pay certain amounts that CNOOC consider due
and payable under the Petroleum Contract relating to the prospecting fee and
exploration work. The Company rejects the outstanding amounts claimed and has
responded to the letter of demand requesting clarification of the basis for
the demands made in the letter. At this time, it is too early for the Company
to form any opinion on the merits of any demands made therein and the Company
intends to continue dialogue with CNOOC and, in line with the provisions of
the Petroleum Contract, to settle amicably through consultation any dispute
arising in connection with the performance or interpretation of any provision
of the Petroleum Contract.
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