Empire to Conduct Perforation, Well Test Program at Red Gully-1 in EP 389

Empire Oil & Gas, an Australian oil and gas exploration and production company, announced Tuesday that it has received the final approval needed to conduct the Red Gully-1 Perforation and Well Test Program in permit EP 389 in Perth Basin, Western Australia.

The program is aimed at increasing gas sales and enabling Empire to obtain independent reserves certification at Red Gully.

Approval of the Environmental Plan from the Western Australia Department of Mines and Petroleum means Empire is set to proceed with its Red Gully-1 B Sands Perforation and Well Test Program early next month.

All the gas and condensate currently processed at the Red Gully facility and sold under contract to Alcoa of Australia and BP respectively comes from the D Sands of the Red Gully-1 and Gingin West-1 wells.

The impending program will test the B Sands of Red Gully-1, which sit above the D Sands and house the bigger of the two gas pools. The objective is to establish that the B Sands contain sufficient gas to enable the EP 389 Joint Venture to supply the 15PJ to Alcoa as contained in the current Gas Supply Agreement (GSA) and to determine if there is any gas for further sales.

By ensuring gas is available to meet Tranche Two of the Alcoa GSA, the joint venture can generate significant additional cashflow.

The well is also aimed at enabling Empire to gain independent reserve certification for the B Sands by production flow-testing (via the Red Gully Facility) for six to nine months.

The production performance of Red Gully-1 to date has indicated that the reserve recovery of the D Sands is likely to be lower than originally expected due to significant pressure depletion.

Further down-hole pressure data will be recovered on the D Sands during the B Sands perforation operations. This bottom-hole pressure data combined with the Wannamal 3D seismic mapping will allow a more accurate estimate of recoverable reserves from the D Sands.