REG - Empyrean Energy PLC - Key Terms Agreed for Long-Term Gas Sales Agreement

Empyrean EnergyAnnouncement

12/09/2023 07:15

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RNS Number : 1423M  Empyrean Energy PLC  12 September 2023

This announcement contains inside information

 

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

 

Empyrean Energy plc

 

Key Terms Agreed for Long-Term Gas Sales Agreement - Indonesian Regulator
Gives the Green Light

 

12 September 2023

 

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 announce that the operator of the Duyung PSC in Indonesia, Conrad Asia
Energy Ltd ("Conrad") has announced that its 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.

 

HIGHLIGHTS

 

·      Conrad subsidiary, WNEL, operator of the Duyung PSC, has signed
non-binding key terms ("Terms Agreement") with Sembcorp Gas Pte Ltd. for a
long-term gas sales agreement for the Mako gas field ("Mako"), that have been
endorsed by the Indonesian petroleum upstream regulator SKK Migas

·      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 parties will now focus on finalising a definitive gas sales
agreement in the coming months.

·      Mako is currently the largest undeveloped gas resource in the
West Natuna Sea, lying in proximity to the West Natuna Transportation System.

·      Conrad and Empyrean discovered Mako in 2016, and since that time
have delineated the resource through successful appraisal drilling. Mako
partners received formal approval from the Government of Indonesia for the
revised Plan of Development in late 2022.

 

Mako, located in the Duyung PSC in the Natuna Sea, Indonesia, has been
independently estimated by Gaffney Cline & Associates (26 August 2022) to
contain gross 2C Contingent Resources of 413 Bcf (100%).

 

The key terms relate to forecast gas production from Mako commencing in 2025
for a period of 12 years to the end of the Duyung PSC in 2037, for a total
sales gas volume (100%) of c 293 Bcf with the potential for an increase to
c392 Bcf (100%). Gas sales will be priced against Brent oil.

 

The development of Mako is an important project for Asia's energy transition.
Mako will provide reliable long-term gas supplies at a time when secure gas
with lower carbon emissions (compared with LNG) has become an important
component to energy security and transition. Indonesia has a stated objective
of doubling its gas production by 2030, with Mako expected to be a contributor
to that objective as well as providing valuable foreign income to Indonesia.

 

Further details of the gas sales agreement will be released to the market once
the agreement is executed.

 

Empyrean holds an 8.5% Participating Interest in the Duyung PSC, WNEL (76.5%
Participating Interest) and Coro Energy Duyung (Singapore) Pte. Ltd (part of
London AIM-listed Coro Energy Ltd, 15% Participating Interest)

 

Empyrean CEO, Tom Kelly, stated:

 

"Empyrean is delighted that agreement has been reached between the operator of
Mako and a major gas utility and that the agreement has been endorsed by the
Government of Indonesia's petroleum upstream regulator. Focus will now be on
converting this significant milestone into a binding gas sales agreement. The
existing terms will be welcomed by those parties currently participating in
the sell down process to fund the development of the Mako gas field.

 

The Mako gas field is the largest undeveloped gas discovery in the West Natuna
Sea and is considered significant for energy security in the region and the
transition from coal to cleaner sources of energy."

 

Note:  The terms of the gas sales agreement remain subject to negotiation and
completion of legally binding documentation. Further details of the gas sales
agreement will be released to the market once the agreement is executed.
Whilst the Company is confident that a binding agreement will be reached,
there can be no guarantee that the final documentation will be completed
and/or on the terms currently envisaged.

 

For further information please contact the following:

 

 Empyrean Energy plc
 Tom Kelly                   Tel: +61 6146 5325

 Cavendish Securities plc (Nominated Advisor and Broker)
 Neil McDonald               Tel: +44 (0) 20 7297 8900

 Pearl Kellie

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

 

Change of Name of Nominated Adviser and Broker

The Company also announces that its Nominated Adviser and Broker has changed
its name to Cavendish Securities plc following completion of its own corporate
merger.

 

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