Half Yearly Report and Accounts
Sydney, Sep 13, 2024 AEST (ABN Newswire) - In the half year to 30 June 2024, Empire Energy Group Ltd (
ASX:EEG) (EEGUF:OTCMKTS), has been focussed on advancing to first commercial gas production from the Beetaloo.
The Northern Territory economy runs on gas. The continuing production problems at the offshore Blacktip Gas Field, while impacting NT energy supply, have put the spotlight on new gas availability in Australia. In March the Australian Energy Market Operator (AEMO) forecast a gap in gas supply for the southern states from 2028 and in June AEMO warned that the market has tightened substantially amid supply disruptions.
Now is the time to bring gas to an energy short market. Empire's Beetaloo gas resources contain less than 1% CO2 in situ, providing the potential for a reduction in the carbon intensity of Australian gas supply.
Consistent with Empire's strategy focused on developing the Beetaloo Basin, in April we announced the sale of the remaining US based operating assets for up to US$9.1 million in cash, while retaining a 3.75% carried working interest in all shale formations below the Medina Sandstone. The proceeds repaid the US debt facility and released US$3.6 million in cash to support Empire's Carpentaria development.
We are now a Beetaloo / McArthur Basin pure play.
In late April we raised $46.8 million through a well-supported capital raise, and sale of a royalty over EP187, cornerstoned by Bryan Sheffield and Liberty Energy (NYSE:LBRT), strongly supported by existing shareholders and we welcomed new US institutional investors to the register. Bryan Sheffield has an enviable history, founding Parsley Energy Inc in 2008 and which was acquired by Pioneer Natural Resources in 2020 (in turn acquired by ExxonMobil in 2024), he then established Formentera Partners active in E&P in the USA.
In 2022 he established Daly Waters Energy in Australia acquiring half of Origin Energy's Beetaloo operations.
The Sheffield group recognises the enormous opportunity that the Beetaloo Basin presents.
While we appreciate the capital support provided by Bryan Sheffield and Liberty Energy, we also recognise and value the extraordinary experience they bring to shale gas development.
In the first half of the year Empire completed a peer review of Carpentaria-2H & 3H in preparation for our first Carpentaria Pilot Project ("CPP") development well, Carpentaria-5H ("C-5H"), a targeted 3,000 metre horizontal stimulated section with 60 stimulated stages in the Velkerri B shale. A multi-disciplinary approach arrived at a new C-5H drill and development design using best in class large diameter drill and larger pressured hydraulic stimulation. A combination of further learnings in choke management and selection of hydraulic stimulation fluid all combine with the aim of achieving greater Estimated Ultimate Recovery ("EUR") per well and flow rates.
C-5H will be connected to the CPP and run over an Extended Production Test ("EPT") to refine the Carpentaria production type-curve. The EUR and EPT will be key elements in future funding scenarios. C-5H drilling is expected to commence in Q4 2024. It is anticipated that drilling will take approximately 40 days. Hydraulic stimulation should be completed prior to the wet season, the well will then be shut-in and soaked as we did with C-2H & 3H. Empire has contracted Ensign Australia to drill and Haliburton Services to fracture stimulate the well.
In early July Chris White joined the team as Chief Operating officer. Chris joins Empire following 18 years at Origin Energy in the roles of General Manager Upstream Growth, General Manager Exploration and New Ventures, Group Manager Field Development Optimisation, Production Optimisation Manager and Petroleum Engineering Team Leader. Prior to Origin, Chris was a Project Manager for gas infrastructure projects at Laing O'Rourke UK, and a Petroleum Engineer at Queensland Gas Company. He has been instrumental in proving the commerciality of onshore unconventional gas resources in Queensland, driving rapid reserves growth and building production to export scale.
Chris has a deep Beetaloo knowledge acquired in his role at Origin Energy.
Also, in July we signed a binding 10-year gas sales agreement with the Northern Territory Government to supply 25 Terajoules (TJ) per day from the CPP. Over the life of the agreement this equates to approximately 75 Petajoules, barely 5% of the 2C discovered resource in EP187. An additional 10 TJ+ per day for 10 years, at the option of the buyer, is to be made available by Empire if production levels from the project exceed 100 TJ per day.
Gas will be delivered to the Power and Water Corporation ("PWC") operated McArthur River Pipeline ("MRP") on an ex-field take-or-pay basis at market-competitive gas prices, escalating at 100% of the Consumer Price Index. The additional 10 TJ per day Option Supply would be at a slightly lower price than the Initial Supply, providing the potential for long-term affordable energy supply for the people of the Northern Territory if larger scale development occurs. A T-piece connection has already been installed into the MRP by PWC at the proposed location of the Carpentaria Gas Plant ("CGP") to allow for delivery of gas from the CPP into the MRP.
We are working closely with the Traditional Owners of the land on which we operate, building on a greater than 12 year relationship and following their full and informed prior consent gained in 2014. Our Beetaloo projects have the potential to improve indigenous lives through economic development, an opportunity that we are proud to be involved with.
We are targeting commercial gas sales in mid-2025.
When we filed our half yearly report 12 months ago our share price was tracking at multi year lows, the process of de-risking the balance sheet and raising sufficient capital was daunting. But we have enjoyed success in being in the right place at a fortuitous time. The Beetaloo Basin is being recognised as potentially the largest resource of yet to be developed onshore gas in the country. Increasingly, the role of gas is recognised as being crucial to the transition but more so with our society's increasing demand for electricity, let alone industrial scale energy requirements, manufacturing feedstock and heating, gas is critical to our energy security.
*To view the full half year report, please visit:
https://abnnewswire.net/lnk/FVDU824X
About Empire Energy Group Ltd
Empire Energy (ASX:EEG) (OTCMKTS:EEGUF) is a Sydney based Australian oil and gas company holding 100%-owned and operated assets with unconventional targets in the Northern Territory Beetaloo Sub-basin and central trough of the McArthur Basin.
Empire is an active Beetaloo Sub-basin operator, focused on maturing its assets to production. Following the successful appraisal drilling and flow testing of the Carpentaria-2H and 3H wells in Empire's EP187, Empire is targeting first gas flow in H1 2025 at its Carpentaria Pilot Project. The Pilot has a targeted sales gas rate of up to 25 TJ per day utilising the existing McArthur River Pipeline.
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