Empyrean Chair Reports 'Significant Progress' at Sugarloaf
Empyrean Energy Plc on Friday announced its interim results for the period ended 30 September 2006. Chairman Patrick Cross' statement follows.
"I am pleased to announce that in the period since our Annual Report was published, Empyrean has made significant progress both with its drilling program at Sugarloaf and the continued identification of developing energy resources, such as Margarita, in regions of low political risk.
"Having only commenced drilling during the period, testing is planned at the Sugarloaf Hosston Prospect following the interpretation of wireline logs which identified gas saturated sands that may result in a potential reservoir.
"To complement its existing portfolio of projects, the Company entered into an agreement on 5 December 2006 to farmin to Project Margarita, located in Texas, USA. Drilling on this project commenced earlier this month.
"Preparations are also underway at the Glantal Prospect to implement a seismic program in Q1 2007, while further testing is required at the Eagle Oil Pool Development Prospect."
Sugarloaf Hosston - Texas, USA
During the period, drilling commenced at the Sugarloaf-1 well located in the onshore Gulf Coast Basin in Texas, reaching a total depth of 6,371 meters. Wireline logs were successfully run over the open hole section of the Sugarloaf-1 well between 5,182 meters and total depth. A five-inch production liner has since successfully set and cemented the Sugarloaf-1 well at 6,034 meters and was tied back into the casing at 5,183 meters.
Interpretation of wireline logs over the primary target indicates that an aggregate of 27.4 meters of potential reservoir are gas saturated and may be capable of commercial production after fracture stimulation.
Preparation is now taking place for the fracture stimulation and testing. The market will be informed of timings as soon as Empyrean is advised by the operator.
Empyrean is earning a 7.5% interest until payout, and the interest reverts to a 6% working interest thereafter.
Project Margarita - Texas, USA
On 5 December 2006, Empyrean announced that it had entered into an agreement with the Wandoo Joint Venture (Sun Resources NL - Victoria Petroleum NL - Wandoo Energy LLC), to earn a 44% interest in the Project Margarita which is located along the Gulf Coast in Texas, USA. Drilling commenced earlier this month at the El Viejito Prospect.
Preliminary work completed by the Joint Venture included interpretation of 530 square kilometers of 3D seismic. A number of leads have been recognized in the prospective stratigraphic/structural settings at various depths ranging from 1,000 meters to 4,000 meters. Having refined the shallow leads through reservoir engineering data from nearby producing analogues, the Wandoo Joint Venture has concluded that the prospect has a high outcome probability of success on drilling.
The El Viejito #1 well is the first of six back-to-back shallow wells planned under the current drilling program. This program is a precursor to the commencement of a drilling program focused on more substantial prospects at a greater depth.
Eagle Oil Pool Development Project - California, USA
Victoria Petroleum NL, as operator for the Eagle North-1 well on the Eagle Oil Pool Development Project located in the San Joaquin Basin in California, is investigating the alternatives for this project, including the possibility of a new horizontal completion. The target zone for re-entry and sidetrack will be the 177 meters of the lower Gatchell oil sands in the horizontal well bore over the interval from 4,209 meters to 4,386 meters.
Since spudding the well early in the year total depth was reached at 4,219 meters. Wireline evaluations of the targeted Gatchell sands indicated oils saturation over a 21-meter interval from 4,143 meters to 4,164 meters with interpreted net oil pay of 13.4 meters. In the opinion of the operator, the wireline log character was similar to that seen in the Gatchell oil sands that produced oil at Mary Bellochi-1, 366 meters to the southeast of the Eagle North-1 well, which have produced at rates up to 223 barrels of oil and 0.7 million cubic feet of gas per day.
The timing of further operations at Eagle are unclear at this stage.
Empyrean has the opportunity to earn a 38.5% interest in the Eagle Oil Pool Development Project by contributing 55% to the total costs of Eagle North-1.
Glantal Gas Project – Germany
Recent drilling of the Glantal-1 well, located in the Neues Bergland Permit near Frankfurt was able to establish that the required seal quality lithology was present on the massive Pfalzer Anticline. Although testing results from the Glantal-1 well itself were disappointing, further exploration is required to test all of the anticline adequately.
Recently the operator, Pannonian International Ltd, a wholly owned subsidiary of Galaxy Energy Corporation confirmed that an application to extend the Neues Bergland Permit had been successful.
Preliminary preparations are now underway to implement a seismic program over selected portions of the anticline to enable the prioritization of drill targets. The seismic program is expected to commence Q1 2007.
Empyrean has the opportunity to earn 52% working interest in the Glantal Prospect.
During the six months to 30 September 2006, the Company made a loss before and after tax of £263,537. Exploration costs of £1,659,943 for the period have been capitalized, which relate to both exploration expenditure at the Glantal Prospect, together with expenditure on the current drilling programs at both Eagle Oil and Sugarloaf Hosston.
While Empyrean has accomplished a great deal in a short period of time, the
Company intends to further accelerate its efforts going forward. The management
and employees remain dedicated to growing Empyrean into a substantial player in
the oil and gas sector and creating value for shareholders.
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